A vote to end Capitalism?

41 posts / 0 new
Last post
darbikrash's picture
darbikrash
Status: Platinum Member (Offline)
Joined: Aug 25 2009
Posts: 573
A vote to end Capitalism?

In this brief excerpt from “The Enigma of Capital” Harvey examines a startling perspective on the ongoing  budget deficit “crisis”, namely, that the deficit can never be extinguished because to do so would kill capitalism. The perverse and essential relationship between debt and the growth imperative of capitalism is simple, but not well understood. You cannot have a capitalistic society without debt- and lots of it.

 

The Vote to End Capitalism

How does capitalism get reproduced over time? This question has puzzled political economists from the seventeenth century onwards. Many simple models have been devised to answer this very complex question. While none of them are fully satisfactory, many insights are to be had from studying them and in these times of deep and frustrating troubles it is very important that we do just that.

One such model can be extracted from the works of Karl Marx and however abhorrent his political views might be to many, we ignore his insights at our peril. So here is a Marx parable that has interesting relevance to our present circumstance.

Capitalists start the day with a certain amount of money. They buy means of production and labor power and put both to work with a given technology to create a new commodity which they sell in the market place for the original money plus a surplus (called profit) at the end of the day.

There are many possible points of disruption here (not enough labor or means of production, wrong technologies, and so forth). One of the more interesting conundrums is where does the extra effective demand (desire plus money to pay) come from at the end of the day so that the profit can be realized?

In Marx’s time there was plenty of residual demand from the old feudal classes and if that was not enough then foreign trade (or plunder) with non-capitalist countries like China and South America might do the trick (they had plenty of gold and silver). Marx even toyed with but then rejected the idea that the gold producers (in our day, the Federal Reserve) could do it. If all these options are taken off the table, then the mystery deepens.

To answer the question, Marx builds a simple two-class model of a capitalist society comprising only capitalists and laborers. Obviously, he says, the laborers do not have the extra money so the only possibility is that the capitalists not only lay out the money to start the process at the beginning of the day but they also have to supply the necessary demand to close it out at the end of the day. This makes for a very peculiar-looking economy.

There are some variants on this argument. Thomas Malthus, for example, divided the bourgeoisie into capitalists who produce and landed aristocrats, parsons (like himself) and venal state officials (including the monarchy) whose great and virtuous service to society was to consume to the hilt without producing anything. Keynes (an admirer of Malthus) later suggested that workers could help provided they were paid more (a proposition that the right wing converts into greedy unionized workers who not only square the circle but push it into an inflationary spiral).

But let’s stick with Marx’s simple version: how do capitalists both consume and pay for the surpluses they have been instrumental in getting labor to produce? The surplus can be consumed in two ways – as capitalists’ personal consumption or through investment in expansion – hiring more laborers and purchasing more means of production. The latter implies perpetual growth and accumulation of capital over time. It also conveniently means that the demand for expansion tomorrow can absorb the surplus product created yesterday.

But there is a timing problem here: the expansion the next day does not realize its profit in money form until the end of that day when the money was needed yesterday to purchase the surplus then produced. The only answer is credit money backed by the promise of future expansion of surplus production. This is what allows the circle to be squared, provided, of course, the future expansion actually occurs. If not, we have a crisis in which the debt cannot be paid. Capitalism is, Marx concludes, one vast speculative system.

The perpetual accumulation of capital and of wealth is therefore crucially dependent upon the perpetual accumulation and expansion of debt. These two variables – accumulation of capital and the accumulation of debt – have in fact run alongside each other in the history of capitalism (go look at the data), both feeding and supporting each other. They occasionally get out of sync to create a crisis of the sort recently witnessed. What looks like a crisis of Greek sovereign debt is in fact a crisis of the financial system which arises because of a failure to find new ways to expand the surplus through reinvestment!

A startling conclusion follows. A vote against further debt creation is a vote to end capitalism! Fortunately or unfortunately (depending upon one’s political point of view) the Koch Brothers and the Republican Party cannot see that. Marx had always hoped that rebellious workers might end capitalism. So far they have not succeeded. So maybe the Koch brothers and the Republican Party can succeed where the workers have so far failed. Marx might not have been too surprised at that. As he also gleefully noted, individual capitalists operating in their own self-interest often take actions that collectively threaten the continuity of capitalism as a whole.

It is unlikely, of course, that the Republicans will stick to this crusading mission for very long. When in power their record is very different. The Reagan and Bush Jnr administrations were profligate in debt creation. (“Reagan taught us that deficits don’t matter,” famously said Vice-President Cheney). Nevertheless, short-term, the crusading Republicans may cause a lot of damage to the system they ostensibly support. As Marx also noted: the contradictions of capitalism move in mysterious ways.

 

 

 

xraymike79's picture
xraymike79
Status: Diamond Member (Offline)
Joined: Aug 24 2008
Posts: 2040
darbikrash wrote: In this
darbikrash wrote:

In this brief excerpt from “The Enigma of Capital” Harvey examines a startling perspective on the ongoing  budget deficit “crisis”, namely, that the deficit can never be extinguished because to do so would kill capitalism. The perverse and essential relationship between debt and the growth imperative of capitalism is simple, but not well understood. You cannot have a capitalistic society without debt- and lots of it.

 

...

A vote against further debt creation is a vote to end capitalism! Fortunately or unfortunately (depending upon one’s political point of view) the Koch Brothers and the Republican Party cannot see that. Marx had always hoped that rebellious workers might end capitalism. So far they have not succeeded. So maybe the Koch brothers and the Republican Party can succeed where the workers have so far failed. Marx might not have been too surprised at that. As he also gleefully noted, individual capitalists operating in their own self-interest often take actions that collectively threaten the continuity of capitalism as a whole.

 

It is unlikely, of course, that the Republicans will stick to this crusading mission for very long. When in power their record is very different. The Reagan and Bush Jnr administrations were profligate in debt creation. (“Reagan taught us that deficits don’t matter,” famously said Vice-President Cheney). Nevertheless, short-term, the crusading Republicans may cause a lot of damage to the system they ostensibly support. As Marx also noted: the contradictions of capitalism move in mysterious ways.

 

Added to the conundrum of monopolization and oligarchization of the economy is the brick wall of resource constraints. Modern capitalist industrial civilization has never experienced such a barrier before, and it is now feeding on the weak and powerless to prop itself up. What did Marx say about capitalism leading to barbarism?

darbikrash's picture
darbikrash
Status: Platinum Member (Offline)
Joined: Aug 25 2009
Posts: 573
Apple has more cash than the

Apple has more cash than the U.S. Treasury

Apple is sitting on a pile of money that's bigger than the Treasury's dwindling balance

 

July 29, 2011, 9:10 p.m.

Apple Inc. may not have more money than God. But it's got more cash than Uncle Sam.

As the government struggled to reach an agreement on raising the debt ceiling, the U.S. Treasury's cash balance fell to $74 billion this week. That's less than the $76 billion that Apple now has in cash.

It's not terribly likely that the government will ask Apple Chief Executive Steve Jobs for help. But it wouldn't be the first time the government has asked for a bailout from an industry mogul.

In the mid-1890s, with the U.S. economy still recovering from the financial panic of 1893, the U.S. Treasury was in danger of going bankrupt as worried investors clamored to collect what they were owed from U.S. gold reserves. With few options left, President Cleveland met with New York financier J.P. Morgan, who pledged a whopping $60 million in gold. Adjusted for inflation, that would be about $1.5 billion today.

"The fact that Morgan had become a cosigner on the federal debt was what impressed the markets," historian H.W. Brands wrote in his account "The Upside-Down Bailout." "Within days the Treasury's condition stabilized; within weeks the dollar's danger had passed."

 

 

dshields's picture
dshields
Status: Platinum Member (Offline)
Joined: Oct 24 2009
Posts: 599
The government is not supposed to be a wealth transfer system.

