Marxian theory of crisis

[Young Master Smeet]

A fascinating blog (only had time to skim it, but still):

https://thenextrecession.wordpress.com/2017/07/01/the-profitability-of-marxian-economics/

Michael Roberts wrote:

JCD: Is there a possibility of solution for the current crisis? Can we talk about the tendency of the world capitalism towards its decomposition? Is a broad war scenario a real possibility? In such case, could it be a solution for world capitalism as it was with World War II?

MR: There is no permanent crisis.  If human political action is absent in changing the capitalist mode of production, then capitalism will revive as the profitability of capital is restored – for a while.  In my view, to restore profitability will require another major slump before this decade is out – and the current ‘recovery’ since the end of the Great Recession in mid-2009 is now eight years old.  If a new slump eventually restores profitability, capitalism could have a new lease of life that might last 15 years, as it did after the second world war.  That war was very effective in raising profitability in the major economies to high levels not seen since the 1890s.  That laid the basis for capitalist expansion in Europe, Japan, the US and eventually industrial Asia.

In my view, another world war is most unlikely as this time such a war could threaten to annihilate capitalism itself and us with it.  Only if lunatic fascist or military dictators came to power in the major imperialist countries could this happen.  A war between the US and China or Russia is thus ruled out unless this happens.  More likely, profitability will be restored by economic slump and the failure of the working class to replace capitalism, as happened in the 1890s.  There is a mountain of new technology to be employed (robots, AI, genetics) that can shed labour and raise productivity.  But only for a while.  As Marx’s law shows, the organic composition of capital will rise and the rate of profit will eventually resume its downward trend.  And each time, it is getting more difficult for capitalism to develop the productive forces and be profitable.  That is its nemesis, along with the further growth of a world working class, which has never been larger.

[Young Master Smeet]

http://www.bbc.co.uk/news/business-40506570

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Demotivated workforces tend not to work more efficiently.And if productivity is falling and labour costs are rising, as they are, then that leads to a profits squeeze.And means that the prospect of pay rises recedes – creating something of a vicious circle and going someway to explaining why wage growth is falling.This is Philip Hammond's headache.I interviewed Lord Adair Turner, the former head of the Low Pay Commission, yesterday and he made a rather startling – but correct – admission."The UK over the last 10 years has created a lot of jobs, but today real wages are below where they were in 2007," he said."That is not the capitalist system delivering its promise that over a decade or so it will raise all boats, and it is a very fundamental issue."There is something about the economy which – left to itself – will proliferate very, very low paid jobs."

[Anonymous]

Richard D. Wolff, the American Marxist economist, hasn’t got the same view on what kind of society could replace capitalism as the SP has – he thinks worker co-ops is the way to go and talks about profits being “retained” by  the workforce in this future society.Anyway, his thoughts on whether there will be a crisis in capitalism and the reasons for the current problems of capitalism, as presented in the Youtube clip below, are interesting.He went to the most “elite” universities in the US and got to know other economists, from the right, left and in between (as he puts it).  When they meet up for discussions, they all disagree on how the US got into the current situation, and also on what to do about it.What they all agree on is that “this is the worst condition of capitalism in our life time”.He thinks there are three reasons for this;First, the end of the Soviet Union and the changes of outlook among the Chinese leadership, enabled Western (and Japanese) capitalists to outsource their production to countries where labour costs are low, and (at least in some cases), also reasonably well trained.Second, as capitalism moved into countries like China, India and Brazil, these countries started experiencing huge changes, as the population moved in greater numbers from the countryside and into the cities.Third, there is no way to handle the political impact of this large scale change, with vast masses of people moving into the labour force, and with the gap between the haves and the have nots growing ever wider.  Wolff thinks that the 5% took fright and decided to “buy the political system”.  As wage workers discern that their “democracy” is really no democracy at all, and that no matter what party they vote for, their insecure life continues, they start flailing around, voting for any maverick idea or person that comes along, hoping that this may somehow change their situation.https://www.youtube.com/watch?v=_tfCLUlFb4Q

[Anonymous]

meel2 wrote:

