Whatever happened to the Great Depression?

Way back in March Peter Taaffe, the General Secretary of the Socialist Party, wrote;

“Most capitalist commentators now agree with our analysis that at the very least this is the worst economic crisis since the great depression of the 1930s and may yet exceed it. In a sense, this crisis is potentially even worse than then. The extent of capitalist globalisation which led to this crash is much wider and deeper than existed in the so-called ‘gilded age’ before 1929. For this reason, it is already the most internationalised, generalised economic crisis in history.”...writes Bill Jefferies

Peter Taaffe - March 2009

Like a Jehovah’s Witness Minister who predicted[1] the end of the earth in 1975, Taaffe will now reassure his followers that he only thought it was “possibly” the Armageddon. But Taaffe was anything but the exception among Marxist economics commentators. The late Chris Harman at the ISJ crisis day school in November 2008 said that the present crisis was either a repeat of the Great Depression or in the best case scenario a worldwide 10 years of Japanese like stagnation. In May 2009 he repeated the idea;

“Supporters of the system always try to console themselves with the thought that every previous crisis of the system has eventually come to an end. But it can take an awfully long time. It took a decade of economic devastation and the worst war humanity had known for the system to resume its old growth in the 1930s.” Chris Harman Socialist Review – May 2009

By then growth had already resumed in Germany, China, Brazil, Russia, France, Japan, Korea. It resumed in the USA in July. The UK’s still waiting. In May Richard Brenner of the Fifth International, not one to be left out of the party, exclaimed;

“The crisis is the predominant and determining factor in world politics. Approaching its second anniversary, it shows little sign of abating, and has moved on to embrace the entire globe. Already the greatest financial crisis in history, it has metamorphosed from paralysis of the banking system and capital markets into the most synchronised global recession yet seen, so far uncontained - and in many respects aggravated - by the battery of policy responses the bourgeoisie has fired at it…..The Great Moderation - otherwise known as globalisation - has given way to a new period: one which shows every sign of being a Third Great Depression.” [2]

After predicting that a recovery would not even begin for 18 months at the earliest, Brenner claimed that by stopping the banks from collapsing, by the slashing interest rates and guaranteeing bad debts, by acting as a lender of the last resort, the world’s financial authorities had “in many respects aggravated” the crisis.

Pause. Gulp.

This guy wants to apply for a job in the Federal Reserve. They could show him where Hank Paulson used to sit. Let the markets rip Paulson said. It’s the best thing for capitalism.

But these three were by no means alone. In September Andrew Kliman postulated that the US may never recover from the recession. In April Hilel Ticktin proclaimed that the present crisis “was a classic depression”[3], just like it was in 2002. István Mészáros[4] said it was “the greatest crisis in human history”. Martin Thomas said it was probably “the fourth Great Depression.”[5] Robert Brenner asked “With a plunging real economy exacerbating the unprecedented financial meltdown and vice versa, how could the governments’ new self-described Keynesian interventions, however titanic, hope to stem the tide? Where, when, and how it would all end was anybody’s guess.”[6]

No need to guess

By now we have no need to guess. By February the financial authorities had stemmed the sub-prime crisis. The nationalisation of key parts of the banking system – far from aggravating the crisis – had stemmed the tide, a wave of write downs based on very pessimistic scenarios for housing losses were carried out, reaching around $1.7 trillion world wide. As I predicted back in March;

“If the rate of write downs only returns to that of early to mid 2008 of around $50bn a month, then financial profits will treble. Further, the considerable fall in raw material prices has increased US domestic demand by around $360bn a year and alongside it the margins for non-financial industry. Around 40% of the cost of a manufactured commodity is raw materials and raw materials have fallen by around 60% from their summer 2008 peaks. Consumption has marginally increased in January/February 2009, while the collapse of trade and alongside it industrial production, seems to have bottomed between December 2008 and January 2009.”[7]

By the end September 2009 financial profits had indeed trebled, rising from $122bn at the end of 2008 to $363bn in September 2009, even while banks were writing off very large amounts due to bad debts. While profits as a whole had risen from $1123bn to $1357bn and the rate of profit had recovered alongside it;

Source: BEA table 1.12 (author’s calcs - note scale starts at 15% better to show the change)

China's response predictable and predicted

China, its bureaucracy terrified of a social revolution and repeat on a grand scale of Tiananmen had passed a $590bn reflationary package and instructed its state owned banks to lend on a grand scale, passing $1.3trillion in the year to September 2009. PR had correctly forecast back in mid-2008 the likely response of the Chinese rulers to a collapse of exports;

“Moreover, history shows the likely impact of a US recession on Chinese exports and the effects of any decline in turn on China’s overall growth. The bureaucracy is terrified of the repeat of a Tiananmen Square uprising – and so, when in 1997 and 2001 export growth collapsed the economy did not, and “a key reason is that counter-cyclical government-led capex [capital expenditure] was able to largely offset the weaker exports such that overall economic growth remained robust.”[8]

What is more as we pointed out then, the Chinese banks, which were largedly viewed as ramshackle, debt laden and on the point of collapse, were in fact the strongest and most financially secure in the world;

“Since 1998 the government has spent nearly US$500 billion to write down bad debts and replenish bank capital, and removed an even larger amount of nominal loans from banks’ balance sheets into state-owned asset management companies. The vast majority of the bad loans made during the 1990s boom-bust cycle have either been cleaned up already or will be dealt with finally in the very near future.” [9]

And the reason why the world capitalism was able to ride out the deepest financial crisis in its history was because it was not in the period of chronic, low growth, low profitability, stagnation that the left falsely claimed. Last winter 2008 during the depths of the crisis we wrote[10];

“Comparisons have been made between the current financial crisis and the crash of 1929, which was followed by a Great Depression lasting 10 years. The stock market lost 90% of its value between 1929 and 1932 in a succession of falls. Real output in most industries declined dramatically – steel for example ran at 17% of its 1928 capacity in 1932 while overall output fell about 30%. Unemployment in the US reached 25% and stayed at 20% for many years. By 1939, employment and output remained well below their 1929 levels.…

The Great Depression was a result of the combination of the Wall Street Crash and of the paralysis of the world economy still suffocated by the colonial system. The growth of the productive resources during the belle époque from 1890-1914, meant that the colonial system was an intolerable barrier on new powers like Germany and the US, excluded from the colonial system of the older imperialist powers, notably France and the UK. It was this system that made the First World War inevitable, as Germany developed into a great industrial power….

The Wall Street Crash certainly damaged the US economy profoundly, but more importantly it coincided with and accelerated the growth of economic nationalism across the world. Those who make comparisons between the Great Crash of 1929 and today should ponder these facts and realise the real differences between the economic and political reality then and now.”

Stagnation not

What the left economics analysts wilfully ignored was the expansion of capitalism into the former Stalinist states during the 1990s. The overthrow of bureaucratic central planning in the ex-USSR, Central and Eastern Europe and China, doubled[11] the size of the working class that could be exploited by capital;

“Before the collapse of Soviet communism … the global economy encompassed roughly half of the world’s population the advanced OECD countries, Latin America and the Caribbean, Africa, and some parts of Asia.…Then, almost all at once in the 1990s, China, India, and the ex-Soviet bloc joined the global economy and the entire world came together into a single economic world based on capitalism and markets. This change greatly increased the size of the global labor pool from approximately 1.46 billion workers to 2.93 billion workers. Since twice 1.46 billion is 2.92 billion, I have called this The Great Doubling.”

Since 1990 a further 300 million peasants have joined the Chinese workforce[12]. But as well as the exponential one off growth of the exploitable work force, the collapse of “Communism”, extended the world market across a further third of the world’s surface, opened up the former relatively protected semi-colonies like India and Brazil to unlimited exploitation by imperialism, consolidated the defeats suffered by the working classes of particularly the US and UK in the 1970s/80s and enabled a whole new technological basis of production, the ICT revolution and globalisation to transform capitalist production, as smoke stack industries were moved wholesale from the older powers to the aptly named emerging markets.

Goldman Sachs the US investment bank, say that, “The integration of the BRICs (Brazil, Russia, India, China) into the global economy resulted in a sharp increase in the world’s effective labour supply and, with it, an increase in global growth. Given that capital stocks are relatively fixed in the short run, this had the effect of boosting the global return on physical capital.”

They go on;

“Imagine you’d been told, in the early-to-mid-1990s, that the world was about to see two big structural shifts: first, a period of rapid productivity growth in the emerging world, newly unshackled from central planning but still with low levels of invested capital, relative to its workforce; and, second, the opening up of capital markets between these fast-growing new markets and the capital-rich economies of the developed world. Because faster productivity growth and scarcer capital (relative to labour) both raise investment demand, one would normally expect the general level of yields and (ex-ante) asset returns to rise.” (p11)[13]

Growth of the world market

Even though the developed markets account for 65% of global GDP[14], and the emerging markets 35%[15], emerging market growth has averaged more than twice the pace of the developed markets over the last four years, contributing more to global GDP growth than the whole of developed markets combined. China’s contribution exceeded the US for the first time in 2007 and in 2008, as the US fell into recession, China’s contribution was more than double the US. In 2009 the G7 abolished itself and created the G20 recognising this fact[16]. UN annual expenditure data[17] up to 2008 shows emerging market consumption accounted for 32% of global consumption versus the US 28%, a trend which will have accelerated in 2009 with the US recession and strong growth in India and China.

The world economy is only stagnant if you ignore how much it has grown.

World GDP Growth

Using the GDP figures from Angus Maddisons[18] Groningen Growth and Development Centre (GGDC) the significance of the expansion of the world market into the former centrally planned economies is clear;

World GDP growth annual % change

World Growth % annual change
1960-69	5.0%
1970-79	4.1%
1980-89	3.1%
1990-99	2.8%
2000-2006	4.5%

Source; GGDC

The period after 2000 is one of strong growth, the fastest since the 1960s.[19] But these figures still grossly underestimate world capitalist growth with globalisation. GDP is a measure of value production. In the non-capitalist economies of the Stalinist states no value was produced. To establish how much the world market grew in the 1990s, it is necessary to establish how much world value production grew with the restoration of capitalism and value production in them.

From the 1950s onwards an entire CIA department attempted to create comparative statistics to measure the output of these non-capitalist economies. Angus Maddison the eminent bourgeois economist explains;

“There are major methodological and practical problems in comparing the performance of capitalist and communist economies….In communist economies, private property in means of production was virtually eliminated, and all major decisions on resource allocation were made by government command rather than by market forces. The party elite gave highest priority to investment in heavy industry and to military spending. Consumption shares were characteristically lower than in Western countries. Basic items were sold below cost and full employment was guaranteed. However, consumers had only limited access to commercial services, private automobiles and housing. There was no competitive pressure to meet consumer demand for quality goods, and queuing made heavy demands on consumer time. Price and tax structures and incentives were different from those in the West. Enterprise profits were simply mark-ups on labour and material inputs and did not reflect asset scarcity.”[20]

But while the capitalist economists knew full well that these economies were not capitalist, they had no other measure than capitalist ones to assess the scale of their economies. Hence, when they collapsed in the 1990s they treated the collapse of planning as the collapse of capitalism. The expansion of the world market in the 1990s is measured as its contraction and decline.

If we adjust the figures to take account for the political expansion of world capitalism in the 1990s, we find that the growth of the world market across a third of the world’s surface and half its population, does indeed lead to a growth of a world capitalist production.

Capitalist world market – adjusting for the expansion of the world market into the former Stalinist states after 1991.[21]

World capitalist GDP growth annual % change

1951-59	4.4%
1960-69	5.2%
1970-79	4.2%
1980-89	3.0%
1990-99	5.0%
2000-2006	4.5%

Source; GGDC

The growth figures for all of the major statistical agencies, World Bank, IMF, UNCTAD, OECD etc. repeat this mistake. That is fine for capitalist theoreticians, but for Marxists who’s theory in large part rests on the economic basis of different modes of production, it leads to a completely erroneous assessment of the period of world capitalism today. If we compare these adjusted growth figures to that of the long post war boom we can see the strength of the long wave with globalisation.

World growth annual % change

Unadjusted including capitalist and non-capitalist states GDP		Adjusted GDP capitalist states only
1950-73	4.9%		4.9%
1974-1990	3.2%		3.4%
1991-2006	3.5%		4.9%

Source; GGDC

The growth of world capitalist production, outside of the core developed economies can be illustrated again by the increase in the output of particular key commodities.

Steel

Take steel production a commodity absolutely central to the growth of world capitalism.

World Capitalist Steel Production

	Thousand metric tons	% change
1980	454,035
1985	435,258	-4.1%
1990	495,775	13.9%
1995	732,337	47.7%
2000	828,297	13.1%
2005	1,113,448	34.4%
2008	1,329,719	19.4%

Source: World Steel Organisation[22]

During the 1980s capitalist steel production genuinely stagnated, from 1980-89 it grew a mere 9.2%. During the 1990s with the addition of the former Stalinist states and their transformation into capitalist economies it expanded 67%. As these economies began to grow on a capitalist basis it accelerated increasing by 60% up to 2008.[23] Even during the depths of the crisis up to August 2009 steel production in China, the largest producer in the world by far, has surpassed its August 2008 figure.[24]

Cars, vans, busses and trucks

Vehicle production, cars, vans, busses and trucks illustrates the shift very clearly. In 1997 the G7[25], produced 36,733,176 vehicles of all types, by 2008 this had fallen to 33,629,306, during 2009 it will have fallen much further, as the major auto manufacturers closed plants in the older manufacturing centres for good or moved them abroad. But the stagnation of vehicle production in the G7 is not typical of the world as a whole.

Annual world vehicle production

	1997	1999	2001	2003	2005	2007	2008
G7	36,733,176	38,521,927	36,319,651	37,248,806	37,582,383	37,222,463	33,629,306
ex-CPE	3,940,120	4,499,684	4,991,232	7,275,414	9,347,231	14,107,006	15,039,907
World	55,085,732	56,258,892	56,304,925	60,663,225	66,482,439	73,101,695	70,526,531

Source: OICA

This table leaves out the expansion of capitalist vehicle production with the expropriation of the former centrally planned economies a one off increase of around 10%, but even then the trend is clear, vehicle production in the former centrally planned economies[26] (ex-CPE) had risen from 1997 3,940,120 to 2008 15,039,907 a total that has increased further in 2009 as China has doubled car sales. From producing 1998 10.8% of the G7 total by 2008 these states were producing 44.7%, while total world production increased by 28% between 1997 and 2008.

Profits and globalisation

The period of globalisation has seen the consolidation of three significant sources of profits for imperialism. Profits from the exploitation of the developing world through the direct export of capital and unequal exchange, buying imported goods at less than their value and selling them at higher prices, profits from financiers exploiting these nations and taking advantage of cheap money from China and the oil exporters, and profits from rising productivity, falling wages and increasing income inequality.

From the 1990s on foreign direct investment (FDI) surged. The new markets in the former Stalinist states, the removal of the buffer of the “communist” states from large semi-colonies like Brazil and India, meant the fire sale of state assets to imperialist financiers and the creation of new production abroad, so called Greenfield developments. FDI grew from 1990 $200bn[27] to 2000 $1400bn at the peak of the hi-tech boom, it fell to 2003 $590bn before peaking again in 2007 at $2000bn. Through the course of 2008 it has fallen to $1650bn and will certainly fall faster up to mid 2009. UNCTAD note;

“Developing and transition economies saw FDI inflows rise in 2008 to record levels for both, with their shares in global FDI inflows growing to 37% and 7%, respectively, from 27% and 5% in the previous year. The combined share was 43%, close to the record share attained in 1982 and 2004, which demonstrates the increasing importance of these economies as hosts for FDI during the crisis – at least in 2008.” (p4)

And while the imperialist companies re-invested an ever increasing proportion of their profits re-invested earnings rose from 2000 1% to 2008 15%, profits as a whole rose from 2002 $200 bn to 2007 $900bn, before falling to a still very high 2008 $750bn.[28] The re-patriation of these profits to the imperialist heartlands means that in the USA foreign profits now account for around 30% of the US total.

US financiers took advantage of cheap Chinese and Middle East oil money, to drive down the price of loans in the domestic economy. Through the course of the 1990s financial profits rose, peaking in 20001 with the hi-tech boom, before stabilising in the USA at around 20% GDP.

