Full Disclosure, Self-Criticism (from a confidential source)

From a message to a friend:

To be honest, I'm not all that happy with "Overproduction, Overcapitalization 2." The point I'm trying to make, or trying to account for in the piece is the actual price increases that accompany increased capital formation, the growth of fixed assets, and the increased capital expenditures that precede and accompany periods of  downturns. 

To me, this is not just a question of speculation-- but the purpose speculation serves in distributing the profits.  Certainly there's speculation:  the Financial Times estimated that 70% of all price moves in the commodity markets are the results of computerized trading programs responding to other computerized trading programs-- but such programs are triggered by, and conform with, certain changes in the size of the capitals dedicated to mining, petroleum, etc.


So that's what I want to get at.  I think the price increases are "deliberate" but inherent,  planned but determined,  by the changes in capital formation-- not by speculators, "monopolists"  etc.

I think this might help explain the transition after the end of the "long deflation" in/around 1898 and the movement to syndicates, trusts, where/when prices move much differently than they do in the 1873-1898 period.

Wish I weren't so lazy, and so bored,by "economics."  I might actually be able to tolerate doing the research such a thesis requires.

If I knew of anyone interested, I'd hire him/her to sort it out. 

(author's name withheld by request by the author, S.Artesian)

Overproduction, Overcapitalization 2

1. Slip

The journals of the bourgeoisie--digital, analog, virtual, print--have spewed tons of ink and blizzards of one and zeros--marveling, worrying, cheering, bemoaning the latest fad in political economy: the "super-cycle" in commodity prices.

The bourgeoisie and their hack political economists reserve the commodity label for those raw materials and foodstuff generally produced in bulk and which form the components for the further fabrication of the means of production and the means of subsistence.  We get energy commodities, agricultural commodities, timber commodities, metal and mineral commodities.  We get everything from live cattle to dead pork;  aluminum to zinc.

Clearly, the dramatic rise in the prices of these commodities since 2005, and the rapid recovery of prices since the Great Recession of 2008-2009, is enough to register as a "super-cycle," or at least the beginning of the "upswing" of a super-cycle...to them.

More than that, the spike and recovery in commodity prices is cited by some as evidence that the Great Recession is indeed just a financial crisis, although a big one, and that the real economy was, is, and will be once always and again reaching new highs; that there is no overproduction of capital as these price increases are the true indicator of long-term "effective demand;" that profitability will increase and the increase will be sustained by the upward movement of these prices.

So what about it?  What about super-cycles and commodities. Is/are there 36 year cycles, 42 year cycles, 84 year cycles?  Are commodities like cicadas, sinking into the ground only to emerge after a number of years, climbing into the tree-tops, looking to meet, mate, reproduce and die?  Are commodities like that body in the lake, sinking then rising, sinking again,  only to rise again, each time a little more bloated, a little more putrid?

My answer is clear unequivocal and brief:  Wrong question.  Wrong questions.

The "right" questions are, whatever the duration of a so-called cycle, whenever the prices rise and/or fall what does the rise and fall accomplish?  What does it tell us about the moments of capitalist reproduction?

My problem, and not that my problems are a big deal, with the super-cycle theories of commodity prices is just that-- at core, these are price theories.  In (many of) these theories price is regarded as both measure and determinant, for demand, consumption, expansion.

For Marx, prices is significant in its function,as a function, as a mode of distribution driven by the determinant of accumulation.

2. Trip

The determinants of capitalist accumulation are, more or less, in a condition of dynamic disequilibrium.  Capital does not "aim" at equilibrium.  Capital has no aim, no purpose, no goal at all, other than the accumulation of more capital. It's like a shark, or rather like Hooper's description of the shark in Jaws: 

 What we are dealing with here is a perfect engine, an eating machine. It's really a miracle of evolution. All this machine does is swim and eat and make little sharks, and that's all. 

It even eats the little sharks it makes, and the little sharks other sharks make.

To do that, accumulate, to be that, accumulation, it spawns destabilization, disproportion, devaluation.  To create its property, it dispossesses.  Its property is the dispossession of labor.  To accumulate value, it over-value and then devalue all previously accumulated value, incrementally, and over time.  "Equilibrium," balance, proportion occur....as accidents, never as necessity.