Richard D. Wolff, the American Marxist economist, hasn’t got the same view on what kind of society could replace capitalism as the SP has – he thinks worker co-ops is the way to go and talks about profits being “retained” by  the workforce in this future society.Anyway, his thoughts on whether there will be a crisis in capitalism and the reasons for the current problems of capitalism, as presented in the Youtube clip below, are interesting.He went to the most “elite” universities in the US and got to know other economists, from the right, left and in between (as he puts it).  When they meet up for discussions, they all disagree on how the US got into the current situation, and also on what to do about it.What they all agree on is that “this is the worst condition of capitalism in our life time”.He thinks there are three reasons for this;First, the end of the Soviet Union and the changes of outlook among the Chinese leadership, enabled Western (and Japanese) capitalists to outsource their production to countries where labour costs are low, and (at least in some cases), also reasonably well trained.Second, as capitalism moved into countries like China, India and Brazil, these countries started experiencing huge changes, as the population moved in greater numbers from the countryside and into the cities.Third, there is no way to handle the political impact of this large scale change, with vast masses of people moving into the labour force, and with the gap between the haves and the have nots growing ever wider.  Wolff thinks that the 5% took fright and decided to “buy the political system”.  As wage workers discern that their “democracy” is really no democracy at all, and that no matter what party they vote for, their insecure life continues, they start flailing around, voting for any maverick idea or person that comes along, hoping that this may somehow change their situation.https://www.youtube.com/watch?v=_tfCLUlFb4Q

Workers running enterprises was tried in Argentina and all failed, and the goverment passed laws to take all of them

[Anonymous]

Quote:

Workers running enterprises was tried in Argentina and all failed, and the goverment passed laws to take all of them

Yes, I know.  I also know about Mondragon and its limitations.I think the SP analysis of how a post-capitalist society will be is more plausible, logical and convincing (if we don’t degenerate into some kind of a dystopia first) than Wolff’s idea that there will still be “profits” made by enterprises which will somehow be “shared out” in this new world.But here’s the rub – I am rather surprised, that this is ALL you took from the Youtube clip.I actually think it’s a good idea to look outside the goldfish bowl now and again.Isn’t it EXCITING that other people, not just the correct-thinking members and sympathisers of the SP, can see that there is something seriously wrong with the current system?  Doesn’t it, you know, give you a TINY BIT OF HOPE?I think Wolff gives some very good insights into the current effects of capitalism in the US, and also some interesting snippets of US history in some of his videos.For example, in one clip he talks about the current US opioid epidemic.  American pensioners are mostly very poor and on Medicaid.  They are struggling to make ends meet.  So they go to the doctor, complain of an ache here or an ache there, get a prescription for a batch of legal opioids (at no cost to them, they’re on Medicaid) – and then “a nice young man” comes to their door once a month and buys it off them!  That’s one way of supplementing a meagre pension.Anyway, in this particular video, what I wanted to point out was that all his buddy economists (of the “left” and “right”), as well as himself, think that capitalism is in a very precarious position right now – this point comes under the heading of this thread.Somebody on this forum (I cannot remember who) made a point in one of his post that some members would seem to prefer the forum being an “echo chamber” of exactly the same ideas.I don’t think that’s a good idea at all, because the SP does not have all the answers either.

[Anonymous]

meel2 wrote:

Quote:

Workers running enterprises was tried in Argentina and all failed, and the goverment passed laws to take all of them