Corporate remuneration, the bonuses of banking bosses and capitalist oligarchs grew exponentially as well, as union failed to maintain the level of pay rises, rising from 1982 5.7% GDP to 2006 9.2% GDP[29].

But Robert Brenner, the US Marxist historian and economist, who's estimate of profit rates is used by the SWP (UK) and Workers Power for example, excludes foreign profits, financial profits and corporate remuneration from his calculation of profit rates. Unsurprisingly, after excluding the majority of profits, including all those areas of profit which have grown particularly strongly with globalisation, he concludes that profit rates have stagnated.

Marxists on the profit rate

In 2006 Permanent Revolution wrote;

“In the world’s largest economy, the USA, profits, productivity, and output in 1993-2000 returned to within a whisker of the “golden years” performance in the long boom of the 1960s. The trend in average US corporate profit rates is incontestably upwards… US profits as a proportion of GDP are the highest for 40 years and on a sharp upward trend and this pattern is repeated across the world. Across the G7 nations (the seven richest imperialists in the world) there has been a growth in the mass and rate of profit, with a steadily rising trend beginning in 1980, from a trough of just around 10% of GDP to around 14% of GDP today. This trend has seen the bottom of each cycle end at a higher level than the preceding one.”[30]

Since then our analysis has been confirmed by a series of both Marxist economists and bourgeois institutions. In a 2008 Fred Moseley a US Marxist economist wrote in a paper “Is the US Economy Heading for a Hard Landing?” wrote;

“It has taken a long time, but the rate of profit is now approaching the previous peaks achieved in the 1960s . . . The last several years especially, since the recession of 2001, has seen a very strong recovery of profits, as real wages have not increased at all, and productivity has increased very rapidly.”

Furthermore he adds:

“And these estimates do not include the profits of US companies from their production abroad, but include only profits from domestic US production. If the profits from overseas production of US companies were added in, it would appear that the recovery of the rate of profit is pretty much complete.”

Dumenil and Levy two French Marxists write;

“. . . the profit rate of the nonfinancial corporate sector displays the now familiar pattern in three phases: (1) the rise into the 1960s bulge; (2) the decline from the mid-1960s to the early 1980s; (3) a recovery to the levels of the 1950s.”[31]

Andrew Kliman a US Marxist has produced a graph of US profits which demonstrate a remarkable arise in profit rates from 2003-2007;

“The Destruction of Capital” and the Current Economic Crisis

Andrew Kliman January 15, 2009[32]

Paradoxically, Kliman’s paper asserts that profit rates have stagnated even while his graph shows the opposite.

Michel Husson a French Marxist from the NPA[33] states unambiguously;

“Today, the evidence is overwhelming: the rate of profit rate has trended upwards since the mid-1980s.[34]…. The raw data delivers an unambiguous answer. If we compare the net operating surplus to net capital stock, it shows a clear upward trend in profit rates in major capitalist countries. This trend is so pronounced that it will not be significantly influenced by any more or less necessary corrections.”

But it is not only the Marxists who have woken up to the recovery of profit rates during the last boom.

Capitalist financiers on the profit rate

In 2007 The Bank of International Settlements explained;

“This paper presents data that suggest that the profit share is unusually high at present (and the wage share unusually low). In fact, the extent and cross-country scope of this outcome has no precedent over the past 45 years. This has not simply been driven by recent strong global growth. Rather, it appears to be the result of a two-decade upward trend common across a number of countries.”[35]

Citigroup followed;

“The profit share in Europe and elsewhere in the industrialised world has recently been at a 40-year high, driven upwards since the mid-1980’s predominantly by the joint forces of globalisation and technological change.”[36]

Of course these record profit levels preceded the credit crunch and recession of the winter 2008, so what about since then?

In mid 2009 the US investment bank Goldman Sachs article “The Savings Glut, the Return on Capital and the Rise in Risk Aversion”, Global Economics Paper No: 185.[37] produced estimates of US, world, European and Chinese returns on capital and yeilds which demonstrate a very sharp rise since the 1980s, they say;

“…far from declining…the global return on capital…has trended up over the past decade or so. Even in 2008, by which stage the financial crisis had begun to hit profits materially, the global [return on capital] remained above its long-term average.”

According to Goldman Sachs figures, the US return on capital (ROC) rose from 1984 5% to 2007 16% before falling to a recession low of 9%. Still twice its 1980s level and well above the trough of previous recessions. China’s increase in profitability is even more dramatic, the return on capital rising from 1996 2%, a year after capitalist restoration, to 2007 22%., a figure which has barely fallen with the crash. The European ROC has gone from 1984 7% to 2007 11% and the global figure from 1982 6% to 2007 14% before falling to 11% with the recession.

Morgan Stanley noted in a recent August 2009 paper;

“Although U.S. corporate earnings have dropped steeply since the start of the Great Recession, net margins for non-financial firms (i.e., the “real economy”) have been surprisingly resilient compared to previous economic downturns…

Profitability for the non-financial constituents of the S&P 500 Index appears to have “troughed” around 6% in the first quarter of 2009, against an average “trough” of 4% seen in previous economic downturns.

A major reason for this is the growth of profits outside of the USA;

"Non-U.S. growth has consistently been a major source of corporate profitability through both the boom and bust periods of the past few decades. All told, the foreign share of U.S. corporate profits has risen to 31.3% in December 2008 from 11.5% in 1984. In tandem with the growing share of foreign profits—which generally have lower tax burdens—effective tax rates have fallen close to 30% from about 40% in

the mid-80’s.”[38]

In October JP Morgan commented;

“The turnaround in global corporate profits is quite striking, with the US, in particular, posting impressive, quarterly gains (in NIPA terms) in 1Q and 2Q and, in all likelihood, in the latest quarter as well, based on what has been seen during the current round of corporate earnings reports.

Looking back at the history of US profits as a share of GDP, what is unusual about the latest episode is the early turn in profits—they bottomed in 4Q08, well ahead of the end of the recession, rather than at its end as is customary—and at a much higher share of GDP than might have been expected considering the abrupt collapse in the economy. Looking back, the US profit share has been trending higher since the early 1980s, setting progressively higher highs and higher lows. This pattern continued in the 2000s.”[39]

Where next?

The rate of decline of world trade over the winter of 2008/9 posed the question of the de-globalisation, would the world hide behind tariffs as it had done in the 1930s? In the second half of 2008, the World Trade Organization found a 17% increase in the number of new antidumping investigations compared with the same period in 2007. These numbers are still well within the experience of the past decade and well short of the peaks seen in the 2001 recession. While some protectionist measures have been introduced, the statistics have not approached what the world experienced in the Great Depression.[40]

The Great Recession has been principally an America recession. US capitalists have used it to finally break the remaining power of organised labor in the auto sector. Chrysler and GM both went bust. Ford nearly did. The United Auto Workers (UAW) have agreed terrible concessions on terms and conditions and jobs have been sacrificed by the million, while productivity, has increased very rapidly.

Over the winter of 2008/9 the major imperialist exporters, Japan and Germany, experienced a very rapid contraction in trade and slashed output accordingly. But through the course of this year output and trade has recovered around a third to half of those falls, and unemployment has not risen anything like as much as in the USA.

For over half of the world’s population, Africa, China and India there has been no recession at all. The recession has marked China’s coming of age. Its ability to re-orient its economy towards domestic investment has dragged the rest of the emerging markets up behind it. China is becoming increasingly assertive, aggressively buying up raw materials firms and resources world wide, its exports of capital have tripled in 2009.[41]

Through the remainder of the year and into next, the world economy will revive as the inventory de-accumulation of 2009 turns into its opposite. It is likely that this will guarantee at least several quarters of above average growth world wide. What will happen after that remains to be seen, the possibility of a double dip towards the end of 2010, as the inventory gains end and government stimulus packages run out is real. But firms by cutting employment very rapidly have maintained profit levels, particularly in the USA, far above their bottoms of previous recessions. Whether there will be a double dip, depends on whether they start hiring again and the productivity of gains of the recession are transformed into a revival of employment and alongside it consumption and accumulation.

-------------------------------------------------------------------------------------------------------------------------------------------------------------

Footnotes

[1] Are we to assume from this study that the battle of Armageddon will be all over by the autumn of 1975, and the long-looked-for thousand-year reign of Christ will begin by then? Possibly, but we wait to see how closely the seventh thousand-year period of man’s existence coincides with the sabbathlike thousand-year reign of Christ....Our chronology, however, which is reasonably accurate (but admittedly not infallible), at the best only points to the autumn of 1975 as the end of 6,000 years of man’s existence on earth."

http://www.religioustolerance.org/witness8b.htm

[2] Richard Brenner The Third Great Depression – May 2009 http://www.workerspower.com/index.php?id=192,1976,0,0,1,0

[3] “As there is no comparison with any other downturn other than the 1929 depression it is clear that we are in a classic depression, with somewhat more spectacular fireworks but with much more government intervention.” Hilel Ticktin; "The Implosion of Finance Capital-Depression and Deflation" http://sites.google.com/site/radicalperspectivesonthecrisis/finance-crisis/on-the-crisis-of-finance-and-financialisation/ticktintheimplosionoffinancecapital-depressionanddeflation

Ticktin regularly announces the latest Great Depression;

“At the present time, we are still in the early stages of the depression, when the reduction in prices of labour power and the items of constant capital are still to show their effects….In short, until the working class acts, the present global crisis will have no end even if there are fluctuations in growth rates.” Hilel Ticktin; The Third Great Depression – April 2002 http://www.critiquejournal.net/hht34.pdf

[4] “The present crisis is profound. The deputy governor of the Bank of England has admitted that this is the greatest economic crisis in human history. I would only add that it is not the greatest economic crisis in human history but the greatest crisis in all senses. Economic crises cannot be separated from the rest of the system.” István Mészáros – January 2009 Socialist Worker Review

http://www.socialistreview.org.uk/article.php?articlenumber=10672

[5] “We are probably in the first stages of the fourth international "great depression" in the history of capitalism.” Martin Thomas March 2009

http://www.workersliberty.org/story/2009/03/24/whats-stake-new-great-depression

[6] [6] http://www.sscnet.ucla.edu/issr/cstch/papers/BrennerCrisisTodayOctober2009.pdf

[7] http://www.permanentrevolution.net/entry/2629

[8] http://www.permanentrevolution.net/entry/2357

[9] http://www.permanentrevolution.net/entry/2357

[10] http://www.permanentrevolution.net/files/26-38%20EconomyKH.pdf

[11] Richard Freeman The Great Doubling: The Challenge of the New Global Labor Market August 2006 NBER

[12] Why are we in a recession? The Financial Crisis is the Symptom not the Disease! Ravi Jagannathan, Mudit Kapoor and Ernst Schaumburg September 2, 2009

[13] Goldman Sachs article “The Savings Glut, the Return on Capital and the Rise in Risk Aversion”, Global Economics Paper No: 185.

[14] This is also a sharp drop. According to IMF data from the WEO Autumn 2009, the proportion of world GDP produced by the G7 has fallen from 1992 51% to 2009 41%. The US produces 23%.

[15] GDP PPP

[16] In tribute to Robert Brenner’s title, this was first advocated by Goldman Sachs two years ago.

[17] Based in nominal US dollars

[18] http://www.conference-board.org/economics/database.cfm

[19] Extending the figures to include estimates for growth up to 2009 reduces the noughties annual average to 4.1%.

[20] Angus Maddison; Review of Income and Wealth Series 44, Number 3, September 1998, Measuring the performance of a communist command economy: an assessment of the CIA estimates for the USSR. http://www.ggdc.net/maddison/

[21] This is a straightforward calculation. The non-capitalist states, China, CEE, USSR, Vietnam, Laos and Cambodia are excluded from estimates for capitalist GDP growth before 1991 then added en bloc after then.

[22] The World Steel Organisation do not include figures for the non-capitalist economies before 1990. They take the date of capitalist restoration in the USSR as 1990. To make the figures consistent I have adjusted it to be 1991.

[23] While steel production has fallen in the first half of 2009, but it remains to be seen what the final year total will be. The August 2009 world monthly total was 18% below that of 2008, but China which now accounts for around half total steel production has seen output accelerate sharply from mid-year on, as the governments relationary package takes hold. And worldwide car production will grow in the second half of 2009, while at the end of 2008 production slowed.

[24] http://www.worldsteel.org/?action=stats_search

[25] Italy, France, Germany, USA, UK, Canada, Japan

[26] Uzbekistan, Ukraine, Poland, Russia, Serbia, Slovenia, Slovakia, Hungary, Romania, Czech, China

[27] UNCTAD World Investment Report 2009 p4

[28] UNCTAD World Investment Report 2009 p6

[29] BEA Table 1.12

[30] http://www.permanentrevolution.net/files/7123421_36-45%20Economy%20corrected.pdf

[31] Gerard Dumenil and Dominique Levy’s paper, The Real and Financial Components of Profitability.

32 http://akliman.squarespace.com/crisis-intervention/ For a

Wed 25, November 2009 @ 10:19

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pr webby said…

Missing footnotes;

32 http://akliman.squarespace.com/crisis-intervention/ For a critique of Andrew Kliman’s calculation of the rate of profit see here http://www.permanentrevolution.net/entry/2861
33 http://www.alencontre.org/Economie/CriseHusson06_09.html
…All statistical sources lead to the same conclusion. To maintain the dogma of the declining trend, we must correct these statistics in order to restore the "real" falling rate of profit. But this is only possible by methodological errors. Alan Freeman shows a falling rate of profit by forgetting that capital constantly transmits its value to the product. Robert Brenner liquidates the theory of value through a model where productivity gains reduce prices, cutting back the profit share. Even Chris Harman, always willing to defend dogma, is forced to admit that ‘profit rates have recovered from about 1982 - but only about half the decline that had occurred in the period period.’ This reservation is not correct in the case of Europe, if one refers to the assessments of Dumenil and Levy…”

34. BIS Working Papers No 231 The global upward trend in the profit share By Luci Ellis and Kathryn Smith
35. Citi Bank Economic Market Analysis and Global Macro Themes November 2008
36. http://www.permanentrevolution.net/files/gs%20savings%20glut%20may%2009.pdf

37. Morgan Stanley Henry McVey August 2009 U.S. Corporate Profitability—Support on the Margin
38. JP Morgan Economic Research Daily Economic Briefing October 20, 2009
39. https://mm.jpmorgan.com/servlet/OpenPubServlet?skey=TU1SQy01Mjk3MTMtMSw0MjAsT1ZFUlZJRVdfRkVFRAA%3D&Name=MMRC-529713-1.pdf
40. http://www.dallasfed.org/research/eclett/2009/el0908.pdf
41. http://www.bloomberg.com/apps/news?pid=20601087&sid=aK6Mf.cvDx98

Wed 25, November 2009 @ 11:04

James said…

"But firms by cutting employment very rapidly have maintained profit levels"

Can you explain this further. Is it by cutting 'unproductive' Labour?

Wed 25, November 2009 @ 12:36

bill j said…

Not really. All that productive/unproductive means for a Marxist is productive or unproductive of surplus value. Auto workers for example were most definitely productive. But the point of a recession is to destroy inefficient/out of date plant and equipment and to bring the market into line with demand. In other words the US were building expensive cars that no one wanted to buy. Hence the surplus value embodied in them could not be realised.
Its pretty clear though that not only in the auto industry, but across the US the bosses have used the recession to wage an all out war against the working class. Unemployment has risen far further than the usual proportion between change in GDP and employment and productivity has also risen alongside it.
While whole industries, AIG, Chrysler, GM etc. have been closed down. For the first time since WWII the capital stock has actually declined.
It is payback for the US dependence on China, which continues, but which is now being radically realigned.

Wed 25, November 2009 @ 17:04

James said…

But if profit rates were rising before the recent 'blip', how does cutting employment now maintain profit levels? Or put another way, why wasn't this wasted surplus value affecting profit rates previously?

Wed 25, November 2009 @ 17:33

bill j said…

I think my graph (fixed now - the first one) shows pretty clearly that while profit rates had recovered to their levels of the 1960s by late 2006, after that they declined. This presaged the slow down then recession in 2008. That recession was combined with a colossal financial crisis/crash in the autumn of 2008, which transformed it into a world recession.

