China's FDI up 14.9% y-o-y
The Economic Times Monday, January 14, 2002 China's FDI up 14.9% y-o-y REUTERS MONDAY, JANUARY 14, 2002 BEIJING: China's actual foreign direct investment rose 14.9 per cent year on year to $46.846 billion in 2001, the Ministry of Foreign Trade and Economic Cooperation said on Monday. Contracted foreign investment, an indicator of the future trend, rose 10.43 per cent to $69.191 billion last year, the ministry said in a statement published on its website: www.moftec.gov.cn. Foreign investors have been pouring into China in anticipation of market opening after its formal entry to the World Trade Organisation last month. Actual FDI was roughly in line with official expectations. Foreign Trade Minister Shi Guangsheng said in December actual FDI could reach $45 billion in 2001, from $40.7 billion in 2000. Copyright © 2001 Times Internet Limited. All rights reserved.
Re: Re: Re: Re: the profit rate recession
Patrick Bond wrote: 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? This would require doing a lot of work with SP Compustat data. Some enterprising team of professors and grad students would be ideally suited for the task. We've been through this before, but much of the profits that, say, Ford and GM earn from their finance subsidiaries come from financing cars and trucks. So it's not speculative profit - they're making the money the bankers used to make. The hollowing out story is complicated. Even something as hollow as Enron had power plants, water companies, and fiber optic lines. Reality wouldn't let them be as a hollow as they'd hoped. Or what about Amazon.com - it discovered it needed warehouses, fulfilment centers, and pickers packers. It couldn't be virtual, as everyone had hoped at first. Doug
You couldnt buy a better speach
Wednesday January 30, 5:09 AM Karzai says Guantanamo detainees not prisoners of war Afghan interim leader Hamid Karzai intervened in a row over the status of prisoners seized by US forces in Afghanistan, branding them terrorists who sowed killing fields and did not deserve to be termed prisoners of war. Karzai, who was to be President George W. Bush's special guest at the annual State of the Union address later Tuesday, backed the White House position on the detainees held at Guantanamo Bay, Cuba, an issue which has sparked international concern. The people that are detained in Guantanamo, they are terrorists, they are not prisoners of war, Karzai said at a press conference. I see it in very clear terms, they are criminals, they brutalised Afghanistan, they destroyed our land, there was no war going on, it was plain killing fields. They committed the same thing in America, he said in a reference to September 11 terror attacks. Karzai warned, however, though that the prisoners should not be ill treated : they were bad, we were good, so we should treat them nicely, he said. A debate is raging in the Bush administration over whether the Geneva conventions should be applied to the al-Qaeda and Taliban detainees. But officials have rejected claims that the men should be classified and treated as prisoners of war. Some officials believe the convention does not apply to the detainees because they did not wear uniforms or fight in military units, and because they targeted civilians. But Secretary of State Colin Powell has reportedly asked Bush to reconsider that position, arguing that the United States must comply with international law over the issue, which calls for a screening panel to judge a prisoners status if it is in doubt. Bush said Monday he was considering the legal aspects of the issue after meeting senior members of his administration.
RE: The rate of profit and recession
[somehow my e-mail program isn't cooperating again. Here's my complete message.] [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, though it's not my data. (It's from the U.S. government's Department of Commerce.) In fact, in the U.S., the K/Y jelly -- I mean ratio -- was moving in the wrong direction after 1980 or so in order to explain a fall in the rate of profit. Though there are other eras which are more classical in appearance (in the sense that excessive capital intensity [fixed K/Y] explains the profit rate's fall), the period since 1980 or so, like the period from 1919 to 1929, didn't fit that rubric. The proximate cause of the fall in the rate of profit during the last part of the 1990s/2000 boom was a fall in the profit share. This in turn was due to a boom-driven fall in unemployment, going down to 4%, which eventually raised wages. The boom also pulled up raw materials costs to U.S. businesses. The latter were unable to pass the costs onto consumers as higher prices because of the high dollar. Increased competition from a large number of places -- including China -- as part of the world-wide race (or crawl) to the bottom, i.e., competitive austerity and export-promotion put a squeeze on U.S. profits. (Missing is an explanation of how a boom could have occurred at all. See below.) 