Sunday, June 27, 2004

Appendix B

The precipitating cause for the invasion of Iraq was not to be found in the policy papers of current, or former, or currently former, officers of the US capital. Nor was the determining factor found in the Pentagon's order of battle, the essays of neo-conservative ideologists with unsavory business partners, the balance sheet of a certain construction services company, visions of new American empires, fear of old economic competitors, loss of hegemony, dramatic dollar declines and euro ascents, or the ecstatic belligerence of the evangelical half-wits occupying all three branches of government.

But the pre-determination of the invasion was published for all to see by the US Department of Energy's Energy Information Agency in its
Appendix B: Performance Profiles of Major Energy Producers 2002.

The headline on the executive summary read Major Energy Companies' Profits Decline In 2002 As Income from Both Upstream and Downstream Operations Falls. And that was the good news. The net income of those companies participating in the Federal Reporting System (FRS) declined, after excluding the effects of unusual items, 36.6 percent in 2002. It was the lowest level of net income since the nightmare year of 1998 when prices broke to $10 per barrel.

The bad news got even worse. Both upstream, production, and downstream, refining and sales, declined from prior levels. A glut, yes glut, of natural gas in the US produced lower natural gas prices and a precipitous drop in net income. Refining and marketing net income dropped 111 percent, proving that zero can be a fond memory and a fervent prayer.

Appendix B recorded high levels of capital expenditures in the petroleum industry, but the expenditures were directed on acquisitions and mergers. Minus capital buying capital, capital expenditures increased only by 5 percent from 01-02.

The War Report/Appendix B recorded the historical build up of the means of production which had created this near disaster. Net property, plant, and equipment (PPE) increased 11 percent between 1996 and the price collapse of 1998. Still, net PPE asset values increased another 33 percent between 199 and 2002 to $446.6 billion. Total liabilities which had expanded by 10 percent in the 1996-98 period, grew 50 percent in the 98-02 period.

The basis for the predicament of petroleum capital had been created in the 1996-1998 period. Total exploration and development expenditures increased 66 percent in that period, with the largest percentage increase going to acquisitions of unproved and proved acreage. These expenditures increased from 11 percent of the total in 1996 to 33 percent in 1998.

Iraq's future was written in the decline of the return on investment for the oil majors of the Federal Reporting System. Higher prices, increased rates of return, were just a cruise missile away. With the assault on Iraq, prices and returns soared. During 2003, at every downturn in prices, the war drum is beaten harder, and prices resume their climb. When, after the invasion, after Bush soft-landed on the aircraft carrier, oil prices declined, there was the terrorism premium, the strategic reserve purchases, the continued demolition of the Iraqi infrastructure to refloat the barrels.

While 2003 is a bad present and an unbearable future for the Iraqi people, for the unemployed workers, the dispossessed citizens of a once secular society, for women, it was bright, shining, day for the industry as profits recovered not just with this economic demolition, but because of this demolition.

And Appendix B 2002 passed its baton,its billy club, its M4 to 2003, oil prices soared above $32 per barrel, and the FRS companies return on investment increased in lockstep. War and terrorism are the snake for the snake oil of economy recovery.

And then there's British Petroleum's Statistical Review of World Energy June 2004, the widely respected and early awaited report of the Dowager Queen of the petroleum sisters.

The review covers the previous year's results and was positively bubbling in its assessment of results and prospects. In 2003 oil prices reached 20 year highs. Brent crude rose from $30/barrel at the year's start to $35/barrel just before the invasion of Iraq. Prices fell as traders expected Iraqi production to return to pre-war levels after the capture of Baghdad, but when production didn't, prices resumed their upward trends. Such sweet sorrow.

In the meantime, the BP report had some disturbing information for the new Hubbertists who make their living predicting the death of oil. The intractable bell curve, the iron-clad offset between production and reserves wasn't quite so bell-shaped, curved, intractable, or iron-clad. It seems that Mexico's proven reserves measured 50.8 billion barrels in 1993 and only 17.2 billion barrels in 2003. According to the Hubbert theory of petroleum depletion, this rather steep decline should have produced the absolute end to production in Mexico. But no such end occurred. Nor is it in sight.

Instead, production in Mexico has increased every year since 1993. Daily production in 2003 was 20 percent greater than in 93. The explanation is in the fact the budgeted amounts for exploration and development of new and existing fields in Mexico have been restricted by the government's financial concerns. Consequently, definite determination of increased reserves has not been possible, despite the fact that such reserves obviously exist.

Reserves exist in the ground and not in the bell curve.

The brand new year, 2004, was brought in and brings along in turn the same old same old. With prices breaking $40 per barrel, retreating, regaining the loss, and retreating, the EIA's performance profile for 51 independent energy companies in 1Q04 were 11 percent above 1Q03. Oil prices were 3 percent higher than the previous year's 1Q, while natural gas wellhead prices declined as storage levels were significantly higher.

Most importantly in this era of grab and go capitalism, refiners net income increase 47 percent over the year earlier level as the terrorism surcharge doubled product prices. Field companies, point of production industrial units, realized only a 6 percent increase in year to year net income.

But the new year brings in one more report of significance, Appendix A. And Appendix A is the report of oil workers' strike in the Norwegian North Sea oil fields. Two hundred oil workers struck Norwegian Statoil, ExxonMobil, and ConocoPhillips, reducing output by 372,000 barrels daily. The issues for the workers are full-time employment and pensions. Looking across the waters, the workers in the Norwegian fields see the handiwork of Thatcher/Majors/Blair-- where only 5 percent of British workers are considered full-time and no pensions exist.

