Oversupply of labour

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Anonymous
Jul 26 2012 15:47
Oversupply of labour

The key structural reason for the global financial crisis seems to be what Dan Alpert recently described as "global insufficiency of demand relative to an immense oversupply of labor and productive capacity."

The immense oversupply of labour is something Paul Mason briefly touches on in his latest book when he talks about "The Great Doubling" and how since 1989 the number of workers in the world doubled from 1.5bn to 3bn, halving the ratio of labour to capital.

From discussions I've had with people I get the impression Marx discussed this in part of Capital or the Grundrisse I've not yet reached, is that the case? There seems to be an argument that workers are now being permanently excluded from wage labour, I'm not sure that's what we're actually seeing and think the global economy will probably recover at some point in the future, but I'd be interested to hear what people think.

wojtek
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Jul 26 2012 18:32

The last but one episode of Novara was dedicated to the topic, but I'll need to listen to it yet again as most of it went over my head...

http://novaragroup.tumblr.com/post/27365875119/series-2-program-3-the-crisis-of-work

http://soundcloud.com/resonance-fm/novara-july-17th-2012

These two articles may also be of interest (I've no idea of their validity):

http://endnotes.org.uk/articles/1

http://endnotes.org.uk/articles/2

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Jul 26 2012 19:01

The bit of the Grundrisse you're probably thinking of is 'the fragment on machines', where Marx discusses increasing automation (fixed capital in the form of machinery etc) pushing living labour (variable capital) to the side of the production process. Aaron John Peters has been reading that lately, so that's probably the basis of the Novara episode (I haven't had a chance to listen yet). Some of these ideas are also there in Capital (iirc the stuff on 'rising organic composition of capital' and the reserve army of labour touches on different aspects). I'm not sure the 'reserve army of labour' is the same as a new era of structural surplus of labour power, iirc Marx argued it was tendential - layoffs from technological progress/productivity increases increase unemployment while new areas of investment absorb some of that surplus labour power. The missing ingredient in the present crisis would seem to be the new areas of investment...

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Jul 27 2012 09:57
Tommy Ascaso wrote:
The key structural reason for the global financial crisis seems to be what Dan Alpert recently described as "global insufficiency of demand relative to an immense oversupply of labor and productive capacity."

That Alpert piece is confused and more than a bit dumb in places. For example, of his "Four Factors" i) & iii) are actually the same, iv) is a counter-tendency and his main reasons* for why QE hasn't overcome the debt-deflation bias, are "empirical" in the worst sense of the word, and based on the presumption of quantity theory - the fact that he can't tell the difference between Neo-Keynesians and Hicksians like Krugman on the one hand, and Post-Keynesians, on the other, is symptomatic in this regard (i.e. control of the money supply).But the main message (and there are quite a few, some of them contradictory and conflicting) of the piece, such as it is, is effectively an oversupply of capital relative to aggregate demand. Salt-water orthodoxy really. But in complete contrast to the next para:

Tommy Ascaso wrote:
The immense oversupply of labour is something Paul Mason briefly touches on in his latest book when he talks about "The Great Doubling" and how since 1989 the number of workers in the world doubled from 1.5bn to 3bn, halving the ratio of labour to capital.

OK, I haven't got around to reading the Mason book yet, but I had no idea he said anything this bizarre. In your interpretation, the contention now is that there is an over-supply of labour relative to capital - i.e. there is an under-supply of capital. Clearly this contradicts the Alpert version. It also contradicts the Marxist (at least in the "value-theoretical" reading) idea of capital not being a "thing" or substance, but a social relation of command over living labour. In that sense the Great Doubling of capital's command over labour is, ipso facto, a doubling of the capital relation tout court. Of course, that also implies a doubling (at least) of the various contradictions of capital. In fact, if you took the orthodox version of the Falling Rate Of Profit (FROP) seriously, a sudden halving of the capital/labour ratio would be cause for a restoration of the profit rate and a reduction in the "principal contradiction" of capital. I don't kneel at that particular altar (as Brenner once put it) myself, but I'd be very surprised if Mason had left his ortho Marxist roots that far behind that he now thought a halving of the OCC was itself an explanation of crisis. If you could direct me to whichever chapter of "Why it's kicking off..." he discusses this in, I would be grateful.

