Bob Mast
----- Original Message ----- From: "Jurriaan Bendien" <andromeda246 at hetnet.nl> To: "Marxmail List" <marxism at lists.econ.utah.edu> Sent: Thursday, November 11, 2004 9:24 PM Subject: [lbo-talk] [Marxism] The Meaning of Surplus Capital
> Hi Bob,
>
> Thanks for the comment. You asked:
>
> Do you agree with those in the U.S. and Europe like Alan Greenspan who
> represent the interests of finance capital that this dramatic and
> escalating
> shift in flows of capital can continue indefinitely (as long as enough
> surplus value can be squeezed out of a shrinking working class)?
>
> In terms of economic theory, that is a possibility, yes. But in
> reality, I
> think no, basically because I think, with Marx, that the economy is
> a social system, not a sort of "engine" which can be controlled
> with decisions based on mathematical equations. Even with
> the most perfect plans for staged economic adjustment, there's
> the people factor, i.e. at the most basic level, what people are
> willing to accept, or can accept. Deregulated markets create more
> socio-economic inequality and more social competition, and that
> creates big problems in terms of organising and unifying people,
> getting them to co-operate with plans that could transform
> capitalism in sustainable ways. That's a question of power,
> of the conflicts of social classes. At stake is not just whether the
> system
> can deliver the goods, but also how it delivers them, and the
> latter involves cultural factors which have nothing to do with
> economics directly. James Heartfield reminded me poetically
> that Marx had no theory of the "automatic collapse of
> capitalism". Lenin for his part said, "there are no absolutely
> hopeless situations for capitalism", provided that the ability
> to accumulate private capital stays intact. But I don't
> operate with a unilinear historical schema of feudalism-
> capitalism-socialism either; capitalism does not necessarily
> lead to socialism, the system could mutate in various
> ways. To establish a socialist system requires a class
> of people with a definite positive project for the
> transformation of society, not simply a bunch of people who
> complain about exploitation and injustice, real or imagined,
> i..e. some people have to be prepared to shoulder the
> social responsibility for this, and provide the leadership
> required, based on a realistic vision of what society
> ought to be like and can be like..In that sense I find
> people like Peter Camejo much more interesting.
>
> You write:
>
> In a series of articles, most recently 1/11/04, US economists Obstfeld
> and
> Rogoff argue that the spiralling process of using European and Asian
> surpluses to 'force balance in international payments' raises the
> spectre of
> depression.
>
> Reply:
>
> I don't have a sub to the FT, I think that is a possibility, yes.
> But in the medium term, the prospects are just for sluggish
> aggregate real growth I would think. GDP figures are less and
> less meaningful as indicators however, because they don't
> tell you what sectors are really growing, and as the "jobless
> growth" phenomenon illustrates, growth in GDP does not
> automatically imply increased employment. Also, the
> growth of international trade and unequal exchange
> distorts the relationship between the reported value of
> output and what tangible things are actually produced.
> It is very difficult to see more than a few years ahead,
> because critical events (not necessarily economic events)
> can suddenly have a big impact. You saw this already
> with 9/11, in itself not a very significant global event
> in terms of its scope, but it had an enormous
> cultural impact and an impact on investor confidence.
> Generally, in social science you cannot foresee much
> beyond 5-7 years, other than in special cases.
>
> You write:
>
> In Kapital V.3 Ch. 25 Marx dealt in a cursory way with the question of
> 'Fictitious Capital' which he defined as a mass of speculative capital
> representing paper claims to a share of the total surplus labor. He
> stressed that Fictitious Capital was an essential feature of the
> process of capital accumulation, but also that as the ratio of
> fictitious claims to surplus labor embodied in circulating use
> values rose, the fictitous house of cards had to come
> crashing down eventually.'
>
> Reply:
>
> I don't think that fictitious capital is such a big systemic problem.
> Fictitious capital facilitates a transfer of net income to property
> owners without involving a corresponding increase in real output,
> but there is usually an underlying real asset on the basis of
> which fictitious capital can grow. Ultimately of course that
> asset is living labor which can create new value. If you
> look at the stockmarket crashes since the 1980s,
> it's clear they had big depressive effects, but they don't
> destroy the capitalist system. What the massive growth
> in capital tied up in securities really shows is that there is
> now overall less confidence in a trade based on artificially
> inflated values. An interesting snippet: Staff turnover among
> investment professionals in the U.K. active equity sector has
> reached epidemic proportions, according to multi-manager
> Investment Solutions. It has conducted a research study which
> shows that up to 45% of all investment professionals have
> changed jobs in the last three years. Fifty-six percent of
> those who left their employer joined a direct competitor.
> The report speculates that theses figures reflect a trend
> among managers to run hedge funds or to seek more
> seniority and higher salaries.
> http://www.globalmoneymanagement.com/default.asp?
> page=1&SID=447788&ISS=11246
> Yes, of course the capitalist system is full of contradictions,
> but in practice what matters is the timing applied in mediating
> those contradictions. The policy makers have a whole raft
> of policy ideas in the political cupboard, but what gets
> implemented depends ultimately on an assessment of
> where people are really at, what is achievable. Ultimately
> economics cannot get away from the people factor, and
> people of course aren't simply "economic agents" as
> Duncan Foley argues in a recent paper.
> http://www.newschool.edu/gf/nser/articles/
> 0101_foleyd_strangehist_fall04_final.pdf
>
> You wrote:
>
> Marx was writing about national economies and in the context of
> boom-bust
> cycles and conjunctural crises. In the globalized economy of today,
> with all
> its internal contradictions, it seems that the question of Fictitous
> Capital
> becomes a central one, as economic crises assume increasingly the form
> of
> credit-monetary crisis.
>
> Reply:
>
> Well the way I have put it is that credit-money enables the postponement
> of current costs of consumption in space and time, but the limit
> consists in
> the ability to pay, and and rate of repayment. Debts can be rescheduled
> or
> renegotiated to a large extent. But the question is whether ultimately
> debt defaults will occur in critical areas of a sufficient size, and the
> "social trust" factor plays a role in this. Then you would get an
> Argentina-type situation. Fictitious capital does play a role here,
> insofar as artificially inflated values are suddenly popped, such that
> an asset which was worth a certain amount is suddenly worth a
> lot less (devaluation of assets) which can make it impossible to
> repay debts and causes chain reactions of debt defaults. But a
> devaluation of assets need not occur as result of an economic
> mechanism, it can occur because of extra-economic events.
> The viability of the credit system depends ultimately on
> social trust and social co-operation. This is essentially why
> the bourgeoisie focuses on terrorism, because terrorism is
> the antithesis of all that, the absolute negation of social
> trust and social cooperation. Which really leads me back to
> my initial comment: the people factor, i.e. what people are
> willing to accept, or can accept. There may be no absolute
> economic limits, but there are human limits. In Marxist theory,
> the dialectics of competition and co-operation have never
> been well-theorized (John McMurtry has an interesting
> article on this though, "How Competition Goes Wrong."
> Journal of Applied Philosophy, 8(2): 200-210, 1991).
>
> Jurriaan
>
>
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