The chronic problem of overaccumulation of modern capitalism - Page 3 - Politics Forum.org | PoFo

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#14414744
Eran wrote:No. Capitalism allows remarkable levels of growth, thereby enriching humanity to previously-unimaginable levels. But it doesn't depend on growth.


Essentially the basis of capitalism is continuously expanding markets. This is the grounds for the division of labor. Expansion of markets is the historical impetus to the transition from local craftsmanship to industrialized production. This logic of perpetual growth is pervasive under capitalism. It is the goal of every capitalist firm. It is the goal of every investor in capital markets. There is really no alternative to perpetual growth under capitalism, aside from economic depression. This is when you have people lining up on the streets staring at empty houses in which they cannot live, while farmers burn crops in the midst of mass hunger. Capitalism has no potential for a steady state. Ever expanding demand against ever expanding supply is the fundamental root of capitalism. Means by which this is achieved (i.e. division of labor) are the products of necessity of capitalism.
Last edited by Crantag on 30 May 2014 06:59, edited 1 time in total.
#14414747
Classicliberal wrote:Let's define some of those "standard conventions and relevant principles" of what would make an economy "communist", at least from your perspective. As it seems your conception of a centrally planned economy is different than mine, which comes from the economic policies of other (former) Marxist-Leninist states.


You remind me with this quote of the statements of old-guard American Stalinists and Maoists I have met who were bitter of the 'coup' which occurred in China by Deng Xiaoping.

I have absolutely no interest in this sort of ideological debate.

It's sort of beside the point, but Stalin and Mao were horrendous tyrants with whom I would never align myself.

My basis is of comparison between the US economy and the Chinese economy. American pro-capitalists who think that China is turning capitalist engage in wishful thinking, for their part. The Central Government in Beijing is still very much in control, and a significant proportion of industrial and commercial enterprises are directly state owned.

The Chinese State reserves the capacity to make absolutely sweeping economic decisions, and they have at times done so. Matters such as grain production are directly administered by the central government. A capitalist who steps out of line and adulterates product (like powdered milk), resulting in deaths, is taken out and shot.

It does have an interesting mix, but the country is indeed communist. The opening up of free enterprise is a deliberate policy measure. This is one of the reasons for confining it to economic zones, so that it is still under the auspices of the state control.

To be sure, this is not your father's communism. If you think you need to invent a new word, be my guest. Based on the standard conventions, like I said, China is most certainly communist.
Last edited by Crantag on 30 May 2014 07:01, edited 1 time in total.
#14414750
Classicliberal wrote:Highly successful how? In terms of equality of distribution? What is your definition of "success" in regards to Marxist economics in practical application?


Marxist economics is a highly successful academic discipline which produces a lot of very good research.

The task of economists is not to craft policy, the task is to analyze. There are innumerable ways in which Marxist theory has influenced policy in positive ways, and there is also considerable feedback between Marxist economics and other schools of economics.

I understand what you are doing here. But you likely lack the grounding in academic economics to really understand the contributions of the Marxist (or Marxian) economic school.
Last edited by Crantag on 30 May 2014 05:03, edited 1 time in total.
#14414815
Essentially the basis of capitalism is continuously expanding markets.

I don't follow your logic. True, it is often in the interest of economic actors to expand their respective markets. The unintended result of the coordinated (but not centrally planned) activities of millions of people is economic growth. However, growth is neither the "basis" nor essential for capitalism. Rather, it is a happy by-product of liberated human ingenuity.

There is really no alternative to perpetual growth under capitalism, aside from economic depression.

Or economic stability. Can you explain why a stable economy, neither growing nor shrinking, is incompatible with capitalism?
#14414838
Eran wrote:I don't follow your logic.

Yes, plainly you do not, nor do you follow the empirical support which I have given as the basis of my logic.
Eran wrote:Or economic stability. Can you explain why a stable economy, neither growing nor shrinking, is incompatible with capitalism?

You already answered your own question, as to why you still have to ask:
Eran wrote:I don't follow your logic.
#14414841
That is to say, I have just explained why a steady state is not really possible. The answer is that capitalism depends on perpetual growth.

You have to understand the premise before you can understand the implication. I have just written on the premise, so not much more that I can add at the moment, if you do not comprehend the premise.
#14414843
So, a steady state is not possible because capitalism depends on perpetual growth. And the evidence that capitalism depends on perpetual growth is that a stable state is not possible, right?

What, btw, of an economy that goes through periodic alterations between growth and contraction, such that, in the long term, the size of the economy is stable?
#14414853
Eran wrote:So, a steady state is not possible because capitalism depends on perpetual growth. And the evidence that capitalism depends on perpetual growth is that a stable state is not possible, right?


