[Marxism] Paul LeBlanc: Why I Am Joining the ISO

S. Artesian sartesian at earthlink.net
Fri Oct 30 12:33:08 MDT 2009

I don't know about FTROP [ok, Shane, don't get your knickers in a twist] as 
metaphor, although I certainly think Marx's analysis of capital is at times 

Try this for a metaphor:

"Every step of this way was, and is, measured by and with the change in the 
price of oil, from the price spikes of 1979 serving to announce the 
double-recession, forming the overture and the coda to asset liquidation; 
with the collapse in oil prices reverberating throughout the financial 
structure, bringing an end to the leveraged certificate of deposit method of 
tapping into accumulated savings of the public, the housing construction 
boon of that decade, leading to the S &L crisis at the end of the decade and 
making the first invasion of Iraq a dead cinch lock.

The recovery from the 2001-2003 contraction, brought about through dollar 
depreciation, reduced wage rates, and rapid inflation of oil prices through 
the second invasion of Iraq, magnified the use of leverage to liquidify, and 
liquidate, the existing reserves of the general public. Recalling the pain 
of the capital investment hangover of the 1993-2001 period, industry 
consumed capital at rates greater than a 1:1 replacement ratio. Annual 
capital investment fell below the amounts claimed in depreciation until 
2005, while cash and marketable securities held by industrial companies 
increased. Even after the increases in capital spending of 2006 and 2007, 
and during the ongoing depression, US corporations continued to generate, 
and preserve cash, at record levels. Estimates are that in 2008, the 
non-financial companies in the S & P 500 index had accumulated reserves of 
more than $800 billion in cash and marketable securities in the United 

With profitability generating more and more cash, with capital spending 
severely restricted, with oil prices flushing money into that great big 
pipeline called foreign reserves, with the US pulling the entire network of 
capitalism in its wake, there existed only one market large enough, liquid 
enough, to absorb the cash flows and achieve what capital must always 
achieve-- the distribution, rationing of profit-- and there were only the 
asset-backed portions, the commercial and consumer real estate portion of 
those capital markets, the US consumer debt markets, the US mortgage debt 
market, and the leveraged loan private equity portions available.

The importance of "financialization's" contribution in establishing a 
general, and satisfactory rate of return in industry grew throughout the 
2003-2007 period. As cash assets expanded an increasing portion of US 
industry income was derived from non-operating sources, including interest, 
dividends, royalties, licensing fees, etc. Between 1996 and 2000, income 
from non-operating sources grew from 11.5 percent of operating income to 
42.5 percent of the operating portion, but for the recovery years 2003,2004, 
2005, 2006, and 2007, non-operating income measured 66, 64, 69, 72, and 70 
percent of the operating contribution.

The increases in operating and non-operating income combined with the 
continued constriction on fixed asset accumulation produced a spike in the 
rate of return on net property, plant, and equipment for US industry. That 
rate measured 22 percent in 2003; 40.3 percent in 2004; 45.6 percent in 
2005; 51 percent in 2006, before falling to 35 percent in 2007.

2006 was the peak in the rate of return for US manufacturing, and that peak 
and its decline were marked on the part of the ideologues, dismal 
scientists, and artists of flim-flam capitalism with euphoria. T hose 
actually compelled to engage in the reproduction of capital, those who form 
the living, breathing source of capital-- those wage-laborers-- marked that 
turn with increased class struggle. In the United States, that class 
struggle was led by the immigrant workers, whose uncompensated labor had 
been, and remains, so essential for controlling the overall wages, the 
general ratio of wages paid out out to the class as a whole, who poured into 
the streets of cities around the country on May Day. These demonstrations 
were the tangible proof that capitalism had indeed overproduced capital and 
had run up against its own ability to exploit labor at a rate of greater 
intensity enough to offset the decline in the rate of return. "

Full at: 

----- Original Message ----- 
From: "Carrol Cox" <cbcox at ilstu.edu>
To: "David Schanoes" <sartesian at earthlink.net>
Sent: Friday, October 30, 2009 1:41 PM
Subject: Re: [Marxism] Paul LeBlanc: Why I Am Joining the ISO

> On FROP: There is a way to make _some_ sense of it in terms of Marx's
> whole Critique, though it involves seeing it more as an image or
> metaphor than as a useful tool of economic analysis.

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