Saturday, October 31, 2009

Time Up, Time Down

An Agreement Was Reached

Big surprise... an agreement was reached between... different sections, different agents of the same ruling class. And on what did these different clowns in the same circus agree? They agreed on a charade. A pantomime. A folie a deux.

Said Alphonse to Gaston, "After you." Said Gaston to Alphonse, "Oh no, after you. I insist."

Said Micheletti to US assistant secretary of State for Western Hemispheric Affairs Thomas Shannon, "I'll pretend to agree to recognize that Zelaya might return to office four weeks prior to new elections, with no control over the military, with no agitation for a constituent assembly, with no penalty to coup-iers."

Said Zelaya to Shannon, "I'll pretend that I'm actually returning to office, with no control over the military, with no constituent assembly, with no penalty to coup-iers, and proclaim a great victory."

Said Tom to Hillary, channeling the former president, "Mission accomplished."

This agreement is an attempt at misdirection, at disorientation of the resistance to the coup, which of course, is more than a resistance to the coup but the initial eruption of a revolutionary struggle.

Even if accepted by the Congress and the Supreme Court, the agreement pretends to allow Zelaya to return to office in only a ceremonial role, as the military would be under the control of the electoral commission, and the election is going to be held in 4 weeks. And of course, the old razzle-dazzle of truth commissions, a government of national reconciliation blahblahblah will function as spectacle, to obscure and distract from the real, material, economic circumstances that precipitated the movement into the streets at the opportunity of Zelaya's removal.
The police, secret police, paramilitary organizations, the practitioners of terror against the rural and urban poor, are maintained in their positions without penalty except of course the revolutionary penalty that the movement can impose itself-- and if that should occur, Zelaya, Micheletti, Shannon, Clinton, Reich, the OAS, will be united in a government of international reconciliation denouncing such self-defense by the poor as "destabilizing" to the prospects of "democracy," detrimental to the legitimacy of the truth commissions blahblahblah-- all that junk that capitalism circulates as exchange value without any corresponding use value.

The agreement prohibits action on behalf of a constituent assembly until after January, when a new government is in power. The bourgeoisie know that the key to maintaining political power when bankruptcy looms is the same as the key for maintaining property and business by any individual capitalist when economic bankruptcy looms--- delay. Restructure, reorganize, even if its only the deck chairs on the sinking ship. In short, buy time-- buy time, buying time, of course is literally what makes the bourgeoisie bourgeoisie. The time expropriated, equally of course, is that time that might,could, must be seized by others; that time that belongs to those others; that time that belongs to those others who labor in the maquiladoras, on the plantations, on their minifundias .
A constituent assembly is no solution to the problems faced by the workers and poor in Honduras as such an assembly is a political form, reproducing in essence the illusory separation of property from social struggle, an illusion that, like the buying of time, also allows the bourgeoisie to function as the bourgeoisie, as a ruling class with class obscured. The conflict in Honduras is, however, exactly the social combat that dispels such illusions, that identifies class and property as the content, the substance of the struggle. As such, success for the workers, urban and rural poor of Honduras, exists outside and beyond the demands for a constituent assembly. Any possibility of success necessarily exists only in the organizations those workers, those poor create in the self-defense of the reclamation of their own time.

The bourgeoisie, however, see, feel, sense, behind the demand for the form of the constituent assembly just that substance. In their recognition the historical impossibility, the obsolescence of their own political forms, the bourgeoisie are in substance admitting the obsolescence of their property, of themselves, of their time.

address all comments to:
sartesian@earthlink.net


Friday, October 16, 2009

A Bit of Clarity....

...as opposed to the "dollar is dead, or dying and governments are getting close to abandoning its in favor of the [yen, euro, yuan, SDR, virtual currency, Krugerrand, pick any or all, or make up you own]...." being sung in harmony by the hustlers, hucksters, flim-flammers of pseudo-left, populist right, China promoters, Lula lovers, Russian dolls etc. etc. etc.

First point of clarity: governments do NOT and cannot control currency exchange markets. Central bank reserves of the world's largest central banks combined do not approach the currency reserves of the private speculators, traders, funds, investment- merchant- commercial banks making and trading in those markets. And while those private sources trade the dollar down, central bankers continue to purchase dollar-denominated instruments for holding reserves.

Why do the central banks do this? Because there is no alternative. Because there is no market as huge, as liquid, as accessible as the market for US Treasury instruments.

Second point of clarity: the movement away from the dollar and into other currencies is not a vote on the future of the US economy; is not an index to the "cracking" of the facade of US primacy; and certainly does not occur in isolation.

The movement away from the dollar by those same funds, traders, etc. is part of the general "relaxation," the sigh of relief and hope that the worst is over, and a return to "RISK" as a way to generate some actual RETURNS.

The movement away from the dollar is part of a trend, process, dynamic that has driven up prices and volumes in the stock exchanges of the US, the developed countries, and emerging markets.

The movement away from the dollar is part of the trend that has seen increases in aluminum prices despite immense overproduction, improvement in steel prices, oil cracking $70/barrel, the issuance of huge amounts of corporate debt snapped up in the bond markets, the rise in commodity prices, etc. etc.

The trading in the markets is being fed by streams of liquidity moving out of the safety of government guaranteed programs and issues; other streams of liquidity provided directly to banks and traders by governments, bankers and traders who, while more than happy to borrow from the Fed or the Treasury at zero interest rates, will not invest in Fed or Treasury instruments that do not offer enough return, or enough return to offset the risks in the instrument itself [i.e. FNMA, FMAC security issues].