It is all busted right now.  The politicians we elected destroyed our economic stability by forgetting what America stands for and over spending to the max for years.  Obama was the straw that broker the camel's back but it started a long time before Obama.  The function of government is not supposed to be a wealth transfer system to transfer the wealth of those who have to those that do not.  Some of that is OK and actually required.  But, because one person knuckles down and goes to college, works, saves, and tries to make something of themselves does not mean the government is supposed to confiscate half or more of their private property and redistribute it to those that are not willing to make the same kind of effort and sacrifices.  There actually is a difference between right and wrong.  People have choices and they make them.  People who make the right choices should not be punished for doing so.  Now there is a small portion of the population that actually does have misfortune and deserves help in getting back on their feet or a helping hand of one kind or another.  For instance lets take blind people.  Blind people do as best they can, they often do better than one might predict, but they really do need our help.  People with IQs of 60 also need assistance.  On the other side, many able bodied people receive transfer payments that should not.

Take retirement for instance.  100 years ago people retired when they could no longer do productive work.  Retirement was when you could not work any more.  If you wanted to retire before that point you had to work and save your money until you had enough to "retire on".  Somehow we came up with this idea that the government (the tax payers) is supposed to pay for people to retire why they are still able to do productive work.  I am not sure where that came from.  Maybe someone on this site has some data on this.  I know the history of the social security system but there is more to it that that.  It is the thoughts behind it I am interested in.  There are many other examples.  For instance, section 8 housing.  Where did that come from ?  Why are people who made the right decisions, worked hard, saved their money, and as a result have places to live also responsible for those that prefer to blow their money and not get an education and not work hard, if at all.

It seems like there needs to be balance.  Balance between spending and not spending.  Balance between government responsibility and people's responsibility.  We lost that balance.  Now we are in trouble.

 

darbikrash's picture
darbikrash
Status: Platinum Member (Offline)
Joined: Aug 25 2009
Posts: 573
Identity politics redux

Although a bit wide ranging, all interesting comments, just not sure what any of that has to do with the subject of capitalism, it’s growth imperative, and the necessary linkage between debt and the business of business.

The requirement for capitalism to always grow, the need for ever increasing debt to satiate this growth imperative, the financial services and related industries that this need spawns, the axiomatic and inevitable consolidation of capital that then occurs, after sometimes decades or even centuries, the social power that extends from this consolidation, and the resulting massive wealth inequality is what Harvey is pointing out.

It is about the irony of political theater, the ultimate contradiction, in that those that fight the most for what passes as conservative theology instead, and seemingly unknowingly, fight for what will ultimately destroy the system that they defend so fervently.

Entirely apropos from the leadership of a population unable to champion, or even recognize causes in their own best interests.

 

xraymike79's picture
xraymike79
Status: Diamond Member (Offline)
Joined: Aug 24 2008
Posts: 2040
darbikrash wrote: Although a
darbikrash wrote:

Although a bit wide ranging, all interesting comments, just not sure what any of that has to do with the subject of capitalism, it’s growth imperative, and the necessary linkage between debt and the business of business.

The requirement for capitalism to always grow, the need for ever increasing debt to satiate this growth imperative, the financial services and related industries that this need spawns, the axiomatic and inevitable consolidation of capital that then occurs, after sometimes decades or even centuries, the social power that extends from this consolidation, and the resulting massive wealth inequality is what Harvey is pointing out.

It is about the irony of political theater, the ultimate contradiction, in that those that fight the most for what passes as conservative theology instead, and seemingly unknowingly, fight for what will ultimately destroy the system that they defend so fervently.

Entirely apropos from the leadership of a population unable to champion, or even recognize causes in their own best interests.

 

I got the irony with the debt ceiling theater. If you're against monetary expansion, then you're anti-growth, thereby anti-capitalist.

I suppose what the capitalist system is now hoping for is a grand downscaling of American/European consumers to be replaced by an upscaling of BRIC consumers. Once again, the only problem with that is global resource constraints choking off the globalized economy.

dshields's picture
dshields
Status: Platinum Member (Offline)
Joined: Oct 24 2009
Posts: 599
darbikrash wrote: Although a
darbikrash wrote:

Although a bit wide ranging, all interesting comments, just not sure what any of that has to do with the subject of capitalism, it’s growth imperative, and the necessary linkage between debt and the business of business.

The requirement for capitalism to always grow, the need for ever increasing debt to satiate this growth imperative, the financial services and related industries that this need spawns, the axiomatic and inevitable consolidation of capital that then occurs, after sometimes decades or even centuries, the social power that extends from this consolidation, and the resulting massive wealth inequality is what Harvey is pointing out.

It is about the irony of political theater, the ultimate contradiction, in that those that fight the most for what passes as conservative theology instead, and seemingly unknowingly, fight for what will ultimately destroy the system that they defend so fervently.

Entirely apropos from the leadership of a population unable to champion, or even recognize causes in their own best interests.

I'm not sure either - I did wander about.  I was trying to say something but I was having trouble getting it into words.  Capitalism seems to be somewhat of a conundrum.  It certainly appears to be more sustainable and brings more wealth and innovation to the most people as compared to socialism or communism.  Part of the problem in the US is we don't really have capitalism.  We have a flavor of capitalism with a layer of socialism and the soft tyranny that goes along with it.  When you add in too big to fail and politicians that pander to large interest groups that desire things that are not in the best interest of the nation - it did not work and now we are busted.

The socialism part got out of control and ramped up way to much debt. Some debt in and of itself is not bad as long as it is productive debt - debt that generates growth and wealth.  Debt that does not is simply dead weight to the economy.  For instance, the government debt generated by retirement as opposed to the government debt generated by investment in transportation systems.  They are both debt but they are two different kinds of debt.  Another example would be charging your grocerys to your credit card as opposed to using your credit card to purchase new equipment for your business.

There needs to be constraints on the amount of money available in capitalism.  There needs to be constraints on illegal activity in capitalism.  Capitalism, like any complex system requires constraints.  There needs to be constraints on non-productive debt and debt in general in capitalism.    Non-productive debt is supposed to be constrained by the people through their elected representatives.  When the people malfunction and elect the wrong politicians you end up where we are now.  The politicians we elected were not good stewards of our nation.  They did not control spending properly.  They did not control the education of the people properly.  Instead of teaching the people the benefits of adhering to the constitution, hard work, self reliance, thriftiness, etc., - the stuff the people needed to learn and understand, the education system taught them everything but that.  So we ended up an improperly educated population who then malfunctioned and voted in bad politicians who enacted policies that have brought us the place we are now.

Re-educating the population and electing politicians that will reverse the current policies and implement correct ones will take at least a generation.  In the meantime we are going to suffer for our mistakes.

 

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
good/bad debt
dshields wrote:

Some debt in and of itself is not bad as long as it is productive debt - debt that generates growth and wealth.  Debt that does not is simply dead weight to the economy. 

Yes and no.  The problem with debt is that it bears interest, and that money is only created as debt.  The core problem with having to pay interest is that the cash to pay the interest with does not exist until another newer debt is created for some other reason.  It's the difference between the two growth rates of GDP and debt creation that is the problem, because that difference grows exponentially, even if very very slowly.  But eventually, as now, it blows up in your face.  Never forget Bartlett's quote: "Humanity's greatest shortcoming is its inability to understand the exponential function"!

For a long long time, that difference in growth rates was imperceptible...... until it turned into a hockeystick.

Mike

dshields's picture
dshields
Status: Platinum Member (Offline)
Joined: Oct 24 2009
Posts: 599
Damnthematrix
Damnthematrix wrote:
dshields wrote:

Some debt in and of itself is not bad as long as it is productive debt - debt that generates growth and wealth.  Debt that does not is simply dead weight to the economy. 

Yes and no.  The problem with debt is that it bears interest, and that money is only created as debt.  The core problem with having to pay interest is that the cash to pay the interest with does not exist until another newer debt is created for some other reason.  It's the difference between the two growth rates of GDP and debt creation that is the problem, because that difference grows exponentially, even if very very slowly.  But eventually, as now, it blows up in your face.  Never forget Bartlett's quote: "Humanity's greatest shortcoming is its inability to understand the exponential function"!

