Cheers, Patrick
grinker at mweb.co.za wrote:
>
> *A CRISIS OF UNDER ACCUMULATION
> <http://www.metamute.org/en/a_crisis_of_under_accumulation>*
>
This all depends upon your time period. After you overaccumulate, of course you underaccumulate. But how do we best characterise the long-term structural crisis that is to blame for subsequent sluggish growth and lower rates of profit derived from genuine surplus value extraction (not financial froth or unproductive labour)? That crisis stems from the tendency to *overaccumulation*, especially in the traditional post-war industrial sites, and the failure to 'resolve' rather than 'discplace' the crisis in subsequent years. The resolution would have been a decisive devalorisation of overaccumulated capital (as occurred in prior episodes); instead, the crisis managers developed several techniques to shift, stall and steal - especially financialisation, globalisation and accumulation by dispossession. Once that's clear, all else follows:
> By James Heartfield
>
> Capitalist profits have been falling, but not for the reasons that
> Marx said they would, says James Heartfield: it is not the objective
> laws of capital accumulation that are a barrier to growth today, but
> the subjective retreat of the capitalist class from industrial growth.
That *always* happens after they run into overaccumulation. They deindustrialise, because there's a huge excess capacity out there, and profit rates are far lower in sectors suffering excess capacity, which explains the retreat from industrial circuits and the shift into financial circuits in search of corporate profits.
> It was Karl Marx who showed that banking crises are only symptomatic
> of more profound problems in the rest of the economy. Evidence of
> declining profit margins must surely vindicate Marx's identification
> of the falling profit rate as the most important law of political
> economy. And surely, after years in the doghouse, the Marxists can be
> allowed to take some credit for anticipating the capitalist crisis.
> Sad to say, closer analysis of the real underlying trends in the world
> economy make it clear that Marx's celebrated theory of the tendential
> fall in the rate of profit has relatively little to tell us today.
>
The key factor is the tendency for profits to fall when organic composition of capital rises. How has that basic position been disproven? We don't learn it from what follows.
> Marx's theory is that rate of profit to capital invested falls,
> consequent on a diminished share of surplus value-generating labour
> ('variable capital') relative to a much greater share of investors'
> money tied up in dead machinery, raw materials and plant ('constant
> capital'), what Marx called the 'rising organic composition of
> capital' (see Marx, 1984: 211-231, Marx: 1969: 492- 516, Mattick,
> 1981: 43-77). But most of this conceptual framework is a poor fit to
> today's circumstances. Marx's theory assumes intensive growth of
> industry with a greater share of investment going to machinery,
> tending to displace living labour. Is that what has been happening in
> the preceding period, let's say over the years from 1993-2005? Far
> from it.
>
Those aren't the appropriate years to consider. The slowdown in industrial accumulation began in the 1970s. The period since 1993 has witnessed far more speculative froth and financialisation as the source of profits. But since those profits aren't grounded in surplus value extraction, of course it becomes an inverted pyramid.
> In fact, the post- Cold War era was marked by a phenomenal world-wide
> expansion of the labour force recruited into capitalist production,
> like these Brazilian miners photographed by Sabastiao Salgado (right).
> Between 1996 and 2006, the world labour force grew by 421 million
> jobs, from just under 3.6 billion to just over 4 billion
> (International Labour Organization, 2006).The largest growth in the
> workforce has come with the recruitment of millions of of wage
> labourers in those post-Stalinist and former nationalist regimes in
> Asia; but north America and even sleepy Europe have massively expanded
> their workforces by recruiting migrant labour, more women workers and
> incorporating Eastern Europe into capitalist production.
>
The reality is that from 1990-96, the Russian and Eastern European contracted massively so any workforce growth afterwards comes off a low base, thanks to more decisive devalorisation of overaccumulated capital in weak sites - where corrupt leaders were not defending their territorial sites of accumulation - and the phenomenon of uneven development is the way to incorporate the East Asian process of accumulation, which was extremely strong but not enough to offset the overall stagnation tendencies at the world scale.
> Between 1988 and 2008 US payroll employment grew from 104 million to
> 138 million, much more than the growth in the natural population. The
> European Union increased its workforce from 60 to 65 per cent of those
> aged 15-64 between 1997 and 2008, as well as expanding eastwards to
> increase the total workforce from 174 million (EU 15) to 218 million
> (EU 27).
>
The critical question, though, is to what extent the additional workers were engaged in surplus value production, as opposed to most of the McJobs we know were actually created.
> By contrast, investment in industrial capital has been very low indeed...
