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January 3, 2013 Wall Street Journal: Potash prices down by 50% since 2009, after increasing fivefold 1999-2009. Since 2002 global capacity has increase 30% to 64 million tons/year. Demand in 2012 was approximately 9% below the 2007 level.
January 7, Financial Times: "Massive softening of Basel 3" stipulations. Full enforcement pushed back from 2015 to 2019. Final core capital rule allows banks to count a wider variety of assets, including equities and 'high quality' mortgage-backed securities to satisfy capital/liquidity ratios. Where have I heard this before?
January 8, WSJ: 16,000 TEU (twenty foot equivalent units) container ships coming on line; fleets practice "slow steaming" to reduce fuel costs, and effectively reduce overcapacity: "Surely if we did not have slow steaming at all implemented on the Far East to EU trading lane, the [hire] rate would be be no higher than a few dollars per container," analyst with Danish based shipping assurance corporation. See Marx notes on fixed capital and circulation, Grundrisse.
January 9, US Energy Information Agency: US oil imports at 25 year low, 6 million barrels/day compared to app 12 million/day 2004-2007. Domestic production 5 million barrels/day 2008, estimated to reach 8 million/day by 2014. All hail the shale!
January 10, FT: UBS chief calls bankers "arrogant." Arrogant? Are you kidding me? They're fucking criminals. Calling them arrogant is like calling the Klan "prejudiced."
January 11, WSJ: US banks, year end, deposits at $10.6 trillion; 5.3% decline in loans outstanding since 2008. Loan to deposit ratio, banks S&Ls 2007 equal 95%; 2012 72%. Cash is king. Cash is trash. Either/or, both.
January 16, WSJ: Speaking of US banks, Bank of America has sold off $50 billion in assets since 2010 (is that notional value or market value? makes a bit of a difference); reduced employment by 11,000; recorded 65% decline in first home owner mortgage products 2012 vs. 2011; has 4.2% share of US mortgage market share vs. 22% in 2009. About time for Bernanke to tell us how healthy the banking sector is.
January 16, FT: "Drive," they said. Renault to eliminate 7500 jobs in France account overcapacity; equals 17% of workforce. Ford closes 20% of capacity in Europe. GM knocks out 3100 jobs at Opel. Your, and their, tax dollars at work.
January 17, FT: Italy in recession. FDI in China-- inbound down 3% in 2011 to $117.9 billion. Outbound up 28.6% to $77.2 billion. That sure is some deformed workers state.
January 18, New York Times: Dell Computer-- spent more money on share repurchases than it has earned throughout its life as a public company. Cash paid to shareholders who sold: $39.7 billion. Cash in dividends (includes special) $139 million. Market value of company $22 billion. Brilliant corporate planning. God bless the liquidationist bourgeoisie.
January 19, FT: Speaking of liquid, US crude production grew more in 2012 than in any year in the history of the domestic industry. Estimates are for an additional growth of 900,000 barrel/day in 2013. I think I felt Hubbert attempt to roll over in his grave, but he couldn't get over the peak.
January 21, FT: Global corporate default rates climbing. 2012 highest since 2009. 85 global companies have defaulted in the past 12 months. Time for Bernanke to tell us how solid global capital markets are.
January 23, WSJ: You know that $1.7 trillion in cash US companies have parked "overseas"? Guess what? It's right here in the US. Cash owned by foreign subsidiaries is kept in US banks in US dollars or invested in US govt. securities. You know, if I was a financial adviser I'd figure out some way to allow the mother company to access that cash without having to declare it as earnings and pay taxes. Hmmh.....how about if the child lends the money to the parent? Who would ever be so curmudgeonly as to doubt the wisdom, the charity, the virtue of a child lending to a parent?
January 24, WSJ: 2012 Asia to Europe shipping volume down 5% vs. 2011.
January 25, WSJ: Greece breaks subway strike, essentially militarizes workers.
January 25, FT: Say this 10 times, fast: Monte dei Pasche du Siena. Say this twice: bailout. Say this as many times as you like. "Irregularities occurred at Monte while being supervised by Italy's central bank when guess who was is charge?" No, not Belusconi, you cluck. Draghi.
Januray 26, FT: UK on the verge of a triple-dip recession. Government of the twits, the posh, and the punters shrugs shoulders. Ben and Jerry's sees opportunity for new ice-cream flavor.
January 28, FT: "Overproduction? No such thing." US oil companies extracting shale oil in North Dakota are flaring off enough natural gas daily to power Chicago and DC. Total US flare gas volume has tripled in 5 years. The good news is that the US is only in 5th place behind Russia, Nigeria, Iran, Iraq. Flyer taped to bus shelter in NYC: "Lost, one petroleum peak answers to the name of M. King. If found please call the offices of the pseudo-Scientific American."
While we're on the subject: US oil product exports 1992-2004 approximatley 1 million barrels/day. 2010= 2 million/day. 2011= 3 million/day.
January 29, WSJ: "Again?" Yeah, again. US money funds cut exposures to Eurozone banks.
January 30, FT: The rights of nations to self-determination-- EU insists on being awarded 30% share of China's telecom market. Defend the right of Chinese telecom corporations, funded, partially or fully owned, and jointly operated with European, Asian, and American (North or South) capitalists to defend their markets from imperialist reactionary European, Asian and American (North of South) capitalists. Download the Chairman Mao ringtone now!
Priceless: Greek Central Bank Governor George Provopoulos quoted: "What is important is that although GDP continues to contract, confidence is steadily improving." Only possible answer to that is "Fuck you, asshole."
February 1, FT: Basel banking committee finds some global banks using models that drastically reduce capital held against assets. No shit? Really? Who would have thunk that? Wait a minute, sounds familiar-- yeah, isn't that exactly what banks have done throughout the last decade? All those "quant" models that told all the banks that their value-at-risk, VAR, was really, really, really low, unless something really, really really unusual happened-- like the default rate on the assets securing the derivatives reduced the payments on the instruments that allowed the instruments to present "value", thus causing a general devaluation and a "herd instinct stamped for the exits"? Something like that. Short term memory loss is essential to capitalist reproduction.
February 2, FT: Netherlands bails out SNS bank for euro 3.7 billion.
February 7, WSJ: US coal exports, 2012, at 115.7 million tons; 2008= app 55 million.
February 9, FT: EU hawks pursue self-deconstruction: push strong reduction in cross-border projects. Sounds like a plan.
February 12, WSJ: Pope resigns-- "sick of being infallible." College of cardinals advises "You're making a big mistake." Rank and file confused. "How can that be?"
February 14, WSJ: Great proletarian cultural revolution figures out primitive accumulation. From village to villa: China seizes farmland, sells same for development of villas, etc. Here's how it works: village provides "compensation" to farmers of 9 yuan/sq. meter. Village sells to developer for 640 yuan/ sq. meter. Developer sells villas for 6900 yuan/sq. meter. What happens to farmers? Guess. Impoverished, marginalized, itinerant, migrant work force, or.. they die. The important thing, as the central bank governor of Greece said, is that confidence is increasing.
February 19, WSJ: Correa reelected. Great victory for oil and mineral deposits.
February 20, FT: Shocker. Hard to believe. Alabama fucks up. Anti-immigration laws drive immigrant labor out of state. Poultry processing and agriculture sectors starve for labor. "We didn't fully think through the economic effects of the law. We shot ourselves in the foot." U of Alabama economics professor channeling his own great-great-great grandfather.
Mining and metal companies rase $249 billion in capital in 2012, down 27% from 2011, "soft prices" as metal inventories climb.
February 21, FT: Fed worried about the assets on its balance sheet. Talk about being a day late and a few trillion dollars short..... . Fed now classified as presenting systemic risk by the Fed.
February 22, WSJ: The invisible hand at work: Continuous mining machines not equipped with sensors to shut down if human becomes entangled in machinery. 4 miners killed in West Virginia. Rule proposed in 2011. No action. MSHA does not issue an emergency order requiring sensors.
February 23, WSJ: Maersk warns on container shipping: "Unless the container shipping industry reduces capacity, there will be a continuous squeeze on freight rates." Meanwhile, Maersk orders 20 "Triple E" container ships, largest ever constructed, with a capacity of 18,000 TEUs. "Do as I say, not as I do." See Marx on circulation time, overproduction of capital ("is always the overproduction of the means of production as capital), and tendency of the rate of profit to decline. Or just wait, and let Maersk demonstrate it all.
February 25, FT: Cyprus-- center-right defeats "communist" for government. "Better position" to obtain bail-out. Sure thing.
February 27, FT: Italian voter reject austerity. Monti sent packing. Same circus, one different clown. Grillo wins 24% of the vote. Center-left inspires confidence: "We will try our best to avoid chaos in Italy."
