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The Current Overproduction Crisis And War
Ian Welsh makes Fourteen Points on the World Economy as the US GDP Drops .7 Percent. He believes that the economy is again turning towards a global recession. This recession comes even as there has not been a real recovery from the last global economic crisis:
Let me put this another way: The developed world is in depression. It has been in depression since 2007. It never left depression. Within that depression, there is still a business cycle: There are expansions, and recessions, and so on. Better times and worse times.
The business cycle is again turning down and is doing so sharply. Not only in the U.S. but also in Europe and Asia.
Every central bank has been throwing money at the local economies but that money finds no productive use. Why would a company invest even at 0% interests when nobody will buy the additional products for a profitable price? How could consumers buy more when wages are stagnant and they are already overburdened with debt taken up in the last expansion cycle? The central banks are pushing on a string while distorting normal market relations. This intensifies the original crisis.
My belief is that the global crisis we see is one of overproduction, an excess or glut of supplies and on the other side a lack of consumption. The exceptional cheap money created by the central banks makes investment in machines preferable over employment of a human workforce. The result: Manufacturing hub starts work on first zero-labor factory
Chen predicted that instead of 2,000 workers, the current strength of the workforce, the company will require only 200 to operate software system and backstage management.
The (Central) bank gave Mr. Chen cheap money and at an interest rate of 0% a complete automation of his company may indeed be profitable. It is unlikely though that he would make the same move at an interest rate of 10%. But on the larger macro economic scale Mr Chen needs to ask this question: "How will the 1,800 laid off workers be able to buy the products my company makes?" Some of the laid off people may find marginal "service" job but the money they will make from those will likely be just enough to keep them alive. And over time flipping burgers will also be automated. And then?
Karl Marx described such overproduction crises. Their cause is a rising share of an economy's profits going to an ever smaller class of "owners" while the growing class of marginal "workers" gets less and less of the total pie. In the last decades this phenomenon can be observed all over the developed world. The other side of the overproduction crisis is an underconsumption crisis. People can no longer buy for lack of income.
While a realignment of central bank interest rates to historical averages, say some 6%, would help to slow the negative process it would not solve the current problem. Income inequality and overproduction would still increase though at a lesser pace. The historic imperialist remedy for local overproduction, capturing new markets, is no longer available. Global trade is already high. There is little land left to colonize and to widen the markets for ones products.
There are then two solutions to such an crisis.
One is to tackle the underconsumption side and to change the distribution of an economy's profits with a much larger share going to "workers" and a smaller share going to "owners". This could be achieved through higher taxes on "owners" and redistribution by the state but also through empowerment of labor unions and like means. But with governments all over the world more and more captured by the "owners" the chance that this solution will be chosen seem low.
The other solution for a capitalist society to a crisis of overproduction is the forced destruction of (global) production capabilities through a big war. War also helps to increase control over the people and to get rid of "surplus workers".
The U.S. was the big economic winner of World War I and II. Production capacities elsewhere got destroyed through the wars and a huge number of global "surplus workers" were killed. For the U.S. the wars were, overall, very profitable. Other countries have distinct different experiences with wars. In likely no other country than the U.S. would one find a major newspaper that arguing that wars make us safer and richer.
I am therefore concerned that the intensifying crisis of overproduction and its seemingly casual preference for war will, in years to come, push the U.S. into starting a new global cataclysmic conflict.
Neoconservatives like Victoria Nuland tried to goad Russia and the EU into a big war over Ukraine. The top lobbyist of the military industrial complex, U.S. Secretary of Defense Ash Carter is trying to instigate a war between China and its neighbors over some atolls in the South China Sea. The U.S. is at least complicit in the rise of the Islamic State which will leave the Middle East at war for the foreseeable future.
Are these already, conscious or by chance, attempts by the U.S. to solve the problem of global overproduction in its favor?
@b
Since you mentioned Karl Marx, the exclusion of a very valid third option, revolutionary war/class struggle, makes itself evident. From the trend we witnessed after WWII, we cannot expect as you correctly noted, a redistribution of wealth out of the greedy and gluttonous transatlantic empire and its minions, since concentration, centralization and consolidation of capital has been the order of the day ever since. The other major trend after WWII has been imperial wars, either by proxy or direct intervention, fought against countries that followed the path to independence from colonial powers by means of revolutionary wars, in Asia, Africa and Latin America. The potential for another period of revolutionary war is real, given the abject misery of the wretched of the earth, which have been left with nothing to lose but their chains. The main obstacle they face is the lack of a scientific tool to interpret their current predicament, and at the same time provide them with a vision of the social paradigm they aspire at, out of the ruins left of their societies. With its inherent limitations given by dogma, Marxism was that tool for Mao, Lumumba, Ben-Bella, Ho Chi Minh, Castro, and many other African, Asian and Latin American leaders who took upon their shoulders to shake their peripheral dependency. Many of them were successful in their revolutionary endeavors, and were able to trace an independent path for their societies, even if burdened with all the problems typical of the “third world.” Nevertheless, even before the fall of the Soviet Union, Marx and Marxism were thrown under a pile of dead dogs, even more after the fall, which was attributed to the utter failure of Marxism as a social science.