British oil production, while down from the 1998 high, is still above the 1993 mark. When the price of oil declined in 1998, dipped in 2000, and retraced some steps in 02, oil companies retired drilling platforms and left others with only skeleton full time staff. As the price of oil increases, production is augmented by hiring temporary workers and reanimating the idling platforms.

The Norwegian government has stepped in, breaking the workers' strike. Nevertheless, Appendix A puts the truth to the predicament of the oil industry and its rates of return-- the overproduction of capital. Two hundred workers producing 372,000 barrels of oil a day can only do so if the technical apparatus so employed is massive. Even if the wages of the 200 workers are, including overhead and benefits, $50 an hour, even if the workers work 16 hours daily, at $40 a barrel, the workers produce oil equivalent in revenues to the total daily wage in the first 2.2 hours of work.

The future is not written in the appendices, but in the main body of the workers' struggle.

S. Artesian

Address all inquiries to

Saturday, June 26, 2004

Something Old...

Obsolete at Birth, Dead on Arrival

The Theory

1. Capital makes its contribution to human culture by repackaging its own mundane economic processes as the stuff of dreams. Accumulation creates the novel, conquest reappears as romance, and the market, the great realization of the extraction of value from socially necessary labor, dresses itself in flags and banners and dreams itself a nation.

Still, in its daily life, capital is a place and time of confusion,
deception, illusion, not dreams; a place of the here and now, the fast buck and no future. Objects, ideas, structures have meaning only to the extent that that they represent and extend the arena of exchange. Its place in history trumpeted by revolution, by a blood shed in common for the liberty of citizens, the nation emerges not as a common product of a people sharing a language, a territory, a color, but rather by those sharing a trade, a commerce, and a position in the world markets. The nation secures in the establishment of borders the universe of private property.

Economy is concentrated history; the organization and appropriation of
labor. All economic histories are histories of the changing relations
between city and countryside. The modern cities step forth as the permanent marketplace, the fixed formations for exchange, where every action, every deed, involves exchange for the articles necessary to sustain the prospects for tomorrow's exchanges.

Exchange requires a medium to dissolve, absorb, measure and balance the
different articles of value, the different values of the articles. The
expansion and permanence of trade requires that all, clergy, noble,
commoner, submit their needs for the articles of value in the market to the need of the market-makers themselves, the merchants, for money.

Trade at its origins is never local, locality gains meaning only after the market develops to the point where it can convert distance to time. The permanent establishment of the trading place, the city, is the product of the itinerant essence of exchange, a displacement from immediacy in both territory and consumption, a transformation from landed property to property in motion. The emergence of the modern city, established in the separation of labor from land, separates production from use, ownership from blood,property from title and rank. At the same time, the enclosure and destruction of the common lands, separates property from collective, social, need.

A permanent, durable market, in its multiple and immediate transactions once established, provides in turn for the possibility, the necessity for the postponement, the delay of payment. In this, the conversion of time into delay, exchange into debt, the market realizes the positive authority of money in its negative form, not a realization, but a claim advanced regardless of realization. Debt attaches itself to the repositories of value and dissolves the attachments to any form, any mode outside the markets, outside exchange. Nothing exists that can't be liquidated.

The historical significance of the French Revolution, its revolutionary
impact, isn't established in the bourgeoisie's loyalty or disloyalty to the poor, not in its declaration of rights, not in its speeches, its clubs, but in the actions of the Assembly, stripping property from the church, the aristocracy, turning that property into a value to be exchanged, to circulate in the markets-- land turned to paper, the assignats, the paper a means to exchange the property, the value itself seemingly abstracted from any form of production, exchange existing solely for the satisfaction of accumulation.

There is no nation, no national question, separate and apart from this "land question." The capitalization of land, its enclosure, expropriation,distribution, circulation provides the basis for the organization of labor as wage-labor and property as capital.

2. Profit extracted in production but realized in trade demands not only overthrow, conquest, liquidation, but also and equally, accommodation, alliance, reinforcement of the bonds common to private property. Capital's existence as private property extinguishes the class's ability to push forward, to reproduce its radical capitalization of agriculture. Faced with the "land question, the "nation" draws a blank. Free, that is to say detached, mobile, dispossessed, exchangeable, soil and labor are both and at once the promise of profit and the threat to private property. Preexisting
relations of landed property are absorbed and reconciled into the mechanisms for exchange.

The US Civil War represents the critical moment when capital is last capable of absorbing the land question within the national framework, within its call for "union." This civil war is the final moment when the bourgeoisie's organization of property can pretend to represent, embody, and ignore, the needs of all in its class specificity. The civil war is the last moment when capital can substitute the abstractions of "free labor" and "free soil" for the reality of the class struggle against the private appropriation of both soil and labor. No more acute and painful manifestation of this emerging
obsolescence exists than Sherman's March to the Sea. His battalions of
foragers, called bummers, stripping the South of food and material, made the march to battle and the base for resupply one and the same, thus destroying the mode of production while confiscating the product itself. The future of slave holders' rebellion was made evident by the Union Army in the proliferation of "Sherman's Bow Ties," lengths of rail stripped from Confederate railroad tracks, heated and twisted around tree trunks. And, at the same time, Sherman himself stands baffled, without comprehension, without program, for recruitment or organization of the thousands of displaced former slaves who followed his army, searching for some content to the word "emancipation."