EU bemoans legacy of Greece: "Democracy is the Eurozone's Achilles heel," Charles Grant, director Centre for European Reform. Note to self. WTF is the Centre for European Reform? Sounds like a front for the Koch Bros.
March 1, FT: The secret of my Deutsche success: Since labor market reform, more lowly paid workers in Germany than elsewhere-- sub-contracting to avoid labor protections; "atypical jobs;" "mini-jobs" paying less than euro450/month. Low paid workers now account for 22% of the labor force, 5 percentage points about EU average. Deutschland Unter Alles.
March 4, WSJ: Shocker, top 20% of earners in US account for 40% of consumer spending.
March 5, WSJ: Cyprus-- things not exactly going as envisioned by the new government. Another shocker.
March 6, FT: Here comes, there goes: North American truck production up 136% 2012 vs 2011, but 4Q 2012 down 23% from 4Q 2011. Classic volatility of overproduction.
March 8, FT: Greece GDP down 25% since 2008: FT asks: "What happens when an electorate decides to vote out leaders for economic policies they disagree with only to find their new leaders being forced to implement the same exact policies?" Hmmh.........good question. Let bring it up in front of the Athens soviet. We'll see if they can give some guidance.
March 9, WSJ: News from Japan: Fukushima Daiichi plant manager say may take 30-40 years to remove melted fuel (think this what Keynes had in mind with his "no use/make work" schemes?). Site generating 400 cubic meters of contaminated cooling water daily-- so let's see 30-40 years times 365 days times 400 cubic meters/day.... Hope they have adequate, impermeable water containment systems, to prevent leaks.
March 13, WSJ: No smoking at the Vatican. China steel output now at 2.21 million metric tonnes daily. Capacity at 970 million tons-- output at around 717 million tons. More than half the world's capacity.
March 13, FT: Don't worry, we know what we're doing at Fukushima, and we know what we are doing here: Japan processing methylhydrate-- methane gas essentially "frozen" under such great pressure in the sea bed.
March 15, FT: US Senate Report on JP Morgan "whale" trading: JPM violated own rules, ignored warnings, misled investigators, and lied. Sounds like banking to me. How does it sound to you?
March 18, WSJ: Cyprus... it gets uglier.
March 18, FT : Uglier that Lagarde? Uglier. Uglier than Schauble? Uglier.
March 19, WSJ: ...and uglier. 57% of US workers have less than $25,000 in total savings and investments (not including the "value" of their homes). Society of Actuaries says, "rising life expectancies could add as much as $97 billion to the liabilities of pension plans." Finally, someone has figured out the problem. These people are just living too long. Can't we do something about that? Oh we are, we are, believe me.
March 19, FT: Moody's estimates cash hoard of US non-financial companies doubled between 2007-2012. Cash levels, home and abroad top $2 trillion. Liquid resources of non-financial corporations now sufficient to cover all debt repayments due for the next 5 years. Well, so much for the theorists of "fictitious capital."
March 20, FT: and uglier.. Power failure at Fukushima Daiichi, shuts down cooling system.
March 21, FT: and uglier...
March 22, WSJ: Building for the future. Chicago plans to close 53 elementary schools, because "children are our future..." and we don't have one.
March 29, WSJ : Somebody must have read The Wolf Report. US corporations tap into overseas cash by borrowing funds for daily operations (HP and GE practice this). Companies not required to disclose this. Companies can set up their own internal banks in low-tax jurisdiction or set up "self" commercial paper money markets.
Re Japan March 9: They don't. It is.
Next Quarter: Uglier, still?
Sunday, April 14, 2013
Saturday, April 13, 2013
Equal Time for the Angels of Our Better Nature.......maybe
Writes Angelus on Louis Proyect's Marxmail:
Word: nothing is more difficult than the orderly disengagement from persistent opponents. Just ask the historians of the US Military Assistance Command-Vietnam.
Regarding the "points" raised by Angelus: (1) Heinrich does not show that there is no way to derive a categorical law of the tendency of the rate of profit to decline. He presents the mathematical representation of Marx's exposition and argues that the mathematical representation does not establish a categorical law because the mathematical presentation assumes a constant rate of surplus value.
If the rate of surplus value increases sufficiently, that is at a rate greater than the rate of the value expansion of the constant capital engaged by the labor, then the rate of profit can rise.
Guess what? No one is arguing that cannot happen, not even, IMO, Marx. However, the law is not the law of the decline in the rate of profit; the law is the law of the tendency of the rate of profit to decline; that is as the mass of capital values, objectified labor, expands, and the mass of living labor so employed declines, the proportional increase in surplus value tends to, and trends toward insufficiency in its ability to counter even the incremental increases in the total accumulated capital.
And why is this a tendency, a trend? Because every increase in surplus value becomes an increase in the total objectified labor, capital, that has itself zero new value producing ability but can only transfer portions of its existing value. Thus to offset this trend, either the means of production must be cheapened, reduced in value, or the exploitation of labor power has to be "excessively" increased in both rate and mass.
If the mass of capital, if the mass of the means of production loses value, that is to say is devalued, then in fact the rate of profit can rise. Devaluing the means of production however involves a period of loss in the overall accumulation process. Improvement in the efficiency of the means of production, reducing costs of production, involves similar loss to the already accumulated capital. Hence, the conditions for the increase in the rate of profit are both preceded and accompanied by the very elements of crisis that are made manifest when the rate of profit declines.
Since we are talking about limits, trends, tendencies, since we are talking about the reproduction of a social relation of production, since we are talking about a process that is based in the conflict between labor and the conditions of labor, the truth is made manifest in the actual processes of the economy, where the expansion of capital becomes, calls forth, its own contraction.
That's one.
As for (2), I suggest everyone take a look at Henwood's chart on the rate of profit linked by Angelus, and look at the trend. Henwood charts a rate of profit that peaks around 1968, staggers lower throughout the 1970s and early 1980s, stabilizes in the mid-1980s but does not exceed the previous peak, turns up sometime around 1992. reaches a high around 1996 which again does not exceed the 1968 mark, turns down again, recovers around 2002 but does not exceed the 1996 level before turning down again around 2007...etc. etc. etc.
Call me a cock-eyed optimist, but I think Angelus is providing evidence of the tendency for the rate of profit to fall despite the offsetting efforts of capitalists everywhere.
Angelus leaves us with "I'm done for now." We leave him with the words "And still it falls."
S.Artesian
April 13, 2013
Sartesian continues to ignore the central points:The discussion of Heinrich's essay is "raging" (excuse the hyperbole) at Libcom and Loren Goldner's Meltdown list as well as Marxmail. I don't know if Angelus is involved in the discussion on Meltdown but he has withdrawn from the discussion at Libcom as well as his apparent disengagement on Marxmail.
1) Heinrich does not deny that the rate of profit (however one decides to calculate it) can decline in reality. It very well can. It can also rise. The point, however, is that one can in no way derive a "law" of the rate of profit to fall at the categorical level that Marx does, and this became clear to Marx himself. Sartesian seems to think that merely asserting that the fall in the rate of profit necessarily follows from Marx's categories is sufficient.
2) Since "the rate of profit" is not a category that actually exists in bourgeois statistics, one actually has to construct a method for calculating it. Not surprisingly, those who wish to argue that the rate of profit is in a state of terminal decline construct their calculations in such a way that "proves" exactly that. That's why I pointed to Doug Henwood's excellent article here as a counterweight: http://lbo-news.com/2012/06/26/profitability-high-and-maybe-past-its-peak/
I agree with Doug's statement about methodology in purporting to calculate the rate of profit:
"Everyone who plays this game does it by different rules. Many esteemed Marxist profit-watchers adjust the official stats in numerous ways, such as trying to eliminate “nonproductive” activity. While I understand the interest in jiggering the numbers, no known capitalist can see or feel the adjusted rate of profit. What they (and their shareholders) care about is the actual rate of profit, reported in cash money, relative to the amount of capital that had to be invested to gain the return."
In any case, this exchange is about as fruitful as arguing with Jehovah's Witnesses, and half as fun. The most that can be said for Sartesian's posts is that at least they're not as mindless as the one that appeared at the Kasama blog, which basically takes up the machine fragment of the Grundrisse to make its case, the very passage that Marx refuted with his concept of relative surplus-value!
Whatever. Spring has come and I'm going to go enjoy it. Anybody who wants to take the effort to construct a rigorous argument against Heinrich that takes into account the arguments that he actually makes should do so, and then maybe contact the editors at MR to see if they'll run it.
I'm done for now.
Word: nothing is more difficult than the orderly disengagement from persistent opponents. Just ask the historians of the US Military Assistance Command-Vietnam.