Marx and Marxism were part of the “end of history,” a thing of the past, a post-Hegelian utopian philosophy whose ultimate results were the creation of dystopian societies…until the crisis of 2007, when suddenly everybody wanted to understand WTF is a cyclical crisis, and why do they happen. Das Kapital became a best seller in Germany and beyond; becoming a model for new works tailored after Marx’s statistically saturated magnus opus, e.g. Thomas Piketty’s “Capital in the Twenty-First Century, ” and others. Despite all the intellectually gifted resisters to the empire, and the vast expansion of knowledge of the digital age, no new revolutionary theory has appeared, able to inspire the masses of dispossessed as Marxism did at the turn of the XIX c., one that changed the course of history forever during the XX c.
It is in this vacuum, a modern epistemological crisis, that the neocons, bastard children of Trotskyism, took ownership of Trotsky’s “Theory of Permanent Revolution,” and turned it into a counterrevolutionary instrument for their nefarious global domination purposes. Hence revolutions became bastardized, categorized by “colors” or “seasons” according to the whims of the vulgar ruling elites, and lost their power to change societies from the bottom up. This crisis of knowledge of their own socio-economic/political conditions are having a profound effect on the masses worldwide, who in many instances rise up against their oppressors, e.g. Egypt/Arab “Spring,” without a leadership, without a clear vision of their goals, without a social agenda that guides their movements, and they end up getting crushed or coopted by the new rulers, toys for the empire games of regime change. These are the “Twitter” and “Facebook” so-called “revolutions,” mass movements with no direction, no aim, and no strategy for social change. What kind of society did the Egyptians, Tunisians, et al want? Did they have a program for the society they wanted to build? Was there a clear strategy and tactics to achieve their goals? “Crisis,” say Gramsci, that giant of Italian Marxism, “is when the old has not died and the new has not been born.” Humanity is now facing an epistemological crisis of galactic proportions, in serious need of a new revolutionary theory that, like Marxism in the XIX/XX c., gives the masses a vision of a future to build with their own hands, and hope there is a better world other than sweat-shops, slavery, toiling without rewards, exploitation, misery, crime, and an ever-growing gap between the ruling elites and the working masses.
Posted by: Lone Wolf | Jun 2 2015 1:46 utc | 23
Wayout @ 38
Electoralism is a tactic, not a strategy for much of the revolutionary left. This was settled for Marxists by the comdemnation of revisionism before the Great War, and the subsequent split between revolutionary communists and reformist socialists after the October Revolution. One participates in elections not in the expectation of voting socialism in, but for the mass agitational possibilities.
The reformist left achieved the sort of power they desired through the means they preferred. As evidenced by the political fates of Labour, Parti Socialiste, and the Social Democrats, they failed to transform society and are now reduced to arguing for a kinder and gentler austerity. The misinterpretation of the collapse of the Soviet Union as “the end of history” produced demoralization and ideological confusion. The right, not the left, so far stands as the greater beneficiary of popular discontent generated by the 2008 Crisis.
I can’t speak for the Maoists of Chairman Bob’s RCP. Though “Revolution in the 80’s — Go for it!” was a memorable slogan, I never took them seriously enough to follow the evolution of their political lines.
I can say any no. of tendencies amongst the Trotskyist Fourth International have kept the faith (so to speak). Given their small size, agitation and education will of necessity remain the order of the day.
The commitment is not to armed insurrection per se, but to the use of all means of struggle, both parliamentary and extra-parliamentary. What is I believe Engels last work, the 1895 Introduction to The Class Struggles In France discusses developments in weaponry (particularly the bolt-action rifle) that made a military victory in street fighting, a la 1848, increasingly unlikely.
With this successful utilization of universal suffrage, an entirely new mode of proletarian struggle came into force… [as] the state institutions, in which the rule of the bourgeoisie is organized, offer still further opportunities for the working class to fight these very state institutions…. And so it happened that the bourgeoisie and the government came to be much more afraid of the legal than of the illegal action of the workers’ party, of the results of elections than of those of rebellion.
For here, too, the conditions of the struggle had essentially changed. Rebellion in the old style, the street fight with barricades, which up to 1848 gave everywhere the final decision, was to a considerable extent obsolete.