Those who think the flight from the dollar indicates the weakness of US capitalism, the loss of the dollar's centrality to capitalist exchanges, are making an equal and opposite mistake to those who not so long ago saw the soaring price of oil as an index to the approaching post "peak" production era, and the soon to disappear supplies of oil. In the case of oil, there was the confusion of use-value with exchange value. In the case of the dollar, there is confusion of money as a store of value and a means of circulation, with its, money's own need, to function as "capital"-- seeking out profit, an expansion of value.


address all comments to: sartesian@earthlink.net


Thursday, October 01, 2009

Yesterday's News

There were some events of importance in the world yesterday, apart from the spectacle
surrounding Roman Polanski, although nothng of that significance as Brad and Angelina did not adopt the octuplets.

For one thing, continuing the work of his predecessor, Obama [his face
rapidly changing to resemble that of Ronald Reagan] followed through on the
investigation into the legal status of workers employed by the Los Angeles
based American Apparel. The company decided to resolve the issue by firing
1800 workers.

Most of those fired, reported the New York Times, were women; many the sole
support for their families. Meet the internal maquiladora, same as the
external maquiladora.

The owner of the company, Dov Charney was busy assuring investors that the
firings would not impact business as production was already down due to the
recession. Oh, happy synchronicity-- firing the workers brings the company
into compliance with the demands of the Dept. of Homeland Security, and..
right sizes the company in these difficult times. Who says markets aren't
efficient?

Meanwhile, John T. Morton, Asst. Sec. of Homeland Security, and in charge of
the Immigration and Customs sector stated:

"Now all manner of companies face the very real possibility that the
government, using our basic civil power, is going to come knocking at the
door."

Isn't that wonderful? Wonder how the US Chamber of Commerce feels about
that? Actually, I don't. But I do wonder why Homeland Security has such all encompassing
power-- currently the dept. has initiated audits of the employment records
of 645 companies-- but OSHA seems to have so little. OK, I lied again. I
don't wonder, I know why.

Meanwhile... the Census Bureau reported that the TARP and stimulus programs
are working just as intended as poverty rates rose in 31 states and DC in
2008, with children particularly hard hit. Poverty rates for children in
poverty rose in 26 states and DC. Yes, we can! Yes, we can, can, sang
the Pointer Sisters.

Trent Lott isn't worried, as Mississippi kept its pole position as number
one with a bullet in the poverty derby with a rate of 21.2% of the
population existing below the poverty line. Way to go, Trent! Give us a
rebel yell!

Meanwhile, Venezuela will issue 3 billion dollars in bonds, denominated in
US currency in an attempt to soak up some dollars in the system and close
the gap, hopefully, between the official rate of exchange and the real,
street rate of exchange. The issue is being managed by Deutsche Bank and
Citigroup. So nice of Hugo to throw a little business to these two
hard-pressed financial corporations

Meanwhile, I don't want to rain on anybody's parade, or parade on anybody's
green shoots, but the FDIC admitted its insurance fund is tapped out after
only 95 banks have failed so far this year, and will ask for pre-payment by
member banks of premiums due over the next 3 years. Each bank remitting
the amount in full before January 1, will receive a "Get Out of Jail Free"
card, endorsed by Sheila Bair and countersigned by Ben Bernacke.

In other news, none of it good for the old FDIC insurance fund, the IMF
expects write downs in the financial sector of another 1.5 trillion dollars,
bringing the estimated total to 3.4 trillion dollars. Of that 3.4, 2.8 trillion in losses belong
to banks. IMF also estimates that US banks have written down 60% of their
non-performing troubled assets, but the European Union has written off only
40 percent. Do the math and the estimates yield totals of $900 billion in
losses for US banks, and $1.9 trillion in losses for European banks. What
was it Brody said to Quint in Jaws? "You're gonna need a bigger boat."
Note to Ben Bernacke-- keep those open ended credit swap lines in place for
awhile.

The IMF is way too optimistic, and way underestimating the exposure of US
banks to bad loans; to commercial real estate; construction companies;
private equity corporations; to commercial mortgage backed securities; to
bad credit card debt. Me, ever the one to look on the bright side, think
the remaining exposure is about twice what the IMF estimates, and US banks
are nowhere near the 60% level. Sorry, Sheila, perhaps you should get the
4th and 5th years prepaid while your at it. Tell the banks to think of it
as..... as a loan? No, they don't do much of that anymore. As an asset?
Nah... hey tell them to think of it as a collateralized debt obligation,
since you could post as collateral all those assets you absorbed as part of
the deals persuading bad banks to take over worse banks. Then keep the
money, and give the assets right back to the banks, so we can start all over
again.

Meanwhile, CIT is facing, again, bankruptcy, again. This primary source of
credit for small and medium and enterprises, for financing inventory and
purchase-- for "factoring," is going down, and the third time is not the
charm.

Not to worry, companies start reporting 3rd quarter results soon and the
street is abuzz with talk of major companies, and major numbers of
companies, exceeding analysts' expectations. In the words of Hudson, "I
feel safer already." Hudson also said [in
Aliens. Did I mention that?]
"Stop your grinnin, and drop your linen" which I think is somehow a bit
more accurate in describing the current and future conditions.

Anyway, that's the news, now back to our 24 hour coverage of the Polanski
story, with expert analysis provided by Kobe Bryant of the Los Angeles
Lakers, and Luis Polonia former major league baseball outfielder.

