"debate: SA discussion list " <debate at lists.kabissa.org>
----- Original Message ----- From: "Doug Henwood" <dhenwood at panix.com>
> By Patrick Bond
>If you are like many aggrieved people I know, the prospect of the US
>economic empire stumbling, tripping, and maybe even crashing is welcome
>indeed.
DH: This POV ignores the collateral damage that a U.S. crash would cause throughout Asia, Latin America, and to a lesser extent, Europe. Whole economies are sustained by U.S. demand. It's not just a U.S. problem - it's a global economy problem.
PB: Depends on your political strategy, right? Many of us - probably most influenced by Samir Amin and Walden Bello - would argue that the weakening of the US and the end of reliance upon cheap-export-based growth would be of great medium-term benefit (as it was after the 1930s crisis in many semi-peripheral lands). Since you know this argument, Doug, but don't cite it here, does that mean you don't want to confront it? It seems to me that not too many of the int'l comrades have had access to the awful globalisation chapter in your otherwise great book After the New Economy (except Shiva who as you know wasn't impressed). So the impression left in the World Social Forum plus radical movements debates is very much that the 'deglobalization' (of *capital* - plus globalization of political solidarity) strategy has huge support.
>1) Overly competitive corporations, which drive down the rate of profit;
DH: But the rate of profit in the U.S. has recovered very substantially since its 2001 low.
PB: Here's what Brenner wrote this morning: "I don't know where one gets the idea that there's been a big profitability recovery. Even in the first half of 2004, the rate of profit for the non-financial corporate sector was lower than the average for the business cycle of the 1990s, which was no great shakes, just a drop higher than for the 1980s."
>2) Overconfidence within financial markets, which today act more like a
>casino than savings/investment mechanism;
DH: When were they ever an S/I mechanism?
PB: They go through phases, as Keynes, Minsky and their followers have shown: at some stages, typically right after a serious devalorization process has occurred, financial markets are the 'handmaidens not masters' of production.
> 3) Overproduction of
>commodities, as a persistent reflection of inadequate consumer buying
>power;
DH: U.S. consumers have too much buying power, which is part of the problem.
PB: Based on the highest-ever consumer debt ratios, right? Enjoy the next few FOMC meetings, Doug!
> and 4) Overaccumulation of capital more generally, a problem which
>cannot be displaced forever, but which one day must face more severe
>devaluation.
DH: I.e., the displacement/deferral school of thought that posits an always postponed crisis that never arrives.
PB: The sky is falling! And if you miss it that faithful day, Doug, we'll be mighty disappointed... ;-)
>Opposed to these is a Marxist position which respects the strength,
>resourcefulness and self-healing capacity within capitalism - and
>especially reflects upon the weakness of the system"s main enemy: the
>working class. Those arguing that the system is *not* facing a systemic
>overaccumulation crisis include Leo Panitch, Sam Gindin and Chris Rude in
>the new *Socialist Register 2005: The Empire Reloaded*, Doug Henwood in
>*After the New Economy* (2003) and Giovanni Arrighi (criticizing Brenner)
>in *New Left Review* last year.
DH: Yup, that has been my posish, and I'd never want to bet against the resourcefulness of the system managers. I do think, however, that they've got a big challenge on their hands right now - how can the USG balance its books under current political constraints (meaning, we're run by a bunch of short-sighted idiots - who else could seriously contemplate Phil Gramm as Treasury Sec'y?) and how can the US bring its current account closer to balance? Something's got to give. It could be done intelligently, meaning gradually over the course of years. Or it could come in the form of a dollar crisis that could - *could* - really challenge the system's bailout managers.
PB: And what's underlying it all? Anything more serious than a fiscal problem that Kerry/Rubin could have handled? Isn't that where many of us also find interesting divergences on the 'marxist' left?