The content of the Civil War, emancipation itself, pushes itself forward with the adoption of the 13th, 14th, and 15th amendments to the US Constitution and in the program of radical reconstruction. The amendments attempt to transform the Constitution from a compact among slave holders and radical reconstruction attempts to transform the union into a republic of small, free, property holders.

Radical reconstruction exists as part of the general expansion of the
capitalist footprint through the world markets, its confrontation with its own pre-configured landed property. It exists as part and parcel of the upsurge that sweeps through Spain, leading to the appointment of the liberal governor, de la Torre, for the Philippines; that abolishes, in name if not in kind, serfdom in Russia; that unleashes the Ten Year War, the first revolution, in Cuba; the overthrow and execution of Maximilien in Mexico; the upsurge of the Irish Rebellion ("No Priests in Politics" was one slogan).

The result is one and the same everywhere, if not all at once, in the world markets. The result is the reaction of capital against social
transformation, against the upheaval it pushes ahead and drags behind
itself. The result is enthronement of nation, trade, accommodation, against republic, emancipation, reconstruction. The needs of capital for free access to detached labor, runs up against the boundaries of its own making, private property. Emancipation and freedom have parted company. Emancipation clearly has become the emancipation and task of labor, while freedom is the preservation of the markets. Capital begins its long retreat. Emancipation passes from the mouth and pens of a Convention, a parliament, a Cortes, to the machete blades of Antonio Maceo's Mambises, the bolos of the Katipunan, the bayonets of the Communards of Paris. Everywhere, if not all at once, capital calls for an end to the liberalization, the reform, the reconstruction, the commune, the revolution. Accommodation is the prophet. Restoration is the Moses. "Order!" its first and tenth commandment.

The nation as a vehicle for the advancement of relations between city and countryside has been eclipsed. The emancipation of land as value encounters the emancipation of labor from value. Capital abandons the former to prevent the latter. The "pre-national" colonial forms of landed property then become the living substance of advancing international capitalism. The abject poverty of the tenant farmer, the growing numbers of destitute migrant agricultural workers, the indenturing of the bulk of the population to the village, to agricultural production, are the negative measure of the progress and the development of capital.

Capital having no existence apart from its self-expansion, reproduces this impulse to a nation, to liberty, to this freedom of landed property, this detachment of labor, with every cycle, every unequal exchange in the world markets with its less developed partners, but it reproduces the impulse in its totality, in its failure, in its inadequacy, in its unreality. The whole history of capital is relived, but in fast forward. The impulse to reproduction, the expansion of capital necessarily demands access to labor, the reorganization of relations between city and countryside to free labor from its servitude to the land. The demands of private property throttle that impulse in its cradle. Behind the appearance of a struggle for "self-determination," is the reality of the struggle between capital and
wage-labor for the social organization of production, for the overthrow or defense of private property. The nation, the dream of outposted capitalists, exists as a shared madness, the memory of something that never will be, the anticipation of something that never was.

The Practice-- the Philippines

3. The Philippines were the death of Magellan. He had sighted the islands in 1521, landed, erected a cross and claimed them for Spain. After baptizing 800 Cebu warriors, Magellan joined the Cebus in a battle against the warriors of Lapu-Lapu. That was a mistake. Magellan was killed. Soon thereafter, the Cebus killed 27 Spaniards in a dispute over women. The Spanish decided to leave and continue their search for spices. That was no mistake.

Only one ship of the original five and 18 of the original 264 crew survived and returned to Spain. The one ship carried 26 tons of cloves (not from the Philippines) which sold for 41,000 ducats, a return of 105 percent on the original investment. That made the circumnavigation a financial success.

The islands were not formally established as a Spanish colony until 1565, with Manila its capital. Even then the colony was administered second hand from Mexico, and served as a warehouse and resupply point for the galleon trade between Canton and Acapulco.

Direct control of the islands rested with the monastic orders, Augustinians, Dominicans, Franciscans, Recollects, and Jesuits which converted the population to Catholicism and imposed religion, family, and landed property against the existing indigenous communal organization called the barangay.

The monastic orders ( designated the "friarocracy" by the Filipinos) founded parishes and estates throughout the colony. The Spanish used the existing distinctions in the barangay, chief, noble, freemen, to create the basis for a reorganization of landed property. After conversion to Catholicism, the chiefs and the nobles were converted into a landed oligarchy, called principales, through the destruction of the barangay and awarding of large,private estates.

The cities in the Philippines, as is the case with the major cities
throughout the colonial systems, functioned as administrative centers rather than the base for a developing home market. Thus, internally, demand for the capitalization of agriculture was suppressed.

The international expansion of capital in the early 19th century brought about the collapse of the galleon trade, and the independence of Mexico. Spain was forced to administer the islands directly. To pay for that administration, the Philippines were made free trading areas. British and US merchant fleets entered Manila. Philippine agriculture was transformed. But the organization of the property relations was not. The estates, organized as value in property rather than production, operated without the existence of a domestic market, had yielded only subsistence levels of agricultural products. The British and US traders wanted the commercial production of cash crops, tobacco, sugar, hemp, for the international markets.

In the countryside, the landed elite made the most of the transition, dispossessing tenant farmers, appropriating more land, concentrating more wealth. In the cities, trade produced those attendants to the demands of trade. Mestizos and Chinese mestizos advanced as merchants and professionals, brokering the exchanges between the advancing world market and the colonial organization of property. They were known as ilustrados.