For a long long time, that difference in growth rates was imperceptible...... until it turned into a hockeystick.

Mike

I agree.  The way we handle money is not necessarily part of capitalism though.  For instance, we could have an asset backed currency and a responsible central bank controlled by the Fed Gov - not the Fed Res.  (Actually, I think we should simply nationalize the Fed Res but that is a different story.)  I do not believe these two changes would be in conflict with capitalism.  It would cap government spending as they could only spend as much as they had assets to back stop the money supply.  A whole lot like what we used to have.  That would certainly stop crazy spending and we would have the most stable currency in the world - it would deserve to be the "reserve currency".

At this point I do not see how we get there from here.  Maybe some smart economics people who frequent this site could weigh in on this.  To me this is the real question.  There is a lot of banter back and forth around here but pretty much everyone around here sees the fundamental defects in what we have done up to now.  The question is how do we go from here to there - stability.  The politicians have made a lot of big mistakes but to me a real whopper was when Nixon took us off the gold standard.  I think that is what triggered the real madness.  That removed the constraint upon government spending and the politicians could just borrow and spend at will - and they did.  Another way to kind of get to the same place, kind of, would be a balanced budget amendment to the constitution.  The democrats object strongly to this.  (When I consider this it angers me as I believe that I know why, but I do not want to digress at this point.  There actually are differences in the political parties and this is one of them.)

It seems to me we face a deep seated problem with getting from here to there.  That problem is the collapse of the education system.  For several generations we taught people the wrong stuff.  Instead of teaching the constitution and self sufficiency we taught our people to be victims and government reliance.  Little kids should have examples in their text books like "What is Mommy doing ?  She is canning the vegetables she grew in the garden this summer so her family can eat them this winter".  "Daddy gets up early and goes to work every day like good Daddies do".  "Grandpa is retired because he saved his money and now uses his savings to live on so he does not have to work when he is old."  I know it sounds corny but it is much better than the crap we teach our kids now.  Starting in middle school there should be a required class in government and the constitution.  The same in every year of high school.  High school should focus on math, science, communications skills, engineering, and proper constitutional government - freedom for the people and the proper role of capitalism in our society - stuff like that.  The constitution is actually an amazing model to build a government on.  We do not spend even close to enough time teaching the people of America about this.  Instead, the education system was allowed to fail and now entitlement and victimization have become the bed rock of our society.  That is totally broken and that is what went wrong.  If we fix the education system and start educating people properly, then over the next generation or two, the problems we face now will diminish and life in America will get much better for everyone.  If people were properly educated then politicians like the ones we have been electing, repub and dem, would not get elected.  The politicians we have been electing for years are simply terrible.  People who run for elective office and campaign on hard work, self reliance, and constitutional government can not get elected in most places as the current malfunctioning population will not vote for them.  Instead, they vote for the politician that promises to give them the most government benefits.  It is all broken.

There is nobody to blame but ourselves.  We did this and now we are going to pay the price.

 

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
why continue with isms?

The problems we face go far deeper than whther we have the right sort of capitalism, and whether or not any flavor of capitalism is better or worse than socialism.  What we need is a reboot, we have to change the way we do absolutely EVERYTHING.  So it's no wonder that a species that seemingly hates change, Homo Economicus, won't change anything, let alone everything, until TSHTF, by which time we will have no choice at all.

I still strongly believe we should cancel all debts, use the cash that is in circulation now, scrap digital money, and stop manufacturing all the crap we see on supermarket shelves.  After all.....  we already have everything!

Rationing will become the norm, no ifs no buts.  And yes, it will get ugly before we finally start living sustainably, but that's the price you pay for digging a hole so deep you can hardly see the sky...

Mike

JAG's picture
JAG
Status: Diamond Member (Offline)
Joined: Oct 26 2008
Posts: 2492
Always Enough Money to Pay Interest.
Damnthematrix wrote:

The core problem with having to pay interest is that the cash to pay the interest with does not exist until another newer debt is created for some other reason.  

Mike, while this statement seems logical, in reality it is not theoretically accurate. As pointed out by your countryman, Dr. Steve Keen, this observation confuses money stocks with money flows. Based on his modeling, the flow of credit money through an economy is in effect 1.5X larger than the money supply itself. Therefore there is always enough "money" on hand to pay the bank-sters their interest, whether or not new credit money is being issued. You didn't actually think the bankers would create an economy in which they wouldn't get paid, did you?

I think he talks about it in this paper: http://www.debtdeflation.com/blogs/2010/07/03/are-we-it-yet//

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Always Enough Money to Pay Interest?
JAG wrote:

You didn't actually think the bankers would create an economy in which they wouldn't get paid, did you?

LOL!!!  Isn't that what the exhorbitant fees they charge are for??

JAG wrote:

I think he talks about it in this paper: http://www.debtdeflation.com/blogs/2010/07/03/are-we-it-yet//

Thanks for that....  I'll try to catch up on it (as someone who finds economics so dry and boring - until now that is!)

Mike

Rihter's picture
Rihter
Status: Bronze Member (Offline)
Joined: Dec 27 2010
Posts: 77
Nail on the head

 

This is the true argument. Taxes, Austerity, supply side economics, bottom up economics, etc.. are all irrelevant.

Classical economic theory, and all of it's manifestions over the years, are based on the idea of infinite growth fueled by an infinite, abundant energy supply. Since anyone who has watched the crash course is aware that infinite resources are not available on a finite planet, these classis models are all junk.

Any right-left political argument that does not try address the conundrum of energy supply is rhetorical nonsense. Economists love to state that there has to be a monetary incentive to drive growth and innovation. What if growth can't be maintained? Then what is the incentive? Maybe incentive based on monetary reward is not sufficient anymore in generating prosperity. It never really explained the activist mentallity anyway. Freedom, justice, equality, and the like are plenty enough incentive for activists to do their work.

Free trade and centralized planning have never been enacted in a pure global form. Colonization, corporate protections, robber baron monopolizes, socialism-capitalism hybrids, have all been barriers to a true test of either theory. We can continue arguing over which is the better end of the spectrum to be designing our collective economis culture on, but it still doesn't get to the heart of the matter....

Is economic growth, monetary incentive, global trade, supply chains based on liquid fuels, and political arguments centered on infinite abundant energy even possible to take seriously?!

 

concernedcitizenx5's picture
concernedcitizenx5
Status: Bronze Member (Offline)
Joined: Jan 15 2011
Posts: 26
Some things that capitalism should not touch.....

Capitalism, if honestly regulated, could benefit everyone. But from the start of capitalism, the advantage has always gone to those with money, connections, power, etc. There are basics necessities that should not be part of the mix.

1. Housing. Everyone should be able to live in a good, sound home, apartment, condo. When it takes 30 years of someones life to pay for a home at 3-4 times the original cost of the house. That amounts to nothing more than debt slavery. Advantage goes to the banks.

2. Medical care. Everyone should have access to good medical care. If someone making 40k a year is paying 7500 or more a year for health care that requires them to pay $40 per visit, has limited coverage and only pays 80% of a hospital bill. That is tandemount to robbery. Look at how many Americans are claiming bankruptcy due to medical bills. Advantage goes to medical insurance companies.

3. Food/water. Food prices should be strictly controlled and not subject to speculation in the market. Water delivery in municipalities is crippled with cronie jobs, mismanaged funds and inefficiency. Advantage goes to the government who collects more taxes/fees to cover for their stupidity, greed/corruption.

4. Education. A good education is critical to a sound society. We don't have anything close to that. A large portion of our society cannot afford to go outside of the public education system. Which, again, is wrought with corruption, poor material, etc. And if a family does not have access to the first three items? Things such as abuse, crime, divorce skyrocket. Leaving teachers to DEAL with a malnurished, unhealthy (mentally and physically) distraut little kid. Advantage goes to corporations who get cheap labor, ROI on privately run prisons, slum lords, drug dealers, etc.

