Thursday, April 24, 2014

On Marx on Value, Fixed Capital, and the Rate of Profit.

You know, I hate citing texts.  Kind of like I hate repeating myself.  If the analysis has validity, then we can find, examine, and display that validity in the concrete-- that is to say not just in history, but in immediate, concentrated history, which is, and is all, that economics  will ever be until that glorious day when it, economics, is abolished; we can find, examine, and display that validity in the real relations between classes; in the specific, and specificity of the, conditions of labour which is all that history has been; and all an economy and its "laws of motion" ever was.

But every once in awhile, I think, "Wait a minute......I have notebooks filled with comments of my own on paragraphs and pages Marx wrote and what X or Y or Z or a H or a P or Maoist ABC, or Leninist XYZ says Marx says is not at all what Marx said."

For example, I write: "No, value is not an eternal, universal condition of production.  The law of value doesn't operate ahistorically, regardless of the class relations."

So OK,  I pull out the notebooks, and the citations, and the page/reference numbers to where Marx says what I said he said and I try to put a really fine point on it, just because... well, somebody isn't  getting the point and I know that someone sure can't be me.

Well then, from the notebooks and other places:

1. In the Grundrisse, Marx points out “Circulation therefore does not carry within itself the principle of self-renewal. The moments of the latter are presupposed to it, not posited by it.” And later in the Grundrisse: “The simple movement of exchange values can never realize capital.”
Make what you want of that. I make that the realization of capital requires the expansion of value production, meaning the exploitation of wage-labor, and when the profitability of that exploitation falls, increased circulation cannot overcome the decline.

2. Marx makes it clear in the Grundrisse that labor exists as a/the use value of/for capital; the mediating activity by which capital realizes itself. It is the means by which it reproduces itself AS EXPANDED VALUE.

If we are to regard Marx’s work as the immanent critique of capital, as the critique contained within capital’s own manifestations, then we have to recognized that the “fault” “limits” “conflicts” “contradictions” of capital are contained exactly in this reproduction of expanded value. We must recognized that VALUE is an historically specific category, not a “universal” one; that VALUE production is the limit to capital. That, at a certain point, the labor process and the value production process which are fused in a specific social form, are in opposition to each other and explode into conflict.

3.  Marx states: “The constantly ongoing devaluation of capital, resulting from the increase in the force of production………”
Stop right there: Get that? Capital is constantly devalued by increasing the force of production. This represents and obstacle, and impediment, and integument to the reproduction of capital. It is necessary to the expansion of capital– just as the prices of production serve to transfer value, to devalue some capitals– but the ongoing devaluation overtakes accumulation when profitability, when the rate of profit declines and the devaluation of “secondary” tertiary, etc. capitals does not siphon enough profit to offset that decline in profitability.

4. Certainly capital shares “something” with all previous production– namely that it is “social” production; involving the organization and distribution of the total socially available labor-time over the activities necessary to the reproduction of society.

Yet capital is a specific organization of that social labor-time; where the “need” can only be meet through the organization of labor as a commodity for exchange– as a value for the production of values. This in turn requires a specific set of historical conditions (which Marx claims have been most clearly and perfectly achieved in England.  And good for Brenner, to take that seriously)– those conditions being the separation of the laborer from the instruments of labor– the dispossession of the independent, subsistence, and subsistence plus surplus producers. This IS the fundamental condition for the organization of capital; for VALUE PRODUCTION, which after all, is what capital is. And all this depends on LABOR having NO USE VALUE to the laborer SAVE ITS VALUE IN EXCHANGE FOR THE MEANS OF SUBSISTENCE.
This leads to the exchange of commodities at the time socially necessary for their reproduction– a UNIQUE SPECIFIC CONDITION for social production.

Marx puts it like this in the Grundrisse:

“The great historic quality of capital is to create this surplus labour, superfluous labour from the standpoint of mere use value, mere subsistence; and its historic destiny (Bestimmung) is fulfilled as soon as, on one side, there has been such a development of needs that surplus labour above and beyond necessity has become a general need arising out of individual needs themselves– and, on the other side, when the severe discipline of capital, acting on succeeding generations has developed general industriousness as the general property of the new species, and finally when the development of the productive powers of labour, which capital incessantly whips onward in its unlimited mania for wealth, and the SOLE CONDITIONS IN WHICH THIS MANIA CAN BE REALIZED (caps added), have flourished to the stage where the possession and preservation of general wealth require a lesser labour time of society as a whole, and where the labouring society relates scientifically to the process of its progressive reproduction, its reproduction in constantly greater abundance; hence where labour in which a human being does what A THING COULD DO HAS CEASED" (caps added-SA).

So if “value” is eternal, if the law of value is universal, how can any of the above be accurate? How in fact if the “issue” the "offspring"  of capitalism is unique, socialism, and requires such previous development, can the “law”– WHICH IS THE CLASS RELATION necessary to this development– have existed universally, eternally previous to the existence of the classes? It cannot.

Hence, what counts are the specific laws of value production, and the specific conflict within the terms, the conditions of value production– the conflict between labor and the conditions of labor. The condition of labor in capitalism is that in order to aggrandize greater portions of surplus value, capital has to expel proportionately greater amounts of living labor from production, thus undermining the very source of its profitability– the component, the relation, the RATIO of the source of new value, of profit to the production process.

5. Criticizing Ricardo for assuming that the categories of capitalist production are “natural,” ahistorical, universal, Marx writes:

“With him [Ricardo], however, wage labour and capital are again conceived as a natural, not as a historically specific social form for the the creation of wealth as use value; i.e. there form as such, precisely because it is natural, is irrelevant, and is not conceived in its SPECIFIC relation to the form of wealth, just as wealth, itself in its exchange value form, appears as a merely formal mediation of its material composition; thus the specific character of bourgeois wealth is not grasped– precisely because it appears there as the adequate form of wealth as such….. as if the form of wealth based on exchange value were concerned only with use value, and as if exchange value were merely a ceremonial form….. ”

So much for the universality of value production, its “eternal” quality divorced from the specific class relations of capital.