Yes, I know.  I also know about Mondragon and its limitations.I think the SP analysis of how a post-capitalist society will be is more plausible, logical and convincing (if we don’t degenerate into some kind of a dystopia first) than Wolff’s idea that there will still be “profits” made by enterprises which will somehow be “shared out” in this new world.But here’s the rub – I am rather surprised, that this is ALL you took from the Youtube clip.I actually think it’s a good idea to look outside the goldfish bowl now and again.Isn’t it EXCITING that other people, not just the correct-thinking members and sympathisers of the SP, can see that there is something seriously wrong with the current system?  Doesn’t it, you know, give you a TINY BIT OF HOPE?I think Wolff gives some very good insights into the current effects of capitalism in the US, and also some interesting snippets of US history in some of his videos.For example, in one clip he talks about the current US opioid epidemic.  American pensioners are mostly very poor and on Medicaid.  They are struggling to make ends meet.  So they go to the doctor, complain of an ache here or an ache there, get a prescription for a batch of legal opioids (at no cost to them, they’re on Medicaid) – and then “a nice young man” comes to their door once a month and buys it off them!  That’s one way of supplementing a meagre pension.Anyway, in this particular video, what I wanted to point out was that all his buddy economists (of the “left” and “right”), as well as himself, think that capitalism is in a very precarious position right now – this point comes under the heading of this thread.Somebody on this forum (I cannot remember who) made a point in one of his post that some members would seem to prefer the forum being an “echo chamber” of exactly the same ideas.I don’t think that’s a good idea at all, because the SP does not have all the answers either.

 Richard Wolf and his argumentations are not new to me. He is not the only reformer of capitalism that I have met and  read about it. Andrew Killman has done a much better job than him in regard to economics. The only real socialists that have existed in the USA have been Eugene Debs ( which also fell in the trap of reformism ) and Daniel de Leon. Noam Chomsky, Naoimi Klenin, Richard Wolf, and James Petra they are icons of the left. We do not have all the answers, but we do have  better answers. My only hope for mankind is socialism and nothing else, i do not place my hopes in reformism, or running capitralism in the name of the working class. We have known for more than 100 years that capitalism is not an economical system beneficial to mankind, and what others peoples are discovering now, we have denounced before

[Anonymous]

Marcos, I still don’t think you’re quite hearing me.  Believe it or not, I’m mainly in agreement with your view of the people you mention.  What I’m trying to get over to you is more of an attitude shift.If I come across someone, either in my readings, on the internet or on TV, who by their words express a good understanding of the nasty workings of capitalism, and who put forward these opinions passionately, I think “Wow, another one who gets the predicament we’re in, brilliant!”Whereas, you, I suspect, would expect the person to have absorbed 100% of not just the analysis of capitalism that the SP has, but also the SP’s entire programme of “how to get there”, before you gave any kind of credit.  You would sum their opinions up in one sour note unless you could tick every box against a check list of SP views.Negativity like that does not sell.As a good example of the way an analysis can be put across, I would like to mention an article by Adam Buick in the latest Socialist Standard, where he talks about “the Corbyn endeavor”.https://www.worldsocialism.org/spgb/socialist-standard/2010s/2017/no-1355-july-2017/corbyn-what-he-did-achieve-and-what-he-could-not-havIn it, he manages to mention positives about the man and about the election result – in fact he starts with a positive paragraph:“Jeremy Corbyn has shown one thing – that contesting an election on a manifesto promising to tax corporations and the rich to pay for improvements in health, housing and education for ‘the many’ is not the vote-loser most pundits assumed. Most, including many Labour MPs themselves, thought that contesting an election with such a programme would be suicidal. In the event, it was one of a number of factors that enabled the Labour Party to increase the number of its MPs by 30 and its share of the popular vote to 40 percent. They didn’t win of course but they were originally supposed to have been annihilated.”Also, further on, he says:“However well-meaning he might be in some ways (and, despite the smear campaign against him, he did come across as more well-meaning than most politicians), his programme was undeliverable.”This is good.  At the same time, Buick gives a very good analysis of why a Labour government will fail, however well-meaning, once they start to grapple with capitalism.Constant negativity is so off-putting and is something the SP should work hard to rid themselves of.

[Anonymous]

 While I can agree with you up to a point and I do try not to 'play the man' himself, as Adam does, but point to the inevitable failure of Labour governments to deliver any lasting change, I am constantly exasperated at their claims of 'socialism' or 'socialistic' attached to their reformist rhetoric.It seems that the only job we have at the moment is to disabuse workers of those notions. Indeed on his current tours, like Micheal Foot the last time I heard him speak at a rally in Glasgow before he was trashed in a general election, Corbyn uses Shelleys famous, "Rise like lions  from your slumber..we are many they are few", lines in 'Masque of Anarchy', to arouse his supporters for what, they probably call, 'transitional gains', as opposed to  reformism. I think those' transitional gains' are just as spurious as 'reformism' and not worth endorsement by socialists other than via trade union struggles.

