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The MoA Week In Review – OT 2021-049
Last week's posts at Moon of Alabama:
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Other issues:
New Cold War:
Julian Assange:
Mark Ames @MarkAmesExiled – 21:35 UTC · Jun 26, 2021
Great reporting by @GunnarHrafnJ on the FBI’s key witness—a serial child molester, fraudster & embezzler who was granted immunity to work as an informant & continued his crime spree while under FBI protection — to build their case against Assange.
Covid-19 – Spread:
Two Delta variant cases in Sydney were traced back to a man who had only passed those he infected and had kept some two feet away from them. That is a measles level of infectiousness, way higher than older variants.
Covid-19 Therapeutics:
Covid-19 Social consequences:
> Results: Between 2010 and 2018, the gap in life expectancy between the US and the peer country average increased from 1.88 years (78.66 v 80.54 years, respectively) to 3.05 years (78.74 v 81.78 years). Between 2018 and 2020, life expectancy in the US decreased by 1.87 years (to 76.87 years), 8.5 times the average decrease in peer countries (0.22 years), widening the gap to 4.69 years. Life expectancy in the US decreased disproportionately among racial and ethnic minority groups between 2018 and 2020, declining by 3.88, 3.25, and 1.36 years in Hispanic, non-Hispanic Black, and non-Hispanic White populations, respectively. In Hispanic and non-Hispanic Black populations, reductions in life expectancy were 15 and 18 times the average in peer countries, respectively. <
Use as open thread …
Sophisticated anti-China propaganda by The Japan Times (again):
China needs higher inflation, by Yu Yongding
Yu Yongding is “a former president of the China Society of World Economics and director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, served on the Monetary Policy Committee of the People’s Bank of China from 2004 to 2006”. So, you might think his opinion is legitimate.
It is not.
For starters, he doesn’t risk any specific level of inflation in China which would, according to his opinion, be desirable. This is typical neoliberal line of argumentation, where inflation is treated as the main factor of all the economy but no golden ratio, no concrete number, is ever given (the most neoliberals came up with was with something between 2-3% during a short period of the End of History era, in the first half of the 2000s).
Yu claims lower inflation is making China dependent on exports again, therefore inflation should go up. The problem is this assertion doesn’t make any sense: currency devaluation (inflation) helps, not hurt, exports. Higher inflation also lowers domestic consumption, not helps it. Lower inflation also certainly hasn’t hurt profitability in China, as they have risen by 83.4% this past semester.
China’s exports aren’t rising because it has lower inflation (that doesn’t make any sense even by neoliberal standards): they’ve risen because China has grown in importance in the world, and because the pandemic has triggered a worldwide spike of imports of medical products (most of which are produced in China).
The truth behind his crazy argument comes out in this paragraph:
The lack of price pass-through — which has kept consumer inflation low — has squeezed the profits of downstream producers, even as upstream industries benefit from a sharp increase in profitability. This undermines consumption, investment and, ultimately, economic growth.
And for what? As a developing economy with a per capita income of just over $10,000, China can tolerate higher inflation better than developed economies can. Given this, the Chinese government should be working to boost consumer inflation by embracing much more expansionary fiscal and monetary policies.
So, long story short: China should voluntarily fall itself into a Middle Income Trap, because, otherwise, Western economists are going to be humiliated once again and, worse, China will really become a superpower (and not one of those false hope pretenders of the past, such as Brazil, Russia, South Africa, India and Turkey). If high per capita income is the problem, then why doesn’t he prescript higher inflation for the USA (per capita income USD 50,000.00) instead?
Posted by: vk | Jun 27 2021 15:33 utc | 4
Some interesting comments in this thread. Responding sequentially…Most responses are not that long but there are so many this looks like a monster comment. Sorry.
