Re: Re: strong dollar
Personally, I wouldn't jump to realist conclusions. It's not at all clear to me that Europe and Japan want to face the crises that would follow a precipitous fall in the dollar. Peter Chris Burford wrote: At 28/01/02 20:28 -0800, Peter Dorman wrote: In the narrow sense, the strength of the dollar can be attributed to the weakness of other currencies, especially the yen and the euro. The downward pressure on those two will continue for some time, I think. If there were a viable rival to the dollar, fundamentals (the chronic US current account deficit) would express themselves much sooner. Does that not mean it is in the interests of Europe and Japan to start creating, no doubt by stealth, an alternative to the dollar as world money? That would mean that the relative advantage of having your currency as world money, is shared out. In a larger perspective, US foreign policy has been run to create the structural conditions for continuing the dollar as the reserve/key currency. It's not so simple, of course, but I think that's the main effect. If/when the dollar falls, it will set off a political crisis of succession as severe perhaps as the economic crisis. Europe and Japan will presumably have to take advantage of this under cover of international cooperation. Could they be willing to let their currencies fall until the point at which this undermines the advantages that the USA gets from its strong dollar policy? Then would they have reforms ready that would change the system, or just make minor repairs so it essentially continues with the mechanisms of unequal exchange. I suspect that talk about international development of poor countries may be a proxy for this power play about the shape of the world economy. Chris Burford London
Re: RE: Re: The rate of profit and recession
The recent falls (i.e., of the last 1 1/2 years or so) are due to falling demand and rates of capacity utilization. That is, there were realization problems. Jim, the classical Marxist is not denying that there is falling demand and realization problems! As Mattick Sr puts it: Every crisis can be understood only in relation to the prosperity preceding it, just because prosperity derives not from the consuming power of society but from the accumulation requirements, imposed by capitalist competition, of the individual capitals which at any time are growing to produce not for an *existing* but for an *expected* market...It is this very process that makes possible the realization of surplus value by way of accumulation, without respect for the restriction of consumption this presupposes. Surplus value becomes new capital, which in turn produces capital. This process, senseless as it is, is actually the consequence of of mode of production oriented exclusively towards the production of surplus value. At a certain point the realization of surplus value by accumulation is halted, when accumulation ceases to yield the surplus value necessary for the continuation of the process. Then it suddenly becomes apparent that without accumulation a part of the surplus cannot be realized, since demand is insufficient to transform the surplus value lying hidden in the commodities into profit. So the question is why was accumulation halted and why did demand become insufficient for the realization of surplus value, not whether a crisis is experienced in terms of falling demand and rates of capacity utilization and realization problems. Nobody is denying this. The surplus value that had been realized was not large enough in absolute terms to encourage capitalists to produce for a larger expected market. Of course there are always a few capitals that can afford to expand, and on the basis of larger economies of scale they may achieve lower unit costs and restore profitability; but such rationalization by means of accumulation is out of reach of most capitalists who are short on surplus value, so overall investment demand (of which workers' wages are a component) weakens, capacity utilization falls, and realization problems arise. Of course all this purgative work can lead to a restoration of the rate of profit. The fixed capital/output ratio continued to fall all the way until 2000 (following its trend from the early 1980s), indicating that labor productivity growth exceeded the rate of growth of fixed capital per worker. And this is Jim D's crucial piece of evidence against the thesis the shortage of surplus value resulted from upward pressure on the OCC. But first note this is not counter-evidence that accumulation had ceased because the surplus value that had already been realized was so declining as a mass as to discourage production for an expanded future market. This slow down in investment demand then leads to a build up of inventories which are then dumped, further depressing profit rates. The question is whether one challenges whether there was a declining mass of surplus value at all before the slow down in investment demand or only the changing VCC explanation for that decline. At any rate, since the destruction (disinvestment) and devaluation of capital seem to be what in fact leads to a restoration of profitability and therewith accumulation by means of which realization difficulties are are in fact overcome, I would not count out the crisis explanation of unfavorable changes in the composition of capital on the basis of Jim D's proxy evidence alone. But this counter-argument is far from satisfactory, and I hope that Fred engages you in terms of your most important piece of counter-evidence. The classical Marxist theory doesn't seem to work, at least not for this specific example, because the counter-acting tendency was winning. Then again what does explain the slow down in investment demand? Rakesh
Re: Re: RE: Re: The rate of profit and recession
I was suggesting that Marx may also have been wrong on the effect of 'globalization' (internationalization of capitalism) on what I believe you have advocated in other papers, the 'overaccumulation of capital' which I suggested with respect, particularly to China but also to other areas of the 3rd world -- and which has led directly to excess capital, international competition, and a realization crisis for domestic (i.e. North American) capital, particularly in the light of rising USD which exacerbates the realization problem for domestic US production. Paul, why did the investment demand of US capital drop off all a sudden? The dollar had been high and rising along with a strong bout of accumulation; in fact it may have fallen relatively before the recession began. So one day the strong dollar is lowering capital costs and inducing accumulation and the realization of surplus value by way of strong accumulation; then the strong dollar is pricing American goods out of the market. What changed? Rakesh suggests I go read Shaik to disabuse myself of such ideas. Well, I have read Shaik, even talked to him about it when he visited our department. His name is Shaikh. We also have a Shaik ex-student on our faculty and we frequently have this discussion -- he gave a couple of lectures in my class last week where this very issue came up. Which issue is that? Whether the high dollar led to realization difficulties that has brought the US profit rate down? Or whether excess capacity is the cause or consequence of crisis? So I would appreciate a little less patronizing by Rakesh really the gall of this is impressive. Just the other day I an ignoramus whose papers you would flunk. Now after this unprovoked attack for which you never apologized you are complaining about my patronizing of you. Have some pride, man. Rakesh
Qatar is the richest Arab state
The Times of India SUNDAY, JANUARY 27, 2002 Qatar is the richest Arab state PTI SUNDAY, JANUARY 27, 2002 DUBAI: Oil and gas rich Qatar has overtaken the United Arab Emirates to become the richest nation in the Arab world, a report on Sunday said. Qatar's per capita income was estimated at $29,000 in the year 2000, a 100 per cent increase over the figure in 1995, buoyed by sales of liquefied gas. Mega gas projects helped Qatar become the richest Arab state and official figures showed Qatar is nearly 80 times richer than Mauritania and Sudan in terms of per capita income, daily Gulf News reported. The UAE was the second wealthiest member of the 22-nation Arab League while Bahrain and Oman were surprisingly ahead of Saudi Arabia although it controls a quarter of the world's oil wealth. The figures were published in the annual Arab economic report for 2000, which presented a gloomy picture about economic and social conditions in the region. While the average daily per capita income in Qatar and the UAE stood at around $80.2 and $58.3, respectively, in 2000, it was only around $1 in Mauritania, Sudan and Yemen, and $2-3 in Djibouti and Morocco. There is a big gap in the per capita income in the Arab world, said the report, prepared by the Abu Dhabi-based Arab Monetary Fund, the Organisation of Arab Petroleum Exporting Countries and Arab Fund for Economic and Social Development in Kuwait. Copyright © 2002 Times Internet Limited. All rights reserved
(Unitended) Humor from the National Bureau of Economic Research
If anyone needs an example of the mis-use of cost-benefits analysis...Of course, if something this sloppy and shoddy had been done to justify (for example) increased environmental regulation, it would have been laughed at and dismissed by NBER economist types. This reminds me for three unrelated OP-EDS in the Washington Post yesterday. The columnists, ranging from Novak to Kuttner have just discovered, to their chagrin, that the Bush Administration is Pro-business, not pro-market. It seems at NBER if you are pro-big corporation, pro-military, pro-prison industy, pro-national security state, anything goes. At least the last paragraph of this abstract basically acknowledges that the whole thing is a sham. 2) FAVORABLE EFFECTS OF IMPRISONING DRUG OFFENDERS Annual expenditures of approximately $10 billion on drug incarceration almost pay for themselves through reductions in health care costs and lost productivity attributable to illegal drug use, even ignoring any crime reductions associated with such incarceration. The number of Americans incarcerated on drug-related offenses rose 15-fold between 1980 and 2000, to its current level of 400,000. Despite this enormous increase, there has been no systematic, empirical analysis until now of the implications of the new, tougher drug laws for public safety, drug markets, and public policy. In An Empirical Analysis of Imprisoning Drug Offenders (http://papers.nber.org/papers/W8489), authors Ilyana Kuziemko and Steven Levitt find that the increase in the prison population on drug-related offenses led to reductions in time served for other crimes, especially for less serious offenses. This phenomenon is primarily attributable to the limited space available at penal institutions. However, despite this reduction in time served, other crimes did not increase more than a few percent. The authors also find that incarcerating drug offenders was almost as effective in reducing violent and property crime as was incarcerating other types of offenders. Furthermore, as a consequence of increases in punishments for drug-related crimes, cocaine prices are 10-15 percent higher today than they were in 1985. This jump in price implies that cocaine consumption fell, perhaps as much as 20 percent. The reduction in cocaine use begins to address the long-standing question of whether the enormous costs related to tougher punishment for drug offenses yield similarly large benefits to society. Previous studies suggest that the costs of current levels of incarceration across all crime categories far exceed societal benefits. However, in the case of drug offenders, the authors find that the cost-benefit calculations might be more favorable, because incarceration not only lowers crime, but also drug consumption. Annual expenditures of approximately $10 billion on drug incarceration almost pay for themselves through reductions in health care costs and lost productivity attributable to illegal drug use, even ignoring any crime reductions associated with such incarceration. The authors stress that their figures are speculative and may not include other relevant costs and benefits. They also do not explore other, potentially more effective ways of reducing drug usage rather than incarceration. (Les Picker) Martin L. Brown Chief, Health Services and Economics Branch Applied Research Program Division of Cancer Control and Population Sciences National Cancer Institute 6130 Executive Blvd, Rm. EPN-4005 Bethesda, MD 20892-7344 Phone: 301-496-5716 Fax: 301-435-3710 Email: [EMAIL PROTECTED]
Good analysis
Good analysis by Mohammad Maljoo 28 January 2002 20:26 UTC -clip- As one senior Iranian statesman wryly remarked at a recent private gathering: The Americans should realize that while indeed they are the strongest global power, that does not necessarily make them the strongest regional power in every part of the world and at all times, he said. If they won't listen to those they consider to be religious fundamentalists, they should recall what Karl Marx, the theorist of bankrupt communism, had to say about history never repeating itself except as farce. ^^ CB: Bankrupt ? Does this senior statesman realize that Santa Claus has moved from the North Pole to China ?