* as a counter-example, amongst his subsidiary reasons, he notes: "Rather it is because we haven’t been able to produce much inflation at all, apart from bouts of commodity inflation that correspond with periods of massive easing and each time only succeed in quashing economic activity at the margin, as consumers cannot keep up.". This I think is a significant characteristic of the current stagnation, although he does not analyse its origins or implications any further.

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Jul 27 2012 13:20

Cool. Thanks for the Mason ref, I'll check it out tonight.

re:

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It is possible for there to be an oversupply of capital, hoarded on the balance sheets of banks, pensions funds, corporations etc. destroying itself and an oversupply of labour not creating new opportunities for capital to expand. The crisis seems to be happening because excess capital isn't being valorised by the excess labour?

The difficult bit about talking about crises is distinguishing between explaining them and describing them. For example, on the subject of "overproduction", Marx says somewhere (or at least Mandel says he does in the intro to the Penguin ed. of vol II, iirc) that so long as capitalist producers can continue to sell all they have produced, there is no crisis. Hence, a crisis is always associated with capitalists having unsold stock - but that's an inevitable part of the form of appearance of crises (from the first bit). So "overproduction" is really more of a description of what a crisis looks like, than an explanation of the cause.

In the current crisis, do we have huge volumes of investor cash sloshing around the financial infrastructure, unable to find valorising investment opportunities and even forced into accepting negative interest rates from "store of value" instruments (US treasuries, German Bunds, Swiss Fr Bonds, etc), combined with mass ranks of unemployed? Clearly, yes we do. But is that a cause of the crisis, or simply a description of what nearly all protracted "stagnation" crises look like? I tbink the latter.

In fact I think it's very difficult to take a "snapshot" of "this is what the crisis looks like at this particular moment" and deduce from it, what the causes where. So in that sense, any accounts on the lines of "there's an excess of X or a dearth of Y" can't really work as explanations. To do that you need more of a "movie" approach - you need to have a narrative of what direction or path the previous regime of accumulation was on, how that direction eventually became blocked, what the forces current maintaining the (blocked) status quo are, where the counter-pressures building up are coming from, what the possible options for new regimes of accumulation are, and which are the factions that might promote them, and what the possibilities for rupture/breakdown are.

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Jul 27 2012 13:51

In the chapter on reserve army Marx wants to show that there is always a tendency to throw labourers in and out of work. Industrial cycles (included, lets say, crisis and investments) rely on this army being there right? This is what he calls the 'simple process' that constantly 'sets free' a portion of the working class. A portion of the working class is constantly thrown into unemployment and semi-employment. I would say that the crisis, along with a new phase in neo-liberal restructuring that is taking advantage of the crisis, is aiming to make the second half of the equation (semi-employment) as part of the norm.

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Jul 27 2012 13:53

I guess what I was trying to say there was that Marx shows capitalism relies on a reserve army of labour for its very existence, during boom and bust and I'm not sure that what we see today is qualitatively different.

no1
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Jul 27 2012 15:37

So does anyone understand the cause(s) of the present depression, and the possible ways forward for capital? I thought at least among the clever Marxists on libcom there'd be some agreement.

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Jul 27 2012 16:03

You are kidding, right? When was the last time Marxists ever agreed about crisis theory? Forgetting about libcom for a minute, I've perused various Marxist accounts (of wildly diverging tendencies) of the causes of the current crisis, and I've yet to see any evidence that they are any less at sea than the rest of the commentariat, still less an account that was both convincing and a guide to useful action for anti-capitalists.

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Jul 27 2012 16:13

thanks for being the first to blink there ocelot wink . I was going to say the same thing, I'm not sure there are any two marxists who fully agree on any one crisis.

