[Marxism] Overproduction - underconsumption

S. Artesian sartesian at earthlink.net
Wed Oct 14 08:30:57 MDT 2009

Actually, Nestor, the same article appeared in the Financial Times, with 
more detail apparently, and without the sobriquet about China being a 
"locomotive."   The  World Steel Association [previously known as the 
International Iron and Steel Institute] is an industry trade organization 
designed to promote steel and the steel industry to consumers, government, 
etc. etc. Might be interesting to compare their past record on predictions 
to reality, just to get a glimpse of their track record for accuracy... not 
that I have any reason to doubt anything a trade body would ever say about 
the prospects for their industry.

But anyway, enough defeatism about the future of capitalism, let's get back 
to steel.

The WSA predicts that steel use in China will actually  increase  2009 by 
18.8%.   Hey, that's just great news, isn't it.  Happy days are here again, 
pretty soon, any moment, right around the corner.. except.. except, China's 
Iron and Steel Association predicted a 10% decline in 2009 so I wouldn't 
rush out and buy shares in Baosteel based on the WSA article, know what I 
mean?  Haven't been able to track down any change in CISA's original 
estimate, but if somebody else has, I would be grateful for the information.

But you know what, the info provided by the WSA is worth reproducing in 
fool, in mean full:

12 Oct 2009

Beijing - The World Steel Association (worldsteel) is forecasting that 
apparent steel use will contract worldwide by -8.6% to 1,104 mmt in 2009 
after declining by -1.4% in 2008. This is an improved figure over the spring 
forecast issued in April 2009 which predicted a decrease of -14.1%.

The improvement is largely due to the exceptionally strong growth in steel 
demand in China. With signs, from the beginning of the second half of 2009, 
of a recovery across the world now apparent, global steel demand in 2010 is 
forecast to grow by 9.2% to 1,206 mmt which is a recovery to the level of 

Commenting, Daniel Novegil, Chairman of the worldsteel Economics Committee 
said: "The global recovery is stronger than we predicted in April. According 
to our current forecast, China will rebound 19% in 2009 and 5% in 2010. 
Emerging economies will slow down 17% in 2009, to grow 12% in 2010. Apparent 
steel use in developed economies, that contracted 34% in 2009, will rebound 
15% in 2010. Therefore, worldsteel forecasts that global steel demand will 
return to growth in 2010 but this is expected to be moderate. As before the 
financial crisis, the emerging economies, especially China, will be the 
critical factor in driving world steel demand in the near future.

Concluding, Daniel Novegil said: "While the state of the global economy has 
improved, uncertainties and concerns regarding the resilience of the 
recovery still remain with the possibility of any premature reduction in 
government stimulus actions. This uncertainty particularly exists for the 
Chinese economy in 2010, whose fast recovery in 2009 was largely enabled by 
such strong government stimulus policies".

China's apparent steel use in 2009 is expected to increase by 18.8% to reach 
526 mmt. China is expected to account for 47.7% of world steel apparent use 
and excluding China, potential world steel demand would have fallen 
by -24.4%.

India also remained relatively resilient to the global crisis and apparent 
steel use is expected to grow by 8.9% and 12.1% in 2009 and 2010, 

The NAFTA region is expected to show a -35.8% decline in apparent steel use 
in 2009 and then a positive 17.1% growth in 2010. Apparent steel demand in 
the US is likely to fall by -38.7% to 60 mmt in 2009 after falling by -8.2% 
in 2008. It should recover to 72 mmt in 2010 with a growth rate of 18.8%.

The EU-27 economies were also severely affected by the crisis and the region's 
apparent steel use is expected to fall by -32.6% in 2009 to 122 mmt. In 
2010, the apparent steel use in the EU-27 is expected to grow by 12.4%.

For both NAFTA and EU-27, the level of apparent steel use that is expected 
in 2010 amounts to what was achieved back in 1991, demonstrating the 
severity of the impact of the crisis on the steel industry.
Japan will see its apparent steel use decline by -31.3%, which is expected 
to recover by 15.8% in 2010 to reach 61 mmt.

Apparent steel use in the CIS region is expected to contract by -30.8% in 
2009 and should grow by only 8.2% in 2010.

I would recommend also that those interested take the time to look at the 
pdf  on apparent steel use, accessed through the link at: 
http://www.worldsteel.org/?action=newsdetail&id=275.  Clearly, any and 
almost all growth is concentrated in China and India.  As for  the most 
efficient producers-- Japan and South Korea, nothing that gets them back to 
2008 levels.  The Ukraine which has shut down about half its production 
lines?  The WSA predicts a 10% improvement in use, bringing it up to 55% of 
the pre-shutdown levels.

But what of China, that's the big question? And the answer depends on--  
profitability.  Can China maintain expansion of unprofitable steel 
production in an economy that has been transformed into a profit governed 
economy?  Certainly it's possible to maintain production, but then by 
definition of capitalism, such production is overproduction and will find 
its expression in further collapse of prices, increased pressures on 
steelmakers to rationalize their output, laying off hundreds of thousands of 
workers, etc.  Remember the incident where a manager was killed by Chinese 
workers recently?  That manager was a manager of a steel related company, 
engaged in steel finishing I believe, that was privatizing a previously 
public owned enterprise, and was intent on dramatically reducing the labor 
force and production hours.

Which gets us to the next critical point:

Rather than "defeatist," a realistic Marxist assessment of production in 
China, of China's embrace of capitalism, as opposed to the ever-so-popular 
confusion of expanding capitalist reproduction with "development," as 
further opposed to obscuring class relations with "national"  "third world" 
chest-thumping,  provides insight into the developing class struggle that 
just might put the fire to the feet of the bourgeoisie in both their local 
and international incarnations.

China as a locomotive?  In the real world of real locomotives, there can 
occur a fault which effectively demolishes the utility of the locomotive--  
and that fault is called "crankcase overpressure."  Locomotive engines are 
designed to automatically shutdown when crankcase overpressure is detected 
because, because if they don't, they might explode, literally.  In the value 
world of value locomotives, the parallel to crankcase overpressure is 
intensified overproduction.

PS I am flattered that Nestor actually broke his promise to the moderator 
and attempted to engage in debate with me.  Be still my heart.

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