Regarding the "points" raised by Angelus: (1) Heinrich does not show that there is no way to derive a categorical law of the tendency of the rate of profit to decline. He presents the mathematical representation of Marx's exposition and argues that the mathematical representation does not establish a categorical law because the mathematical presentation assumes a constant rate of surplus value.
If the rate of surplus value increases sufficiently, that is at a rate greater than the rate of the value expansion of the constant capital engaged by the labor, then the rate of profit can rise.
Guess what? No one is arguing that cannot happen, not even, IMO, Marx. However, the law is not the law of the decline in the rate of profit; the law is the law of the tendency of the rate of profit to decline; that is as the mass of capital values, objectified labor, expands, and the mass of living labor so employed declines, the proportional increase in surplus value tends to, and trends toward insufficiency in its ability to counter even the incremental increases in the total accumulated capital.
And why is this a tendency, a trend? Because every increase in surplus value becomes an increase in the total objectified labor, capital, that has itself zero new value producing ability but can only transfer portions of its existing value. Thus to offset this trend, either the means of production must be cheapened, reduced in value, or the exploitation of labor power has to be "excessively" increased in both rate and mass.
If the mass of capital, if the mass of the means of production loses value, that is to say is devalued, then in fact the rate of profit can rise. Devaluing the means of production however involves a period of loss in the overall accumulation process. Improvement in the efficiency of the means of production, reducing costs of production, involves similar loss to the already accumulated capital. Hence, the conditions for the increase in the rate of profit are both preceded and accompanied by the very elements of crisis that are made manifest when the rate of profit declines.
Since we are talking about limits, trends, tendencies, since we are talking about the reproduction of a social relation of production, since we are talking about a process that is based in the conflict between labor and the conditions of labor, the truth is made manifest in the actual processes of the economy, where the expansion of capital becomes, calls forth, its own contraction.
That's one.
As for (2), I suggest everyone take a look at Henwood's chart on the rate of profit linked by Angelus, and look at the trend. Henwood charts a rate of profit that peaks around 1968, staggers lower throughout the 1970s and early 1980s, stabilizes in the mid-1980s but does not exceed the previous peak, turns up sometime around 1992. reaches a high around 1996 which again does not exceed the 1968 mark, turns down again, recovers around 2002 but does not exceed the 1996 level before turning down again around 2007...etc. etc. etc.
Call me a cock-eyed optimist, but I think Angelus is providing evidence of the tendency for the rate of profit to fall despite the offsetting efforts of capitalists everywhere.
Angelus leaves us with "I'm done for now." We leave him with the words "And still it falls."
S.Artesian
April 13, 2013
Friday, April 12, 2013
Down with the Dogs! Up With the Fleas!
Angelus Novus, a close associate of Michael Heinrich, and participant on Louis Proyect's Marxmail list, and the Libcom list, read "Oh You Kid," and he didn't like it. Wrote the avenging Angelus on Proyect's list:
So first things first: See the evidence for the tendency of the rate of profit to decline is not in the text or rituals of a sect, or in the secret recipes of wizards, demons, or butlers. The evidence is in the actual historical movement of capitalism. Those who agree with Marx's analysis of the tendency of the rate of profit to decline don't base the agreement on the irrefutability of Marx's mathematical presentation. They, we, base it on the historical evidence. Me? I like to take it back to 1968-1970, and then bring it forward to right here/right now, accounting as best I can for the twist and turns of OPEC, Pinochet, Volcker, Thatcher, the petroleum sector, the semiconductor industry, the S&L crisis, the "lost decade" in Latin America, the multiple attacks on the working class of Mexico, the "Clinton" boom, and its end, the Bush wars, the profusion of asset-backed debt instruments, on the basis of changes in the rate of profit and the relation of those changes to increases in capital investment. Maybe that's just me. Maybe not.
Others have done work on this current and previous eras. Shane Mage performed an analysis of the tendency of the rate of profit to decline for the post-WW2 period in the US. Andrew Kliman, Michael Roberts (and others) have explored the movement of rates of profit. All these explorations are based on actual calculations of the rate of profit and the relation of those changes to accumulation of the means of production of capital.
If those of us who have done that work decide that historical evidence is worth more than Marx's mathematical "proof," or Heinrich's refutation of that proof, that's hardly a demonstration of religious faith. It's an expression of.....materialism, historical materialism. The real content of history is concrete, and may, or may not be, representable as mathematical symbols. There is a difference between "proof" (or "disproof") and truth. See Gödel for further information.
This gets us to Heinrich's section on "The Crisis Theory Without the Tendency of the Rate of Profit to Fall." Heinrich opens us with this gem:
However, the historical evidence is that what Marx meant by crisis, what Marx thought the causes of crisis were, and the tendency of the rate of profit to fall were not regarded as identical, nor as different aspects of a single identity, nor interchangeable categories for "many Marxists." Indeed, the historical evidence is that "crisis" and its causes were not well developed in Marx's work, and were not well understood by "many Marxists."
The historical evidence is that the emergence of the rate of profit as a determining limit to capital reproduction gains credence, not as the foundation of a crisis theory, but as part of the reclaiming of Marx's labor theory of value, both of which re-emerge at the end of the post WW2 "golden era," when in fact the rate of profit had declined from a level that has yet to be surpassed. How about that? as Mel Allen used to say. How about that?
Look, the connecting thread in Marx's work that unites his various comments on capitalist crisis is that of overproduction, which "many Marxists" have confused, misunderstood, and even defended vehemently or not, with "underconsumption."
At this point, it's time to bring in that usual suspect, Engels. Engels, according to Heinrich, heavily revised Marx's original material-- a "sea of notes and constantly interrupted thoughts"-- to make a third chapter on the law, condensing it, rearranging it, "creating the impression of an already largely completed theory of crisis." Now maybe it's just me, but when I read volume 3, I knew that Engels had revised the material; that the material was almost not presentable in its original state; that rearrangements were made; and that this in no way shape or form represented Marx's complete "crisis theory." Maybe it's just me, but I think it's clear Marx was not presenting a fully developed theory regarding the ultimate or penultimate crisis of capitalism, since there can be no such thing without the overthrow of capitalism, its abolition by the proletarian revolution, without the action of classes. I think that implicit in Marx's unfinished explorations of the tendency of the rate of profit to fall is not its role as the death-knell for capitalism, but its functioning as critical, necessary, to the process of counteracting the overproduction of the means of production as capital.
Heinrich then argues:
I'm not. And he isn't. We have disparate thoughts on crisis theory from unfinished notes and manuscripts, which Heinrich presents to us in general formulation, stating that the starting point is the immediate purpose of capitalist production, surplus value or rather profit. And this differs from Engels' work to develop volume 3 how? Perhaps in that Engels was Marx's closest friend and collaborator?
And that bit that about the "starting point [of capitalist crisis] is the immediate purpose of capitalist production, surplus value or rather profit"? Exactly how does Marx present the starting point of the tendency of the rate of profit to decline if not directly from the immediate purpose of capitalist production, the expropriation of surplus value and its realization as profit? Remember all that stuff about the barrier to capitalist production being...capitalist production?
Heinrich then turns to volume 3 and quotes from "Development of the Laws Internal Contradictions," the very part of the manuscript that is a "sea of notes and constantly interrupted thoughts,"[adding his own italics]:
However, the antagonistic conditions of distribution in the capitalist framework are reflections of the social relation between capital and wage labor. In fact, consumption as consumption does not occur in capitalist society. Consumption occurs as derivative to and a function of exchange. The realization of the surplus value in any and all commodities requires exchange, expanding exchange, with wage-labor.
The consumption of a commodity as a use-value is only possible through the realization of its exchange value, through continuous reproduction of the classes and class relations, bourgeoisie and worker, capital and laborer. The market for the commodity is the commodity.
In the Grundrisse, Marx writes:
As capital develops, expands, accumulates to create the commodities as commodities, to appropriate more surplus labor time, to extrude that surplus-labor time as surplus value, proportionately more labor most be expelled from production. Now haven't derived the mathematical formula yet, but it seems to me that limits to the social power of consumption, that antagonistic condition of distribution, and the negative impact that limitation has on the realization of value, on the turnover of capital, derives from the changing organic composition of capital. And as Marx repeatedly points out, circulation, the turnover of capital is a critical factor in establishing the rate of profit.
Heinrich then takes us to the post-1870 period. First he mischaracterizes that period as a "stagnation lasting for years..." The period from about 1872-1895 is anything but a period of stagnation. It is period of expansion, bankruptcy, recovery, repeated contraction-- but overall capital accumulation grows and grows rapidly worldwide. In the US the period is not a "long depression." It is a "long deflation" where changes in production processes, increases in the value composition , drove down prices, and depleted profits, and created brief and weak recoveries.