If people want to participate in capitalism they can do so by buying luxary items (tvs, boats, fancy cars... these are luxeries, not necessities). Charge people for the supplies to upgrade their home or taking a vacation or buying clothes. But what we have is a society that is slowly being choked to pay for excesses of capitalistic greed. No regulation, no long term prison sentences for corporate crooks. People need basic necessessities at very low to no cost in order to become functioning members of society. If a corporation is making millions or billions in profit the individual(s) benefiting from that profit should share the responsibility of improving the lives of those who PAY for those profits. I know that this sounds socialistic. But we are all human beings and we have to live on this little blue marble together. Capitalism, socialism, communism all fail the test. Time to try something new me thinks.

dshields's picture
dshields
Status: Platinum Member (Offline)
Joined: Oct 24 2009
Posts: 599
concernedcitizenx5
concernedcitizenx5 wrote:

Capitalism, if honestly regulated, could benefit everyone. But from the start of capitalism, the advantage has always gone to those with money, connections, power, etc. There are basics necessities that should not be part of the mix.

1. Housing. Everyone should be able to live in a good, sound home, apartment, condo. When it takes 30 years of someones life to pay for a home at 3-4 times the original cost of the house. That amounts to nothing more than debt slavery. Advantage goes to the banks.

Quote:

I am not sure what you are getting at here but the people who build the housing have to get paid, the people that prepared the land have to get paid, the people that loaned money to the bank have to get paid, the people that risked their capital to start the bank have to get paid, the FDIC that skims the bank has to get paid, the property taxes at the homes and the bank have to get paid, the lawyers have to get paid - you see the picture.  Lots of people involved in bringing you a place to live and they have to get paid or there will be no places to live.  Interest rates on mortgages are super low by historical standards right now.  It is a buyers market.  Subsidized housing means you are using the government to confiscate the property of one set of people to give to another set of people.  You punish one set of people to reward another set of people.  Why should one set of people be punished so that another set can be rewarded ?

2. Medical care. Everyone should have access to good medical care. If someone making 40k a year is paying 7500 or more a year for health care that requires them to pay $40 per visit, has limited coverage and only pays 80% of a hospital bill. That is tandemount to robbery. Look at how many Americans are claiming bankruptcy due to medical bills. Advantage goes to medical insurance companies.

Quote:

The same story as item 1.  The doctors have to get paid, the student loans have to be paid, the nurses have to get paid, the insurance companies have to get paid, the buildings have to be paid for, the lawyers have to get paid, the equipment manufactures have to get paid, the taxes have to be paid, and so on.  If nobody pays there will be no medical system or the system will shrink up to only service those that can pay.

3. Food/water. Food prices should be strictly controlled and not subject to speculation in the market. Water delivery in municipalities is crippled with cronie jobs, mismanaged funds and inefficiency. Advantage goes to the government who collects more taxes/fees to cover for their stupidity, greed/corruption.

Quote:

History has proved that price controls never work.  Price controls create shortages, hording, and the like.  if you want to have a lot of hungry folks then implement price controls on food.

4. Education. A good education is critical to a sound society. We don't have anything close to that. A large portion of our society cannot afford to go outside of the public education system. Which, again, is wrought with corruption, poor material, etc. And if a family does not have access to the first three items? Things such as abuse, crime, divorce skyrocket. Leaving teachers to DEAL with a malnurished, unhealthy (mentally and physically) distraut little kid. Advantage goes to corporations who get cheap labor, ROI on privately run prisons, slum lords, drug dealers, etc.

Quote:

The education system has already failed.  The majority of the people in America do not know squat.  I live an isolated life.  When I come into contact with average Americans I am always shocked by the things I see and hear.  The education system has dismally failed.  Just take a look around.  Everywhere there is madness.  Just look at the politicians we have been electing for decades.  Look what they have done to us.  They got elected because the people voted for them.  Most people would not know what the constitution was even if you rolled one up and hit them in the head with it.

If people want to participate in capitalism they can do so by buying luxary items (tvs, boats, fancy cars... these are luxeries, not necessities). Charge people for the supplies to upgrade their home or taking a vacation or buying clothes. But what we have is a society that is slowly being choked to pay for excesses of capitalistic greed. No regulation, no long term prison sentences for corporate crooks. People need basic necessessities at very low to no cost in order to become functioning members of society. If a corporation is making millions or billions in profit the individual(s) benefiting from that profit should share the responsibility of improving the lives of those who PAY for those profits. I know that this sounds socialistic. But we are all human beings and we have to live on this little blue marble together. Capitalism, socialism, communism all fail the test. Time to try something new me thinks.

Prison sentences for corporate criminals is definitely something I can agree with.  I could go on for pages about that but I will not bore you with my rantings on that subject.

It has been debated here a fair amount but one view is that taxes on business generally tend to be pass through costs.  The business tends to raise the prices of their goods or services to compensate for the increased taxes.  This may not be 100% true but it is mostly true.  These price increases are then forced upon the market (consumers).  If taxes are raised to the point where the costs can not be passed through and thus places the business at a competitive disadvantage, the business will fail or the business will move and other businesses will not be started - this is a jobs issue.  Why do you think businesses offshore or move/create new businesses to low tax low cost right to work states ?

Believe me, I am sympathetic with your point of view.  I wish I had decent low cost housing, low cost medical, low cost food/water, and low cost education.  Where do I sign up for all this low cost stuff ?  I just love low cost stuff.  Who are we going to rob to pay for it ?  Somebody is going to have to pay for people to have all this low cost stuff.  Whose property are we going to confiscate to pay for it ?  As long as they do not take my property or your property to pay for it then it is going to be real good for us.

 

concernedcitizenx5's picture
concernedcitizenx5
Status: Bronze Member (Offline)
Joined: Jan 15 2011
Posts: 26
dshields

Yes, I agree with you that people need to get paid for their services. What I am trying to say is that the system that has developed is out of control. Lawyers make anywhere from $75 to whatever per hour? The sad part is people pay it. What is even sadder is that we even need lawyers because people don't trust each other. Sure they have school loans to pay. But if you look at the lawyer life style. What are we paying for? Excesses.

The  housing dilema is based on something that started a long time ago. Possibly with John Locke. Property ownership. Who determines that? God? Divine right? The truth of the matter is most all property on this earth has been stolen from someone else. Mainly indigenous tribes who never claimed to own the land in the first place. I don't know if you have ever read anything about the crash of 1920-21. But a lot of farmers who were given easy credit, which was then called, lost a lot of land to bankers who then created Levittowns across this nation to sell to the many WWII vets as the economy started rolling in the 50's. And during those years between 1920 and the 50's. The land changed hands to those who had lot's of money or even self starters who had no idea what existed there before and how it was acquired. Unfortunately, most baby boomers of that time didn't care, hence the name the ME generation. Capitalism fuels a competition for stuff.

I am certainly not utopian in thinking. Anything made by man is always going to need improvement. I guess what I seek is balance. The population is growing at astounding rates. And basic needs are not being met because people with power/money put a price on everything. To me that is not human. When someone values money over a human being, they themselves lose the right to be called human. I think that this world is coming to a crises of size which may be hard to imagine. I hope that in the aftermath that people have a revolution of mind and spirit and realize that we can help each other in a way that the motivation or reward is not tied to money. I don't know if you have ever been in combat or a situation where you had to depend on some else to save your life.  People bond almost instantly. It is hard to explain. There is no money changing hands. No knocking someone down to get to the next rung or capitalizing from their hard ship or lack of education. I think that there are solutions to these problems. No one running the system is talking seriously about them. Status Quo is all I see. Human life is something that seems to taken for granted anymore. People are commities, problems or annoyances to those with power/money. My hope is to see that change. We can do it. We have only to believe in ourselves and our ability to affect change. People who benefit the most from capitalism pay a lot of money to keep things just the way they are. From the way you write I believe you are aware of that. Thanks for taking the time to write/type your thoughts. Ron

gregroberts's picture
gregroberts
Status: Diamond Member (Offline)
Joined: Oct 6 2008
Posts: 1024
Since anyone who has watched

Since anyone who has watched the crash course is aware that infinite resources are not available on a finite planet, these classis models are all junk.