profit rate and recession
Rakesh: However, note that the crisis would be overcome not at all by raising the consumption of the masses! CB: Whose crisis ? The crisis of the masses will not be overcome until their consumption is raised.
the rate of profit and recession
Jim Devine: The fixed capital/output ratio continued to fall all the way until 2000 (following its trend from the early 1980s), indicating that labor productivity growth exceeded the rate of growth of fixed capital per worker. The classical Marxist theory doesn't seem to work, at least not for this specific example, because the counter-acting tendency was winning. CB: Are you referring to the counteracting tendency termed increasing intensity of exploitation ? What about the counteracting tendency increase of stock capital in the time period you are discussing ? Was there a big rise in the stock market in this timeframe ?
The rate of profit and recession
The rate of profit and recession by phillp2 29 January 2002 02:20 UTC Jim, What you suggest here is that the profit rate fell despite a *falling organic composition of capital*. I don't disagree though I would again ask is that because of an improper measuring of productivity growth as I suggested in my earlier post? You suggest this seems to contradict classical Marx and I would agree. Doug in an earlier post also suggests that Marx was wrong on some details. I was suggesting that Marx may also have been wrong on the effect of 'globalization' (internationalization of capitalism) on what I believe you have advocated in other papers, the 'overaccumulation of capital' which I suggested with respect, particularly to China but also to other areas of the 3rd world -- and which has led directly to excess capital, international competition, and a realization crisis for domestic (i.e. North American) capital, particularly in the light of rising USD which exacerbates the realization problem for domestic US production. -clip- Still, Jim, I think that the question of what was the real increase in productivity (and thus the organic composition) and the impact on realization of the rising exchange rate and increased competition, has yet to be answered. ^ CB: How does the rise in productivity ( even The fixed capital/output ratio continued to fall all the way until 2000 (following its trend from the early 1980s), indicating that labor productivity growth exceeded the rate of growth of fixed capital per worker) imply that the OCC is going down ? Doesn't a rise in productivity usually accompany a rise in OCC ?
Re: Good analysis
G'day Charles, As one senior Iranian statesman wryly remarked at a recent private gathering: The Americans should realize that while indeed they are the strongest global power, that does not necessarily make them the strongest regional power in every part of the world and at all times, he said. If they won't listen to those they consider to be religious fundamentalists, they should recall what Karl Marx, the theorist of bankrupt communism, had to say about history never repeating itself except as farce. ^^ CB: Bankrupt ? Does this senior statesman realize that Santa Claus has moved from the North Pole to China ? I reckon there's a lot more evidence that Karl Marx was a theorist of capitalism rather than one of communism, I hear China's banks face bad debt to the tune of 44% of national output (a cool half trillion greenbacks' worth), 1/3 of its landmass has been desertified, and it faces the interesting social phenomenon of sixty million desperate and disillusioned unemployed within the next couple of years. I'd get home if I were Santa. Cheers, Rob.
RE: the rate of profit and recession
I wrote:The fixed capital/output ratio continued to fall all the way until 2000 (following its trend from the early 1980s), indicating that labor productivity growth exceeded the rate of growth of fixed capital per worker. The classical Marxist theory doesn't seem to work, at least not for this specific example, because the counter-acting tendency was winning. CB: Are you referring to the counteracting tendency termed increasing intensity of exploitation ? What about the counteracting tendency increase of stock capital in the time period you are discussing ? Was there a big rise in the stock market in this timeframe ? the rise in labor productivity growth (which, BTW, was not as big a deal as the new economy folks alleged) relative to real wages helped raise the rate of exploitation (as measured by the share of profit+interest in the income of the non-financial corporate business sector) until the end of the 1990s, when it started to fall. However, this was not as important as a second trend: labor productivity growth also meant that the ratio of fixed capital to income (K/Y) fell, since the normal rise in the amount of fixed capital per worker (K/L) was out-weighed by the rise in labor productivity (Y/L). The fall in K/Y for this sector was a steady trend after 1980 or so. I don't understand the role of the increase in stock capital. Jim
Monbiot on Blackhawk Down
Both saviour and victim Black Hawk Down creates a new and dangerous myth of American nationhood George Monbiot Tuesday January 29, 2002 The Guardian [UK] The more powerful a nation becomes, the more it asserts its victimhood. In contemporary British eyes, the greatest atrocities of the 18th and 19th centuries were those perpetrated on compatriots in the Black Hole of Calcutta or during the Indian mutiny and the siege of Khartoum. The extreme manifestations of the white man's burden, these events came to symbolise the barbarism and ingratitude of the savage races the British had sought to rescue from their darkness. Today the attack on New York is discussed as if it were the worst thing to have happened to any nation in recent times. Few would deny that it was a major atrocity, but we are required to offer the American people a unique and exclusive sympathy. Now that demand is being extended to earlier American losses. Black Hawk Down looks set to become one of the bestselling movies of all time. Like all the films the British-born director Ridley Scott has made, it is gripping, intense and beautifully shot. It is also a stunning misrepresentation of what happened in Somalia. In 1992 the United States walked into Somalia with good intentions. George Bush senior announced that America had come to do God's work in a nation devastated by clan warfare and famine. But, as Scott Peterson's firsthand account Me Against My Brother shows, the mission was doomed by intelligence failures, partisan deployments and, ultimately, the belief that you can bomb a nation into peace and prosperity. Before the US government handed over the administration of Somalia to the United Nations in 1993, it had already made several fundamental mistakes. It had backed the clan chiefs Mohamed Farah Aideed and Ali Mahdi against another warlord, shoring up their power just as it had started to collapse. It had failed to recognise that the competing clan chiefs were ready to accept large-scale disarmament, if it were carried out impartially. Far from resolving the conflict between the clans, the US accidentally enhanced it. After the handover, the UN's Pakistani peacekeepers tried to seize Aideed's radio station, which was broadcasting anti-UN propaganda. The raid was bungled, and 25 of the soldiers were killed by Aideed's supporters. A few days later, Pakistani troops fired on an unarmed crowd, killing women and children. The United Nations force, commanded by a US admiral, was drawn into a blood feud with Aideed's militia. As the feud escalated, US special forces were brought in to deal with the man now described by American intelligence as the Hitler of Somalia. Aideed, who was certainly a ruthless and dangerous man but also just one of several clan leaders competing for power in the country, was blamed for all Somalia's troubles. The UN's peacekeeping mission had been transformed into a partisan war. The special forces, over-confident and hopelessly ill-informed, raided, in quick succession, the headquarters of the UN development programme, the charity World Concern and the offices of Médecins sans Frontieres. They managed to capture, among scores of innocent civilians and aid workers, the chief of the UN's police force. But farce was soon repeated as tragedy. When some of the most senior members of Aideed's clan gathered in a building in Mogadishu to discuss a peace agreement with the United Nations, the US forces, misinformed as ever, blew them up, killing 54 people. Thus they succeeded in making enemies of all the Somalis. The special forces were harried by gunmen from all sides. In return, US troops in the UN compound began firing missiles at residential areas. So the raid on one of Aideed's buildings on October 3 1993, which led to the destruction of two Black Hawk helicopters and the deaths of 18 American soldiers, was just another round of America's grudge match with the warlord. The troops who captured Aideed's officials were attacked by everyone: gunmen came even from the rival militias to avenge the deaths of the civilians the Americans had killed. The US special forces, with an understandable but ruthless regard for their own safety, locked Somali women and children into the house in which they were besieged. Ridley Scott says that he came to the project without politics, which is what people often say when they subscribe to the dominant point of view. The story he relates (with the help of the US department of defence and the former chairman of the joint chiefs of staff) is the story the American people need to tell themselves. The purpose of the raid on October 3, Black Hawk Down suggests, was to prevent Aideed's murderous forces from starving Somalia to death. No hint is given of the feuding between him and the UN, other than the initial attack on the Pakistani peacekeepers. There is no recognition that the worst of the famine had passed, or that the US troops had long ceased to be part of the solution. The
Re: The rate of profit and recession