S. Artesian, October 1, 2009
address all comments to-- oh, never mind.

Sunday, September 27, 2009

Accumulation/Decomposition in the Epoch of Lift and Separate, Part 1

I. The News from China

On the one hand...

"Industrial production continued to speed up. In August, the total value added of the industrial enterprises above designated sized was up 12.3 percent year on year or...

On the other hand...

0.5 percentage points lower than that in August 2008, or....

Back of the hand...

1.5 percentage points higher than that in July 2009; it was the fourth consecutive month which witnessed an acceleration of year-on-year growth. In the first eight months of this year, it was up 8.1 percent year-on-year, which....

While on the back of the other hand...

was down 7.6 percentage point over that in the same period last year, or...

On the one hand...

0.6 percentage points higher than that in the first seven months in 2009."

--Li Xiaochao
Spokesman
National Bureau of Statistic of China
"China's Major Economic Indicators in August"

And on the one hand...

"Investment in primary industry, secondary industry, and the tertiary industry went up by 60.4 percent, 27.0 percent, and 37.3 percent respectively."

On the other hand...

"Industrial profit in 22 regions realized 1,110.7 billion yuan from January to July, declined 17.3 percent year on year"

On the one hand...

"[profit decline] narrowed 3.8 percentage point over the first half of the year..."

On that same hand...

The profits of 14 industrial sectors increased within 39 sectors of the industrial sectors...

On the other hand...

the decreasing rate [of profit declines] of nine industrial sectors narrowed over the first half of the year, and...

On the one hand...

the profits of 4 industrial sectors increased

--Chinese Bureau of Statistics
"Industrial Profits Kept Dipping from January to July"

Two hands...



(Sector) General Purpose Machinery (Profit change) +3.9% (Fixed Asset Change) +43.1%

Steel -77.3%, +10.8%

Non-ferrous metals -63.9%, +21.7%

Electronics -43.5%, +4.7%

Transportation Equipment +4.7%, +35.2%

No Hands....

In August, the Aluminum Company of China, Chinalco reported a net loss for the first half 2009 of 3.52 billion yuan and reduced output by 32 percent.

On the one hand...

Between 2004 and 2006, high yield debt in Pacific Asia, including China, grew 53 percent.

On the other hand...

Time for a haircut. Foreign holders of the high yield debt of Asia Aluminum Holdings, a China based, an insolvent, aluminum fabrication enterprise received 1% of the face value of their holdings.

Resolution of the FerroChina corporate bankruptcy provided zero percent renumeration to offshore foreign holders of the company's 4130 million in bond, while other foreign holders received 60 cents on the dollar.

While on the other hand...

CIC-- China's sovereign wealth fund-- joined with Qatar, Simon Glick, and Morgan Stanley in a syndicated equity purchase of 800 million pounds in the nearly bankrupt London based prime manager of nearly empty Canary Wharf, Songbird Estates.

On the one hand....

The major portion of profits earned in China by US and European banks in China comes from establishing, and acting as a counterparty for, derivative contracts with large state-owned companies. In 2008, derivative contracts on the movement of the Australian dollar cost Citic Pacific almost $2 billion. Fuel hedge contracts entered into by China Eastern Airlines, Air China, and China Ocean with Deutsche Bank, Goldman Sachs, JP Morgan Chase and Citigroup cost the transport companies more than $1 billion when the price of oil collapsed in 2008-2009.

Biting the one hand...

China's Asset Supervision and Administration Commission of the State Council declared its support for the efforts of Chinese companies to have the loss-making derivative contracts declared null and void.

On the one hand...

Bank of China announced it will launch a fund to invest in hedge funds-- a "fund of funds."

While on the other hand...

Estimates are that almost two thousand hedge funds have closed in 18 months while the market values of assets held by the "funds of funds" have declined by 40 percent.

Feeding the hand that bites you...

China Investment Corporation, China's sovereign wealth fund, has agreed to invest $1 billion with Oaktree Capital Management LP of the United States. Oaktree Capital specializes in "vulture investing," accumulating "distressed" debt securities of companies in, or close to, insolvency. CIC already has stakes in "funds of funds" operated by Blackstone Group LP and Morgan Stanley. CIC is expected to invest another $2 billion with hedge funds.

In both hands...

Accumulation and decomposition.

In one word...

Overproduction. Overproduction is always the overproduction of capital.