Incidentally this paper;

http://www.dallasfed.org/research/eclett/2009/el0908.pdf

has some excellent details on the impact of the financial crash on the financing of trade and the extent or otherwise of de-globalisation.
As production and then demand contracted so the spiral of recession lead to a sharp contraction, until a new lower equilibrium was established from mid-2009 on. Since then the factors that lead to the slow down are now working in the other direction. This graph for Euro-zone industrial orders shows the pace of the rebound currently underway;

Euro-Area-13 and UK Industrial Orders
Saar except m/m Mo/Mo Sep-09 Aug-09 Sep-09 Aug-09 Sep-09 Aug-09
Ezone Detail Sep-09 Aug-09 Jul-09 3-Mo 3-Mo 6-mo 6-mo 12-mo 12-mo
MFG Orders 1.5% 0.6% 4.4% 29.0% 35.8% 23.6% 19.1% -16.5% -23.2%
Memo:MFG
Total Orders 1.5% 0.6% 4.4% 29.0% 35.8% 23.6% 19.1% -16.5% -23.2%
E-13 Domestic MFG orders 6.5% -3.2% 5.1% 38.3% 40.3% 22.4% 5.4% -13.4% -21.4%
E-13 Foreign MFG orders 7.3% -5.0% 5.0% 31.1% 32.8% 26.3% 13.9% -17.3% -24.9%
Countries: Sep-09 Aug-09 Jul-09 3-Mo 3-Mo 6-mo 6-mo 12-mo 12-mo
Germany (MFG): 1.5% 2.5% 2.0% 26.9% 40.6% 29.8% 35.0% -16.7% -24.2%
France(Ind): 5.7% 2.9% 4.7% 67.4% 42.3% 33.8% 6.0% -5.6% -14.0%
Italy (Ind): 5.2% -8.6% 2.4% -5.8% -16.5% -3.8% -16.4% -21.4% -29.5%
UK (Engineering Industy): 2.3% -15.1% 4.7% -31.7% -26.0% -3.0% -3.5% -30.9% -13.1%

Haver commented;

Euro-Area orders are still falling year-over-year. As the chart shows the Yr/Yr drop is being steadily mitigated. Both foreign-sourced orders and domestic orders (in-region orders) are rebounding smartly after their recession-induced drop.

· Of the EU’s big four economies Germany and France are doing best with orders surging at stunningly strong 3- and 6-month rates of growth. Italy’s orders are still falling over both those periods as are orders in the UK. UK orders, in fact, are dropping at a horrific 31% annual rate in the three month period ended in Sept. demonstrating a severe drop off sparked by a 15.1% order drop in the month of August alone.

· Needless to say the Euro-Area, while doing better, remains a very heterogeneous community. The orders rebound itself, is also not altogether uniform. The detailed figures revealed September's orders were driven by heavy transport equipment, such as ships, railway and aerospace equipment, which tend to be volatile. Excluding heavy transport equipment, orders dropped 1.2% from August and were 18.2% weaker than in September last year. Orders for intermediate goods dropped 2.1% in September from August, but orders for capital goods, durable consumer goods and nondurable consumer goods all rose.

· On balance the orders trends show that the zone is doing better. As in the US a number of Zone economies did better on the back of government schemes to boost auto sales coupled with scrappage requirements; these programs are starting to lapse with some negative consequences for orders and growth.

Wed 25, November 2009 @ 21:39

Gerry Downing said…

“In the great depression, every major industrial power slumped. In the present crisis, every major industrial power is still growing – and some of them are growing very fast.”

Remember this one? - and now there is the embarrising episode on Dubai - we can pnly hope you are not proved so spectacularly wrong again.

Mon 30, November 2009 @ 10:08

bill j said…

In the Great Depression US output declined by 30% over three years. Every capitalist country in the world plunged into crisis and world production was 16% below its 1929 level three years later. In this "Great Depression" US output has declined by 4% and is now growing. China the second largest economy in the world has grown by 9% and India the fourth largest has grown by 8%. World output might decline by 1-2% this year. Not so wrong then.

Mon 30, November 2009 @ 10:49

bill j said…

Here's an interesting post on the actual Great Depression.

http://voxeu.org/index.php?q=node/3280

Note world production is 30% below its 1929 level in 1932. And the major reason why it did not recover until 1935 was due to the rise of extreme national protectionism.

Mon 30, November 2009 @ 17:12

m said…

were you there at the HM conference?
Ticktin said in his presentation, that this depression would be way worse than others. he didn't really bother to substantiate his calim with data, thoug he referred to the figure of 600 trillion dollars oin derivatives as a proof that capital has become totally parasitic. on the other hand he also state hat he didn't care about pofit rate figures, because they were not measured in marxian value categories, so they're worthless....hmmm

of course there were also other people, who were much closer to your position, such as Leo Panitc or the Dick Bryan. Panitch tried to caution Ticktin that he shouldn't draw such extreme conclusions from this sort of financial data, but Ticktin wouldn't listen.

Tue 01, December 2009 @ 12:19

m said…

(sorry about the typos)

Tue 01, December 2009 @ 12:20

bill j said…

No couldn't make it I'm afraid - too many London meetings! I debated Ticktin at the beginning of the crisis and he carried on about derivatives there. He said then that if this wasn't the Great Depression then he would give up everything that he had ever understood about Marxism. Of course he said it was the Great Depression in 2002 as well (see quote above).
Let's put it like this, it was my impression that he wasn't particularly on top of the empirical data. He made the same remark about profits rates then too. Its a useful argument at times, but you might as well say that all data about the economy is bourgeois and therefore doesn't count. I have heard quite a few Marxists claim that btw.
Paradoxically of the financial instruments that caused such havoc in the credit crunch derivatives was not one of them. According to the BIS (from memory) their total value is only around $10bn once the mutually exclusive bets are cancelled out.
Don't know who Dick Bryan is. Leo Pantich did have a similar position. But they are all weak on the expansion of the world market with the restoration of capitalism, none of them account for it as we explain above. They all attribute globalisation to something else other that the most important factor that changed world politics - the abolition of the USSR etc.

Tue 01, December 2009 @ 13:27

Karl said…

Just a couple of questions to help my understanding more than anything,

1. Are these profit rates USA rates only and if so are there any figures for world profit rates and if so why didn't you use them?

2.Do the USA rates include the retail sector, such as Wal Mart?

Tue 01, December 2009 @ 13:42

bill j said…

Generally profit rates are derived for the US as its the biggest economy and has the best data, regularly updated and with clear categories.
Studies of China, Japan and Europe, all confirm the same picture however.
There is a debate if they should include the unproductive sector, i.e. Walmart, IMO they should, as a) Walmart earns billions of real profits via unequal exchange from mainly China, b)inasmuch as their is an unproductive sector, any profits it earns are a deduction from the productive sector.

Tue 01, December 2009 @ 14:57

m said…

Dick Bryan is an economist from Australia, and wrote a book specifically on derivatives about 2 years ago.
http://www.arts.usyd.edu.au/departs/political/staff/dick_bryan.htm

http://www.amazon.co.uk/Capitalism-Derivatives-Political-Economy-Financial/dp/1403936455

AFAIK this is the only book-length analysis of the subject from a MArxist point of view. I think you should check it out.

As I understand it, the figure "600 trillions of derivatives" is very misleading, that's only a notional value, kind of like all contracts summed up, and these assets have a pyramidal and/or cross-referential structure, so the real liabilities are much smaller ...I don't think it means that much, certainly doesn't prove that everything's about to crash (though things might crash, but one need to underpin this claim with a hell lot of data - Ticktin certainly didn't do so, and was kind of irritated when challenged)

Tue 01, December 2009 @ 17:13

Karl said…

But wouldn’t stripping out the unproductive sectors, such as Wal Mart, tell us something fundamental?

Tue 01, December 2009 @ 18:48

Aleksandar Sarovic said…

I don't get why the profit rate is so important to you! Capitalism will never fall because of the low profit rate because when profits lower in crisis capitalism simply destroy everything and starts increasing the profit rate from the begining again and again. Capitalism will be removed when a better system is invented and accepted. The first part of it is explained here http://www.sarovic.com/humanism_extensively.htm

Tue 01, December 2009 @ 18:56

bill j said…

@ Karl well some people think so, but personally I think its misleading.

A large part of the surplus profits extracted from the emerging markets are made through unequal exchange, buying cheap and selling dear, i.e. through trade rather than direct exploitation through FDI. Wal Mart buy output below its value in China and sell it at a huge mark up in the USA. These surplus profits go straight into the bottom line of US imperialism. They are an addition to the already around 30% of profits extracted from abroad. If you leave those profits out you are underestimating the strength of US imperialism and its parasitism.

The IS tradition of Cliff/Harman/Callinicos and co do just that, for to acknowledge the extent of surplus profits extracted from the developing world to the imperialist developed world, would make their opposition to Lenin's theory of the labour aristocracy untenable.

Secondly, unproductive sectors are parasitical on productive sectors. Therefore, to arrive at the most accurate estimate of the rate of profit, in my view, you need to measure both together, as the profits from in the unproductive sector i.e. parts (although not all) of retail, are a deduction from the profits in the productive sector.

Tue 01, December 2009 @ 19:45

m said…

you make me curious...what productive/unproductive distinction exactly do you subscribe to? is retail all unproductive? is finance?

This is a good paper on the topic, arguing that actually most of these categories, generally classified as unprod. are in fact productive:
http://www.scribd.com/doc/23534262/Diego-Guerrero-Nonproductive-Labour-Growth-and-the-expansion-of-the-tertiary-sector-Mattick-Marx-Keynes

Thu 03, December 2009 @ 00:07

Jacob Richter said…

Here's an even better, more mathematically rigorous, yet shorter paper on productive vs. unproductive labour:

"Hunting Productive Work" By Paul Cockshott and Dave Zachariah

http://www.dcs.gla.ac.uk/~wpc/reports/unprod3b.pdf

Thu 03, December 2009 @ 05:32

James said…

If it is being claimed the corner shop is productive I need to go
back and read Marx again.

Thu 03, December 2009 @ 09:06

bill j said…

Well Marx changed his mind a few times, but I think its essentially whether the product/service is exchanged against capital rather than revenue and whether it is part of production rather than circulation, i.e. retail, banking etc.
What's your definition?

Thu 03, December 2009 @ 09:25

m said…

I'm not really sure, to be honest.
the "exchange against capital vs. revenue" distinction seems solid enough, however, I'm not sure about the production/circulation distinction. Eg. Marx thought that transport is productive. Then, why not retail? You might even argue,that a lot of work in banking is producing money and financial products (see the paper by Guerrero)...is that productive (of SV) too...? I think most of it is: it's people working under the control of capitalists, supplying services/products to a market and for a profit.

It's a tricky one.

Thu 03, December 2009 @ 15:49

bill j said…

I think it basically boils down to a distinction between what is necessary for the production of commodities under capitalism and what are the faux frais of production.
http://en.wikipedia.org/wiki/Faux_frais_of_production

(The illustration used there from the IRS has got nothing to do with it btw)

So inasmuch as a manager organises production, something necessary for it to take place, then that's productive, inasmuch as the discipline workers that's unnecessary and unproductive.
Inasmuch as retail is simply the selling of products its unproductive, inasmuch as it adds a special desirable quality to the commodity - i.e. Nike advertising - its productive.
Banking is definitely unproductive as it simply redistributes profits away from the productive capitalists to the unproductive ones. That's btw why using maths is a useless diversion here, its the relationship to the means of production that matters, not the quantities involved.
It is the relationship of the activity to capital that matters not the activity itself. So sex exchanged for money is productive, sex for pleasure without money unproductive.

Thu 03, December 2009 @ 16:09

Karl said…

“An actor, for example, or even a clown, according to this definition, is a productive labourer if he works in the service of a capitalist (an entrepreneur) to whom he returns more labour than he receives from him in the form of wages; while a jobbing tailor who comes to the capitalist’s house and patches his trousers for him, producing a mere use-value for him, is an unproductive labourer. The former’s labour is exchanged with capital, the latter’s with revenue.”

I know there has been an age old debate over what is productive labour in a capitalist system but doesn’t this definition posited by Marx still hold good?

So "sex exchanged for money" could be unproductive.

Thu 03, December 2009 @ 20:33

bill j said…

Fair point, its the exchange with capital that counts not with money per se.

Thu 03, December 2009 @ 21:59

bill j said…

See here;

"Thirdly. On the other hand: an entrepreneur of theatres, concerts, brothels, etc., buys the temporary disposal over the labour-power of the actors, musicians, prostitutes, etc.—in fact in a roundabout way that is only of formal economic interest; in its result the process is the same—he buys this so-called “unproductive labour”, whose “services perish in the very instant of their performance and do not fix or realise themselves “any permanent” (“particular” is also used) “subject or vendible commodity” (apart from themselves). The sale of these to the public provides him with wages and profit. And these services which he has thus bought enable him to buy them again; that is to say, they themselves renew the fund from which they are paid for. The same is true for example of the labour of clerks employed by a lawyer in his office—except for the fact that these services as a rule also embody themselves in very bulky “particular subjects” in the form of immense bundles of documents."

http://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch04.htm

We discussed it in more detail here

http://www.permanentrevolution.net/entry/1556

Thu 03, December 2009 @ 22:01

bill j said…

He also earlier gives this definition;

"Productive labour, in its meaning for capitalist production, is wage-labour which, exchanged against the variable part of capital (the part of the capital that is spent on wages), reproduces not only this part of the capital (or the value of its own labour-power), but in addition produces surplus-value for the capitalist, It is only thereby that commodity or money is transformed into capital, is produced as capital. Only that wage-labour is productive which produces capital."

Thu 03, December 2009 @ 22:04

Dimitris said…

according to these definitions almost all of the retail and services sectors that involve corporations that hire workers are productive, like for example marketing an advertising...

Thu 03, December 2009 @ 22:40

bill j said…

Frankly I think all of this discussion about unproductive/productive is a bit of a digression. Marx elsewhere explained why he thought retail were unproductive. Why not check it out for yourself if you're curious, its all on line.
I does amaze me how people can find endless time for this, yet not notice for example that the USSR wasn't a capitalist state.

Thu 03, December 2009 @ 23:05

Karl said…

"Frankly I think all of this discussion about unproductive/productive is a bit of a digression."

Possibly but we should recognise that the Bourgeois are now having a debate about this very topic or one that is related to it, the Tories are talking about the need for Britain to invest more in Industry and be less reliant on finance. The Bourgeois are beginning to ask can a nation survive and prosper on "unproductive" industry.

Fri 04, December 2009 @ 13:09

bill j said…

Of course that's an interesting although in reality quite different question about the prospects of UK imperialism in the next period - rather than the ins and outs of the Marxist definition of productive/unproductive.
My view is that probably it can for the next period anyway. While China has begun to flex its muscles during this recession, it still has massive excess profits which it will need to put somewhere. Its possible I think to see the end of the long wave, the break up of the world into competing blocs, the diminishing of the dynamism imparted by the expansion of capitalism into the former Stalinist bloc, but personally, I think that's after the next business cycle crisis a few years down the road.

Fri 04, December 2009 @ 14:12

Bob McKee said…

Bill

Have you read the new book on the Great Recession by Michael Roberts? It's just been published at lulu.com and provides brand new comprehensive data on the rate of profit and the cause of the recession.

Might be worth reviewing too.

B

Fri 04, December 2009 @ 14:14

bill j said…

Nope never heard of it. I take it though it follows Rob Sewell from September 09?

"World capitalism is experiencing a deep slump - indeed in many ways the present crisis is potentially even more serious than that of 1929-33. Its scope is much wider than the thirties and its impact has been far swifter."

http://www.socialist.net/unfolding-capitalist-crisis.htm

I need to add that one to my list of catastrophist quotes.