>Yet the internal contradictions continue bubbling up. Globalization has
>generated economic stagnation, not dynamism. According to even the World
>Bank, the increase in the world"s annual GDP per person fell from 3.6%
>during the 1960s, to 2.1% during the 1970s, to 1.3% during the 1980s to
>1.1% during the 1990s and 1% during the early 2000s.
DH: That masks important regional differences. Asia has been anything but stagnant. Capitalism hadn't ever seen anything like the Japan-Korea-China serial booms before 1950, had it?
PB: Uneven development, sure.
>On the other hand, corporate interest payments remained at record high
>levels throughout the 1980s-90s. Subtracting interest expenses, we get a
>better sense of net revenue available to the firm for future investment
>and accumulation, which indeed remained far lower from the early 1980s-
>present, than during earlier periods, according to French Marxists Gérard
>Duménil and Dominique Lévy (http://www.cepremap.ens.fr).
DH: Some of this strikes me as adjusting the data to prove what you want. A lower interest burden is a real relief, and can represent real improvement. High interest rates were the symptom of an imposed crisis - the Volcker crackdown designed to crush the rebellious elements at home and abroad. It worked.
PB: It 'worked' only insofar as the neoliberal style of management helped to temporarily restore price stability and shift profits into financial not productive assets. What does 'work' mean for you? I would have said, FDR's tricks 'worked' for capital on a longer-term basis, but Reagan/Bush/Clinton/Bush's won't 'work' for more than the US corporate sector, and then only half-heartedly and unsustainably.
DH: What's interesting now is that profits are high (even in Europe), but investment isn't following suit. US corps are building up huge wads of cash right now. It seems like a very Keynesian moment, with fear/uncertainty/doubt leading to a great preference for liquidity.
PB: Sounds like a renewal of the problem of inventory gluts and overinvestment that reared up around 1997. (Always there, but sometimes worse than at other times.) Maybe the single key factor in restoring global effective demand will be China's ability to land soft (versus hard).
>Duménil and Lévy also deconstruct the ways that US corporations
>responded to declining manufacturing-sector accumulation. Manufacturing
>revenues were responsible for roughly half of total (before-tax) corporate
>profits during the quarter-century post-war "Golden Age", but fell to
>below 20% by the early 2000s.
DH: The Golden Age was an anomaly and it's time to stop using it as the norm against which the present is measured.
PB: More from Robert Brenner: "As to the so-called mis-comparison with the postwar boom, data show that the long downturn also looks bad from the stand point of the pre-WWI boom."
>And capitalism's use of "space" - geographic crisis displacement - is
>really what globalization has been about: allowing corporations facing
>falling profits to seek relief in sites where raw materials and labor are
>cheaper, where regulations are fewer, and where new markets for products
>might emerge. Hence corporate profits drawn from global operations rose
>from a range of 4 to 8% during the 1950s-60s to above 20% by 2000.
DH: Lots of those foreign profits come from First World investment sites, not Third.
PB: Sure, most do. But in turn there's quite a sophisticated global assembly line and supply network that sources in components from the NIC zones, even if they go via Europe or Japan, right?
>To be sure, some of the problems faced by capitalism have not been simply
>stalled and shifted around. Some vicious hits - asset devaluations - have
>occurred in different sites over the past 30 years.
>
>These included the Third World debt crisis (early 1980s for commercial
>lenders, but still going on for most of the world's states and societies);
DH: A great political victory for the First World, however.
PB: To be sure, geopolitical power has followed the neoliberal strategy of accumulation, in a mutually reinforcing manner.
>energy finance shocks (mid 1980s); crashes of international stock (1987)
>and property (1991-93) markets; crises in nearly all the large emerging
>market countries (1995-2002); and even huge individual bankruptcies which
>had powerful international ripples.
DH: And what's the fallout been? The system keeps barrelling along.
PB: With ever more debt loading to accommodate the financing of earlier bubbles, right?