Let us have no illusions about it: a real victory of an insurrection over the military in street fighting, a victory as between two armies, is one of the rarest exceptions. But the insurgents, also, counted on it just as rarely. For them it was solely a question of making the troops yield to moral influences…. If they succeed in this, then the troops fail to act, or the commanding officers lose their heads, and the insurrection wins. If they do not succeed in this, then… the superiority of better equipment and training, of unified leadership… makes itself felt.
It is the unity and self-discipline of the class-conscious proletariat that will make for revolution. Luxemburg’s 1906 essay on The Mass Strike, the Political Party and the Trade Unions drew the appropriate conclusions just over a decade later.
The mass strike is the first natural, impulsive form of every great revolutionary struggle of the proletariat and the more highly developed the antagonism is between capital and labour, the more effective and decisive must mass strikes become. The chief form of previous bourgeois revolutions, the fight at the barricades, the open conflict with the armed power of the state, is in the revolution today only the culminating point, only a moment on the process of the proletarian mass struggle…. [The mass strke] unites with the revolutionary period and enormous cultural work in the most exact sense of the words: the material and intellectual elevation of the whole working class through the “civilising” of the barbaric forms of capitalist exploitation.
It is worth noting that revisionist opposition prevented the Second International from formally adopting this as a tactic. Accordingly, the 1907 Stuttgart Resolution on Militarism limited itself to generalities: its constituent parties would “prevent the outbreak of war by the means they consider most effective, which naturally vary according to the sharpening of the class struggle and the sharpening of the general political situation.”
Posted by: rufus magister | Jun 3 2015 3:55 utc | 59
President Bill Clinton, and those in Congress who revoked the Glass-Steagall Act, should explain before the nation, just why they imagined that human nature had changed, after a few decades had passed, since the Great Depression.
On the Subject of Usury:
I found this, and more, over at the Jewish Virtual Library, and it’s interesting reading:
Linked Loans
The steep inflation that has become a relatively common economic phenomenon has given rise to a new financial instrument: loans whose values are linked to the inflation index. This financial instrument is intended to protect the lender from a decrease in the value of his loan in terms of its buying power. In a linked loan, the borrower undertakes to repay the amount of the loan linked to the value of a foreign currency, to the cost of living index, or to the building price index, as agreed between the parties. The issue of linked loans is problematic vis-à-vis the prohibition on interest and remains complicated and convoluted.
The central problem regarding this context is the tension existing in defining the meaning of money: should it be defined in nominal terms, or should it be defined in real terms (i.e., its real value)? During a period of inflation, the borrower will insist on repaying the loan according to the specified, nominal amount of the loan, while the lender will argue that what is of importance is not the nominal value of the loan, but rather its actual value, that is, the purchasing power of the money in the marketplace of goods and services. It is clear that, if the nominal value is the criterion, any nominal addition will be considered as prohibited interest.
Some applications of usury, in this tradition of religious law, are considered more reprehensible than others. Taking undue advantage of your indigent brother, or bilking the poor with this scheme, are examples of the worst moral posture.
It has been said that the prohibition on interest rests on two grounds: firstly, that the prosperous ought to help the indigent, if not by gifts, then at least by free loans; and secondly, that interest (or excessive interest) was seen to lie at the root of social ruin and was therefore to be outlawed in toto. Both these considerations would apply only internally: there could be no obligation to help foreigners, nor was public policy concerned with their well-being. Moreover, moneylending transactions with foreigners were motivated solely by the legitimate desire to make profits, while the internal economy was eminently agrarian and had no money markets of any importance. It follows from the charitable nature of the prohibition on interest that its violation was not regarded as a criminal offense to which any penal sanctions attached, but rather as a moral transgression; in other words, while taking interest would not entail any punishment, granting free loans and refraining from taking interest would lead to God’s rewards and blessings (Deut. 23:21 …[…]
“He that augmenteth his substance by interest and increase” is listed among the “evil men” (Prov. 28:8); while “He that putteth not out his money on interest” is among the upright and righteous (Ps. 15:5).
LEGALITY OF INTEREST
While biblical law allowed the taking of interest from foreigners, excluding alien residents (Lev. 25:35), talmudic law extended the exemption: “One may borrow from them [foreigners] and lend them on interest; similarly in the case of an alien resident” (BM 5:6, 70b–71a). However lawful interest transactions with foreigners were, they were looked upon with disapproval: some jurists held that they were permissible only when no other means of subsistence was available (BM 70b); others would allow them only to persons learned in the law, as the uneducated might fall into the error of believing that interest is permissible in general (BM 71a). The psalmist’s praise of the man who would not lend his money on interest (Ps. 15:5) was interpreted to apply to the man who would not take interest from a foreigner (Mak. 24a).