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Jul 29 2012 17:36

The Financial Crisis Inquiry Commission set up by the US government concluded that the crisis of 2007 and 2008 was the result of “human action and inaction, not of Mother Nature or computer models gone haywire”, but “of human mistakes, misjudgments, and misdeeds” and so avoidable

That isn't the view of socialists. The Commission criticised the investment banks and other financial institutions for taking such risks but could those involved in making these decisions have decided otherwise? "Because the capitalist economy is orientated to making profits and as the expansion of the competing enterprises in the economy is not regulated and harmonious, the over-expansion of some sectors, a process which has a knock-on effect to the economy as a whole, is always a danger – and periodically a reality...A key factor in this is that capitalism's financial apparatus is largely built on confidence that transactions will be smooth and payments will be met. When this confidence in the efficiency of trade and commerce starts to ebb then things can take spectacular – and serious – turns for the worse. The erosion of financial confidence is one of the ways in which a downturn in one sector - or country - can spread to others." Socialist Standard 2001

Could they have decided to forgo the chance of making the ‘hefty profits’ that were there to be taken? No, because if one of them decided not to pursue these profits, the others would have enthusiastically taken their place. It wasn’t a mistake on their part. Given the competitive, profit-seeking nature of capitalism they had to take the decisions they did. In that sense the financial crisis was therefore not avoidable.

The Commission did not examine the housing boom whose collapse in 2006 triggered the financial crisis. They merely recorded that “when housing prices fell and mortgage borrowers defaulted, the lights began to dim on Wall Street”. If they had gone further into the housing boom and why it ended, they would have discovered that it was a classic case of the pursuit of profits leading to over-production (too many houses being built in relation to what people could afford to buy).

See the Socialist Standard May 2007 article
http://www.worldsocialism.org/spgb/socialist-standard/2000s/2007/no-1233-may-2007/forever-blowing-bubbles

And see our 2008 article
http://www.worldsocialism.org/spgb/socialist-standard/2000s/2008/no-1245-may-2008/bubble-troubles

I'm not claiming the SPGB saw the crisis coming (just that one is always due after a boom). Marx makes it plain you can only study the specifics of a particular crash in retrospect.

The enormously long crisis thread (over a thousand posts) on Libcom is invaluable at following the course of the crisis and the debates about it that ensued.
http://libcom.org/forums/news/economic-crisis-18122007

Because the capitalist economy is orientated to making profits and as the expansion of the competing enterprises in the economy is not regulated and harmonious, the over-expansion of some sectors, a process which has a knock-on effect to the economy as a whole, is always a reality.

A key factor is that capitalism's financial apparatus is largely built on confidence that transactions will be smooth and payments will be met. When this confidence in the efficiency of trade and commerce starts to ebb then things can take spectacular – and serious – turns for the worse. The erosion of financial confidence is one of the ways in which a downturn in one sector - or country - can spread to others. If the word 'globalisation' means anything, it is surely that the world economy has now become so inter-related.

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“Once a crisis is in full swing, then the argument starts about who is to blame for it. The businessmen blame the abrupt credit refusals by the banks, the speculative mania of the stockbrokers; the stockbrokers blame the industrialists; the industrialists blame the shortage of money, etc. And when business finally picks up again, then the stock exchange and the newspapers note the first signs of improvement with relief, until, at last, hope, peace, and security stop over for a short stay once more. Modern society notes the approach of crisis with horror; it bows its head trembling under the blows coming down as thick as hail; it waits for the end of the ordeal, then lifts its head once more—at first timidly and skeptically; only much later is society almost reassured again.” Rosa Luxemburg
S. Artesian
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Jul 29 2012 22:17

I beg your pardon; I certainly understand that origin, and the manifestations of the current predicament of capital. And while I think I'm unique in how I present things, I'm certainly not alone in my evaluation of the causes, and the reasons for the actions of the bourgeoisie.

Shameless self-promotion:

http://thewolfatthedoor.blogspot.com

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Jul 31 2012 22:03

In the Mike Davis book Planet of Slums part of his analysis is of the slumdwellers as this class of unwanted proletarians, they have been proletarianised (kicked off their smallholdings or whatever) but now the global economy doesn't want them so they are this massive reserve army of labour stewing in their favelas.
It's partly true and partly flawed. Actually loads of the slumdwelling population do work in production for the world market, especially in low capital investment industries like textiles. On the other hand, there is clearly a massive oversupply of labour as well.