>Most importantly, the US stock market was the site of an enormous "New
>Economy" bubble until 2000, perhaps culminating in the Dot Com crash which
>wiped $8.5 trillion of paper wealth off the books from peak to trough (in
>the US alone) - but on the other hand, seemingly reinflating in 2003-04
>thanks to the return of household investors and mutual fund flows, and
>possibly rising further in future years if Bush begins social security
>privatisation.
>There were crashes not only in New York, but also 1/3 declines during 2002
>in Finland, Germany, Greece, Ireland, Netherlands,and Sweden, and other
>less severe falls in most other stock markets.
DH: Again - so? THe fallout (economic, political, or cultural) from the dot.com crash hasn't been anywhere near as severe as you might have imagined. Maybe that means there's another leg down awaiting us.
PB: Yes, so folks like Michael Alexander (who does cycle work - I have no idea about his politics) have suggested.
>David Harvey provides a further idea to interpret how the system responds
>to overaccumulation and financial overhang. Inspired by Rosa Luxemburg"s
>ruminations a century ago over the relations between capitalism and non-
>capitalist spheres of life, he describes new systems of "accumulation by
>dispossession", which means, essentially, the looting of the commons and
>use of extra-economic power to gain profits.
DH: Accum by dispos is a great phrase, but I'm not convinced that it's an innovation. It's as old as capitalism. You could say that capitalism has been spreading to parts of the world (and parts of life) that it hadn't previously colonized, but how is this all that new?
PB: Of course, as Harvey agrees, primitive accumulation was not just a once-off, it's a permanent affair. What's 'new' is that this sort of looting plays a much bigger role than ever before, and yes, that it is attempting to conquer aspects of human life and nature that were always out of bounds to commodification, for cultural or political reasons.
>The systems of dispossession today also more explicitly attack the sphere
>of "reproduction", where exploitation occurs especially through unequal
>gender power relations.
DH: Gender power relations are trending towards less inequality, not more, which is why we have such a cultural backlash these days.
PB: 'Less' inequality? Are you factoring in billions of victims of structural adjustment? What data do you draw upon for that, comrade?
***
----- Original Message -----
From: "joanna bujes" <jbujes at covad.net>
> Yes, what Trotsky called "combined and uneven development" where nations
> that are bombed into the "stone age" have a paradoxical relative
> advantage over nations with established industrial infrastructures,
> because the nations that start from scratch are more likely to start
> with state of the art stuff.
PB: Yes, but surely this depends entirely upon the geopolitical arrangements (and associated economic processes) that follow, e.g. Germany and Japan/Korea/Taiwan.
***
----- Original Message -----
From: "Marvin Gandall" <marvgandall at rogers.com>
> That's why they respond with bank bailouts and Keynesian fiscal solutions
to
> prop up zombie firms and jobs, hoping that the restoration of credit and
> purchasing power will eventually put the system back on its feet, and
> preferring economic stagnation as an alternative to mass social unrest
until
> that happens. It may not bbe enough if the crisis is deep enough, but that
> hasn't happened yet. Isn't that the story of Japan most recently?
That's the point, eh. Could global K stand a Japanization process of whittling down overaccumulated financial/property assets over the course of decade? While Japan was AWOL, the US consumer class picked up the effective demand 'responsibility,' but if that now wanes badly with a shrunken $, and if China stands very badly overaccumulated, what will K rely on then, the EU?
----- Original Message -----
From: "Doug Henwood" <dhenwood at panix.com>
> <hari.kumar at sympatico.ca> wrote:
> >What is with this "Austrians" counter-position to "Marxists" on this
strand?
> >I vaguely get the sense that it is meant as an insult.
> >Is that right? If yes - why is it supposed to be one?
> Not an insult, just a criticism. Seems to me a lot of Marxists share
> the belief of a lot of right-wingers that the state can't defuse an
> economic crisis - it can only displace one. You disagree?
> Doug
PB: Doug, do you mean 'defuse' as in: *solve* the system's deep-seated contradictions, associated with both accumulation and class struggle, in the process setting the stage for a new golden age of renewed accumulation? (Surely not.) Or do you mean by 'defuse,' *management* of the problems? If the latter, isn't 'displacement' a good way of describing the socio-spatial-temporal strategies? What's the issue here, just semantics?
