[Marxism] An increasingly precarious role for the global hegemon

Jurriaan Bendien andromeda246 at hetnet.nl
Sat Mar 19 03:14:18 MST 2005


Tom wrote:

"But the rhetoric served its real purpose -- convincing workers to tighten 
their belts."

The current bourgeois discourse about "low savings-ratios", quite a funny 
metaphor, performs a similar ideological function I think. The discussion 
conveniently abstracts from different income classes, and from the fact that 
those who borrow the largest amount, are those who own the most assets and 
have the highest potential earnings. It shifts the blame for indebtedness to 
ordinary working folks and governments, and provides a rationale for 
policies aiming to lower and regiment ordinary consumer spending, and 
increase privatisation. In Australia of course you have a large fall in 
measured consumer confidence at present, in which interest rates are an 
important factor.

In his book Capital, Marx talked about the bourgeois ideology of getting 
rich through frugality and thrift. This is mainly a nonsense, and in reality 
it is very much the reverse - you get rich precisely through borrowing large 
amounts of capital, and investing it at a higher rate of return, while 
meantime accumulating net income from that capital. It requires no 
production, only real estate for which there is a demand. The mystification 
of indebtedness occurs, because there is no social clarity about who the 
debtors are, who the creditors are, what form the debt takes, what the 
annual repayment liability is, and how debts relate to net worth and 
earnings potential. Obviously, you have to distinguish between:

- government domestic debt and government external debt, by sector
- business domestic debt and business external debt, by sector (indurtail, 
financial, import/export oriented etc.)
- household modestic debt and household external debt, by sector 
(distinguishing between classes of asset holders).

But almost nobody does any serious analysis of this kind. As I said though, 
for the vast majority of ordinary consumers, their "savings" consist of 
various forms of insurance/retirement schemes plus mortgages, and this is 
the same in Europe, Japan, the USA and Australasia, although the proportions 
of after-tax income saved do differ somewhat in different countries (but 
even then many of those differences disappear, if you examine the different 
systems and data more closely).

The reality is that between a quarter and a third of the Western working 
class has no real savings at all, and this is also reflected in political 
moods. For instance, hundreds of young rioters from poor Paris suburbs 
disrupted a demonstration by 9,000 French leftwing high-school students 
("bolo's") on March 8, beating teenagers to the ground, and stealing their 
mobile telephones and cameras.

"Rrubinelli" claims that I suggest "a decline in investment  in US 
securities" but I do not suggest that. The general world trend in the last 
five years has indeed been a shift of capital from shares to securities, and 
the longer-term trend is an increase in the share of securities in total 
capital placements. There has been a boom in the foreign acquisition of US 
Treasury paper, but my source mentions there is now less attraction among 
foreign investors specifically for US stocks (industrial equities). 
Essentially, a higher dividend rate (distributed profits) is now being used 
to offset lacklustre share-price appreciation (capital gain), but even 
higher dividend pay-outs aren't able to change the ratio of capital invested 
in stocks and capital invested in securities significantly, or the unequal 
trend in their relative growth rates.

Jurriaan







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