Saturday, August 22, 2009

Honduras

1. Cowboy Up!
Taking the lessons learned at the feet of the US military to heart, the Republic of Honduras' Cobra squadron woke the president of that country to tell him the bad news: 1) he was no longer president; 2) he never really was president; 3) there really isn't a republic of Honduras; 4) a plane was waiting to take him to that haven of stability, productive farms, and CIA stations, Costa Rica; 5) he would have to leave his credit cards behind.
Zelaya, blinking in the beams of the US military issued flashlights, appeared confused. "Where am I?" he asked, "Haiti?"
Haiti, indeed. The same ratbag collection of consultants, counterrevolutionaries, drug dealers, death squaders, entrepreneurs, landowners, and hedge funders came together once again. And not just through necessity, but through natural affinities, through a veritable kinship, through blood, albeit the spilled blood of others.
Once again, in Honduras as in Haiti, each bosom clasped the other to itself. Once again, that brotherhood of Blackberrys, rifles, and jump boots secured the expulsion of a president. Honoring the 40 year anniversary of the moon landing, the brotherhood announced its actions as one small step forward for CAFTA, and one giant step backward for humankind.
In Honduras as in Haiti, the once and former president had run afoul of.... privatization. Aristide had opposed the World Bank's schemes for the privatizaton of Haiti's government owned utilities. Actually, he had done more than just oppose these schemes. He actually wrote a book against those schemes, thereby enraging those stormtroopers of free marketeerism, those buccaneers of the digital age for whom asset-stripping, the annihilation not just of usefulness but of value and utility coincident, is the greatest good for the greatest number with that greatest number being, of course, 1.
Aristide expressed his opposition throughout his first administration, earning the enmity of the Clintonians and his first overthrow. He maintained that opposition throughout his second administration, earning the enmity of Bushites and his second overthrow.
There is no doubt that the coup in Honduras, the rousting of a president by a para-military elite, his extraordinary rendition to a life in exile, was anything other than free market at work. Behind every free market there's a death squad.
There is no doubt that the motivation for the coup was the same motivation that guides US capitalism and its handmaidens, its beneficiaries, its shills, its agents, its remoras, in every action in every second of every day. And those motivations are fear and greed.
Fear-- by joining ALBA, in embracing Chavez, Zelaya would subvert Honduras' status as a US dependency, which since the US accounts for 45% of Honduran exports and imports produced in the bourgeoisie, big and little, north and central, fear, loathing, and nausea.
Greed-- eager to take advantage of the provisions of the CAFTA agreement, anxious to do to Honduras what "private equity" firms had to done to corporations at home and abroad, the new/old, conservative/liberal, big/little, north/central alliance of the bourgeoisie was determined to strip the assets of public utilities away from the Honduran government.
It, asset stripping of public utilities is not a new endeavor for our liquidationist-monetarist, hedge fund, death squad bourgeoisie. Asset stripping has been around since before the Washington Consensus. Indeed, without the asset-stripping as practiced and enshrined in the Reagan administration, the Washington Consensus never would have existed. Property, after all, does determine ideology.
Bolivia in 1994, during Goni's first administration, saw the passage of the capitalization law aimed a privatizing the public sector, the mines, the airline, telecommunications, electricity generation, gas and oil, the railways, etc, with 50 percent of ownership offered directly to private investors, and the other 50 percent to be held "in trust" for the public, a trust organized as pension funds to be administered by international money managers. Among the utilities to be
privatized, the public water utility which supplied El Alto, in the mountains above La Paz.

Halliburton, and later French Suez, salivating over converting such a universal necessity into a commodity to be traded, hedged, detached from social need and transformed into private property, targeted the water supply like a terrorist would target a city bus. Everything under capitalism is held hostage; exchange value becomes a ransom-generating vehicle. Every capitalist a landlord! Every landlord a kidnapper! Not just profit, RENT!
During Goni's second administration, the residents of El Alto organized in neighborhood councils to expel Halliburton, and Suez, and restore the water and its distribution to the municipal water utility. The struggle over water soon merged with the struggle over the privatization of the petroleum sector, and Goni fled his office with the residents of El Alto, and the miners, and the school teachers, and the rural poor of the country in hot pursuit. This time, of course, this president was only too happy to accept the military's offer of air transport to a place of greater safety-- Florida.
The bourgeoisie, big/little, north/central, might have targeted Honduras' public water utility, if Honduras had a developed and functional water utility, but it doesn't. Access to safe, public, water supplies and sanitation in the urban areas is available to barely 2/3 of the population. In rural areas, less than half those classified as extremely poor even have access to septic tanks for sanitation.
No, water wasn't the target as that would have required our liquidationist bourgeoisie to actually develop and accumulate an asset prior to stripping it.
Telephones... there was the target. The national telephone company, Hondutel, was the prize kept in the eyes of our CAFTA raiders. And why not? In 2006, the IMF had already stated and in public that "the implementation of CAFTA and the opening of the telecommunications market will help build growth prospects...," adding, somewhat ominously, "although there will be a need for measures to offset lower government revenues." And what was that offset to be? Why, of course, nothing other than an agreement by the Honduran government to limit wages paid to the public sector employees, particularly teachers. Wrote our IMFers, "key policy achievements include fiscal adjustment, particularly by controlling the increase of the wage bill." There we have it, the compressed identity of modern capitalism, asset-stripping and wage reductions.. in short the continuous reproduction of poverty, and the permanent development of underdevelopment.
The bourgeoisie, big/little, north/central knew that even during this, by many measures, the most severe economic contraction since the Great Depression, a contraction that had reduced the flow of emigrants from Honduras, Mexico, all of Central America seeking work in El Norte; even during this contraction dramatically reducing the remittance from those workers still employed or not in the country of above ground under water real estate; just knew that those still in the big land of the subprime mortgage, the subminimum wage, the substandard education would still want to call home.
Zelaya, to the chagrin of his own party, his own class, had opposed, actually resisted, this asset stripping.
So...so our little brother bourgeoisie of Honduras, weak, stunted, impoverished, venal, vicious, a too perfect homunculus of their big brother/patrons to the North, flipped the script yet again on the "usual history" of the bourgeoisie's "rise to power." Where in the advanced countries, the bourgeoisie used their wealth to obtain government power, in the "undeveloped" countries of Central America, the bourgeoisie used governmental power as a means to amassing wealth. In this latest iteration, the little/big, north/central bourgeoisie find their opportunity for wealth in "dismantling" government, in privatizing the public revenue of the public utilities:
"A cell phone in every hand!"
"A connection fee for every call!"
"Every connection fee in my pocket!"
That's the future as envisioned, as practiced, by our rentier-monetarist bourgeoisie of CAFTA.
[For a solid discussion of this coup d'telephone see this summer's writings of Machetera at: http://machetera.wordpress.com].
2. No Time For Cowboys
If the bourgeoisie, big/little, central/north, exiled, expelled, exported one of their own over what surely to them was the issue of fee splitting, we don't have to imagine, we know what they have done, are doing, and will do against those others, the urban and rural poor, the workers of the maquiladoras, the landless, the subsistence producers.
We know that our little/big, central/north, bourgeoisie, embracing the legacy of their Spanish/English mercantile/capitalist forefathers have created in Honduras the second poorest country in Latin America; a country with an infant mortality rate of 24 per thousand; a country where the income share of the poorest 20 percent of the population is 2.5 percent and the income share of the wealthiest 20 percent is 66 percent; a country where 70 percent of the landholders possess 10 percent of the land while 1 percent of the landholders possess 25 percent of the land; a country where more than half the population is poor, where two-thirds of the poor live on less than US $1.50 per day; a country where 50 percent of the rural population toils at subsistence agriculture on hillsides with slopes with a gradient of more than 12 percent; a country where remittances from emigrant laborers grew from 8 percent of GDP in 2000 to 20 percent of GDP in 2006-- and 2006, by no accident, is the year when the rate of profit in industry in the US peaks, the year that brought hundreds of thousands of migrant laborers into the streets of US cities.
Our big/little, north/central bourgeoisie have created in Honduras not just a country but a mirror to the real terms of the reproduction of capital from hacienda to maquiladora.
In its June 2006 assessment of poverty in Honduras, the World Bank wrote:

Poverty in Honduras has hardly changed since 1998, despite economic growth at 3 percent annually in real terms. Although per capita GDP growth has basically been stagnant at 0.3 percent per year, this can only explain, partially, the lack of progress...

That was 2006. In 2007 the World Bank produced its Annual Progress Report [APR] on Honduras' Poverty Reduction Strategy [PRS]. Different year, same report:
Overall incidence of poverty and extreme poverty has fallen only slightly between 2001 and 2006. Inequality has increased..
Subscribing to big brother's Washington Consensus, Honduras in the 1990s reduced tariffs, joined the GATT, established special export processing zones [EPZ], negotiated bi-lateral agreements with Canada, Chile, Colombia, Mexico, Panama, Switzerland, Taiwan, and the United States. It was, it is, the era of the maquiladora, and the number of firms availing themselves of the incentives and privileges of the EPZs grew from 24 in 1990 to 306 in 2005 to 313 in 2006. Employment in the EPZs expanded during this same period from 9000 to 130,000. Value added to product grew from US $16.2 million in 1990 to US $970 million in 2005, and exceeded US $ 1 billion in 2006.
By 2006, the maquiladoras accounted for 27 percent of Honduras' exports of goods and service. Traditional exports-- bananas, coffee, precious metals-- had declined from 51 percent of exports to 16 percent of exports.
"Growth!" that was the patent medicine, the miracle in a bottleneck the bourgeoisie promoted.
And who supplied that growth? Who worked in the EPZs, adding all that value to non-traditional exports? Women, of course. In a country where female participation in the non-domestic labor force is barely 50 percent, almost 70 percent of the workers in the EPZs were women. In a country where 4.3 million are of working age, where the average age is 20, in that country of young women and men, 130,000 produced 27 percent of the country's exports.
And of what did these non-traditional exports consist? Textiles and apparel accounted for 51 percent of the output of the EPZs. Where maquiladoras are, where women are the labor force to be exploited intensively, textiles and clothing are the "entry" products.
Twenty four percent of the EPZ output consists of auto components, furniture and wood products.
Textiles, clothing, auto components, furniture, wood products... these are the areas that have suffered for more than just the last 18 months, and from more than just the current economic contraction.
With the admission of China to the WTO and the removal of quotas on China's textile and apparel exports with the expiration of the multifiber agreement [MFA], production in the maquiladoras of Central America, the Caribbean, Africa, the Indian Ocean has declined. Between 1997 and 2002, the average annual rate of growth [AARG] on non-traditional exports from the EPZs in Honduras measured 23 percent, while the rate of growth of the traditional exports measured negative 4 percent. Between 2002 and 2007, however, this relation was reversed with the growth rate of non-traditional exports slowing to 6 percent while that of the traditional exports accelerated to 12s percent per year.
At origin, and throughout its historical development, the economic distress that has affected Honduras, that has so impoverished its population, that has now propelled the population to confront the military is more than impervious to resolution through "growth." That distress is in fact the product of the growth of the world markets, the growth of capitalism which has maintained, enforced, and expanded the growth of underdevelopment. The growth that our charlatan-entrepreneurs flog so zealously as the tonic for all that ails all is nothing but the enclave, concession, special enterprise zoned manifestation of the overproduction of capital.
The struggle in Honduras is precipitated by the same overproduction of capital, the same underdevelopment of a human economy that has precipitated the industrial struggles in South Korea, in France, the UK, China. As such, the struggle has nothing to do, essentially, with the restoration of Zelaya to power; has nothing to do with calls for "democracy," with the demand for a "constituent assembly," all of which only serve to obscure the fundamental class relations at the core. Honduras already has a constitution. It already has a parliament, a supreme court.