Fri 04, December 2009 @ 15:18

Graham B said…

Yes, the Michael Roberts book may contain some interesting data on profit rates and this great recession, but if the graphic on the front cover is anything to go by it does rather hint at his views on the trajectory of capitalism over the last quarter century.
http://www.lulu.com/product/paperback/the-great-recession/6079458

Fri 04, December 2009 @ 15:29

Arthur Bough said…

Bill,

A very nice piece of analysis. You would have thought that in the light of the overwhelming data of the last few months demonstrating not only that this was NOT a repeat of the Great Depression - something both of us on the basis of our Long Wave analysis would have been amazed to have been the case - but that the recession itself was brought to a fairly rapid stop - I would say due to the ability of Capital in a Long Wave boom to mobilise the accummulation of Surplus Value via Keynesian stimulus as in fact it also did during the recessions of the previous Long Wave Boom. Yet, even this week, I noticed that the Weekly Worker poured scorn on the idea.

I agree with you that the Left is fixated on this kind of catastrophism, and I have suggested that it arises from a tendency to want to cut corners - I think the Far Right share this tendency. The idea is that if only there is some very serious crisis then the masses will flock to those offering a radical solution. I actually beleive under current conditions the Far Right are far more justified in beleiving that than are the Left. For the left it is just an alternative to the long laborious task of "winning the battle of democracy" within the working class, which actually means working alongside the ordinary workers - who many of the left (as LOR showed) recoil from because of their backward often reactionary ideas - rather than contenting yourself with the much cosier life of talking to other intellectuals, students, and petit-bouregois radicaals of various stripes, or at best the tiny number of already convinced militants.

The WW even come out with the argument that Capitalism cannot adequately resolve the crisis because Capitalism is a system in decay! That might have been what Lenin beleived 90 years ago, but the reality is quite clearly different. In fact, all the evidence is that the Imperialist Stage of Capitalism, certainly from he end of WWII onwards, is in fact the most dynamic phase of Capitalist development yet! In the actual Depression of the 1980's/90's, that is manifested by he fact that global Capitalism was able to avoid the kind of destruction of the 1920's/30's. The application of science to industry of the last 20 years has been unprecendented, and there is much more to come. It is accompanied with the development of a large sector of production, in which Complex Labour forms a major component, resuling in a lowering of thee Organic Composition of Capital, and consequent tendency for the Rate of Profit to rise, as I demonstrated in my debate with Paul Cockshott on my blog some time ago.

On the question of productive/unproductive labour and retail/finance etc. Marx refers to the producer who had to take his goods to market. he comments that the producer would do this in time he would not have used for production, clearly seeing it as a cost of production rather than adding to value. That is why he argues that retailers buy below value, and sell at value, the producer being prepared to sell below value, because the specialisation of thee retailer enables the costs that would have been incurred to be reduced.

I think the question with Finance is more complicated. Some is unproductive for the above reason, but some is not. To the extent that Finance companies sell products/services to consumers then these have to be viewed as no different from any other commodity produced by the service sector - for example as with the case of the theatre - and consequently the labour employed (usually some of that very complex labour referred to) is productive labour in Marx's terms. The question here then is is the service merely a means of productive Capital realising its product or is it a product in its own right, produced by the Financial Company and sold direct to consumers. Much of what the Financial Services industry does today is of the latter variety. It is really only the common or garden commercial banking of ledning to firms, which is of the former unproductive type.

Fri 04, December 2009 @ 21:06

Arthur Bough said…

Just to back up the data, the US employment data out today showed that the unemployment rate had fallen from 10.2 to 10%, and monthly job losses amounted to just 11,000, which given the very drastic revisions of the past two months will probably be revised to show that the US economy is already creating net new jobs, some months ahead of when economists beleived that was likely to happen. Oil prices have almost doubled from their low point, industrial metals prices have risen sharply, the Baltic dry Index is volatile but has shown a huge gain from the low point, and today the World Bank has said that the huge injection of liquidity into the world economy is pushing up global food prices again. No wonder Gold prices are soaring ahead of a potential huge spike in inflation.

Of course, as I suggested some time ago that inflation is the ruling class's chosen method of tackling its debts rather than the far more risky route of Public Spending cuts, which might threaten the recovery and would spaark social unrest. No wonder Labour is now talking about deferring such cuts until some years out, and even the Tories are beginning to row back.

Fri 04, December 2009 @ 21:15

m said…

actually, Michel Roberts doesn't seem to be a catastrophist at all, based on (eg.) this recent article of his:

http://www.marxist.com/great-recession-is-it-over/print.htm

"For the capitalists, this Great Recession could be more or less over, but the level of spare capacity in industry and construction together with the level of debt still owed by businesses, government and households alike mean that this recovery may be stunted. Every major capitalist economy now finds that it has more than 30% more capacity than it needs to meet demand. That is a record high of overcapacity in industry.

For the capitalists, this Great Recession could be more or less over. The pace of decline in the major capitalist economies slowed in the second quarter of this year. Indeed, in some major economies like Germany and France, national output rose. And in some smaller ones like Australia and Norway, there was a small pick up in growth.

...

But probably, the recovery will be more like a square root sign. The big fall in output is over. Now there will be an upturn. But it will fall short of restoring the rate of economic growth achieved before the Great Recession. Instead of 3-4% a year, output in the major economies will be closer to 1-2% a year. That will not be good enough to restore profitability to previous levels. The capitalist system will thus face the risk of a new slump further down the road."

Sat 05, December 2009 @ 00:56

bill j said…

Yes that's weird isn't it, his book strap line says its the Great Depression "he predicted it" indeed in September, yet by November he's decided its all over (presumably he didn't predict that). The Fifth International do that too, their journal has three unbelievably long winded articles on "the historic crisis of capitalism" and then ends with "a new upturn?", obviously not such a historic crisis then! Lol.

It really shows I think that people play fast and loose with these categories, there's only one danger to be "wrong" to the upside, being found not catastrophist enough. But why should that be so? These forecasts are only best estimates anyway? But for the catastrophists that doesn't really matter, so they'll happily engage their fantasies and when they're disproved they just fall back to....ah but its all stagnant.

The Michael Roberts article demonstrates that well, while it recognises the Great Depression wasn't a Great Depression - does make you wonder why though - it then says well the recovery will be stagnant anyway.

But what evidence has he got for that? If you look at the historical pattern, the most likely thing next year is for there to be a strong recovery (whether or not there is an upward wave). Strong recoveries usually follow serious crises, a mass of capital has been destroyed, the rate of profit restored, there are large amounts of unused plant and labour that can be rapidly deployed, the trade patterns have already been established and can be simply reactivated, the rising in stocks and property restores the value effect and so on.

It would be interesting to hear why the catastrophists think none of this will apply now when it has done after every recession since the war.

Sat 05, December 2009 @ 11:25

Arthur Bough said…

I'm also not convinced by the argumnet of over capacity. I'd like to see the actual data to prove this. Overproduction for Capital means overproduction in the sense that what is produced cannot be sold at a sufficient profit. The "overproduction" that did exist was basically due to a massive disproportion in the world economy, of which the trade balances and Capital flows were a manifestation. In short, the process of globalisation and de-industrialisation had not been carried out consistently. In the US, in particular, large manufacturing monopolies like GM were able to continue unprofitable production, precisely because of their size and monopoly position and size of their balance sheets. The US state assisted them to do so because of their importance for the US economy and employment. In both cxases hey were able to respond to their lack of competitiveness by simply buying up the competition - and of course by branching out themselves into finance such as GMAC.

But, the crisis forced that to come to a head. Masses of that Capital has been destroyed or sold off. They have restructured, and as usual responded by attacking workers conditions, which are no longer sustainable in a global labour market. But, the fact that there is masses of productive potential does not mean as Bill correctly states that there is "overproduction" in the classic sense. It means that the Credit Crunch caused a temporary phase of "underconsumption" as essnetially everything stopped as people thought thee end of the world had arrived. The idea of indebtedness is largely a crock too. As I've written elsewhere, in Britain, the fall in mortgage rates has been the equivalent of a 20% pay rise for many workers. Fallking house prices have a similar effect. That is why we've actually seen a big reduction in personal indeebtedness alongside retail sales remaining fairly resilient.

Governments have become indebted, but a large part of that will be recovered as they sell Bank shares - probably at a Capital Gain - and in fact, there remains masses of liquidity in the global economy to finance these deficits. We may see a temporary plateauing of growth in the first few months of next year as the effects of re-stocking unwind, but after that I'd expect as Bill says the normalpattern of a sharp downturn to be followed by rapid growth.

Sat 05, December 2009 @ 16:50

JamesT said…

The 'disproportion' in the 'world economy' has come from more and more capital being pumped into finance, this caused a huge bubble of unsecured 'fictitious capital'. And the response of governments is to support financial markets and begin a whole new bubble of speculation and credit, which just goes to highlight the structural nature of the crisis.

Socialists should be putting forward the argument that capitalism doesn't work, it cannot function without periodic massive upheaval, we should focus on the attacks on workers rights, especially attacks on pensions. We should not be telling people how robust the system has proved to be, what ever happened to 'permanent revolution'?

This critical view of capitalism has suddenly been repackaged as catastrophism, but it is in fact the opposite, it is the recognition that socialism needs to be argued for and capitalism needs to be argued against.

Sun 06, December 2009 @ 10:35

bill j said…

"This critical view of capitalism has suddenly been repackaged as catastrophism, but it is in fact the opposite, it is the recognition that socialism needs to be argued for and capitalism needs to be argued against."

That is absolutely not true. What has been packaged as catastrophism is the idea that this crisis was the "Great Depression". It wasn't. Capitalism is inherently crisis ridden due to its anarchic unplanned nature. That won't be wished away by dreaming of the "final crisis".
Why is that important? Its important because the left has to face up to the difficult struggle to rebuild the labour movement in an objective situation where the bosses have considerable resources to cushion the effect of their crisis.
Even this year during the depths of the recession, the capitalists have spent freely, with money that the catastrophists said did not exist, to cushion the social consequences of the crisis. In the USA they have extended unemployment benefit, passed massive job creation schemes etc. All this, the catastrophists said could not happen. They were wrong.
Its time to abandon radical phrases, they have built nothing and destroyed quite a lot.

Sun 06, December 2009 @ 11:44

Arthur Bough said…

I don't think the disproportion was to do with the amount of Capital involved in finance. There has been an increase in the Financial Services industry, because Capital has increasingly sought to protect against risk through the development of Futures Markets. In addition, the increasing numbers of people, inlcuding workers, with increased amounts of savings etc. have creaated the potential for a whole new series of financial commodities to be produced and sold to such individuals. No the disproprtion was that which I set out.

I agree, wholeheartedly with what Bill says in his last comment. Our job is not to say to workers "Capitalism does not work"! In the main many workers can see that it does. In the last 50 years or so many have seen their living standards rise substantially as a result of it. In Asia today many millions more are being "rescued from the idiocy of rural life" by it. For those like Lassalle who put out the message you suggest Marx had the following to say,

"It is as if, among slaves who have at last got behind the secret of slavery and broken out in rebellion, a slave still in thrall to obsolete notions were to inscribe on the program of the rebellion: Slavery must be abolished because the feeding of slaves in the system of slavery cannot exceed a certain low maximum!"

Marx had no truck with such ideas, nor with those like the Moral Socialists who only wanted to talk about the down-side of Capitalism, and whose ideas therefore led backwards, nor with the reactionary socialists who reflected the interests of the old feudalists in their attacks on Capital. And today simply saying Capitalism doesn't work can play the same role. It can lead workers into the arms of the fascists just as easily as into the arms of socialists.

Rather our task is to win workers to the idea that socialism would work better. But, the experience of workers when they look at Nationalised industries, or the NHS in he West, or Stalinism in the East can give them no confidence that what they have been led to beleive constitutes socialism IS better. That is why Marx also attacked the ideas of the Lassalleans who called for state intervention by the Capitalist state, and instead argued that workers needed to remain independent from it, and to develop their own Co-operatives. In his address to the First Internaional, which called for workers to establish such Co-operatives as a national Co-operative federation, marx wrote,

"But there was in store a still greater victory of the political economy of labor over the political economy of property. We speak of the co-operative movement, especially the co-operative factories raised by the unassisted efforts of a few bold “hands”. The value of these great social experiments cannot be overrated. By deed instead of by argument, they have shown that production on a large scale, and in accord with the behests of modern science, may be carried on without the existence of a class of masters employing a class of hands; that to bear fruit, the means of labor need not be monopolized as a means of dominion over, and of extortion against, the laboring man himself; and that, like slave labor, like serf labor, hired labor is but a transitory and inferior form, destined to disappear before associated labor plying its toil with a willing hand, a ready mind, and a joyous heart. In England, the seeds of the co-operative system were sown by Robert Owen; the workingmen’s experiments tried on the Continent were, in fact, the practical upshot of the theories, not invented, but loudly proclaimed, in 1848."

That is the political task facing Marxists today. In each case to provide the worekrs with a political alternative that drives forward their own independent action, and brings back more and more aspects of their life under their direct ownership and control, and on the back of that drives forward their economic and social position, their organisation and strength, their conscioussness, and the development of the Workers Party to fight the political struggles that the resistance of the bouregoisie will throw up. In other words to provide he workers with the kind of practical example of how a socialist society will work
"By deed instead of by argument".

Mon 07, December 2009 @ 15:02

m said…

"Our job is not to say to workers "Capitalism does not work"! In the main many workers can see that it does."

I think the phrase "capitalism works/doesn't work" has two equally possible readings.

one is: does capitalism work in its own terms, ie. is it still capable to self-expand, to accumulate, to reproduce itself on an expanded scale. Of course in this sense, it does work.

the other is: does capitalism work as regards the needs of most humans and the rest of the Earth's ecosystem. and in this sense I think we CAN say that by and large it doesn't. of course it does to a certain degree, but the growing irrationality of the system is also appararent, ie. how it is capable to grow and expand and help develop technology and how it's chronically unable to turn these means to the fulfillment of human needs.

there's nothing wrong IMHO in emphasising this irrationality of the capitalist system.

Mon 07, December 2009 @ 18:40

JamesT said…

Firstly, if capitalism works then why are you putting forward an alternative?

Secondly, which socialist uttered the banal drivel that this crisis was the final crisis of capitalism?

Anyway saying capitalism doesn’t work on a socialist website is shorthand for a number of arguments. It is not meant to be a scientific explanation for capitalisms failings. If I was making this argument on a conservative site I would have expanded the argument.

I would argue that capitalism does not work in the best interests of the workers but I also think an objective argument (not a moral one) can be made to say that capitalism does not work. Capitalism is prone to periodic and sometimes severe crisis; we have empirical evidence for this. These crises are not the result of exogenous factors but inherent features of capitalism itself. Secondly, waste under capitalism is enormous. This can measured against previous modes of production, such as primitive communism, feudalism etc, which were far less wasteful. Then we can add the ‘moral’ dimensions, capitalism concentrates wealth, it dictates human action towards psychopathic tenancies, e.g. profit is more important than the planet itself, it acts without any conscience with proven negative consequences, environmental degradation.
The huge inequalities and alienation created by capitalism produce an array of negative social phenomena, which by any objective standards are undesirable.
The goal to produce for profit rather than need produces a host of problems, war, famine, dictatorship, chronic inefficiency in use of resources and so on and so on.

The only redeeming feature of capitalism imo is due to its great productive powers through revolutionising the means of production. I.e. capitalism makes communism possible. Capitalism without the transition to communism is a dystopian nightmare that the most imaginative science fiction writer couldn’t better. I think Marx said somewhere that capitalism was like the sorcerer who had created a monster but was unable to control it, could anyone objectively claim that Frankenstein’s experiment worked?

Now onto your suggestion that I argued for nationalisation and against cooperatives, where did I say this? I would use the example of cooperatives as further relative proof that capitalism doesn’t work. I remember reading a paper from a university in the USA (if anyone has the link I would be grateful) that showed cooperatives were more efficient in developing labour saving practices than capitalist firms but at the same time did not fire workers. Instead the qualitative aspects of the cooperatives were higher, such as customer care. The same outcomes have been observed within the Mondragon Corporation, which has managed to keep a high employment rate, even during crises. This shows that even within the failing system itself, alternative modes of production work better.

Finishing on the crisis itself, I feel ‘permanent revolution’ is in the minority in that you underplay the extent of this crisis. More than 4 million jobs were lost in the USA in 2009, the highest since WWII!
The US has a record $1.4 trillion budget deficit and a debt of over $10 trillion. Most commentators are predicting a drastic cut to public services, some of this is already happening. Some Local authorities in the UK are budgeting for 10% cuts to service areas in 2010/11. The consequences of this crisis will be with us for many years to come and exacerbate more of the problems I have already highlighted.