In its evolution, capital demands that profits, which are the social realization of a portion of all the surplus value funneled into the markets, be distributed among the particular capitals in proportion to the size of the capital deployed and regardless of the internal relations of the components (variable and constant) that form the capital.  Size matters, bigger is better, or at least demands to be treated better.

In its apportioning of profit, capital approaches the creation of average rate of profit.  The apportionment process itself however demands that every particular capitalist must strive to accrue a profit greater than the average-- to swim faster, eat more, make more than the average.  You are average only when eating or being eaten.  Value, in its realization and not as chum, must devalue other capitals-- eat their lunch, eat them for lunch.

OK, enough with the shark analogy.  Forgive me for having watched Jaws again last night.

In this process of accumulation, commodities do not simply and solely exchange with other commodities as equals.  They exchange as the capitals-- as mechanisms and modes for realizing this compulsion, apportioning profit through price. 

Between 1960 and 1969, world commodity prices indexes (as archived in the World Bank Commodity Price Data Sheets), unadjusted for inflation, experienced a period of stability.  Energy prices declined about 15 percent.  Agricultural prices were virtually unchanged; metal and mineral prices were flat in the first half of the decade, increasing 30 percent in the second half.

It is after the OPEC oil price spikes of 1973 that the commodity price indexes turn upward.  The price of oil is the whip that drives the prices of other commodities forward.  Between 1970 and 1979, the index for energy commodity prices increased seventeen fold; agriculture commodity prices were up 250 percent; metals and minerals about 225 percent.   Sound super?  Sounds super.

However, between 1980 and 2000, the indexes declined 25 percent for energy; 35 percent for agricultural commodities; 13 percent for metals and minerals.

Next comes the big uptick between 2005 and 2012, when the energy price index doubles, the agricultural and metals indices triple, recuperating all the ground lost in 2009 and 2010.

Which gets us to... exactly where? Well, it might get us right back to 1973, or 2003 when the price increases in oil push and pull the other commodity prices ahead and behind it; when the price of oil  directs profit to the largest capitals where the rate of profitability had deteriorated.

And maybe it gets us right where we are today: with the commodity prices already past their peak and on the downhill side of the curve, the cycle; where the over-capitalization has engendered overproduction to the point that the transfer of profit sets the terms for general devaluation.

3. Stumble

If, near the close of one "super-cycle," that of the post-war recovery, the word that capital whispered across the pillow to those who embraced it was "plastics," that word at the close or the start or something in between of this "super-cycle" was/is/has been "metals." 

On December 4, 2010, the Financial Times headlined an article "Global Resources Spending Soars."

On June 5, 2013, the article featured in the Financial Times was headlined  "Poor Returns Face Mining Groups." 

Not to be left behind by its British cousin, the Wall Street Journal  headlined "Losses Mount in Resource Markets."  Included in the article is this comment by a portfolio manager at Pacific Investment Management Co. who manages $27 billion in commodity investments for the firm, "I think the super-cycle is dead." Can't get any more definitive than that, can it?  Except to say, "what super-cycle?"

In the world of attention-deficit disorder capitalism, in this network and era of short-term, flipping, optioned, get in and get out-- in this network and era just like every other network and era of capital, seven years is as good as it gets.  Then things get itchy, and for capitalism, it's an itch it can never scratch.

When our "super" cycle began in 2005, capital spending by mining and resource companies accelerated.  In 2008, that amount (not including oil and gas) was a record $110 billion, which was one more indicator to political economists just how "healthy"  the "real" economy was.  In fact the "real" economy was so healthy capital spending and commodity prices recovered rapidly from their declines in 2009. 

Capital spending peaked in the 4th quarter 2012, with the total for the year (again not including oil and gas) weighing in at $140 billion globally.

Prices for metals were already on the way down in 2012, and have continued downward in 2013.  Aluminum prices on the London Metals Exchange (LME) have declined 25% since 2011.  Copper prices are down 20 percent.   Steel prices, not exactly a "resource" but the driver of iron ore prices, have declined 35 percent since 2011. 