What about an almost infinite universe?

concernedcitizenx5's picture
concernedcitizenx5
Status: Bronze Member (Offline)
Joined: Jan 15 2011
Posts: 26
gregroberts

It is obvious that Nature will rid itself of the human problem if what you wrote is not recognized. Will have to watch the crash course again.

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
the end of growth

dshields's picture
dshields
Status: Platinum Member (Offline)
Joined: Oct 24 2009
Posts: 599
concernedcitizenx5
concernedcitizenx5 wrote:

Yes, I agree with you that people need to get paid for their services. What I am trying to say is that the system that has developed is out of control. Lawyers make anywhere from $75 to whatever per hour? The sad part is people pay it. What is even sadder is that we even need lawyers because people don't trust each other. Sure they have school loans to pay. But if you look at the lawyer life style. What are we paying for? Excesses.

The  housing dilema is based on something that started a long time ago. Possibly with John Locke. Property ownership. Who determines that? God? Divine right? The truth of the matter is most all property on this earth has been stolen from someone else. Mainly indigenous tribes who never claimed to own the land in the first place. I don't know if you have ever read anything about the crash of 1920-21. But a lot of farmers who were given easy credit, which was then called, lost a lot of land to bankers who then created Levittowns across this nation to sell to the many WWII vets as the economy started rolling in the 50's. And during those years between 1920 and the 50's. The land changed hands to those who had lot's of money or even self starters who had no idea what existed there before and how it was acquired. Unfortunately, most baby boomers of that time didn't care, hence the name the ME generation. Capitalism fuels a competition for stuff.

I am certainly not utopian in thinking. Anything made by man is always going to need improvement. I guess what I seek is balance. The population is growing at astounding rates. And basic needs are not being met because people with power/money put a price on everything. To me that is not human. When someone values money over a human being, they themselves lose the right to be called human. I think that this world is coming to a crises of size which may be hard to imagine. I hope that in the aftermath that people have a revolution of mind and spirit and realize that we can help each other in a way that the motivation or reward is not tied to money. I don't know if you have ever been in combat or a situation where you had to depend on some else to save your life.  People bond almost instantly. It is hard to explain. There is no money changing hands. No knocking someone down to get to the next rung or capitalizing from their hard ship or lack of education. I think that there are solutions to these problems. No one running the system is talking seriously about them. Status Quo is all I see. Human life is something that seems to taken for granted anymore. People are commities, problems or annoyances to those with power/money. My hope is to see that change. We can do it. We have only to believe in ourselves and our ability to affect change. People who benefit the most from capitalism pay a lot of money to keep things just the way they are. From the way you write I believe you are aware of that. Thanks for taking the time to write/type your thoughts. Ron

Well, I was worried for a few minutes after you previous post but by the sounds of this you and I have alot to agree on:

1) I hear what you are saying about land.  We stole the US from the Indians.  If you are interested in details about that I would suggest a book called "Bury My Heart at Wound Knee" by Dee Brown.  However, since we stole it we now "own" it.  I have been to Wounded Knee.  It is a moving place to visit.  We did terrible things to the Indians.  Indians were not covered by the constitution as they were not "men".  They were "savages".  We had our own holocaust.  It is pretty shocking if you study it.

2) There is a market called the labor market.  The prices of labor fluctuate over time as do prices in other markets.  The current labor market in the US us having some serious issues.  New flash - right or wrong, people are a commodity.  A lot of places on earth you can still buy people.  Girls are a major component of the slave labor market.

3) Completely agree that a "reset" is on the way.  There is a super debt bubble.  It is going to pop.  I hope things are better after the reset but don't bet on it.  When the super debt bubble pops demigods are going to come out of the woodwork and violent power hungry people are going to try take advantage of the chaos that will result from the super debt bubble popping to grab power and influence over your life.  These people will have to be resisted.  The government itself may well declare marshal law, disregard the constitution (it has been disregarded for some time now anyway) and go for a power grab.  People are going to have to watch out of this and resist it.

 

xraymike79's picture
xraymike79
Status: Diamond Member (Offline)
Joined: Aug 24 2008
Posts: 2040
Damnthematrix wrote:
Damnthematrix wrote:

Great Video, but GDP as defined by mainstream economists (perpetual growth) IS A RELIGION. In order to build those local, self-sustaining communities would require cooperation and sharing - more of a socialist effort. Good luck with that. The high priests of finance and militarism are planning a much darker future for us all.

dshields's picture
dshields
Status: Platinum Member (Offline)
Joined: Oct 24 2009
Posts: 599
xraymike79
xraymike79 wrote:

...The high priests of finance and militarism are planning a much darker future for us all.

I am afraid you are right.  I am not a big Ron Paul person as I do not agree with some of his foreign policy ideas, but I do agree with one thing he has said recently - we should default now while we still have at least some capital and jobs etc. verses becoming debt slaves and then defaulting later when we have nothing.

 

 

xraymike79's picture
xraymike79
Status: Diamond Member (Offline)
Joined: Aug 24 2008
Posts: 2040
"A society without the means

"A society without the means to detect lies and theft soon squanders its liberty and freedom."Chris Hedges

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
growth as religion
xraymike79 wrote:

Great Video, but GDP as defined by mainstream economists (perpetual growth) IS A RELIGION.

I used to believe that too, but I now recognise that growth is utterly essential for the payment of debts + interest....  The religion you mean is really consumption, and largely consumption through debt.  Might be splitting hairs, but.......

xraymike79 wrote:

In order to build those local, self-sustaining communities would require cooperation and sharing - more of a socialist effort. Good luck with that. The high priests of finance and militarism are planning a much darker future for us all.

Unfortunately, I think you might be right.  So it's head for the hills!

Mike

darbikrash's picture
darbikrash
Status: Platinum Member (Offline)
Joined: Aug 25 2009
Posts: 573
Repost from the basement

Bringing portions of this thread up from the basement so that those who are interested may continue the discussion, as it may head in a direction of some interest.

 

xraymike79 wrote:

As far as what caused the economic meltdown, was it  human greed or the machinations of capitalism? It's the power of money over the political system which corrupted or eliminated the regulatory barriers. Under capitalism, growth is an imperative and one way to grow is to capture the regulatory agencies.

3. "Grow or die" is a law of survival in the marketplace:

In capitalism most producers (there are some exceptions, which I will note below) have no choice but to live by the capitalist maxim "grow or die." First, as Adam Smith noted, the ever-increasing division of labor raises productivity and output, compelling producers to find more markets for this growing output. Secondly, competition compels producers to seek to expand their market share, to better defend their position against competitors. Bigger is safer because, ceteris paribus, bigger producers can take advantage of economies of scale and can use their greater resources to invest in technological development, so can more effectively dominate markets. Marginal competitors tend to be crushed or bought out by larger firms. Thirdly, the modern corporate form of ownership, which separates ownership from operation, adds further irresistible and unrelenting pressures to grow from owner-shareholders. And shareholders are not looking for "stasis"; they are looking to maximize portfolio gains, so they drive their CEOs forward.

In short, I maintain that the growth imperative is a virtual a law of nature, built-into in any conceivable capitalism. Corporations have no choice but to seek to grow. It is not subjective. It is not just an "ideology," an "obsession" or a "spell." And it cannot be exorcised. Further, I maintain that these theses are uncontroversial, even completely obvious to mainstream economists across the ideological spectrum from Milton Friedman to Paul Krugman.

Beyond Growth or Beyond Capitalism? A Reprise

If you can explain how you could reconfigure capitalism to eliminate this incessant need for growth, then please elaborate. We need a new economic system that is not predicated on continuous growth. This planet's carrying capacity is maxed out and then some.

safewrite wrote:

Xraymike,

Thank you for your measured response. I have some thoughts on radical reforms. I will be happy to share them once you are back to posting, and it will take me a while to put them into written form anyhow. They will be heavily slanted toward what seems to work, rather than theory, as I am an engineer and incredibly fond of results.