No, this is not a case of circular reasoning. You just do not understand. Perhaps by choice.

Like I said, the premise of why a steady state is not really possible is that capitalism is dependent on perpetual growth.

No circular reasoning here.
#14414854
Eran wrote:What, btw, of an economy that goes through periodic alterations between growth and contraction

This periodic alterations between growth and contraction is sometimes called the business cycle.

Eran wrote:such that, in the long term, the size of the economy is stable?


For there to be stability over the long term under such conditions, such periodic contractions would need to sufficiently destroy productive capacity so as to make room for new productive investment over the course of a consistently long upturn.

Unfortunately, this has not happened (as a long-term condition) since World War 2.

Or at least it has not happened since the post-War expansion. The US economy post-1970s demonstrates against such a potential.
#14414856
That being said, it is a very typical response of pro-capitalist types when confronted with the theoretical constructs of Marxist economics which demonstrate capitalism's proneness to crises to argue, or to wishfully think, that capitalism does have this restorative power through sequential upturns and downturns to maintain a steady state; as if this is somehow a desirable state of affairs.

They seem to ignore the human costs of the downturns in the way of hunger, homelessness, crime, etc. That doesn't matter to them.

And it doesn't really matter to the Marxist analysis, either. But, it does demonstrate that this sequential crisis pattern may not be that wonderful a thing.

However, I maintain that such a so-called steady state is not even a potentiality, and that the post-war experience demonstrates this; as do considerable data on the subject.
#14414865
Like I said, the premise of why a steady state is not really possible is that capitalism is dependent on perpetual growth.

And what makes you think that?

And, more to the point, why are you presenting perpetual growth as a problem?
#14414875
You are making unsupported claims, and then characterise my request that you justify or explain your claim as "meaningless"?

Perpetual growth is a positive side-effect of free markets. No more, no less.
#14414885
Eran wrote:You are making unsupported claims, and then characterise my request that you justify or explain your claim as "meaningless"?

Perpetual growth is a positive side-effect of free markets. No more, no less.


I have addressed your questions in my prior posts.

None of my claims have been unsupported.

You see, I know how to conduct myself in a proper academic fashion, which is why I have supported everything with evidence and/or data.

You are free to leave my thread if you don't like what my own observations, conclusions, and cited scholarship imply for your own entrenched views.
#14414941
I have addressed your questions in my prior posts.

I went back to carefully read your prior posts.

You don't seem to have answered Nunt's point: "The good news is that this problem is fixing itself. More money for capital means more investments in capital. Gradually making capital more abundant and labor more relatively scarce. According to supply and demand, the income share of labor should then go up again."

If there is an overaccumulation, entrepreneurs and existing producers will find fewer uses for new capital investments. Consequently, interest rates will drop, as over-abundant investments chase after fewer and fewer people interested in borrowing. In the balance between capital and labour, capital will lose strength, and labour will benefit from its growing (relative) scarcity.

It is rather futile to attempt to summarize a 350 page book in a forum post, but basically the argument is that the oligopolistic control over industry (and the authors go to sufficient length to demonstrate how it is that oligopolistic firms indeed, as a rule, do not really compete) and the limited opportunity to invest in capital leads to a problem of excessive surplus. Since this can't be readily absorbed in new capital, it is absorbed in other ways.

What other ways?
#14414951
There is a certain problem of vernacular here when it comes to the use of the word capital (which I have committed myself several times in this thread).

The conventional meaning of the word 'capital' is basically loanable liquidity in the financial markets. 'More money for capital' may refer to this; the problem here is the prevalence of 'fictitious capital'; that is, money which is allocated for capital investment, but which does not lend itself to real production.

My opening post, and a number of my follow up posts, borrow heavily from the analyses of Paul Sweezy. In his pursuit of the stagnation thesis, Paul Sweezy frequently uses the word 'capital' to refer to fixed capital. That is, to the actual machinery itself.

Paul Sweezy argues that there is a chronic overaccumulation (he doesn't use these words, but in essence) of fixed capital, so that new investment in fixed capital is not sufficient to capture all of the proceeds of industrial profit making.

I have sought to present the arguments as clearly as I can, but Sweezy's analysis is quite meticulous, and it is impossible for me to do it any justice. But, what I have just said is of relevance to his overall scheme (most maturely laid out in Baran and Sweezy's 'Monopoly Capital'; and indeed it is their joint scheme, again I'm just trying to simplify, as they both had their own distinct bodies of related work).

So, in short, the profits of industry are not able to be absorbed via fresh investment in the implements for further expansion of the profits of industry, in an advanced capitalist economy such as the US in the 1960s (and exclusively to such an advanced economy). This leads to a tendency whereby there is an expansion of surplus beyond that which can be absorbed readily in the means of fresh production.

