Sunday, August 10, 2008

The Shipping News, 2

Ships On The Ocean

So I'd like to know
Where you got the notion
To...rock the boat
(Don't rock the boat, baby)
Tip the boat
(Don't tip the boat over)
--The Hues Corporation

1. In 1997 the currency and financial crises that swamped the export-driven NIEs of Asia and the Pacific soon revealed themselves to be just one face of that many faced coin of the capitalist realm, overproduction. The secret to money, after all, is contained within the secret of the commodity and not vice-versa.

The over-accumulation of industrial assets became, as it always does, the overproduction of commodities and declining profits. Failure to realize expanded value in the circulation of commodities necessarily reproduces itself in the devaluation of the means of production and the means of circulation. The secrets to accumulation and trade are in the secret of the commodity and not vice-versa.

By 1998, the shipping industry had absorbed, painfully, a 33% decline in asset values. Earnings per vessel declined. For the entire decade, the annual earnings per year average $4.2 million. Things were to get better, as they sometimes do. By 2000, the annual earnings had increased to $7 million.

Things were to get worse, as they always do, before they got better again, as they sometimes do. By 2004, earnings had recovered to $11 million per vessel per year, and 2008 estimates are for earnings of $13.7 million. Except estimates are often optimistic and early, and sometimes wrong.

2. 2oo6 was a very good year for the maritime trade; 2006 was a very good year for capitalism in general. In fact 2006 was the peak year for the recovery of capitalism, for its profitability, from the 2001/2002 contraction. The secret to maritime trade is in the secret of profitability and not vice-versa.

The UN's Review of Maritime Transport 2007, reporting on 2006 performance, noted that value of world merchandise trade had grown by 8%, twice the rate of growth of world GDP. Seaborne good tonnage increased to 7.4 billion tons with ton-miles increasing 5.5% as longer haul south-to-south trade increased.

The world maritime fleet increased 8.6%, exceeding the previous record for increase of 7.2% in 2005, Total fleet capacity measured 1.04 billion deadweight-tons (dwt). Oil tanker capacity increased 8.1%, dry bulk carrier increased 6.2%, and these 2 categories represent 72% of fleet tonnage. The highest growth in tonnage was recorded by the container ship segment which grew 15.5% to represent 12.3% of fleet tonnage.

The average vessel age declined to 12 years, with that of tankers at 10 years, container ships at 9.1 years.

"Productivity" measures, however, absorbed the impact of the record deliveries. Tons carries per deadweight ton of capacity declined to 7.3 and thousand ton-miles operated per dwt declined to 30.1. The surplus tonnage increase to 10 million dwt, with tanker surplus at 1.4% or 4.5 million dwt and dry bulk carriers at .6%, or 2 million dwt. Still, hardly anything to worry about. In 1990 surplus rates for the world maritime fleet measured at 9.7 percent.

The greatest growth in tonnage and ships was recorded in the sector that has been recording the greatest growth for more than 20 years, container shipping. Container shipping has grown from 7.4% of total dry cargoes in 1985 to 24% in 2006. Since 1988, container shipping capacity (measured in TEUs--twenty-foot equivalent units) has increased sevenfold. At the start of 2007, the container fleet capacity had increased increasing 16.2% over 2006 to 9.4 million TEUs. More than 1/3 of this fleet is less than 5 years old.

And, in 2006 for the first time since 2001, the increase in capacity exceeded the increase in the world's container trade which grew 11.2% to 1.13 billion TEUs.

3. A very good year was 2006. Shippers took delivery of almost 2400 new vessels, a record 71 million dwt, 20% above the 2005 mark.

Nothing inspires growth like growth; nothing inspires spending like spending. The bourgeoisie, see nothing in those floating fixed assets in good, or nearly good times, except an increased revenue stream; seeing nothing but clear sailing and a bigger wave ahead/behind; never seeing the deadweight in all those deadweight tons until the seas have dried up; never missing their water until their ships run high and dry, continued to fill the order books of shipmakers.

While deliveries slowed in 2007, orders for new shipping did not. In 2007 tonnage on order for container ships tripled from the 2006 level; tonnage on order for oil/refined product tankers nearly tripled; for dry bulk and general cargo carriers doubled. Since construction times from order to delivery are from 1 to 2.5 years, the merchant fleet will more than double between 2006 and 2010 as the generallow average age of the existing fleet means break-up rates (the process of tearing down obsolete shipping) will not impact overall capacity.

For the bourgeoisie to make so dramatic a statement of confidence in world-wide liquidity, and the accelerating growth rates for trade, it is of course more than fitting that such increased purchases were made right as growth in trade is decelerating and lines of credit are drying up. More than fitting, it is in fact the increased purchases, the increased expenditures on these floating fixed assets that are the means for circulating capital, that drives international capitalism from expansion to contraction, from expanded reproduction to declining rates of return.