6. Marx:   “But from the fact that capital posits every such limit as a barrier and hence gets IDEALLY beyond it, it does not by any means follow that it has REALLY overcome it, and since every such barrier contradicts its characters, its production moves in contradictions which are constantly overcome but just as constantly posited. Furthermore. The universality towards which it irresistibly strives encounters barriers in its own nature, which will, at a certain stage of its development, allow it to be recognized as being itself the greatest barrier to this tendency, and hence will drive towards its own suspension…”
“…The whole dispute as to whether OVERPRODUCTION is possible and necessary in capitalist production revolves around the point whether the process of the realization of capital WITHIN PRODUCTION [caps added] directly posits its realization in circulation; whether its realization posited in the PRODUCTION process is its REAL REALIZATION…..Ricardo and his entire school never understood the really MODERN CRISES, in which this contradiction of capital discharges itself in great thunderstorms which increasingly threaten it as the foundation of society and production itself.”
–Grundrisse The Chapter on Capital Notebook 4 (Transition from the process of the production of capital into the process of circulation…..)

And there’s always this gem: “The higher the development of capital, the more it appears as a barrier to production– hence also to consumption–”

7. Marx says this: “Hence, the larger is the part of the capital consisting of the fixed capital–i.e. the more capital acts in the mode of production corresponding to it, with great employment of produced productive force- and the more durable the fixed capital is, i.e. the longer its reproduction time, the more its use value corresponds to its specific economic role- the more often must the part of capital which is determined as circulating REPEAT THE PERIOD OF ITS TURNOVER, AND THE LONGER IS THE TOTAL TIME THE CAPITAL REQUIRES FOR THE ACHIEVEMENT FOR ITS TOTAL CIRCULATION.
– –Grundrisse, The Chapter on Capital, Notebook 7 (Turnover time of capital…..)

8.  Marx continues, as if anticipating the tub-thumpers of fictitious capital:
“This much clear, then, which already follows from the difference introduced by fixed capital into the industrial cycle, namely that IT ENGAGES THE PRODUCTION OF SUBSEQUENT YEARS, and just as it contributes to the creation of a large revenue, it anticipates future labour as a counter-value. The anticipation of future fruits of labour is therefore in now way a consequence of the state debt, etc., in short, not an invention of the credit system, It has ITS ROOTS IN THE SPECIFIC MODE OF REALIZATION, MODE OF TURNOVER, MODE OF REPRODUCTION OF FIXED CAPITAL."

That specific quality introduced with increasing fixed capital is– lengthening of the period of total turnover, of total realization.

9. Now, if the introduction of the increased component of fixed capital into the increasing component of constant capital, does not reduce the turnover period, but lengthens it; does not offset the decline in the “unit” rate of profit by increasing the annual rate of profit, where are we? We’re where we always are– with the relation between the living and dead components of capital determining profitability; with the contest between accumulation and devaluation; where accumulation produces devaluation.

And this is where the decline in the rate of profit is NOT offset, and cannot be offset by an increase in the MASS of profit–

that point is the point where, with a declining rate of profit because of the amassed, stored, accumulated capital in its fixed assets, the ability to EXPAND the production of VALUE at an increment high enough to generate profit is IMPAIRED due to the high THRESHOLD COSTS FOR SUCH EXPANSION represented in the established industries themselves. Thus boutique auto producers can gain a hold, a fraction, in the market, and  thus markets can be segmented or “niched”; thus automakers accustomed to, organized around lower profit margins, as the Japanese automakers are can gain significant market share– with the support of MITI, or similar organizations;but the large auto makers, established majors in their “home markets,” are not generating profits quickly or massively enough to capture significantly greater shares of the established markets.

10.  Now we come to Marx’s analysis of the rate of profit in the Grundrisse. In Notebook 7, Marx says:  

“Thus, in the same proportion as capital takes up a larger place as capital in the production process relative to immediate labour, i.e. the more the relative surplus value grows–the value-creating power of capital– the more DOES THE RATE OF PROFIT FALL. ….Hence the rate of profit falls relative to the total value of the capital presupposed to production–and of the part of capital acting as capital in production. The wider the existence already achieved by capital, the narrower the relation of newly created value to presupposed value (reproduced value). PRESUPPOSING EQUAL SURPLUS VALUE, I.E. EQUAL RELATION OF SURPLUS LABOUR AND NECESSARY LABOUR, there can therefore be an unequal profit, and it must be unequal relative to the size of the capitals. The rate of profit can rise although real surplus value falls. Indeed the capital can grow and the rate of profit can grow in the same relation if the relation of the part of the capital presupposed as value and existing in the form of raw material and fixed capital rises at an equal rate relative to the part of the capital exchanged for living labour. But this equality of rates presupposes growth of the capital without growth and development of the productive power of labour. One presupposition suspends the other. This contradicts the law of the development of capital, and especially of the development of fixed capital. Such progression can take place only at stages where the mode of production of capital is not yet adequate to it….”

First let’s keep in mind that all these movements of capital are cyclical, but that within the cycles, that with the repeated cycles, and trend is established, an overall structural movement based on the growing accumulation of capital.

The movement of the rate of profit in synch with the growth of the fixed assets and raw materials is possible, but it is an “outlier”– it is a condition counter to the real domination of capital– where the productivity of labor does not grow, which means in fact, that the application of fixed assets to production is impeded in that the necessary labor, the wage is not reproduced in less time;  “This contradicts the law of the development of capital, and especially the development of fixed capital.”

Marx calls the various iterations of the decline in the rate of profit, or the changes in rates of profit in proportion or disproportion to the size of the capital the “most important law of modern political economy, and the most essential for understanding the most difficult relations. It is the most important law from the historical standpoint. It is a law which, despite its simplicity, has never been grasped and, even less, consciously articulated.”