Best,

Safewrite

darbikrash wrote:
safewrite wrote:

 

Thank you for your measured response. I have some thoughts on radical reforms. I will be happy to share them once you are back to posting, and it will take me a while to put them into written form anyhow. They will be heavily slanted toward what seems to work, rather than theory, as I am an engineer and incredibly fond of results.

I would be most interested in your comments as well. However, as someone who has similar training as yours, may I comment that knowledge is based on not just empirical observations, but the theory that backs up and explains those observations as well. As an engineer, you know that observations without explanation are not particularly useful when creating an actionable knowledge base.

And we already have plenty of observations being advanced by the punditry with little intellectual basis.

XRM brings up a very important point, that can be both observed and thoroughly explained by theory, that which is the growth imperative of capitalism. You and I have crossed paths on this subject in previous posts, and you seemed surprised at this concept. To what degree I don’t know, but I would be interested to see if your (soon to be published) thoughts can reconcile this reality. I find that the notion of a system with a irrefutable, perpetual growth requirement to be at cross purposes to the values of this forum. Yet, many of the forum participants seem quite happy to propose unregulated free market systems as either a full or partial solution to our predicament- a proposal I find to be nonsensical.

I am not aware of a single credible economist that, when pressed, would look you in the eye and tell you that capitalism does not have a perpetual growth imperative. Much of the high level discourse among such practitioners is as to whether or not regulating capitalism is even possible, with much controversy on this point. Yet obviously, our planet has finite resources which are being challenged, and the financial system has been nearly blown up by endless profit seeking, and despite these vivid observations, we have a significant portion of the population that is quite sure that what we need is more growth and the sooner the better. And this group would largely (but not uniquely) be composed of conservatives with corporate sponsorship.  I find that very troubling.

So I would submit that as a person with technical training, that you consider what almost any competent technical person would do in such a case, that you attempt to obtain the operating theory for such contradictions, and do so (as a start) by reviewing  reference papers, published literature and textbooks to determine a basis of understanding, and then overlay these with empirical observation, and attempt to correlate the two.

And as a start, may I propose you review the paper that XRM has linked to the above post (reproduced here)

Looking forward to your thoughts on radical reform.

 dk

safewrite wrote:

First we will need to have a working defintition of capitalism that we all agree on. I am not certain at this point that we all are talking about the same thing.

First, we need to define our terms.

jneo's picture
jneo
Status: Platinum Member (Offline)
Joined: Jan 7 2009
Posts: 742
    Capitalism will self

 

 

Capitalism will self implode as we currently see.  It has run its course.  It's not going to get any better, War is among us soon as that is the last resort when the financial system becomes more insolvent.  People want the economy to improve so joe blow can open another dollar store and sell a 2$ dollar watch that will break in a month and end up in a land fill that will probably end up in China too.  The culture and value system needs to change.  This cycle of economic theory of monetary exchange will only repeat and repeat, cool....great a few more Paris hilton dolls for little susie and a tonka truck for bobby.  More buy and throw away.  

Teen unemployment Rates are through the roof, sounds like the military industrial complex will have plenty of people they can indirectly draft to go Fight the Good Fight (hahahh) aka War Propaganda.  Can't find a Job, go sign up and get money when (if) you come back after this staged war.  

I can see it now, war capitalism will capitalize on a false flag to get the country behind it.  Headlines will be saying "Bin Ladens Revenge"  more ghost writing from our bought and paid for Media all of whom are following in the foot steps of its founder Dr. Goebbels.  

I still hear it today still:  "if clinton would of gotten bin laden"  bla bla bla.  Hey folks, NO.  9/11 still would of happened, the esoteric crowd would only of changed the story a little.  9/11 would of been "revenge for killing bin laden" and the same cycle of war, housing bubbles, currency problems, and unemployment would of played out as we see today.  

Nothing lasts forever, that should be no surprise, expect more patch work on capitalism.  

 

darbikrash's picture
darbikrash
Status: Platinum Member (Offline)
Joined: Aug 25 2009
Posts: 573
Class consciousness

Class consciousness

 

Just finished reading Joe Baegants’ latest (and last) book “Rainbow Pie”. Expecting the usual bombastic rejoinder, I was surprised at how measured and thoughtful this memoir  is. It is a story of capitalism, and how it affects real people in real ways, in the post WWII time frame. It is a story of the white underclass, a story of last chance substinence farmers forced by capitalism into a debt construed lifestyle not only against their wishes, but outside of their framework of understanding. A slow motion, intergenerational systematic dismantling of the backbone of a country perfectly content with a small government and “live off the land” philosophy, to an exploitative wage and debt economy.

And no one really noticed until it was over.

Told in Joe Baegants’ own words, as a self proclaimed “left neck” he exhibits the ability to see and comprehend what happened to his people despite being surrounded by a co-opted ultra conservative peer group, and he puts faces and names to what academicians with pipes and patches on their blazers have being trying to say for nearly 150 years.

He makes it real, because it is real, but most importantly he answers perhaps the most compelling question of our modern times, why do good, honest, and oftentimes smart people continue to not only act against their own best interests, but vehemently defend the option to do so?

He answers it with the story of his own family, where he takes a complex (and wholly forbidden subject) and unfolds it to present the two most dangerous words in the American language, two words that cause political leaders to stop mid sentence with knees knocking, two words that gives pause to czars and kings alike, two very, very dangerous words, words effectively expunged from Americanized English, at the cost of hundreds of millions of dollars in marketing propaganda and countless Fox News bulletins.

This concept has been thoroughly- at great cost- papered over and is now addressed in polite company with a rolling of the eyes and a clucking of the tongue, not THAT tired old argument again. Thanks to a masterstroke of Madison Avenue bombardment for 40 years, we have trivialized the notion of class consciousness to all but obliterate the concept, any vestiges are deemed race issues- but nothing could be farther from the truth. TV sitcoms now routinely pair vastly disparate social classes as equals, lumping them together to demonstrate to all that the American society is a homogenous non-stop party of equals, in TV shows like “Modern Family” gay couples are paired with supremely successful capitalists and all are having a laugh on seemingly equal footing. The message: We’re all one big happy family enjoying the spoils of abundance and wealth.

Consider the Ralph Lauren franchise, the pictures that this brand portrays in their ads. Pictures of purity, of timeless ease, the landed gentry dressed down for sincere and honest social interactions with you and with each other, these are not race portraitures, they are class portraitures. And here comes the masterstroke, even though we have a “classless” society, for a pittance, a swipe of the charge card you can have what the Ralph Lauren models imbue- well almost. Because upon closer examination it is not quite what it seems. That purity of face, those lily white hands, that tanned and perfect composure, that is not aristocracy as we know it, it is something else altogether, it is the purity of those that do not exchange labor for substinence. Ever. And never will.

But you will. And you’ll do it for them. Over and Over.

 

darbikrash's picture
darbikrash
Status: Platinum Member (Offline)
Joined: Aug 25 2009
Posts: 573
Lumpenproletariat

Lumpenproletariat

 

Lumpenproletariat, a collective term from Lumpenproletarian (a German word literally meaning "raggedy proletarian"), was first defined by Karl Marx and Friedrich Engels in The German Ideology (1845) and later elaborated on in other works by Marx. The term was originally coined by Marx to describe that layer of the working class, unlikely to ever achieve class consciousness, lost to socially useful production, and therefore of no use in revolutionary struggle or an actual impediment to the realization of a classless society[1]

In The Eighteenth Brumaire of Louis Napoleon (1852), Marx refers to the lumpenproletariat as the "refuse of all classes", including "swindlers, confidence tricksters, brothel-keepers, rag-and-bone merchants, beggars, and other flotsam of society".

 

Description:  Originally intended to indicate a small subset of the much larger (and more honorable) proletariat proper, it can be fairly argued that in modern America this class is by far the largest, if we use class consciousness as a key determinant. This class is commonly confused as to mean criminals and assorted low lifes, this is not all true, but these elements are certainly included. It is most accurately used to denote opportunists, e.g. those that exchange anything for money, and this can mean things of criminal enterprise, or more contemporaneously, anything of convenience that “can make a buck” legal or not.