The very same force that drove the commodity prices up, capital accumulation, now drives the prices down.   The commodity, the commodities, remember are but vehicles for capturing a portion of profit.  With the expansion of capital spending, the expansion of the value of the means of production, the commodities act as representatives of that capital.  Accumulation then manifests itself as the accumulation of the commodities as profit claiming vectors.


The larger capital claims larger profit.  The mechanism for this claim is price, or price increases, or as we might know it today --"economic rents" when commodities command  prices extraordinarily higher than their value as commodities. 

Inventories of metals which were relatively high at the close of the 2001-2003 recession were drawn down in the recovery as capital spending for production 3-5 years in the future forged ahead.   Inventories of copper, for example, declined from about one million metric tons in 2002 to 200,000 metric tons in 2008.  In 2013, copper production expanded at the highest rate in its history.  Inventories reached 600,000 metric tons.

Trading volumes increase.  Turnover, circulation of claims to the commodities, exceed the circulation of the commodities themselves.

The inventories of the metals held in warehouses connect to the LME  expanded more than fivefold between 2008 and 2013.  Aluminum stocks grew from less than one million metric tons to more than five million;  Zinc stocks grew from less than 100,000 tons to more than one million tons. 
 
At a certain point, the over-capitalization is transformed into over-production.  Each/both predetermines the failure of expanded reproduction.  The general devaluation of capital ensues.

4. Fall

Five years into this process, we are still just at the beginning.  2014 is going to be one helluva year.  Count on it.


S.Artesian

July 23, 2013

This Just IN

(NY) Rumors are flying, and furiously, that  Rupert Murdoch's News Corporation  could announce that it might consider hiring George Zimmerman to host a proposed new show on its possibly soon to be launched children's network.  Speculation is that on the show, tentatively entitled "Guns and Dolls,"  George will explain the benefits of bullying, stalking, and killing all those with darker skins except maybe for Clarence Thomas (George isn't sure about that, but he's willing to listen). 

"We're in the entertainment business," said a person familiar with the rumored discussion of a possible show that might feature Zimmerman. 

In a separate but related item, the Bush...error... the Obama Administration announced today that it has hired the six jurors who acquitted Zimmerman as a special board of review and clearance to oversee the US government's "targeted killing" program.  An unidentified highly placed source stated that as its first assignment the new board will review the applicability of pre-emptive "stand your ground" targeted killings when the government feels threatened by those who might leak embarrassing security documents and wear hoodies.

S.Artesian
July 15, 2013

No Title... 4b, or 5

The first case to be heard, and fully reflect the United States Supreme Court's decision to void the Voting Rights Act, ended in the acquittal of one George Zimmerman, who stalked and killed an African-American youth.  Zimmerman, because he killed the African-American youth, was considered close enough to being white to warrant acquittal.

This application of the Court's recent decision has been closely observed by the citizens and officials throughout the southern, western, eastern, northern, mid-western, mid-Atlantic, southeastern, northwestern United States who understand that the Court has reconfirmed the historical first principle of the North American republic:  "An African-American has no rights that any government, federal, state, local, is obligated to defend, protect, or enforce."

S. Artesian
July 14, 2013

Falling Out

The Muslim Brotherhood's and the Egyptian military's uneasy alliance broke apart for the same reasons it was joined: bringing the revolution to an end.  Towards that single goal, the Egyptian military had withdrawn its support from Mubarak two years prior.  For that purpose, the Muslim Brotherhood exercised power.  Because the Brotherhood could not bring the revolution to an end, could not address the underlying social roots of the struggle, which is at core, a class struggle, the Egyptian military deposed Morsi.

The actions of the military are a coup, no less and no more than the expulsion of Zelaya in Honduras was a coup; no more and no less than the 1973 overthrow of the Unidad Popular in Chile by Pinochet was a coup.

Regardless of the theocratic, right-wing nature of the Brotherhood's  Freedom and Justice Party, the military coup in Egypt is not a "victory" of any sort for revolution, nor an advance of the revolutionary process, no more than the overthrow of Allende or Zelaya was a defeat for "democracy." "Democracy" gives way, and gives way always, to class struggle.