Marx, of course, is about to consciously articulate the importance of the law: “hence it is evident that the material  productive power already present, already worked out, existing in the form of fixed capital, together with the population etc., in short all conditions of wealth, that the greatest conditions for the reproduction of wealth, i.e the abundant development of the social individual– that the development of the productive forces brought about by the historical development of capital itself, when it reaches a certain point, suspends the self-realization of capital, instead of positing it.”


 Let’s continue:

“Beyond a certain point, the development of the powers of production becomes a barrier for capital”….. [ and let's not lose sight what capital "means"-- it means the expansion of value production, of the production of the means of production and subsistence as values to be exchanged with living labor; it means reproducing the capital relation and "materializing" that relation in greater accumulations]…. ; hence the capital relation a barrier for the development of the productive powers of labour. When it has reached this point, capital; i.e. wage labour enters into the same relations towards the development of social wealth….as the guild system, serfdom, slavery, and is necessarily stripped off as a fetter…. [Marx is just getting warmed up]… “the material and mental conditions of the negation of wage labour and of capital…are themselves results of its production process [see previous comments about the conflict between the labor process and the valuation process; between labor and conditions of labor].

“The growing incompatibility between the productive development of society and its hitherto existing relations of production expresses itself in better contradictions, crises, spasms. The violent destruction of capital not by relations external to it, but rather as a condition of its self-preservation, is the most striking form in which advice is given it to be gone….Since this decline of profit [NOTE: Marx does not distinguish rate from mass of profit here, the decline of one is the decline of the other] signifies the same as the decrease of immediate labour relative to the size of the objectified labour which it reproduces and newly posits, capital will attempt every means of checking the smallness of the relation of living labour to the size of the capital generally, hence also of the surplus value, if expressed as profit, relative to the presupposed capital by REDUCING THE ALLOTMENT MADE TO NECESSARY LABOUR AND BY STILL MORE EXPANDING THE QUANTITY OF SURPLUS LABOUR WITH REGARD TO THE WHOLE LABOUR EMPLOYED.”{caps added}

“These contradictions lead to explosions, crises, in which momentary suspension of labour and annihilation of a great portion of capital violently lead it back to the point where it is enable [to go on] fully employing its productive powers without committing suicide.”

So, I’ll pause here… with plenty of more from the Grundrisse still to come– not to mention the other economic manuscripts Marx wrote between 1857 and 1864, and from volume 3 itself.
One can, of course, disagree with Marx, argue that Marx was wrong… but what one cannot do is  pretend Marx is saying something about the rate of  profit and profitability which he does not say.

S.Artesian  April 24, 2014

Tuesday, April 15, 2014

It's That Time of the Year Again

It's that Passover, Easter, Spring Break, baseball, crocus-daffodil-tulip, tree-budding, lunch outdoors, insect returning,  time of the year again.

And speaking of insects returning, sap rising, hope springing, spring hoping,  and rituals of the season--well,  I was about to say "meaningless rituals..." intending specifically the religious holidays but that seems a bit redundant.  Rituals are at their very essence meaningless, aren't they?  Pledges of allegiance to the archaic, the obsolete. Decimation of the imagination by nostalgia; a tic; a triumph of decay. Ignorance, superstition, pathology.  Preserve us from a future where we won't be doing next year exactly what we're doing this year.  Let us affirm our solidarity with the market for things, relations that never were, but will always be.  Ritual, rites... those are the traditions of all dead generations that weighs like a.... nightmare?  an Alp?... on the brain of the living.

So speaking of bugs, it's that time of the season when the Left Forum starts hawking its latest hoe-down, jamboree, hootenanny, sing-along, barn-raising, quilting--bee, pottery class and all around expo called, amazingly enough, the Left Forum.

Last year, you will recall, or better yet, maybe you won't, the Left Forum rolled out its radish carpet (red on the outside, white on the in) for Alvaro Garcia Linera, once-upon-a-time r-r-r-evolutionary guer-r-r-r-r-illa and now vice-president in charge of leasing gunmen to that well-known international brigade of freedom fighters,  MINUSTAH.  What thunderous ovations were bestowed on Mr. Linera by the left forumers!  All power to the coca planters !  Political power comes from the barrel of a gun, especially when that gun is leased to the bourgeoisie.  We're all Maoists now, proclaims the Bolivian of the Bolivarian Revolution.

Tough act to follow, I guess.  I mean how to top that?  Mandela's dead. He can't speak. Comrade Delta from the British SWP was already engaged in exactly what I don't want to know.   Qaddafi's dead.  Morsi's under arrest.  Assad-- well we know he's not leaving Syria anytime soon.  Hamas can't get a visa.  Hezbollah-- check with Assad.  Kirchner can't travel, doctor's orders.  Every time Bachelet tries to go anywhere, Chile either catches on fire, or gets ripped by an earthquake. Putin...maybe, but then he annexed Crimea just because it holds Russia's only warm water port, and he wound up not only on the no-fly list, but the no-land list.  The Core Four's done, the BRICs have become the Fragile Five and Paul Krugman-- well ever since you know what his fees have gone through the roof.

Who, what, how to follow the triumph of Linera? 

Well come on, we watch Mad Men.  We know what the key to marketing is.  Sure we do.  The Left Forum is a shop, and every shopkeeper knows that business is all about location, location, location.  So this year, with its theme "Imagining a World with Transformative Justice," the Left Forum chose as its locus for imagination......the John Jay College of Criminal Justice.   Now that really is a triumph of the imagination, and location.

Not to put too fine a point on it, but one of the founding institutions of the the "discipline" that became the John Jay College of Criminal Justice was...the New York City Police Department. The school was founded originally as the College of Police Science.  But that's just so much history, and as that other great revolutionary, what'shisname said,  "history is bunk."