The application of steam power to the merchant fleets and the opening of the Suez Canal in 1869 had great impact on the Philippines. The foreign trade of the islands tripled between 1861 and 1870.

The expansion of international trade brought with itself growth of the
cities, greater demands for access to labor, and greater pressure upon the countryside, upon landed property to supply the domestic market with both detached labor and agricultural products, and export commodities. The island of Negros was settled and dedicated to the production of sugar. Internationally financed loans were arranged to facilitate the clearing, planting, and harvesting from vast tracts of land. Labor migration to Negros was encouraged, and finally, the application of steam power to sugar refining, transformed part of the landed oligarchy into sugar barons. Still, the preexisting organization of rural property was not transformed, it was extended.

The demands of international trade carried the mythic enlightenment of
Europe in its free exchanges with the islands. To the consternation of the friarocracy, the ilustrados found a voice in advancing proposals for secularization, reform, liberty of the press and assembly. The "national" flower did not bloom for long. Unable to attempt the reorganization of landed property, to articulate even a concept of relations between city and countryside, the ilustrados withdrew into silence and exile when Spain replaced the liberal governor with Rafael de Izquierdo who reimposed the dictatorship of the crucifix, the infallibility of the sword.

In 1872, after the Spanish crushed the desperate revolt of dockworkers in Cavite province, the ilustrados in exile formed the Propaganda Movement, designed to awaken the Spanish conscience to the plight of the Philippines. During the 1880s, Jose Rizal became its leading spokesman. The Propaganda Movement did not address the land question in its proposals. The Propaganda Movement never proposed a "national liberation" for the Philippines. In this, the ilustrados were the true and faithful offspring of the world markets.

Andres Bonifacio, an indio (native), organized the Katipunan in 1892. The Katipunan was a secret society dedicated to the overthrow of the Spanish rule. It's ranks were filled by the rural landless and the urban poor. The Katipunan led the revolt against Spain in 1896.

Despite his nonviolence, his allegiance to Spain, and his opposition to the Katipunan, Rizal was executed by the Spanish governor at the start of the revolt.

The Katipunan were ill-trained, poorly armed, and defeated in battle with the Spanish troops. Except in Cavite province. There, the militancy of the workers joined with the Katipunan leadership of Emilio Aquinaldo and defeated the Spanish troops. Aquinaldo offered a program for independence from Spain, but that program did not speak of the dream of a Philippine nation founded on liberty and equality, but a Filipino Republic organized around the equitable distribution of land, the organization of the republic under the control of the poor for the benefit of all.

At the outset of the Spanish-American War, the commander of the US Pacific squadron, Dewey had sought out an alliance with Aquinaldo. However the close of the war saw the Spanish governor and Dewey agreeing on the timing and terms of a surrender designed to prevent the entrance of Aquinaldo's insurgents into Manila.

So obstructed, the insurgent army retreated to the north of Manila to the city of Malolos where a constitution for the republic was written and approved by a revolutionary congress. On January 21, 1899, a government was organized, currency issued, a military established, and a comprehensive educational system through the university level was developed. The revolutionary government then turned to the land question. On February 4,1899, the United States began military operations against the Filipino revolution.

The resistance to the US was not limited to Luzon or the Tagalog speaking people. There was resistance in the Visayan Islands, Cebu, Bohol, and Mindanao. Only the sugar plantation island of Negros offered no resistance. Two hundred thousand civilians died by the end of the war. Aquinaldo was captured in 1901 and proclaimed his allegiance to the United States. Fighting continued for two more years.

4. With characteristic grandiosity, the US imagined itself a benevolent
force for the Philippines, a source of economic development and education for its new wards. The US would build railroads, improve the ports, lower tariffs, stimulate investment in mining, lumber, agriculture. The Taft Commission proposed selling the public lands (estimated at 93 percent of the total area) to US investors. However, US corporate agricultural producers of the big cash export crops, sugar, tobacco, and coconut oil fearing the competition, defeated the proposals. Limits were set at approximately 16 hectares for individual purchase, 1000 for corporations. With these restrictions, the pre-existing relations of landed property were preserved.

Tenant farming on the large landed estates was maintained and enforced
by....debt. Here debt, the debt of the cultivator, not the owner, solidified the archaic form of property. Children inherited the debts of the parents and were bound to the land for the life of the debt which exceeded their own life expectancies.

Between 1903 and 1935 (the year the Philippines became a commonwealth) areas under cultivation tripled, the number of farms fell by 25 percent, the number of absentee landlords doubled.

5. Marcos' second decree after declaring martial law identified the entire archipelago as an area for land reform. The program that followed the decree was a failure. Only rice and corn land were covered, and only 20 percent of that. Sugar plantations were excluded. And it is the cultivation of sugar that requires and maintains the archaic form of landed property. Unlike rice and corn, cane is cultivated on large tracts, with the plantations relying on agricultural wage-labor rather than sharecropping.

From the opening of the islands to the world markets, through the 1970s, sugar was the most important cash-crop of the Philippines, accounting for 20 percent of exports through the 1960s. After OPEC 1, the price of sugar, like that of other "raw" commodities soared. Sugar prices then collapsed to 10 cents per pound. In 1985 the price reached 3 cents per pound.

Historically, sugar yields in the Philippines have been consistently low. The cultivation of large tracts of land with indentured, cheap labor, with exports guaranteed by its position in the US quota system, provided sufficient profit for the landowners. With the end of the US guarantees in 1974, the landowners attempted to increase yields through mechanization. The mechanization itself could only be accomplished by the assumption of debt to finance the purchases of machinery. The mechanization in turn, dramatically reduced the labor requirements and precipitated the massive migration of the rural population to Manila and the other major cities.