I've always said that Marx should have spent more time writing about the long deflation and less time on his calculus. Who knows what we might have learned? According to Heinrich, Marx "clearly recognized the need for a fundamental revision of the hitherto existing manuscripts." The manuscript that Marx had in mind for a complete revision was the first volume of Capital. That's interesting, since discussions of the rate of profit do not figure in volume 1.
The problem here is that Heinrich in arguing and rightly so, that Marx did not produce a fully developed "theory of capitalist crisis" is, in effect, setting up a straw man, or straw men. The, avenging Angelus repackages this with his accusations of "religious orthodoxy" against those who can point to, demonstrate, the importance of rates of profit to the direction of capital. The problem is that to defeat the straw man, Heinrich has to transform Marxism from a critical inquiry into capitalism, its actual means and methods of reproduction, and to a critical inquiry of texts.
A pretty underwhelming response.Well look, I've been called worse than underwhelming, and by better people, so no big deal, but the religious thing is not going to go unanswered.
Heinrich basically does the math to prove that Marx's calculations don't actually support giving his speculations the status of a "law", and Sartesian's response is basically that the math that Marx intended to prove his assertion is not relevant, what matters is the unproven assertion it was intended to prove (!).
I have to say, though, that the various responses to Heinrich are providing a fascinating insight into the religious mentality of a lot of Marxists, conferring sacred text status on manuscripts whose author regarded them as unfinished and unsuitable for publication!
So first things first: See the evidence for the tendency of the rate of profit to decline is not in the text or rituals of a sect, or in the secret recipes of wizards, demons, or butlers. The evidence is in the actual historical movement of capitalism. Those who agree with Marx's analysis of the tendency of the rate of profit to decline don't base the agreement on the irrefutability of Marx's mathematical presentation. They, we, base it on the historical evidence. Me? I like to take it back to 1968-1970, and then bring it forward to right here/right now, accounting as best I can for the twist and turns of OPEC, Pinochet, Volcker, Thatcher, the petroleum sector, the semiconductor industry, the S&L crisis, the "lost decade" in Latin America, the multiple attacks on the working class of Mexico, the "Clinton" boom, and its end, the Bush wars, the profusion of asset-backed debt instruments, on the basis of changes in the rate of profit and the relation of those changes to increases in capital investment. Maybe that's just me. Maybe not.
Others have done work on this current and previous eras. Shane Mage performed an analysis of the tendency of the rate of profit to decline for the post-WW2 period in the US. Andrew Kliman, Michael Roberts (and others) have explored the movement of rates of profit. All these explorations are based on actual calculations of the rate of profit and the relation of those changes to accumulation of the means of production of capital.
If those of us who have done that work decide that historical evidence is worth more than Marx's mathematical "proof," or Heinrich's refutation of that proof, that's hardly a demonstration of religious faith. It's an expression of.....materialism, historical materialism. The real content of history is concrete, and may, or may not be, representable as mathematical symbols. There is a difference between "proof" (or "disproof") and truth. See Gödel for further information.
This gets us to Heinrich's section on "The Crisis Theory Without the Tendency of the Rate of Profit to Fall." Heinrich opens us with this gem:
Since many Marxists regarded the "law of the tendency of the rate of profit to fall" as the foundation of Marx's theory of crisis, they vehemently defended it against every critique.To the perceptive reader this should be enough to warn us off any further reading. The assumptions that Heinrich makes on behalf of those "many Marxists" are:1) that Marx provided a "crisis theory" of capitalism 2) that the basis for that theory was the falling rate of profit 3) that the many defended this foundation theory vehemently and against every critique. Heinrich provides zero historical evidence for these assertions. Some Marxists I'm sure do think Marx provided a crisis theory, complete and in total in Capital. Some certainly think the law of the tendency of the rate of profit to fall is the foundation of that theory. And I'm sure some vehemently defend it against every critique.
However, the historical evidence is that what Marx meant by crisis, what Marx thought the causes of crisis were, and the tendency of the rate of profit to fall were not regarded as identical, nor as different aspects of a single identity, nor interchangeable categories for "many Marxists." Indeed, the historical evidence is that "crisis" and its causes were not well developed in Marx's work, and were not well understood by "many Marxists."
The historical evidence is that the emergence of the rate of profit as a determining limit to capital reproduction gains credence, not as the foundation of a crisis theory, but as part of the reclaiming of Marx's labor theory of value, both of which re-emerge at the end of the post WW2 "golden era," when in fact the rate of profit had declined from a level that has yet to be surpassed. How about that? as Mel Allen used to say. How about that?
Look, the connecting thread in Marx's work that unites his various comments on capitalist crisis is that of overproduction, which "many Marxists" have confused, misunderstood, and even defended vehemently or not, with "underconsumption."
At this point, it's time to bring in that usual suspect, Engels. Engels, according to Heinrich, heavily revised Marx's original material-- a "sea of notes and constantly interrupted thoughts"-- to make a third chapter on the law, condensing it, rearranging it, "creating the impression of an already largely completed theory of crisis." Now maybe it's just me, but when I read volume 3, I knew that Engels had revised the material; that the material was almost not presentable in its original state; that rearrangements were made; and that this in no way shape or form represented Marx's complete "crisis theory." Maybe it's just me, but I think it's clear Marx was not presenting a fully developed theory regarding the ultimate or penultimate crisis of capitalism, since there can be no such thing without the overthrow of capitalism, its abolition by the proletarian revolution, without the action of classes. I think that implicit in Marx's unfinished explorations of the tendency of the rate of profit to fall is not its role as the death-knell for capitalism, but its functioning as critical, necessary, to the process of counteracting the overproduction of the means of production as capital.
Heinrich then argues:
..it quickly becomes clear that Marx's considerations do not yield any unified theory of crisis, but contain rather disparate thoughts on crisis theory. The most general formulation of capitalism's tendency is completely independent of the "law of the tendential fall in the rate of profit." rather its starting point is the immediate purpose of capitalist production, surplus value or rather profit.If I were a generous soul, I would say that Heinrich is being intentionally hilarious here. He's pulling our leg and winking his eye and nodding his head in a demonstration of gymnastic prowess last seen when Spiro Agnew proclaimed his innocence, acknowledged his guilt and pleaded "no contest" all at once.
I'm not. And he isn't. We have disparate thoughts on crisis theory from unfinished notes and manuscripts, which Heinrich presents to us in general formulation, stating that the starting point is the immediate purpose of capitalist production, surplus value or rather profit. And this differs from Engels' work to develop volume 3 how? Perhaps in that Engels was Marx's closest friend and collaborator?
And that bit that about the "starting point [of capitalist crisis] is the immediate purpose of capitalist production, surplus value or rather profit"? Exactly how does Marx present the starting point of the tendency of the rate of profit to decline if not directly from the immediate purpose of capitalist production, the expropriation of surplus value and its realization as profit? Remember all that stuff about the barrier to capitalist production being...capitalist production?
Heinrich then turns to volume 3 and quotes from "Development of the Laws Internal Contradictions," the very part of the manuscript that is a "sea of notes and constantly interrupted thoughts,"[adding his own italics]:
The conditions for the immediate exploitation and for the realization of that exploitation are not identical. Not only are they separate in time and space, they are also separate in theory. The former is restricted only by the society's productive forces, the latter by the proportionality between the different branches of production and by society's power of consumption. And this is determined neither by the absolute power of production nor by the absolute power of consumption but rather by the power of consumption within a given framework of antagonistic conditions of distribution, which reduce the consumption of the vast majority of society to a minimum level.This is indeed interesting and Marx is giving credence to the notion that restricted consumption does present a barrier to capital, despite Heinrich's attempt to disassociate this from "underconsumptionist" theory.
However, the antagonistic conditions of distribution in the capitalist framework are reflections of the social relation between capital and wage labor. In fact, consumption as consumption does not occur in capitalist society. Consumption occurs as derivative to and a function of exchange. The realization of the surplus value in any and all commodities requires exchange, expanding exchange, with wage-labor.
The consumption of a commodity as a use-value is only possible through the realization of its exchange value, through continuous reproduction of the classes and class relations, bourgeoisie and worker, capital and laborer. The market for the commodity is the commodity.
In the Grundrisse, Marx writes:
With capital, the consumption of the commodity is itself not final; it falls within the production process; it itself appears as a moment of production, i.e. of value-positing [Wertsetzen].Consumption to realize value must be value-positing. And how is value posited? Only through the dispossession of the laborer; only though compelling labor to present itself as a commodity for exchange in the market for a value equivalent to its, or its cost of, reproduction.