I called Yu’s suggested course of action typical for a capitalist roader. I did not mean this in a good way. vk is the one who thinks capitalist roaders will never get to the fork of the road where state power must be used to discipline the working class. Implicitly I called for raising wages. As to Yu’s belief that it is impossible to for downstream firms to pass on rising prices, that means Yu sees deflationary pressure at work. *Deflation* I think is even worse for the working class than inflation. Besides, the chimera of a stable currency under capitalism is an ideological chimera, the anarchy of production forbids it. But then vk is fundamentally a financial reformist I’m sorry to say. vk says China doesn’t have a problem with high per capita income, but under capitalism there is quite often a problem with high per capital incomes, even if objectively those supposedly high per capita incomes are not high enough to support the alleged bourgeois standard of living. That problem is, falling profits. Labeling this fact of social life a Middle Income Trap, is to pretend that such normal operations of market economies is actually the failure of the government to conduct the correct policies. Yu probably believes that capitalism merely needs a correct policy, vk seems to believe that public banking and such will give capitalism a second life that will lead China, then the world onward and upward, just like the dreams of Adam Smith.
donkeytale@21 I think meant to finish the sentence in the first paragraph “at the expense of socialism, social ownership of the means of production and planning.” Or something along those lines?
At any rate, as to the question, currency devaluation=inflation, or currency devaluation=/=inflation? I think it depends on two things, first, on the relative importance of imports in the consumption of the devaluing nation. Second, on the general rate of profit. If profits are falling, either prices will fall as firms attempt to maximize profits, or limit production to what can be sold at nominal prices. Another way of putting it is that the quantity theory of money is wrong, the effect of changes in the quantity of money depend upon the so-called velocity, which is an independent variable, not a constant.
I don’t think Yu was making a left-wing critique myself. The unequal exchange between advanced economies and less developed ones is I think a real thing. But then, this kind of unequal exchange takes place between cities and countryside *within* a nation as well, but no one is so foolish as to think it’s the cause of the poverty of undeveloped areas, or rust belts either. That’s why it is deeply reactionary to call for secession. The primary form of exploitation is still the extraction of surplus value. There is more surplus value extracted in nations with a higher organic composition of labor. This kind of imperialist exploitation cannot be remedied by currency schemes. (It’s also why countries like Sweden and Switzerland are still imperialist, by the way.) Goods can be exchanged at fair market value yet inequalities will be generated, strengthened and stability undermined even as the overall level of development rises. It’s just an expression here I think of why capitalism if fundamentally irrational. (And why many schemes of market socialism are guaranteed to fail, too, I think.) As to currency devaluation being a concession to imperialism, I think in real life concessions to strength must be made by the weak. So, yes, concessions, like the neocolonial concessions/SEZs may have to be made. I do still think concessions that are intended to be forever are surrender.
ADKC@22 asks a rhetorical question. The answer is, the inability of genetics to actually do anything remotely like what transhumanists may (or may not, I thought they were into craziness with computers, not genes) is precisely why nobody with actual money is conducting such a scheme. A transhumanist carrying out genetic experimentation would be analogous to Elizabeth Holmes, of Theranos, ill fame, a con artist whose only success is separating fools from their money. The quotes cited are evidence *against* ADKC’s implied answer of “No.” (Betteredge’s Law of Headlines is possibly the only internet “law” that reliably works.)
vk@26 dismisses donkeytale’s rebuttal. “Inflation is used by the capitalists to erode real gains of wages in a fiat currency system.” Marx lived in vain. I’m sorry, no, the exploitation of capitalism is in production, not in financial chicanery. The central committee of nefarious capitalists are rigging the labor market by manipulating currency? This would be sophisticated thinking in a Republic studios serial from the Thirties/Forties. Not in real life, though. Again, the idea that reforming finance will tame capitalism and the classes will collaborate happily until classes just whither away is nonsense. Maybe vk is influenced too much by the very recent Michael Roberts article linked to earlier. If so, both Roberts and vk have forgotten that with inflation, the division is between creditors and debtors. Inflation favors debtors, and that includes some capitalists and some workers too, while creditors includes some capitalists. Even here, the difference in interests between petty bourgeois and haute bourgeois matter. The notion that the central bank has the awesome technical skill to calibrate the inflation rate fetishizes bourgeois economics and self image as those whose expertise rules the world. Even worse, the rate of exploitation is determined by class struggle, not decree of an omnipotent government. I’ve forgotten what Toyotism even is. But the idea that the problem is the exploitation of POC by the filthy whites in the USA (aside from bleaching the US working class!) means that the worst exploiters of humanity are the leeches on welfare and unemployment. And the Final Solution for capitalism is getting rid of the American working class. vk isn’t into logical conclusions, so no doubt vk hasn’t confronted the real meaning of some misconceptions.
