Thomas Lunde wrote (see below):
The major problem with this thread - including Tom's thoughtful piece - is
the persistent concentration on money. Of course it depends on what you
mean in your definition of the concept of "money", but it is probably
thought to be bits of paper which record claims on real wealth.
The trouble is that when "money" enters the discussion substantive
reasoning becomes mush. So, Tom says that money becomes capital. And that
it makes more money.
I don't blame Tom for saying this. It's pretty orthodox. But it means
nothing. I thought the best way to make more money was to print some.
'Course there are problems doing that, but if it's desirable to make money
it's worth it.
Overcapacity is a another silly word. It surely means that there is no
market - that everyone has all they need. What! They don't? Then, surely we
should concentrate our attention on why they haven't got all they want.
What prevents them from buying what they want? No money? Well, once again,
print some.
The question is deeper than that. Why are so many unable to buy what they
want. Why?
It's the real question for Futurework, too, for it touches the list's nub -
if it has one!
The idea that it's gone into investment is a no-no. The idea of not
consuming wealth so it can become capital date back to before the first
wheel. We delay consumption to make production more efficient and therefore
wages higher.
So, why doesn't it do that? Why, so often, does it take two breadwinners to
keep a family alive? Why is a minimum wage needed?
At the end of the 15th century, the English Statute of Laborers put a
ceiling on wages, not a floor - and employers who paid more could be fined
heavily. (They paid more anyway which led to some amusing findings of
altered pay ledgers - altered to show a lower wage than was actually paid.)
They worked a 48 hour week for wages that in many ways were comparable to
our wages. We've had 500 years of invention and discovery since then, so we
obviously can't say back then was better. However, a common laborer, with
15 weeks work could earn enough food for his family for a year - and they
had larger families then. (An artisan - a carpenter or blacksmith - could
do the same with 10 weeks work.)
It all ended in the 16th century. However, why did it happen, and why did
it end? Maybe from it we could get a clue.
So, now we are able (with the aid of capital - real capital) to produce a
hundred or a thousand times as much with the same exertion. How can there
be poor?
Gortz' article (which Tom enclosed) was pretty hopeless.
"Money" needs a little more analysis - perhaps at another time.
We can say that our problems have nothing to do with money
Surely we know that 'underconsumption' isn't the problem - The problem is
underproduction. Surprised? Well, instead of looking at money fantasies,
one must instead look at the people in the economy. Where else would they be?
Taxing high incomes is very hopeless. It would be better to consider why
they are high. Taxing profits merely passes those taxes through to the
consumer.
And so on, and so on.
For heavens sake, let's extricate ourselves from the apparently deliberate
confusion and try to see why low wages and unemployment persist.
Harry
--------------------------------------------------
>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.
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*****************************
Harry Pollard (818) 352-4141
Henry George School of Los Angeles
Box 655
Tujunga CA 91042
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