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Constant negativity is so off-putting and is something the SP should work hard to rid themselves of.

It is 'how to' do so, while contesting the claims, is the problem. I am constant propaganda mode in letters columns elsewhere, so I for one, welcome any helpful suggestions.

[Anonymous]

Matt said:

Quote:

It is 'how to' do so, while contesting the claims, is the problem. I am constant propaganda mode in letters columns elsewhere, so I for one, welcome any helpful suggestions.

It’s a matter of not seeing the world in black and white, but in shades of grey.  It is a matter of seeing the human being behind an opinion.Marcos mentioned Naomi Klein, among others, as an example of a “reformist”.She may well be such a dreadful being – a “reformist” – but given the choice between having lunch with her, or, say Barack Obama, I would choose Klein – because we would at least have some platform on which to start a conversation; we would both realise that something is very wrong with the world as it is.What is the best way to win somebody over? It is, first of all, to establish common ground.  What do we actually agree on?  Once that is established, we can go on to say “but have you considered….”, “but how do you actually think that is going to work….”, “but don’t you think it would be better if…”.Starting with a positive, establishing that common ground gets people into a positive frame of mind and makes it more likely that they will want to continue the conversation.  It isn’t rocket science, and it isn’t about “being soft”.  It is about having an understanding about how people function in order to achieve a goal.I was listening to James O’Brian and his phone in guests on LBC this morning.  They were debating the Grenfell disaster again.  Time and again they expressed outrage at the complacency and contempt of the “elite” at the plight of the poor.  One young lady from Liverpool phoned in to say that before the Hillsborough disaster, she had not realised that there was a “system”, or an “establishment”.  The treatment of the Liverpool football supporters by the establishment made her wake up.  Another woman had been working as a volunteer among the Grenfell survivors and was appalled at of the attitudes of some of the council officials.  Again, she was exposed to the new thought that there is a “them and us”, one rule for the rich, one for the poor.  To me, it’s heartening to see people grasp that there is a system in place, whenever or wherever it happens.  It appears, though, that to some people on this list, nothing is worth mentioning unless it comes totally packaged in the complete object and declaration of the SP.

[Anonymous]

meel2 wrote:

It appears, though, that to some people on this list, nothing is worth mentioning unless it comes totally packaged in the complete object and declaration of the SP.

 I think it can also be a valuable corrective to my wooly thinking and prefer to read it as such.A Glasgow comrade, now sadly  deceased, once described me as being 'naive' but chortled merrily when  I said, 'innocent' perhaps'. I can see the difference betwen Obama and Klein now, but before Obama had the power to exercise sending in drones, there were great hopes for his potential, in the White House from well meaning people, although Klein declined to opine much beyond, "Though it's too soon to issue a verdict on the Obama presidency, we do know this: he favours the grand symbolic gesture over deep structural change every time. "She nonetheless endorsed Sanders over Clinton.

[Young Master Smeet]

http://socialisteconomicbulletin.blogspot.co.uk/2017/07/stagnant-economy-falling-investment-and.html

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It should be noted that throughout the entire period from the 1st quarter of 2006 to the 1st quarter of 2008 Consumption continued to rise strongly. In fact it did not begin to turn lower until the 3rd quarter of 2008, six months after the recession began. The recession was driven by the fall in Investment. The fall in Investment was itself driven by the fall in profitability. It is the weakness of Investment which continues to act as a brake on the economy, leading to stagnation or worse. Therefore the trend in profitability takes on decisive quality if there is to be a private sector-led recovery.

Profitability and investment again – the AMECO data

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All countries suffered a severe slump in profitability during the Great Recession, as you might expect.  Then profitability recovered somewhat after 2009. But, with the exception of Japan, all economies have lower rates of profit in 2016 than in 2007, and by some considerable margins.  And in the last two years, profitability has fallen in nearly all economies, including Japan… the AMECO data show that profitability is still historically low and is now falling. No wonder business investment in productive capital has remained weak since the end of the neo-liberal period (graph below for the US) and now is even falling in some economies.

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