The coup is an advance for counterrevolution.  The economic, social, class conflict in Egypt will not be resolved by the coup, by those demonstrating support for the coup, just as the conflicts were not and could not be resolved by the Morsi government.  To the degree that the military is able to cover itself with a "liberal" or "technocrat" or "moderate" mask, the better it will be able to weaken  that struggle, and protect its own privileges, which-- since the military owns quite a bit of the property, the industry, and the infrastructure of Egypt-- pretty much amounts to the same thing.


The so-called "International Marxist Tendency has disgraced itself with the garbage it has published regarding the coup, which is no news and no big deal.  That it attaches the name Marxist to this garbage is somewhat of a big deal, or maybe even more unfortunately it's not such a big deal, to others who think Marx drew the line at supporting the institutions and organizations of capital, whether military or theocratic.

No Marxist has any business supporting the Egyptian military.  And no Marxist has any business supporting the MB/FJP or calling for the return of the Morsi government to power.  The opposition to the coup, to be Marxist, has to be along class lines and based on a class program.  Of utmost importance to the future of the revolution in Egypt is a program that introduces class struggle into the military itself.

With the usual modesty for which I am so well known, I offer, for consideration, criticism, improvement, rejection, discussion, dismissal the following modest items for such a program:

1. repeal of the legislation enabling the government to replace union leaders with Muslim Brotherhood or any other government appointees.

2. workers’ organizations, including defense committees, strike committees to freely function without interference from the military and/or any other part of the government.

3. immediate rejection of the IMF loan, and cancellation of all debt payments to all capitalist governments and their international organizations

4. immediate termination of grants of equipment and money for the military from the United States and any other country.

5. Free, non-religious based, education for all children including college and university levels.

6. no discrimination between men and women regarding wages, education, access to healthcare, dress code requirements, etc..

7. termination of all trade agreements with Israel until such time as the blockade against Gaza is lifted, settlements in the captured territories are eliminated, and the right of return for Palestinians is enacted. Open all the borders, Egyptian and Israeli, surrounding Gaza.

8. the right of workers'  organizations to freely distribute information to the ranks of the military.

9. right of the military ranks to organize committees of representatives.

10. right of enlisted ranks to refuse orders unless such orders are approved by these committees.

And that's as democratic as it gets.

S.Artesian
July 13, 2013

Overproduction, Overcapitalization (1)

1. Anti-Executive Summary:  Marx's theory of revolution is not one that correlates the improving or worsening prospects for revolutionary overthrow with improving or worsening economic conditions.  In this regard, Marx is neither a "crisis=revolution" advocate, nor a "growth=revolution" theorist.

In his A Contribution to the Critique of Political Economy,  Marx offers his well-known, oft-cited, sometimes abused:

At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production or--this merely expresses the same thing in legal terms--with the property relations within the framework of which they have operated hitherto.  From forms of development of the productive forces these relations turn into their fetter.  Then begins an era of social revolution.

Marx's critique being the analysis of the immanent limits to capital, the immanent tendencies for or toward the abolition of capital, and not the assertion of that imminent abolition, the conflict between means and relations must exist at the very origin of capital, must in fact be capital.

That conflict is inherent in the organization of labor as value, and value producing.  The conflict exists in the organization of social labor, the labor power of class, expropriated, circumscribed by and as the private property of others.

The immanent conflict becomes manifest, becomes more than apparent, becomes acute as and at moments in the reproduction of capital.  The moments can erupt during periods of expansion.  The moments can occur as the legacy, the hangover of expansion.  They can erupt as "civil protests" demanding "equality" "justice" "equity" against the very property relations integral to capital's past; to the security of its property, to the conditions of labor, and made obsolete, an obstacle, a barrier to further reproduction by the expansion of capital itself.

For example, the civil rights struggle in the United States was precipitated by the disruption of plantation-share-cropper relations driven by the mechanization of Southern agriculture prior to, during, and after the Second World War.

Ultimately, necessarily, this conflict revealed itself as the conflict between labor and the conditions of labor by reaching into the heart of US industry with the organization of the Dodge Revolutionary Union Movement and the League of Revolutionary Black Workers.

The conflict can  be made acute during periods of contraction, for example Spain in the 1930s; or in the overture to periods of contractions as in Spain, Portugal, Chile, Argentina in the mid-1970s.