As capital develops, expands, accumulates to create the commodities as commodities, to appropriate more surplus labor time, to extrude that surplus-labor time as surplus value, proportionately more labor most be expelled from production. Now haven't derived the mathematical formula yet, but it seems to me that limits to the social power of consumption, that antagonistic condition of distribution, and the negative impact that limitation has on the realization of value, on the turnover of capital, derives from the changing organic composition of capital. And as Marx repeatedly points out, circulation, the turnover of capital is a critical factor in establishing the rate of profit.
Heinrich then takes us to the post-1870 period. First he mischaracterizes that period as a "stagnation lasting for years..." The period from about 1872-1895 is anything but a period of stagnation. It is period of expansion, bankruptcy, recovery, repeated contraction-- but overall capital accumulation grows and grows rapidly worldwide. In the US the period is not a "long depression." It is a "long deflation" where changes in production processes, increases in the value composition , drove down prices, and depleted profits, and created brief and weak recoveries.
I've always said that Marx should have spent more time writing about the long deflation and less time on his calculus. Who knows what we might have learned? According to Heinrich, Marx "clearly recognized the need for a fundamental revision of the hitherto existing manuscripts." The manuscript that Marx had in mind for a complete revision was the first volume of Capital. That's interesting, since discussions of the rate of profit do not figure in volume 1.
The problem here is that Heinrich in arguing and rightly so, that Marx did not produce a fully developed "theory of capitalist crisis" is, in effect, setting up a straw man, or straw men. The, avenging Angelus repackages this with his accusations of "religious orthodoxy" against those who can point to, demonstrate, the importance of rates of profit to the direction of capital. The problem is that to defeat the straw man, Heinrich has to transform Marxism from a critical inquiry into capitalism, its actual means and methods of reproduction, and to a critical inquiry of texts.
Thursday, April 11, 2013
Oh You Kid
Michael Heinrich has written an article in the latest Monthly Review, and you can read it here . You should read it, because I'm not going to summarize it. Basically, Heinrich argues 1) that Marx never proved that the tendency for the rate of profit to decline is in fact a law, in that Marx's mathematical rendering does not show that"C" must grow at a rate faster than the rate of surplus value and 2) the Marx himself, after the publication of Capital, had grave doubts about the "law."
However, as I think is clear from Heinrich's text this is not about proving an equation.
From Marx's work it should be clear that this is about the inherent tendency of capital to reduce "v," replacing it with fixed assets, transforming the increased "fc" (fixed capital) into increased circulating capital in order to (1) reduce its cost of production and (2) appropriate a larger share of the total socially available surplus value to achieve an average rate of profit.
Now I think that is what will, must, drive the average rate of profit down; I think this can establish a link between overproduction and the growth of the means of production as capital (linking overproduction to declining profitability in exchange as opposed to insufficient consumption or lack of "effective demand"), and declining profitability to slowing turnover time of the capital invested in production.
My objection is not that the Heinrich is denying the possibility that the rate of profit will fall, is likely to fall, is even very likely to fall; but rather that he asserts the decline is NOT inherent in the growth of the means of production as capital. Marx is providing the immanent critique of capital, where the very determinations of capital became the basis for its negation. That's what Marx's "immanence" is all about . And immanence does not mean "permanent." There is no "permanent" decline in the rate of profit as capital is quite capable of incinerating productive capacity and living labor in the millions (of whatever units you want-- people, dollars, labor hours); and there is no permanent crisis as crisis is necessary to capital and is a countervailing tendency.
But there is the inherent tendency of the means of production to outgrow their organization of capital, the relation of production which is wage-labor, and that "overgrowth" is pretty well identified by a declining profitability.
Momentary digression:
Back in the day, and I'm sure many have heard this story or versions of it before, (but maybe not my explanation for it)... anyway Henry Ford had a section of the Rouge Plant (IIRC) given over to R&D, with the purpose of creating a completely automated assembly line. He took Walther Reuther on a tour of the facility and supposedly said: "When this becomes reality, Walter, who are you going to organize?"
Supposedly, Reuther, always the empiricist and the wannabe social democrat said, "When this becomes reality, Henry, who's going to buy your cars?"
Well the answer is-- "everybody else" and the lower price of the Ford cars will in theory serve to transfer the profits from the other auto manufacturers, so that Ford will achieve the average rate of profit, which it has thus driven down.
Now imagine that all production in capitalism is automated-- in all sectors. Where then is the surplus value? Nowhere. There is no necessary labor-time that can only be satisfied through the alienation of surplus labor time. Surplus value cannot be transferred, or allocated when its basis for existence-- necessary labor-time-- has disappeared. While Heinrich may laugh or refer to the absurdity of those who, as a matter of fact, do tease out the conflict between necessary and surplus labor-time by reducing wage-labor zero, such a conflict, revolving around a zero-point, or approaching it even asymptotically, is made explicit by Marx in some of his manuscripts, and is implicit throughout some others, including IMO, The Poverty of Philosophy. "Time is everything; man is nothing. At most, he is time's carcass."
I just want to add, I think Heinrich is historically wrong when he refers to the "crisis theory" of the 20th century as being concentrated this issue of the rate of profit. Much has centered on overproduction vs. underconsumption. Pavel Maksakovsky in his The Capitalist Cycle contends that Marx did indeed provide us with a crisis theory, and Maksakovsky says it's in volume 2. Today we know it as disproportion.
I truly recommend Maksakovsky's book-- it is brilliantly written and brilliant, so brilliant I wish I could agree with him [hell, sometimes I wish I could just agree with somebody]. But I don't because, at core, in my opinion, disproportion theories become underconsumption theories.
Somewhere along the line we have to come to grips with the necessity for the emergence in the reproduction of capital the reason for declining profitability, overproduction, and disruptions in circulation. I don't think the answers for each, or any, can be achieved without integrating them as a whole.
S. Artesian
April 11, 2013
From Marx's work it should be clear that this is about the inherent tendency of capital to reduce "v," replacing it with fixed assets, transforming the increased "fc" (fixed capital) into increased circulating capital in order to (1) reduce its cost of production and (2) appropriate a larger share of the total socially available surplus value to achieve an average rate of profit.
Now I think that is what will, must, drive the average rate of profit down; I think this can establish a link between overproduction and the growth of the means of production as capital (linking overproduction to declining profitability in exchange as opposed to insufficient consumption or lack of "effective demand"), and declining profitability to slowing turnover time of the capital invested in production.
My objection is not that the Heinrich is denying the possibility that the rate of profit will fall, is likely to fall, is even very likely to fall; but rather that he asserts the decline is NOT inherent in the growth of the means of production as capital. Marx is providing the immanent critique of capital, where the very determinations of capital became the basis for its negation. That's what Marx's "immanence" is all about . And immanence does not mean "permanent." There is no "permanent" decline in the rate of profit as capital is quite capable of incinerating productive capacity and living labor in the millions (of whatever units you want-- people, dollars, labor hours); and there is no permanent crisis as crisis is necessary to capital and is a countervailing tendency.
But there is the inherent tendency of the means of production to outgrow their organization of capital, the relation of production which is wage-labor, and that "overgrowth" is pretty well identified by a declining profitability.
Momentary digression:
Back in the day, and I'm sure many have heard this story or versions of it before, (but maybe not my explanation for it)... anyway Henry Ford had a section of the Rouge Plant (IIRC) given over to R&D, with the purpose of creating a completely automated assembly line. He took Walther Reuther on a tour of the facility and supposedly said: "When this becomes reality, Walter, who are you going to organize?"
Supposedly, Reuther, always the empiricist and the wannabe social democrat said, "When this becomes reality, Henry, who's going to buy your cars?"
Well the answer is-- "everybody else" and the lower price of the Ford cars will in theory serve to transfer the profits from the other auto manufacturers, so that Ford will achieve the average rate of profit, which it has thus driven down.
Now imagine that all production in capitalism is automated-- in all sectors. Where then is the surplus value? Nowhere. There is no necessary labor-time that can only be satisfied through the alienation of surplus labor time. Surplus value cannot be transferred, or allocated when its basis for existence-- necessary labor-time-- has disappeared. While Heinrich may laugh or refer to the absurdity of those who, as a matter of fact, do tease out the conflict between necessary and surplus labor-time by reducing wage-labor zero, such a conflict, revolving around a zero-point, or approaching it even asymptotically, is made explicit by Marx in some of his manuscripts, and is implicit throughout some others, including IMO, The Poverty of Philosophy. "Time is everything; man is nothing. At most, he is time's carcass."
I just want to add, I think Heinrich is historically wrong when he refers to the "crisis theory" of the 20th century as being concentrated this issue of the rate of profit. Much has centered on overproduction vs. underconsumption. Pavel Maksakovsky in his The Capitalist Cycle contends that Marx did indeed provide us with a crisis theory, and Maksakovsky says it's in volume 2. Today we know it as disproportion.