The debt coupled with the collapse in prices brought about the drastic drop in cultivation by nearly half between 1974 and 1988.

After Marcos left, leaving the shoes but taking the gold, Corazon Aquino campaigned for election on the basis of making land reform a reality.. Her Comprehensive Agrarian Reform Program was to cover 80 percent of cultivated land. Details, however, were to be determined by the Congress were the landowners were in the majority.

The devil was truly in the details. The Congress produced a program that allowed for non-land transfer profit-sharing alternatives, and the
incorporation and distribution of equity equal in value to the land, minus the value of fixed assets required for cultivation. Here the French Revolution rises from its grave, upside down and backwards, issuing stock to preserve the existing capitalization of land, with Marie Antoinette declaring, "Let them farm paper."

No government of the Philippines, with the exception of Aguinaldo's
short-lived republic, has ever had an answer to the land question. No
national government of the Philippines will ever answer the land question, for the answer is the emancipation of labor from the production of exchange values in both city and countryside. Despite the "modernization" of the Philippine economy since 1986, almost forty percent of the work force is still committed to agricultural production. Despite the flood of the dispossessed into the cities, the growth of the service industries, the increased foreign trade, there is no and can never be a national recapitalization of agriculture. International capitalism has no need for this radical reconfiguration.

And because international capital has no need for this reconfiguration,
there can be no local solution, no national revolution, no revolutionary nationalism, no struggle that is a struggle for a self-determination of peoples. The need for the capitalization of land as a nation has been replaced by the need for the socialization of production internationally.

Sunday, June 20, 2004

Scarorism and Terricity

What was, for capitalism ascendant, its self-leavening was the conquering of new markets; the uprooting of all that had gone before; the transformation of all social relations in its self-image. And all this existed, for waxing capitalism, only as an abstraction, a tendency, an impulse. In the concrete, the impulse is obstructed, and conjoined with the very source of the obstruction. What was in theory the condition for development is in practice the limit of development and vice versa. The essential nature of capital is made manifest in its deviation, its aberration from its own code for growth. So that capital announces its triumph not in the destruction of all foregoing, pre-existing, archaic relations of land and labor, but in their embrace, accommodation, absorption into the plastic stream of exchanges called the market. Private property demands just such an embrace, just this accommodation, and private property is nearest and dearest to the bourgeoisie.

The dissonance between abstract and concrete, essence and appearance, is their essential unity under the conditions of alienated, wage, labor. This unity and dissonance becomes every more acute and painful with the tendency for capital to overproduce its own forms of expropriation beyond the ability of the market to sustain the return on investment, which is the stability of property.

The critical moment for the realization of this limit to capitalism is the tremendous capitalist expansion occurring prior to and after the US Civil War. When, in a moment of historical, collective, spontaneity, Union soldiers refused to march in rank and file into the death zones of Confederate fire, but instead hit the dirt and dug earthenwork defenses, it was the end of Napoleonic influence in more ways than one. Attrition, logistics, resupply, maneuver, firepower became the measure of and method for victory. With those came Grant and Sherman's "total war," war against infrastructure and economy. It was capital in all its brutal flowering.

But war was not revolution, and the military destruction of property was nowhere near as risky as the reorganization of Southern landed property. It was from this task that the bourgeoisie turned not just away, but against, determined that private property in its backward forms was essential to the security of all its forms.

The Spanish-American War certified the conservator role of the bourgeoisie, as US capitalism simultaneously replaced the backward Spanish capitalists while preserving the backward relations of land and labor against the prospects of social revolution. The intervention of the US was the reverse anticipation of the revolutionists demand in WW 1 to "Turn the Imperialist War into Civil War," as, in the Philippines, in Cuba, the civil was pre-emptively turned into an imperialist one.

For advanced, even sclerotic, capitalism the preservation of private property is still and always the order of the day. The overgrowth of the productive apparatus beyond the ability of markets, of exchange, to realize profit means that the impulse to destruction of archaic forms is now the impulse to the destruction of capital itself. Thus the expansion of capital is pre-figured, accompanied, immediately followed by the destruction of the productive base, of the living standards, of the very fabric of social life. Advanced production detaches itself more and more from the overall advancement, the overall reproduction of social development. Dreaming of an existence like Jack Welch's ideal barges, capital sees itself floating from tax haven to tax haven, free zone to free zone, cheap labor pool to cheap labor pool. The world's population during both economic recovery and contraction resembles more and more refugees, displaced persons, camp followers.

Under these conditions, terror and scarcity are the perfect (mis)representations of overproduction and social destruction-- the first un-defining the source of economic uncertainty, the second providing the necessary distraction from the actual destruction of productive capabilities. Terror and scarcity are the peace dividend of overproduced capitalism.

S. Artesian
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Tuesday, June 15, 2004

A Definite Stage in Development


“A definite stage in the development of agriculture whether in the country concerned or in other countries forms the basis for the development of capital.”
Marx, Theories of Surplus Value, Part 1

1. When George Bush signed the Farm Security and Rural Investment Act of 2002, economists expressed surprise at this intervention into the operation of free markets. While the economists speculated about the extravagant final tab for the countercyclical supports in the legislation, perhaps $180 billion, the reality was that since 1990 direct payments to US farmers had already reached that mark. In fact the average direct payments increased from the 1990-1997 level of $8.8 billion per year, to more than $20 billion per year since 1998. Leave it to economists to find something new in an action that was already old, always borrowed, usually blue.