And I still maintain this crisis was as a result of structural problems within capitalism, i.e. Capitalism could no longer find sufficient opportunities for valorisation in the ‘real economy’. These problems have not gone away.

Mon 07, December 2009 @ 18:44

bill j said…

I agree with most of what you said James. I don't think capitalism works either.

Obviously PR are in a minority on the crisis. That's clear I think from the article above. All the rest of the left erroneously believed that this was the Great Depression, effectively the final crisis of capitalism. Call that a lot of things but it isn't "banal drivel". Why not be a bit more imaginative and accurate with your adjectives?

Job losses in the US were getting on for 7 million, btw. PR do not underestimate the crisis, we accurately estimate the crisis. That isn't the same thing at all.

In the USA it was a very deep and lengthy crisis and lead to massive rise in unemployment.

In Japan and Europe it was deep but short lived and did not lead to massive rises in unemployment.

In China and India and Africa and Latin America, it was a shallow and short lived crisis.

Certainly it arose due to structural problems within capitalism, how else could a crisis of capitalism arise?

Have these problems "gone away"? Well it depends which problems. Some of the problems have gone away, that's the point of crises, they destroy value and allow the resumption of profitable accumulation. Some other problems have not gone away. The point is which problems and what is their significance?

The US does have a large budget deficit. Whether it leads to cuts in public spending there remains to be seen. Obama is pushing through his trillion dollar health care reform, and Congress are considering a further $300bn job stimulation package, based on the new lower estimates of the cost of the bail outs.

In the UK the ruling class does appear to be gearing up for an assault on the public sector. How much that is driven by economics rather than politics is moot. Take the financial rescues out of UK debt and its still below 60%, well under the European average.

Tue 08, December 2009 @ 01:21

Graham B said…

"I would argue that capitalism does not work in the best interests of the workers but I also think an objective argument (not a moral one) can be made to say that capitalism does not work. Capitalism is prone to periodic and sometimes severe crisis; we have empirical evidence for this. These crises are not the result of exogenous factors but inherent features of capitalism itself."

Agree with that, but not all crises are alike and the frequency and depth of crises has not been regular throughout capitalism. There are prolonged periods, despite the ever-present business cycle, that everyone would agree are broadly distinct, e.g. the 1950/60s compare to the 1970/80s. The fundamental and contentious issue here is not so much the obvious severity of this one but it's causes and consequences and that in large part comes down to how you characterise the period that preceded it. This is why the rate of profit is so important. Most on the Left view the last 15 years to 2007 as one of stagnation/crisis, an extension of the 1970/80s, and that is why they were all too keen to emphasise the similarities with the Great Depression in 2008/09 - funnily enough, agreeing with many bourgeois commentators at the time.

If you really want a definition of catastrophism, look no further than Tony Cliff who, at the beginning of the 1990s, foresaw the coming decade as the '1930s in slow motiion'. This was the general tenor of the SWP's writings on the economy, Alex Callinicos wrote one in the ISJ in 1998 entitled "World Capitalism at the Abyss". Well yes, there was the East Asian Crisis back then but it does look a bit silly now, and the 1990s as the 1930s in slow motion?!

Tue 08, December 2009 @ 12:14

Arthur Bough said…

"Firstly, if capitalism works then why are you putting forward an alternative?"

Because Marxists are in favour of progress. We are not satisfied simply that something works, we seek to develop things that work better. My computer works, it works better that computers I've had in the past. I'm still interested in a computer that works even better.

"I would argue that capitalism does not work in the best interests of the workers but I also think an objective argument (not a moral one) can be made to say that capitalism does not work."

It may not, but that is not the same thing as not working. Moreover, even in terms of the interests of workers it is not clear cut. Marx argued that the fundamental drive of Capital was its self-expansion. Not only does that mean a growing demand for Labour, but it also as Marx showed in the Grundrisse necessitates a growing volume of Use Values being produced and consumed by workers. It necessarily raises workers real living standards as a consequence - what calls Capitalism's "Civilising Mission". If we add in all of those peasants rescued from their pitiful existence, and if we look at the massive increase in living standards that Capitalism has brought about then it is difficult to see how in any absolute sense Capitalism has not worked in the ibterests of workers. That is the whole essence of Marx's dialectical analysis of it, and why he rejected the views of the Moral Socialists.

Waste is enormous under Capitalism, but it is ridiculous to counterpose that to previous systems. The very fact that these systems failed to use the productive forces efficiently as Capitalism does in comparison represents enormous, though for them unavoidable waste. What about the pyramids and all the other such wqsteful use of labour-power? many of the world's deserts like the Sahara are examples of man-madde devastation, long before the advnet of Capitalism! And compared to these previous systems, which were defined by dictatorship and absolutist rule, Capitalism is a paragon of virtue in spreading bouregois freedoms, liberty, enlightenment and bourgeois demcoracy.

I'm not aware that I did criticise you for opposing Co-operatives. My point was that the left attempts to provide an alternastive for workers, which in the main relies on a Lassallean, statist view rather than the anti-state position of Marx. Given workers experience of statism its no wonder they have found few takers for such a view!

Many commentatorss are predicting drastic cuts. They are almost certainly wrong. Such cuts are not in he interests of Capital. Even under Maggie Thatcher, the size of the State expanded. Labour has deferred any cuts until 2011, and the Tories are rowing back, some like Michael Portillo admitting that drastic cuts will be impossible to achieve.

Wed 09, December 2009 @ 20:10

JamesT said…

“Why not be a bit more imaginative and accurate with your adjectives?”

How about Infantile Tolkienist fantasy?

“how else could a crisis of capitalism arise?”

Well I am sure some right wing commentators (and maybe some left ones) would argue that it is state intervention that has created these problems in the market and that if left to itself it would function better. I guess this is another argument for saying capitalism doesn’t work, or at least doesn’t function effectively or is prone to contradiction (for the pedantic dialecticians out there). The capitalist system cannot manage change in an effective and efficient way, it can only manage change by massive upheaval leading to social unrest and it can only do it in an undemocratic way.

I agree with the school of thought that says the great inflation of finance in recent decades has been due to the inability for capital to be valorised in ‘core’ production areas. While this delayed the onset of a general crisis, the creation of speculation bubbles, asset bubbles, fictitious capital etc created the kind of upheaval we have just seen. I think the response of states shows that this problem cannot be solved by the system itself. As for US profit rates, the supposed increase in profit rates has in part come from the finance sector, which it can be seen included a large proportion of “fantasy valuations”.

“If you really want a definition of catastrophism, look no further than Tony Cliff who, at the beginning of the 1990s, foresaw the coming decade as the '1930s in slow motiion'.”

Well this is a prediction rather than an explanation of an ongoing crisis. As long wave advocates I am guessing that ‘permanent revolution’ will be predicting some pretty ‘catastrophic’ results at some point in the future.

I will respond to Arthur Bough’s comments later.

Thu 10, December 2009 @ 12:02

bill j said…

"How about Infantile Tolkienist fantasy?"
Unfortunately, no improvement.
“How else could a crisis of capitalism arise?”
As you say some people not on here may think it could arise in that way. But given that no one on here thought so, who was that remark aimed at? Tolkein?
As for profit rates you're wrong. Financial profits have stagnated over the last decade, while non-financial profits have soared, as have foreign profits. Financial profits measured in national income statistics do not include windfall gains.
See facts do have their place.

Thu 10, December 2009 @ 13:05

JamesT said…

"Unfortunately, no improvement"

Simon Cowell has nothing on you!

"As you say some people not on here may think it could arise in that way. But given that no one on here thought so, who was that remark aimed at? Tolkein?"

Well that was a slight dig at the idea of the state propping up GM causing 'disproportion' in the world economy. Probably unfair.

"As for profit rates you're wrong. Financial profits have stagnated over the last decade, while non-financial profits have soared, as have foreign profits. Financial profits measured in national income statistics do not include windfall gains.

See facts do have their place."

What facts?

I don’t just mean the finance sector. I mean finance as a generality. For instance 42 percent of General Electric’s profits were generated by its financial wing, GE Capital.
Also as a percentage of total US corporate profits, financial sector profits rose from 14 percent in 1981 to 39 percent in 2001 and by 2006 they represented 40 percent of American corporate profits.

Thu 10, December 2009 @ 13:37

bill j said…

Don't know what you're on about with GM?
But you're still wrong on profits. The graph is here.

http://www.permanentrevolution.net/entry/2717

US financial profits peaked in 200 reaching 34% of all profits, since then they have fallen as a proportion of profits to around 25%. Non-financial profits rose fastest during the last boom, and have not fallen very far during the recession. Foreign profits also increased dramatically.
Indeed GE did produce a lot of their profits from their financial wing. The national income accounts are capable of measuring the difference. The ability of non-financial firms to raise cash directly through the money markets, was one of the key pressures on financial profits in the last recession.

The table 6.16 on the BEA website.

http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=239&Freq=Qtr&FirstYear=2007&LastYear=2009

Thu 10, December 2009 @ 15:11

Graham B said…

"If you really want a definition of catastrophism, look no further than Tony Cliff who, at the beginning of the 1990s, foresaw the coming decade as the '1930s in slow motiion'.
Well this is a prediction rather than an explanation of an ongoing crisis."

So, I take it that you agree that Cliff was just a tad wide of the mark. Ok, originally a prediction, but even with the benefit of hindsight the SWP obstinately defended his formulation right up to 2000, the only revision being that the film did seem to be running very slowly... And I guess that they would still defend it.

Thu 10, December 2009 @ 16:29

JamesT said…

Here is the response to Arthur Bough who for clarity the GM comment was aimed at.

“Because Marxists are in favour of progress. We are not satisfied simply that something works, we seek to develop things that work better.”

But in whose interest? This seems to be bordering on the whole equality of classes demand. I am suspecting the Bourgeois modernization theory any minute.

“My computer works, it works better that computers I've had in the past. I'm still interested in a computer that works even better.”

And here it is right on time. No need for socialism, no imperative, no class conflict. Less permanent revolution more permanent tweaking.

“Marx argued that the fundamental drive of Capital was its self-expansion. Not only does that mean a growing demand for Labour”

That should be a demand for surplus labour! The difference is subtle but significant. So Marx also observed the opposite, that workers would become superflous to production. The demand for labour is continually reduced by increased productivity. Though the process of accumulation, crisis etc changes this demand. Every mechanism of capitalism therefore acts to continually increase the proportion of the population which is ‘surplus’ compared to the demand for labour. Centralization accelerates accumulation – increases productivity – reduces demand for labour – increases surplus population.

I certainly didn’t read the Grundrisse as an impassioned defence of capitalism.

“If we add in all of those peasants rescued from their pitiful existence, and if we look at the massive increase in living standards that Capitalism has brought about then it is difficult to see how in any absolute sense Capitalism has not worked in the ibterests of workers. That is the whole essence of Marx's dialectical analysis of it, and why he rejected the views of the Moral Socialists.”

Dialectical analysis works both ways! Engels even said it was possible for a slave to be better off than a worker. As I stated previously I believe capitalism without the transformation to communism will ultimately prove be a nightmare. (As would any retreat back to feudalism!) But I really don't think we need to bring Feudalism into the practical struggle, our job is to facilitate the proletariat in it's class struggle with the Bourgeois. To do this we have to expose the inequities of capitalism.

“Waste is enormous under Capitalism, but it is ridiculous to counterpose that to previous systems. The very fact that these systems failed to use the productive forces efficiently as Capitalism does in comparison represents enormous, though for them unavoidable waste.”

Exactly. This is my argument, capitalism creates huge waste because it is so productive, but it is productive in an anarchic way. There is a real urgent need to bring the monster under control. Primitve communism was extremely efficient in it’s use of resources. This provided the clue for Marx to argue for higher communism, so it’s not such a ridiculous comparison.

“And compared to these previous systems, which were defined by dictatorship and absolutist rule, Capitalism is a paragon of virtue in spreading bouregois freedoms, liberty, enlightenment and bourgeois demcoracy.”

I am not sure how far this can be applied to primitive communism and the undoubted dictatorship of Feudalism was restricted by it’s inability to advance technology. So the enforcement of this absolutism was difficult though often horrific. In contrast capitalisms worst dictatorships, Nazi Germany, colonial regimes were horrific by any standards and much more enforcable.

“Labour has deferred any cuts until 2011, and the Tories are rowing back, some like Michael Portillo admitting that drastic cuts will be impossible to achieve.”

Only time will tell on this. But looking at the pre budget debate you may be right, capitalism’s failure to create jobs in the private sector will mean there is a limit to this, I tend to think that limit will stretch further than you suggest.

Thu 10, December 2009 @ 18:39

Tom K said…

Interesting article. I don't have sufficient knowledge to join the debate on the left, and i don't know whether all this is correct (or wrong), but what's interesting are the organizational conclusions drawn by the radical left and your conclusion. Since most parties have been arguing that they had prepared for this period for a long time don't you think that if they end up being wrong about their economic prospects a lot of disillusion could spread?

Thu 10, December 2009 @ 20:48

bill j said…

That's possible of course, and emphasises why exaggerating for effect is a futile and pointless exercise.

Fri 11, December 2009 @ 09:29

Karl said…

Makes you wonder how advertising ever took off!

Fri 11, December 2009 @ 11:54

bill j said…

Fair point, obviously its not futile and pointless for everything! I was chatting to someone the other day who told me how the UK youth group Revolution, allied with Workers Power, told their members that it was "scientifically proven" that capitalism would collapse and the socialist revolution triumph within...five years. That was four years ago.

Fri 11, December 2009 @ 12:36

Arthur Bough said…

“Here is the response to Arthur Bough who for clarity the GM comment was aimed at.”

But, I have never said that this crisis was caused by disproprtionality or State intervention. What I have said is that during the Long Wave downturn that began in the mid-70’s and ended at the end of the 90’s a number of features could be observed. Firstly, although Keynesian methods continued to be applied during the 70’s, and quickly brought the 74-5 slump to an end, their use during a period where the Long Wave decline had set in – i.e. the reservoirs and capability of creating large reservoirs of Surplus Value and growth to pay for it had ceased – led to rampant inflation. By the late 70’s it led to stagflation. In the US and UK, in particular, the State turned to the ideas of the Austrians, Mises and Hayek. They cut Money Supply, which forced inflation out of the system, forced employers to confront workers rather than concede pay rises, and cut off the supply of finance to loss making firms, thereby forcing up unemployment, which created the conditions for defeating the Labour Movement. Having done that, they abandoned the Austrians in favour of Chicago School Monetarism. Mises had said the Depression was caused by too loose money in the 20’s creating a “Crack-Up Boom”. Friedman said, that it had been caused by the Fed and other Central Banks tightening Money Supply in 1929, whereas it could have been avoided by increasing Money Supply. Having defeated the Labour Movement the State in the US and Britain in the late 80’s, adopted precisely that tactic, both began pumping huge amounts of liquidity into their economies, particularly in response to the crisis of 1987, and the subsequent repetition of this in future Stock Market declines became known as the “Greenspan Put”.

They were able to do this to boost the profitability of big Capital, precisely because having defeated the Labour Movement they knew that workers could not respond by driving up wages. In both the US and UK, workers real wages declined or remained flat, whilst profits rose. But, particularly after 1990, and in the context of a growing and developing Asia, Capital was also able to confidently locate in areas where labour-power was even cheaper, and profit rates even higher. This had two benefits. Firstly, the Value of Labour-power in the West could be reduced – thereby also mitigating some of the effect that would otherwise have been felt by workers from a drastic fall in real wages, and possibly have caused social unrest – as a result of increasingly cheap wage goods being imported. Secondly, the increases of liquidity, and scrapping of financial regulation meant that workers could be encouraged to turn themselves into debt slaves to finance not only continued, but increased consumption. On the back of that, which maintained an artifically buoyant economy during the downswing, some monopoly enterprises like GM, Ford etc. were able to continue their operations without the need to completely relocate to lower-cost areas of the world, which would have been devastating to their domestic economies. The consequence was that this caused a disproprtionality, and misallocation of Capital. Not only should some of that Capital have been located in developing economies, some of it should have been allocated to other types of production within the US itself i.e. those areas where a higher rate of profit could have been achieved. But, this is not what caused the crisis! The economy was due a normal trade cycle last year anyway, but it was the Financial Crisis, which turned that normal cycle into a deep recession. Rather than it being that the disproportion caused the crisis, it has been the crisis which has caused Capital in the US to address the disproportion!