I truly recommend Maksakovsky's book-- it is brilliantly written and brilliant, so brilliant I wish I could agree with him [hell, sometimes I wish I could just agree with somebody]. But I don't because, at core, in my opinion, disproportion theories become underconsumption theories.
Somewhere along the line we have to come to grips with the necessity for the emergence in the reproduction of capital the reason for declining profitability, overproduction, and disruptions in circulation. I don't think the answers for each, or any, can be achieved without integrating them as a whole.
S. Artesian
April 11, 2013
Monday, April 08, 2013
Reasons to be Cheerful...
...are three
1. It's 70 degrees here in New York
2. The crocus are in bloom
3. Margaret Thatcher is dead
1. It's 70 degrees here in New York
2. The crocus are in bloom
3. Margaret Thatcher is dead
Monday, March 25, 2013
Pocket Rocket Guide to Marxism
Some brief considerations on turnover, circulation, circulation time and labor time:
Capitalists imagine their mode of production as production for exchange and imagines its origins in trade, in the circulation of the commodities between producers and .....producers, between producers and consumers, producers and "circulators," merchants.
Production based on capital is not exactly how the capitalists imagine it. Capital is more than simply production for exchange. It is the requirement, the economic compulsion, to realize through exchange the expropriation of alienated labor power, of value. To that end, and everything is focused on that end, the movement of the commodity to market, its circulation, is one that both parallels and intersects the movement of the commodity through the production process itself, except... in the production process itself, the commodity's use value, it's specific physical characteristics are the manifest object of labor and its abstract, universal social characteristic, its value in and for exchange are latent, while in the circulation process the concrete is smothered by the commodity's function, its purpose, as the abstract power over labor.
Capital sustains itself in the moment when the intent of production is the compulsion to exchange. Capitalist production does not arise from circulation, simply from exchange, but rather from a specific exchange between property and labor, between owners and laborers.
Capital in its circulation can only realize itself as expanded value to the degree that its commodities command greater supplies of "lost" alienated, wage-labor. Capital produces circulation out of its own condition. Circulation time becomes a moment in the total social reproduction time.
Marx explains how the circulation time of a specific process, a sector of capitalism, impacts the surplus value that can be expropriated. It's no mystery. Takes long or longer to get a return on the capital, takes longer to throw that money back into production and try it all over again. Circulation time then appears as a barrier, as a deduction to the generation of surplus value. In the Grundrisse, Marx writes:
And what can, must the capitalists do? They must seek to reduce the circulation time. To that end, capital compresses, as best it can, circulation time, not just by reducing production time to move the commodities to market, not just by reducing the circulation time by moving more commodities more quickly, but by "pre-empting" circulation time through numerous mechanisms, most of which have something to do with receiving, obtaining advances, or credits. Production is organized around milestones where payments are received prior to the completion of all work, but as the work progresses.
Contracts for production become exchangeable bills themselves, much like bills of lading, upon which advances are received, amounts are discounted, circulation time is suspended, attenuated, shrunk, but most all transferred.
The expansion of credit, of an instrument acting on the assumption of value, is based on the differences in turnover times, the unevenness of capital's times of and to realization.
Loans, hedges, futures, options, credits, bank letters of credit are all mechanisms for reconciling the different turnover times, and mitigating the conflicts between production and circulation times. As with every other exchangeable product, the exchanges themselves serve to distribute, allocate portions of the total available profit.
All of these instruments can be considered "speculative," but the speculation is inherent in the production and circulation of value. All these instruments can be considered fictitious, but only to the extent that capital unrealized is not capital. The "fictitious" component in the credit vehicles is not that these instruments do not correspond to "real values," but that the real values cannot be realized quickly enough, massively enough to maintain profitability.
S. Artesian
March 25, 2013
Capitalists imagine their mode of production as production for exchange and imagines its origins in trade, in the circulation of the commodities between producers and .....producers, between producers and consumers, producers and "circulators," merchants.
Production based on capital is not exactly how the capitalists imagine it. Capital is more than simply production for exchange. It is the requirement, the economic compulsion, to realize through exchange the expropriation of alienated labor power, of value. To that end, and everything is focused on that end, the movement of the commodity to market, its circulation, is one that both parallels and intersects the movement of the commodity through the production process itself, except... in the production process itself, the commodity's use value, it's specific physical characteristics are the manifest object of labor and its abstract, universal social characteristic, its value in and for exchange are latent, while in the circulation process the concrete is smothered by the commodity's function, its purpose, as the abstract power over labor.
Capital sustains itself in the moment when the intent of production is the compulsion to exchange. Capitalist production does not arise from circulation, simply from exchange, but rather from a specific exchange between property and labor, between owners and laborers.
Capital in its circulation can only realize itself as expanded value to the degree that its commodities command greater supplies of "lost" alienated, wage-labor. Capital produces circulation out of its own condition. Circulation time becomes a moment in the total social reproduction time.
Marx explains how the circulation time of a specific process, a sector of capitalism, impacts the surplus value that can be expropriated. It's no mystery. Takes long or longer to get a return on the capital, takes longer to throw that money back into production and try it all over again. Circulation time then appears as a barrier, as a deduction to the generation of surplus value. In the Grundrisse, Marx writes:
Pretty incredible exploration, isn't it? Capital posits the conditions of its own limitation as part of its total social reproduction. Circulation is a "characteristic form"-- a whole that both embodies and conflicts with the sum of its parts.This is the nature of capital, of production founded on capital, that circulation time becomes a determinant moment of labour time, for the creation of value. The independence of labour time is thereby negated and the production process is itself posited as determined by exchange, so that immediate production is socially linked to it and dependent on this link-- not only as a material moment, but also as an economic moment, a determinant, a characteristic form.
And what can, must the capitalists do? They must seek to reduce the circulation time. To that end, capital compresses, as best it can, circulation time, not just by reducing production time to move the commodities to market, not just by reducing the circulation time by moving more commodities more quickly, but by "pre-empting" circulation time through numerous mechanisms, most of which have something to do with receiving, obtaining advances, or credits. Production is organized around milestones where payments are received prior to the completion of all work, but as the work progresses.
Contracts for production become exchangeable bills themselves, much like bills of lading, upon which advances are received, amounts are discounted, circulation time is suspended, attenuated, shrunk, but most all transferred.
The expansion of credit, of an instrument acting on the assumption of value, is based on the differences in turnover times, the unevenness of capital's times of and to realization.
Loans, hedges, futures, options, credits, bank letters of credit are all mechanisms for reconciling the different turnover times, and mitigating the conflicts between production and circulation times. As with every other exchangeable product, the exchanges themselves serve to distribute, allocate portions of the total available profit.
All of these instruments can be considered "speculative," but the speculation is inherent in the production and circulation of value. All these instruments can be considered fictitious, but only to the extent that capital unrealized is not capital. The "fictitious" component in the credit vehicles is not that these instruments do not correspond to "real values," but that the real values cannot be realized quickly enough, massively enough to maintain profitability.
S. Artesian
March 25, 2013
Sunday, March 24, 2013
Serious as a Heart Attack
Sometimes, even I have trouble believing how stupid, venal, vicious, brutal, ignorant, miserable, petty, incompetent the bourgeoisie really are. Not often, but sometimes I have to shake my head and say "You cannot be serious." or "You're putting me on." or "Are you out of your minds?" or "You must be kidding me." or "You cannot make this stuff up." or simply "Wow."
Sometimes too many things, too many incidents, too many stories, actions, plans, programs, quotes occur all at once, or nearly all at once, to just be a coincidence. And that's how I know the bourgeoisie are just that stupid and more; just that venal, vicious, brutal, ignorant, miserable, petty, incompetent, and more. That's when I recognize just how arrogant the bourgeoisie are in their venality, their ignorance, their incompetence; how comfortable they are in their obsolescence. They've been around so long, so too long.
So having reduced the economy, that is to say the social reproduction of human life, in Greece to ashes, literally, as hillsides have been denuded of trees for firewood; having driven Greece's economy to levels below the lowest point of the Great Depression of the 1930s; having forced Ireland to re-up for another tour of hell; having readied Spain for the killing floor... having done all that and emerged intact, relatively, regaining access even to the commercial paper and money markets; having done all that and emerged, relatively, unchallenged for power, the European bourgeoisie just had to do something.
They did it all right, and it's called Cyprus, and it's a thing of beauty.
Cyprus has an annual economic output of about e18 billion. It also has banking deposits of about e70 billion. Cyprus is a member of the EU and a member of the euro currency union. It also has a destination for deposits made by various wealthy individuals from Russia.