Why undermine a perfectly informative discussion with such personal sniping? Please stop. Rakesh Bhandari wrote: Paul wrote: So I would appreciate a little less patronizing by Rakesh really the gall of this is impressive. Just the other day I an ignoramus whose papers you would flunk. Now after this unprovoked attack for which you never apologized you are complaining about my patronizing of you. Have some pride, man. Rakesh -- Michael Perelman Economics Department California State University [EMAIL PROTECTED] Chico, CA 95929 530-898-5321 fax 530-898-5901
Capitalism Is In Trouble:
Capitalism Is In Trouble: A Deliberate Scandal Washington Post Editorial January 27, 2002 SUMMONING UP contemptuous rage at the Enron hearings last Thursday, Sen. Richard Durbin (D-Ill.) declared, When the corporate insiders at Enron realized the ship was sinking, they grabbed the lifeboats and left the women and children, their workers and investors, to drown. But this scandal is actually much worse than that. The bad guys did not merely grab lifeboats; they deliberately created the leaks that brought the ship of Enron down. What's more, the bad guys included not just Enron executives and Arthur Andersen's accountants but also, to a different degree, many of Mr. Durbin's own colleagues in Congress. Start with Enron's managers. Until last week, it seemed likely that Enron had taken on too much risk; that it had hidden this risk from shareholders by parking it in secret partnerships; and that senior executives had urged investors to buy stock even when they themselves were selling out. But fresh details suggest worse than this. Enron's executives apparently used the secret partnerships not just to hide risk but also to steal money from shareholders. The small group of financiers and insiders that invested in the partnerships reaped returns higher than ordinary shareholders could dream of; one deal paid out 212 percent in just over three months. This was a way of siphoning money that should have been declared on the company's balance sheet. The money belonged to Enron's shareholders. They were robbed. Next, consider Arthur Andersen. The company claims that one rogue partner was responsible for shredding documents in an apparent coverup. But the supposed rogue, David Duncan, did at least advise Enron against issuing a misleading statement about its earnings; it was Andersen headquarters that recommended he destroy the record of his misgivings. Yet even if other Andersen employees were involved in shredding, that would actually understate the scandal. For Andersen was colluding in a different kind of coverup years before the bankruptcy, starting in 1997 when it signed off on financial statements that it knew to be wrong. What's more, Andersen may well have done the same at other companies; the Securities and Exchange Commission has alleged that the firm's partners saw but failed to prevent problems at two other companies, Sunbeam Corp. and Waste Management Inc. Some Andersen managers seem to have made a business decision to condone misleading financial statements, figuring that it is more profitable to placate top executives than to protect investors. In consequence, shareholders again got robbed. Now consider Mr. Durbin's colleagues. During the 1990s Congress repeatedly squashed attempts to tighten rules on auditors. Sen. Joe Lieberman (D-Conn.), who chairs the Senate committee that held Enron hearings on Thursday, fought in 1994 against proper accounting for stock options. Rep. Billy Tauzin (R-La.), the chair of Thursday's House hearings on Enron, opposed a plan to bolster auditors' independence from managers in 2000. Sen. Chris Dodd (also D-Conn.), who now proposes reformist legislation, led a battle in 1995 to limit auditors' liability. These and other members of Congress would like you to forget this, or perhaps to believe it was an honest error; we were wrong, Sen. Robert Torricelli (D-N.J.) declared on Thursday, in a show of graciousness. But in Congress there was never a fair argument over the merits of audit regulation. The merits by and large were on one side, and the campaign dollars were on the other. Of the 248 members who sit on committees that plan to hold hearings on the scandal, an extraordinary 212 received money from Andersen or Enron. All the players in this scandal -- Enron's managers, its auditors, the lawmakers -- helped to create the conditions for Enron's collapse. That collapse cheated investors of their savings and cost thousands of jobs. It has also called into question the whole premise of stock market capitalism, which is that investors scrutinize honest financial statements and then allocate capital to the companies that will use it best. If financial statements aren't honest, then capitalism is in trouble. Corporate leaders, auditors and lawmakers need to put aside venality-as-usual and start thinking of remedies. The past pattern -- in which audit scandals have yielded brief breast-beating but no action -- must not repeat itself. --
Re: Good analysis
Jan. 29 Hello Rob and Charles, Re: Good analysis by bantam 29 January 2002 G'day Charles, As one senior Iranian statesman wryly remarked at a recent private gathering: The Americans should realize that while indeed they are the strongest global power, that does not necessarily make them the strongest regional power in every part of the world and at all times, he said. If they won't listen to those they consider to be religious fundamentalists, they should recall what Karl Marx, the theorist of bankrupt communism, had to say about history never repeating itself except as farce. ^^ CB: Bankrupt ? Does this senior statesman realize that Santa Claus has moved from the North Pole to China ? I reckon there's a lot more evidence that Karl Marx was a theorist of capitalism rather than one of communism, I hear China's banks face bad debt to the tune of 44% of national output (a cool half trillion greenbacks' worth), 1/3 of its landmass has been desertified, and it faces the interesting social phenomenon of sixty million desperate and disillusioned unemployed within the next couple of years. I'd get home if I were Santa. Cheers, Rob. Seth: Author and teacher Robert Weil said the most striking development in his last visit to China was the consolidation of the super rich. He visited China in 1995 and 1999. Weil is the author of Red Cat, White Cat: China and the Contradictions of Market Socialism, Monthly Review Press, 1996. He spoke Jan. 17 in Sacramento. _ Chat with friends online, try MSN Messenger: http://messenger.msn.com
RE: Re: RE: Re: The rate of profit and recession
Paul Phillips writes: What you suggest here is that the profit rate fell despite a *falling organic composition of capital*. I don't disagree though I would again ask is that because of an improper measuring of productivity growth as I suggested in my earlier post? You suggest this seems to contradict classical Marx and I would agree. Doug in an earlier post also suggests that Marx was wrong on some details. I am disagreeing with classical Marxism rather than with Marx himself. Whereas Karl didn't have a complete theory of crises (cf., e.g., Simon Clarke's 1993 _Marx's Theory of Crisis_), so-called classical Marxism posits a specific theory based on one of Marx's incomplete theory-fragments as presented in a poorly-edited posthumously-published manuscript (volume III of CAPITAL). Actually, if we were to define classical Marxism in terms of what Marxists during Marx's time believed, instead of the allegedly classical rising OCC theory, we'd probably define classical Marxism in terms of underconsumption or disproportionality. (That doesn't make any of these theories right, though. People should stop using the word classical to imply correctness.) As for the issue of measuring productivity, I agree that it's always problematic, especially when services are involved. In practice, capitalism defines productivity in terms of producing exchange-value or surplus-value, but what most people are interested in use-value is productivity. I was suggesting that Marx may also have been wrong on the effect of 'globalization' (internationalization of capitalism) on what I believe you have advocated in other papers, the 'overaccumulation of capital' which I suggested with respect, particularly to China but also to other areas of the 3rd world -- and which has led directly to excess capital, international competition, and a realization crisis for domestic (i.e. North American) capital, particularly in the light of rising USD which exacerbates the realization problem for domestic US production. I don't understand how Marx was wrong in your view. But I'd actually prefer a discussion of how _I_ am wrong, since discussions of what Marx (really) thought typically bog down. Rakesh suggests I go read Shaik to disabuse myself of such ideas. Well, I have read Shaik, even talked to him about it when he visited our department. We also have a Shaik ex-student on our faculty and we frequently have this discussion -- he gave a couple of lectures in my class last week where this very issue came up. Shaikh's foreign trade analysis makes sense to me, but his crisis theory doesn't, except in a limited way. In very simple terms, he argues that capitals drive themselves into a situation of lower profit rates because they seek higher profit margins. That makes some sense (under a relatively strong labor regime) -- but it's only a short-term, cyclical, theory. There's no reason why there should ever be a long-term downward trend in the rate of profit, since crises purge imbalances such as excessively high organic compositions and because the capitalists get the workers to pay for crises. And Jim, as you remember, gave an early version of your paper on the origins of the great depression at a seminar in our department -- was it 15 years ago Jim? [yup!] So I would appreciate a little less patronizing by Rakesh and perhaps a more discretionary interpretation of scripture. I don't understand this. I don't want to interpret scripture. (You can take the boy out of the Unitarian church, but you can't take the Unitarianism out of the boy. I'm a skeptic, not a quoter of scripture.) I hope that _I_ haven't been patronizing. Still, Jim, I think that the question of what was the real increase in productivity (and thus the organic composition) and the impact on realization of the rising exchange rate and increased competition, has yet to be answered. I don't think it's right to equate increases in labor productivity with increases in the organic composition. There's a lot of variance in that relationship. In my paper that I presented in Sacramento, I didn't even measure the organic composition, since I was more interested in the _combination_ of the effects of rising capital intensity and rising labor productivity on the rate of profit. I interpret the fixed K/Y ratio as measuring this combination of tendency and counter-tendency. Also, I'm not exactly clear what questions you are asking. I hope that you'll indulge me by repeating your questions in a way that I can understand. I do think that the rise of the USD in the late 1990s is an important fact that needs to be brought into the analysis, though. The rising dollar went along with -- or was due to -- a massive capital flow into the US which helped finance the investment consumption booms of the late 1990s until 2000: investment could continue to rise despite the cyclical downturn in the profit rate and real GDP could continue to rise despite a worsening US trade deficit
