Millies and underconsumptionism

[Young Master Smeet]

http://www.socialistparty.org.uk/articles/17458/20-09-2013/the-causes-of-capitalist-crisis-reply-to-andrew-kliman

To be frank, I don't have the willpower to more than skim the above screed, but it seems substantially to be defending underconsumptionist models of crisis, could be worth someone taking a look at…

[ALB]

Just posted this yesterday on another thread:http://www.worldsocialism.org/spgb/forum/general-discussion/andrew-kliman-marxist-humanist-slams-underconsumption-theorists-monthly-rev?page=1#comment-8374Actually, they don't seem to be defending crude underconsumption views (they say explicitly that Rosa Luxemburg was wrong on this). What they do do is defend policies which others defend on underconsumption grounds, e.g. increasing government spending and workers incomes, but which they defend on other grounds ("transitional demands", i.e bait to gain a following). They also point out that "underconsumption" is an apparent feature of one stage of the boom/slump cycle (as it is).As I posted yesterday, I think they score a point against Kliman (one only) when they argue that not all crises are caused by a falling rate of profit due to a rise in the organic composition of capital (crudely, due to increased mechanization). They even mention the explanation of crises we have tended to favour:

Quote:

Crises can be caused by disproportionality between different industries.

But the document is mainly political. At one point they accuse Kliman of echoing SPGB views:

Quote:

Insofar that this means anything, it is that the working class must be 'theoretically' educated – presumably by Kliman and Bruce Wallace – to prepare them for socialism.This sounds familiar. It echoes the arguments of the Socialist Party of Great Britain (SPGB) – not our party, the Socialist Party of England and Wales, but the tiny organisation – that seeks the road to socialism, which by definition must be long and protracted, through abstractly 'educating' working people on the realities of money and demanding its immediate abolition, and the same with classes, the law of value, etc.

Such an accusation when used amongst Trotskyists is normally a winner. But Kliman is not a Trotskyist. It may even help us get a debate with him.

[ALB]

I think I may have posted this link before but here's Kliman explaining in 3 minutes why redistributing income to the working class is not a way out of the crisis. Anyway, it bears repeating:http://www.youtube.com/watch?v=O47sXexnM9A#t=6m40s

[Socialist Party Head Office]

Comment from a Socialist Party member who is not on this forum:Militant have always been ‘working class underconsumptionists’ rather than crude underconsumptionists like Luxemburg. It always enabled Grant to argue for a radical Keynesian programme like the one he developed in the 80s with Andrew Glyn.It also led him to obsess about stock market crashes like in 1987, which led to a big disagreement within Militant incidentally. It was all about fictitious capital not being able to be reinvested profitably because of a maldistribution of income in society. It always seemed to be one of the nuances of difference between him and Healy, who was always arguing of course that capitalism ‘had reached its limits’ and was about to imminently collapse.

[ALB]

The website comrades have just added another article to the Socialist Standard archive here which exposes Militant's confusion over another economic question: banks and credit. This article criticises a pamphlet they brought out in 1977 in which they argue that banks can create credit out of thin air:http://www.worldsocialism.org/spgb/socialist-standard/1980s/1981/no-917-january-1981/militant-confusion-about-inflationThis might go down well today in some reformist circles but is just as much mistaken today as it was then. They are still fishing in currency crank waters as this article calling for the "banksters" to be jailed shows. It also shows that a nationalised bank is a key part of their reformist plan to relaunch the capitalist economy by a massive programme of public works:

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the banking system should be nationalised under democratic popular control. Only on this basis would it be possible to get rid of the spivs and speculators that are holding working class people to ransom. A genuinely nationalised banking sector would be run for the benefit of the majority, rather than for the super-rich. Those struggling to pay their mortgage would have it converted to an affordable rent; small businesses could get cheap loans, and public works such as a massive house-building programme could be cheaply financed.

[ALB]

At the Anarchist Bookfair on Saturday I was given a free copy of the latest issue of Kittens put out by the Wine & Cheese Association (section in England of the group from Germany Gegen Kapital und Nation). In one of the articles there are a couple of paragraphs refuting the idea, embraced by trade unions and the Left and propagated by groups like Militant (even if they don't believe it or at least their leaders don't), that increasing workers' consumption is a way out of the slump and in fact good for capitalism:

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Some Left parties and the TUC claim that companies are being irrational when they suppress wages, and they do not mean the simple fact that workers are having a hard time to make ends meet. They point out that somebody has to buy the commodities with which capital makes its profits. Their proposal is: wage increases create more effective demand and this benefits everyone – workers have more wages and capital more profit. Capitalism could be a nice symbiosis if companies were not so short-sighted.What is remarkable about this theory is that it is only ever proposed to support rather limited wage demands: a minimum wage, a wage increase of 3% or even an unconditional basic income of a few hundred pounds. Why are the proponents of this theory so humble? Why not an hourly wage of £50, a wage increase of 100% and an unconditional basic income of £5000? If the theory was right, then this would make the economy go pop. Their humbleness shows that they themselves do not really believe their own theory. Rather, these advocates are looking for a reason to have their interest in higher wages recognised in the national discourse.The theory is also simply wrong. For one, a single company has no advantage if it increases the wage. Even the workers of Nestlé spend only a small part of their wage on Nestlé products. Of course, if other companies pay their workers higher wages, then Nestlé might make more sales. However, it is not the logic of a single capital to pay its workers more for this effect.Yet, sometimes competitors must be obliged for their own benefit. This is why the Left looks to the state which ought to enforce such wage increases. Workers get more money because the state mandates it. All companies sell more commodities to workers and, hence, attract more money from them. However, the imagined advantage for everyone is not realised: what companies pay more to their workers, they get back through their sales. Though these proponents of higher wages in the interest of capitalist success would not admit it, from the standpoint of the rate of profit, the ratio of advance and surplus becomes worse.

And of course, as it's the pursuit of maximum profit that drives the capitalist economy, reducing the rate of profit will have negative consequences. Which is why this won't work or even be tried. So what's the point of campaigning for it (instead of for socialism)?It's online here: http://antinational.org/en/wage-and-profit-rate

[ALB]

imposs1904 wrote:

The IP is holding a joint meeting in NYC on December 2nd:http://fischerzed.wordpress.com/2013/11/19/can-redistribution-solve-capitalisms-crises-public-meeting-in-new-york/I'm hoping to pop along to it, but it depends on family considerations.

There's a You tube video of this meeting here:http://www.youtube.com/watch?v=XGxp4C04YbA#t=4996In their opening speeches the four speakers virtually put our case against "underconsumption" theories of crises and of an increase in popular consumption as the way-out.One of them coins the new word "redistributionism". I think that might convey better what we mean as it's a good description of the policies of those who say "Tax the Rich to pay for the Crisis they caused", e.g. the trotskysit groups and leftwing trade union leaders.All the speakers call for the aboition of wage-labour (as opposed to higher wages, which like us they are all for, though not for "redistributionist" reasons), though only one (McIntosh of IP) explicitly spells out that this involves the abolition of money too. He also rejects "labour-time vouchers" (whick Kliman and the MHI don't, but they didn't rise to the bait).          

[alanjjohnstone]

Any chance HO can order a number of the Kliman pamphlet that was being referred to in the video. A short insert can be inserted explaining where we have a difference with him, such as on labour-time vouchers.

[ALB]

There's a review in the January Standard (already out but not online till 1 January). I don't think we are necessarily committed to his view (extensively argued, with graphs and statistics, in this pamphlet) that there was no redistribution of income (which would be brought about by the spontaneous operation of the economic laws of capitalism) from the working class to the capitalist class in the years preceding the outbreak of the present crisis in 2008. This would certainly show that crises are not caused by the working class coming to consume too small a portion of national income but is not absolutely or logically necessary to demonstrate this point.The speakers from "Internationalist Perspective" disagreed with him on this and I think we too, accurately or inaccurately, have accepted and publicised that working class living standards in the US have stagnated over the past 30 or so years. He may be right that in fact they didn't but have even increased (taking into account the so-called "social wage") but this is still a matter of controversy. In any event, as one of the IP speakers pointed out, quoting CLR James (originally Marx), that whether their wages be higher or lower the working class are still exploited.

[alanjjohnstone]

 Anne Jaclard right at the end of the video discusses factory occupations and by coincidence i posted what i thought would be a contentious blog on the same subject on Socialist Courier http://socialist-courier.blogspot.com/2013/12/revolution-without-revolutionaries-or.html

[alanjjohnstone]

http://www.moneynews.com/Elias/Invest-income-revenue-consumption/2014/01/03/id/544982I'm not sure how relevant this is to over-consumptionist theory but i got a feeling it does have a point."In 1980, $1 in money supply generated $3.50 of income. Today, that same dollar only generates $1.40 in income, based on data from the Fed. The primary reason for this decline has been lower levels of investment relative to GDP. Investment has a greater economic multiplier than consumption does. It generates more income per dollar of expenditure, since the spending occurs at the beginning of the production process, not at the end, as with consumption. Expenditures at the beginning create collateral expenditures to support the production process of cost-effective, high-quality, value-added goods and services for the masses."From 1980 through 2008, consumption as a share of the economy rose from 61 percent to 68 percent, while the share due to gross private domestic investment fell to 12 percent from 20 percent, according to the Federal Reserve – So how can under-consumptionism be a cause of the crisis when consumption actually rose. Whereas if Rand D is a reflection of capital consumption from 1987 through 2008, U.S. research and development rose a mere 0.3 percent per annum, compared with 4.9 percent annually from 1953 through 1987.   

[ALB]

This passage from the current issue (23-29 January) of their paper, the so-called "Socialist", confirms that they are "underconsumptionists" (workers-can't-buy-back-ists):

Quote:

Even in boom times the working class cannot afford to buy back the full product of its labour power. In periods of growth capitalism can temporarily overcome this problem by ploughing part of its profits into developing the means of production. This in turn creates new factories, workplaces – the organisation of science and technique – but at a certain stage all the same contradictions reappear.

Of course even in the state capitalism they envisage the income of the working class won't be (and couldn't be) enough to purchase the "full product" of their labour.

[ALB]

Apparently the SPEW member who wrote this criticism of their theory of crisis has now been expelled:http://socialismiscrucial.wordpress.com/2013/08/16/how-many-straw-men-does-it-take-to-reply-to-my-critique-of-the-cwis-crisis-theory/?relatedposts_exclude=329Like this last point (but not too sure about all of the rest):

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And at Number One: “Have your wages gone down since the crisis? They have?! Well, that’s your answer to the cause of the crisis!”This is one of the crudest false arguments and yet one that seems to crop up all the time. No one is denying that real wages have fallen since the crisis. The evidence is very clear on that and scientific socialists would be foolish to deny there has been a sustained fall in average wages since the crisis.However, I assert (like the CWI used to do) that the ‘fall in/lack of demand’ (underconsumption) is a result of the crisis, and not the cause. This is why Keynesian stimulus packages don’t work, because although they may give people more money to increase demand and thus profits in the short term, they do not solve the underlying problem in capitalist production of the low rate of profit, and so any recovery is temporary at best.

Not surprising they've booted him out as his reply undermines their whole strategy of seeking a working-class following on the basis of demanding that the government can and should stimulate the economy by spending more on building houses, infrastructure, etc as a way out of the current slump.

[ALB]

There's another blatant, and even cruder, example of Militant's workers-can't-buy-back underconsumptionism here:http://www.worldsocialism.org/spgb/forum/events-and-announcements/lse-marxist-society-debate-lse-hayek-society

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