Given its extensive trading and banking ties with the EU in general, and Greece in particular, the sustained contraction of the EU economy in general, and the EU enforced collapse of Greece's economy in particular, the admission by the Cyprus government two years ago that the island's banking system (outside the Turkish occupied northern zone) faced collapse was belaboring the obvious.
"Take a number, and wait your turn," replied the EU, which Cyprus did, but not exactly. In the interim it floated a loan with a substantial dollar value, estimate at $2.5 billion, from Russia.
Soon enough, it was Cyprus' turn. The money from the Russian loan was pretty well exhausted, and the EU, ineptly deft at the tasks of deconstruction, liquidation, impoverishment and having turned Greece into Romania now decided it could turn Cyprus into Haiti..
So here's what happened. Cyprus, its president, Nicos Anastasiades, its finance minister, Michael Sarris, pockets out-turned, empty hats in hand, and clown noses firmly in place, appealed to the European Union for a bailout. Hurriedly the finance ministers of Germany, France, Finland, Germany, the Netherlands, etc. etc.. along with representatives of the European Commission, the European Central Ban, and with Christine Lagarde, she of the IMF, gathered to plug the leak, fix the sail, repair the mast, utilizing whatever and how many nautical metaphors it took in their tireless efforts to save "lifeboat Europe."
What the finance minister and president of Cyprus did not yet know was the fact that "saving" lifeboat Europe meant chumming the waters with body parts from Cyprus.
When told that without the bailout, Cyprus would no longer be able to pay for food imports, Lagarde, channeling Meryl Streep channeling Margaret Thatcher channeling a hipster Marie Antoinette declared "Let them eat local!" She then proposed that 30-40% of all amounts in bank deposits in greater than e100,000 be confiscated to collateralize any bailout. Joining the spirit of Occupy to the shadow of Eva Peron, Lagarde demanded that Cyprus "make the rich pay!"
Excited beyond all belief by the thought of a French woman making a whole country of swarthy non-Aryans beg, and by the prospect of authorizing a preemptive drone strike on an entire island if Cyprus refused the deal, or if not that, at least waterboarding its finance minister and president, Wolfgang Schäuble, finance minister of Germany and winner of the recent Doctor Strangelove look-a-like contest, popped a wheelie on his armor plated personal personnel carrier, the SS Totenkopf, spun around twice, visions of a whole new meaning to "V-E day" dancing through his death's head, broke into the hochdeutsch version of New Order's "Shell Shock":
Sarris, the Cypriot finance minister, recognizing that he was running out of room to maneuver, phoned home and had his wife electronically transfer all their savings to Norway, (which, because it has a lot of oil, doesn't think it's really part of Europe), leaving just enough in their checking account to not have to return the Ipod Touch they received as a gift when opening the account. Ipod safe, Sarris then froze all electronic transfers into, out of, and within Cyprus. ATMs were fried by remotely controlled digital pulse weapons which the president could plausibly blame on Chinese hackers.
Sarris then countered the Lagarde/Schäuble/Draghi axis, attempting to persuade his president to impose a 7.5% "tax" on deposits less than e100,000 and a 12.5% tax on deposits greater than e100,000, but Anastasiades refused, citing his moral objection to harming the life-savings of the hard-working millionaires who called Cyprus, if not home, at least a clearing house.
Anastasiades wondered about devaluing the local currency. "Let's do what Iceland did, only in reverse," he said. "We'll protect the accounts of the international depositors, sacrificing those of the local depositors." When it was pointed out to the president by the finance minister that Cyprus no longer had a local currency, the president replied, "Now you tell me?"
Sarris returned to the conference room, offering instead a 3.5% confiscation rate on deposits less than e100,00 and 7% on accounts larger than that, only to have the troika reject the offer.
It was at this moment that the "troika" played its ace. The European Central Bank advised Sarris that the collateral offered by Cyprus' private banks under the EU's Emergency Liquidity Assistance (ELA) Program was no longer of sufficient quality to secure additional loans. While the ELA is technically administered by the national central bank of the EU country, the ECB retains right of approval over the loans. The program restricts its loans to "illiquid but solvent" institutions. In addition, while the program cannot be used to finance a country's government, the government is on the hook as the guarantor of the loans made to the private banks.
Upon receipt of this advice, Cyprus agreed to confiscate 6.75% of all deposits equal to or less than e100,000, and 9.9% of amounts greater than e100,000, the president apparently pleased he had kept the rate below 10% on the wealthy.
In the isolation of their conference room, the troika congratulated itself for once again having vindicated vindictiveness as essential to accumulation. "The operation will be a success," said Dr. Draghi to Dr.Schäuble, "The patient will die." Both scanned the room for Ms. Lagarde, expecting to see her wearing her customary post-negotiation victory party black vinyl cat suit. But Lagarde was gone, flying back to Paris to welcome the police as they raided her apartment in their official search for evidence of "improper influence." While she was France's minister of finance she approved the award of several hundred million dollars paid by Credit Lyonnais to a close personal friend of her then boss, French president Nicholas Sarkozy. It pays to have a friend in the business, or government, doesn't it?
Lagarde tossed off the accusations, as did the IMF press department. Their press release openly "wondered what's all the fuss about? It's not like Christine is accused of sexually assaulting a hotel maid, is it?" Or.. is it?
Anyway, while the troika was celebrating, others, and not just Cypriots weren't. "Scandalous! Arbitrary! Capricious! Illegal!" said depositors all over Europe and Asia. "How could they?"
How could they? Because they could, that's why. Just as, five years ago, they, the same collection of finance ministers, bankers, I-MFers, could "guarantee" deposits up to 250,000 dollars/euros; just as they could guarantee bank debt; just as they could proclaim that Greece would never default on its debt; just as they drove down living standards in Greece as the condition of that default, the EU, the IMF, the ECB could confiscate deposits that were supposedly guaranteed, insured, against loss or confiscation.
The Russians were upset, having already loaned Cyprus a couple of billion. The Russians were incensed that the "troika" had not even consulted with Moscow before this "rescue," before precipitating the electronic freeze-out of all money transfers routed through Cyprus. The Russian Prime Minister Medvedev likened the proposed "rescue" to the confiscation of private property under Soviet rule.
Russia calling the IMF "Soviet"? Be still my libertarian, anti-trilateral, beating heart!
Indeed, Russia has reason to feel aggrieved. In 2012, investment transfers from and to Russia routed through Cyprus amounted to $120 billion.
"Russian? Where's that?" joked the high-spirited Schäuble. "Last time I checked, Russia wasn't part of the European Union. Actually, isn't Russia but a mongrelized mixture of Slavs and Asians with reserves of natural gas?"
"Let me worry about the Russians," Schäuble told his fellow troika-ites. "I'll have my personal assistant, Frederick Barbarossa, and my military advisor, General Plan Ost take care of the Russians."
And that worked out so well for the cause of Europe last time, didn't it?
Now what's really stupid about all this... all this "rescue," all this "haircutting"? The amounts involved are literally trivial. The troika's confiscations amount to less than six billion euros, while the amount to be "secured" by the confiscation is about ten billion euros. Six billion, ten billion? The ten billion amounts to less than 1% of the amount offered by the ECB to banks for extended periods at low interest through its Long Term Refinancing Operation.
The ECB could probably provide the entire 16 billion from the profits generated by its purchases, and preferential treatment of its purchases of the very sovereign debt of Italy, Spain, Portugal and of Greece, the general devaluation of which put Cyprus between Schäuble's anvil and Lagarde's hammer.
Is it a matter of principle? For the bourgeoisie? For bankers? Come on. Do we look like we just fell off a truck of pumpkins?
Is there a purpose to the troika's demands? The demands are the purpose, that's the significance and the stupidity of the program. The irrationality of capitalism as a relation among human beings for organizing social life overwhelms quantity, size; mocks its own method of accounting; accumulates risk without possibility of reward; engenders cost without benefit; destroys the very notion of private property that gives it half-life.
Irrationality is the necessity of capitalist reproduction. Stupidity, arrogance, blindness are the agents of capital's progress.
S. Artesian
March 24, 2013
Sometimes too many things, too many incidents, too many stories, actions, plans, programs, quotes occur all at once, or nearly all at once, to just be a coincidence. And that's how I know the bourgeoisie are just that stupid and more; just that venal, vicious, brutal, ignorant, miserable, petty, incompetent, and more. That's when I recognize just how arrogant the bourgeoisie are in their venality, their ignorance, their incompetence; how comfortable they are in their obsolescence. They've been around so long, so too long.