Re: Re: The rate of profit and recession
Why undermine a perfectly informative discussion with such personal sniping? Please stop. We seem agreed that capitalists did not undertake the level of investment needed for surplus value to have been realized. The question is why. There are several answers on the table: (1) underconsumption. The level of investment needed for surplus value to have been realized would have added to productive capacity especially of consumer goods for which there was no forseeable effective demand especially since wages had been restricted even in the preceding prosperity and boom phase. Moreover, the very accumulation of capital would have itself diminished consumption below even its present levels, thereby clouding the prospects of the realization of surplus value. Recovery depends on more a more optimistic outlook for consumption. The imposition of social democracy on capitalists would raise purchasing power and encourage them to undertake the investments by which the latent surplus value embodied in idle commodities could be realized. Social democracy would be good for the capitalists (and needless to say the workers too). (2) Mass and rate of profit. The level of investment needed for surplus value to have been realized was not undertaken as capitalists had found themselves suffering a declining profit rate and the mass of surplus value coming up short from previous accumulation. For this diminishing flow of surplus value, there are several sub-explanations: (a) the flow of surplus value had been diminished by a rising value composition of capital and U/P labor ratio which even a rising S/V was no longer able to neutralize. This explanation suggests that general, protracted crises can be and are indeed overcome not by improving the prospects of mass consumption but by the destruction and devaluation of capital, along with a rising s/v, that improve profit prospects; encourage a high level of investment demand of which variable capital may in fact become a relatively smaller component; and thereby ensure the realization of surplus value despite the further restriction of consumption and high levels of unemployment! (b) the realized surplus value had been diminishing as a result of an attentuation in the rate of exploitation as the labor market tightened. (c) realized profits were suffering because of the high value of the dollar and the consequent vulnerability to international competition which prevented the mark ups needed for strong profitability. (3) labor shortage. capitalits were discouraged from making the level of investment needed to realize surplus value because they would have been putting in place productive capacity for the valorization of which there seemed to be working class in place. The capitalist way out of crisis then depends on expanding the valorization base and intensifying the rate of exploitation. Explanations 2a, 2b and 3 focus on difficulties in the production of surplus value. Explanations 1 and 2(c) focus on difficulties in the realization of surplus value. Rakesh
Re: Monbiot on Blackhawk Down
Uh-huh, so what about ... the people who construct the story the nation chooses to believe.? If one reads Mark Bowen's book plus seeing the movie and CNN and the History channel's versions, it would be politically (in)correct to suggest that the Somalis ( like the Afghans and the Palestinians ) were engaged in practices similar to our second amendment right regarding militias and gun ownership, although was it a common practice during our own 18th century armed struggle to drag the dead bodies of British soldiers through the streets? What is the best approach to warlordism in whatever situation? Putting well-dressed puppets in front of cameras, in that context, the head of Enron and Arthur Anderson is one? Frankly, let's just put Aideed's son and GW Bush in a steel cage match, after, it's their fathers who caused the conflict. Think of how famine would be eliminated with the pay-per-view revenues. Our sense of what constitutes heroism is severely tested these days. When Shugart and Gordon went to provide support for the downed helicopter, I'm sure they were not thinking of getting the medal of honor. It's no damn compensation for incompetent professionals and professionalism up and down the chain of command. The USA program Combat Missions only furthers a media agenda of mystification and only convinces one that whatever goes on in military or in the case of SWAT (militaristic) training, it's signals further complication for everyone. For example, I live in a small exurban quiet town of 30,000 that now has its own armored personnel carrier. - Original Message - From: Devine, James [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Tuesday, January 29, 2002 11:54 AM Subject: [PEN-L:22054] Monbiot on Blackhawk Down Both saviour and victim Black Hawk Down creates a new and dangerous myth of American nationhood George Monbiot Tuesday January 29, 2002 The Guardian [UK] The more powerful a nation becomes, the more it asserts its victimhood. In contemporary British eyes, the greatest atrocities of the 18th and 19th centuries were those perpetrated on compatriots in the Black Hole of Calcutta or during the Indian mutiny and the siege of Khartoum. The extreme manifestations of the white man's burden, these events came to symbolise the barbarism and ingratitude of the savage races the British had sought to rescue from their darkness. Today the attack on New York is discussed as if it were the worst thing to have happened to any nation in recent times. Few would deny that it was a major atrocity, but we are required to offer the American people a unique and exclusive sympathy. Now that demand is being extended to earlier American losses. Black Hawk Down looks set to become one of the bestselling movies of all time. Like all the films the British-born director Ridley Scott has made, it is gripping, intense and beautifully shot. It is also a stunning misrepresentation of what happened in Somalia. In 1992 the United States walked into Somalia with good intentions. George Bush senior announced that America had come to do God's work in a nation devastated by clan warfare and famine. But, as Scott Peterson's firsthand account Me Against My Brother shows, the mission was doomed by intelligence failures, partisan deployments and, ultimately, the belief that you can bomb a nation into peace and prosperity. Before the US government handed over the administration of Somalia to the United Nations in 1993, it had already made several fundamental mistakes. It had backed the clan chiefs Mohamed Farah Aideed and Ali Mahdi against another warlord, shoring up their power just as it had started to collapse. It had failed to recognise that the competing clan chiefs were ready to accept large-scale disarmament, if it were carried out impartially. Far from resolving the conflict between the clans, the US accidentally enhanced it. After the handover, the UN's Pakistani peacekeepers tried to seize Aideed's radio station, which was broadcasting anti-UN propaganda. The raid was bungled, and 25 of the soldiers were killed by Aideed's supporters. A few days later, Pakistani troops fired on an unarmed crowd, killing women and children. The United Nations force, commanded by a US admiral, was drawn into a blood feud with Aideed's militia. As the feud escalated, US special forces were brought in to deal with the man now described by American intelligence as the Hitler of Somalia. Aideed, who was certainly a ruthless and dangerous man but also just one of several clan leaders competing for power in the country, was blamed for all Somalia's troubles. The UN's peacekeeping mission had been transformed into a partisan war. The special forces, over-confident and hopelessly ill-informed, raided, in quick succession, the headquarters of the UN development programme, the charity World Concern and the offices of Médecins sans Frontieres. They managed to capture, among scores of
BLS Daily Report
BLS DAILY REPORT: Tuesday, January 29, 2002 RELEASED TODAY: In December 2001, there was 2,425 mass layoffs actions by employers as measured by new filings for unemployment insurance benefits during the month, according to data from the U.S. Department of Labor's Bureau of Labor Statistics. Each action involved at least 50 persons from a single establishment, and the number of workers involved totaled 267,839. The number of layoff events and initial claimants for unemployment insurance, while lower than in December 2000, were the second highest for the month of December since the series began in April 1995. Sales of new homes rose 5.7 percent in December, thanks in part to low mortgage rates, making 2001 a record year for new-home sales, the Commerce Department reported. The country slid into recession in March and was dealt another blow by the September 11 terror attacks, but the housing market, one of economy's few bright spots, managed to hold up well because of low mortgage rates, analysts say ( Washington Post, page E2, New York Times, page C1). Job dissatisfaction and an aging population have contributed to a shortage of nurses, according to numerous studies. But the University of Pennsylvania's School of Nursing says interest is now rising. The stability of nursing and the health professions is appealing, says Linda Aiken, a professor there. Applications for fall are up at the University of Washington's School of Nursing. You can graduate at 22 and be making $40,000, says Carolyn Chow, recruiting director (The Wall Street Journal page A1). DUE OUT TOMORROW: Metropolitan Area Employment and Unemployment: December 2001 application/ms-tnef