Harrison
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Aug 1 2012 01:07

Its like solfed marx club on here.

I finally read the full Kittens journal (junge linke) article on Bitcoin today, which interestingly dealt with how credit guaranteed by central banks is of a rather different character to the 'naturally arising' credit that appears on a real free market. (in that central banks operate as a state intervention that uses the authority of the nation state to declare debt as real money).

Thereby credit created by central banks acts as, 'a money whose value is guaranteed by the growth it stimulates'.

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Aug 1 2012 08:18

So, thinking just of this country for a moment, the government wants to reduce benefits and force loads of unemployed/sick/childcaring people into competing for jobs, so making their reserve army of labour function better to bring down wages, but how is this really going to work? There isn't a shortage of workers, they are cutting vocational training so they are not investing in producing a skilled workforce, and wages have already dropped. In London labouring is down two pounds an hour since before the crisis. So if they force people off benefits but without training, what will happen to them? There isn't an undersupply of people prepared to work as cleaners atm. The whole workfare/apprenticeship thing is designed to undercut the minimum wage, ok, but I don't think lowering wages like that really "creates jobs" as according to right wing propaganda, does it? Making people homeless is more likely to make them unable to be productive workers (health problems etc) so aren't they just destroying social capital? I can imagine some people would employ cleaners if they could pay two pounds an hour but I don't think that's going to create a big expansion of jobs and anyway if someone in Stoke Newington doesn't have to do their own ironing that won't produce "growth" in the economy. So what is going to happen, economically and socially?

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Aug 1 2012 09:46

Fingers, while there is a global crisis, corporate profits are at historically high levels. And this is being achieved by reducing labour costs - namely, cutting jobs, cutting wages, cutting pensions and benefits.

You are quite right that cutting wages does not create jobs. (You can find the stats demonstrating this online, I saw a good set once but I can't remember where) However, it does mean that employers can get really cheap workers and thus make more profits and expand.

In terms of what is going to happen… Well I imagine in the short-term at least we are going to see wages continue to fall and job insecurity continue to rise. With more and more people on the minimum wage and even sub-minimum wage employment (apprenticeships, workfare etc).

Or are you asking a different question which I haven't understood?

(Edited to add, are you basically wondering how this will work, not having many skilled workers? If so, I guess basically they are banking on jobs predominantly being made unskilled - or at least the only skills will be a couple of days/weeks training on the job following a school or possibly university education. I think a lot of profits in particular over the next few years are going to be made by contracting out public services on the cheap, with lots of skilled, full-time, relatively well-paid, secure jobs replaced with loads of casual, part-time, low-paid people with no benefits.)

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Aug 1 2012 11:37

@no1
Jul 27 2012 11:37

Quote:
So does anyone understand the cause(s) of the present depression, and the possible ways forward for capital?

The crisis is ALWAYS about the length of the social working day; it is the solution that is the contest between classes. And this contest ALWAYS has to end either in the extension of the period wage slavery or the extension of the hours free from social labor.

BTW: There is no such thing as an oversupply of labor.

martinh
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Aug 1 2012 14:16

LIke the point above - we shuold be calling for a four hour week or something in response to what's going on. Less time at work would be a popular demand. There's never an oversupply of labour, it's just not shared out fairly.
On the companies sitting on massive profits - I don't think its just to do with suppressing wages (though that has undoubtedly happened). It is also to do with them not investing, which is why the few companies to announce they are investing are trumpeted by the govt here (and presumably in EU and N America). It's noteworthy that the only significant manufacturing investment announced here has been Jaguar LandRover, and Indian company that's so big to be relatively immune from some market cycles and also making luxury goods, the one growth area across the world.

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Aug 1 2012 15:12

This is an incoherent post. Points not an argument.

Tommy Ascaso wrote:
There's also been some articles on FT Alphaville about negative carry and overproduction which is summed up on tumblr (and should probably go in the library if the author wants?)

http://withoutpity.tumblr.com/post/26587397813/on-qe-negative-carry-abundance-and-overproduction

Jesus light grey text on a white background. Yeah I'm not reading that. But just FYI I flagged that FT article up on libcom a while back.