No more and no less than the increased price of oil reapportions profits to, does more than channel the profits, more than canalize the revenue streams of all other industries, to the petroleum majors, but also measures the overproduction of the means of production, measures the inability of capital to realize a mass of profit quickly enough to offset a fall in the rate of return, the increased freight rates of the maritime shippers are more than a response to increased operating costs, increased fuel costs. Increased maritime rates measure a declining rate of return on investment brought about by the very "over-investment" in the industry's real assets.

In 2005, total world import values transported by the maritime fleet increased 13.4%, while the freight revenue from these shipment increased 31.2 percent. The average freight tariff for advanced countries amounts to 4.5% of the value of the goods in shipment. For developing countries, the ratio is 7.7% of the value. For the period 1990-2000, the tariff ratio had dropped 22% for the developing countries, only to begin moving upward again in 2004. For the advanced countries the tariff ratio has remained essentially unchanged.

The relative higher rates for developing countries are directly a factor of longer dwells (loading/unloading) at ports with lower throughput capacities. The inequity in development then refracts, and perpetuates, itself in a penalty, a microcosm of unequal exchange.

The price inflation of shipping rates cannot offset the declining rate of return for the industry. It will instead bring the over-investment, overproduction of fixed assets with longer and slower rates of return into painful relief, as there will be "too many" ships on the ocean, too many ships in the construction yards, too many ships on the order books, too many ships in the list of collateralized loans.


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Saturday, August 09, 2008

Summer Reading

Way back when... Thirty-four years ago, A. Solzhenitsyn was allowed to leave the then Soviet Union and reap the usufructs of advanced capitalism. Around that same time, Solzhenitsyn's Letter to the Soviet Leaders appeared in print and those who actually read, rather than promote, his work learned just how right the Soviet leaders were to send this master of literary banality packing.

Way back when, when the predecessor of The Wolf Report, Nightwatch, appeared in print on actual paper, I wrote an appreciation of sorts of the man, and the circumstances that brought the man to his new home.

Way back when, Nightwatch prided itself on featuring regularly, in its every most irregularly scheduled publication, obituaries, marriages, births-- "transitions" that in their absurdity, venality, false propriety most clearly illuminated the darkness at the heart of modern capitalism. What a Difference a Day Makes, and made, way back when.

The Solzhenitsyn report was written in that vein, with that intent, but its length, which is to say, and singularly concentrated attack, required that it appear as a separate piece.

I never thought much more about Solzhenitsyn, not to mention my most unliterary criticism of the man, but my former collaborator on Nightwatch, noting the death and the outpouring of appreciations offered in tribute to the now stuffed literary lion suggested I reproduce it here, where it may be preserved, like Solzhenitsyn himself, and ignored, like Solzhenitsyn himself, eternally.

So...edited [in brackets] and abridged, here comes, there goes:

A Five and Ten Cent Baby in a Million Dollar Store, Fall 1974

While capitalism exports credits, grain, technology, and complete industrial plants to the USSR, the Stalinist bureaucracy returns the favor by exporting minerals, some natural gas, and some unnatural gas in the person of Aleksandr Solzhenitsyn, to the capitalist countries. Somebody's getting a raw deal along with the raw materials. It sure isn't Solzhenitsyn. He stands to make a cool million off his exile. It isn't the bourgeoisie. They will get their percentage of the gate. It isn't the Soviet bureaucracy. [Solzhenitsyn's exile goes right to their bottom line as a plus]. But Solzhenitsyn is a total liability for human emancipation. Once again, Stalinism has forced the working class to carry the burden and the debts of Stalinism's own deformity.

....A "dissident" in the USSR, Solzhenitsyn became a "champion of freedom," a "defender of artistic truth." Now that Solzhenitsyn is out, so is the truth. The champion of freedom is an organic reactionary....His struggle is nothing but the slavish praise for the historical poverty of Russia. The real crime of the Russian Revolution, according to Solzhenitsyn, was disturbing the sanctity of that poverty.

Hard on the heels of Solzhenitsyn's arrival in the West came the publication of his Letter to the Soviet Leaders in which he fuses his literary and political purposes into one-- the slavation [intentional reversal of letters] of Russia from the "horrors" of modernism and for the spiritual regeneration through a return to the past. Holy Russia is Solzhenitsyn's cause, but how little he knows of earthly Russia and how much less he understands. Of the Russian Revolution, its advance and decline, of this single most important event in all of modern history, he knows nothing and detests everything. In this, Solzhenitsyn is a perfect example of petty Russian cretinism. Solzhenitsyn claims Marxism broke the tranquility and strength of Holy Russia, [catapulting] it into the clutches of a profane world. ... nothing so evil could have grown up in the natural soil of Holy Russia, the revolution was imported from the West.