Capital finds in all these cases an obstruction, a limit, in all that it has accomplished, and left undone in that accomplishment, just yesterday.

2. Interjection:  Michael Heinrich in his highly publicized, and overrated, An Introduction to the Three Volumes of Karl Marx's Capital argues:

Capital, self-valorizing value, has no intrinsic limits to valorization, and for that reason no rate of valorization, once reached, is sufficient.

Rarely has a researcher, scholar of Marx, expressed his misapprehension  of Marx's critique so concisely, which is the best thing I can say about Heinrich's "introduction."

In fact, Marx's Capital might best be described as an inquiry into and an exploration of the intrinsic, inherent, multitudinous limits to valorization, a description that can also be applied to Marx's Grundrisse, his Economic Manuscripts 1857-1864, and the notebooks Engels edited into volumes 2 and 3 etc. etc.  

All of Marx's critique of capital is a critique of both the ideology of capital, "political economy," which sees capital as "natural," without historical limit, and an exploration of the fragility of the material mechanism for the accumulation of capital,  valorization, which is threatened on all sides from the inside.

If the law of value is nothing other than the relations between classes, the specific organization of labor as wage-labor, and it most assuredly is nothing other than that, then the intrinsic limit to valorization is derived from that law.

Private property in the means of production is the limit to valorization, a limit that cannot be overcome, no more than a human being can jump over his or her own head while holding onto both feet.  End of Interjection.

3. Road Trip:  In its various iterations, advanced, developed, less-developed, developing; in its conflicts, alliances, adaptations to, adoptions of the forms of private property exploiting labor socially, that is to say for reasons, purposes, other than subsistence on either the grand or petty scale, or both,  capital embeds its unique requirements for its reproduction, which is the conversion of product into value through the transformation of surplus product by surplus value.  Such transformation can only occur if  (1) all products are superfluous and not products of direct consumption for the subsistence of the laborers and (2)the expropriation of all the products of the laborers is necessary for them to receive a value equivalent to the cost of their subsistence.


Whereas in other modes of production, in other than capitalist markets, commodities exchange as commodities, presenting an image of value, in capitalist markets, commodities are exchanged as representatives of capitals, as bearers of socially necessary labor time, where exchange, where the realization of the value, is a distribution, a parceling out of the whole.

Every category, and every moment of this process is the result of the self-reproduction of the first category, or principle, of capital:  Surplus value can only be expropriated from labor, if the means of production are also be organized as commodities, as values, which achieve their realization in the extraction of higher rates of surplus value.  The means of production can only realize their value through the appropriation of surplus value.  Capital, that mode of production, is the accumulation of the means of production as expanded values.

4(a). Getting There:  So much for the determinants of capital.  Let's get started on the good stuff, the negations of capital, which of course are those very same relations.  Anyway, back in the day, the day being almost any day after JP Morgan was given $29 billion by the Fed to liquidate Bear Stearns and prior to September 15, 2008, those a step removed from Wall Street amused themselves by contrasting the dire condition of the "derivative economy" with the relative health of the "real economy."

"Who cares," they whistled walking by the Trinity Church graveyard in lower Manhattan, "if a hedge fund, or two, or an entire investment bank goes under?  What harm can it do the real, productive, economy?"

Then Lehman Bros went down, AIG was effectively bought by the US government masquerading as the maiden in Maiden Lane, John Thain pulled a miracle "out of his arse" as bankers have been known to remark, by unloading Merrill Lynch, an entity of substantial negative net worth on Bank America for $29 a share. And the whistling stopped.  It's tough to put your lips together and blow when all you can do is suck.

Right bloody mess, it was. Still is.  Some, crusty bastards-- those with money safely invested in shotguns, canned goods, and Treasury notes--wagged a finger, telling all "We told you so" and welcomed the self-correcting invisible hand made visible, that would wipe out the phony, derivative, fictitious capital that was impairing productive capital.  And then "we," upright, responsible, god-fearing, flag-loving, industrious citizens would roll up our sleeves and with a hundred million invisible hands wave good-bye to the artificial financialized economy encumbering the real economy.