On Marxist explanations of the crisis. Yeah there's a weird thing where half the political economist Marxists seem to have no idea what they are talking about during this crisis. Like David Harvey's book the Enigma of Capital is absolutely fucking awful. One of the worst books I've ever read. And Harvey is quite a good writer normally and I rate if even if I disagree with him, so I put it down to just a dud. Sometimes good writers write shit books. But soooo many lefties and marxists are saying how wonderful the Enigma of Capital is, which suggests to me that (a) most people who say they've read it haven't and (b) most people who say they've read it have no idea what its argument is, therefore assume its right and just repeat some of the madder bits with little more basis than an appeal to authority.

On Sunday I had one of the people form Endnotes who believes in this overpopulation stuff say that one keynes v. the austrians, he was an austrian. Which is pleasantly honest but still kind of barmy.

Yeah Chapter 8 in the Mason book is absolutely awful. I borrowed ronan's book and sribbled all over chapter 8 because its silly and I thought I might write something it.

@Steven. The question of whether or not lower wages lead to higher employment is a pretty big one and I can't imagine there are stats that "show" it. The principle is pretty basic, demand curves slope down (i.e. if something is cheaper people buy more of it ex. if currys sells the iphone 4S at £600 and argos sells them at £300, argos will sell more) and there therefore labour demand curves should slope down. However, this doesn't seem to work as simply as it should for a number of reasons, some of these are microeconomic problems, but there is also a macro problem. For example in the current economic climate there is a big demand problem (firms are unable to sell their products), this problem arises because people are saving to much and investing/spending too little, if you decrease workers wages across the economy then you decrease the amount of disposable income that workers have. This exacerbates the demand problem. Now if investors aren't investing because wages are too high then the increase in investment resulting from the fall in wages should out weigh the fall in demand and employment should increase. However, if investors aren't investing because of weak demand then the fall in wages will exacerbate the problem and people will invest even less and, if anything, employment should fall. The question of which one works is one way of posing what is basically the defining question of macroeconomics. Pretty much everyone agrees (well, except people who believe in decline) that in the very long run the former holds, ignoring the political/social question of class relations and the security of property, at some point low wages stimulate economic growth. The question is whether or not this works in the short run. Freshwater economists and austrians say yes, keyensians say no, marxists say lots of things.

On the reserve army, I think Marx is right that capital can't have full employment. But how you go from that to the capital creating more and more surplus population involves some pretty big leaps of logic.

Quote:
Arrighi's concept of a systemic crisis seems quite convincing for what we're experiencing, maybe long-term the global economy will recover and accumulation will go back to something normal because of the wage increases won by workers in the developing world, while the developed world becomes less developed? Leaving us with the kind of multi-polar capital accumulation thing that Aufheben talk about with a transnational capitalist class and loads of impoverished consumers?

I actually think Arrighi on crises is pretty shit. Where did Aufheben say that?

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Aug 1 2012 15:16

On the shorter working week as a demand. I don't know. It would be nice but I don't think its achieveable. It seems to be a bit like arguing for a universal social income, I agree that'd be a really big class victory but I don't really see it happening. In fact I think arguing for a universal social income would make more sense.

Harrison
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Aug 1 2012 15:25
Tommy Ascaso wrote:
I've started reading David Harvey's Engima of Capital

got a copy of this on my desk for over a year now that i still haven't yet started....

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Aug 1 2012 15:39

@ georgestapleton Aug 1 2012 11:16

Universal social income is not the same as a reduction in hours of work. While a reduction in hours of work must lead to an improvement in the working class' material standard of living, the increase in income has no necessary relation to hour of work. This is because fascist state ex nihilo currency is worthless and has no connection to socially necessary labor time. But, it was also true, in the long run, when gold standard currency was in effect. Hours of work is not about wages (or the distribution of income between classes generally) per se, although it can influence them.

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Aug 1 2012 15:49
georgestapleton wrote:
On the reserve army, I think Marx is right that capital can't have full employment. But how you go from that to the capital creating more and more surplus population involves some pretty big leaps of logic.

