Magic word, overcapacity, read instead the shift of income from labour to
investment income over the last 20 or so years has literally taken money
out of the consumer market where it could buy goods and services and
circulate - this lack of money in the consumer market has been compensated
for by massive amounts of credit. Which of course, those issuing it want
it back.
The money that went into savings, RRSP's and stocks became capital.
Capital is not wealth or earnings, capital is money used to make money. At
this point in time, massive amounts of money is locked up and out of reach
for the purchase of goods and services in capital investment. If savings
and investment were released from the constraints of being used to make
money and turned into purchasing power, we would have no problem except the
massive amounts of useless production that would be generated contributing
to more waste in material and energy. It would also collapse the system.
Paths to Paradise by Andre Gorz
Page 7
6. The limits of Keynesian regulation
In the past, capitalism's periodic crises have had two principal causes:
1. Over-accumulation, that is the investment of amounts of capital in
excess of what can be made profitable by the sale of realisable production
at market price;
2. Under-consumption, that is, the inability of part of the population to
satisfy its potential demand because of lack of purchasing power.
Over-accumulation and under-consumption are obviously linked. The former
would not occur, or would at least be delayed, if potential demand (broadly
speaking, from the poor) could be realized. To do so, and thus to expand
the market, means of payment must be distributed to potential consumers,
through taxes on high incomes and, especially, on company profits.
State taxes on company profits and their redistribution as social
expenditure, subsidies and public investments assume a far greater
strategic importance than the redistribution of part of private incomes.
For they ensure that total profits do not exceed the opportunities for
profitable investment. They prevent the market from collapsing after a
period of over-investment, with all the destruction of capital that would
entail through a series of company closures and stock liquidation.
Keynesian policies, then, are acts of external regulation, performed by
state technocracy to compensate for the market economy's own inadequate
capacity for self-regulation. They are in the overall interest of
capitalism as a system - but they clash with the interests of individual
capitalists, of particular firms, since compulsory contributions and taxes
reduce the size of their potential profits before these have even been
realized. Each individual firm is led to believe that it would make a far
greater profit without state intervention, while in fact insufficient
demand and lack of opportunity for profitable investment would rapidly
produce a substantial drop in reliable profits.
However, Keynesian regulation can work only during times of high profits,
of strong potential growth, and thus of strong capacity to invest. It can
regulate and sustain economic growth, but cannot alone create the
conditions for it. It cannot instigate growth when a long cycle of
accumulation comes to an end, and when, true market saturation, labor
shortage and exhaustion of the resources of technological progress, the
rate of profit falls and a long downward cycle begins.
At best, Keynesian regulation can soften the affects of the structural
depression, but only at the cost of a sharper fall in the rate of profit
and/or higher inflation. It can never eliminate the structural causes of
the crisis. On the contrary, these are clear signs that capitalist
development, along with its Keynesian regulation, has reached its limit.
Note: shortage of labour in this case is shortage of appropriately trained
labour, noticeably the high tech sector which if it had all the labour it
needs, it would accelerate the elimination of more labour as the growth of
the high tech industry is to increase efficiency by reducing labour costs
through automation and intelligent tools.
It seems to me, that "the long cycle of accumulation" has come to an end.
Welcome to the future.