That definite stage necessary for the development of capital is not simply a technical factor, a quantity of products and a level of productivity required to sustain a nonagricultural population. It is first and foremost a social development, a formation of private property for the production of commodities; of values to be exchanged for other commodities essential for the expanded re-production of the property form and its offspring, agricultural commodities. So if in the secret to primitive accumulation there is the separation of the producers from the means of production, then the secret to the secret is the transformation of the land itself from a source of subsistence into an engine of surplus; from production for consumption into production for exchange; from a self-contained unit of use into a dependent, useless article, having no value other than the value realized in social exchange; into a commodity to be more than bought or sold-- to be accumulated, and destroyed. The development of agriculture forms the basis for the development of capitalism precisely to the extent that agriculture becomes capital. The transformation from subsistence to subsidy in agricultural production measures the advance of capital, and at its most advanced, capital comes up short. Agriculture’s capitalization cannot produce profits quickly enough to sustain its own reproduction.

2. Agriculture steps forward as the primogenitor of capitalism only to find every moment thereafter determined by its industrial offspring. It’s not so much a case of Doctor Frankenstein and his monster as it is the fact that the monster now has the doctorate, the shingle, the license and the practice.

The demands of capital for profit and production, the contradiction of the two is embedded in both city and countryside. In fact the conflict of these demands constitutes the totality of relations between rural and urban areas.

Directly after Word War 2, annual US farm sector capital expenditures dramatically increased. Between 1945 and 1949, farm purchases of machinery and equipment doubled while total expenditures, including structures, tripled. Expenditures on machinery and equipment were five times the expenditures preceding the depression.

The intrusion of this capital intensive agriculture into the US South disrupted the preexisting relations of landed property and labor. The preexisting landed estate system, legitimate heir to the plantation; bastard offspring of agricultural slavery and industrial capital; corporation of reaction, compromise, and cowardice; product of incomplete destruction and defeated Reconstruction; resting upon the tenant-share system, was dependent upon black labor, parceled black labor. The fragmentation, isolation, dependence of this parcel labor upon land parcels, created an immiserated self-sufficiency. Within this social relation, neither labor nor land could be made available, could make each other available, for expanded reproduction.

It is the separation of labor from the means of production, particularly the primary means of production-- land, that determines, defines, the existence of capital. The separation of these two, the power and the means to labor, propels capital forward into expansion of the latter through the employment, expropriation, and ultimately expulsion of the former. It is not poverty, nor wealth, that distinguishes of capitalism, it is detached, insufficient, useless labor that constitutes its past and its future. It is detachable, exchangeable, expanded value that constitutes its currency.

And so the mechanization of agriculture, disrupting the archaic organization of the South, reproduced its need for accessible, free labor in the civil rights movement, a movement centered in the cities, where labor expelled had already become labor power employed; a movement already an aftershock of black labor moving collectively into industrial production in Detroit, Cleveland, Buffalo, and Birmingham. A definite stage in the development of capital demanded a definite stage in the development of agriculture.

3. The US recovery from the depression of the 1930s was outpaced by the recovery in agriculture. Between 1940 and 1950, nonresidential fixed asset values employed in agriculture grew 225 percent, five times the rate of that growth in the overall economy. Capital expenditures were twice capital replacement costs during this period. Expenditures continued to exceed replacement costs throughout the 1950s and 1960s.

The fire applied to the US economy by the OPEC price increases burned brightly in the farm sector. In 1973, net farm income exceeded $34 billion, 80 percent over the 1972 level. The 1973 mark was not exceeded until 1987. But in the period after 1973, annual farm sector capital expenditures soared. Annual capital expenditures doubled between 1973 and 1979. Real expenditures exceeded replacement costs by 22 percent.

The increase in income, the growth in fixed asset capital stock, were predicated upon the recycling of petrodollars through US money center banks and into the farm economy. This process is the domestic market for capital investment. This process is debt driven, and the debt in its origins was a world market phenomenon. Debt creates the domestic market in the image of the world market. Production for exchange, of exchange values, is necessarily production for export. Between 1973 and 1980, the value of US agricultural exports nearly tripled to $43 billion.

Production costs, operating costs, diminish, relatively, in size and importance. Capital costs are paramount, and realization of a return on the investment is transformed from producers’ income into interest. In 1985 farm debt equaled 30 percent of total farm equity. Farm interest payments, which had never exceeded six percent of gross income before 1970, always exceeded six percent after 1970, exceeding between 1980 and 1986. This ratio did not decline to the six percent level again until the 1990s.

By 1983, the farm sector net capital stock had grown to $466 billion. And in 1983, net farm began a sustained and dramatic slide, falling one-third that year. The 60s were really over, the Beatles weren’t betting back together, and the farmers’ friends, OPEC, petrodollars, money center banks, weren’t. Nearly one quarter of all farms were experiencing debt repayment problems.

Fixed asset growth, capital stock expansion, expanded reproduction of the material basis of output, by its very organization as capital, had been transformed into a means, an object, and a need for devaluation. The devaluation itself was contained inside the ongoing processes of concentration and centralization of production. Absolute concentration and relative disaccumulation of fixed assets became the mutually inclusive contradictions of advanced agricultural production.