Solzhenitsyn employs Spiro Agnew's criteria of social development, Malthus' principles of political economy, and Teilhard de Chardin's philosophy as he argues that Russia is doomed to destruction of the bureaucracy maintains its ideology of "economic growth" and "international revolution." A moron always stands on the shoulders of other morons but that does not mean he will be able to see past his own noses, especially when the eyes are crossed and the brain is addled.

The "ideology" of Marxism can only bring calamity after calamity for Holy Russia argues our Calamity Jane. The calamity will be war with China... and then Russia, like the West will collapse in the calamity of economic "over-development." Solzhenitsyn's solution to these calamities is "zero-economic growth." Modern technology, large scale industry and agriculture, world trade, cities, and even babies must be renounced. The underdeveloped countries, who don't have all that much to renounce, must employ "small-scale technology, simple machinery, and increased manual labor to insure their purity. Well, it just so happens that much of the underdeveloped areas have existed on just that diet and those rations for 200 years and see how good life is there? ...1974 is making the idea of zero economic growth a reality. In the first half of 1974, the US GNP actually declined 4.1% and the rest of the world isn't far behind. So let's hear it now. Is everybody happy? Is the world any "cleaner," any less strapped for wealth?....If Solzhenitsyn really hates economic expansion, he should love the Stalinists whose desperate need for technology already obsolete in the West reveals just how backward they are.

It is economic growth that Solzhenitsyn views as the greatest calamity of all, for it disrupts everything dear to his backward little heart. How he longs for the good old times of the good old time villages with their good old time Orthodox churches, their good old time Black Hundreds, their good old time smallpox and typhus, their good old time wife-beatings and illiteracy. And all this nostalgia from a man born in 1918. What a true novelist's memory to remember the joys never experienced. How poetic he waxes as he dreams of the resurrection of the small towns made for "people, horses, dogs" (not necessarily in that order). Solzhenitsyn's five year plan calls for the construction of these charming little outhouses all Russia with transportation provided only by horses and battery-powered electric motors......

Intellectual poverty always extols the virtues of physical poverty. The real positive outcome of Solzhenitsyn's un-development of the USSR will be the Christian salvation of the Russian people who suffering will once again produce that chorus of moans and groans that are music to the ears of every priest. Solzhenitsyn performs a service here in articulating religion's inherent need for absolute immiseration of human life. Poverty may be murder on the body, but it's gangbusters for the spirit.

Marxism opposes and uproots poverty and religion, and both at once. For this reason, Solzhenitsyn finds Marxism more intolerable than Stalin's labor camps where both poverty and religion flourished. Solzhenitsyn never read Marx, but that's no drawback. Stalin never read Marx, Mao Tsetung never read Marx, most Marxists haven't read Marx....Solzhenitsyn calls Marxism a "primitive, superficial economic theory, it declared that only the worker creates value and failed to take into account the contribution of organizers, engineers, transportation, or marketing systems." Like capitalism, Marx never ignored the role of engineers or advertising agents, but like capitalism, Marx knew that only the proletariat created surplus value. In 1972, US Steel's executives were bemoaning the fact that only one-third of their employees was involved in actual production. The company's top heaviness, they complained, devoured profits before they were realized.

...Economic development drags in its wake the possibility of concrete human freedom. Solzhenitsyn despises that freedom above everything else. He craves "authoritarianism with love." Solzhenitsyn wants a Czar, nothing more and there is nothing less. It is no accident that Solzhenitsyn's books as well as this letter reek with a secret admiration for Stalin, who after all, provided his own brand of "authoritarianism with love." How Solzhenitsyn must have embraced and even fondled his imprisonment in the labor camps. Those were the days that come closest to the good old days he desires for the future. "Authoritarianism with love," cries Solzhenitsyn. "Long live the chains!" cried the Spanish guerrillas... when they threw Napoleon's troops out of Spain and restored the conditions of their own slavery. "Long live the chains!" echoes Solzhenitsyn

So what could the Soviet bureaucracy do with dear Aleksandr? Trial and imprisonment. But Solzhenitsyn obviously was mentally incompetent and unfit to stand trial. A mental ward? But Solzhenitsyn was already insane and an idiot to boot. Shoot him? but to do that the Stalinists would have had to reverse fifty years of policy and actually fire a shot in defense of the proletarian revolution. Solzhenitsyn had to be exported, and the bourgeoisie eagerly accepted him, COD.

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