Recognizing that "College of Police Science" was somewhat limiting, might tend to impair the school's ability to market itself, and penetrate its markets, the school, in the greatest of great American traditions, rebranded itself as the John Jay College of Criminal Justice-- naming itself for the first chief justice of the US Supreme Court. 

Let's not get the wrong idea here.  I could care less that Mr. Jay resigned from the Continental Congress rather than sign the Declaration of Independence.  I kind of like the fact that Mr. Jay ruled against the state of Georgia in Chisolm vs. Georgia-- not as much as I like the way Sherman ruled against the state of Georgia, but different strokes for different folks as Sly and the Family Stone would say.  And I know that Mr. Jay was an opponent of slavery. 

None of that is the point.  The point is that the college, the curriculum, the field of "criminal justice" no matter how "enlightened" is about preserving, extending, deepening police "science," the science coming down to, as science always does, the proper application of effective force at the proper time against certain subjects, those subjects being those who need to overthrow the existing relations of social reproduction.   

If you doubt me, and please, don't ever stop doing that,  just check the 4 year academic program for its BS (!) in Criminal Justice available here

What gets me about this is... of us is nuts.  Either I'm crazy for thinking that being "radical" or being a "revolutionist" or a "Marxist" means opposing those who pimp armed forces to the bourgeoisie to suppress the struggle of the most mistreated people in history; either I'm crazy for thinking that "transformative" means radically opposing colleges of progressive police science or I'm not crazy, in which case the organizers, supporters, participants, book dealers, and attendees of and at the Left Forum are nothing other than the current incarnation of past defeats, determined to smother the prospects for future emancipation. 


April 15, 2014

Monday, March 31, 2014

Lunch with Karl

 I hate repeating myself.  I mean I really hate repeating myself.  See?  For numerous reasons which are basically all the same reason-- "reasons #1-1000?  it's boring."  It's boring to write; it's boring to read.  If I repeat myself others might think I suffer from a paucity of imagination.  I think, when I repeat myself, that I'm exhibiting a bit of neurotic behavior, to wit:  If nothing changed when I said, wrote, drew, sang it the first  n number of times, what makes me think saying it  n+1 times is going to make the slightest bit of difference?  Obviously, the answer to that question is......a paucity of imagination.

So imagine how difficult it is for me to maintain the edge on the razor of critique I imagine I'm holding to the throat of capitalism.  Of course, this wouldn't be a problem if we were actually holding and actual razor against the actual throat of capitalism.  Everything could be sorted if  in this class struggle, one of the classes actually showed up as a class, and actually tried a bit of the old in and out on that class that's been on the offensive, inning and outing it to death for the last..........holy half-Gettysburg, Batman.... 40 years, give or take 6 months.

But alas, ach, oy vay, sayang, no such luck and luck has nothing to do with it.  So let's get some things said in a hurry, so I can get back to what I think are the really unique, and devastating moments, of Marx's critique of capital, the razor he used:

a. About those upheavals in Egypt, Tunisia, Libya, Venezuela, Syria, Turkey Ukraine, Thailand which seem so problematic to the left-- either they are the different, and differing, manifestations of the same problems of capital accumulation, the same accumulated stresses that have imposed austerity throughout the countries of Europe; that have triggered massive strikes and demonstrations in Greece, Portugal, France, Spain, Britain; that have compelled the emigration of a substantial portion of Ireland's younger people; either those upheavals are driven by those same forces or... or world markets don't exist; world markets don't function as mechanisms of transfer, of exchange, of reproduction; and capitalism as a asynchronous whole; capitalism as a system composed and conflicted, composed of conflicts doesn't exist.

b. Because that capitalism does exist, and does exist in those characteristics, it is no surprise that in these moments the core conflict of  the labor process with the valorization process is expressed unevenly, asynchronously, and that those driven first into protest and combat with these old relations are those whose prospects for "prosperity," meager as they were, have been effectively shuttered, eliminated.  It is no surprise that the young, students, professionals move first, and massively, against the existing regimes.

c. Consequently,  this initial movement is in a very real sense an expression of  those declassed,  of those no longer with prospects. It is inherent that such movement embodies reaction equal to if not greater than notions of democracy, freedom espoused in the movement.  There is no mistaking that reaction, and opposition to democracy dominates the protests in Thailand; that the protests in Venezuela are little short of an invitation to pre-emptive counterrevolution; that reaction has been able to utilize the opportunity afforded by the breakdown of the prior regime brought about by protests. There is no denying the role Saudi Arabia is attempting to play in Syria; financing and equipping reactionary religious forces to dispossess the Syrian revolution of its struggle against the Assad regime and its version of clan capitalism in the attempt to convert the struggle it one against Iran.  There should be no denying that beneath this reaction is the necessity to increase the volatility of the region, to further the strategy the bourgeoisie used in Libya-- where destruction itself is the purpose, as destruction is capitalism's avatar.

So the bourgeoisie, and the would-be bourgeoisie are active in these movements?  What did you expect?  It's their world, we only work in it....and need to overthrow it. 

d. Despite the presence and/or the strength of reaction within these movements, since these movements are the products of the breakdowns in the existing regimens of accumulation, there is no prospect for the advance of the struggle for the emancipation of labor, for the abolition of capitalism, in the defense of the existing regimes.  The prospects for emancipation are elsewhere; absorbed in and expressed by some in some of the movements; existing in the mobilization independent of,  in all cases, the existing governments against the elements of reaction; against the pre-emptive counterrevolution; against the generals, businessmen, former and future ministers who want theirs-- their time as "heroes,"  as "parties of national salvation."

e. Tactics differ; the strategy is shared: the strategy is   the animation of the working class, independent of the government, independent of all other classes, as the force of opposition to poverty, ignorance, bigotry, the subjugation of women (which of course is the fundamental condition for poverty, ignorance, bigotry).  In Egypt, this required in the recent past, requires in  the present, and will require in  the near future, the opposition through strikes to the military coup against Morsi,  and opposition to the subsequent military governments.  In Venezuela, it requires the expropriation of the property of the bourgeoisie by the organizations of the workers, not the government.  In Thailand it means opposition to the anti-democratic protests without any support for the government or its military.