----- Original Message -----
From: "Doug Henwood" <dhenwood at panix.com>
> But the hope of many crisis fans is that the collapse will finally
> bring about that class-conscious left. That's delusional, I think,
> but it's a common belief.
Not necessarily 'class conscious' (because in the US under the present balance of power and media manipulation, that consciousness probably moves to right-populism and in search of a Big Man, as the Californians showed us last year). The 'hope' is that the array of *international* forces will be thrown into the sort of disarray that allows counterhegemonic impulses to emerge and prosper. (Where those come from is also a messy problem to sort out.)
> There are also some weird affinities between crisis Marxists and
> libertarians/Austrians. Both camps think that state bailouts just
> can't work, and the crunch has to come - someday. That position makes
> sense for the right, which sees the state as some external imposition
> on the beauties of the market. For Marxists, who presumably
> understand the role of the state as enforcing a ruling class agenda,
> it's mysterious.
Not mysterious, just a matter of studying more carefully where the state can intervene effectively and where it has problems. I think the finest socialist analysis of this question is being done by Panitch/Gindin, and while we disagree about the sources and the potentials, we have *lots* to learn from their dissections of Washington's enormous power.
----- Original Message -----
From: <uvj at vsnl.com>
> > 1) Overly competitive corporations, which drive down the rate of
> > profit;
>
UVJ: > It is not clear how "overly competitive corporations" drive down the
_long term_ rate of profit? What's role of mergers, amalgamations and
closures in overcoming competition?
That's usually during the shake-out phase. 'Long'-term in terms of accumulation cycles typically means K-wave trough-to-trough, over a period of several decades, right? So that's not too useful; what's important is the signalling that lower profits in some circuits of capital send to the men making investment decisions in affected firms. In Brenner's story, the hyper-competition is behind the signals; in Harvey's (Limits to Capital), you can have *both* hypercompetition over profits *and* increasing concentration because the competition then moves from the horizontal (within sector) mode into vertical (still within a sector) or into conglomeration and financialization strategies. You'd have to admit - read Doug's Wall Street if you won't - that the shift in corporate behaviour to follow share price maneuvres reflects both excess competition and higher levels of corporate concentration, within a given economy?
> 2) Overconfidence within financial markets, which today act
> > more like a
> > casino than savings/investment mechanism;
>
> Financial markets don't create surplus value. IMHO,the crisis theory must
be grounded in the reproduction cycles of productive capital.
Hear, hear. That's why I left the Post-Keynesian camp about 20 years ago. (However, Keen has an argument about why the labour theory of value is a distraction from following the Minsky-style financialization process, in his 2001 Pluto book Debunking Economics.)
> >3) Overproduction of
> > commodities, as a persistent reflection of inadequate consumer buying
> > power;
>
> Capitalism can create its own consumer power, if the profitability can be
sustained.
Up to a point.
> >and 4) Overaccumulation of capital more generally, a
> > problem which
> > cannot be displaced forever, but which one day must face more severe
> > devaluation.
>
> Destruction of capital is a mechanism to restore the rate of profit and
lay the basis for the revival of capitalism.
Exactly. And partial destruction is going on perpetually; the mastery of Clinton's Treasury was allowing the bubbles to grow and then moving them around, hitting the most vulnerable the hardest. Gramm would be a pleasant relief, bumbling deregulatory moron as he appears.
> > Opposed to these is a Marxist position which respects the strength,
> > resourcefulness and self-healing capacity within capitalism - and
> > especially reflects upon the weakness of the system"s main enemy: the
> > working class.
>
> It's difficult to find "the working class" nowadays. There are workers,
billions of them, all over the world, but where do you find this mythical
working class?
Hey comrade, if you have to ask this question...