We cannot seriously respect the idea that capitalism is a failure because the split is not right for the overseer class on this plantation. The obsession implanted in the people is to consume in disproportion to their needs, to borrow dangerously and foolishly. And austerity is the final, criminal stage in this capitalist nightmare, when the process of extraction and theft is extended further against people who already have been driven into ruin.
The barbarism of this system continues to grow, punishing the vulnerable and the poor, and rewarding the treachery of the political class, which would turn over the sovereignty of governments, and the jurisdiction of the nation’s judiciary, to direct corporate rule.
Posted by: Copeland | Jun 3 2015 4:33 utc | 62
@rufus magister@59
The needed re-statement of historical materialism must of necessity begin with a proper, objective assessment of the legacy of the Soviet Experiment.
As a comprehensive theory for socio-economic, political and historical analysis, and for interpretation of complex social dynamics, I fully agree, for as long as rotten capitalism rules, historical materialism will be the only theory to fully explain the inner workings of a market-based system. As a revolutionary theory, Marxism/historical materialism need to be rethought at the light of the revolutionary experience of the XX c., not only of the Soviet Experiment, but the entire legacy of the application of historical materialism as a social paradigm in the former USSR, China, et al.
The dogmatic traits Marxism suffered once it became the ideological base of the so-called “socialist” societies (in essence state-capitalism with a five-year plan) need to be reexamined, a revitalization of Marxism is impossible without it, let alone it becoming an instrument for social change. The damage done to the revolutionary movements the world over, which became appendages to the Soviet Union first, via the III International, and later to the Chinese after the disgraceful Sino-Soviet split, can be felt even now. Revolutionary movements lost their independence of thought and action, and those who dared to question the Moscow party line, were either shot, ostracized, sent into exile, or forced into the creation of a Maoist alternative.
For example, the imposition of the “popular front” by Moscow pre and during WWII, as a world-wide recipe in the struggle against Nazi-Fascism, blocked many revolutionary movements from taking power, and tamed many communist parties in Europe and elsewhere into becoming cogs within the capitalist system. The Sino-Soviet split only contributed to a greater confusion among the masses world-wide, and to a permanent division within the revolutionary movements that only benefited the empire and the ruling classes in the capitalist world. I could go on with many more examples, but your grasp of history makes it unnecessary.
The point I left without much elaboration in my former post for space considerations, has to do with the need for that “objective assessment” you pointed out, of the reasons why Marxism/historical materialism has lost its position as a vanguard theory of revolution, leaving the masses lost, confused, making SMS “revolutions” with no direction, no purpose, no goals, no program, and no strategy for change. That assessment needs to be done by “organic intellectuals” (Gramsci), integrated into the new wave of revolutionary movements that will give life to a refreshed, rejuvenated theory of revolution, one that will give the capitalist system its final push into the “trash bin of history” (Trotsky).
(Sorry for my brief answer to a complex subject, I only found your comments a bit late into the night.)
Posted by: Lone Wolf | Jun 3 2015 8:38 utc | 65
Part of the over-production and stagnation of the economy (taking those on board for now as valid concepts) is due to the replacement of human labor by machines, a process that began way back when but lets consider only post WW2, 1955, 1960, forward.
Production relies on energy inputs – FF and electricity— and what can be done, or not, depends on the availability and price of energy, which is in itself tricky, as supply chains (for energy input and the machinery, other inputs extracted with energy, not to mention yet other raw material inputs such as milk, timber, iron ore, rare metals, etc. also run by machines…) are very long and complex, and rather rigid, not easily ‘malleable’ or ‘changeable’, in a large part because world finance and business is *profit* and *politically* driven; monopolies are built into the ‘free market’; therefore energy supply becomes a geo-world-political cause of war.
side bar: Seeking out cheaper labor was / is one solution but it has a lot of pitfalls and is far more expensive, cumbersome, even dangerous than is ever admitted.
So the model is very fragile, and limping, gasping, because peak-oil, peak energy, and in a way, peak food (machine / transport / tech driven), poor or pretend – corrupt, oligarchic, elitist, corporatist, ersatz democratic, fascist, etc. – Gvmt, and Finance exist only for profits and skimming, yet both hold a great deal of power.
The system is broken, and therefore one sees wealth accumulation (top 15% not 1%), future returns are moot, no uses for the slosh of cash flowing around the world – aka workers are just useless eaters, social aid, food stamps, to stop uprisings, etc. -, with at the same time debts up the wazoo that cannot be honored. And War. Because productivity gains and a new tech and competition and all that jazz don’t furnish enough profits, safe energy routes etc.
Posted by: Noirette | Jun 3 2015 17:28 utc | 72
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