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. I don't discount underconsumption forces except as an explanation of the proximate causes of the decline in profitability. Instead, I see them as working in the background, determining the conditions needed to be met to allow a sustained boom. Given the underconsumptionist undertow resulting from the one-sided class war in the U.S., the only one way that we could see a sustained economic boom of the sort that prevailed in the 1990s was to have either a profit-driven investment boom, a credit-driven workers' consumption boom, a boom of luxury spending, a surge in U.S. net exports, and/or a rising government deficit. Given the general stagnation of most countries outside the U.S., due to the one-sided class wars and neo-liberalism there, along with the highly valued US$, the penultimate substitute for consumption growth was ruled out. The neo-liberal policy revolution ruled out the last one on the list; in fact, the US government's budget went into the surplus territory. So, the boom was based on profit-driven investment and a rise in luxury spending, each of which were pushed along by the rightward shift in the income wealth distributions and the stock-market bubble, plus credit-based consumer purchases by workers. But all of these created imbalances which made the boom more and more prone to collapse. Debt accumulation and a more rapid growth of industrial capacity are the most crucial imbalances. In addition, these types of spending are especially flaky -- subject to fluctuations -- compared to income-based workers' consumer spending, so demand became increasingly subject to fluctuations as it became more dependent on them. These imbalances make the boom increasing unstable. Toward the end of the 1990s/2000 boom, we saw the possibility of an escape from the underconsumption undertow, as wages started rising (in the U.S.) relative to productivity. But given the world political economy of neo-liberal triumphalism and IMF- and TNC-driven wage cuts, this didn't widen to include many other countries or last very long. So the undertow remained. Back in my 1983 REVIEW OF RADICAL POLITICAL ECONOMICS article on the Great Depression, I said I believed that in a weak-labor regime where the underconsumption undertow operated, booms were increasingly fragile -- so that even a surge of wages could pop the bubble. I think that's part of how things worked out in the 1990s, though of course there were other shocks to the system (such as the collapse of telecom, dot-com, etc. and 911). The point is not that shocks knocked the system down as much as that the system was increasingly a house of cards. 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 --
RE: Re: Re: Re: Re: the profit rate recession
We've been through this before, but much of the profits that, say, Ford and GM earn from their finance subsidiaries come from financing cars and trucks. So it's not speculative profit - they're making the money the bankers used to make. Yeh, but it got bigger by an order of magnitude in the 1990s. I don't think that GE Capital makes most of its money by financing fridges and air-conditioners any more. And that's without getting into the profits Microsoft booked selling puts on its own stock dd ___ Email Disclaimer This communication is for the attention of the named recipient only and should not be passed on to any other person. Information relating to any company or security, is for information purposes only and should not be interpreted as a solicitation or offer to buy or sell any security. The information on which this communication is based has been obtained from sources we believe to be reliable, but we do not guarantee its accuracy or completeness. All expressions of opinion are subject to change without notice. All e-mail messages, and associated attachments, are subject to interception and monitoring for lawful business purposes. ___
ECONOMIC NOTES
ECONOMIC NOTES NEWS AND ANALYSIS FROM THE LABOR RESEARCH ASSOCIATION http://www.LaborResearch.org or http://www.lraonline.org Jan. 29, 2002 Pensions Lack of Pension Coverage a Reality for More Than Half of U.S. Workers (Jan. 29, 2002) The Enron collapse starkly exposed the risks that workers face when their retirement plans are loaded with company stock, especially stock that has been inflated by illegal and deceptive accounting practices. But beyond Enron there is another pension crisis in America: the fact that the majority of workers in the United States are not covered by a pension. http://www.lraonline.org/story.php?id=95 Wages Workers' Real Wages Are Up, According to the Government. But That Does Not Mean Big Raises (Jan. 24, 2002) Although the recently announced 2.9% annual increase in real weekly earnings sounds like good news for American workers, it may mean just the opposite. As the economy slows to a recession, the lowest earning workers are laid off and those remaining in the labor force earn, on average, higher real wages. And for the hundreds of thousands of laid-off temps and other lower-wage workers, there are fewer benefits to help them stay afloat during a recession. http://www.lraonline.org/story.php?id=94 Labor Headlines From Around the Web Oil Workers Union Begins Negotiations for New Contract - Beaumont Enterprise (Jan. 29, 2002) http://hoovnews.hoovers.com/fp.asp?layout=printnewsdoc_id=NR200201281180.3_37e0003043f11dc4 United Acts To Avert Strike But Outcome In Question - Airline Financial News (Jan. 29, 2002) http://hoovnews.hoovers.com/fp.asp?layout=printnewsdoc_id=NR200201291675.1.1_608800313ba60e68 UPS, Teamsters union to begin talks after quarterly earnings - Reuters (Jan. 29, 2002) http://biz.yahoo.com/rf/020128/n28149938_1.html Recession hitting young job seekers hard - USA Today (Jan. 28, 2002) http://www.usatoday.com/money/mlead.htm Immigrants in Las Vegas fighting for wages - Las Vegas Review-Journal (Jan. 27, 2002) http://www.lvrj.com/lvrj_home/2002/Jan-27-Sun-2002/news/17854166.html Enron Directors Shouldn't Serve on Other Boards, AFL-CIO Says - Bloomberg (Jan. 26, 2002) http://quote.bloomberg.com/fgcgi.cgi?mnu=newsptitle=Technology%20UKtp=ad_uknewsT=news_storypage99.htad=uktechnologys=APFHOJxUPRW5yb24g _ ___ Labor Research Association 330 West 42nd St., 13th Fl. New York, NY 10036 Tel: (212) 714-1677, Fax: (212) 714-1674 E-mail: Internet:[EMAIL PROTECTED] http://www.laborresearch.org http://www.lraconsulting.com ===
Good analysis
Good analysis by bantam 29 January 2002 15:48 UTC Thread Index 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. CB: I was sort of farcing, but do you predict that China is going bankrupt ?