Your version of Marxism puts the cart before the horse.

I said,

“Because Marxists are in favour of progress. We are not satisfied simply that something works, we seek to develop things that work better.”

To which you respond,

“But in whose interest? This seems to be bordering on the whole equality of classes demand. I am suspecting the Bourgeois modernization theory any minute.”

How? I then said,

“My computer works, it works better that computers I've had in the past. I'm still interested in a computer that works even better.”

To which you replied,

“And here it is right on time. No need for socialism, no imperative, no class conflict. Less permanent revolution more permanent tweaking.”

Which is an all the more ridiculous argument given that my comments were in response to your question “Why do you advocate an alternative?” i.e. Socialism!!!!!!! There is nothing I said, which justifies your argument. I did not say how I was to acquire a computer that worked better. I could steal it, build it myself, build it in co-operation with others, or simply buy it. Similarly, the statement, which is unquestionably true, that Marxists are in favour of progress says absolutely nothing about how that progress is to come about. But, giben that we are talking AS Marxists, I took it for granted that if we are talking about progress in terms of the replacement of one Mode of production by another, then we recognise that this can only come about via class struggle and revolution!

But, there is a worse implication in what you say. Of course, progress can be achieved even within the context of a given Mode of Production. Your argument is essentially Luddite not Marxist. Even within the context of Capitalism, Marxists are in favour of progress, even knowing that such progress will benefit Capital. We do so in the sure knowledge that ultimately, and often immediately also, such progress benefits the working class.

And, of course, Marxists do not fetishise class struggle, or revolution. We do not want such things just for the sake of having them. Were it POSSIBLE to achieve progress without class struggle, or revolution, then Marxists would favour it. We only advocate class struggle and revolution, and all the downsides of that for the working class, BECAUSE we recognise the fundamental contradiction of class interests, and the fact that at least in terms of replacing Capitalism there is no other alternative!

To answer your question directly, “But in whose interest?” the answer clearly for a Marxist is, in the interests of humanity! But, we recognise that under Capitalism the interests of humanity as a whole can only be met, by the working class liberating itself and creating Socialism. Had it been possible for there to have been Marxists under Feudalism that would not have been the case, because the working class was small to non-existent, and the transformation of society could be achieved by the bourgeoisie. That is why in much of Europe that was still dominated by Feudalism, Marx and Engels, argued that the Communists had to give their support to boureois forces that were seeking to modernise those societies. His comments, about Capitalism’s low prices being the battering rams that knock down all Chinese walls, were actually directed against the reactionary Central European states that were resisting modernisation, and which he and Engels held in contempt.

What your argument comes down to is a fetishisation of the working class. As said earlier you put the cart before the horse. You basically say, we are champions of the working class, and we advocate Socialism, because Socialism will be in the interests of that class. This is not Marxism, nor an application of Historical Materialsm. Marxism argues the other way around. Marxism says, humanity develops the productive forces, and that development forces certain conclusions upon it about how society has to be structured. Those conclusions are arrived at through the competing interests of classes who stand in different positions in relation to these productive forces. The class whose interests are tied to the new, progressive organisation of the productive forces is thereby transformed into the revolutioanry class. Marxists only support that class for that reason i.e. they are the historical vehicle of change. If some other class existed here and now, which stood in that relation then Marxists would abandon the working class, and become the champions of that other class.

“That should be a demand for surplus labour!”

The demand for labour-power implies the demand for Surplus Labour, because Capital will only employ Labour-power if it provides surplus labour gratis. But, the expansion of Capital does not of itself imply that the amount of Surplus Labour must also continually expand! Competition for labour between Capitals, the strength of the Labour Movement within that to raise wages, could REDUCE the amount of Surplus Value produced, and yet Capital could still expand. As Marx points out, although there is a Minimum to which wages can fall, there is no minimum to which profits can fall.

“So Marx also observed the opposite, that workers would become superflous to production. The demand for labour is continually reduced by increased productivity. Though the process of accumulation, crisis etc changes this demand. Every mechanism of capitalism therefore acts to continually increase the proportion of the population which is ‘surplus’ compared to the demand for labour. Centralization accelerates accumulation – increases productivity – reduces demand for labour – increases surplus population.”

In that case 200 years after the Industrial Revolution we should see an absolutely massive surplus population. Where is it?? On the contrary, the working class globally is larger than it has ever been, and now constitues the majority of the global population! What you are proposing is aversion of the old Lassallean imjmiseration thesis that was also adopted by the Stalinists. It is totally at odds with what Marx actually argued. Mandel, in his Introduction To Marxist Economic Theory, explains it.

“The apologists for capitalism have always pointed to the reduction in prices and widened market for a whole set of products as the benefits brought about by this system. This argument is true. It is one of the aspects of what Marx called “the civilizing mission of Capital.” To be sure we are concerned here with a dialectical but real phenomenon where the value of labor-power has a tendency to fall by virtue of the fact that capitalist industry produces the commodity equivalent of wages with ever increasing rapidity while it simultaneously has a tendency to rise by virtue of the fact that this value of labor-power progressively takes in the value of a whole series of commodities which have become mass consumer goods, whereas formerly they were reserved for a very small part of the population.

Basically, the entire history of trade between the sixteenth and twentieth century is the history of a progressive transformation from trade in luxury goods into trade in mass consumer goods; into trade in goods destined for an ever increasing portion of the population. It is only with the development of the railroads, of the means for fast navigation, of telegraphy, etc., that it became possible for the whole world to be marshalled into a real potential market for each great capitalist producer.

The idea of an unlimited market does not, therefore, merely imply geographic expansion, but economic expansion, available purchasing power, also. To take a recent example: the extraordinary rise in the production of durable consumer goods in world capitalist production during the past fifteen years was not at all due to any geographic expansion of the capitalist market; on the contrary, it was accompanied by a geographic reduction in the capitalist market, since a whole series of countries were lost to it during this period. There are few, if any, automobiles of French, Italian, German, British, Japanese or American manufacture exported to the Soviet Union, China, North Vietnam, Cuba, North Korea, or the countries of East Europe. Nevertheless, this expansion did take place, thanks to the fact that a much greater fraction of the available purchasing power, which had increased absolutely as well, was used for buying these durable consumer goods.”

See: http://www.marxists.org/archive/mandel/1967/intromet/ch02.htm#s3>Introduction To Marxist Economic Theory

“I certainly didn’t read the Grundrisse as an impassioned defence of capitalism.”

It isn’t, but nor is it simply a moralistic assault on the evils of Capitalism. You only want to advocate the latter, whilst ignoring Marx’s comments about the former. Not surprsing given that you clearly reject Marx’s dialectical method, as shown by your comment about, “pedantic dialecticians”.

“To do this we have to expose the inequities of capitalism.”

Yes, of course, we have to do that, but we have to do that in the way that Marx and Engels did, not simply stating that “Capitalism does not work”, or trying to paint it as uniformly black, when quite clearly that is not true. As Trotsky said, we have to tell the truth to the workers, and that also means telling the truth about what is progressive within Capitalism, as well as what is reactionary. My computer like most is subject to crashes and glitches, but I do not conclude from that that it does not work, I conclude that it is possible to build a better computer free of those problems. I do not assume that I have to scrap all of the existing knowledge embodied in current computer technology and start again!

“Exactly. This is my argument, capitalism creates huge waste because it is so productive, but it is productive in an anarchic way.”

But, the point is that it is so productive that even given its anarchy – and modern Capitalism is much less anarchic than 19th Century Capitalism – it is still way, way more efficient than anything that has gone before!!!

“Primitve communism was extremely efficient in it’s use of resources. This provided the clue for Marx to argue for higher communism, so it’s not such a ridiculous comparison.”

This is nonsense. Primitive Communism was certainly NOT “extremely efficient in it’s use of resources”. That is why people living in such societies have always been on the verge of extinction! If such societies were so efficient then they would not have broken down. They broke down because as the productive forces developed they could be more efficiently utilised under a system of private rather than communal property, as Engels sets out in his “The Origin of The Family, Private Property and the State”. Marx’s argument for Communism has nothing to do whatsoever with some kind of sentimental longing to get back to the forms of Primitive Communism, and everything to do with his scientific analysis that the development of the productive forces was driving society to such a conclusion!

“I am not sure how far this can be applied to primitive communism and the undoubted dictatorship of Feudalism was restricted by it’s inability to advance technology. So the enforcement of this absolutism was difficult though often horrific. In contrast capitalisms worst dictatorships, Nazi Germany, colonial regimes were horrific by any standards and much more enforcable.”

We actually do not know in detail how Primitve Communism functioned. We do know that peoples living in Primitive Communist societies were driven to war over land, hunting rights etc. We do know that the only reason during such conflicts they failed to turn their victims into slaves was because the development of the productive forces was such as to not be able to make it worthwhile. That is why they were either killed, turned into members of the tribe – usually in the case of women – where the tribes numbers were depleted, or else eaten. We know that once the productive forces had developed to such an extent as to make the keeping of slaves possible, such societies in their development into class societies did so.

Your comments in relation to Feudalism are way off beam. Not only is it not true to say that Feudalism was incapable of developing technology – it developed technology in a whole array of fields not just in warfare – and had it not been able to do so, the basis of Capitalism would never have arisen, but one of the features of feudalism as a system based upon rank, and one of the reasons it was so inefficient, was the size of the ruling class! As a hierarchical society its means of social control are hard to imagine today. Not only was the individual serf controlled by the local Squire, from the Manor House, but also by the local clergy from the Church. And on top of that were multiple tiers of control, from the Soverign and Court down. It is no wonder this system of control continued for centuries under the most brutish manner.
By contrast, Nazi Germany lasted just 12 years, most other fascist dictatorships not much longer. Colonialism certainly lasted much longer than that, but Colonialism for much of that was a fucntion of the overseas expansion of Fedualism and its partners amongst the merchant class. Given that industrial Capital really only achieved total political hegemony at the end of the 19th Century/beginning of the 20th Century (even in Britain the landed aristocracy maintained a majority position in Parliament until the end of the 19th century, and Disraeli and his “Young England” Movement dreamed of a return to the past) Capitalism’s responsibility for it is limited. Indeed, the death-knell of Colonialism was spelled as much by the needs of US multi-national, industrial Capital, as by the development of anti-colonial movements.

“Only time will tell on this. But looking at the pre budget debate you may be right, capitalism’s failure to create jobs in the private sector will mean there is a limit to this, I tend to think that limit will stretch further than you suggest.”

But Capital IS creating large numbers of jobs in the private sector. Many of those jobs are in China, India and other developing economies, but it is creating them, and demand from those workes whose living standards are rising rapidly will also play into an increase in world demand. China actually has a trade deficit with Europe for instance. The question for western Capital is how quickly it can allocate into areas of production in which it has a comparative advantage, such as high tec production, the production of various types of media production (films, computer games and so on), and how quickly, and how many workers it can train to undertake such work.

Fri 11, December 2009 @ 12:52

bill j said…

Blimey Arthur, its not really digestible posting such mammoth comments.
Personally I think disproportionality as an explanation for crisis has a lot going for it. Hilferding and Mandel both have very good analyses of the business cycle, which are way better than anything written by the over-accumulation school. The over-accumulationists tend to hide behind the fact that they have established ever crisis is one of over-accumulation, in and of itself a relatively banal statement, to simply assert that there is the perpetual over-accumulation of capital. Even really sophisticated Marxist economists like David Yaffe do that. Never mind all the rest, Brenner, Callinicos, Brenner (no-relation), Harman etc.

Fri 11, December 2009 @ 13:13

Arthur Bough said…

Bill, yes, sorry for the length of that comment, but I thought there ws so much of James' comment that needed to be dealt with. I'm not saying disproprtionality cannot be an explanation of crises. I just don't think it was the cause of this one. I agree with the position I think you have made previously that the real nature of this crisis is of a financial Crisis that spilled over into the real economy.

Fri 11, December 2009 @ 16:07

JamesT said…

“Rather than it being that the disproportion caused the crisis, it has been the crisis which has caused Capital in the US to address the disproportion!”

“Your version of Marxism puts the cart before the horse.”

Then,

“I'm not saying disproprtionality cannot be an explanation of crises. I just don't think it was the cause of this one.”

Your version of Marxism makes my head hurt. I suppose you will put this down to the dialectic.

“Which is an all the more ridiculous argument given that my comments were in response to your question “Why do you advocate an alternative?” i.e. Socialism!!!!!!!”

But your answer to this question causes doubt that you are putting forward an alternative. Not only do you claim that capitalism works, you claim that it may work in the workers best interests. If you are putting forward a genuine alternative and not just some bourgeois modernization theory then the question “If you think capitalism works then why put forward an alternative” needs to be answered.

“But, given that we are talking AS Marxists, I took it for granted that if we are talking about progress in terms of the replacement of one Mode of production by another, then we recognise that this can only come about via class struggle and revolution!”

Funny I had exactly the same thought when I said capitalism doesn’t work. As I stated previously I assumed this would be taken as shorthand for a more complex position.

“Your argument is essentially Luddite not Marxist. Even within the context of Capitalism, Marxists are in favour of progress, even knowing that such progress will benefit Capital. We do so in the sure knowledge that ultimately, and often immediately also, such progress benefits the working class.”

No I have never smashed a machine in my life. I just try to emphasise the class struggle above the ‘shared interests’ of capital and labour.

“Were it POSSIBLE to achieve progress without class struggle, or revolution, then Marxists would favour it.”

Were this possible there wouldn’t be Marxism!

“We only advocate class struggle and revolution, and all the downsides of that for the working class, BECAUSE we recognise the fundamental contradiction of class interests, and the fact that at least in terms of replacing Capitalism there is no other alternative!”

But do you recognise this? Your statements tell me something different. A revolutionary movement cannot afford to have this level of doubt and confusion.
You say capitalism works and may work in the best interests of the workers. You say Marxists are only interested in what ‘works best’. This is nonsense, it ignores the conflicts within society, the social relations, to understand how absurd this is imagine making the same arguments in relation to slavery! Imagine some 18th century version of you arguing that the system of slavery may be in the best interests of the slaves!

“Capitalism’s low prices being the battering rams that knock down all Chinese walls, were actually directed against the reactionary Central European states that were resisting modernisation,”

I use this to describe nationalism as the weak force, like gravity it seems all powerful but as soon as it comes into conflict with some other force (such as cheap imports) it loses out.
You are correct in saying that Marx and Engels were keen to see modernization, especially in their homeland, Germany. Today we do not have this concern, we have the advantage of being able to focus our weapons solely on the capitalist system.

“If some other class existed here and now, which stood in that relation then Marxists would abandon the working class, and become the champions of that other class.”

If this were a reality we wouldn’t be living in a capitalist system. While we are I will continue to support the proletarian class struggle and fetishise the workers.

“The demand for labour-power implies the demand for Surplus Labour”

It does but you said demand for labour.

“But, the expansion of Capital does not of itself imply that the amount of Surplus Labour must also continually expand! Competition for labour between Capitals, the strength of the Labour Movement within that to raise wages, could REDUCE the amount of Surplus Value produced, and yet Capital could still expand.”

Who said otherwise?

“In that case 200 years after the Industrial Revolution we should see an absolutely massive surplus population. Where is it??”

Unemployed, begging, criminality, working in state schemes, slavery, beastiality films.

ILO report: “Unemployment in terms of actual people out of work is at its highest point ever and continues to rise. In the last ten years, official unemployment has grown by more than 25 % and now stands at nearly 192 million worldwide, or about 6 % of the global workforce. Unemployed and under-employed together total about a billion people.”

I don’t think we need go into a discussion on the industrial reserve army, suffice to say that we see expansion and contraction and we should be aware of the growing army of under-employed also. The point is though that this specific part of our debate revolves around the question, does this system work in the best interests of workers? Clearly they have no democratic control over this process, they are at the mercy of an alien force. As I stated before change within capitalism is inevitably undemocratic, how can such a system be in the workers best interest?