>
As you would expect in a slow-motion crisis that did not have the benefit of a resolution along the lines of the 1940s, the prior era of crisis resolution in which relations of production were restructured in the context of massive devalorisation of overaccumulated capital.
> For the most part the story of China's growth is of a further
> extension of capital accumulation across the east, by the creation of
> new points of production, recruiting a new labour force, not of an
> intensification of capitalism with industrialization forcing labour
> out. Pointedly, it is not China where the problems have arisen, but in
> the less rapidly growing west.
>
There are good debates - some on LBO in the past - about the extent to which accumulation in China has created net jobs, given the huge retrenchments that were underway simultaneously in state-owned firms.
> It is not easy to map Marx's analytical categories directly onto
> empirical economic statistics (which are in any case distorted by many
> ideological devices). Still, in aggregate, the great growth in the
> labour force all points in the opposite direction to that indicated by
> Marx's theory of crisis - it points to a stable or falling organic
> composition of capital not a rising one.
>
The two problems I've identified above - chronology (contemporary Marxist theories typically point to the late 1960s as the peak moment of accumulation in the long cycle) and the relationship of employment to surplus value - remain for James to address.
> Not an 'overaccumulation of capital', but underinvestment in new
> technologies.
>
No, there was huge corporate overinvestment in new technologies in the late 1990s; software was a major input. It was mostly a waste, of course, as the dot.com crash showed.
> Not intensive growth forcing workers out as they are replaced by
> machines, but extensive growth sucking up more and more labour.
>
That's regulation theory talk; the core question is what's happening in commodity production - not the superfluous economic processes that are little more than froth.
> ... falling profit margins without a rising 'organic composition' of
> capital do not demonstrate Marx's theory.
>
There's plenty of deconstructed profit data which do show the trends Marx predicted in the value-producing sectors, such as by Dumenil and Levy, Mosely and others.
> For some Marxists, workforce expansion can be dismissed as a growth in
> unproductive service workers - in the developed world at least, though
> decidedly not in Asia. In 2001, the U.S. service sector accounted for
> more than 80 per cent of the non-agricultural labor force, while the
> goods-producing sector employed less than 20 per cent (AFL-CIO, 2002:
> 1). On this reading, we can set aside the service sector, and discover
> a rising organic composition in capital-intensive manufacturing
> sector, leading to overaccumulation.
>
Ah, finally we get to the obvious point.
> But the identification of the manufacturing workforce in the national
> accounts with Marx's concept of productive labour and service sector
> employment with 'unproductive labour' is too restrictive - a point
> which Anwar Shaikh makes (Shaikh and Tonak, 1994: 21), but then goes
> on to discount most of the service sector as unproductive in his
> analysis of the national accounts (Shaikh and Tonak, 1994: 29;
> Poynter, 2000: 198, makes a good case that much of what is called
> 'services' ought to be seen as productive labour). And if an economy
> can support some unproductive labour, it would be hard to understand
> the motives for such a great expansion of employment in the service
> sector if it created no new value for capital.
>
It wouldn't be that hard if you look at crisis management/displacement techniques, including all the deregulatory and speculative processes which generated such high growth in services, FIRE, construction.
> What is more, if Marx's theory accounted only for relations between
> labour and capital in one fifth of the economy, we would have to have
> a new theory to understand the rest.
>
Or we go back to Das Kapital to find the core dynamic in capitalism: the commodity. If commodity production is now responsible for just 1/5th of economic activity (it's actually far more, because there are a great many commodities that are generated in the 'service sector' though we don't have good enough data to disaggregate), why would that disprove Marx's theory?
> One of Marx's great qualities was his insistence on objectivity,
> refusing to substitute the wish for the thought. But amongst his
> lesser followers objectivity has shaded into objectivism, a mechanical
> reading of a mechanical society in which human subjectivity plays no
> role. Paul Mattick (who did more to resurrect Marx's theory of crisis
> in the long years of the post-war boom than anyone) warned Science &
> Society readers against turning it into a dogma back in 1959: 'For
> some of his disciples the "law of value" ... seems to assure the
> breakdown of capitalism', he chided, adding that for them 'Marx's
> critique of political economy became the ideology of the inevitability
> of socialism'. (Mattick, 1959: 33) ...
>
I'm a lesser follower, to be sure. And in the internal debates in Socialist Register, this question of emphasis - structure/struggle - constantly arises. But I don't find anything yet convincing to suggest Marx's basic insights on crisis generation need overhauling. Given the weakness of the working class, no one I know is positing that *because* capitalist crises seem to be getting more intense, in the manner Das Kapital suggested, means socialism will be ushered in. Who exactly makes that sort of argument today?