4. Between 1983 and 1999, agriculture’s net capital stock declined 32 percent. Real replacement rates remained below one through the 90s. However, no decline in agricultural productivity has accompanied this reduction in capital stock. Between 1980 and 1999, total farm output (in constant dollars) increased 50 percent, farm output per unit of input increased 66 percent. Output per labor unit increased 28 percent. Relative “consumption” of durable equipment in production has declined by half.

Between 1980 and 2003 the number of operating farms declined by 12 percent while the acreage in farming decreased nearly 14 percent. The actual harvested acreage however has increased ten percent. Productivity has been maintained through the processes of concentration and centralization, eliminating “redundant” fixed assets, utilizing remaining capital and operating inputs at near-capacity levels.

In 1992, farms with annual production valued greater than $1 million represented 0.58 percent of total US farms. These mega-farms accounted for 25 percent of total farm production value and 44.5 percent of net farm income. By 2002, these mega-farms were 1.39 percent of the total, accounted for 38 percent of total production value and 79.8 percent of net farm income.
In the same year, all farms with production valued at greater than $250,000, 8 percent of the total enterprises, accounted for 68 percent of total production and 99 percent of net farm income.

For 2003, net farm income increased more than 50 percent from the 2002 level. Production costs, paced by the 21 percent rise in fuel and oil expenses, increased 5.7 percent, the largest single year increase since 1979. Capital’s whispering of “2,3, Many OPECs,” is, like Coltane’s definition of the clarinet, an ill wind that nobody blows good.

5. The linkage between exports and farm income is precisely that certain stage of development that reflects the level of development of capital as a whole. Exports and farm income in the 90s peak together in 1996, 1997, and decline together with first, the financial collapse of the emerging Asian economies. The decline continued with the European Union’s action banning imports of genetically modified soybeans and corn.

At the certain stage in the development of agriculture, the stage reflecting the advanced development of capitalist production, that stage of the expansion of capital stocks, the costs of the production of the agricultural values are not recovered in the prices received for the products. This parity gap was described as a “scissors crisis ” by Preobrazhensky in his works on the Soviet economy. The gap is a specific manifestation of overall rates of profit to fall with the development of the capitalism, as the mass of labor is expelled from the production process and replaced by masses of machinery, and raw and processed materials. That Preobrazhensky, the Bolshevik “specialist “ in economic development, should confront this problem is no surprise. The problem confirmed the compressed, nested, nature of the Russian Revolution, where Russian in its specific circumstances of underdeveloped agriculture coexistent with developed industrial production, reflected the general conditions of capitalism. The revolution takes over from capitalism not just its the means of production, but all its inadequacies, contradictions, and conflicts.

The scissors first “opened,” the parity gap first appears in the period directly prior to World War.
The US Department of Agriculture’s Economic Research Service uses the 1910-1914 period as the baseline for parity analysis, with prices received and prices paid for that period at the 1:1 ratio. Since then, the parity ratio of prices received to prices paid has declined to 40 percent. The disparity is the transfer of income from agriculture to industry. It is in this disparity ratio that the “progress” of capital from expanding value creation to decelerating profit realization is made tangible. Price supports, production subsidies, discount loans are mechanisms to control that rate of deceleration.

From 1998 through 2001, the price per bushel of wheat averaged $2.59. The USDA ERS has calculated that at the average price, 85 percent of US farms are capable of covering their operating costs. At the average price, 82 percent of corn producers and 96 percent of soybean producers covered their operating costs. Asset costs, the costs of ownership, are not recovered with the average prices. Only half of the US corn and wheat producers, and 25 percent of the soybean recovered operating and ownership costs during this period.

ERS analysis of US hog and milk production revealed similar patterns. Eighty seven percent of milk producers recovered operating costs at the average prices, but less than half were able to recover operating and asset ownership costs. Fifty nine percent of hog farmers recovered their operating costs, but less than 25 percent recovered operating and asset costs.

6. The fact that the annual returns decline in proportion to the capital advanced if there is an increase in that part of auxiliary capital which consists of fixed capital, that is, if its turnover period extends over several years-- its value only entering into production annually in the form of depreciation--is not a phenomenon peculiar to agriculture, but a general one.

Karl Marx, Theories of Surplus Value, Vol 3, Chapter 24, “Richard Jones.”

At this stage in its development, representing just two percent of US GDP, capitalist agriculture represents the history and the future of the remaining 98 percent: the accelerating production of value creates a declining rate of return. In agriculture, and in industry, capital sees a remedy in reduction of the fixed asset base, achieving recovery in concentration, centralization, and in increased application of circulating inputs, i.e. seed, fertilizers, pesticides. It is at that point, however, that expanded production is no longer expanded reproduction. In fact, the domestic market, which is nothing but the relation between city and countryside, agriculture and industry, declines. The development of production is, in general, a decline in annual returns. The re-absorption and reproduction of the productive powers of labor in agriculture is the limit and the end to the realization of profits.

S. Artesian

Friday, June 11, 2004

Death of a Salesman

In a scripted display of official grief and mourning the likes of which hasn't been seen since the introduction of the 8 hour day, the bourgeoisie, small, big, bigger, and biggest, lined up like.... well, they lined up like the bourgeoisie at a free meal, for a chance to network, globally, at the bier of that empty-headed lout, that spokesman for 20 Muleteam Borax, General Electric, and death-squad capitalism, Ronald Reagan.

The current administration, realizing that riding the coattails of dead man was preferable to presenting a live candidate, mugged for the cameras and hugged the casket for all it was worth, which, given the current condition of the national treasury, isn't all that much. The current empty-headed lout, the chief occupant of SUV 1, illegitimate offspring that he is, love child of a drunken coupling, a swapping of former presidents and former presidents' wives, is the legitimate heir to the ignorance, the vicious venality, the torture of language, bodies, and souls so essential to today's Creutzfeldt-Jakob capitalism.

