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Northern Soul Classics - I keep Trying - Fred Hughes
Top upbeat dancer from Fred Hughes.
The Law Of The Tendency For The Rate of Profit To Fall - Part 12
The Fall In The Value Of The Circulating Constant Capital (2)
In Part 10, it was shown that the process which lies behind the tendency for the rate of profit to fall, i.e. a rise in the social productivity of labour, induced by technological change, causes the demand for raw materials to rise, and thereby causes their prices to spike. This may or may not result in a rise in the price of the commodities into which those materials enter. It will depend upon how much their price rises, and how much the rise in productivity, reduces the amount of living labour absorbed in the final product.
But, it is, in fact, the sharp rise in material prices, consequent upon a sharp rise in their demand, caused by this new technology, which is one of the causes of crises, as opposed to the falling rate of profit. As Marx describes, in Capital III, Chapter 6, and in Theories of Surplus Value, the sharp rise in demand for materials causes their market price to rise way above their price of production. As a consequence, this rise in price cannot be passed on in the price of those commodities into which those materials enter, as inputs, because the higher price of these commodities meets consumer resistance, which causes demand to fall. In order to maintain the level of demand, producers are forced to absorb some of the rise in material prices out of their profits. If falling demand causes the market price to fall far enough, the market price falls below the cost of production so that the capital consumed cannot be reproduced.
But, these periodic crises of overproduction are also the means by which this situation is resolved. In the longer term, in periods of sustained growth, the high prices of raw materials will encourage investment, which will bring down these prices too. In fact, they may as a result, experience sharp falls in value alongside a significant increase in their own supply, creating then a glut of these materials. This cycle of around around 20-25 years, when material prices are falling, due to over supply, followed by around 12 – 15 years when they rise sharply due to under supply, followed by a period when they are relatively flat, can be seen in every long wave cycle. The cycle for copper is particularly clear in that regard.
The process described for the reduction in value of fixed capital, also then applies to the primary products that make up part of the circulating constant capital, but is only visible over this longer period, on the basis of averaging out the periods when the market price is above, and those periods when it is below the price of production. But, not all circulating constant capital consists of primary products. An increasing amount of the circulating capital is itself the result of the capitalist production process. This is more so the case, as capital seeks to replace natural products with synthetic products precisely in order to overcome these lengthy periods when natural production cannot be easily increased. Marx details some of those methods, whereby capital uses science to provide chemical and other processes either to speed up natural processes, or to replace natural products. Even, in respect of natural products, Marx refers to Bakewell's sheep that were bred so as to be ready for slaughter much sooner, and the use of crop rotation so that the production time was reduced etc.
As well as a crisis of overproduction causing some firms to go bust, whose devalued capital is then picked up by others, the very process described in Chapter 11, shows why these capitals with a high organic composition, will have every incentive to try to bring about a reduction in the value of their constant capital, even more than their variable capital.
This is particularly the case given that this rise in wages can result in a rise in the demand for and supply of their own commodities, so that even if prices fall, the mass of profit on them may rise.
Under a regime of prices of production, it appears to capitalists that their profits arise simply from the difference between their selling price and their cost of production. This is emphasised by the fact that a general rise in wages leads to a falling price of the commodities produced by capitals of the higher composition. For these capitals, the main component of their cost of production is the constant capital, and so it appears that the most effective means of raising profits is to reduce this cost.
Consequently, as Marx points out, although the technical composition of capital rises, the organic composition does not rise in the same proportion, because the value of the circulating constant capital falls, and because the quantity of fixed capital falls relatively, whilst its value falls also.
Labels: Capital, Marxist Economic Theory, Rate of Profit
Capital II, Chapter 16 - Part 12
Part of the turnover period is determined by the working period. In agriculture, that is largely determined by natural cycles. In manufacturing and mining it is dependent on the development of the productive process itself, i.e. the increasing scale of production and distribution. That operates in a contradictory manner. On the one hand, the development of the scale of production tends towards the need for a larger productive supply, lengthening the turnover period. On the other, that same development of productive forces means that supply itself expands, and becomes more regular, tending towards a reduced turnover period. Similarly, the development of a global market, as the need arises to search for markets on an ever wider basis, to sell the increased output, tends to increase the turnover time. But, the same process expands and develops distribution networks – and under Imperialism leads to production facilities themselves being established closer to markets – as well as revolutionises transport, thereby reducing turnover time.
Marx gives the example of British cotton exports to India. When times were good, and money is readily available, in the money-market, the exporter may pay the manufacturer for the products. At other times, the exporter may not be inclined to take that risk, instead serving only to ship the goods, leaving the manufacturer to bear the risk of whether they will be actually sold.
However, in the former case, the wages paid to the cotton workers from the money received from the exporter, are not the value they have produced being returned to them. That can only happen when that value is actually realised by the commodity being consumed, i.e. bought by a final consumer.
The exporter, here, is not a final consumer. He only buys in order to sell on. In reality, he buys these commodities with additional capital, just as if the manufacturer had introduced additional capital to cover the circulation period.