Didn't exactly work out that way, did it?  We saw that the "real economy,"productive capital" did not take advantage of this self-correction.  We saw that the devaluation of the asset-backed securities could not be accomplished without the devaluation of the real assets behind those securities.  We saw that the asset devaluation began before and initiated the collapse of the asset-backed securities, just as the asset inflation preceded the inflation of the asset-backed securities.

We also saw the loss of millions of jobs in the so-called real economy; the real decline in the volume and value of world trade in 2009; the lay-up of 10% of the world's maritime fleet, and about 1/4 of the US railroads' freight car stock.

We have also seen that when the so-called real capitalist economy moved off the bottom of this contraction, the movement is not predicated upon the removal of "fictitious capital" but is accompanied by new issues of the so-called "fictitious capital."

We see that asset inflation does not, has not, cannot restore profitability, but that a certain uptick in profitability, based on reducing the value of the labor aggrandized in the production process, gets translated into asset inflation.  Profit is like a pheromone to the traders, dealers, hawkers, in the financial markets, inspiring them to chase after that elusive object of their desire called "yield" via junk bonds, private equity buy-outs, and re-derived derivatives, inflating those assets.

We heard that the financial collapse, at one and the same time divorced from,  immaterial to, and "beneficial" to the "real," "productive" economy wasn't completely beneficial to the real, productive economy.  The financial collapse produced a "credit crunch."  The financial collapse produce a "crisis of confidence."   "Crisis of confidence" is the bourgeoisie's, the social democrats', the monetarists', the free marketeers', the state interventionists', the bankers', the parliamentarians', the regulators' "go-to" theory for everything and anything.  The crisis of confidence inhibits "effective demand."  The crisis of confidence drives government to institute programs of excess austerity in order to restore confidence.  The crisis of confidence causes banks not to lend.  It causes corporations not to borrow.  It cause everything bad the interferes with the normally balanced, pacific, mechanisms of accumulation.

The invisible hand requires a leap of faith.  Smith, Ricardo, Kierkegaard meet Keynes, Minsky, and Billy Graham.


When things go crappers, it's because the bourgeoisie are  expressing "excessive exuberance;" because they are too confident.  When things are still going crappers, it's because there's not enough confidence.  "If we could just get this confidence thing right, we would conquer the business cycle," spoke the economist confidently.

In the US, for the "real" "productive"  capital, there was no credit crunch.  US non-financial industries dramatically increased the their cash and cash-type assets on hand.  US non-financial corporations did in fact borrow, although their cash and cash assets were at all time highs, issuing record amounts of corporate bonds, and even with the record issues, the corporations had enough cash on hand to meet all debt payments due for the next five years.

I don't know about you but the way I figure it, confidence follows money.  Make money, confidence goes up.  Lose money, confidence goes down. At least that's how it works for me.

4(b). (Hicks) "Vasquez!"  (Vasquez) "Almost there!" (Aliens, 1986): With mercantile capitalism, "investment," such as it is,  follows trade.  Investment, and as little as possible, is committed as a factor of trade. In industrial capitalism, trade follows investment.  The capture of wealth is in the organization, control, and exploitation of labor, in the disposition over labor-time.

Industrial capital realizes that wealth, distributes it, apportions it, through the exchange of all expropriated values.  The market for the commodity is other commodities.  The market for capital is all capital.

Since 1990, the flow of outward directed (directed towards a country other than the "home" country)foreign direct investment has grown from about two trillion dollar to about twenty four trillion dollars.  Industrial production, merchandise trade, and maritime transport of that trade have all moved in unison-- not in lock step, but in unison.

In 2011, maritime transport accounted for 80% of world trade by volume, and 70% of world trade by value.

Rates, charges, hire costs, in the shipping industry were, and are, so low as to be unprofitable for most transport lines.  The reason is that throughout the years of the Great Recession, beginning in 2008, the maritime fleet size grew at a rate that far exceeded the growth in trade.  In 2011, the world maritime fleet capacity expanded 10% over the prior year.  Freight volume expanded by less than half that amount.   Since world trade in 2012 is estimated to have grown by less than 2% year-on-year, the shipping news has oscillated between bad and worse.

