Stock Market & Economic Crisis

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Apr 20 2007 18:37

A very quick response to spikymike, underlining lurch's contribution. Decadence means a fetter on the development of the productive forces as a whole, and one of these is the working class itself. The appearance of mass unemployment as a permanent structural feature of capitalism, the current crisis in education (i.e. the inability of the system to equip workers with even basic skills needed for work, etc.), are just examples of how the system is failing in this regard.

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Apr 20 2007 18:42

I agree with Lurch's points in response to Spikey. The class struggle and consciousness are certainly factors in the way the economy unfolds. Dem has already made this point with regard to the consciousness of the bourgeoisie, but it also applies to the workers. If they could have no impact on the economy whatever there would be no point struggling for immediate demands, for one thing. So the economy is not an absolutely 'external' category. But it is 'external' in the sense that it is an alienated reality that has escaped the hands of its makers, and it does follow its own logic, which has become an increasingly self-destructive one. That's the whole point about Marx's critique of political economy. More than any other form of social exploitation, capitalism has turned the economy into a 'thing' standing above human life. But our analysis of its inner laws also show that this too is but a passing stage in the history of humanity and can be superseded by a society in which the economy as a separate sphere no longer exists.

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Apr 20 2007 19:45
Demogorgon303 wrote:
Decadence means a fetter on the development of the productive forces as a whole, and one of these is the working class itself. The appearance of mass unemployment as a permanent structural feature of capitalism, the current crisis in education (i.e. the inability of the system to equip workers with even basic skills needed for work, etc.), are just examples of how the system is failing in this regard.

I had always thought that unemployment (or originally 'landless peasantry') was a precondition for the development of capitalism, not a product of capitalism (though it is reproduced by capitalism) and also the IMF takes very specific steps (at least with their latin american borrowers) to undermine higher education in order to have undereducated workers. Is that decadence or is that one of the basic conditions for capitalist development? also, this thread is awesome.

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Apr 20 2007 20:44
fkschulze wrote:
I had always thought that unemployment (or originally 'landless peasantry') was a precondition for the development of capitalism, not a product of capitalism (though it is reproduced by capitalism)

True enough. The 19th century was marked by the continual attraction and repulsion of the working class into capitalist production. Marx characterised the unemployed as the reserve army of capitalism. Nonetheless, the general trend was for capital to expand the working class more and more, improve working conditions (albeit in response to class struggle), provide education to enable workers to work in an increasingly sophisticated environment. The whole trade union and social democratic struggle was predicated on this reality.

In the 20th century, mass unemployed becomes the norm even in times of boom. For example, in Britain there's about a million on the dole with other measures of unemployment much higher. Even in the 70s this was seen as a national emergency, but today it's so normalised the government can call it "full employment" and get away with it.

fkschulze wrote:
the IMF takes very specific steps (at least with their latin american borrowers) to undermine higher education in order to have undereducated workers.

The IMF's policy in the developing countries is somewhat different to its policy in the West. Again in the UK, employers organisations are constantly moaning about the lack of basic skills school leavers have. In my job I regularly see applications from University educated people who border on the illiterate. Employers whinge constantly about this and there are constant high-level meetings between University and business leaders. People who leave school at 16 are in an even worse position, largely consigned to employment oblivion, condemned to an eternity of precarious, part-time "McJobs" if they're lucky enough to get those.

The government is under constant pressure to "improve standards" - which they can't do, of course, because it costs money that increasingly the bourgeoisie hasn't got. Even if you buy the Labour line that they've "improved" education (and health, etc.) it's come at the price of a literal explosion of the state debt as I mentioned in my earlier post.

The Latin American economies, in a similar vein to China, are dominated by low skill labour for which education isn't such a prerequisite. In countries like India on the other hand, there is very large proportion of highly educated graduates who are super-exploited by, for example, Western banks who in the mean time close their call centres in the West.

Of course, when push comes to shove, the countries hit worst by the crisis have no choice but to cut back education whatever the long term harm it does to their economy. The fact that the IMF forces countries to do this, is both a product of the fact that the main capitalist countries can no longer afford to carry failing countries but it also has a useful ideological effect. It allows the indigenous government to blame the "Washington Consensus" and rally support behind nationalism (e.g. Venezuala) and allow capital as a whole to deflect criticism from the fundamentals of the system as a whole towards "neo-liberalism" or "globalisation".