So having reduced the economy, that is to say the social reproduction of human life, in Greece to ashes, literally, as hillsides have been denuded of trees for firewood; having driven Greece's economy to levels below the lowest point of the Great Depression of the 1930s; having forced Ireland to re-up for another tour of hell; having readied Spain for the killing floor... having done all that and emerged intact, relatively, regaining access even to the commercial paper and money markets; having done all that and emerged, relatively, unchallenged for power, the European bourgeoisie just had to do something.
They did it all right, and it's called Cyprus, and it's a thing of beauty.
Cyprus has an annual economic output of about e18 billion. It also has banking deposits of about e70 billion. Cyprus is a member of the EU and a member of the euro currency union. It also has a destination for deposits made by various wealthy individuals from Russia.
Given its extensive trading and banking ties with the EU in general, and Greece in particular, the sustained contraction of the EU economy in general, and the EU enforced collapse of Greece's economy in particular, the admission by the Cyprus government two years ago that the island's banking system (outside the Turkish occupied northern zone) faced collapse was belaboring the obvious.
"Take a number, and wait your turn," replied the EU, which Cyprus did, but not exactly. In the interim it floated a loan with a substantial dollar value, estimate at $2.5 billion, from Russia.
Soon enough, it was Cyprus' turn. The money from the Russian loan was pretty well exhausted, and the EU, ineptly deft at the tasks of deconstruction, liquidation, impoverishment and having turned Greece into Romania now decided it could turn Cyprus into Haiti..
So here's what happened. Cyprus, its president, Nicos Anastasiades, its finance minister, Michael Sarris, pockets out-turned, empty hats in hand, and clown noses firmly in place, appealed to the European Union for a bailout. Hurriedly the finance ministers of Germany, France, Finland, Germany, the Netherlands, etc. etc.. along with representatives of the European Commission, the European Central Ban, and with Christine Lagarde, she of the IMF, gathered to plug the leak, fix the sail, repair the mast, utilizing whatever and how many nautical metaphors it took in their tireless efforts to save "lifeboat Europe."
What the finance minister and president of Cyprus did not yet know was the fact that "saving" lifeboat Europe meant chumming the waters with body parts from Cyprus.
When told that without the bailout, Cyprus would no longer be able to pay for food imports, Lagarde, channeling Meryl Streep channeling Margaret Thatcher channeling a hipster Marie Antoinette declared "Let them eat local!" She then proposed that 30-40% of all amounts in bank deposits in greater than e100,000 be confiscated to collateralize any bailout. Joining the spirit of Occupy to the shadow of Eva Peron, Lagarde demanded that Cyprus "make the rich pay!"
Excited beyond all belief by the thought of a French woman making a whole country of swarthy non-Aryans beg, and by the prospect of authorizing a preemptive drone strike on an entire island if Cyprus refused the deal, or if not that, at least waterboarding its finance minister and president, Wolfgang Schäuble, finance minister of Germany and winner of the recent Doctor Strangelove look-a-like contest, popped a wheelie on his armor plated personal personnel carrier, the SS Totenkopf, spun around twice, visions of a whole new meaning to "V-E day" dancing through his death's head, broke into the hochdeutsch version of New Order's "Shell Shock":
Halten Sie an! Es ist nie genug
Es ist nie genug, bis dein Herz aufhört zu schlagen
Je tiefer man wird, desto sĂĽĂźer der Schmerzen
Geben Sie nicht auf das Spiel, bis dein Herz aufhört zu schlagen
Es ist nie genug, bis dein Herz aufhört zu schlagen
Je tiefer man wird, desto sĂĽĂźer der Schmerzen
Geben Sie nicht auf das Spiel, bis dein Herz aufhört zu schlagen
Sarris then countered the Lagarde/Schäuble/Draghi axis, attempting to persuade his president to impose a 7.5% "tax" on deposits less than e100,000 and a 12.5% tax on deposits greater than e100,000, but Anastasiades refused, citing his moral objection to harming the life-savings of the hard-working millionaires who called Cyprus, if not home, at least a clearing house.
Anastasiades wondered about devaluing the local currency. "Let's do what Iceland did, only in reverse," he said. "We'll protect the accounts of the international depositors, sacrificing those of the local depositors." When it was pointed out to the president by the finance minister that Cyprus no longer had a local currency, the president replied, "Now you tell me?"
Sarris returned to the conference room, offering instead a 3.5% confiscation rate on deposits less than e100,00 and 7% on accounts larger than that, only to have the troika reject the offer.
It was at this moment that the "troika" played its ace. The European Central Bank advised Sarris that the collateral offered by Cyprus' private banks under the EU's Emergency Liquidity Assistance (ELA) Program was no longer of sufficient quality to secure additional loans. While the ELA is technically administered by the national central bank of the EU country, the ECB retains right of approval over the loans. The program restricts its loans to "illiquid but solvent" institutions. In addition, while the program cannot be used to finance a country's government, the government is on the hook as the guarantor of the loans made to the private banks.
Upon receipt of this advice, Cyprus agreed to confiscate 6.75% of all deposits equal to or less than e100,000, and 9.9% of amounts greater than e100,000, the president apparently pleased he had kept the rate below 10% on the wealthy.
In the isolation of their conference room, the troika congratulated itself for once again having vindicated vindictiveness as essential to accumulation. "The operation will be a success," said Dr. Draghi to Dr.Schäuble, "The patient will die." Both scanned the room for Ms. Lagarde, expecting to see her wearing her customary post-negotiation victory party black vinyl cat suit. But Lagarde was gone, flying back to Paris to welcome the police as they raided her apartment in their official search for evidence of "improper influence." While she was France's minister of finance she approved the award of several hundred million dollars paid by Credit Lyonnais to a close personal friend of her then boss, French president Nicholas Sarkozy. It pays to have a friend in the business, or government, doesn't it?
Lagarde tossed off the accusations, as did the IMF press department. Their press release openly "wondered what's all the fuss about? It's not like Christine is accused of sexually assaulting a hotel maid, is it?" Or.. is it?
Anyway, while the troika was celebrating, others, and not just Cypriots weren't. "Scandalous! Arbitrary! Capricious! Illegal!" said depositors all over Europe and Asia. "How could they?"
How could they? Because they could, that's why. Just as, five years ago, they, the same collection of finance ministers, bankers, I-MFers, could "guarantee" deposits up to 250,000 dollars/euros; just as they could guarantee bank debt; just as they could proclaim that Greece would never default on its debt; just as they drove down living standards in Greece as the condition of that default, the EU, the IMF, the ECB could confiscate deposits that were supposedly guaranteed, insured, against loss or confiscation.
The Russians were upset, having already loaned Cyprus a couple of billion. The Russians were incensed that the "troika" had not even consulted with Moscow before this "rescue," before precipitating the electronic freeze-out of all money transfers routed through Cyprus. The Russian Prime Minister Medvedev likened the proposed "rescue" to the confiscation of private property under Soviet rule.
Russia calling the IMF "Soviet"? Be still my libertarian, anti-trilateral, beating heart!
Indeed, Russia has reason to feel aggrieved. In 2012, investment transfers from and to Russia routed through Cyprus amounted to $120 billion.
"Russian? Where's that?" joked the high-spirited Schäuble. "Last time I checked, Russia wasn't part of the European Union. Actually, isn't Russia but a mongrelized mixture of Slavs and Asians with reserves of natural gas?"
"Let me worry about the Russians," Schäuble told his fellow troika-ites. "I'll have my personal assistant, Frederick Barbarossa, and my military advisor, General Plan Ost take care of the Russians."
And that worked out so well for the cause of Europe last time, didn't it?
Now what's really stupid about all this... all this "rescue," all this "haircutting"? The amounts involved are literally trivial. The troika's confiscations amount to less than six billion euros, while the amount to be "secured" by the confiscation is about ten billion euros. Six billion, ten billion? The ten billion amounts to less than 1% of the amount offered by the ECB to banks for extended periods at low interest through its Long Term Refinancing Operation.
The ECB could probably provide the entire 16 billion from the profits generated by its purchases, and preferential treatment of its purchases of the very sovereign debt of Italy, Spain, Portugal and of Greece, the general devaluation of which put Cyprus between Schäuble's anvil and Lagarde's hammer.
Is it a matter of principle? For the bourgeoisie? For bankers? Come on. Do we look like we just fell off a truck of pumpkins?
Is there a purpose to the troika's demands? The demands are the purpose, that's the significance and the stupidity of the program. The irrationality of capitalism as a relation among human beings for organizing social life overwhelms quantity, size; mocks its own method of accounting; accumulates risk without possibility of reward; engenders cost without benefit; destroys the very notion of private property that gives it half-life.
Irrationality is the necessity of capitalist reproduction. Stupidity, arrogance, blindness are the agents of capital's progress.
S. Artesian
March 24, 2013
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