March 31, 2014

Sunday, February 02, 2014

The Big Uneasy, Part 1

Stop me if you've heard this one before.....

a) One man's definition of progress "This shows that the programs work when they are properly implemented," Jose Barroso former prime minister of Portugal now in its tenth year of a cycle of little if any growth, recession, stagnation, austerity;  and current president of the European Commission of the European Unionnow entering the sixth year of stagnation, recession, and austerity.

or this one
b) Another definition of progress: Since 1987, the median wage for male workers in the United States has declined 2 percent while that of female workers has increased 16 percent, meaning the median wage for females is now almost 80 percent of the median wage for males.

or this one
c) Go-go:  In 2013 bond sales in emerging market countries set a new record of $506 billion.  Corporate, non-sovereign debt accounted for 70 percent of the total.

or this one

d) More definitions of progress: Cambodia, home to 800 garment and footwear factories, employing some 600,000 people responded to workers demanding a doubling of the wage to $160 per month by......shooting the workers.  A living wage for Cambodia is estimated to require $283 per month.

or this one
e) The glass is half-empty; the glass is half-full: Also in 2013, EU leveraged loan volumes reached their highest level since 2007, which level was about 1/2 the volume of  2007, and less than the amount transacted in 2005.

or this one

f) A new NEP:  The appreciation of  China's yuan/renminbi (about 18% in recent years) and increased wages for workers has cut into the profit margins of China's exporters.  Said an officer of Pacific Group, a maker of power tools with factories in China:  "We've spent more on automation in the past year than in the previous 15 years combined."

or this one

g)  Shocked and appalled: The "Basel 3" rules for bank risk exposure, capital requirements etc. have been watered down to the degree that they have very little resemblance to the initial proposals.

or this one

h)  Mr. Barroso, Madame Lagarde would like a word: The IMF warned of a significant risk of deflation to the global economy due to actions of the United States and the policies of European Union.

or this one

i) Mr. Barroso suspended from position for 162 games after testing negative for performance enhancing drugs:  Industrial output in the Eurozone is still 10 percent below its pre-crash peak.  

or this one

j) Wait, wait, don't tell me.  It's on the tip of my tongue.  I know this:  "Shadow banking"-- the creation of "investment trusts" offering asset-backed structured investment vehicles which remain "off-balance sheet"-- accounted for 1/3 of the total credit created in China since 2008.

or this one

k) Are you sure we haven't met before?: ICBC (Industrial and Commercial Bank of China, Ltd) refused to "backstop" approximately $500 million in high yield investment trust assets.  The trust, called "Credit Equals Gold #1" was created by China Credit Trust and was based on the debt and equity of  Shanxi Zenfu Energy Corporation, a coal mining company, that facing bankruptcy, decided to expand by tapping the "investment trust" market.

or this one

l) Going, going Commenting on the flow of capital away from emerging markets, which has caused the value of the local currencies of Brazil, South Africa, Turkey, Russia, India to decline, the IMF said such flows are confined to a subset of emerging market countries with "idiosyncratic factors." 

or this one

m) Who could it be?:   ICBC announced the holders of securities in the "Credit Equals Gold #1" investment trust will be able to sell their securities for the principal amounts to an "unidentified third party purchaser."

or this one

n) Let me guess:  Your name is Bear, or Stearns, or maybe it's Greenspan?  Fuld? Thain? Lehman? Merrill?  Lynch?  Pierce? Fenner? Smith?  Commenting on the risk posed by and to the investment trusts of China's shadow banking, the chief investment officer (Asia) for HSBC said:  "It gets called 'shadow banking' and that has negative connotations.  It sounds like it's an operation that's not overseen by regulators.  And that's just not true.  The trusts are overseen.  The banks that sell the products are overseen.  It's a regulated activity.  It's very unlikely to be a worst-case scenario."

n1) Question:  How do you regulate activity that is off-balance sheet?

Now I know.  You're Andy Fastow, aren't you?  When did you get out?

February 2, 2014

Thursday, January 02, 2014

Firm Demand

1.  Wish I had written it:
 Financial Times, 7 November 2013:  Shares in Karex, a Malaysian company that is the world's largest maker of condoms have surged more than 30 percent on their debut on the Kuala Lumpur stock exchange amid forecasts of firm global demand for contraceptive products.
2.  Marx, considering the disintegration of the Ricardian school in Chapter 20 of his Theories of Surplus Value (Part 3, page 119, Progress Publishers, 1971) remarks: 
The same value can be embodied in very different quantities [of commodities].  But the use-value—consumption—depends not on value, but on the quantity.  It is quite unintelligible why I should buy six knives because I can get them for the same price that I previously paid for one.
It's unintelligible that a reduction in price should expand the demand for a commodity here, in Chapter 20, but it wasn't so unintelligible to Marx in Part 2 of Theories of Surplus Value when refuting those political economists claiming that there can be overproduction of particular commodities but no general overproduction,  he wrote:
Crises are usually preceded by a general inflation in prices of all articles of capitalist production.  All of them therefore participate in the subsequent crash and at their former prices they cause a glut in the the market.  The market can absorb a larger volume of commodities at falling prices, at prices which have fallen below their cost-prices, than it could absorb at their former prices.  The excess of commodities is always relative; in other words it is an excess at particular prices.  The prices at which the commodities are then absorbed are ruinous for the producer or the merchant.  (Part 2, Page 505).
It's not quite so unintelligible if we recall what Marx wrote in Part 2, on page 485:
It seems therefore, that for accumulation to take place, continuous surplus   production in all spheres is necessary.
And what he wrote on page 495:
It  must never be forgotten, that in capitalist production what matters is not immediate use-value but the exchange-value and, in particular, the expansion of surplus-value.
Marx here is focused on the potential for overproduction that exists in the organization of production for value.  Yet, this very process, the production of six knives for the price (value) originally required for the purchase of one knife, is exactly the process that identifies capital's expansion, it's accumulation of the means of production as values, as value-extracting commodities, that confirms the  real domination of capital over labor, the ascendancy of relative surplus value.  What appears as a moment in capitalist production is in fact a necessity for the totality of capitalist reproduction

The totality is the organic, structured, essential antagonist identity of accumulation with devaluation.  The universe of capital cannot expand, cannot accumulate, without the devaluation of its parts.