This surplus is absorbed elsewhere. In the book Monopoly Capital, three principle categories were posited into which the absorption occurs. The sales effort (such as marketing and product differentiation--primacy of form over function, essentially), civilian government, and militarism and imperialism. As for the latter category, the private arms manufacturing industry is a readily demonstrable element of this category (again, further elaboration of how the arms manufacturing industry demonstrates this is really beyond my scope in this venue).

As I said before, the Monthly Review Current has later strongly speculated that the rise of financialization is also owing to the excessive surplus and the need for surplus absorption.

David Harvey argues that the production of urban space is another category, essentially (he doesn't cite Sweezy directly, that I know of, but he has engaged in considerable analysis to this effect).


Again, where it concerns the definition of 'capital', so-called capital which does not end in expanded real production is 'fictitious capital', under a theoretical Marxist economics framework.
#14415709
Truth To Power wrote:There is no such necessity.

Crantag wrote:Capitalism is near entirely dependent on perpetual growth.

First of all, your claim was that perpetual growth is a necessity in a market economy, not capitalism; second, it was in the context of China, which you (incorrectly) claim is communist; and third, capitalism is a way of organizing ownership of the means of production (land and capital), and is certainly not dependent on perpetual growth, as the long-term stagnation of numerous capitalist economies in Africa and Latin America attests.
#14415718
Crantag wrote:So, in short, the profits of industry are not able to be absorbed via fresh investment in the implements for further expansion of the profits of industry, in an advanced capitalist economy such as the US in the 1960s (and exclusively to such an advanced economy). This leads to a tendency whereby there is an expansion of surplus beyond that which can be absorbed readily in the means of fresh production.

But that's false. Like Marx, Sweezy just doesn't understand the role of land in the economy, and of "all-devouring" land rent in absorbing excess production.
This surplus is absorbed elsewhere.

Mainly by landowners and other rentiers.
In the book Monopoly Capital, three principle categories were posited into which the absorption occurs. The sales effort (such as marketing and product differentiation--primacy of form over function, essentially), civilian government, and militarism and imperialism.

But somehow, towering, astronomical land valuations happen without any additional return going to land....?
As for the latter category, the private arms manufacturing industry is a readily demonstrable element of this category (again, further elaboration of how the arms manufacturing industry demonstrates this is really beyond my scope in this venue).

The arms industry is large, and there is a lot of rent seeking in it, but it pales beside landowning. The main sinks of production in modern, advanced capitalist economies are land rent, IP rents, interest on bankster-issued debt money, and monopoly-privileged labor, especially in the public service and the medical, legal, etc. fields.
As I said before, the Monthly Review Current has later strongly speculated that the rise of financialization is also owing to the excessive surplus and the need for surplus absorption.

No, it's mainly owing to the desire of banksters to get their hands on the real loot: land rent. The sub-prime mortgage crisis showed the lengths they will go to to do that.
David Harvey argues that the production of urban space is another category, essentially (he doesn't cite Sweezy directly, that I know of, but he has engaged in considerable analysis to this effect).

"Production of urban space," is it?

Anything to avoid knowing the fact that all production above subsistence goes to landowners according to the Law of Rent, and that any naive attempt to redress that injustice also goes to landowners, according to the Henry George Theorem.
#14415721
Crantag wrote:My basis is of comparison between the US economy and the Chinese economy. American pro-capitalists who think that China is turning capitalist engage in wishful thinking, for their part. The Central Government in Beijing is still very much in control, and a significant proportion of industrial and commercial enterprises are directly state owned.

That is often also true under fascism, so your argument is not relevant.
The Chinese State reserves the capacity to make absolutely sweeping economic decisions, and they have at times done so. Matters such as grain production are directly administered by the central government. A capitalist who steps out of line and adulterates product (like powdered milk), resulting in deaths, is taken out and shot.

Again, this could as easily be fascist.
It does have an interesting mix, but the country is indeed communist.

No it isn't. Communism requires abolition of private property. China has never been close to abolishing private property, and now has private ownership of the bulk of capital goods, and is therefore no longer even socialist.
The opening up of free enterprise is a deliberate policy measure. This is one of the reasons for confining it to economic zones, so that it is still under the auspices of the state control.

You don't seem to know that there is a difference between communism and fascism.
To be sure, this is not your father's communism. If you think you need to invent a new word, be my guest. Based on the standard conventions, like I said, China is most certainly communist.

It most certainly is not. There is one and only one respect in which China is communist: its governing party (incorrectly and dishonestly) calls itself communist.
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