The fetishization of "convene a constituent assembly," stemming from the Russian Revolution confuses the inability of a "liberal democratic bourgeoisie" to execute a program for its power [as it could not in Russia in 1917], with the current conditions where the bourgeoisie already have their political power and need no longer obscure class relations behind "democracy," behind a parliament, behind a constitution. This is, here and now in Honduras, as liberal and democratic as the bourgeoisie gets. To demand a "constituent assembly" in Honduras is to obscure the origin and resolution of the situation in class struggle. The sham constituent assembly process conducted by Morales in Bolivia says all that needs to be said about the significance, the class content, of the "constituent assembly."
The workers, students, the urban and rural poor, the women of the maquiladoras will find the solution the the "problem" of underdevelopment/overproduction in their own strike committees, defense committees-- in the example of the neighborhood councils of El Alto in Bolivia, and not in the charade, and dead, literally, end, literally of a "constituent assembly."
S. Artesian
address all comments to: sartesian@earthlink.net

Tuesday, July 21, 2009

Paper, Scissors, Tiger, Dragon.

1. Dragon

Faced with the dramatic decline in direct foreign investment [26% Jan-Feb 09 vs Jan-Feb 08], declining exports [-21% Jan-Feb 09 vs Jan-Feb 08], declining profits [as much as -50% in shipping and containerization], China announced a stimulus program of some 4000 billion yuan aimed at creating a domestic market capable of absorbing and reproducing surplus accumulation at a profitability sufficient to ... well, to absorb and reproduce surplus accumulation beyond the existing limits of the world and domestic markets.

2. Scissors

Capitalism achieves what it achieves in all its glorious misery and vice-versa, by separating the means of labor from the conditions of labor-- by reproducing the classes that give its dead weight life. While capital, to exist as capital, requires access to wage-labor, wage-labor itself can only exist throught its dispossession, its detachment from the means of production so that the labor appears as useless save for its value in exchange for wages, in its exchange with capital.

It is dispossession that creates the domestic market-- the dispossession, the expulsion, of wage-labor in the production process and the dispossession of the subsistence agricultural producer. All of capital's "productivity" amounts to dispossession and expulsion.

Now what capitalism is compelled to do by its internal, abstract organization, and what it actually does do in the concrete conditions in which it finds itself enmeshed are more than two different things . They are two different things that are one and the same. Whatever conflict capital finds with the already or pre existing property relations, becomes the conflict within itself, with its organization of production as private property.

Whatever the limits, constraints capital encounters in its need to cut the ties that bind labor from land, to access detached labor; whatever the obstacles capital finds to its need to distinguish the laborer from the instruments of production through the wage form, obstacles that exist in the plantation, the hacienda, the manor, the great house, capital recognizes itself in those limits and obstacles. Value, the "as if" quality of the commodity-- as if value exists as a quantity, a thing, and not a relation, as if it possesses a life of its own and does not expropriate the lives of others, as if behind every "free market" there wasn't a death squad-- finds an image of itself, projects an image of itself unto every product obtained through every form of exploitation and brought to market. It, capital, bestows the as if quality through exchange onto all those products, treating them as if they were commodities, as if they were produced by wage-labor.

And the as if quality of value is conveyed also to the products of small-scale individual production, "subsistence +" production.

While the hacienda, the plantation, the manor, the great house and subsistence production cannot and do not create capitalism, capitalism can and does recreate the hacienda, the plantation, the manor, the great house. Capitalism can and does absorb all these forms in the limits to its own expansion, namely private property and profit. At the same time, capital is compelled by its own organization to interrupt that transformation, as it interrupts itself and its accumulation. Capital is compelled to undermine all of these forms of property as it undermines itself.

History is not a "on the one hand, while on the other hand" process. History is co-incident processes. If Marx and Engels played the card of capital's revolutionizing the method and relations of accumulation-- the card that had capitalism bequeathing to the workers the whole world, albeit in market form; the card that had capitalism abolishing all other modes of accumulation; the card that melted all that was solid into the quicksilver streams of credit, finance, circulation; the card where the land itself had been capitalized with all living labor minimized, and all the minimized labor transient-- history itself had another card up another sleeve. And that was the card of capital bequeathing to all of humanity its inability to effect the transformations of land and labor. History held the two-faced joker. One face-- the hacienda, the plantation, the great house. The other face-- small scale subsistence production. Both faces-- labor tethered to the land; capital unable to realize itself quickly enough, massively enough with more than enough wage-labor.

So for more than a century, in more than one country, the struggle for the emancipation of labor has been burdened, buried even, by this inability. This failure gets identified at various times as "uneven and combined development," "the land question," "the role of the peasantry," and most often, "the unfinished tasks of the bourgeois revolution."

Well, first things first. The only task of the bourgeois revolution is to secure the opportunity for the bourgeoisie to turn a profit. There is no other task as important, as essential, as bourgeois, as that. Economic development, "free" soil farming, "free" labor, are at one and the same times extraneous and inherent, accidental and essential to the bourgeoisie's political power. These are items to be negotiated, compromised, bargained down, in the name of order and property if the price is right.

The struggle for the emancipation of labor from wage-labor, however demands, requires the struggle to emancipate the land itself from private property, to transform it [and in some instances restore it] as the basis for social production; not as an instrument for exchange, but as the platform for satisfaction of need.