Maybe not as absolute surplus, but as a tendency within ongoing business cycles1 I'd say yes (I'd have to think about this a bit more to say with "certainty" though). Though I guess you're talking absolute, since I think relative is what Marx was arguing in Vol 1. Absolute, yeah I guess I'd agree with you on that.

On the current crisis, some guys like Bischoff (one of the co-publishers of the German magazine "Sozialismus") argue that it was borne out of the housing bubble (citing Harvey et al) - which I think is complete bullshit and flies in the face of logic. So at least one I can exclude... as a fan of theories like overaccumulation and falling rate of profit as sources of crises stuff (next to suspended crises building up to bigger ones) I'd say that must be it... but if production and consumption are, as Marx put it in the Grundrisse "differences within a unity", I guess it's neither easy nor proper to single out one origin of the crisis but to say, if they're interconnected then underconsumption and overproduction are two sides of the same medal and both apply.

But I dunno, I'm not even at the point where I could make any qualified posts, just writing down some thoughts...

  • 1. Thinking of Marxian conceptions of business cycles as put forward by Müller and Krüger which end with crises, the end of a crisis marks a new cycle where capital accumulation starts anew
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Aug 1 2012 16:18
georgestapleton wrote:
On Sunday I had one of the people form Endnotes who believes in this overpopulation stuff say that one keynes v. the austrians, he was an austrian. Which is pleasantly honest but still kind of barmy.

lol. Malthusian, surely? twisted

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Aug 1 2012 16:28

I don't read German so I can't comment on Muller, Kruger or Bischoff. But it seems to be a pretty clear empirical fact that at the very least the housing bubble had some role in the 'birthing' of the current crisis. So I don't know why you say it is complete bullshit and flies in the face of logic.

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Aug 1 2012 16:42
georgestapleton wrote:
Now if investors aren't investing because wages are too high then the increase in investment resulting from the fall in wages should out weigh the fall in demand and employment should increase. However, if investors aren't investing because of weak demand then the fall in wages will exacerbate the problem and people will invest even less and, if anything, employment should fall. The question of which one works is one way of posing what is basically the defining question of macroeconomics. Pretty much everyone agrees (well, except people who believe in decline) that in the very long run the former holds, ignoring the political/social question of class relations and the security of property, at some point low wages stimulate economic growth. The question is whether or not this works in the short run. [...]

Actually I'm not convinced that "pretty much everyone" is right about reducing wages stimulating growth in the long run. Surely that would only work if wages in a given economy were reduced relative to wage levels in other economies in the context of the global market. Too much macro is national macro, rather than global macro - international competition is assumed as an exogenous factor (not to mention demand).

Practically, the nuance means that if all the Western economies try to reduce wages at the same time, then there is no guarantee of recovery, even in the "long run" (scare quotes because I can't even use the phrase without that Keynes gag echoing in my head - gaah!). Particularly in the era of mature globalisation where international competition is no longer between Europe, US and Japan, but with India, China, Brazil etc. If "long term" growth depends on getting Eurozone wages down to Chinese levels, the "short run" depression could last for generations. Worse, even if, by some magic, we were able to close the output gap within the current global capitalist OS, and achieve global full employment at maximum productivity, without any reduction in the work week, we'd smoke the planet in double quick time.

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Aug 1 2012 16:47
Quote:
lol. Malthusian, surely?

No in fairness, it was in reference to the role of money in the economy, not population. But yeah I definitely think there's a connection there. One more push comrades to be truly revolutionary malthusian.

Quote:
What makes you think it's so bad? I'm only on the introduction and have only spotted one glaring error so far.

Mainly the structure. There is one but it isn't visible. So the argument is all over the place. In fact there barely is an argument its almost like a stream of consciousness.

Quote:
Quote:
georgestapleton wrote:
I actually think Arrighi on crises is pretty shit.

How come?