Defining Attribute(s): Most critically, this group, due to its opportunistic nature does not comprehend class consciousness in any form, they are singularly focused on day to day conversion of any manner of convenient substinence wage labor or income of any kind, legal or not.

Ramifications and effects: Singularly narcissic and focused on self, two powerful ramifications are evident: a.) Because there is no awareness of a larger picture concerning class and the futility of their plight, they are easily led (and misled) to follow demagogues that offer simplistic explanations to assuage the alienation that they experience but cannot define. B.) They are of no use whatsoever as revolutionaries or change agents, their existence is too fragile and they fear that any change could disrupt the tenuous ability to receive money from their opportunistic travails.

Migration path: Virtually none. Poor to non existent understanding of social framework, often trained but not educated. Traditional paths of social mobility are limited by access to education. Access to education is increasingly unlikely, costs and access to education are problematic, and time commitments needed for essential substinence wages are not conducive to investments of time for learning.

Social mobility: Limited. Many focus on lottery style events, potential celebrity, or becoming sports players as the only accessible venue for meaningful mobility.

Comments: We have to also add to this category those that derive all of their substinence income from government as well. The most disturbing attribute of this group though is the complete ignorance of class consciousness, coupled with a feverent embracing of demagoguery.

 

darbikrash's picture
darbikrash
Status: Platinum Member (Offline)
Joined: Aug 25 2009
Posts: 573
Proletariat

Proletariat

 

In Marxist theory, the proletariat is the class of a capitalist society that does not have ownership of the means of production and whose only means of subsistence is to sell their labor power[9] for a wage or salary. Proletarians are wage-workers, while some refer to those who receive salaries as the salariat. For Marx, however, wage labor may involve getting a salary rather than a wage per se. Marxism sees the proletariat and bourgeoisie (capitalist class) as occupying conflicting positions, since workers automatically wish their wages to be as high as possible, while owners and their proxies wish for wages (costs) to be as low as possible.

Description: Simply put, those that exchange their labor power for wages. Or, virtually 90% of working age America. It is useful to contrast this with what preceded the widespread adaptation of the wage economy, which in America was substinence farming. In this (predecessor) model, a small Jeffersonian government (small if you were an American settler, rather large and obtrusive if you were a native American) actively engaged in primitive accumulation, which is to say using the full force of the US government to slaughter native Americans, displace them, and take their land. This land was then homesteaded to settlers, or sold at low prices to settlers with provisions to “work the land”. Naturally property tax was part of the deal, enabling the “small” government to expand their purview in the decades and centuries ahead. In this model, a self sufficient population was set into motion, able to take care of themselves and their families by substinence farming.

This model was prevalent even to the turn of the last century, and did not dissipate until after the second world war, at which point capitalism, accelerated by the war, was able to consume a much larger number of wage laborers, which completed the transformation to the wage economy, a progression that lasted 150 years. Despite protestations from contemporary tea party types, this lifestyle is structurally obsolete (although it remains an option for those who wish to “get off the grid” at the individual level) and no longer relevant for large scale society- and never will be again.

The wage economy introduced subtle but powerful forces to displace self sufficiency. In this model, you are forced to sell your labor power to eat. But more important is the dynamics of that sale. In selling your labor, you must, by definition, enable others to make a profit from your labor, which bakes in exploitation as an unavoidable consequence.

Defining Attribute(s): In plain English, we went from growing our own food and livestock, on our own land, to a world where we produce almost nothing of what we consume, and to purchase substinence goods we must agree to sell our labor, willingly or not, and also agree to some level of exploitation or none of it works.

Despite these disadvantages though, the proletariat has one thing going for it, and that is class consciousness. It understands it’s role in the network of capitalism, and takes active steps to try and minimize exploitation. The underlying key is awareness, and not ignorance.

Ramifications and effects: Historically, the proletariat tended to use collective bargaining approaches to gain advantage. Awareness of the detrimental effects of atomization or reduction of skill content, leads to strategies to thwart such efforts by capitalists. This of course is the essence of class struggle, where a natural tension is installed as a check and balance to keep either wage laborer or capitalist from gaining advantage.

In practice these efforts are always unsuccessful, as capital accumulates the bourgeois can convert this excess surplus value into social power, and using this asymmetrical social power, break unions, creating favorable legislation, and more importantly, dilute the efficacy of localized wage labor by employing globalization methods to access cheap offshore labor.

Migration path: In past times, high caste proletariat exhibited effective social mobility. One method (there were many) extends from mercantile times and includes the concept of the “journeyman” wage laborer. The “journeyman” so named in honor of his propensity to journey to neighboring towns to ply his trade, enjoyed what was called “confidence of agency” or , the means to, sight unseen, convert his in demand skill to income in any town or any workshop that had a need. And incumbent was the requirement that this skill (an example might be a blacksmith)  was in high demand. Thus, the journeyman enjoyed social mobility, although not quite in the sense of the literal meaning. He did enjoy the ability to “shop” his skill to bourgeoisie to use market forces to limit the exploitation, therefore giving him bargaining power without the use of collective force. In modern times, this type of success was deemed perquisite to gaining a promotion, under the (now long buried) notion that to manage effectively you first had to master the task yourself. This modern inflection is more true to the literal use of social mobility, and for decades it gave those without formal education a shot at true change of class.

Social mobility: Diminishing opportunities. Escalating salaries were often used make investments with an eye toward entering the rentier class, for example using surplus wages to purchase rental properties with the goal of “retiring” and allowing the wage earner to suspend exchange of labor power for subsistence income. These days are over, as (obviously) the real estate market cannot support these schemes, and the investment climate in general provide such poor returns that truly vast sums must be accumulated before one can exist as represented by the aforementioned Ralph Lauren ads.

Comments: Despite a lifetime of labor exchange, the proletariat is no longer able to exercise the former ladder of social mobility or even provide for themselves after they can no longer physically work. They live in an environment where the bourgeoisie has externalized nearly all of their costs, extracted every drop of labor potential, leaving alienated and physically depleted carcasses in their wake, and denying, at every opportunity, that any recompense is required to support wage laborers after a lifetime of toil- effectively discarding them  and then arguing that what is now needed is spending cuts (in Social Security) to further victimize those that gave up their productive lives.

 

darbikrash's picture
darbikrash
Status: Platinum Member (Offline)
Joined: Aug 25 2009
Posts: 573
Petite Bourgeoisie

Petite Bourgeoisie

Though distinct from the ordinary working class and the lumpenproletariat, who rely entirely on the sale of their labor-power for survival, the petit- is different from the haute bourgeoisie, (high bourgeoisie) or capitalist class, who own the means of production and buy the labor-power of others to work it. Though the petite bourgeoisie may buy the labor power of others, in contrast to the haute bourgeoisie, they typically work alongside their own employees; and although they generally own their own businesses, they do not own a controlling share of the means of production.

More importantly, the means of production in the hands of the petite bourgeoisie do not generate enough surplus to be reinvested in production; as such, they cannot be reproduced in an amplified scale, or accumulated, and do not constitute capital properly.

The petit bourgeois were to lose out in the historical processes that Marxism predicted; the claim was made that they were therefore the mainstay of Fascism, which was presented as a terroristic reaction to the inevitability of these losses.[1]

 

Description: This largely refers to the class of small business in America, with some holdbacks. By definition this class does not own the means of production, e.g. factories, etc, but rather participates in capitalism solely by purchasing  labor power of others. A typical migration path would include the aforementioned “journeyman” who upon refining his skills starts a business and adds employees under his tutelage to leverage his knowledge and experience.

Examples will include traditional crafts such as woodworking, construction, metal working, auto mechanics, etc, but is not limited to blue collar content. Accounting firms and law firms are also present in this category, and are examples of white collar participants in the petite bourgeoisie.  Once powerful in America, and often used as a showcase of American business atomization, this class has lost much of its authority particularly in the last decade, as its contribution to the total corporate revenue is now miniscule (about 4%) and the employment numbers, once the pride of politicians are equally dismal, with 75% of the corporations in America now having zero employees. Not included are the archetypical entrepaneurial class, this group seeks to leapfrog the class structure entirely using outside investment and leverage (borrow) their way into the means of production.