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Apr 21 2007 16:02
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If they could have no impact on the economy whatever there would be no point struggling for immediate demands, for one thing

If they had an impact on the economy it wouldn’t be a “struggle” at all, it would be a walk in the park. Neither would they be “demands”, but self-sufficient objectives. The leftist framework of struggle dooms the working class to demoralising defeat before the fight even begins.

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So the economy is not an absolutely 'external' category. But it is 'external' in the sense that it is an alienated reality that has escaped the hands of its makers, and it does follow its own logic, which has become an increasingly self-destructive one.

It has no makers, it has no simple logic, it's just a bunch of bourgeois protecting their inherited privilege and sating their exquisite tastes. Capitalism is no “alienated reality”, it is an imaginary institution. As such, its decadence, as a historical tendency, is also imaginary. Further, the idea that there is a recurring social tendency towards communism which is the natural negation of capitalism exists only in the minds of communists, largely as a matter of psychological predisposition. Whereas the communists seem to see the class conflict as merely a factor in capitalist crisis, the organisation we develop that supersedes such petit-bourgeois left currents will know that the working class is the crisis.

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Apr 21 2007 16:06
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the idea that there is a recurring social tendency towards communism which is the natural negation of capitalism exists only in the minds of communists, largely as a matter of psychological predisposition.

seconded

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Apr 23 2007 08:08

UK economy 'skating on thin ice' warn experts

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Apr 28 2007 17:31

To continue the "crisis blog" aspect of this thread, there are now apparently worries about "mild stagflation" returning to the US as reported here in The Guardian, with a possible risk of outright recession.

This is an interesting contrast to China, where growth has been powering ahead at 11% per annum and the worry there is "overheating".

In many respects, the contrast between China and the US could be the key to the evolution of the whole world economy in the current period. The Chinese stock-market, in spite of recent wobbles has actually doubled in the last 6 months, while their foreign exchange reserves have expanded massively. This seems to represent a flood of capital pulling out of the US and being pumped into China. This could accelerate Chinese growth even further, pushing the economy and the stock market up even further, accelerating capital flight from the US, reinforcing the decline there and creating a perpetuating cycle.

The problem is that all this growth in China will push against a market that is shrinking as the US economy declines and reduces consumption. As soon as this overheated expansion hits the wall of contracting markets, there is potential the whole financial system could simply implode in a similar manner to 1929 (which was worrying similar with the US playing China, and the UK playing the US).

Obviously the bourgeoisie has learned a trick or two since then and there will be concerted action to prevent such a collapse, but nonetheless the situation is precarious. If the Fed raises rates it push capital into China, if it raises them the impact on the debt-ridden economy, already in difficulty, could be catastrophic. While it seems likely that the bourgeoisie will do everything it can to prevent an outright economic collapse, it seems we are in for some turbulent times ahead.

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May 5 2007 15:14

Record numbers were declared insolvent in the first three months of this year, according the Guardian today.

Hardly a surprise, really. Some interesting figures in the article though especially the £1.3 trillion personal debt one, equivalent to around 1 year's total GDP. Most of this is taken up with mortgages but over £200 billion is unsecured loans, credit card, etc. To put this figure in context, the current UK total public debt is approx £500 trillion (and increasing at a rate of 1% of GDP per year). According to a report referenced earlier in this thread, the public sector debt could, in fact, be twice as high thanks to accounts fiddling through PFI. None of these figures include company debt.

Using these figures as a guideline, it doesn't seem unreasonable to conclude that the UK owes about 2 years of its total production, a rather shocking figure to my mind.

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May 5 2007 15:46
Demogorgon303 wrote:
Using these figures as a guideline, it doesn't seem unreasonable to conclude that the UK owes about 2 years of its total production, a rather shocking figure to my mind.

i read some petit-bourgeois jubilee 2000 type a while back who reckoned all countries everywhere were in a similar situation. he blamed the banks, but then again he also said marx was a simpleton wall

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May 5 2007 15:58
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Using these figures as a guideline, it doesn't seem unreasonable to conclude that the UK owes about 2 years of its total production, a rather shocking figure to my mind.

One last time Demo, in what way is it shocking? I've always found Guardian style reports pretty flakey to be honest, I'd stick to the FT if I was you. I'm being as polite as I can here, but the idea that these debt stats warrant "shock" implies a lack of appreciation on how money enters the UK economy. Until there's a food or fuel shortage, the crisis lies in the communist analysis not capitalism itself.

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May 15 2007 07:49

More worries about a bubble forming in the Chinese stockmarket.

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May 15 2007 09:40

The problem is economic. The unemployed are needed to create pressure on workers to bring down conditions, but then logically, what is the point in spending money educating people who are never going to work. This leads to drops in standards and choice, but at some point the lack of skills among the unemplyed eventually hits up against business requirements.

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May 16 2007 07:54

Unfortunately, I don't think we can say that modern capitalism is extremely fragile. OK, its financial superstructure is subject to irrational bubbles and bursts but this has always been the case and thesedays these take place more or less independently of the actual extraction of profit from the workers at the point of production. Finance is just the froth on top of the real economy.
In any event, capitalism is not just going to collapse of its own accord. It's going to have to be deliberately done to death. As Alexander Berkman put it, "capitalism will continue as long as such an economic system is considered adequate and just". Unfortunately again, it still is by most people. Until people see through it capitalism will continue to stagger on from economic crisis to war to ecological crisis.

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May 16 2007 10:35
capricorn wrote:
OK, its financial superstructure is subject to irrational bubbles and bursts but this has always been the case and thesedays these take place more or less independently of the actual extraction of profit from the workers at the point of production. Finance is just the froth on top of the real economy.

When you get a pub that serves more froth than beer, you wonder if something might be wrong with the equipment. Finance is no longer simply froth it is actually replacing the rest of the economy more and more, as the phenomenon of industrial desertification shows. The profit rate of manufacturing is now so low that the only way it can be profitable is by paying workers less than the cost of their reproduction, which is why most manufacturing has shifted to the "sweatshops" of China, etc. Even so, only 10% or so of companies in China are making a profit!

Lenin was pointing out the "parasitical" nature of finance capitalism nearly a hundred years ago, when "financerisation" was still in its infancy. Today finance capital appears as a bloated monstrosity sucking more and more life out of the capitalist system (ever wondered why the manufacturing bourgeoisie loathe the "coupon clippers"?) - but capitalism has no choice, it's the only way it can survive.

capricorn wrote:
In any event, capitalism is not just going to collapse of its own accord. It's going to have to be deliberately done to death. As Alexander Berkman put it, "capitalism will continue as long as such an economic system is considered adequate and just". Unfortunately again, it still is by most people. Until people see through it capitalism will continue to stagger on from economic crisis to war to ecological crisis.

It won't collapse through economic crisis alone, no - at least not without a long series of more or less devastating economic collapses. But the root economic crisis also breeds precisely the other phenomena you mention - war and ecological crisis. These certainly do have the potential to destroy human civilisation and in some parts of the globe (especially Africa and Iraq) war alone has already made great progress in doing so and the consequences of the ecological crisis haven't even begun yet. Add to this the social crisis - the tidal wave of drug abuse, growth of irrational sects, the collapse of community life and its replacement by gang "culture" - and you begin to see the real future capitalism offers for the whole of society. Capitalism really does have the potential to destroy itself and take us with it, just as the collapse of Rome had devastating consequences for the whole of Europe. This is the "common ruin of the contending classes" that Marx mentioned in the Communist Manifesto.

The wider question of "decadence" is being discussed on this thread

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May 16 2007 10:47
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Finance is no longer simply froth it is actually replacing the rest of the economy more and more, as the phenomenon of industrial desertification shows ... The profit rate of manufacturing is now so low that the only way it can be profitable is by paying workers less than the cost of their reproduction, which is why most manufacturing has shifted to the "sweatshops" of China, etc. Even so, only 10% or so of companies in China are making a profit!

i don't know if this holds up. numerically, the industrial proletariat is bigger than ever, and wrt to rates of profit i don't think you can just look at the chinese capitalists who are effectively local, outsourced managers for multinationals much of the time. capital always pays below the cost of reproduction of labour wherever it can get away with it - there are rumblings of class struggle in china which may well to change the situation.

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May 16 2007 11:17
josephk wrote:
i don't know if this holds up. numerically, the industrial proletariat is bigger than ever, and wrt to rates of profit i don't think you can just look at the chinese capitalists who are effectively local, outsourced managers for multinationals much of the time. capital always pays below the cost of reproduction of labour wherever it can get away with it - there are rumblings of class struggle in china which may well to change the situation.

What about the proletariat's proportion of the world population though? What about its growth in relation to general population growth? What about the proportion of the proletariat in productive labour as opposed to unproductive? You can't look at the question in a purely nominal sense although I wouldn't be surprised if the industrial proletariat (i.e. working in manufacturing) might have shrunk or remained static since the 70s.

As for wages, I pointed out on another thread that in the US at least real wages rose every decade from the mid-19th century until the 70s when this trend reversed. Capital always seeks to increase exploitation but there is a difference between absolute and relative exploitation. Throughout the 19th Century relative exploitation increased while absolute exploitation actually diminished as reflected in the rising living standards of the proletariat. The attacks on living standards took place during capitalism's infancy and reflected its early weakness. The renewed increases in absolute exploitation today represent a renewed weakness in capitalism. Increasing relative exploitation is no longer enough, it has to attack us at every level to keep the system going.

Class struggle may be able to push back these attacks, but only in the sense of delaying them. The bourgeoisie is having to attack us more and more, regardless of the way it stimulates the class struggle.

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May 16 2007 11:30

the whole productive/un-productive thing is a can of worms and i think there's another thread. i think even as a percentage of world population the industrial proletariat has grown, industrialisation has spread massively since marx's day or even wwII and millions of peasants in india and china and mexico now fill the sweatshops and maquiladoras (however i don't have sources, i'm getting this second hand from a guy i know who's researching china, and i'm thus not 100% sure).

there's a couple of books i want to read on this as its important and i've been busy with other things, but it think there's a good case that class struggle drives certain attacks - capital moves to countries with a weaker organised working class and a greater 'reserve army' for example. i know wages in the west are in real-terms decline, but is there an increase in absolute exploitation in china and india? looks like it may be more relative, apparently living standards are slowly rising in the new metropolises, wrt to peasant life. i need to read up though because i really don't know enough to sustain a productive (ho ho) level of discussion beyond speculating (ho ho again).

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May 16 2007 11:54

You're totally right about shifting the manufacturing to take advantage of a weaker working class though. This is largely because the working class in the metropoles has refused to accept the levels of exploitation that capitalism demands.

Most of the "developing" countries have seen the growth of massive shanty towns, which are basically peasants fleeing the decompostion of the rural economy but not being integrated into the proletariat except on the most lumpenised basis.

Chinese workers are, literally, being worked to death as has been documented in various revolutionary forums, including libcom I think. Also, if conditions are improving why are so many coming here to work for slave wages like the infamous cockle-pickers? Obviously conditions are improving for some workers, probably more so in India than China. But this has to be balanced against the decline of living standards in the West and other sectors of the developing world as well.

The question can only be examined in its global aspect. Off the top of my head, the mechanism works something like this. A proletarian in China might (lets call him Wong), as an individual, see a rise in his living standard by virtue of being transformed from his peasant status (I don't necessarily accept this, but for sake of argument). But if his job (working a 12 hour day) has been paid for by sacking a French car worker (Pierre) on a 8 hour day, that capital has increased the absolute exploitation by 4 hours! In the meantime, our French worker languishes on the dole or gets a part-time job in McDonalds and thus leaves the industrial proletariat entirely. Pierre - the main market for the cars produced by Slave Labour plc - can only maintain his previous level of consumption (necessary for keeping our friend Wong in a job) by increasing his debt.

This mechanism is what is behind the industrial desertification in the west (our sacked friend Pierre), the development of manufacturing in China (Wong), and the increase in finance capital (Pierre's new debt) that is brought in to fill the gap.

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May 16 2007 12:09

i certainly think credit is being used to mask falling real wages and postpone the resistance to that, and this is an interesting and understudied area (i've only really seen loren goldner's stuff, bits and pieces from harry cleaver and werner bonefeld and bourgeois economists blaming profiteering banks - i want to read david harvey's 'limits to capital' which sounds like it deals with exactly what we're discussing). the rest is going to get into the productive/unproductive labour debate i think, which i'll probably take to the other thread.