Consequently, the revolutionary impulse itself is profoundly anti-bourgeois as it confronts capital's recreation of the conditions of "unfree labor," of labor impoverished by scarcity, deprivation. Any "unfinished tasks" are the finished products of the world market. In reality a revolution can only become bourgeois in its defeat.

3. Tiger (uneven)(combined)

China's growth the past three decades has been based based, not on Deng's "four reforms," but on a triangle of cheap labor, foreign direct investments and exports. If clothes make the man, the metrics by which an economy is measured, tailored, fitted, dressed, and turned out , make that strategy look so g-o-o-d.

Contracted foreign direct investment since 1984 amounts to more than $1.2 trillion. Utilized FDI [the amount actually deployed] exceeds more than $700 billion. Sixty percent of the FDI has been dedicated to manufacturing. Twenty percent to real estate.

In 2000, half of FDI funds were invested in electronics and telecommunications manufacturing, with FIEs accounting for 72 percent of total output

In 2007 the FIEs account for 30 percent of gross output, 11 percent of jobs, 57 percent of trade.

The impact on international trade has been massive, with the companies created by the FDI, called foreign invested enterprises [FIEs] accounting for approximately 56 percent of China's exports and 56 percent of its imports, and 86 percent of high-tech exports in 2008.

While the leadership of the CCP has achieved success in recasting industry in the image of the great helmsman, Milton Friedman, the transformation of agriculture has not been quite so substantial. Certainly, gross agricultural output has increased. Total government expenditures on agriculture quadrupled in the ten years between 1997 and 2006. Rural consumption of electricity doubled between 2000 and 2006. Total power of agricultural machinery doubled between 1995 and 2006. Driven by the increased focus on dairy and meat farming, the area in production spiked 40 percent between 1995 and 1996, falling back some 8 percent between 1996 and 2006.

Grain and rice production remained fairly level between 1993-2006, with the farming of "cash crops," fruits, vegetables, meat, and dairy increasing substantially in the latter part of that period.

The gross output [measured by value] of agriculture, forest and fisheries increased 17 percent between 1998 and 2003, spiking 21 percent between 2003-2004, and increasing another 30 percent to 2007.

Impressive numbers to be sure, but not so impressive when analyzed on the basis of labor productivity.

Agricultural employment peaked in 1991 at 391 million, falliing back to 325 million in 2006, a number that exceeds the number employed in 1984, 1985, 1986, 1987.

In 2007, China had 301 million acres under cultivation. By contrast, the United States had 406 milllion acres in production. US agriculture employed 2 million compared to China's 300+ million. For that year gross agricultural receipts per worker in China measured approximately $2000 compared to $170,000 per worker in the US.

Total portion of the population living/working in rural areas in the US measures 3 percent compared to China's 40 percent.

Average area cultivated per agricultural worker in China amounts to 1 acre or less; in the US 194 acres.

The expansion of agricultural output in China has not altered the basic configuration of rural property and production from the forms that the Chinese Revoluton inherited and proved so incapable itself of altering.

Chairman Mao to the contrary notwithstanding, the history of China, in particular the history of agricultural production relations, does not give evidence of an emerging "incipient" capitalism throttled in its crib by imperialist penetration.

In his studies of agriculture in China, The Peasant Family and Rural Development in the Yangzi Delta 1350-1988 and The Peasant Economy and Social Change in North China, Philip C.C. Huang concludes that much of China's agricultural production is characterized by involution, through which productivity of land is maintained and even improved through the application of greater amounts of labor. The productivity of labor actually declines. Yields then increase with the increase of population only through increased labor on small, and shrinking plot size as plots are divided and sub-divided to accommodate the maturity of children in the farm families. Production itself remains tied to the needs of family subsistence, or "subsistence +" production. While landlords, emperors, taxes, and rents took advantage of the fragmented and atomized nature of rural production, involution was itself inherently resistant to any change in the patterns of land-tenure.

Historically, then, increased output has been achieved through increased labor intensity, increased land "productivity" through multi-cropping, inter-cropping, at the expense of labor productivity. One of the impacts of this agricultural involution on China's development was that the continuous overavailability of labor that preserved small-scale farming, that allowed output to increase with population increases, also supported a commercial network of home industry, market exchanges, rents, and sub-contracting both land and labor that inhibited capitalist penetration of the countryside. With home industry involving less fixed cost, with surplus labor available at rates far below rates in urban areas, with subsistence preserved through increased labor application, that sine qua non of capitalism, the detachment, dispossession of labor from the land, from the means of its own subsistence, its ability to create the conditions by which it could aggrandize labor as wage-labor and expel wage-labor from production was unattainable. Capitalism couldn't compete.

So....so it is not the fact that agricultural output hasn't increased in China since the advent of the "household responsibility system." It is the fact that such growth has not transformed agriculture from small-plot "subsistence + surplus" production, to one of capitalized production, where the land itself has value only in its production of exchange values. It is not the fact that growth has not occurred, it is the fact that such growth is limited by the physical, that is to say, the social organization of production, and that China is coming to the end of a cycle based on the existing organization of land and labor.

An indication of this obstacle to agricultural expansion is the change to the agricultural data of 2006 that was originally reported in China's 2007 Rural Statistical Yearbook and revised by the 2008 Statistical Abstract. In that revision, almost all the metrics-- gross output, sown area, output, animal inventories, slaughter, meat output, aquaculture products-- measuring the individual items in the 2006 agricultural sector-- crops, livestock, forestry, fisheries-- were revised substantially downward for that year 2006. Of course, this allowed the 2008 Statistical Abstract to report a number of increases in the same metrics between 2006 and 2007, some substantial, some modest, but that's the beauty of statistics.