the rate of profit and recession
the rate of profit and recession by Devine, James 29 January 2002 15:49 UTC Jim, On the below, I don't know if I interpreted your reference to the counter-acting tendency ...winning correctly as one of the countervailing influences that Marx lists that prevent the profit rate from falling despite its general tendency to fall. I took stock capital from Marx to be stock market profits as acountervailing influence to the tendency of the rate of profit to fall. Charles ^^^ 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
RE: the rate of profit and recession
Charles writes:On the below, I don't know if I interpreted your reference to the counter-acting tendency ...winning correctly as one of the countervailing influences that Marx lists that prevent the profit rate from falling despite its general tendency to fall. I'm not as interested in being true to Marx's posthumously published and poorly edited manuscript as much as I am interested in figuring out how the economy works. The fact is that any increase in the organic composition of capital can be counteracted by a surge of labor productivity growth. I took stock capital from Marx to be stock market profits as acountervailing influence to the tendency of the rate of profit to fall. a lot of stock market profits on simply on paper. In 2000, a lot of people had paper winnings (capital gains) from the stock market. But these can't be realized if everyone tries to realize them, since that drives down the stock price, abolishing the capital gains. The valid stock market prices are based on corporate earnings (real production of surplus-value). Jim Devine
The rate of profit and recession
The rate of profit and recession by Rakesh Bhandari 29 January 2002 20:45 UTC 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? Let us suppose that the whole of society is composed only of industrial capitalists and wage-workers. Let us furthermore disregard price fluctuations, which prevent large portions of the total capital from replacing themselves in their average proportions and which, owing to the general interrelations of the entire reproduction process as developed in particular by credit, must always call forth general stoppages of a transient nature. Let us also disregard the sham transactions and speculations, which the credit system favours. Then, a crisis could only be explained as the result of a disproportion of production in various branches of the economy, and as a result of a disproportion between the consumption of the capitalists and their accumulation. But as matters stand, the replacement of the capital invested in production depends largely upon the consuming power of the non-producing classes; while the consuming power of the workers is limited partly by the laws of wages, p! artly by the fact that they are used only as long as they can be profitably employed by the capitalist class. The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit. http://www.marxists.org/archive/marx/works/1894-c3/ch30.htm
Q4 Sunbeam
Surprise! Surprise! GDP rose in the fourth quarter by a breathtaking 0.2%. 0% financing on new car sales have raised the yankee economic chin just millimetresabove the bar. Huzzah! Huzzah! Buy! Buy! Happy days are here again! Prosperity is just around the corner. Wesee the recovery Sunbeam* at the end of the recession tunnel. *Hint: Chainsaw Al, rebates, Arthur Andersen Tom Walker
BLS Daily Report, Wednesday January 30
RELEASED TODAY: In December, 305 metropolitan areas reported higher unemployment rates than a year earlier, 21 areas had lower rates, and 5 areas had rates that were unchanged, the Bureau of Labor Statistics reported today. Ten metropolitan areas had jobless rates over 10.0 percent, with seven of these in California and two along the Mexican border in other states. Only 3 areas recorded rates below 2.0 percent, compared with 43 areas in December 2000. A measure to boost payment levels and expand unemployment benefits to part-time and newly hired workers will receive a second Senate vote the week of Feb. 4, following the proposal's narrow defeat Jan. 29 ( Daily Labor Report, page AA-1). Consumer confidence increased in January for the second consecutive month, hinting that a recovery from the recession could be near, according to the Conference Board. Confidence increased nearly three points from 94.6 in December to 97.3 in January ( Daily Labor Report, page A-4). A rise in durable-goods orders in December and an increase in consumer confidence in January have added to the likelihood that Federal Reserve policy makers, who meet today, have finished cutting interest rates for now. New orders for durable goods, or items meant to last three years or longer, rose by 2.0% after falling 6.0% in November, a drop originally estimated at 4.8%. Capital-goods orders excluding defense rose 1.3%, the third straight increase, paced by a 3.5% gain in orders for computers and electronics, suggesting business investment, the dominant factor in the recession, may have stabilized. Separately, the Conference Board said its index of consumer confidence rose to 97.3 in January from a revised 94.6 in December ( The Wall Street Journal, page A2, and The New York Times, page C4). Since March, nearly 1.4 million jobs have been lost--1.1 million of them in manufacturing--as the nation tipped into recession and then suffered the shock of the Sept. 11 terrorist attacks, which triggered waves of layoffs in the airline, hospitality and related industries. The nation's payrolls plummeted by more than 800,000 workers in October and November combined, followed by a drop of 124,000 in December. Analysts' expectations vary widely, but many expect Labor to report a small decline of 20,000 or so in January, which would be a big improvement compared with the previous months. But in recent days, a growing number of forecasters have begun to predict a rise in payrolls of up to 100,000 jobs. (This article also shows a graph charting the unemployment rate and another one charting the monthly change in non-farm payroll employment, and cites BLS as the source.) ( The Washington Post, page E1). DUE OUT TOMORROW: Employment Cost Index, December 2001 application/ms-tnef
Re: RE: Re: Re: Re: Re: the profit rate recession
Davies, Daniel wrote: We've been through this before, but much of the profits that, say, Ford and GM earn from their finance subsidiaries come from financing cars and trucks. So it's not speculative profit - they're making the money the bankers used to make. Yeh, but it got bigger by an order of magnitude in the 1990s. I don't think that GE Capital makes most of its money by financing fridges and air-conditioners any more. And that's without getting into the profits Microsoft booked selling puts on its own stock Yup. No question about it. But measuring the scope of it would take some work. Microsoft plays financial games, but they make software, and that's where most of their money comes from. So even they don't fit the hollow model perfectly. Doug
Re: The rate of profit and recession
The rate of profit and recession by Rakesh Bhandari 29 January 2002 20:45 UTC 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? Let us suppose that the whole of society is composed only of industrial capitalists and wage-workers. Let us furthermore disregard price fluctuations, which prevent large portions of the total capital from replacing themselves in their average proportions and which, owing to the general interrelations of the entire reproduction process as developed in particular by credit, must always call forth general stoppages of a transient nature. Let us also disregard the sham transactions and speculations, which the credit system favours. Then, a crisis could only be explained as the result of a disproportion of production in various branches of the economy, and as a result of a disproportion between the consumption of the capitalists and their accumulation. But as matters stand, the replacement of the capital invested in production depends largely upon the consuming power of the non-producing classes; while the consuming power of the workers is limited partly by the laws of wages, p! artly by the fact that they are used only as long as they can be profitably employed by the capitalist class. Charles, why do capitalists find at some point in the course of accumulation that it is no longer profitable to employ workers in the expansions of either or both depts and thus limit investment demand (of which variable capital is a component) such that surplus value that has already been produced and lays idle (not all of which by the way is in the form of consumer goods) cannot be realized by way of accumulation? The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit. So investment demand falls, the masses are further impoverished and their consumption even more restricted, yet supply had been built up with a view to meeting unmet needs and demands as such which are now however no longer effective because of the drop off of investment demand the explanation for which is the shortage of the surplus value that was actually being produced even as that surplus value had in fact realized. The capitalists no longer believe that it pays to accumulate, investment demand falls off, capital and workers are idled, the masses are thereby impoverished and their consumption further restricted--so yes indeed the ultimate cause of crisis can be said to be the restriction on the consumption of the masses by the adequation of the production to the valorization of capital. The question remains what are the limits to the valorization of capital. Rakesh
RE: Re: the profit rate recession
Charles Brown wrote: Do you think this fundamental problem can be solved through reforms ? Fred writes: 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. yes, those are important, but it should be noted bankruptcies and write-offs don't help the aggregate rate of profit unless the excessive capital equipment is scrapped; a bankruptcy can simply redistribute the ownership of existing capital equipment. Lowering wages can make realization crises worse, especially given the consumer debt load and rising unemployment rates these days. (There's no way consumer spending is going to hold up if unemployment rises to 6.5%) The ouster of unproductive workers -- i.e., one kind of lay-off -- also has this effect, as does the speed-up of the aggregate growth of labor productivity (output/(productive + unproductive labor)) that would result. Realization problems are made worse if productivity rises relative to wages. BTW, why aren't these reforms? The neo-liberals promise that their reforms will abolish unproductive labor (as they define it). 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. This is an excessively simple presentation of my theory. Among other things, as I've said before on pen-l, I don't think anyone can simply wish for higher wages and have their wish come true. BTW, in my theory the lack of conflict between capital and labor over wages (on a macro level) only applies in what I term an underconsumption trap and then only on the macro level. In that situation, business investment is blocked (by unused capacity, excessive debt, pessimistic expectations) and other sources of aggregate demand such as government deficits and positive net exports are ruled out. In this situation of low profits, individual capitalists try to pull the iron out of the fire by squeezing workers. But, given the blockage of other sources of aggregate demand, underconsumption forces apply directly, so that the profitability situation _gets worse_ as capacity utilization rates fall again. (There's micro/macro irrationality, of the sort that Marx referred to in the GRUNDRISSE, p. 420, Martin Nicholaus edition. It's also similar to the Keynesian paradox of thrift.) In this situation, and only in this situation, a mass effort to raise wages would force the capitalists to be more sane on the macro-level. However, they would fight it tooth and nail, because capitalists only truly understand micro-level rationality (i.e., the bottom line). 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. The posited inverse relationship between real wages and profits assumes, among other things, something akin to Say's Law, i.e., that there are no realization crises. (Ricardo fell for this Law, but Marx did not.) But if aggregate demand increases (for whatever reason) so that capacity utilization rates rise -- e.g., as in the early 1940s or the 1960s -- it's possible for both real wages and profitability to rise. Further, ignoring realization issues, rising labor productivity allows the real wage to rise without necessarily squeezing profit shares or the rate of surplus-value. In a recession, individual capitalists _think_ that there's an inverse relationship between wages and profits. That's why they push down wages (along with speeding up and stretching out work). But that's only a microeconomic perspective (infected with what Marx termed the illusions created by competition or the fetishism of commodities). On the macro-level, a rise in wages could prevent a fall in consumer demand, as explained above. Jim Devine
RE: Q4 Sunbeam
you left out the fun part. Nominal GDP actually fell, but the price level went down more (3/10's%). We're in a deflationary recovery. Will wonders never cease. mbs -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]On Behalf Of Tom Walker Sent: Wednesday, January 30, 2002 11:16 AM To: [EMAIL PROTECTED] Subject: [PEN-L:22093] Q4 Sunbeam Surprise! Surprise! GDP rose in the fourth quarter by a breathtaking 0.2%. 0% financing on new car sales have raised the yankee economic chin just millimetres above the bar. Huzzah! Huzzah! Buy! Buy! Happy days are here again! Prosperity is just around the corner. We see the recovery Sunbeam* at the end of the recession tunnel. *Hint: Chainsaw Al, rebates, Arthur Andersen Tom Walker
RE: Q4 Sunbeam
Uh. My jawis on thefloor. I guess my excuse is that THEY -- the breezy upbeaters --didn't tell me. But that's no excuse, really. You reallymean we're in a DEFLATIONARY recovery? Oh, that doesn't sound like fun at all. This puts a whole new spin on the comments of Diane Swonk, chief economist at Bank One: ``We are well positioned for a recovery here,'' said Diane Swonk, chief economist at Bank One in Chicago. ``We almost have to look back and call this a recession-ette, rather than a recession,'' Swonk said. Max Sawicky wrote, you left out the fun part. Nominal GDP actually fell,but the price level went down more (3/10's%). We'rein a deflationary recovery. Will wonders never cease. Tom Walker
Re: RE: The rate of profit and recession
[somehow my e-mail program isn't cooperating again. Here's my complete message.] [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, though it's not my data. (It's from the U.S. government's Department of Commerce.) In fact, in the U.S., the K/Y jelly -- I mean ratio -- was moving in the wrong direction after 1980 or so in order to explain a fall in the rate of profit. Though there are other eras which are more classical in appearance (in the sense that excessive capital intensity [fixed K/Y] explains the profit rate's fall), the period since 1980 or so, like the period from 1919 to 1929, didn't fit that rubric. but the question remains what the relation of such data are to Marx's variables of vcc, occ, s/v, and U/P labor ratio. The proximate cause of the fall in the rate of profit during the last part of the 1990s/2000 boom was a fall in the profit share. This in turn was due to a boom-driven fall in unemployment, going down to 4%, which eventually raised wages. But why would the underconsumption undertow have kicked in at the point that consumption gains were being generalized? The boom also pulled up raw materials costs to U.S. businesses. oil prices skyrocketed but what about a basket of raw materials? and does the timing work out? hasn't the recession grown worse as raw material prices have weakened? The latter were unable to pass the costs onto consumers as higher prices because of the high dollar. the high dollar may have also reduced capital costs. Increased competition from a large number of places -- including China -- as part of the world-wide race (or crawl) to the bottom, i.e., competitive austerity and export-promotion put a squeeze on U.S. profits. Why did this decrease mark ups more than costs? I don't discount underconsumption forces except as an explanation of the proximate causes of the decline in profitability. Instead, I see them as working in the background, determining the conditions needed to be met to allow a sustained boom. Given the underconsumptionist undertow resulting from the one-sided class war in the U.S., the only one way that we could see a sustained economic boom of the sort that prevailed in the 1990s was to have either a profit-driven investment boom, a credit-driven workers' consumption boom, a boom of luxury spending, a surge in U.S. net exports, and/or a rising government deficit. Given the general stagnation of most countries outside the U.S., due to the one-sided class wars and neo-liberalism there, along with the highly valued US$, the penultimate substitute for consumption growth was ruled out. The neo-liberal policy revolution ruled out the last one on the list; in fact, the US government's budget went into the surplus territory. So, the boom was based on profit-driven investment and a rise in luxury spending, each of which were pushed along by the rightward shift in the income wealth distributions and the stock-market bubble, plus credit-based consumer purchases by workers. But all of these created imbalances which made the boom more and more prone to collapse. Debt accumulation and a more rapid growth of industrial capacity are the most crucial imbalances. In addition, these types of spending are especially flaky -- subject to fluctuations -- compared to income-based workers' consumer spending, so demand became increasingly subject to fluctuations as it became more dependent on them. These imbalances make the boom increasing unstable. I don't see how this responds to Fred's point that less mass underconsumption would have made the boom more unstable, more vulnerable to an earlier collapse; moreover, I don't see how this responds to the classical Marxist argument (Grossman, Mattick, Yaffe, Daum, Cogoy, Shaikh, Moseley) that less underconsumption in a downturn may not only not help in overcoming the dowturn, it may exacerbate it. After all, if the overcoming of realization problems depends on the revival of accumulation which in turn depends on the brighter profit prospects generated by the crisis-created cheapening of constant capital and intensifying of the rate of exploitation, how would less underconsumption and less restriction on wages overcome the crisis? Toward the end of the 1990s/2000 boom, we saw the possibility of an escape from the underconsumption undertow, as wages started rising (in the U.S.) relative to productivity. But given the world political economy of neo-liberal triumphalism and IMF- and TNC-driven wage cuts, this didn't widen to include many
Re: Dual Power
Karl, your post very much helped me to understand why the proposition that the emancipation of the working class must be conquered by the working class itself remains the implicit postulate of all socialist thought. rb
Davos/Anti-Davos
Going global Jan 30th 2002 From The Economist Global Agenda The 32nd meeting of the World Economic Forum is being held in New York this week. But the annual schmoozing session favoured by politicians and businessmen has a new rival: the second meeting of the anti-globalisation movement in Porto Alegre in Brazil. Are the anti-globalisation protesters regrouping? IT SEEMED to be all over. The war on terrorism, launched after the attacks on New York and Washington on September 11th, stopped the anti-globalisation protesters in their tracks. The people who had wrecked the Seattle meeting of the World Trade Organisation (WTO) in 1999, and who then went on to do much the same to a succession of other international gatherings, suddenly went very quiet. Their increasingly violent protests looked out of place in a world worried about further terrorist attacks. Now, though, it looks as if the protest movement has begun to regroup. This week the worlds most prestigious networking event, the World Economic Forum (widely known as Davos for the Alpine Swiss resort where it is usually held), faces a competitor: the Another world is possible gathering in Porto Alegre, Brazil, staged by anti-globalisation groups from around the world to counter the attention, power and publicity of the Forum, which attracts mostly businessmen, top politicians and journalists, and where the virtues of globalisation are usually trumpeted. The Porto Alegre meeting is conceived as a sort of anti-Davos and this year it will be far bigger than the original, with about 50,000 people, three times the number who attended the first such meeting last year. The antiglobalisation movement may be in temporary retreat and, with luck, it may be about to take a different, less violent path, but one thing seems clear: it is far from dead. Full article: http://www.economist.com/agenda/displayStory.cfm?Story_ID=965055 Sabri
Export tax subsidies that aren't?
Jagdish Bhagwati has an op-ed in yesterday's FT where he says the US Congress's objections to that huge WTO ruling last month that declared we are unfairly subsidizing our exports to the tune of $4 billion are hypocritical, nationalistic and wrong. No argument from me there. But he makes one argument I can't follow: quote Then others argue that the EU does it too. Here, they are wrong again on the economics. Citing value-added taxes, they object to the rebates on exports therefrom as a parallel offence. But as my former student Gene Grossman, now of Princeton, has shown, this tax system does not distort comparative advantage. unquote I'm not sure I understand this: At first glance, the critics' argument looks quite plausible. What makes value added rebates different than income tax rebates? Is Bhagwhati not elaborating because the counter argument is now so obvious and well-known that he feels no need? Or is he being disingenous and passing off something long and complicated and controversial as if it were an agreed fact? Inquiring but ignorant minds want to know. Michael __ Michael PollakNew York [EMAIL PROTECTED]
RE: RE: Q4 Sunbeam
you left out the fun part. Nominal GDP actually fell, but the price level went down more (3/10's%). We're in a deflationary recovery. Will wonders never cease. mbs it's not _really_ deflation until it's sustained for a few quarters and money wages start falling too. That's when the shite hits the thermantidote! Jim Devine
the profit rate recession
the profit rate recession by Fred B. Moseley 29 January 2002 22:55 UTC CB: Do you think this fundamental problem can be solved through reforms ? Fred: Charles, thanks for the clarity of your question. Charles: Thanks your further clarifying discussion. Fred: 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. CB: I agree with you that there is an irreconcilable antagonism and inverse relationship between wages and profits. This follows directly from Marx's most fundamental concepts in that surplus value is value not paid in wages to workers, but which rather is exploited as surplus value by the capitalists. The struggle over wages is a zero sum game. If wages go up, profits must go down, and vica versa. I just don't see how leftists, Marxists, radicals, communists of any type can propose measures by which profits can be raised in order to avoid or get out of any specific recession or depression. We have to push aggravation the fundamental contradiction you point out. It reminds me of Marx's argument in _Value, Price and Profit_ with the then commonly posed puzzler to the workers: if wages go up, prices must go up. Marx said, well no, wages can go up and prices stay down if profits stay down. Seems we should say something analogous here. As to the theoretical point, it still seems to me that in the quote from Marx's Vol. III of Capital ( Chapter Money Capital and Real Capital I ) that I reproduce below, Marx still sees the ultimate reason for all crises and therefore ultimately behind the fall in the rate of profit as , contradictorily perhaps, the poverty and restricted consumption of the masses. Can you tell me why Marx would make the statement I copy below , if the ultimate reason for crises, the ultimate cause were not lack of consuming power in the masses ? ^^^ 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 ^^^ From Vol. III Capital, Chapter XXX Let us suppose that the whole of society is composed only of industrial capitalists and wage-workers. Let us furthermore disregard price fluctuations, which prevent large portions of the total capital from replacing themselves in their average proportions and which, owing to the general interrelations of the entire reproduction process as developed in particular by credit, must always call forth general stoppages of a transient nature. Let us also disregard the sham transactions and speculations, which the credit system favours. Then, a crisis could only be explained as the result of a disproportion of production in various branches of the economy, and as a result of a disproportion between the consumption of the capitalists and their accumulation. But as matters stand, the replacement of the capital invested in production depends largely upon the consuming power of the non-producing classes; while the consuming power of the workers is limited partly by the laws of wages, p! artly by the fact that they are used only as long as they can be profitably employed by the capitalist class. The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit. http://www.marxists.org/archive/marx/works/1894-c3/ch30.htm
RE: Export tax subsidies that aren't?
The mainstream argument is that exchange rates adjust to wash away all tax advantages, whether legal or illegal. Not being a trade person, the best argument I can think of goes like this: If you want to buy US goods, you need dollars to pay for them. A cost reduction in said goods increases demand for dollars relative to other currencies, cost of dollar (and good, in importer's currency) go up, cost advantage disappears. I'm not familiar with the Grossman paper. If you have less faith in the flexibility of the price system, you would favor the position that cost savings improve U.S. competitiveness, so there are indeed tax subsidies, relative to tax systems with no special concessions for exports. In the latter sense, the VAT and the CIT both subsidize exports. The U.S. problem is that the latter is GATT illegal, and now thanks to the WTO, the U.S. faces the prospect of actually facing up to the dictum that crime doesn't pay. The fun part comes when the free trade maniacs in Congress are confronted with a breach of U.S. sovereignty (something they claimed couldn't happen), in the form of instructions from commie-pinko Europeans to change our red-white-and-blue tax system. It's kind of sweet. max Jagdish Bhagwati has an op-ed in yesterday's FT where he says the US Congress's objections to that huge WTO ruling last month that declared we are unfairly subsidizing our exports to the tune of $4 billion are hypocritical, nationalistic and wrong. No argument from me there. But he makes one argument I can't follow:
Right wing support for UK state schools
Presumably this is like the British bourgeoisie deciding to support state funded secondary eduction at the end of the 19th century when they realised Germany was overtaking Britain in the literacy of its workforce. Chris Burford From the Times Educational Supplement (UK) 25.1.02 Right-wing thinker favours state schooling State schools provide better value for money than their independent counterparts, according to a report by a right-wing academic. Private schools may produce better GCSE and A-level results but for each pound spent, state schools do up to 50 per cent better, says Dr John Marks in Standards and Spending - Dispelling the Education Orthodoxy , published by the Centre for Policy Studies think-tank.
Red Globe
Hello, http://www.placerouge.info has been re-launched and updated. We have merged with PlaceRouge and Communards. All three parts of the project can be found now at one site. New is the Gallery, which, hopefully will hold quite a number of images in future. You are invited to either mail us pictures you find worth to be shared or load them up directly (please use irfanview or another programm to crunch the images to a webrelated size). We also invite all of you to link your sites at our link engine and use the download eara to share the URL of possible download items at your sites. If you would need free space for your sites (full ftp accessibility, PHP4, Python and Python2, CGI), use the support link or click the banner. It would be fine if you could sign-up at our members aera. We assure you that we neither give your mail-addys away, nor will we spam you. Some of the new stories posted are: + That is Bloody Sunday A brief history of Bloody Sunday On January 30, 1972 -- 30 years ago today -- British soldiers opened fire on a civil rights demonstration in Derry. Thirteen protestors were killed. Those who died were: Bernard McGuigan (41), Gerard V. Donaghy (17), Hugh P. Gilmore (17), John F. Duddy (17), James Mc Kinney (34), James J. Wray (22), John P. Young (17), Kevin McElhinney (17), Michael G. Kelly (17), Michael M. McDaid (20), Patrick J. Doherty (31), William A. McKinney (27), William N. Nash (19). John Johnston (59) died later as a result of injuries received. The following is a brief history of Bloody Sunday, with background and subsequent reaction, taken from the extensive website of the Bloody Sunday Trust at this link You can view the story here. http://www.placerouge.info/article.php?sid=26mode=threadorder=0thold=0 # Resolution on Milosevic You can view the story here. http://www.placerouge.info/article.php?sid=24mode=threadorder=0thold=0 # New York, New York NYPD KILLS AGAIN By Imani Henry Brooklyn, N.Y. There is anger in the East Flatbush section of Brooklyn over the police killing of a 23-year-old Black man, Louis Geme. On the afternoon of Jan. 16 he was shot at close range by Sgt. Thomas Muirhead and Officer Joe Thompson. They fired a volley of bullets near the busy front entrance of 3501 Foster Ave. in the Vanderveer Estates, barely missing community residents who ducked for cover. Many horrified residents had just arrived home after picking up their children from school. You can view the story here. www.placerouge.info/article.php?sid=20mode=threadorder=0thold=0 Martin Timm Red Globe
Re: Re: RE: The rate of profit and recession
Come on. We don't need this crap! Rakesh Bhandari wrote: [somehow my e-mail program isn't cooperating again. Here's my complete message.] [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 that's the problem with Perelman's rule that we can't attach individual's names to descriptions of assholery. Do you think you are *not* calling me an asshole? Rakesh -- Michael Perelman Economics Department California State University [EMAIL PROTECTED] Chico, CA 95929 530-898-5321 fax 530-898-5901
Help on the deflation front
Hope on the horizon for those fearing deflation. Also looks like something the Justice Department might be interested in ;) From EETimes (http://www.eetimes.com/semi/news/OEG20020130S0028) an article about memory chips for, among other things, personal computers: Major DRAM manufacturers are putting their heads together in an effort to coordinate production capacity. . . .Among the participants are Samsung Electronics, Micron and Infineon Technologies. . .There are getting to be fewer and fewer suppliers so we have to work more closely, he said. There is a lot of contact with these guys. Suppliers are comparing notes about production quantities across different product lines, capacity plans and the expected supply of Intel's Pentium 4 chip in an effort to balance supply with demand. We are not talking pricing because that is illegal, but we are talking about how to cooperate how to ensure that the supply side does not get crazy, he said. (NOTE: OPEC generally doesn't talk pricing either.) After nearly a year of dismal memory chip pricing, DRAMs have shot up by more than 250 percent from their November low. . . Eric
Steel Woes
Wednesday January 30 11:58 AM ET Japan Files WTO Complaint Over Steel TOKYO (AP) - Japan filed a complaint to the World Trade Organization (news - web sites) on Wednesday against U.S. antidumping measures on Japanese steel sheets, saying they violate WTO rules, officials said. The Japanese government also asked Washington to hold talks on resolving the dispute under WTO auspices, said Makoto Nakajima, a spokesman at the Ministry of Economy, Trade and Industry. Washington decided in November 2000 to maintain antidumping measures on Japan's exports of surface-treated steel panels used in automobile bodies. The trade ministry said it believed the United States reimposed the measure without collecting sufficient evidence. Under WTO rules, a country must gather sufficient evidence before starting a review of its antidumping action - taken against imports at unfairly low prices - or let it expire in five years. But Japan says the United States, which initially imposed the measure in August 1993, automatically began its review five years later without any evidence and has since maintained it. Japanese officials say the United States also violated the accord by setting excessively strict standards on dropping the antidumping action. Tokyo also plans to propose tougher antidumping rules at the new round of WTO trade talks, which began Monday.
Re: Re: Dual Power
Rakesh At least someone seems to appreciate some of my contributions. Karl --- Karl, your post very much helped me to understand why the proposition that the emancipation of the working class must be conquered by the working class itself remains the implicit postulate of all socialist thought. rb
Green Party vs. Natural Law Party
I just recieved my California voter information guide for the primary election. I had never heard about the Natural Law party, which looks like a party of scientists. They seem quite progressive in some respects (export know-how instead of weapons and national health care). Has anyone else come across this party? I also wonder what some of the Californians on this list do when election time comes around. I have not yet found an active social democratic party here and am debating between the Green party and this Natural Law party. www.natural-law.org www.cagreens.org Joshua _ Join the worlds largest e-mail service with MSN Hotmail. http://www.hotmail.com
RE: Green Party vs. Natural Law Party
Transcendental Meditators, mate. Children of the Maharishi (not that there's necessarily anything wrong with that, apart from a slight tendency to draw ridicule). George Harrison was their big name in the UK, and they put out a full slate of candidates in our general elections. I don't really see them getting elected until they stop claiming that they can fly through meditation, which claim they seem wedded to. I also seem to remember that they have some entertaining views on the subject of our friends the gays. cheers dd -Original Message- From: Joshua Bragg [mailto:[EMAIL PROTECTED]] Sent: 31 January 2002 07:39 To: [EMAIL PROTECTED] Subject: [PEN-L:22113] Green Party vs. Natural Law Party I just recieved my California voter information guide for the primary election. I had never heard about the Natural Law party, which looks like a party of scientists. They seem quite progressive in some respects (export know-how instead of weapons and national health care). Has anyone else come across this party? I also wonder what some of the Californians on this list do when election time comes around. I have not yet found an active social democratic party here and am debating between the Green party and this Natural Law party. www.natural-law.org www.cagreens.org Joshua _ Join the world's largest e-mail service with MSN Hotmail. http://www.hotmail.com ___ Email Disclaimer This communication is for the attention of the named recipient only and should not be passed on to any other person. Information relating to any company or security, is for information purposes only and should not be interpreted as a solicitation or offer to buy or sell any security. The information on which this communication is based has been obtained from sources we believe to be reliable, but we do not guarantee its accuracy or completeness. All expressions of opinion are subject to change without notice. All e-mail messages, and associated attachments, are subject to interception and monitoring for lawful business purposes. ___