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May 16 2007 14:35

Imperialist war is a question that can't be left out of decadence.
What numbers are we talking about? 40 million killed WWI:; 25 million killed by Stalin; 70 million WWII; 50 million and counting since? The vast majority of these workers and oppressed - every one of them bayoneted, torn apart, blown apart, incinerated. This is not to include those seriously wounded, terrorised, truamatised and mentally crushed. All sacrificed on the alter of capitalism and its increasingly irrational wars. I would say this guess is probably an underestimate.
The question of imperialist war is generally ignored by those that question the decadence of capitalism or it is approached in such a way that imperialist war could be positive. There are reasons for this. There are many - many that call themselves "anti-capitalist" who support WWII on the grounds of its "anti-fascist" aspects. WWIi for them therefore is not a sign of capitalism's decay but the superiority (however slight) of one aspect of capitalism - in this case democracy - over another - fascism. Of course this is all hedged in qualification and ifs and buts, but essentially, one aspect of the national capital is preferred or supported against another. There's a whole spectrum of the swamp that is sucked into this perpetually propagandised mystification.
It's similar with the question of the unions and imperialist war: supporters of nationalism and imperialist war from 1914 (with a couple of small exceptions), the unions mobilised workers to die for the national capital in 1914 and 1939 with bells on. But again, qualifications, ifs, buts and maybes, then whole numbers of "anti-capitalists" continue to support the bourgeoisie's trade unions.
It's obvious looking at the tendency of the 20th and what we've seen of the 21st century, that the irrationality and extent of imperialist war is a very strong indication - at least - of the decay of the system and the necessity for its overthrow.

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May 16 2007 14:53
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What numbers are we talking about? 40 million killed WWI:; 25 million killed by Stalin; 70 million WWII; 50 million and counting since?

Jesus baboon, you expect people to overthrow Capitalism on the grounds of its high body count? You are talking about the same species which flocked to the Coliseum to watch people tear each other apart in Gladiatorial combat you know.

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May 16 2007 18:22
Demogorgon303 wrote:
You don't have to be a crazy left-communist to see that the current situation of the world economy is built on debt of massive proportions and that the "bubble economy" has become a way of life for capitalism...

...but it helps!

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May 16 2007 18:33
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languishes on the dole or gets a part-time job in McDonalds and thus leaves the industrial proletariat entirely

So by industrial proletariat you mean manufacturing and raw materials?

Workers come to England for 'slave' wages because they are still relatively much higher than in China. In the same way that Poles used to come to England and work and save money, although I'm hearing that this is becoming harder and harder.

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May 17 2007 08:28
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Finance is no longer simply froth it is actually replacing the rest of the economy more and more, as the phenomenon of industrial desertification shows. . . . Today finance capital appears as a bloated monstrosity sucking more and more life out of the capitalist system (ever wondered why the manufacturing bourgeoisie loathe the "coupon clippers"?) - but capitalism has no choice, it's the only way it can survive.

This doesn't make sense. All that happens on stock exchanges is that capitalists trade and try to swindle each other out of titles to wealth. No wealth is created there. It's the same with banks; they only lend wealth that has already been created; they don't create any themselves. The only way that wealth can be created is by people working to transform materials that originally came from nature into something useful. It's just impossible for finance to "replace the rest of the economy". How could it, as it produces nothing? If you disagree and think that finance can somehow create wealth then you'd have to be categorised as a currency crank. Work is -- must be -- the basis of all human societies, including capitalism.
That's why I still say that manufacturing is still the basis of the capitalist economy and that finance and financial dealings are entirely dependent on it. Unless there was manufacturing there'd be no wealth for the banks to lend or for capitalists to gamble on the stock exchange for titles to it (and no food for us to eat, clothes to wear, houses to live in, cars to drive or any of the other thousands of manufactured things we use every day). If there are proportionately less people employed in industrial production generally and more in "services" this is a reflection of the fact of the high productivity of manufacturing labour in certain parts of the world.
I know that Lenin claimed that industry in his day had become dominated by the banks and that the main capitalists were now the finance capitalists. But Lenin isn't an authority for me and, as you yourself point out, to denounce finance capitalism as the main enemy is to side with industrial capital in the struggle between the two over how much each is to get of the wealth produced by the worker class.

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May 17 2007 11:23

this is where the stuff on 'fictitious capital' comes in. loren goldner's the main guy, though i haven't read much

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May 17 2007 11:36
capricorn wrote:
This doesn't make sense. All that happens on stock exchanges is that capitalists trade and try to swindle each other out of titles to wealth. No wealth is created there. It's the same with banks; they only lend wealth that has already been created; they don't create any themselves. The only way that wealth can be created is by people working to transform materials that originally came from nature into something useful. It's just impossible for finance to "replace the rest of the economy". How could it, as it produces nothing? If you disagree and think that finance can somehow create wealth then you'd have to be categorised as a currency crank. Work is -- must be -- the basis of all human societies, including capitalism.

This is exactly the problem. Finance does indeed produce absolutely nothing, which is exactly why its increasing domination of the economy is an element of capitalism's historic weakness.

capricorn wrote:
That's why I still say that manufacturing is still the basis of the capitalist economy and that finance and financial dealings are entirely dependent on it. Unless there was manufacturing there'd be no wealth for the banks to lend or for capitalists to gamble on the stock exchange for titles to it (and no food for us to eat, clothes to wear, houses to live in, cars to drive or any of the other thousands of manufactured things we use every day). If there are proportionately less people employed in industrial production generally and more in "services" this is a reflection of the fact of the high productivity of manufacturing labour in certain parts of the world.

Again, exactly right but you fail to follow through on the implications for this. Its the absolutely gigantic productivity of manufacturing that:

a) raises the organic composition of capital to enormous proportions and thus causes the rate of profit to fall
b) causes a general crisis of overproduction because capitalism cannot absorb the enormous amount of goods it produces

Because a growing proportion of capital can no longer be profitably invested in the actual accumulation cycle, it is diverted into speculative activities - the gambling on the stock exchange you quite correctly describe. The problem is that its even worse than that - the varying attempts (beginning with the abandonment of the gold standard) to divorce money from "real" production constitutes capital's attempt to cheat its own fundamental laws and is the basis for the absolutely absurd economic changes we've seen since the beginning of the 20th century. It is precisely because all of this is in complete contradiction to the real motor of capitalism: accumulation: that left communists say capitalism is in historic crisis.

capricorn wrote:
I know that Lenin claimed that industry in his day had become dominated by the banks and that the main capitalists were now the finance capitalists. But Lenin isn't an authority for me and, as you yourself point out, to denounce finance capitalism as the main enemy is to side with industrial capital in the struggle between the two over how much each is to get of the wealth produced by the worker class.

It's not a question of denouncing finance capital as opposed to manufacturing capital and nowhere did I say it was. This is the reactionary rubbish that springs from the "anti-globalisation" camp. Both are enemies of the working class. The growth of finance capital is a strategy for the bourgeoisie, an attempt to compensate for the system's growing dysfunction. Without finance capital to provide an artificial market (in the form of ever-increasing state, commercial and consumer debt) the system would collapse under the weight of its own contradictions. Finance capital (really state capitalism because all finance is regulated and controlled by the state, particularly the US) can compensate for these contradictions and keep accumulation going, albeit in a retarded and unstable form, but the price for this is the ever more dangerous adulteration of money and instability in the financial markets.

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May 17 2007 14:59

What's your point on the 16th Lazy, that nothing will ever change? Desmond Morris's fatuous argument about "human nature" is right There will never be any revolution because people went to circuses in ancient Rome? I don't understand what you are saying.
My point is that capitalism has become, apart from many other elements to its existence, an irrational killing machine. The increasing numbers demonstrate, for those that have eyes to see, that it is becoming more and more of a threat to the whole of mankind.
And Spartacus understood a lot more about people and gladiators than you do.

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May 17 2007 15:51
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My point is that capitalism has become, apart from many other elements to its existence, an irrational killing machine.

It does have a certain morbid beauty, I’ll give you that. We choose to watch the irrational killing machine go about its daily work rather than suffer the endless bleating of various left currents, not because our values are those of the bourgeoisie, but through rational pursuit of our lust for blood.

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May 18 2007 14:42

Your contempt for the working class comes through loud and clear.