Throughout the "Great Recession, the maritime transport companies have continued to take delivery of vessels ordered in 2006, 2007, and 2008.  The industry took delivery of more vessels with more capacity-- identified as deadweight tonnage or DWT-- in the two years 2010 and 2011 than any previous two years in its history.

Overall, world vessel DWT capacity increased 38 percent between 2008 and 2012.  Bulk carrier (iron ore, coal, etc.) capacity grew 60 percent.  Container shipping capacity grew 40 percent.  The tanker fleet expanded to the point where hire rates in 2011 were at or near the rates at the bottom of the Great Recession in 2009.

Now this is not the devaluation of an "old industry" by a new industry; the devaluation of an "old fleet" by a new fleet, although there is certainly an element, a very small element of that going on, because there's always an element of that going on in capital, in capitalist accumulation. 

The average age of the world maritime fleet has been declining with the delivery of the new vessels, and currently, the age of vessels greater than 80,000 dwt is less than four years. 


The overproduction of the maritime fleet has forced the daily hire rates below profitability; such overproduction is simply a different moment of the over-capitalization of the industry.  Too much real capital, not fictitious capital, had been accumulated and reproduced through investment in expanding the fleet.  This is the (attempted) revalorization of capital, without which it cannot survive as value, but with which it drives down its own profitability.  The collapse in daily hire rates drives down the asset values "sunk"(you should pardon the expression) into the production of the ships themselves-- into the accumulation of these means of production as expanded values.

Devaluation here is not the displacement of one capital by another, it is devaluation in accordance with the diminished profitability of capital. 

5. There: Capital's existence  depends on its revalorization, which is the same thing as saying it depends on the recapitalization of surplus value.  Once surplus value is realized it can be reabsorbed, redirected in a number of ways.  It can be consumed as revenue, simply meeting the income requirement of its possessor(s), but this is but another iteration of subsistence.  The portion consumed as revenue no longer engages, commands, possesses and dispossesses the laborer of labor-time, expressing that dispossession as value.

The recapitalization of surplus value, the revalorization of capital is the accumulation of the means of production as expanded values.  I think I said that before, but it bears repeating.  This drives the expansion of the fixed assets in the production process of capital.  This fixed capital only transfers its value incrementally, and only by extinguishing its use value through numerous cycles of production, to the product or service.  In this case, transportation is both product and service.

No capitalist realizes surplus value "independently." At its core, capitalist production is production has no value, no useful value, to the owner.  Its only value to the owner is solely its value in exchange.

To amplify the extraction of surplus value, each and every capitalist is compelled to alter the relation between the necessary labor time-- that time in which the laborers reproduce the value equivalent to their own wage-- and the surplus labor time, which is materialized as the commodity's value.

While compelled to do this, capital can only do this effectively to the degree that the cost of production declines.

The reduced cost achieved by any particular capital belonging to any particular capitalist (corporate or individual) is the vector through which the individual capital can claim a greater portion of the total available surplus value thrown into the market by all capitals.

This circulation of isolated, or uneven, dis-uniform increased applications of fixed assets/reduced costs of production, reduces the average time necessary for the reproduction of the product or service.

Accumulating the means of production as expanded values requires expanded production in order circulate the increased ratio of surplus value.  Unit value declines.  Prices follow

Prices decline, transferring profits to the "new" "market leader."  Profits are leveled.  Profitability as a portion of the total capital committed to the valorization process, declines.

This process lengthens the time of return for the value embodied in the fixed assets of the "older" capitals.  As the prices decline, are forced to decline for those "older" capitals, the time to circulate the original value sunk into the means of production expands.  As turnover time lengthens the rate of profitability declines.  As the rate of profitability declines, the asset values in the production process are once again devalued.

We've arrived.  Not all capitalists arrive at the same time, but all capital, sooner rather than later, gets there, because all capital pursues its revalorization the same way.  All capital must accumulate the means of production as expanded values.

We get the sudden, extended, violent, widespread devaluation of all capitals.

Overcapitalization, overaccumulation, overproduction are all different expressions of the same face.

The decline in profitability, in the rate of profit, is so dreaded by capitalists because it is a summing up.  The decline proclaims that the limits to valorization have been reached and the limits are capital.

We're there.  There's nowhere to go.

July 11, 2013

S. Artesian

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