The exporter/merchant may have obtained this money-capital himself by borrowing in the money-market.
"Similarly, before this money is thrown on the market, or simultaneously with this, no additional product has been put on the English market that could be bought with this money and would enter the sphere of productive or individual consumption. If this situation continues for a rather long period of time and on a rather large scale, it must have the same effect as the previously mentioned prolongation of the working period." (p 321)
In other words, in this situation, the English workers are producing goods, which are shipped out of the country. They are paid wages in money with which to buy goods. The money itself may have been obtained as credit in the money market, particularly where credit is easy, and interest rates are low. But, because their production has been exported, and the equivalent value of goods has not been imported, in return, a situation arises, of too much money chasing too few commodities, so that market prices are forced up – inflation.
Today, that situation arises in Britain, not because goods are being exported without a corresponding import of goods to the same value, but because money tokens are printed, and credit is created, so that workers can be encouraged to borrow and spend. Plenty of imported Chinese goods ensures that these prices are kept down, but the inflation manifests itself in the prices of energy, food, and of asset prices like property, shares and bonds, which rise way above their underlying value.
When the British cotton goods reach India, they may be bought, possibly by other merchants again using credit. The exporter/merchant may also themselves use this credit to buy Indian commodities. The way this worked was often via Bills of Exchange. For example, A sells £100 of goods to B. A is given a Bill of Exchange drawn on B to the value of £100, like an I.O.U. A can either wait until the due date of the bill and cash it for full payment, or they can discount it at a Discount House, which pays cash less a discount in return for it. Alternatively, A can endorse the bill, and use it as a means of payment themselves, passing it to C, from whom they buy goods, who then eventually collects from B.
"With this credit, products are bought in India and sent as return shipment to England or drafts remitted for this amount. If this condition is protracted, the Indian money-market comes under pressure and the reaction on England may here produce a crisis. This crisis, in its turn, even if connected with bullion export to India, calls forth a new crisis in that country on account of the bankruptcy of English firms and their Indian branches, which had received credit from Indian banks. Thus a crisis occurs simultaneously in the market in which the balance of trade is favourable, as well as in the one in which it is unfavourable. This phenomenon may be still more complicated. Assume for instance that England has sent silver bullion to India but India's English creditors are not urgently collecting their debts in that country, and India will soon after have to ship its silver bullion back to England." (p 321)
Credit here has hidden the fact that in reality the cotton has not been sold and its value has not been reproduced. The wages of the cotton workers have not been paid with the return of the value they previously created, but by the advance of additional capital, extracted from the money-market.
"But as soon as the crisis breaks out in England it turns out that unsold cotton goods are stored in India (hence have not been transformed from commodity-capital into money-capital — an over-production to this extent), and that on the other hand there are stored up in England unsold supplies of Indian goods, and moreover, a great portion of the sold and consumed supplies is not yet paid. Hence what appears as a crisis on the money-market is in reality an expression of abnormal conditions in the very process of production and reproduction." (p 322)
Marx refers to one final aspect of the effect of the rate of turnover of circulating capital. It relates to where one or more of the inputs are themselves an output. For example, coal used to fuel steam engines for pumps in a coal mine. The shorter the working period, the more frequent these inputs are themselves made available, and so the less productive supply is required.
Forward To Chapter 17
Back To Volume II Index
The points made already demonstrate the contradictory nature of the process which lies behind the law of falling profits. That process relies upon the continual rise of the social productivity of labour, brought about by technological change. But, it has already been seen that this very same process requires that the mass of capital, including variable capital, and therefore, the mass of surplus value, also continually rises. In addition, this very same process means that although the mass of fixed capital declines as a proportion of the total output, and, therefore, as a proportion of the laid-out circulating constant capital, it rises as a proportion of the advanced capital. That is because, the rise in social productivity, it brings about, increases the rate of turnover, of the advanced capital. The circulating capital turns over much more quickly, whilst the fixed capital, because it has to be present continuously in its entirety, thereby occupies a larger place amongst the advanced capital.
It was demonstrated that, in fact, as the proportion of fixed capital within the advanced capital rises, this has the necessary effect not of causing the rate of profit to fall, but to rise, because of this associated rise in the rate of turnover of the circulating capital. That same process leads to a proportion of the advanced capital being freed, which can be used for additional accumulation, including the establishment of new lines of business, where the organic composition of capital, and rate of profit is very high. But, the same process of raising the social productivity of labour, also reduces the value of the fixed capital employed, which means that the value of the total advanced capital, thereby falls relatively too. Particularly, in periods of rapid technological change, when the process of rising social productivity would be greatest, this has an even more marked effect on reducing the value of this fixed capital, via the process of moral depreciation. But, in reducing the value of the fixed capital, this also has the effect of reducing the organic composition of capital, and thereby raising the rate of profit. The greater the proportion of fixed capital within the advanced capital, the more marked this effect must be, as was shown earlier.