3. There's a bit of ambiguity in Marx's treatment of overproduction in these critiques of the the theories of surplus value.  Is consumption the limit to capitalist production?  Is the truth of overproduction in the separation, the disassociation, of the extraction of surplus value from the realization of surplus value? Well, yes and no, actually inclinations towards yes, and inclinations towards no.  For all his criticism, and correctly so, of those who think "dialectic" means, "on the one hand...while on the other hand," Marx himself does a whole lot of "on the one hand, while on the other hand."  Not that there's anything wrong with that.  Ambiguity is a signature human characteristic, evident whenever humans aren't exercising their talent for self-contradiction.

Anyway, the ambiguity in this matter is derived from Marx's treatment of the market as representing a quantity, a sum, a near fixed number, known as demand when in fact Marx had established the framework for apprehending the "market" as a social relation for the reproduction of classes, where the quantities of goods, and their successful circulation, are reflections of a) "improved" rates of exploitation of labor b) the ability to expand that exchange-relation fundamental to all other exchanges,  the exchange between the means of production organized as capital, as private property, with human labor power organized as wage-labor.

That relation has to increase not only in its breadth, extensively, but also in its intensity, and for that to occur, the expansion requires the expulsion of wage-labor from the production process, relatively, but as in all things capitalism, relatively becomes absolutely.

As this occurs, as the proportions of exchange are altered between  capital and wage-labor, the increased aggrandizement of surplus-value is achieved, made manifest, in transfer of value from less efficient, less intensive capitals to these vanguards of exploitation.   On the one hand, accumulation; while on the other hand, devaluation?  Yes, no, maybe, and you can sue me.  Actually, it's not on the one hand, or on the other, it's at one and the same time.  These processes are coincident, co-determined, co-dependent.

The market is not a "thing"-- a sum total of "demand," a fixed quantity of buyers and sellers, of things to be bought and sold,  but an arena for working out these processes of allocation, alteration, transference; of accumulation and devaluation.

So what?  So this-- it's not about me purchasing six knives because the six now embody the value of one.  It's about a) what conditions are required for the production of the six at the value previously embodied in one  b) how those conditions are achieved  c) what portion of those six, or 600,000, or 6,000,000, which in the selling, serve to transfer the previously accumulated value, thus devaluing the previous knives and knife-makers.

"Demand" is a social condition.  It's very existence assumes, presumes, the market, where consumption as such does not occur outside the exchange of  the objects of labor.  The capitalist market is one of dispossession; where satisfaction of need is impossible on the basis of individual labor-- and on the buying or selling of  one knife.  For the knife, or knives, to be sold, requires the organization and reorganization of society,  that is to say the condition of labor,  such that labor power is useless, destitute, without exchange. 

4.  Accumulation is "prompted" by the technical innovation of the production process.  This innovation assumes an identity with the value process, transferring previously accumulated value and expanding exchange-- what's called economic growth-- until such time that the technical innovation becomes widespread, the new normal, and thus depresses its own transformation into the value process.  In short, overproduction and the tendency of the rate of profit to fall are integral to each other.

So what?  Again?   Well, at least to me, this means that capital doesn't require "outside sources" of "demand," but rather "effective demand" requires that specific form of exchange with labor power at the origin of  the capitalist market.  It means that so-called "primitive accumulation" occurs throughout every moment of capitalism and that primitive accumulation is not so-much about looting or plundering (although looting and plundering are constant preoccupations for our brave hedge-fund managers) as in the fact that looting and plundering enforces the destitution upon labor necessary to convert it into wage-labor.  `

It means that the "obstacle" or "barrier" to  is not some iteration of "monopoly" or "finance" or "oligarch" or "rentier" capitalism, but rather the inability of capital to exploit labor-power intensely and extensively enough to offset the tendency of profitability to decline because it is exactly the intensive and extensive exploitation of labor power that is the tendency of the rate of profit to decline.

It means that capital, which requires access to labor-power, finds the "solution" to contraction, recession, not simply in the passage of time, not simply in the lowering of prices, but in the radical devaluation in labor-power-- necessarily attempting to drive the wage of wage-labor below the cost of labor power's reproduction

January 2, 2014

Friday, December 13, 2013

Director, Ashridge Business School, London UK Answers Michael Heinrich (sort of)

Financial Times,  9 December 2013

Sir, Professor Mariana Mazzucato's concerns about lack of investment in innovation and its likely impact on longer-term growth are well placed...But her analysis of the cause is misquided.  She suggestst that today's cash-rich companies could invest and do well in the long term, but choose not to because of their short-term orientation.

My research concludes that, on average, companies will not get a good return even in the long term.  The reasons taxpayers need to invest in innovation is that the majority of benefits from innovation accrue to consumers as "consumer surplus" rather than to producers as profits.  Take semiconductors, for example.  Society has benefited immeasurably.  But the producers made low returns for decades.

Governments do not need to intervene because of market failure.  They need to intervene because the market is too efficient.  It is not short-termism that makes companies reluctant to invest.  It is the low returns caused by efficient competition

I remain your faithful and obedient blahblahblah and all the rest of the usual rubbish. (note-- make sure to excise this upon publication... ed.)