donkeytale@29 is irritated it seems by vk’s curt dismissals and accusations of misrepresentation (to put it mildly.) I have trouble figuring out what precisely vk is saying myself, so I think accusations of malice are obstructive. But the general idea that “socialists” will reform capitalism and that capitalist growth engine will lead humanity into the uplands and the capitalists will someday just wander off into the meadows or something, why, that’s *exactly* what reformists believe, from the days of Proudhon to the Mensheviks and Social-Democrats to the innumerable breeds today. As to what Marx predicted, I think it is more precise to say that Marx demonstrated that capitalism was temporary, that the social class that had both the ability to replace it (requiring a revolution, contra the reformists,) *and* the need to create the conditions of its liberations, socialism, the abolition of classes and production for, was the proletariat (which is not just factory workers, much less just white ones.) In the optimism of the mid-nineteenth century the other possibility, the collapse of modern civilization, was famously announced by Rosa Luxemburg, “Socialism or barbarism!” Barbarism I think will be multipolar. A last point here, Orwell was a piece of shit and copying his ideas endorses his despicable “ideas.” My opinion, of course, but I suggestthere’s a reason Orwell is rammed down high school kids’ throats.
Marx@32 is correct about the contributions of Engels who learned from businessmen and workers alike, but I would add that Marx was taught by German workers and revolutionists, by French workers and revolutionists, by English workers and revolutionists. The German League of the Just, the Communist League, the experience of the revolutions of 1848, the workers of the Chartist movement, the terrible lessons of the defeat of the Paris Commune…the role of real live workers and real life period in making “Marxism” is a study that can and has filled volumes. Marxism isn’t like libertarianism, where some crank sits in a library and makes stuff up. Yes, the library work was also essential in the long run, because the lessons have to be written down. Marx is great for writing them down, not for imagining from his innate genius. But I would also like to say, Marxism is like any science, it’s not closed. Closed systems are for philosophy, religion, law, you know, the inhumanities.
snake@34 imagines the people love the Constitution, which is not true at all. Otherwise, Republicans would have impeached Trump for the emoluments, something he was incontestably guilty of. They don’t care about the Constitution in that case, if they even bothered to understand it. Tackling it from another end, they don’t care the Heller decision was blatantly unconstitutional, arbitrarily ignoring the requirement militias be well-organized. The grounds, that people have just got the feeling that the Second Amendment, despite the plain English, means individuals have an more or less unlimited right to own guns of any kind, for any purpose. If popular feeling counts more than the Constitution, the popular feeling that *they* are voting for President should count too. By and large, Constitution worshippers are like any religious believer, they just believe what they want, and they think their opinion is right because they think they are holier than the unbelievers. They don’t believe in reasons, though, those are just for losers and bad people. The righteous know them when they seem them.
donkeytale@37 is too curt I think, but I suppose the temptation to give in can feel overwhelming. I would say again, deflation and unemployment are still worse than inflation, barring true hyperinflation, which ensues basically after defeat in war (including economic warfare with an overwhelming imperialist power.) Going ape over inflation is covertly anti-worker I think. Waxing wroth with “fiat money” is close to turning into a gold bug, which hasn’t been a sensible position for two centuries. (See results of British currency act or the role of the gold standard in the Great depression.)
murgen23@39 isn’t using the word “bigot” in any sense I understand. vk no more likes to admit being wrong than I do (which is why I cheat and tend to limit my comments to stuff I’m right about…and speak less dogmatically, I hope, when I’m not.) The points about China’s GDP debt etc. doesn’t mean that China has a bleak future, strictly speaking. It’s Chinese *capitalism* that has a bleak future, despite the delusions of the capitalist roaders and vk. And it is quite true that inflation helps debtors, a point vk (and Michael Roberts) has neglected. And it is true the impact of inflation also depends on the role of foreign currency in the national economy. The last point about bonds bears very strongly on fictitious capital. That’s why austerity by the government to fight inflation is deemed so vital even as the Fed has been creating money by the trillions for far longer than the pandemic. And that’s why I tend to see inflation fear mongers as fighting for capital.