Re: : The rate of profit and recession
CB: Yea, realization problems. In this passage , Mattick is with us, isn't he ? Even if he discusses realization of surplus value by accumulation, his conclusion is dependent upon insufficient demand by consumers of commodities from Department I, insufficient mass demand or consumption. No the problem is that though surplus value had indeed been realized, it was proving insufficient as a mass to encourage capitalists to undertake the level of investment by which surplus value could again be realized. Difficulties in the realization of surplus derived from difficulties in the production thereof. Moreover, while it appears that the investment demand is murdered by high interest rates, the Fed in fact raise interest rates as it finds that attempts to pump liquidity in the system are leading more to (asset) inflation and the fragility to which that gives rise rather than real investment which falls off as a result of a decline in the rate and mass of profit. The Fed is powerless to change this; fiscal policy can relieve realization problems but the resumption of private investments depends on the restoration of profitability through the devaluation of constant capital and a rising rate of surplus value. To the extent that fiscal policy adds to pessimism about future profits it can encourage the further retrenchment rather than the making of new investments. So Bush is attempting to build confidence by some fiscal stimulus with future regressive tax savings by cutting into any kind of social welfare. Social darwinist military Keynesianism. The business class thus looks to the state first and foremost to turn the world market to its national advantage and to beat the hell out of labor not for any good *reason* but out of frank and brute defense of privilige and possession. They have the perfect man for the job. Rakesh
Re: : The rate of profit and recession
Jim, The question we were discussing, I thought, was what explains the drop in profits after 1997 (despite rapidly rising labour productivity) and which subsequently resulted in a fall in investment initiating the recession. Your data, at least as I read it, questioned whether the fall in profits was initiated in production given the stable K/Y ratio. Underconsumption was discounted because, as many have noted, consumption expenditure has held up despite the drop in consumer confidence. How then to explain the decline in profits if real wages were not rising faster than labour productivity unless one were to suggest that the intensity of labour was being reduced. My question was really quite simple -- could not the fall in profits been because of a form of inability to realize profits (surplus value) caused by competition from offshore (as claimed by CEOs to explain why inflation was held in check despite falling unemployment -- i.e. in their terms, a leftward shift in the NAIRU), competition that was fueled by a) overaccumulation in competing countries, in particular China; and b) the steady rise in the value of the USD which forced down prices of domestic production in order to remain competitive. (ps. the references to scripture, etc. were not referring to you.) Paul Phillips, Economics, University of Manitoba Economics, University of Manitoba
Re: : The rate of profit and recession
So Bush is attempting to build confidence by some fiscal stimulus with future regressive tax savings by cutting into any kind of social welfare. Social darwinist military Keynesianism. Rakesh Actually I am not quite right here. Bush's attempt to restore benefits to legal non citizen residents was an interesting, unexpected move which may indeed buy him votes. rb
Re: Re: : The rate of profit and recession
Rakesh Bhandari wrote: The Fed is powerless to change this; fiscal policy can relieve realization problems but the resumption of private investments depends on the restoration of profitability through the devaluation of constant capital and a rising rate of surplus value. So, translating into demotic English - one of the most aggressive easing streaks in Fed history will have no effect, and there will be no recovery anytime soon? Are you expecting a long stagnation or a deep depression? Doug
Re: Re: : The rate of profit and recession
Jim, The question we were discussing, I thought, was what explains the drop in profits after 1997 (despite rapidly rising labour productivity) and which subsequently resulted in a fall in investment initiating the recession. Your data, at least as I read it, questioned whether the fall in profits was initiated in production given the stable K/Y ratio. Underconsumption was discounted because, as many have noted, consumption expenditure has held up despite the drop in consumer confidence. How then to explain the decline in profits if real wages were not rising faster than labour productivity unless one were to suggest that the intensity of labour was being reduced. My question was really quite simple -- could not the fall in profits been because of a form of inability to realize profits (surplus value) caused by competition from offshore (as claimed by CEOs to explain why inflation was held in check despite falling unemployment -- i.e. in their terms, a leftward shift in the NAIRU), competition that was fueled by a) overaccumulation in competing countries, in particular China; why is there overaccumulation in the system as a whole? why is global investment demand not strong and high enough to realize the surplus value that remains latent in commodities? yes there is an outbreak of global competition but why? and since on the whole I would imagine that Chinese goods are non competing with US production why wouldn't such cheaper exports lower costs as much lower mark ups? Why should the consequence of big bad Chinese competition be lower profitability for US capital? Note that the solution to the crisis implied by your analysis of it points to protectionism and nationalism; you're a big free trade critic, right? and b) the steady rise in the value of the USD which forced down prices of domestic production in order to remain competitive. But the strong dollar may not have only undermined the realization of surplus value; in fact realization may have been aided by the higher rate of accumulation made possible by the availability of cheaper capital as a result of the high dollar. (ps. the references to scripture, etc. were not referring to you.) Yes, yes, I give no reasons in my posts. Rakesh
Re: Re: Re: : The rate of profit and recession
Rakesh Bhandari wrote: The Fed is powerless to change this; fiscal policy can relieve realization problems but the resumption of private investments depends on the restoration of profitability through the devaluation of constant capital and a rising rate of surplus value. So, translating into demotic English - one of the most aggressive easing streaks in Fed history will have no effect, and there will be no recovery anytime soon? Are you expecting a long stagnation or a deep depression? Doug To the extent that the working class prevents the crisis from being resolved on its back, the longer the crisis will endure but the stronger the working class will be, organizationally speaking, to commence even more fundamental inroads into the system. Nothing is predetermined; prediction is strictly impossible. We are all Henwoodians now. I certainly don't think a painless working down of inventories will be enough to stimulate a strong new bout of investment; there has to be more destruction and devaluation of capital to encourage strong new levels of investment among the surviving capitals. There however will doubtless be a US recovery (some of that trillion dollars will come out of the money markets, assets will rise and investment on that basis) but I doubt that recovery will be strong enough to compensate for weakness in the system as a whole. If the crisis is not protracted in the US, we'll get bitten in the butt before long as a result of financial crises in Japan and Asia. rb
RE: Re: Re: : The rate of profit and recession
Doug writes:So, translating into demotic English - one of the most aggressive easing streaks in Fed history will have no effect, and there will be no recovery anytime soon? the cuts have already had an effect in the U.S.: they propped up the asset values of housing and the stock market, which has so far prevented the recession from being worse. To my mind, we may have a recovery (in the U.S.), but it won't be fast enough to keep unemployment rates from continuing to rise for a year or two. Further, in line with Godley/Izureta analysis, excessive private-sector debt (and U.S. external debt) and the synchronization of a lot of countries' recessions make it quite likely that this recovery will part of a Dubya-shaped process, i.e., a temporary boom that follows a recession and is followed by another (as with the temporary 1981 boom). Private sector debt becomes more important if unemployment continues to increase. -- Jim Devine
Accounting Concerns
Top Financial News 01/29 15:27 U.S. Stocks Fall; Tyco, Williams Drop on Accounting Concerns By Danielle Sessa New York, Jan. 29 (Bloomberg) -- U.S. stocks fell, driving the Standard Poor's to its biggest decline since September, as investors unloaded shares of Tyco International Ltd. and Williams Cos. on concern the companies may have misstated profits. The declines reflect eroding confidence in corporate accounting after bankrupt energy trader Enron Corp. hid debt from shareholders. Tyco disclosed that it paid a director to help arrange an acquisition, and Williams said it may have to write off $2.15 billion from its telecommunications unit. ``Institutional investors are questioning whether they should be long-term holders of any company that has accounting questions,'' said Diane Garnick, global investment strategist at State Street Global Advisors, which manages $775 billion. SNIP + Merrill Lynch Executives Invested in Enron Partnership Used to Hide Debt Top Financial News 01/29 12:18 Merrill Top Managers Invested in Enron Partnership (Update3) By Mark Lake and Stephen Cohen New York, Jan. 29 (Bloomberg) -- Merrill Lynch Co. executives invested in a limited partnership Enron Corp. used to inflate earnings and hide debt from shareholders, according to people familiar with the situation. Merrill invited executives, including some managing directors and other senior officials, to invest after helping the Houston- based energy trader raise $349 million for the partnership, known as LJM2, from pension funds and other institutional investors. The investments may come under congressional scrutiny. The House Energy and Commerce Committee has subpoenaed Enron's partnership records, including the identities of investors. Enron's disclosure on Nov. 8 that Chief Financial Officer Andrew Fastow made $30 million managing two partnerships, including LJM2, hastened the company's collapse. ``It raises questions about conflicts of interest and how objective Merrill could be about Enron,'' said Joel Seligman, the dean of the Washington University law school in St. Louis. In an internal e-mail, Merrill said that LJM2 was expected to return more than 30 percent a year. That's triple the average return on the Standard Poor's 500 Index, the benchmark for U.S. stocks, over the past 75 years. Members of the investment banking executive committee were encouraged to invest by Daniel Bayly, then head of the group, said one investor. ``The investment partnership was reviewed and deemed appropriate by parties on all sides of the transaction,'' said Merrill spokesman Joe Cohen. ``Consistent with common industry practice, it was offered to qualified external as well as internal investors, and this is not a conflict of interest.'' Bayly, who is now the chairman of investment banking, declined to comment. Merrill's shares fell $1.50, or 2.8 percent, to $51.46, outpacing today's 2.4 percent decline by the Bloomberg Wall Street Index. The investments by senior Merrill executives shows the conflicting roles that may have made investment banks less skeptical of Enron, said Seligman. At the same time that the firm was doing business with the company, Merrill officials had a vested interest in Enron's performance, he said. Merrill's Role LJM2 was one of dozens of partnerships Enron officials set up to move as much as $3 billion in debt off the company's balance sheet and by doing so make the company appear more profitable. Enron also exaggerated profit by recording sales of assets to the partnerships as gains. The company in November restated earnings for the three full years between 1997 and 2000, reducing profit by $586 million because of losses from the partnerships. It also reduced its reported earnings for the first three quarters of 2001 by $1.2 billion. Enron created LJM2 in October 1999 to hold or sell Enron assets, including fiber-optic cable that it bought at a premium from Enron in June 2000 and resold six months later to another partnership controlled by Fastow. The company sought to attract some pension funds by promising outsized returns. Danny Bowers, chief investment officer for the Houston Firefighters Relief and Retirement Fund, which manages about $1.7 billion, said Fastow indicated an investor could expect to double their money. Arranged Business Enron chose Merrill to raise the money for LJM2 in part because the firm arranged bond sales for Enron, the people said. According to Bloomberg data, Merrill arranged more than one third of the 29 bonds Enron has outstanding. The firm also has one of the biggest private equity operations on Wall Street. Kevin Albert, head of that business, didn't return calls for comment. Merrill, the largest securities firm by capital, rounded up investors for LJM2 by touting Fastow's participation, according to a 42-page presentation sent to pension funds. ``A. Fastow's dual role creates advantages for the fund and Enron,'' the prospectus said, adding
Justice or revenge?
Justice or revenge? As a hostage in Beirut, Terry Waite was chained to a wall, beaten and denied all human rights. Here he gives his thoughts on America's treatment of the al-Qaida detainees in Guantanamo Bay Terry Waite Wednesday January 23, 2002 The Guardian I can recognise the conditions that prisoners are being kept in at the US camp at Guantanamo Bay because I have been there. Not to Cuba's Camp X-Ray, but to the darkened cell in Beirut that I occupied for five years. I was chained to a wall by my hands and feet; beaten on the soles of my feet with cable; denied all my human rights, and contact with my family for five years, and given no access to the outside world. Because I was kept in very similar conditions, I am appalled at the way we - countries that call ourselves civilised - are treating these captives. Is this justice or revenge? I was determined that my five years in captivity would not break me, and they didn't. But I cannot say that it was easy. The hardest thing for a prisoner in those conditions is the uncertainty. You don't know what will happen to you next: you have no rights, no one to speak to, no one to advise you, no one to fall back on. You only have your own resources. These men, who may or may not be guilty, will be experiencing that sense of isolation and dislocation. For four years I was kept in solitary confinement and had no companionship at all. I was always blindfolded, or had to wear a blindfold when someone came into the room. I never saw another human being. The initial effect is eerie, but eventually you become accustomed to it. You learn to live from within. But that's tough, and no one should be forced to attempt it. I had a diet very similar to that being given to these men - bread, cream cheese, rice, beans. I was adequately fed, but not luxuriously, and I lost a lot of weight. The greatest difficulty was never having any exercise in the whole period. I had to get what exercise I could while chained to the wall. I had five minutes a day to go to the bathroom; for the rest of the time I had to use a bottle. The conditions were inhuman, but all the time I had to assert my humanity. What I experienced makes me all the more determined when I say that prisoners of whatever description must be treated humanely and justly. I would stand up for the rights of the alleged terrorist and of any other individual facing serious charges. I am not soft on terrorism - I have had too many dealings with it to be so - but I am passionate that we must observe standards of justice. I fear that unless firm action is taken to institute just and fair procedures, the long-term results for the US will be catastrophic. Terrorism is not ultimately defeated by the force of arms; you have to deal with the root causes and ask what makes people act in such extreme ways. It alarms me greatly that the prisoners' status seems to have been determined almost exclusively by the US president and his advisers. Their status should be determined by an independent tribunal. The US seems to be making up the rules as it goes along. First, it said that the appalling acts of terrorism in New York and Washington were acts of war; now it is saying that these captives are not in fact prisoners of war, that they are unlawful combatants. An independent tribunal should establish precisely what they are. If the US is making up the rules, it will have no moral authority should other countries try, convict and perhaps execute American and European suspects. There will be no moral grounds on which we can stand if we allow this to continue. Americans tell me that they have little patience with international tribunals - they take a long time, and often come up with a different result from that which was hoped. But that is no argument. It doesn't matter how long it takes - justice must be seen to be done, and be done impartially. I was appalled when I heard a prominent American suggest that in certain circumstances the limited use of torture might be justified. That is a dreadful statement to come from a civilised nation. Torture can never be justified, and must be clearly condemned. When it comes to trial, these men are entitled to basic defence rights and ought to be tried under the auspices of the UN. It is vital that we uphold standards of international law for the protection of the innocent, and for the protection of American or European subjects who may find themselves in difficult circumstances in the future. For once, morality and pragmatism go hand in hand. · Terry Waite is the former special envoy to the Archbishop of Canterbury. He was held captive by terrorists in Beirut from 1987 to 1991. Guardian Unlimited © Guardian Newspapers Limited 2002
Taliban Support
Prominent radical cleric, Maulana Samiul Haq, head of the 35-party pro-Taliban Pakistan-Afghanistan Defence Council, told the crowd Muslims would continue to wage jihad against non-Muslims in places such as Chechnya, Palestine and Afghanistan. Afghanistan is our backbone. Why can't we fight jihad in Afghanistan? Haq asked the crowd. The Taliban have lost in Afghanistan but we are not disappointed nor discouraged, Haq said as the crowd chanted slogans in support of fugitive Taliban leader Mullah Mohammad Omar and bin Laden. Several senior Taliban leaders graduated from Haq's madrassa near Peshawar. (MER) It is interesting that the Taliban appear to have had a strongers social base in Pakistan than in Afghanistan. There has been more popular protest and resistance concerning imperialist aggression in Afghanistan against the Taliban than in Afghanistan itself. In Afghanistan there has been a virtual absence of popular protest against the attack on the Taliban. It is extraordinary that there has been more support from elements within the Pashtun community within Pakistan while virtually none in Afghanistan. Recent events in Afghanistan have had a rather extraordinary character. It is clear that little of the story has been made accessible to the public. In many ways the war itself and related events has unfolded in intended secrecy. Regards Karl Carlile (Communist Global Group) Be free to join our communism mailing list at http://homepage.eircom.net/~kampf/
Panic?
Yahoo market overview: "Fears of accounting irregularities ruled the day today." Tom Walker
Re: Re: the profit rate recession
On Mon, 28 Jan 2002, Doug Henwood wrote: Devine, James wrote: the data that Fred Moseley and I are discussing is from the BEA and is available at: http://www.bea.doc.gov/bea/ARTICLES/2001/09september/0901ror.pdf or http://www.bea.doc.gov/bea/ARTICLES/2001/09september/ror.xls. These data are not disaggregated by industry. Ah, but their definition of profits adds interest back in. That's a useful measure for some purposes, but money spent servicing debt isn't available for investment or dividends. The rate of profit defined gross of interest is a broader measure of the return to capital for the capitalist class as a whole. The rate of profit defined net of interest is also affected by the division of the gross profit into non-financial profit and interest. Doug is right that, from the point of view of individual non-financial capitals, the money they pay in interest cannot be invested BY THEM. However, from the point of view of the capitalist class as a whole, the interest collected by financial capitalists can (and usually will) be loaned out and invested by someone else in one way or another. Doug is also right that the net rate of profit has increased slightly more than the gross rate of profit since 1982. This is because lower rates of interest in the 1990s have reduced interest payments and raised the net rate of profit relative to the gross rate of profit (i.e. nonfinancial capital received a larger share of the gross profit). However, from 1965 to 1982, the net rate of profit DECLINED MORE than the gross rate of profit, for the opposite reason (increasing interest rates and nonfinancial capital received a smaller share of the gross profit). So that, for the whole period from 1965 to 2001, the net rate of profit declined more than the gross rate of profit. According to my calculations (from the estimates in the SCB article by Larkin and Morris), the gross rate of profit in 2000 was 36% below the 1965 peak and the net rate of profit was 45% below the 1965 peak. And if reasonable estimates for 2001 are added, the declines for the whole period are 46% for the gross rate of profit and 59% for the net rate of profit. Thus, by either measure, there was a very significant decline in the rate of profit from 1965 to 1982, and a much smaller increase since then, so that the rate of profit today is about 50% below its 1965 peak. As I have said, the fundamental problem of insufficient profitability has not yet been solved. It has been masked by accounting tricks, including fraud (as Michael P. suggests), but it has not yet been solved. Fred
Re: Taliban Support
Wherever the religion-oriented state obtains political power in a Muslim country , the political Islam grows and the social Islam declines. For example, compare Iran with Eygpt: in Iran the state is religious, so the social Islam is failing fast and the political Islam is increasingly growing; but in Egypt the social Islam is powerful and ... Similarly, in Afghanistan a religious state had arraived on the scene and hence was not capable of chaining many minds. Therefore, it is not surprisng , as Karl Carlile writes, that [i]n Afghanistan there has been a virtual absence of popular protest against the attack on the Taliban. But Pakistan has a very poweful social Islam and, again, it is not surprising that there has been more support from elements within the Pashtun community within Pakistan I think that this issue has not to do with racial and tribial causes. When a religious state arraives the political scene, the social base of Islam in that country is weakened. Regards, Mohammad Maljoo From: Karl Carlile [EMAIL PROTECTED] Reply-To: [EMAIL PROTECTED] To: Communism List [EMAIL PROTECTED] Subject: [PEN-L:22071] Taliban Support Date: Mon, 28 Jan 2002 21:51:17 - Prominent radical cleric, Maulana Samiul Haq, head of the 35-party pro-Taliban Pakistan-Afghanistan Defence Council, told the crowd Muslims would continue to wage jihad against non-Muslims in places such as Chechnya, Palestine and Afghanistan. Afghanistan is our backbone. Why can't we fight jihad in Afghanistan? Haq asked the crowd. The Taliban have lost in Afghanistan but we are not disappointed nor discouraged, Haq said as the crowd chanted slogans in support of fugitive Taliban leader Mullah Mohammad Omar and bin Laden. Several senior Taliban leaders graduated from Haq's madrassa near Peshawar. (MER) It is interesting that the Taliban appear to have had a strongers social base in Pakistan than in Afghanistan. There has been more popular protest and resistance concerning imperialist aggression in Afghanistan against the Taliban than in Afghanistan itself. In Afghanistan there has been a virtual absence of popular protest against the attack on the Taliban. It is extraordinary that there has been more support from elements within the Pashtun community within Pakistan while virtually none in Afghanistan. Recent events in Afghanistan have had a rather extraordinary character. It is clear that little of the story has been made accessible to the public. In many ways the war itself and related events has unfolded in intended secrecy. Regards Karl Carlile (Communist Global Group) Be free to join our communism mailing list at http://homepage.eircom.net/~kampf/ _ MSN Photos is the easiest way to share and print your photos: http://photos.msn.com/support/worldwide.aspx
Re: the profit rate recession
On Mon, 28 Jan 2002, Charles Brown wrote: the profit rate recession by Fred B. Moseley 28 January 2002 00:20 UTC My conclusion from these estimates, as I have said many times before, is that the fundamental problem in the US economy of insufficient profitability has not yet been solved and continues to causes recessions and stagnation. CB: Do you think this fundamental problem can be solved through reforms ? Charles, thanks for the clarity of your question. The short answer to your question is no, there is no reform - that I know of - that will solve the fundamental problem of insufficient profitability. According to Marx's theory, what is needed is one or more of the following: a devaluation of capital (through bankruptcies, write-offs, etc.), lower wages, and/or a reduction of unproductive labor. Marx emphasized the former. So the reform that you seem to be most interested in - higher wages - will not solve this problem. Rather, it will make this problem worse. It would be nice if Jim's theory of insufficient demand for consumer goods were true. Then there would be no inherent conflict of interests in capitalist economies, and no necessary inverse relation between wages and profit, as Marx (and Ricardo) emphasized. It would then always be possible to achieve higher wages and living standards for workers with endangering profits. But, alas, I don't think this theory is true. The inverse relation between wages and profits becomes especially clear in times of recessions, like today. Perhaps a reform that will make the bankruptcy process less disruptive of production and employment would make the restoration of profitability less painful. Chapter 11 bankruptcy already does that to some extent. But the problem is that in a bankruptcy, someone has to lose a lot of money, and there will usually be a fight over that, e.g. the bankruptcy of Global Crossing announced today (the second largest bankruptcy in US history, second only to Enron). Fred
Dual Power
Adam:The Assembleas Populares are spreading and becoming a base for dual power. These assemblies, 46 in number today, are not yet in the hundreds. These assemblies are only recently beginning to represent factories and other workplaces. Inter-assembly coordination is beginning to occur. But your general demand, skips critical intermediate steps. The Assemblea Populares and the piqueteros movements must fuse and build the workers councils. Karl: Your claim contains a serious political misconception. The matter of dual power is not, as you think, an abstract institutional matter. The core of dual power is politics. Dual power can only exist when the working class have politically developed to such a degree that they recognise the need to seize control of the production process. In the struggle to seize control of production dual power emerges. Under these conditions there takes place a struggle for control over the process of reproduction of use values. To effectively engage in such struggle the working class must throw up organisational forms that meet the needs of this struggle: federations of workplace committees, workers councils, armed militias etc. In the struggle to seize control of the system of production the issue of ownership of the mode of production is called up. The working class recognise that if it is to comprehensively control reproduction it must seize ownership of reproduction. Politics then passes from the issue of control to the issue of ownership and the character of ownership. This raises questions concerning the character of the current ownership of the mode of production of the bourgeoisie. This then raises questions concerning capital and the critique of capital and thereby political economy. This makes Marx's Capital a constituent part of the communist programme of the working class. Emerging from this developing class consciousness the problem as to procedures for seizing control to seizing ownership are sharply posed. This calls for institutional forms that corresponds to the newly understood needs of the class struggle. It is clear that this process of growing class consciousness towards communist political consciousness is not a function of the manipulative techniques of social engineering Leninists whether Trotskyist or Stalinist. It is a function of developments in the class struggle and the corresponding recognition by the working class of the necessities of the struggle in the advancement of its class interests. Clearly communists must form an integral constituent in the struggle for communism. They must continually hammer out the necessities of this struggle. It is not the task of communists to seek to bridge gaps through manipulation. It is the task of communists to make clear what must be done, politically and institutionally, if the necessities of the class struggle are to be met. It is the responsibility of communists to clearly establish that if these necessities are not met then the working class facing inevitable defeat --no such woman as a half pregnant woman. There are only two possibilities facing the working class: victory or defeat. Reformism, in contrast, conceals this reality. Adam: Just as important to this process is the need for a revolutionary workers party. Without its participation in the Assembleas or the workers councils, there is no guarantee that the class enemy will not use the Assemblea Populares or the workers councils, relying on inexperience and twisting conservative and bureaucratic elements in the workers movement. Soviets (workers coucils) have been manipulated crassly and openly by the bourgeoisie in the past to stall or overturn revolutions. The role of the revolutionary workers party is critical here. Karl: Again you are inflicted by political misconception. You suggest that the revolutionary workers party exists to ensure that the class enemy dont use the workers councils to serve its interests. This suggestion is an reflection of your lack of confidence in the ability of the working class to seize the power and establish communist proletarian power. It suggests that the working class lacks the objective and subjective conditions to create communism. Consequently a party of manipulation is necessary --the anti-democratic Leninist vanguard party. Communists adopt a diametrically opposite position. Their position holds that only the working class can achieve communist revolution. Their position is that the working class must choose communism. It is not an objective nor subjective process. It is a process that entails a coherent unified dialectical process that entails specific subjective and objective conditions. Ultimately there is an element of freedom of choice entailed in this combined process. The working class is free to choose social revolution. No despotic Leninist party can bend that choice. Communists know this. This is why they see that telling the truth is a class necessity. They know that when it gets down to it
Re: Re: Re: the profit rate recession
Are you disaggregating the extremely high profits that derive from corporate interest earnings or financial-asset capital gains, as US firms hollowed out from the early 1980s and took higher earnings shares from their financial/treasury operations? They would have paralleled the interest-payments deduction? (I think Chris Niggle did a study on this during the 1980s but presumably Bob Pollin or Tom Schlesinger -- or Doug -- have updated the argument?) - Original Message - From: Fred B. Moseley [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Wednesday, January 30, 2002 12:49 AM Subject: [PEN-L:22073] Re: Re: the profit rate recession On Mon, 28 Jan 2002, Doug Henwood wrote: Devine, James wrote: the data that Fred Moseley and I are discussing is from the BEA and is available at: http://www.bea.doc.gov/bea/ARTICLES/2001/09september/0901ror.pdf or http://www.bea.doc.gov/bea/ARTICLES/2001/09september/ror.xls. These data are not disaggregated by industry. Ah, but their definition of profits adds interest back in. That's a useful measure for some purposes, but money spent servicing debt isn't available for investment or dividends. The rate of profit defined gross of interest is a broader measure of the return to capital for the capitalist class as a whole. The rate of profit defined net of interest is also affected by the division of the gross profit into non-financial profit and interest. Doug is right that, from the point of view of individual non-financial capitals, the money they pay in interest cannot be invested BY THEM. However, from the point of view of the capitalist class as a whole, the interest collected by financial capitalists can (and usually will) be loaned out and invested by someone else in one way or another. Doug is also right that the net rate of profit has increased slightly more than the gross rate of profit since 1982. This is because lower rates of interest in the 1990s have reduced interest payments and raised the net rate of profit relative to the gross rate of profit (i.e. nonfinancial capital received a larger share of the gross profit). However, from 1965 to 1982, the net rate of profit DECLINED MORE than the gross rate of profit, for the opposite reason (increasing interest rates and nonfinancial capital received a smaller share of the gross profit). So that, for the whole period from 1965 to 2001, the net rate of profit declined more than the gross rate of profit. According to my calculations (from the estimates in the SCB article by Larkin and Morris), the gross rate of profit in 2000 was 36% below the 1965 peak and the net rate of profit was 45% below the 1965 peak. And if reasonable estimates for 2001 are added, the declines for the whole period are 46% for the gross rate of profit and 59% for the net rate of profit. Thus, by either measure, there was a very significant decline in the rate of profit from 1965 to 1982, and a much smaller increase since then, so that the rate of profit today is about 50% below its 1965 peak. As I have said, the fundamental problem of insufficient profitability has not yet been solved. It has been masked by accounting tricks, including fraud (as Michael P. suggests), but it has not yet been solved. Fred
Re: Re: Re: the profit rate recession
I would reiterate that the denominator in the profit rate calculations is a very questionable figure. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
RE: Re: : The rate of profit and recession
[I thought I started writing a reply to this, but somehow there's no file. I'm sorry if anyone received two versions.] Paul Phillips writes: The question we were discussing, I thought, was what explains the drop in profits after 1997 (despite rapidly rising labour productivity) and which subsequently resulted in a fall in investment initiating the recession. Your data, at least as I read it, questioned whether the fall in profits was initiated in production given the stable K/Y ratio. right. Underconsumption was discounted because, as many have noted, consumption expenditure has held up despite the drop in consumer confidence. How then to explain the decline in profits if real wages were not rising faster than labour productivity unless one were to suggest that the intensity of labour was being reduced. My question was really quite simple -- could not the fall in profits been because of a form of inability to realize profits (surplus value) caused by competition from offshore (as claimed by CEOs to explain why inflation was held in check despite falling unemployment -- i.e. in their terms, a leftward shift in the NAIRU), competition that was fueled by a) overaccumulation in competing countries, in particular China; and b) the steady rise in the value of the USD which forced down prices of domestic production in order to remain competitive. (ps. the references to scripture, etc. were not referring to you.)
Lethal Elections
Here is a reminder of Grey Davis's election strategy, following today's execution. Lethal Elections: Gubernatorial Politics and the Timing of Executions BY: JEFFREY D. KUBIK Syracuse University Department of Economics JOHN MORAN Syracuse University Department of Economics Document: Available from the SSRN Electronic Paper Collection: http://papers.ssrn.com/paper.taf?abstract_id=282294 Date: September 2001 Contact: JEFFREY D. KUBIK Email: Mailto:[EMAIL PROTECTED] Postal: Syracuse University Department of Economics 426 Eggers Hall Syracuse, NY 13244-1020 USA Phone: 315-443-9063 Fax: 315-443-1081 Co-Auth: JOHN MORAN Email: Mailto:[EMAIL PROTECTED] Postal: Syracuse University Department of Economics 426 Eggers Hall Syracuse, NY 13244-1020 USA ABSTRACT: We document the existence of a gubernatorial election cycle in state executions, suggesting that election year political considerations play a role in determining the timing of executions. Our analysis indicates that states are approximately 25 percent more likely to conduct executions in gubernatorial election years than in other years. We also find that elections have a larger effect on the probability that an African American defendant will be executed in a given year than on the probability that a white defendant will be executed, and that the overall effect of elections is largest in the South and Midwest. These findings raise concerns that state executions may fail to meet the constitutional requirements stipulated by the Supreme Court in Gregg v. Georgia for the administration of state death penalty laws. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Re: Re: : The rate of profit and recession
On Tue, 29 Jan 2002, Doug Henwood wrote: Rakesh Bhandari wrote: The Fed is powerless to change this; fiscal policy can relieve realization problems but the resumption of private investments depends on the restoration of profitability through the devaluation of constant capital and a rising rate of surplus value. So, translating into demotic English - one of the most aggressive easing streaks in Fed history will have no effect, and there will be no recovery anytime soon? Are you expecting a long stagnation or a deep depression? I think that it is very unlikely that the Fed's expansionary monetary policy will be successful in reviving investment spending anytime soon, because of continuing problems of low profits, high debts, and low capacity utilization rates. The US economy is not going to be pulled out of recession in 2002 by increased investment spending. It is possible that consumer spending will continue to be strong, in spite of a decline in disposable income, and that households will make up the difference by going even deeper into debt than they already are. US households seemed to be determined, come hell or recession, to continue their recent spending spree, even though their disposable income has declined (and promises to decline even more), and even though their continued spending requires rapidly increasing debt. In this case, there might be a slow recovery in 2002, but only as the result of households increasing their already heavy and unprecedented debt burdens. This does not seem to be a very strong basis for a sustainable recovery. And the fundamental problem of insufficient profitability remains, and will continue to depress investment and thus the economy in general. Fred
even more debt?
Billions still hidden in Enron pyramid David Teather in New York Wednesday January 30, 2002 The Guardian Enron, the failed energy firm, was yesterday likened to a pyramid-selling scam and was said to be possibly hiding billions of dollars of debts that have yet to come to light. Robert McCullough, a forensic accountant who will testify before Congress today, said an examination of just one of the many offshore entities used to mask Enron's debts had found $2.7bn in unreported losses. Professor McCullough, of Portland State University, told the Today programme on BBC Radio 4 that he had been surprised by the sheer magnitude of losses. The discoveries will make the task for Enron's new chief executive all the more difficult. The company yesterday confirmed that it has hired Stephen Cooper, a corporate recovery expert, as interim chief executive and chief restructuring officer. Mr Cooper has in the past helped to restructure struggling companies including Polaroid and Federated Department Stores, which owns Macy's and Bloomingdales. Mr McCullough said his initial findings had confirmed all the worst fears of the whistle-blowing Enron executive who had warned the company could implode in a wave of accounting scandals. The venture studied by Mr McCullough was dubbed Whitewing, which housed investments in Eastern Euro pean and Brazilian utilities that had gone bad. Whitewing used money from insurance companies and mutual funds to buy the bad assets and place them into an offshore company called Condor. Some $4.7bn of investments - failing investments, as it turned out - were housed within Condor, taken off the books so that investors would never be able to see the full impact, Mr McCullough said. Our close review indicated that there were probably unrealised losses of $2.7bn in this one set of investments alone He said there is probably far worse still to come out. Our review of the single Whitewing group surprised us by the sheer magnitude of the guarantees and investments hid den behind it. We're hearing about 4,000 of these entities. Enron's spectacular collapse was triggered after it announced a $1.2bn reduction in asset value after taking some of the offshore entities on to its books - prompted by an outside investigation. It recorded losses of more than $600m and admitted it had overstated profits by a similar amount in the previous four years. In further developments, the House energy and commerce committee piled further pressure on to Arthur Andersen, the accountants which audited Enron. The committee has written to Andersen demanding new information including a list of names of the members of staff that took part in the shredding of key Enron-related documents. Hearings into the collapse continued yesterday. Lawrence Whalley, the company's president and chief operating officer stood down yesterday and will take up a position with investment bank UBS Warburg, which has bought Enron's energy trading arm.