Andrew Campbell
Ashbridge Business School

Tuesday, November 19, 2013

Food, Machinery, and Chemicals

1. In Marx's encounter with political economy, criticism itself, and the elements of criticism-- conflict, opposition, antagonism-- moves from thought and knowledge to the activity of human being in their relations with other human beings.  Philosophy gives way to history.  History is a product of social beings, and therefore shifts from a contemplation of abstractions, like progress, like freedom, to the concrete determinations of necessity; from the abstraction of thought to the concrete of conditions; from the abstraction of right to the concrete of labor.

Marx develops this transformation through and by the examination of the value relation.  In the critique, the inversion at the heart of this veiled relationship is exposed.  The subject initially apprehended as the material, concrete substance of capital, the commodity, is revealed and displayed to be essentially immaterial,  indeterminate, but determined; universal to but derivative from the specific condition of its creation.  The abstract facet, the "slippery soul," lacking weight but not gravity; absent height but not status; without corporeality but with substance, the value relation, the organization of labor as value-producing, as a value in exchange, is exposed as the real material of political economy; the real material of capital.  It, the value relation, is both the code and the messenger for human beings reproducing themselves as social being.  It is the fused, antagonistic, compressed, opposite, identity of labor and the condition of labor as wage-labor. 

We move from wealth as the production of material objects, to wealth as the condition of that production, the appropriation of value.  We get to, although in a completely degraded, immiserated form, wealth as the disposition over time.

II.  Every once in awhile, someone notices that a  recovery looks so much like a recession as to appear indistinguishable.  Every time this every once in awhile, when this happens, it's news. The Wall Street Journal, that paper of intelligent reporting and ignorant editorializing, on November 15 headlined an article  "Eurozone rebound feels like a recession."

No matter how many times it has happened before, it's always supposed to be news, and everyone is supposed to be surprised that the recovery looks so much like the recession, because...because good times are supposed to be better than bad times; because expansion is different than contraction; because... well, just because.

There are differences, all right, between good times and bad, between recovery and recession, between expansion and contraction, but they look so much alike because they share the same womb; recovery and recession, contraction and expansion are the "hostile brothers,"  the opposite identical twins of capitalist accumulation.

The response of the US bourgeoisie to this period known as the Great Recession has been the drastic curtailment of production hours.  Between 2007 and 2009, production hours in US industry declined 22 percent.  Between 2009 and 2011, there was no significant increase in production hours.  There was, however, an increase in the total value of the output from US industry, which brought that measure above its previous peak in 2008.  

III. The US Department of Commerce overseer of the US Census Bureau and the Bureau of Economic Analysis, produces an Annual Survey of Manufactures.  The survey provides data for approximately 70 different categories-- everything from total payroll to taxes and licensing fee, and using several of those categories, it is possible to develop a calculus, and approximation,  for rates of extraction of surplus value, and the conversion of surplus value into a rate of profit.  We can utilize the data to provide numbers in the formula that says:  big C (total value of shipments) = c (cost of materials, plus consumption of machinery) + v (value of labor power, wages)  + s (surplus value, the value absorbed in the production process beyond that that replaces the wage).

The ASM categories are not precise matches for Marx's, hence the calculus and the approximation.  We (that means you and me, partners in this excursion) have to make an estimate for fringe benefits for production workers, based on data provided for total cost of fringe benefits provided to all employees.  The data provided for overall rates of fringe benefits suggest 33 percent is a reasonable "add-on" accounting for the costs of the fringe.

We utilize depreciation amounts for the value of the means of production consumed.  We utilize total cost of materials utilized in production for the value of the raw and processed materials required, and we use total value of shipments (which includes revenues from sales of scrap, waste, etc) for our big C capital.  Because the ASM data includes production worker hours, we can even calculate all these inputs, and outputs, on an hourly basis.

Since it's history that we're talking about, since it's history we are always talking about, what matters most is the trend. So...we look at the period starting in 2007 ending in 2011 (the most recent year of published data), and we select six major categories of US industry, which together account for about 62 percent of the value of output from all industry.  Those six categories are the "building blocks" of capital accumulation, F, M, C-- food, machinery, chemical:  1) food   2) machinery manufacturing    3) transportation equipment  4) computer and electronics  5) chemical 6) and the Big Papi of US capitalism, the petroleum industry, which is represented in the "Petroleum and Coal manufacturing classification.

All errors to transcription, computation are mine. Errors in analysis will be attributed to some other likely party, as soon as I can find one.   Meanwhile the data look like this:

Column1 Column2 Column3 Column4 Column5 Column6 Column7
2007-2011 Food Machinery Chemicals (and Petroleum)

Industry      C/hr $         c/h $         v/hr $          s/h $            s/v            s/C
Manufa 282.23 163.52 24.89 93.82 3.77 0.33
         31-33 307.53 186.92 25.69 94.92 3.67 0.31

300.1 172.72 26.34 101.04 3.84 0.34

337.13 191.21 27.39 110.66 4.04 0.33
2011 369.85 225.77 28.06 116.02 4.13 0.31

Petroleum 3986.01 3270.88 42.39 672.74 15.87 0.17
324 5080.59 4497.95 42.51 540.13 12.71 0.11

3368.38 2905.31 44.09 418.98 9.5 0.12

4412.23 3840.33 46.09 525.81 11.4 0.12
2011 5889.97 5101.1 48.31 740.56 15.33 0.13

Food 258.03 158.06 20.23 79.74 3.94 0.31
311 285.85 181.93 20.51 83.41 4.07 0.29

285.67 172.91 21.13 91.63 4.34 0.32

298.22 185.47 21.87 90.88 4.15 0.3
2011 327.02 211.7 22.1 93.22 4.22 0.28

Machinery 232.69 127.42 25.77 79.5 3.08 0.34
333 244.26 135.29 26.97 82 3.04 0.34