Ramifications and effects: Caught midway between the proletariat and the haute bourgeois, the petite bourgeoisie suffer the penalty of small size and scale. Unable to amass sufficient surplus capital to grow organically, they are fixed in space with no growth imperative. In many cases, this is accepted as many of these entities have no intrinsic desire to grow, they normally conduct commerce regionally, and take satisfaction in these localized social relations. Significantly, as they often have no outside investment, or if they do, such investment is silent, they are not subjected to the growth mandates that larger externally financed entities requires. Coupled with a regional commerce radius, this model can be an effective alternative to other forms of class.

Disadvantages include their inability to compete with larger, focused components of the capitalist class with large and effective economies of scale. Regulatory overhang is quite significant to this class, as compliance consumes a disproportionate amount of surplus value- a fact larger capitalist entities can exploit. Directly speaking, this is rare, as the contribution of the petit bourgeoisie to the total revenue picture is so small as to be insignificant to large capitalist entitles.

Migration path: Usually backward towards the proletarian class. Running a small business is demonstrably tougher and much riskier than operating as a single entity, even if one must again sell his labor power to another, many (in fact most) give up and retrench to the proletariat class. If one is to push upward, this generally means debt financing and scaling to a degree that is not normally within the realm of skillsets of the petite bourgeoisie. Risk is quite high and external investors often take management roles in the company, pushing aside or marginalizing the original owner to protect and optimize the use of their capital.

If done carefully and correctly, this can provide a migration path into the bourgeoisies class, but more often leads to failure than success.

It is also possible, over long time durations, to accumulate sufficient capital to methodically and slowly grow organically, but this takes many years.

Social mobility: The additional surplus value captured by purchasing the labor power of others is a powerful contributor to upscale social mobility. This can often lead to better than average lifestyles, and generally a more comfortable living, which is offset by much greater risk. In addition , if the entity can be preserved, then future generations (offspring)  may be brought into the business, giving them a head start in the multi-generational time horizon needed to create competitive stability- and a large jump ahead in social mobility.

Comments: In direct response to the declining wage models we are seeing in the proletariat class, more and more workers are attempting to break into the petite bourgeoisie. The figure noting that 75% of American corporations have zero employees is shocking, and it illustrates the tidal wave of workers that are attempting to break into this class to drive higher wages, partially as a response to the death of collective bargaining. Notably, Mussolini claimed that the petite bourgeoisie was the vanguard to fascism, owing to the frustration of not being able to break through the competitive forces of the larger capitalist class, and simultaneously, requiring more than reasonable surplus value from a tiny population of employees- converging dictates that can be fertile ground for oppression under color of commerce.

 

darbikrash's picture
darbikrash
Status: Platinum Member (Offline)
Joined: Aug 25 2009
Posts: 573
Bourgeoisie

Bourgeoisie


Marxism defines the bourgeoisie as the social class that owns the means of production in a capitalist society. As such, the core of the modern bourgeoisie is industrial bourgeoisie, which obtains income by hiring workers to put in motion their capital, which is to say, their means of production – machines, tools, raw material, etc. Besides that, other bourgeois sectors also exist, notably the commercial bourgeoisie, which earns income from commercial activities such as the buying and selling of commodities, wares and services.

In medieval times, the bourgeois was typically a self-employed proprietor, small employer, entrepreneur, banker or merchant. In industrial capitalism, on the other hand, the bourgeoisie becomes the ruling class—which means it also owns the bulk of the means of production (land, factories, offices, capital, resources – though in some countries land ownership would still be a monopoly of a different class, landed oligarchy) and controls the means of coercion (national armed forces, police, prison systems, court systems). Ownership of the means of production enables it to employ and exploit the work of a large mass of wage workers (the working class), who have no other means of livelihood than to sell their labour to property owners; while control over the means of coercion allows intervention during challenges from below.[2] Marx distinguished between "functioning capitalists" actually managing enterprises, and others merely earning property rents or interest-income from financial assets or real estate (rentiers).[3]


Description: The core class element of capitalism, the term bourgeoisie is used interchangeably with “capitalist”. The root word capital has various meanings, and is best described not as a thing, but rather a process. Capital morphs and changes form between money, commodities, labor power, surplus value, and other embodiments as it matriculates through the political economy. Capitalists mobilize capital, and deploy these in pursuit of profit defined as surplus value, principally through the exploitation of labor power achieved by purchasing labor from workers, and profiting from the difference in cost of production and the price of sale.

Notably there are two key factors: a.) The capitalist owns the means for production, and b.) The capitalist himself does no work. 

Ramifications and effects: The ramifications of this arrangement are profound. This is covered in detail by many works, but in brief summary the more concerning ramifications center around the concentration of capital that occurs organically over time. This concentration of capital and it’s accompanying surplus value can then be converted to social power and used to inordinately influence social relations, up to and including entire governments. Governments under control of such forces implement favorable legislation, taxation policies, and regulatory practices designed to favor those who control this excess surplus value in a self serving and impenetrable fashion.

Another key effect is the axiomatic unequal distribution of wealth among actors in a capitalistic economy, which grows more distorted and mal-distributed as time progresses. It can be seen throughout history that societies with massively unequal distributions of wealth are unstable and prone to implosion and/or revolution.

Migration path: Then sky is the limit, until capital bumps into one of the feared limitations which are avoided and overcome at all costs. The capitalist operating at scale must grow perpetually to not only appease his investors who demand a market return on their investment, without which the capitalist cannot function, but also because his competitors are also constantly growing and introducing technologies, labor initiatives and other means and methods to increase surplus value. The combination of investor pressure for investment returns, and actions of competitors results in a corrosive landscape which requires constant, and often destructive growth.

Typically, these limits or barriers to capital are addressed with full support of the State, in the form of military intervention for access to global markets, offshore labor access, and access to critical raw materials. In past decades, the dominate threat was labor power, largely rendered ineffective by concentrated campaigns to “break unions” and dissolve collective bargaining.

Contemporary threats or barriers are proving to be more persistent, namely access to natural resources (such as oil) that can be used to promote expansionary initiatives, is becoming more difficult as supplies disappear and costs to procure increase. Demand destruction, and saturated credit markets for consumers are sharply limiting the amount of discretionary income available to consume the required expansionist flow of goods, in short, consumers have reduced buying power and loss of appetite to pile on more credit.

Social mobility: Access to surplus capital provides access to living conditions, social circumstances, educational institutions and other form of upward mobility not accessible to the lower caste entities. Further, this access is often passed to the bourgeoisies’ progeny, and as we shall see, can and does create a nearly unbreakable cycle of inbred prosperity and social power.

Comments: One of the more interesting limitations, and potential barriers of capital can manifest as lack of demand from the consumer perspective, known as under consumption. This is quite relevant to what we see today, and is the dominant failure mode of the capitalist system in a contemporary sense. This occurs initially with the appearance of two key symptoms, a.) Declining real wages, b.) Saturation of private debt at the consumer level.

These symptoms always occur, and occur in cycles with increasing frequency and magnitude, and the characteristics of these are well known and understood. What is interesting is the response. These symptoms lead to loss of purchasing power by the consumer, and a crisis of effective demand, which has the effect of completely stopping capitalist production  in its tracks. No customers equals no business, in other words the bourgeoisie effectively cannibalizes their own customers and damage themselves in the process. The so-called Under-Consumptionists, for example Rosa Luxemburg, theorized (correctly) that the response to this inevitability was defined by two dominant approaches:

1.)    The creation of a central banking system with the power to print money.

2.)    The adoption of the practice of Imperialism, with the express purpose of forcibly capturing access to foreign markets outside of the closed sanctum of the original capitalist society.

Both tactics are used, and used extensively, to stifle the effects of under consumption by either printing  money, or forcibly entering foreign markets. In a capitalist society, neither of these utilities can be removed without threatening the basic premise of capitalism, no matter how much the citizenry wants to see these initiatives removed and no matter what Ron Paul says.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments