[Marxism] [UCE] Re: Guardian: US capitalism in crisis while most Americans lose out

Ralph Johansen mdriscollrj at charter.net
Wed Jun 1 12:21:46 MDT 2016


Shalva Eliava wrote

What is particularly noteworthy about this piece is that it's written by 
CNN's economic editor:

    "In simple terms, what this means is that rather than funding the
    new ideas and projects that create jobs and raise wages, finance has
    shifted its attention to securitising existing assets (such as
    homes, stocks, bonds and such), turning them into tradeable products
    that can be spliced and diced and sold as many times as possible –
    that is, until things blow up, as they did in 2008. In the US,
    finance has doubled in size since the 1970s, and now makes up 7% of
    the economy and takes a quarter of all corporate profits, more than
    double what it did back then. Yet it creates only 4 % of all jobs.
    Similar numbers hold true in the UK.

    American corporations now get about five times as much of their
    revenue from financial activities such as offering credit to
    customers, tax “optimisation,” and trading, as they did in the 80s.
    Big tech companies underwrite corporate bond offerings the way banks
    do. Traditional hedging by energy and transport firms has been
    overtaken by profit-boosting speculation in oil futures, a shift
    that actually undermines their core business by creating more price
    volatility. The amount of trading done by these organisations now
    far exceeds the value of their own real-world investments, a sure
    sign of financialisation)

    http://www.theguardian.com/commentisfree/2016/may/21/crisis-in-capitalism-and-role-of-wall-street


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Here is Michael Hudson with a challenging interpretation of "the 
perverse effect that financialisation can have on corporate culture", 
presented at Left Forum 2016,Marxist Laws of Motion and Today's Economic 
Collapse (with Michael Perelman and Bertell Ollman), where he offers a 
precis of his forthcoming book, J is for Junk Economics 
https://www.youtube.com/watch?v=AtQTLmK6lnQ, proceeding first on the 
accepted premise that "stocks, bonds and bank loans are not means of 
production; they're financial claims on production" and concluding that 
"instead of finance being industrialized [as Marx expected], industry is 
being financialized":

"So, what we're having today is, in my analysis, a constant build-up of 
debt, and what junk economics doesn't show is that America has taken off 
into a higher and higher level of debt in relation to government income, 
of family income and of corporate income, and I think we've finally 
reached the limit. And I think we're now in what used to be called "the 
final crisis. "The final crisis" is when the environment can't continue 
along the laws that it's been doing. It can't restore the status quo 
ante because there's only one way to restore equilibrium, and it's not a 
self-stabilizing, an automatic stabilizer. If the problem is the credit 
system taking more and more personal income, for mortgage debt, student 
loans, for bank loans and the credit card debt, the only way that you 
can restore equilibrium is to wipe out the debt to the financial class.

  ... So you had a circular flow, which kept rising and rising until you 
had a 1929. And that led to a kind of crisis that, well, you didn't have 
socialism out of it, but a New Deal to kind of postpone real socialism. 
I think we're in a kind of similar place in the world today, and the law 
of anarchy, which is one of these laws of motion, takes place and 
everything is up for grabs. And the question is, where are these laws of 
motion leading today. Well, I think if you're having the impact of 
rising levels of debt on a national economy, the model to look at for 
tomorrow is Greece ....  What's going to happen? Well, the IMF and the 
Germans say, you're going to have to do what the Germans did after World 
War one, you're going to have to borrow the money. But they can't borrow 
the money because nobody's going to lend to Greece anymore. The IMF will 
only lend the money to pay off the bondholders. So you'll have to sell 
off the property. Privatize... So, we're in the process of rolling back 
capitalism, rolling back even to feudalism, where we're rolling back 
public investment in property, rolling back ownership of the commons, of 
the basic public utilities, of the roads, the land, the government, the 
ports, everything that is in the public sector, all the way from the 
temples and palaces of Mesopotamia. We're rolling back, actually, to, 
what would you call it, well, you could call it neo-feudalism because 
we're going back to pretty much what Marx was describing. And it's the 
result of foreclosure - we're into a time of foreclosure right now; and 
what's happening in Greece is a kind of voluntary foreclosure, as long 
as Greece remains in the Euro zone and remains in the European monetary 
system, the IMF and the World Bank, it's going to shrink and have an 
exodus of labor.

You're having privatization of government; you're having a return from 
democratic government back to oligarchic government. The whole fight of 
Ricardo and the land reformers in the 19th century, the progressives, 
was to extend the vote, to empower the House of Commons over the House 
of Lords. The idea, obviously as we know now it was a silly idea, was 
that people would vote in their own self-interest. And the idea was 
that, when they did it, they would vote in their own economic 
self-interest. And that would promote economic reform, would cure the 
problem of the idle rich.

And all that is being rolled back today, not only by Citizens United, 
but by having people vote on issues of identity other than their class 
interests. As I mentioned the other day, you have a National 
{Organization] Association [sic] of Women for Wall Street, a National 
Association of LGBT for Wall Street, led by Wall Street billionaires, 
the National Association of Women is led by a Wall Street right wing 
billionaire. You have all these identity groups led by Wall Street 
lobbyists. I try to tell people these are identities other than class 
identity. And my editors - I'm doing something for the Washington Post, 
my editors when I mention working class, they all say, no. no, middle 
class. It's like we don't call the Blacks certain names. It's similar 
with "working class".

The degree to which voters and workers think of themselves as 
capitalists in miniature and landlords in miniature. Let the workers in 
telephone buy shares in British Telephone. Offer it at half the price, 
one-tenth the price at issue, we can make money, Oops, there, you lost 
your job. Maybe landlords in miniature, making a killing on the house, 
Privatizing the council housing in Britain, so that the price of housing 
is so high in London that you have to live way outside of London and go 
to work in London on privatized railways with higher fares and lowered 
safety and more accidents, since safety impairs profit. As Milton 
Friedman said, the job of capitalism is to make profit. That's 
Thatcherism, finishing the job.

Well, that's what's happening today. Actually, we're moving back not 
only to feudalism but to what Marx called the ancient mode of 
production, usury and slavery. The difference, of course, is that it's 
not the type of slavery you had either in antiquity or feudalism. In 
feudalism although the slaves were allowed to have families, their labor 
belonged to the lords. They couldn't leave the lot, which was owned by 
the landlord... [today] if they want security they have to take out a 
mortgage. The federal government in this country guarantees mortgages up 
to 43% of their income. So, if the worker pays 43%, let's say, for their 
home mortgage, about 10% for student loans, because you need to get a 
degree in order to get a job in order to qualify for a mortgage, and 
then maybe another 10% for an auto loan and some credit card debt in 
order to feed yourself, and so you're already up to 60% and then the 
government takes 15% as pre-saving for social security and health care 
to produce enough of a surplus so that the tax rate on the upper 90% can 
be cut, so that the budget is in balance, then obviously, what you're 
having is debt slavery, or debt peonage, instead of feudalism. So, I 
think if you can look at Marx's laws of motion in a big sense, a huge 
grand circle, then what we're really seeing is not progress, but really 
what we're seeing is what the ancient concept of time was, circle - the 
western idea is there is upward progress, but I think they all add up to 
a circular return, kind of a renewal of time, and this was Mesopotamia, 
Egypt, my teacher at the University of Chicago, Mercilia Eliade, wrote 
about The Myth of Eternal Return, but he didn't talk about debt. And the 
whole point of eternal return in Mesopotamia was that any new rulers, 
the first thing they'd do was to proclaim a clean slate. wipe out the 
debt so that it can begin again. That was the ancient business cycle, 
and it worked. That's the only way you can restore the status quo ante. 
The only way you can restore equilibrium is for government outside the 
business cycle. That's why economists don't talk about it. That's the 
difference between the Marxist laws of motion and the economists' laws 
of non-motion.

[...]

At issue is, where's finance capital leading? If you ask Marx, well, 
he'd say it's merging with industrial capital, but it's going to be 
subordinate to industrial capital, because that's what capitalism does: 
it subordinates all these preexisting modes of production, existing laws 
of motion. But instead of finance being industrialized, industry is 
being financialized, as Michael [Perelman] just said. So, this is 
something that Marx would not have expected. He thought that capitalism 
was going to move forward towards socialism, but it's not moving towards 
socialism. And if it's not  moving towards socialism, where is it moving?

Well, Bertell [Ollman] often says, it's moving towards barbarism. You 
can call it fascism or barbarism, but it's certainly not moving towards 
socialism as part of the industrial process, because when finance 
capital takes over, it's downsizing, it's outsourcing, its way of making 
money is the bubble economy, using debt leverage to increase the price 
of stocks and bonds. This is not real wealth, this is not tangible 
wealth. this is not a means of production. Stocks, bonds and bank loans 
are not means of production; they're financial claims on production. And 
as Frederick Soddy said, the exponential growth of finance overcomes the 
ability of the economy to produce a surplus in order to pay the debt."

[Also, here's an interesting discussion based on this set of premises, a 
plausible prognosis but then arguing for the impossible prescription, 
under the regime of capital, of a "steady state economy", at 
http://steadystate.org/growth-debt-and-the-world-bank/ "...it requires 
physical growth of the economy. Such growth in yesterday’s empty-world 
economy was reasonable — in today’s full-world economy it is not. It is 
now generally recognized that there is too much debt worldwide, both 
public and private."




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