My objection is with the idea of long cycles of capitalism ending with financialisation, which I think wrong for a number of reasons. The primary one being that the forms of capitalism that existed in Genoa and the Netherlands were qualitatively different to the UK and US. The result is that the argument doesn't really hold for Genoa or the Netherlands. And seeing as the big point is 1st Genoa, the NL, then UK and now US. If you take out the NL and Genoa examples then you are left with this happened with the UK and now its happening/going to happen with the US. Or to be extremely uncharitable it says that the long 19th C in the UK is actually how the last 1000 years of capitalism has developed.

I like arrighi, and there's lots of info and detail in his work but I don't think the core argument stands up.

Quote:
On the two demands people have mentioned, are either possible in one nation?

I don't think you can answer that without addressing the balance of class forces. Hypothetically if the US was close to having a social revolution, yes I think a universal social income could be a means of reincorporating proletarian power into capital. However, that is pretty far from the current situtation so no I don't think its likely, but sure it is possible.

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Aug 1 2012 16:50

George, Jim,

yeah I was taking the piss at the argument that it was the sole origin of the crisis - that it plays a contributive role in the formation of the crisis is uncontroversial to me, but to me it makes no sense that unsold houses gave rise to a (series of) crisis/crises that is growing bigger like a black hole of apparently cataclysmic proportions.

The crisis theory that makes the most sense to me right now is that of "crisis accumulation", that past crises were suspended or at least weakened by deficit spending and shitloads of credits, and that one factor, may as well be the housing bubble (though I am still not convinced that is actually the case), makes the whole stuff crumble like a house of cards.

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Aug 1 2012 17:35

@ Tommy Ascaso Aug 1 2012 12:19

Quote:
On the two demands people have mentioned, are either possible in one nation?

A reduction in hours of work is possible in any nation with an average technical level of productivity that is above world average, I think. But certainly in the most productive (technically) nation. This would be true if this reduction were accompanied by a reduction in wasted or superfluous labor, Since this wasted labor time adds no material wealth, but does add labor cost to prices, its elimination would amount to a controlled deflation in prices, without a corresponding increase in unemployment.

How this works out for the law of value is that the production of surplus, which require ever larger quantities of labor power consumption, and which serves as the source of profits, would be reduced in proportion with the legally mandated hours of labor.

The reduction in hours of labor would actually make the country implementing it more competitive in the world market, since it would reduce the value of s in the equation c+v+s, or capitalist production prices.

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georgestapleton
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Aug 1 2012 17:32

@ocelot

No I don't think that competitive devaluation is necessary. The point about the long run is that it can be very long. A point I make all the time is that there have been three big depressions in the history of capitalism proper (i.e. since the existence of a market for labour-power), the current one, the great depression and the long depression, which is largely forgotten but lasted from 1873-1896 (roughly). And there is no real reason to believe that the current depression is going to end anytime soon. For all we know the recovery could come in 2050.

The point however, is that the defining characteristic is the ability to hold wealth in liquid form enables people to keep money capital outside of productive processes. They do this because they believe the return on capital held in liquid form to be higher than in illiquid forms. Things change when it becomes possible to earn a higher return by putting your capital into production.

So when will that change happen? Well that depends on why people are unable to earn a return.

If there is a technological limit (i.e. there are no productive processes that can be made more efficient) then that's truly one thing and we really are at a point of decline. But I think that's pretty obviously not the case.

If the problem is in some sense some imbalance then the question is when will that imbalance right itself, or how will it right itself?

Now, today there is a problem with demand and ocelot says that they only way wage cuts could correct that would be by selling to foreign countries. However, I think that is a quite luxemburgist way of looking at things. At which point the manuscript breaks off...

[TBH I've found it hard to explain why luxemburg is wrong in a crisis, I know whey she's wrong in normal times but in a crisis she's right almost despite herself. And its 6.30 and I've another bit to do before leaving work so fuck this... I'll come back to it tomorrow or latter tonight or I'll admit I'm wrong and join endnotes or something.]

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georgestapleton
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Aug 1 2012 17:34
Jehu@rethepeople wrote:
How this works out for the law of value is that the production of surplus, which require ever larger quantities of labor power consumption, and which serves as the source of profits, would be reduced in proportion with the legally mandated hours of labor.

And why would capitalists not just take their money out of production in the country if the surplus is falling?