And so they filed by; current and former officers of government, industry, foundations, institutions, domestic and foreign (with some notable exceptions-- those not requiring a rollover of debt from the IMF, those too drunk, or like the guest of honor, those already dead); checking themselves and the cameras, for just the right profile for just the right photo opportunity-- thinking one and all and almost out loud, if only we could prop the old geezer up and get a shot with his arms around us.

This is what all bourgeois politics becomes, an exercise in reverse resuscitation-- those still ambulatory convinced that by placing their lips against the stone cold mouth of a corpse, the stiff might blow some life into them. It was a parade of dead men walking; a zombie jamboree.

Grief, mourning, sadness -- the bourgeoisie regret nothing but the loss of market position. Nostalgia is their remedy, where fondness for the past is the program for today. Reagan in his mortification is the embodiment of that truth. So it's the very immiseration of society the bourgeoisie uphold as progress. It's the absolute decline in wages, the absolute increase in child poverty, the absolute re-distribution of income, assets from the poorest to the richest, the arson economy of leveraged buy-outs, the absolute wealth of poverty, fraud, swindle, bankruptcy, corruption, deceit; the assault, fire-armed in Afghanistan, El Salvador, Argentina, Nicaragua; court-armed in the United States; it's the actual offensive against living standards, against the working class, the bourgeoisie beatify in the current spectacle.

Who better to introduce this offensive into the living rooms, the small-holdings, the workplaces at home and abroad, than the man who only read what was written for him; the man experienced as a pitchman for soap and light bulbs, those measures of progress created by rendering human labor into the private property of others? Who else could proclaim poverty as wealth, dismemberment as accumulation, war as peace, ignorance as strength, slavery as freedom? If Nixon was the Bartleby the Scrivener of terminal capitalism, haunting his own employers by his very service, then Reagan was their Orwellian totem, draining all significance from the spoken word in order to provide cover for the liquidation of assets.

S. Artesian

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Saturday, June 05, 2004

Cool Jerks

Scratch any boutique leftist, academic radical, smoke and mirror pseudo-Marxist and you'll find a dedicated follower of fashion. So yesterday's fashion was "hegemony," and today's fashion is "loss of hegemony." Yesterday's fashion was US super-exploitation of the rest of the world through dollar dominance and today's fashion is declining US economic dominance as the euro appreciates against the dollar. Yesterday's fashion was Japanese, European, Chinese, Asian, Latin American, subservience to US capitalism. Today's fashion is European, Japanese, Chinese replacement of the United States at the top of capital's pyramid. All this changing of clothing is explained by the mannequins, these shopkeeper Marxists, as "dialectics," when of course, none of it is dialectics, none of it is the negation and overthrow of a system by the reproduction of its opposite identities.

Fashion is a market creation, and like all market exchanges, fashion is designed to obscure rather than reveal the source of produced values. Hegemony, dollar dominance, declining competitiveness are the rag trade. Expropriation of surplus value, aggrandizement of PROFIT, first, next, and last big thing.

Nothing sells in the fashion business like nostalgia and retro and we've seen this before, along with platform shoes, the layered look, and bad hair. Japan was destined to replace the United States, or perhaps Germany would; US industrial output could not compete with Europe's, Japan's, and watch out for the emerging dragons of Taiwan, South Korea, Malaysia. The US dollar was too strong or too weak or both and everybody knows the oil is about to run out.

And today? As yesterday, neither Japan, nor Europe, nor China can replace the United States' role in the capitalist network. Euro high or low, capital account surplus or deficit, merchandise trade deficit or not, the strength of the United States is in its exploitation of wage-labor both inside and outside its borders.

The appreciation of the euro has been a drag on the export production of the eurozone economies, economies that are much more export dependent than the US. While the US merchandise trade deficit continues to grow, the deficit itself is the product of the US penetration of the economies of its major trading partners-- China, Japan, Mexico, Canada, and Europe. Indeed, while much is made of the "export of capital" as the hallmark of advanced capitalism, the US merchandise trade deficit is the result for the profitable realization of that export through reimportation of the commodities so produced. If China is quite correctly identified as an import-reexport economy, the US is correctly identified as an export-reimport economy.

US industrial labor productivity has continued to outpace productivity gains in the eurozone, so much so that eurozone bureaucrats have attempted to establish a common policy to close the productivity gap, to little avail. Gross economic measures for 2003 year to year changes in GDP, unemployment, employment, industrial production, output per worker all indicate the relative strength of US capitalism vis-a-vis Japan and the eurozone.

This strength is not simply a military or financial strength, but a real strength in the expropriation of surplus value,and in offsetting declining rates of return by diminishing the standards of living of the workers.

Japan's recent recovery, fed not by the China demand, but by depreciation of labor and a 25% reduction in capacity utilization, has done little to arrest the deflation in industrial and residential real estate assets.

Tomorrow is not a whispered promise of some other capitalist economy supplanting the United States in a restabilized global capitalism. Rather it is the accelerating decline of the system of exchanges as a system, with the United States, that is the US bourgeoisie, making out better than its counterparts, collaborators/competitors. A rich man can always get through poor times better than a poor man. And the fashion plate Marxists, as always, are all dressed up with no place to go-- and dressed up in last year's model.

S. Artesian

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