“What you are proposing is aversion of the old Lassallean imjmiseration thesis that was also adopted by the Stalinists. It is totally at odds with what Marx actually argued.”

No I am arguing here that capitalism is not run in the best interests of the workers. You have gone way off track here. Instead of putting words in my mouth, justify your claim that capitalism could be in the workers best interests.

“Marx’s argument for Communism has nothing to do whatsoever with some kind of sentimental longing to get back to the forms of Primitive Communism, and everything to do with his scientific analysis that the development of the productive forces was driving society to such a conclusion!”

Certainly not but he didn’t term it primitive communism by accident. He wanted to show that collective property was just as ‘natural’ as private property. He wanted to show that the only way to tame the beast of capitalism was communism and some of the features of primitive communism held clues to how this could work. It’s called the dialectical method.

“By contrast, Nazi Germany lasted just 12 years, most other fascist dictatorships not much longer.”

Okay fair point. I was getting carried away. The point should always be made however that we do not live in a peaceful society, we live in a society where one class controls another and that under this system that power can be wielded to terrible affect. And the power to enforce it is greater than ever – in fact the cost to society in dealing with capitalisms shortcomings is another argument to say that capitalism does not work.

“The question for western Capital is how quickly it can allocate into areas of production in which it has a comparative advantage, such as high tec production, the production of various types of media production (films, computer games and so on), and how quickly, and how many workers it can train to undertake such work.”

With great difficulty I would say seen as it has much capital already there!

Sat 12, December 2009 @ 11:43

Arthur Bough said…

Reply to James

“James”,

You quote two statements by me in respect of the crisis, and disproportionality. You imply that there is some contradiction between these two statements. If you believe that they are contradictory you should explain why. In fact, as anyone who reads the two statements carefully can clearly see, there is no contradiction. Perhaps your headache is due to the fact that you seem to be hard of understanding.

You then attempt to build an argument on the basis of your assertion that I have said that “Capitalism works in the workers’ best interests”. But, I challenge you to find one instance where I have said that! I have not. I have like Marx and other Marxists said that Capitalism in a number of ways does work in workers’ interests, but that is not at all the same as saying that it works in workers’ BEST interest. So you have wasted many words in an argument that was based on misrepresenting what I said.

You deny that workers and Capitalists have a shared interest in progress. Marx did not, and your position is, therefore Luddite. Accepting that concept does not remove the need for class struggle at all. It only means that the role of class struggle within it is to ensure that the benefit that can accrue to workers from such progress is fought for.

You say that if progress were possible without the need for class struggle or revolution there would be no Marxism. Why?

Your comments in regard to slavery are completely ahistorical and in conflict with the theory of Historical materialism.

Your comments about Capitalism’s low prices, nationalism and gravity appear to be just gibberish.

Our concern today as much as in Marx’s time is on modernisation, because the more capitalism develops and modernises the productive forces the easier the task of constructing socialism will be, and the more it is possible here and now to use methods of class struggle to improve the conditions of the working class and make it more fit to adopt the role of ruling class.

Of course its possible that under Capitalism some other class could be identified as being the revolutionary class! Some “Marxists” already believe that they had identified such a class in the technocratic and bureaucratic elite, believing that the next stage of human development was not Socialism, but a system of Bureaucratic Collectivism.

Yes, I did say Labour, and stick by it, because the expansion of Capital requires precisely that.

I do not deny the existence of unemployment and so on, but the point is that this unemployment does not at all constitute the increasing proportion of the labour force, which your argument stated has to be the case. Quite the contrary. And in respect, of poverty, under-employment etc., this in general is a symptom not of Capitalist development, but a lack of it. As Lenin said in his arguments against the Narodniks who made a similar case to the one you put forward, poverty and under-employment in Russia were not caused by Capitalism, but by “not enough Capitalism”. (See: http://www.marxists.org/archive/lenin/works/1899/devel/index.htm) The Development of Capitalism in Russia.

Marx’s arguments about the supercession of Capitalism by Communism have nothing whatsoever to do with looking backwards to Primitive Communism as a means of “Taming the beast of Capitalism”, and in fact he says so. A real Marxist rather than someone pretending to be one would know that, and certainly would not attempt to pass of the statement you make as being “dialectics”.

Mon 14, December 2009 @ 16:52

JamesT said…

I will not continue to argue with someone who lays claim to be Marx’s official representative on God’s earth,
“A real Marxist rather than someone pretending to be one would know that”
Put the toys back in the pram.

The following will be my final say on the subject.

“You then attempt to build an argument on the basis of your assertion that I have said that “Capitalism works in the workers’ best interests”. But, I challenge you to find one instance where I have said that! I have not.”

I began by saying,
"I would argue that capitalism does not work in the best interests of the workers but I also think an objective argument (not a moral one) can be made to say that capitalism does not work."
Your reponse to this,
“It may not, but that is not the same thing as not working. Moreover, even in terms of the interests of workers it is not clear cut.”
You seem to be saying here that capitalism may be in the best interests of the workers. If I have wasted many words on this subject it is entirely your fault. I never knew that 'genuine' Marxism was so confused.

“You deny that workers and Capitalists have a shared interest in progress.”
No I said I would empathise the class struggle above this. That doesn’t mean I can’t see what progress computers have brought to humanity. So who is wasting words here?

“You say that if progress were possible without the need for class struggle or revolution there would be no Marxism. Why?”
We need to give your full quote here,
“Were it POSSIBLE to achieve progress without class struggle, or revolution, then Marxists would favour it. We only advocate class struggle and revolution, and all the downsides of that for the working class, BECAUSE we recognise the fundamental contradiction of class interests, and the fact that at least in terms of replacing Capitalism there is no other alternative!”
Progress here is taken as moving from one system to another and not just ‘progress’ within a system. I don’t think you need to be a ‘pure aryan’ Marxist to understand how important class stuggle is to Marxism. History is the history of and all that.

“Your comments in regard to slavery are completely ahistorical and in conflict with the theory of Historical materialism.”
Gibberish. But now you have come round to my viewpoint on Capitalism not being in the workers best interest we need not waste any more time on this.

“Of course its possible that under Capitalism some other class could be identified as being the revolutionary class!”
I disagree but then I am not a Marxist am I.

“I do not deny the existence of unemployment and so on, but the point is that this unemployment does not at all constitute the increasing proportion of the labour force, which your argument stated has to be the case.”
No I didn’t I just said there were countervailing tendencies to your ‘demand for Labour’, which was part of your argument for saying Capitalism could work in the workers best interests. You have now seen sense on this matter.

“Marx’s arguments about the supercession of Capitalism by Communism have nothing whatsoever to do with looking backwards to Primitive Communism as a means of “Taming the beast of Capitalism”, and in fact he says so. A real Marxist rather than someone pretending to be one would know that”
My points about primitive communism have been repeated by many Marxists and the following links provide ample evidence,

This review of David Harvey’s Justice, Nature & the Geography of Difference by Louis Proyect nicely summarizes the issues and differences.
http://www.columbia.edu/~lnp3/mydocs/indian/Harvey_Indian.htm

Take this quote from Workers liberty “Engels glorified primitive communism, arguing more or less that the Marxist prescribed communism should be an updated version of primitive communism. This raises an interesting point given the leading role women had in primitive communism.”
The full article is here : http://www.workersliberty.org/node/7779

Take this quote from the International communist current,
“As early as the Communist Manifesto, the tendency around Marx and Engels had denounced the hypocritical and oppressive nature of the bourgeois family and had openly advocated its abolition in a communist society. But now Morgan’s work enabled the marxists to demonstrate through historical example the fact that the patriarchal, monogamous family was not the irreplaceable moral foundation of any social order; in fact it was a rather late arrival in humanity’s history and, here again, the further back one looks, the more it becomes evident that marriage and child-rearing were originally communal functions, that a “communism in living” (Notebooks, p 115) prevailed among the tribal peoples.”
The full article can be found here : http://en.internationalism.org/ir/081_commy_11.html

And this link to Marxist.com includes an article on primitive communism which makes some of the points I raised.
http://www.marxist.com/History-old/historicalMaterialism.htm

Or this article written by Chris Harman, particularly the section on primitive communism.
http://www.marxists.de/science/harmeng/engels2.htm

Or this article by Mark Jones titled Marxism and peripheral peoples.
http://www.marxmail.org/archives/February99/peripheral.htm

For someone trying to cast doubt on another’s authenticity you seem to be bloody ignorant of these debates within Marxist circles.

Mon 14, December 2009 @ 20:19

JamesT said…

If you would just indulge me on a further point on these comments by Arthur B,
“You deny that workers and Capitalists have a shared interest in progress. Marx did not, and your position is, therefore Luddite.”
“Our concern today as much as in Marx’s time is on modernisation, because the more capitalism develops and modernises the productive forces the easier the task of constructing socialism will be”
I feel my response to this was too defensive.

Let us take an example of the real world, the recent postal strikes.
The bosses, led by Adam Crozier, very much took the view that their attempt at ‘modernisation’ was in everyone’s interests and they denounced the defence of workers pay, jobs and conditions by unions as being an obstacle to progress.
What attack on workers pay and conditions has not been called modernisation and progress by the bourgeois and their spokespeople in the media? Which union defending these attacks have not been denounced as luddites?
I will take Arthur’s criticisms as a compliment.

So if you,
a)Believe capitalism works and works in the interests of workers.
b)Believe workers are no longer a revolutionary class but that position is now occupied by a technocratic ‘elite’.
c)Believe the 'shared interests' of capital and labour should be emphasised above or alongside the class struggle.
Then I think the political implications of this are clear

Tue 15, December 2009 @ 09:30

bill j said…

I really don't think we should indulge you. Not least as you show a remarkable lack of knowledge of what Luddism was all about. It was the early revolt of a working class in the process of formation against the destruction of their living standards by machines. They fought armed battles with the local militias and scored quite a few victories.
Good stuff all in all.

Tue 15, December 2009 @ 12:26

Arthur Bough said…

“James”,

Once again you build your argument on the basis of misrepresenting what has been said. That is a method you have used previously when writing under the multitude of other names you use on the Internet. My comment about someone pretending to be a Marxist was said in that context.

I challenged you to show what the alleged contradiction was between the statements you quoted in relation to disproprtion and the crisis. You have not done so. I challenged you to give just one quote where I said that Capitalism worked in workers’ BEST interests. Again, you have failed to do so.

In fact, as you now even state,

“I began by saying,

‘I would argue that capitalism does not work in the best interests of the workers…’ Your reponse to this,

‘It may not…’”

I rest my case!

“No I said I would empathise the class struggle above this. That doesn’t mean I can’t see what progress computers have brought to humanity.”

Yet, later you comment,

“What attack on workers pay and conditions has not been called modernisation and progress by the bourgeois and their spokespeople in the media? Which union defending these attacks have not been denounced as luddites? “

This really is a contradiction on your part. In fact, the unions have not opposed such modernisation on the basis you propose i.e. because it would mean accepting some shared interest with the benefits gained by the bosses. They have generally dealt with modernisation on the basis I have suggested, of recognising mutual benefit! That was the whole basis of Technology Agreements for instance, which basically said, we recognise the need and benefit from introducing new technology, but we insist on ensuring that some of the benfit from that comes to our members through higher pay, reduced hours, improved conditions!

“I don’t think you need to be a ‘pure aryan’ Marxist to understand how important class stuggle is to Marxism. History is the history of and all that.”

Careful “James”, XXXXX XXX XXX XXX (Deleted by PR webby - personal abuse is not allowed on PR web - do not post it). You are wrong. Marxism is a science, that science was applied to identify that history progresses by means of class struggle. Had it identified some other method by which history progresses, it would not cease to be Marxism. Physics as a science discovers natural laws. From time to time, it finds that what it once thought was a law is in fact, not so, take for instance Newton’s Law of Gravity, superseded by Einstein. Yet, the fact that it adduced new laws did not mean that Physics ceased to be Physics! As Lenin said, “The truth is always concrete”, and what is concrete is always historically specific, things change.

‘Of course its possible that under Capitalism some other class could be identified as being the revolutionary class!’

“I disagree but then I am not a Marxist am I.”

Quite right you are not, XXX XXX XXX (Personal abuse deleted - PR Webby)

You did say that the growth of Capital must lead to an ever larger reserve army compared to the labour force. You said,

“Every mechanism of capitalism therefore acts to continually increase the proportion of the population which is ‘surplus’ compared to the demand for labour.”

“My points about primitive communism have been repeated by many Marxists and the following links provide ample evidence,”

But none of the quotes or references you cite confirm your statement that Marx wanted to recreate an updated version of Primitive Communism! All you have shown, as with all of your other Internet activity, under your various persona, is that you can use Google to find material you think supports your case, but without actually understanding what you have cited! It is impossible for Marx to have the position you attribute to him or Engels precisely because the whole basis of the Historical Materialist method is that it is historically specific. To re-quote Lenin, “The truth is always concrete”. And, in fact, as Marxists know, Marx said very little about how a future Communist society would work, precisely because only the concrete reality of historical development could show that.

“a)Believe capitalism works and works in the interests of workers.

b)Believe workers are no longer a revolutionary class but that position is now occupied by a technocratic ‘elite’.

c)Believe the 'shared interests' of capital and labour should be emphasised above or alongside the class struggle. “

But, its clear that Capitalism DOES work. It has worked for several centuries. That is why it was able to supplant Fedualism! Marx recognised that it worked, and glorified its achievements. He opposed those amongst the Reactionary and Moral Socialists who only focussed on its limitations. Lenin also believed that it worked, and criticised the Narodniks, who adopted the idea that it did not, that it could be skipped as an historical stage. In his “The Development of Capitalism in Russia”, he shows how it was the more developed forms of Capital, which provided Russian workers with higher wages, and better conditions, pointing out that Russian workers suffered from the inadequate development of Russian Capital. In fact, the US Marxist Hal Draper commented that for Marx and Engels Socialism was essentially a continuation of the modernising role performed by Capitalism, but which Capitalism could not fully carry through!

I have not said that workers are no longer a revolutionary class. Far from it, I have argued vehemently against those who advocate the idea of Bureaucratic Collectivism! Once again you grossly misrepresent my position. I merely pointed out that using the Marxist method it was POSSIBLE to arrive at such a conclusion. I disagree with that position, because I disagree over the FACTS that those who put forward such a position cite. But, like Trotsky, I do not deny the POSSIBILITY of such a development.

I have never suggested that the shared interests of workers and bosses in development should be emphasised ABOVE the class struggle. Once again you grossly misrepresent my position.

Tue 15, December 2009 @ 13:00

JamesT said…

"I really don't think we should indulge you. Not least as you show a remarkable lack of knowledge of what Luddism was all about. It was the early revolt of a working class in the process of formation against the destruction of their living standards by machines. They fought armed battles with the local militias and scored quite a few victories."
If this is aimed at me I am really puzzled as I am the one accused of being a luddite and therefore not the one providing a definition.

As for Arthur B's response, how do you respond to that. Who on earth is the sentinel, what possesses you to think I am a BNP'er. Utterly bonkers.

Tue 15, December 2009 @ 15:22

pr webby said…

Point deleted above. Reminder personal abuse is not allowed on PR web. Do not post it.

Tue 15, December 2009 @ 21:54

Arthur Bough said…

Webby,

I tracked a comment from "James T" to my blog. Hence the comments.

Wed 16, December 2009 @ 10:49

pr webby said…

Hence does not come into it. Personal abuse is not allowed. Do not do it.

Wed 16, December 2009 @ 12:26

JamesT said…

"I tracked a comment from "James T" to my blog"
No you haven't because I have never, I repeat never represented the views of the BNP on any site. That is more of an insult than anything you could have included in the deleted comment.

Wed 16, December 2009 @ 13:14

Arthur Bough said…

If I have confused this JamesT with someone else I wholeheartedly apologise. However, I have dealt with James' comments in good faith irrespective of who he is. He has not done the same. He has grossly misrepresented what I have said, and having been given several opportunities to either retract his statements, or to substantiate them has failed to do so.