> ... The left's collapse in the 1980s was what saved the capitalist
> system. It created new conditions for the expansion of capitalism,
> namely a supplicant labour force east and west -that expansion was not
> accompanied by the creation of new technologies, however but the
> squandering of lives in backbreaking, labour-intensive toil.
>
Sure, in crisis management, the extraction of absolute surplus value is one of the first gambits; and neoliberalism-as-class-war follows logically. But this only makes matters worse, as Marx pointed out, it's a short-term countervailing strategy to declining profits. It doesn't 'save the capitalist system', otherwise the 1990-91, 1997-98, 2001 and 2008 crashes wouldn't have happened.
> ...What characterises today's capitalist class is not excessive risk
> taking, but risk aversion.
>
Financial hedging is a technique for the risk averse, until the numbers bust out of the box the modelers developed, and then these lads in the investment banks and mortgage companies look like very drunk gamblers.
> Far from pursuing growth at any cost, today's capitalists have
> retreated from growth. If today's capitalists look like giants, it is,
> as James Connolly said, because we are on our knees. Get up and take a
> look: they are insecure and timid midgets.
>
Depends on who you mean. The managers of GM, Ford and many other industrial firms are insecure, for a very very good reason: overaccumulation.
> The crisis of confidence in the capitalist class, more than any
> 'objective conditions' explains the insipid character of growth in the
> new millennium.
>
There are such huge gluts out there that we don't need to resort to pop-psychology.
> Those who take the opposite view will point to the exorbitant and
> speculative inflation of asset prices, to the great risks that the
> money markets took. But that is to see things the wrong way around.
> What happened in the new millennium is that investors confused a
> mathematical increase in asset values with real growth.
>
Agreed. There weren't enough Marxist Chicken Littles out there (we were ridiculed rather a lot prior to September 2008), though to be fair to Volcker (usually I'm not), he called it in 2004.
Most of us were saying things very much like this, James:
> ...
>
> The question that arises is why was the speculative bubble allowed to
> grow for so long without being called to account. Bubbles are a
> feature of capitalism, but for the last fifteen years we have seen
> speculative inflation of assets in emerging markets in Eastern Europe,
> new technology stocks, the fine art market and mortgage lending. The
> answer is that motive cause of the turn into speculative investment
> was a retreat from the world of industrial growth. Surpluses generated
> by industry were not ploughed back into new lines of production, but
> redirected instead into speculation.
>
Exactly. That was the essence of crisis management: stalling (through the credit mechanism), shifting (through uneven development via 'globalisation) and stealing (accumulation by dispossession, i.e., uneven/combined development, through extra-economic surplus extraction). All the excellent examples that follow relate very closely to these friendly amendments to Marx's crisis theory (especially from David Harvey's Limits to Capital where he considers the temporal and spatial 'fixes' and his New Imperialism where he adds more on the extra-economic sphere, in Luxemburg's spirit).
> ...
>
> In looking at today's challenges it is better to pay homage to Marx's
> underlying approach
>
Yeah, including value theory.
> than to any one or other of his worked up theoretical reconstructions
> of capitalist society.
>
Who exactly are you complaining about?
> ... The world economy is in deep trouble. That is not because too much
> has been invested in industrial machinery and plant, but because not
> enough has.
>
The industrial gluts prove this incorrect. And the Marxist argument about overaccumulation is a longer-term one, dating to the 1970s.
> The romantic anti-industrialism of the green movement might tempt
> Marxists to portray our problems as runaway growth, but that would be
> a mistake.
>
No green I know who has looked at the per capita GDP figures since the 1960s - which show declining rates of growth - would call it 'runaway'. But it is an extremely destructive mode of growth because so much is externalised, especially greenhouse gas emissions. Who in their right mind could deny that? And the red-greens - see John Bellamy Foster's excellent syntheses last year, or Elmar Altvater - are stitching these processes together very eloquently.
> It would be wrong to make a virtue out of austerity when working class
> people are being made to pay for the failures of capitalism.
>
Agh, come on. The red-green strategy is austerity for the elites, and expanded consumption of basic-needs goods - including electricity - for the masses. If you are finding anyone in particular to rave against for confusing this sort of moral politics, call them out on it. Don't write off classical Marxist crisis theory, James, it's unbecoming for someone who contributed such a seminal text - Grossmann's - to the tradition.