vk@52 seems to quote a disappeared comment from donkeytale (originally @50.) That maybe is because of an aside about Dugin’s ideology leading to a neofascist Russia? This seems far-fetched. The statement that ideology may be conceived by a few minds but they are accepted widely for rather materialist reasons, including the unintended collective outcomes from pursuing individual interests, is correct. It does seem to contradict the Dugin aside.
vk’s attempted rebuttal is wrong. First, exploitation is not underpayment. Exploitation occurs even when the worker’s commodity, labor power, is sold at the fair market price. The use of labor power produces more value, surplus value, which is the social relationship (division of labor) that underlies profit, interest, rent, etc. In a society with a higher organic composition of labor, which means more productive labor, the amount of surplus value extracted, is higher, the rate of exploitation therefore is higher. vk comes out here as an anti-Marxist who rejects the labor theory of value, a commonplace in the capitalist roader faction as I understand it. They laugh at Marx. Second, the notion that capitalists can at liberty freeze wages is not correct. Third, the negative interest rates have not been tried very much for a reason, but the limited track record they have is they don’t work so well either. The irrationality of capitalism is not cured with funny money schemes. Money should become less valuable as the amount of capital increases, and the rate of profit tends to fall, to put it crudely. Panic about inflation, ordinary inflation at least, is pro-bourgeois in general, and pro-creditor specially. Third, the notion the Bolshevik party was in control fetishizes the Party. It certainly wasn’t in “control” during the Civil War. And it’s questionable how in control it was during the NEP and collectivization (which was a bit of peasant war, in some way,) much less during the Nazi invasion. The real thing about the Bolshevik Party was they were defeating the bourgeois and their allies on the field of battle and expropriating their property. The CPC currently is helping the emergent bourgeois domestically and allying with their old bourgeois in Taiwan and Hong Kong and Singapore as much as possible.
Tom_Q_Collins@@54 is correct. vk’s position is very much about condemning the masses in the US, including or especially, the working masses, which for these purposes is bleached.
PeterAU1@57 is partly correct. Infrastructure is important, as the network effects lower the real costs of production, restoring profitability. *But,* and this is a huge but, the restoration of profitability also requires the destruction of old capital. It can be literal, as in the massive destruction of old capital in WWII. Or it can be by orderly (more or less) bankruptcy, aka, capitalist crisis, which is the normal operation of capitalism, not some inexplicable failure of liberal policy or whatever. That’s why Japan, which has enormous infrastructure spending still (it was the mainstay of the Liberal Democratic Party’s long rule,) has not worked. Japan is not booming. By the way, much of the infrastructure investment in the US was during the war, not the New Deal.
Paco@59 quotes Karaganov to the effect a main reason for the fall of the Soviet Union is the Russian elites *and* people lost their feeling of moral rightness. This seems implausible, not just for the ability to read the minds of many, many people forty years ago. The USSR falling because it went out of fashion is like saying socialism rose because intellectuals made it fashionable. Karaganov sounds like a fool to me.
donkeytale in the exchanges with max focuses on similarities between US and Chinese capitalists. I will only point out those similarities somehow do not extend to the capitalist business cycle. Capitalism without a business cycle seems like conceding vk’s belief that with a little reform capitalism can be used to usher in the socialist millennium whereupon the capitalists will politely retire.
vk@69 I have read newspaper articles and pamphlet polemics from the early republic and from the Civil War and, for my unrepented sins, the New York Times coverage of the Bolshevik revolution (they kept reporting how Trotsky and/or Lenin had absconded with all the Tsar’s gold.) The picture of sober, factual journalism is…well, I don’t know where that comes from.
Posted by: steven t johnson | Jun 27 2021 22:53 utc | 70
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