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CURRENT POLITICS - Back to the 30s |
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BACK
TO THE THIRTIES This morning, I won’t go back over all
the reasons why the crash is on its way. For instance, I won’t consider China,
(see notes for 19 September) except to say that its excess capacity in
steel-making is larger than the entire steel-making capacity of Japan. But I can’t resist going back to the June
2014 Report of the Bank for International Settlements. The BIS is the central bank
for 60 of the world’s largest Central banks. It warned that governments and
corporations had done no more than to postpone the day of reckoning. What is the day of reckoning? One, it is
slashing government debt levels; two, it is purging excess capacity by closing
down factories. In short, it will be doing to the world what has been done to
Greece. (for more on the devalorisation see notes
from 12 December) If we confine our attention to the
banking sector, what do we find? Deutsche Bank is the biggest bank in Europe’s
strongest economy. Last year, it posted a trading loss of $ US 7bn. All the big
banks are at risk because of their loans to energy companies which are now bad
debts because of the collapse of oil and gas prices. The turmoil in the financial sector expresses
itself in opposing ways according to the conditions in each nation-market-state.
Compare India with Japan. The chairman
of the Central Bank of India warned that low interest rates are paving the way
to the next crash by getting people to borrow more than they’ll be able to
repay. A week later, the Bank of Japan imposed sub-zero interest rates after 25
years of stagnation to get people to start borrowing. Late last year, a funds manager who had
returned 20 per cent for twenty years shut up shop. The turbulence was so great
that he could no longer predict price movements. The crash we’re talking about
involves much more than the share-price slumps over the past few months. (see
notes for 17 October) Yet, there is a vital overlap. The excess
capacity in the production and processing of raw materials has slashed the
price of BHP-Billiton shares. The abandonment of coal-seam projects is also part
of the purging of excess capacity. In
these cases, there is still some connection between the share-price and the
capacity of the corporations to realise profits from their plundering more of
the wealth of nature through the exploitation of wage-slaves. The entire
capitalist system has to fight its way back to that happy state for the boss
class. In addition, there is an indirect
connection between excess capacity and stock-market turbulence. This cross-over
is not confined to stock markets It
extends to the foreign exchange markets, as well as to the markets for physical
goods, such as food - and onto the futures markets for the lot. Why is all this surplus capital sloshing
around? Because there haven’t been enough investments to return the average
rate of profit from the exploiting of labour. We
need to apply that insight to our political work. Yes, it’s important for the
working class to be organized. We have to be strong to resist the power of the
capitalist state standing behind the might of global corporates. But we also
need to know how to sharpen our intellectual tools. Marx’s Capital is the whetstone on which to sharpen our weapons for the
class war. Too often, people around the left think
they’re being Marxists when they parrot a line about changing the world rather
than interpreting it. That’s not the choice. Our movement cannot privilege mindless
activism above action-directed study. Marx divided his time between organising
the working-class and writing the four-and-half thousand printed pages of Das Kapital. We can interpret capitalism correctly
only through changing it. We will never change the world towards communism if
we do not learn how to interpret capitalism. That fact of life brings us up against the
hard question: how
can we use Capital to interpret what
is happening to global capital today? To put that question the other way
around: what follows if we don’t improve our understanding of how capitalism
operates? The answer is that we are left with nothing to say beyond putting a
progressive spin on the spin from the paid liars. In
case you’re wondering who they might be – they are the professors of economics
and the fund managers feted on the ABC. We are all struggling to keep our noses
above a supersaturated solution of bourgeois bullshit. How are we to use Capital to understand the looming crisis? Lots of people around the
Left have heard that Marx provides an explanation for why capitalism implodes. It’s
something called ‘the falling rate of profit’. That ‘Open
Sesame’ is in volume three. In the time we have today, it’s not
possible even to outline what Marx has to tell in those sixty pages. Moreover, those
three chapters are far from the be-all and-end-all of his crisis theory. During
the year, we’ll introduce some of its other elements. Meanwhile, the pages on the falling rate
of profit will make no sense unless we understand one more of Marx’s
discoveries: which is how ‘capital’ develops by replacing living labour with dead
labour, that is, with machinery. (for definitions of ‘constant’ and ‘variable’,
‘fixed’ and ‘circulating’ capitals see my ‘Re-fining Capital’ on www.surplusvalue.org.au/McQueen under Marxism.) In the time available, we can concentrate
on the words in the chapter title. The
first point is that the chapter is NOT called ‘The Falling Rate of Profit’. The
title is much longer and more complicated. It reads: The law of the
tendency of the rate of profit to fall. We
need to pay attention to the first part: The LAW of the TENDENCY
of Those
words are all too often left out, even among Marxists. For Marx, the rate of profit is falling
almost all of the time. But that persistent decline does not spark a crisis in
the total system. The Big Crash comes when the mass of profit shrinks, and not
just because an endless fall in the rate. The Law is ‘tendential’, that is, it
breaks through to the surface only ‘other things being equal’ – which they
almost never are. Indeed, Marx calls his next chapter ‘Counteracting Factors’. Hence,
the Law is NOT an absolute in each
and every situation. ( for a elaboration see Michael Lebowitz,
‘Marx's Falling Rate of Profit - A Dialectical View’, on the www.surplusvalue.org.au site in the folder ‘Politics’) Now let’s look into the second half of
the chapter title: the
RATE of PROFIT There
are two aspects here: ‘rate’ and ‘profit’. A rate is arrived at as a fraction
of the total volume. That means doing ‘sums’. The majority of
us who are maths-averse need not be scared off. We are being asked only to
follow a few fractions and percentages. It’s no harder than lower secondary level.
There’s no algebra. What looks like algebraic equations are just abbreviations: s over v, for example, where
‘s’ is shorthand for surplus value
and ‘v’ for variable capital. Two: the fall is in the rate of profit
not in the rate of surplus-value. Surplus-value is what employers extract from
us as wage-slaves. It’s no use to them until the commodities in which it is present
have been sold. Only then does some of the surplus-value flow back to the
employing capitalists as profit. The argument is dense because capitalism
is itself a thicket. We need to read with pen in hand. Read slowly, paragraph
by paragraph. Find someone to talk through the pages after you‘ve both studied them.
Before
we close, there are three points to add. The first is that when an economy blows,
everything else gets worse. So, if your primary political interest is either
Gonski or refugees, a global implosion must make the desired outcomes harder to
achieve. Hence, making the effort to understand the coming crash is not an
option. The second point is that crises are good
for capitalism as a system. They are the way capitalism breaks through to its
next phase of expansion based on exploitation. The third and final point is of a
different order. ‘The Law of the tendential fall in the rate of profit’ arises
only within the capitalist system. It arises from capital’s need to go on expanding
through its exploiting labour. Marx does more than show why capitalism is prone
to crises. His larger conclusion is that only a different mode of production
can eliminate that burden on working people. The entire economy and society
would be organised differently. It would serve - in Marx’s words - ‘the needs of socially developed
human beings’ (p. 367) And
that’s communism for you, comrades. [The
three volumes of Capital are
downloadable from www.surplusvalue.org.au
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See also Crisis |