Wed 16, December 2009 @ 14:01

Llin Davies said…

Lenin writes,

“We still have, in conclusion, to sum up on the question which in literature has come to be known as that of the “mission” of capitalism, i.e., of its historical role in the economic development of Russia. Recognition of the progressiveness of this role is quite compatible (as we have tried to show in detail at every stage in our exposition of the facts) with the full recognition of the negative and dark sides of capitalism, with the full recognition of the profound and all-round social contradictions which are inevitably inherent in capitalism, and which reveal the historically transient character of this economic regime. It is the Narodniks—who exert every effort to show that an admission of the historically progressive nature of capitalism means an apology for capitalism—who are at fault in underrating (and some times in even ignoring) the most profound contradictions of Russian capitalism, by glossing over the differentiation of the peasantry, the capitalist character of the evolution of our agriculture, and the rise of a class of rural and industrial allotment-holding wage-labourers, by glossing over the complete predominance of the lowest and worst forms of capitalism in the celebrated “handicraft” industries…

“The progressive historical role of capitalism may be summed up in two brief propositions: increase in the productive forces of social labour, and the socialisation of that labour. But both these facts manifest themselves in extremely diverse processes in different branches of the national economy.
The development of the productive forces of social labour is to be observed in full relief only in the epoch of large-scale machine industry…

“A large number of errors made by Narodnik writers spring from their efforts to prove that this disproportionate, spasmodic, feverish development is not development…

“In Russia, the progressive character of capitalism in this respect is particularly marked, since the personal dependence of the producer existed in our country (and partly continues to exist to this day), not only in agriculture, but in manufacturing industry (“factories” employing serf labour), in the mining and metallurgical industries, in the fishing industry, etc.[3] Compared with the labour of the dependent or bonded peasant, the labour of the hired worker is progressive in all branches of the national economy. Fourthly, capitalism necessarily creates mobility of the population, something not required by previous systems of social economy and impossible under them on anything like a large scale. Fifthly, capitalism constantly reduces the proportion of the population engaged in agriculture (where the most backward forms of social and economic relationships always prevail), and increases the number of large industrial centres. Sixthly, capitalist society increases the population’s need for association, for organisation, and lends these organisations a character distinct from those of former times. While breaking down the narrow, local, social-estate associations of medieval society and creating fierce competition, capitalism at the same time splits the whole of society into large groups of persons occupying different positions in production, and gives a tremendous impetus to organisation within each such group.[4] Seventhly, all the above-mentioned changes effected in the old economic system by capitalism inevitably lead also to a change in the mentality of the population. The spasmodic character of economic development, the rapid transformation of the methods of production and the enormous concentration of production, the disappearance of all forms of personal dependence and patriarchalism in relationships, the mobility of the population, the influence of the big industrial centres, etc.—all this cannot but lead to a profound change in the very character of the producers, and we have had occasion to note the corresponding observations of Russian investigators…

Furthermore, whether the development of capitalism in Russia is slow or rapid, depends entirely on what we compare this development with. If we compare the pre-capitalist epoch in Russia with the capitalist (and that is the comparison which is needed for arriving at a correct solution of the problem), the development of social economy under capitalism must be considered as extremely rapid. If, however, we compare the present rapidity of development with that which could be achieved with the general level of technique and culture as it is today, the present rate of development of capitalism in Russia really must be considered as slow. And it cannot but be slow, for in no single capitalist country has there been such an abundant survival of ancient institutions that are incompatible with capitalism, retard its development, and immeasurably worsen the condition of the producers, who “suffer not only from the development of capitalist production, but also from the incompleteness of that development.”

http://marxists.org/archive/lenin/works/1899/dcr8viii/viii8vi.htm

This last quote is, of course taken from Marx himself in Capital.

I have to say I’m a bit confused by Bill J’s position of saying that Capitalism doesn’t work, whilst at the same time arguing that its currently going through a Long Wave Boom. I’d have thought its difficult for anything that doesn’t work to be booming!

Wed 16, December 2009 @ 15:15

pr webby said…

I have explained the policy of PR web. Personal abuse is not allowed. Stick to it in future please.

Wed 16, December 2009 @ 16:53

bill j said…

I can well understand why you're confused if that's what you think the long wave theory is. Essentially all it says is that there are broad periods of upward or downward curve in the overall direction of capitalist development. Post war there was an upward long wave, the period is in fact known as the "long boom", but there were nonetheless recessions in 1948, 1958, 1960 and 1970.
There was a downward long wave from around 1974-1991, during that period there were also brief booms in the mid 1970s and mid 1980s.
Now there is an upward long wave, but nonetheless still recessions in 2001-2003 and one from 2008-2009. The point is do these recession characterise the general direction of capitalism as a whole?
Capitalism does not work for the working class, they suffer alienation and exploitation as a result of it. That does not mean in a period of upward long wave that there can be no relative advance, there obviously can and indeed its difficult to say that there has not been over the last two decades, (that of course does not stop the left from saying it).

Wed 16, December 2009 @ 16:58

m said…

Have you read this paper by Alan Freeman, which kind of argues against long wave theory:
Has the empire struck back? ‘new paradigm’ globalisation or return to classical imperialism?
http://mpra.ub.uni-muenchen.de/2589/

There was also a very long article in the German L5I journal, Revolutionärer Marxismus which made a similar case and argued specifically against your position, quoting a lot of your articles in PR:
Globalisierung und der Mythos von der neuen langen Welle
http://www.arbeitermacht.de/rm/rm39/rm39globalisierung.htm

Wed 16, December 2009 @ 22:32

bill j said…

Thanks I don't think I've seen the German one. I've quickly googled it and there is nothing really new from what I can see. On the long wave they misrepresent Mandel (and me) to say that we see an automatic transition from the downward to the upward phase. He didn't and we don't. They quote me from 2007 saying "If the recent history served as a guide, we would expect that the current period of very strong growth will not persist through 2010 and beyond, before the economy falls off sharply for about 2 years. However, we would expect that if the current restoration of lasting profit, not the next downturn, leading to a major recession, but only a pause before a further period of strong growth. How long this will last boom period depends on the continued ability of capitalists to increase the qualitative progress in the field of production, which was created by globalization, quantitatively. But the experience of previous long-wave upturn suggests that the capacity will be exhausted during the third cycle, that is, around 2015. "(11)"

That seems to me a pretty accurate forecast and description of what we have seen so far. The growth did not continue through 2010, in fact the downturn came slightly earlier in late 2008/2009. There was a major recession in parts, but certainly not the world economy as a whole. China and India, Africa and Latin America, most of Asia, did not see serious crises. Where it goes next we will find out soon enough. But it certainly won't be the Great Depression that bunch anticipated in May. He also spells my name wrong the whole way through. That bugs me no end!

I have read Alan Freeman's articles on it before, funnily enough his dad, Chris Freeman is one of the foremost proponents of long waves, non-Marxist but interesting, sort of an economic historian, As Time Goes By is the name of the book.

Wed 16, December 2009 @ 23:59

Llin Davies said…

Bill,

I do understand what the Long Wave theory says, and your elaboration of it does not overcome the contradiction in what you are saying. If there are ups and downsa in development, but an overall upward trend, it is difficult to see how you can say that such a system is not working. Surely an overall downward trend at least would be required to make such a statement. That is, of course, what the catastrophists, the believers in the idea that Capitalism is in an Imperialist Phase of Long Term decline and decay state.

Now, if we take your argument that Capitalism does not work for the workers, then surely we have to ask in what terms you are making that statement. It certainly does not seem to be compatible with the analysis provided by Lenin above. Some simple questions surely arise.

Have workers living standards risen since the inception of Capitalism? Has workers access to education, culture, and basic things such as decent healthcare and living conditions improved since the inception of Capitalism? Have workers basic democratic rights, and rights to basic individual liberties improved since the inception of Capitalism?

As far as I can see the only people who tried to give a negative answer to the first question were Stalinists. No sensible person can deny it, or that they are if anything improving today more rapidly than they have in the past. Given that prior to Capitalism workers had no access to education and so on, it seems difficult to deny that either. Certainly Marx never did, he thought it was fundamental to workers being able to transform themselves into the ruling class. Lenin did not deny it either as the quotes above demonstrate. Nor can it be denied that workers have better access to healthcare and housing conditions, even in the US. In addition they now enjoy a considerable amount of leisure time that was denied them in the 19th century prior to large scale machine industry becoming dominant. And, whatever, limitations we might argue apply to the basic bourgeois freedoms that workers enjoy - just as we would argue that Socialism would enhance all of these former benefits obtained by workers under Capitalism - we cannot deny that workers DO beenefit from those basic bouregois freedoms, of speech, to organise, to vote and so on. Certainly, Lenin thought so, which is why he argued against the Economists for the need to fight for those basic bouregois freedoms rather than simply engage in economic struggle. Trotsky thought so, which is why he argued for defence of them against fascism.

So, if workers have gained all of these benefits from Capitalism it is not just undialectical - which is Lenin's argument against the Narodniks above, and was Marx's argument against the Sismondists - to simply state that Capitalism does not work for the benefit of workers.

"Recognition of the progressiveness of this role is quite compatible (as we have tried to show in detail at every stage in our exposition of the facts) with the full recognition of the negative and dark sides of capitalism, with the full recognition of the profound and all-round social contradictions which are inevitably inherent in capitalism, and which reveal the historically transient character of this economic regime. It is the Narodniks—who exert every effort to show that an admission of the historically progressive nature of capitalism means an apology for capitalism..."

It can lead to incorrect programmatic formulations. For instance, opposing any Capitalist measure simply because it is a measure that advances the interests of Capital. Improved technology could be one, the development of the EU could be another. For the Stalinists it was opposition to the development of Monopolies, which led to their reactionary "anti-Monopoly Alliance". It can lead to failing to defend basic boruegois freedoms, simply because they are bourgeois!

Another good example, that shows the obverse of these incorrect positions is Lenin's position on the Stolypin reforms. The Stolypin reforms reforms were designed to remove some of those obstacles to Capitalist development in Russia that he refers to above. They were designed to transform Russian agriculture and speed up the spread of Capitalist agriculture. From that perspective Lenin argued that they were progressive. On that basis he refused to oppose them even though they were Capitalist measures. His position, which was correct was instead to stay, no opposition, but to raise within the process the need to defend and advance the interests of the workers.

Thu 17, December 2009 @ 12:45

bill j said…

Lenin's position was not static through the course of his life. As capitalism changed Lenin's analysis of it also changed. In that sense he did not have a "position", he had a concrete analysis of a changing thing. His analysis of capitalism in Russia made at the time of the Stolypin reforms was not the same as his analysis of capitalism during the belle epoque or during or after WWI.
That all seems pretty straight forward. You seem to imply that he did. If that's what you think you're wrong.
Does capitalism work for the workers? The recession should answer that question. Obviously not. Is capitalism capable of relative advance and has it advanced relatively over the last period of globalisation, obviously yes. Does that mean it has advanced as it could have done under socialism, have workers experienced the changes in their lives for the better that a socialist government could have produced, obviously not, but that is not the same thing as saying there can be no advance, and it does not mean that "capitalism works".
The catastrophists say - the L5I are a good example as they're so crass - its also btw the reason that most of their articles consist of a good half of lengthy quotes - that because Lenin said that there was a tendency for capitalism to stagnate under imperialism, writing in the middle of WWI, then capitalism is always stagnant (except for the long boom when it grew very fast - but lets draw a veil over that). All of the Marxist catastrophists - I think that probably includes nearly ever left group in the whole world except the LCR/NPA - take the possibility of crisis described by Marx, the possibility of stagnation described by Lenin and simply assert that it is a continuous ongoing feature of "over-accumulation".
That's why they can denounce my prognosis of the likely course of the recession, thus far vindicated pretty much entirely I might add, and claim that it is a Kondratieff schema. What a joke.

Thu 17, December 2009 @ 13:30

m said…

Michel Husson just published on his website 2 papers criticising Kliman's profitability studies:

http://hussonet.free.fr/histokli.pdf
http://hussonet.free.fr/h9tprof.pdf

(both in French)

Tue 22, December 2009 @ 00:29

bill j said…

Good stuff. How do manage to be so up with the latest releases?!

Tue 22, December 2009 @ 11:43

Graham B said…

Anyone translate? Google isn't great. Husson's got a list of recent contributions to the rate of profit debate:
http://hussonet.free.fr/cricoco.htm

Tue 22, December 2009 @ 11:48

Arthur Bough said…

Bill.

I'm not sure what you meant above about there being no automatic transmission mechanism between the Long Wave Downturn and Upturn. If you mean that it cannot be understood in a completely mechanistic way, that each cyle has to be analysed in its own specifics, then I agree. But, there clearly are mechanisms than lead to Long Wave Downturns ending and upturns commencing. Those mechanisms appear to involve a number of interrelating cycles and phenonomena. They seem to involve the Innovation Cycle, through which new base technologies are developed, which form the foundation for whole new industries, as well as new products, and new production methods. It appears to involve the "Commodity Cycle". Market Trades speak in terms of a 20 year bull and bear cycle for "Commodity" prices, meaning raw material, food prices etc. And this also seems to play into the idea of a cycle for large investment projects, similar to Marx's interest in the duration of such large investments as the construiction of new factories.

In fact, new production methods now mean that this latter is not such a long-term investment as it was in Marx's day. But, we do know for example that it takes 7 years for a new Copper Mine to come on stream from inception, and inception itself only occurs after some years of exploration, which in turn only happens when raw material prices have risen to a level where such activity becomes worthwhile. All of these factors have secondary effects in terms of Commodity Prices, Labour Productivity, The Rate of Profit etc., and the cosnequent movements of all these relative prices during the course of the cycle have further secondary effects. So it is clear that a mechanism does exist. The cycle is not just an accidental phenomena, and moreover, the effects that draw in the subjective element e.g. the responses of bosses and workers though they have thier own dynamic, are clearly derivative from the cycle and the changes within it. As the Boom progresses, labour becomes relative short in supply, bosses accede to demands more easily because they are able to due to high rates and volumes of profit. Workers confidence and militancy rises etc. Similarly, if workers are unable to provide a political solution when when the conjuncture changes, then ultimately the economic consequences of the decline make bosses more determined to resist, and workers seeing firms close, their workmates lose their jobs, become more willing to scale back their demands, become less militant etc. And, of course that is reflected in the Worekrs class conscioussness, and its organisations which move decisively to the Right.

On Lenin, yes his position did change, but even at the end of his life he still saw Capitalism working in relative terms for the interests of workers. Not as much as Socialism would, but still relatively. That is why he introduced NEP, it is why he tried to get Western Capitalists like Armand Hammer to set up Joint Ventures in Russia, so that they could benefit from the Capital, the KNow-how, and the competitive whip on production that such enterprises could provide to the Soviet economy, and he said he was prepared to obtain those advantages of such Capitalist enterprise even at the expense of the continued exploitation etc of Russian workers. Asked how long he thought NEP might have to last he commented possibly up to 25 years!

Of course, Capitalism does not work in workers interests in the same degree that we expect Socialism to work, but firstly we do not yet have Socialism, and secondly we do not yet know whether Socialism actually will deliver what we expect. We have to deal withr eality as it exists. Moreover, even during the 1930's, its not true that Capitalism did not work in workers interests. It certainly did not work in the interests of those in places like the North-East where there was chronic long-term unemployment, but they were a mInority. Elsewhere in the South-East, for instance, new industries were developing in consumer electronics, and workers in these industries and areas, actually did quite well. Even during the Long Wave downturn, there is normally overall growth, it is just slower growth than during the Long Wave Boom. In the 1930's, living standards overall rose because prices fell more than wages, and as Hobsbawn states in "Industry & Empire", the majority of workers who DID lose their jobs, only were out of work for a few months. The same was true of the Second Slump of the 80's and 90's.

Capitalism clearly does work, and if anything works better today than it did in either Lenin's time, or Marx's time. The period sicne the end of WWII has been of one of remarkable growth and dynamism from Capitalism that far outstrips anything achieved in the 19th Century, and I expect even more in the next 15-20 years of the current Boom. Marxists should recognise the potential of that, and attempt to utilise it in workers interests as they did at the end of the 19th Century, before such a powerful boom ends in a catastrophic bust.

Wed 23, December 2009 @ 13:27

m said…

Michael Roberts' new book on the topic, The Great Recession, has also been made available online&for free:
http://www.archive.org/details/TheGreatRecession.ProfitCyclesEconomicCrisisAMarxistView

Wed 23, December 2009 @ 22:22