250.64 137.3 27.56 85.78 3.11 0.34

274.63 148.63 28.66 97.8 3.41 0.36
2011 294.65 160.34 29.78 104.53 3.51 0.35

Transp Eq 336.91 214.73 32.8 89.38 2.72 0.26
336 326.58 217.37 33.54 75.67 2.26 0.23

343.08 208.73 34.34 100.01 2.91 0.29

403.83 246.57 35.57 121.69 3.42 0.3
2011 416.78 261.62 35.97 119.19 3.31 0.29

Computer 371.01 162.91 25.83 182.27 7.06 0.49
334 396.32 172.5 29.12 194.4 6.67 0.49

416.93 181.62 30.39 204.92 6.74 0.49

440.61 190.16 33 217.45 6.59 0.49
2011 445.75 188.89 33.63 223.23 6.64 0.5

Chem 760.22 399.59 32.47 328.16 10.11 0.43
325 813.15 446.56 33.7 332.89 9.88 0.41

754.02 381.47 34.92 337.63 9.67 0.45

841.3 448.72 35.95 356.63 9.92 0.42
2011 925.45 506.19 37.16 382.1 10.28 0.41

First some words on method.  I like simple math because, let's face it, if capitalism were that complicated,  the bourgeoisie would never have been successful at it.  Greenspan would have been flipping asset-backed burgers at Freddy Mac's.  It's volume and velocity which make capitalism appear complicated and demand all that processing power.

Anyway "s/h,"  surplus value per hour, column 5:  the result of Big C capital, column 2, less the sum of column 3 and column 4 (c+v);

Column 6 "s/v" is the ratio column 5 to column 4 (column 4 includes wages and fringe benefits);

Column 7, ratio of surplus value to Big C, the ratio of column 5 to column 2.  Clear?

There is a small  decline in output per hour for industry as a whole in 2009.  There is a steep decline in output per hour for the petroleum and chemical sectors, but modest increases for machinery, transportation equipment, and computers. In all categories of FMC, we see substantial recoveries in "s" per hour between 2007 and 2011.

From the information in this table, it would be difficult if not impossible not only to gauge the intensity of the "Great Recession," but also its breadth in both time and place.  Indeed the recession and recovery seem almost, but not quite, indistinguishable, and aberrations from the "smooth course" of capitalist "development."   That's because a bit of critical information is absent from the ratios of output, costs, and surplus.   That critical input is "production worker hours."

In 2011 production worker hours were:
12% below the 2007 mark in the chemical classification;
30% below the 2007 mark in the computer and electronics classification;
25% below the 2007 mark in the transportation equipment classification;
18% below the 2007 mark in the machinery manufacturing classification;
5% below the 2007 mark in the food manufacturing classification;
7.5% below the 2007 mark in the petroleum/coal classification.

More capital has been exchanged with less labor power, in less time. The portion of the working time that is required for the workers to reproduce a value equivalent to their own wage is reduced; that is to say it recovers to the ratio achieved prior to, and right at the beginning of the contraction.  The recovery is achieved in reduction of the proportion of living labor appropriated in production.  The recovery indeed looks just like the contraction, because it is just like the contraction.

If wealth is the disposition over time, capitalist wealth is the disposition over alienated labor time, and the recovery in capitalist accumulation is the dissolution of wealth, the expansion of poverty as capital cannot exploit the labor-power profitably.  Living labor-time is, more than less, expelled from the production process in order that the living labor time remaining in the valorization reproduces itself more rapidly.

If we break these value  relations into production minutes, we find in 2011 that for every hour of production in the chemical sector,  32.8 minutes are represented by cost of materials and machinery,  the pre-existing value that is preserved and passed along in production; 2.4 minutes represents the cost of labor (or it takes 2.4 minutes for the worker to produce a value equivalent to his/her hourly wage) and 24.8 minutes represents the surplus labor time, the surplus value.

In the transportation sector, the proportions are 37.7 minutes in "pass-through" value, 5.1 minutes to reproduce the wage, and 17.2 minutes in surplus value.

For machinery manufacturing, we get 32.6 minutes for the pre-existing value, 6.1 minutes to reproduce the wage, and 21.3 minutes of surplus value.

In the food production sector, 38.8 minutes for c , 4 minutes for wages, 17.2 minutes for surplus value.

For computer and electronics manufacturing, 25.4 minutes for c, 4.6 minutes for v, and 30 minutes for s. 

For petroleum........don't even ask, it's flat out ridiculous, or actually not, its precisely proportionate to the tremendous investment in fixed assets, the "overweight"  in the petroleum sector; massive amount of pre-existing value deployed to accelerate the pace of production, to reduce production times.

Given the minimal times involved for the worker to produce a value equivalent to his/her wages, it is also clear just how difficult it is to push s/C,  a proxy here for the rate of profit,  higher   The increment of accumulation runs into the barrier of all previous accumulation.

Absent a generally applicable technological breakthrough that can dramatically reduce the cost of the components of the production  process, the rate of  valorization stagnates, and stagnation is an achievement.

Writing in Capital, Volume 1, Marx notes "The constant tendency of capital is to force the cost of labour back towards this zero" (Part 7, Chapter 24, Section 4).  With reproduction times of 1 minute, 2 minutes, 4 minutes, or 6 minutes per hour, capital has pretty much forced that cost, relative, to the mass of value animated, to zero.  What else can capital do? Lots of things, and none of them good.

For one, as Marx wrote, "...there also comes a time in every industrial cycle, when a forcible reduction of wages beneath the value of labour power is attempted for the purposes of cheapening commodities."

The cheapening of commodities is not exactly the purpose-- appropriating a greater portion of the total available surplus value by hook or crook is.  As intense and extensive as the attacks on the living standards of workers have been, we are at the very beginning of that time in this cycle.  The "recovery" such that it is, will be worse than the recession.

November 19, 2013