> > Some of these latter accounts stress a fifth school of Marxist theory:
> > class struggle as determinant. And it is true, the world's working
> > class and nearly all counterhegemonic national struggles have suffered
> > persistent, debilitating defeats over the past three decades,
>
> Why have there been "persistent, debilitating defeats" over past three
decades?
A mid-1970s shift in Northern ruling class strategies from legitimation/cooptation to militarism, reinforced exploitation and accumulation-by-dispossession?
> > Yet the internal contradictions continue bubbling up.
> > Globalization has
> > generated economic stagnation, not dynamism. According to even the
> > WorldBank, the increase in the world"s annual GDP per person fell
> > from 3.6%
> > during the 1960s, to 2.1% during the 1970s, to 1.3% during the
> > 1980s to
> > 1.1% during the 1990s and 1% during the early 2000s.
>
> Decline in the per capita GDP can hardly provide an explanation for the
economic crisis, whether actual or potential.
Yes, merely a symptom (and rather badly measured at that).
> > On the other hand, corporate interest payments remained at record high
> > levels throughout the 1980s-90s. Subtracting interest expenses, we
> > get a
> > better sense of net revenue available to the firm for future
> > investmentand accumulation, which indeed remained far lower from
> > the early 1980s-
> > present, than during earlier periods, according to French >Marxists
>
> Isn't the Profit After Tax calculated after subtracting interest expenses?
Not that I'm aware, but check Dumenil/Levy's website if you want the full explanation. Made sense to me.
> > These included the Third World debt crisis (early 1980s for commercial
> > lenders, but still going on for most of the world's states and
> > societies);
>
> China and India don't face any crisis of external debt. That's 35% or more
of the world's population.
Well, they're not in 'crisis' because debt/GDP levels aren't that high. And much is dollar-denominated. But they are high. And China's banking system and internal debts look like a severe Achilles Heel, no?
But from where I'm sitting, at the tip of Africa, we can still make very serious arguments about net financial outflows from here, from Latin America, from E.Europe and from much of Asia. Most states are still paying above 15% of export earnings to foreign creditors. The way this is kept going - when in previous periods (1830s, 1870s, 1930s) at least a third of all countries formally defaulted on foreign debt - is the banking bailout system devised in 1944 and put into play during the late 1970s... and the antidote is to join the movement to weaken and indeed shut down this system (http://www.worldbankboycott.org). Join us, comrade...
***
----- Original Message -----
From: "Doug Henwood" <dhenwood at panix.com>
> Marvin Gandall wrote:
> >I think Marxists and Austrians also equally fail to take into
> >adequate account the effect the advent of the universal franchise has had
> >since Marx and the classicial economists produced their great works. Both
> >camps see capitalist crises resulting in an inevitable wave of personal
and
> >corporate bankruptcies and mass unemployment - a necessary cleansing and
> >revitalization of the system for the right, the necessary precondition to
> >its overthrow for the left - but in the 20th century and beyond this
> >economic option is now limited by the actual (and potential) political
power
> >of the masses.
DH: > As usual, you make a convincing case. I'll bet a lot of the crisis
> Marxists think that elections are a sham, and the bourgeoisie is in
> perfect control of the state, so they're not likely to give this
> factor much weight.
PB: Sham? Oh yes. Bourgeoisie in 'perfect control of the state'? There you go again, comrade Doug!
***
From: "Marvin Gandall" <marvgandall at rogers.com>
> > So cheer up, it seems like comeuppance season has dawned.
> ---------------------------------
MG: > In an otherwise useful summary of Marxist crisis theory, this is a
statement only a comfortable academic could make.
Marvin, true, I'm a petit bourgeois academic. But are you *that* out of touch with the majority of politically progressive people in the world, not to sense how much satisfaction there would be if the US lost economic power in a dramatic manner? Schadenfreud is not good politics, but you have to grant *some* sort of validity to the view that's what is bad for the US *might* be good for everyone else? (And then help with that weakening process?!)