4. Paper (tiger)

With the reduction in exports and imports beginning in 2008 (continuing through 2009), China announced its stimulus program of 4 trillion yuan, aimed at turning production inward, creating a modern infrastructure of road and rail linking city to city and city to countryside, and tapping the forced savings of the rural population to support the expansion of domestic production of durable and consumer goods through increased consumption. A domestic market is to be created to replace the shrinking market of international trade.

The backbone of the stimulus program has been the expansion of lending by regional and local banks.

Again, China has posted impressive numbers, reporting increases in industrial output, and raising its estimated GDP growth for 2009 to nearly eight percent from earlier estimates of six to 6.5 percent. Inflows of foreign currency and China's purchase of US Treasury instruments have increased.

But the domestic market? Capitalism does not reproduce nor expand though consumption. It expands through capitalization, through the exchange of values. Capitalism, in China as everywhere else, can only establish a powerful domestic market through the capitalization of agriculture, the dispossession of labor from the land, so that capital can exchange itself profitability with wage-labor, and through relative expulsion of wage-labor from production, which we call labor productivity. If such productivity does not exist in agriculture, the domestic market cannot be expanded. If capital cannot exchange itself profitability enough with dispossessed labor, then the expansion of capital does not occur.

China cannot establish its domestic market without massive dispossession of the rural population and concentration and consolidation of land under cultivation. To do so, however, unleashes the class warfare so dangerous to the capitalization of land itself, to private property. To do so when the profitability of industrial production is declining, when millions of migrant laborers have been forced back to their villages, threatens both private and state property.

In the first half of 2009, China's banks have lent 7.4 trillion yuan. This is twice the amount lent for the entire year 2008. Estimates are that total loans for 2009 will approach 10 trillion yuan. There is no way such rapid increases in lending can be achieved without the radical reduction in standards of "credit-worthiness," without declines in the quality and quantity of collateral supporting the loans. This should ring a bell everywhere around the world. And the bell rung is called a bubble.

In the second quarter 2009, foreign currency inflows exceeded export earnings and foreign direct investment flows. The difference is the so-called "hot money" that flows into the stock exchanges, into certain real estate transactions, into financial plays. The hot money exerts on China that same pressure for convertibility of the currency exerted by international trade and foreign direct investment, but in a more virulent, liquid, form. China's complaints and concerns about the stability of the US dollar, the suggestion of a special drawing right system to replace the dollar, its worries about the value of its US Treasury holdings, are direct reflections of the increasing pressure for direct convertibility. Such convertibility will expose China to currency fluctuations outside its control, and to attacks on the yuan based on declining profitability, demands from the FIE's for hard currency to repatriate profits, and capital flight.

In this cage, caught between internal class struggle and the demands of the world markets, it is China, despite its holdings of $2 trillion in foreign currency instruments, that finds itself to be the paper tiger.


S. Artesian, July 21, 2009

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Tuesday, July 07, 2009

While We're Waiting...

...for the other shoe to drop, or for me to get on with the analysis of China, I thought I would divert myself, and hopefully others, with the following items from the daily papers:

1.Those of you, us, who think overproduction-- not to be confused with underconsumption-- is the source of capital's current, and repeating, predicament will be interested in the NYT article on Micron and the semiconductor industry, available at: http://www.nytimes.com/2009/07/06/technology/business-computing/06micron.html?_r=1&ref=technology
A couple of juicy bits:
"The seeds of the industry's current financial straits were sown in 2006 and 2007, when memory makers went on a capital spending binge to expand capacity, said Jim Handy, a director of objective analysis, a chip industry research firm. "It takes two years from spending before capacity reaches full volume production, so the onset of the overcapacity was in early 2008, two years after the 2006 spending spree commenced...
As a result of the upheaval, the industry's capacity has shrunk about one-third, although some of that will eventually return..."
And my personal favorite:
"This is a horrible, terrible business that no one should be in, the way it's organized currently... You get some incremental profits for a little while, then everybody moves in and there's oversupply again."
Gee, sounds like something we could say about all of capitalism, doesn't it?
2. Stop Me If You've Heard This One Before. From the 6 July Financial Times:
Barclay's Capital has come up with an innovative way of reducing capital costs and capital requirements of their banking operations. In a burst of originality, BarCap decided to pool assets from several client into a secured financial product [which means backed by collateral] to be rated by a credit rating agency and then sold to other investors.
BarCap protested that no, no this new product was not the same-old, same-old CLO, CDO, ABS type of junk as before, because in this product, there was no securitization of new lending, just the securitization of the already existing assets on the bank's books.
So...so the assets [loans,debts] that the banks originally spun-off their books in order to maintain capital requirements; that they were then forced to back onto their books after values of the underlying assets plummeted and everybody was a counterparty and everybody was ready to sue, will now be packaged into special investment vehicles, rated by Moodys or S&P, and sold to ...
Oh, there's a sucker born every minute I guess.
Here's what I think the banks will try-- to spin these derivative products into the Treasury's TALF-PPIP program that has been such a stirring failure. In this way, the banks won't have to record a loss on the market-value of the underlying assets, and everybody get's to pick the public's pocket again.
7 July 2009
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