But, this process of rising social productivity does not just reduce the value of the fixed capital, it continually reduces the value of all commodities, and therefore, of the commodities that make up the circulating capital. In the example, given above, for example, a new spinning machine was introduced, which spun nine times as much cotton. As a result, it reduced the amount of living labour required in the spinning process to one-ninth its previous level. By that process, the value of yarn is reduced significantly. But, yarn is not just a consumer product. It comprises the raw material of other producers, such as weavers, tailors and so on. By reducing its value, this process reduces the value of the circulating capital of these other capitals, thereby reducing the organic composition of their capital, and acting to raise their rate of profit.
This process is again contradictory. The very fact of the sharp rise in demand for cotton causes its price to rise. That means that the "value" (not really its value but its price) of the circulating capital, of the spinner rises, their organic composition of capital rises, and so their rate of profit falls. Moreover, the sharp rise in the price of cotton causes the price of the yarn to rise, as the cost of the cotton is passed on. But, the extent of this depends on a number of factors. The price of yarn will not rise, for example, if the reduction in the value of living labour is greater than the increased price of cotton.
Suppose we have:
c 1000 + v 1000 + s 1000 = £3000. It represents 3000 kilos of yarn, making the price of each kilo £1.
As a result of the introduction of a new machine across the industry the demand for cotton rises sharply sending its price up by 20%, but the machine means that the same amount of labour processes twice the amount of cotton. As a result only half the workers are employed, the amount of living labour embodied in the product is cut in half, thereby reducing the value of the final product. (NB. The example, here is designed to show this effect on the price of the end product, but for the reasons set out in Part 10, its clear why this absolute reduction in labour-power would not occur. Indeed, the increased demand for cotton causing the higher price is premised on more of the new machines being introduced than just replace the output of the old machines.)
c 1200 + v 500 + s 500 = 2200. Now the 3000 kilos have a price of £0.733 per kilo, despite the fact that there has been a 20% rise in the price of cotton.
Here, the total capital advanced by the spinner has fallen from £2000 to £1700, but their surplus value has fallen from £1,000 to £500. Their rate of profit has fallen from 50% to 29.41%. But, the price of yarn has fallen for the weaver, tailor and so on. As a result, the value of the latter's constant capital, will have fallen accordingly, their organic composition of capital will have fallen, and their rate of profit risen. If this situation were to continue, capital would move from spinning to weaving, tailoring etc. where the rate of profit is higher. Marx says,
"When spinning-machines were invented, there was over-production of yarn in relation to weaving. This disproportion disappeared when mechanical looms were introduced into weaving." (TOSV2 Note p 521)
At the end of Part 10, the problem of democratic planning at a detailed level, was outlined, because of the inevitable gap that would exist between the verbally derived macro decisions about what to produce, as against the billions of micro decisions, of consumers, about what they actually wanted to consume. Effective planning could only be outline, indicative planning rather than detailed, and would need to develop gradually and organically, based on the growing integration of the individual production plans of the workers' co-operative enterprises.
But, capitalism does not allocate available social labour-time efficiently either. More so in Marx's time than today, when large scale production has become planned and regulated, and when the national economy itself has been subject to similar planning and regulation.
"On the one hand pressure is brought to bear on the money-market, while on the other, an easy money-market calls such enterprises into being en masse, thus creating the very circumstances which later give rise to pressure on the money-market. Pressure is brought to bear on the money-market, since large advances of money-capital are constantly needed here for long periods of time. And this regardless of the fact that industrialists and merchants throw the money-capital necessary to carry on their business into speculative railway schemes; etc., and make it good by borrowing in the money-market." (p 319)
This demonstrates the differences and similarities of today compared with Marx's time. Today, we have the easiest money market of all time. Yet, the very largest enterprises, that have billions of dollars on their balance sheets, do not spend it to increase their production, to increase their profits. Why? Because these large corporations do not base their decisions on immediate market signals, as they did in Marx's day, but on planned investment covering many years. That itself is based on complex market research, demographics and so on. Unlike the kind of small firms of Marx's day, these large companies are able to judge whether an increase in production is capable of being absorbed by the market or not, and so whether it will be profitable or not.
If not, or economic or political uncertainty gives doubt about whether it will be profitable or not, there is no reason they will invest in additional production. In Marx's day, when the economy was booming, the myriad of small companies sought to increase their profits and market share by ramping up production to meet the increased demand and benefit from the higher prices. As each did so, the potential arose for the market to become oversupplied. Then, each firm tried to retain its market share by producing even more, and selling it at lower prices. Such crises of overproduction always arose on the back of periods of prosperity and rising consumption, contrary to the belief of the underconsumptionists, that crises erupt because of inadequate consumption.
Instead, today, crises arise because the big companies bring about planned reductions in output, or simply fail to expand, to prevent such overproduction. But, in doing so, they reduce the level of aggregate demand in the economy, setting in place its own downward spiral of economic activity.
Similarly, the many small firms that continue to exist, remain prone to the kind of overproduction Marx refers to. In the last ten years, at least, very easy money-markets have led to the establishment of many small businesses that really should not have been created. In Britain, they form part of the 150,000 known zombie companies, only able to repay the interest, rather than the capital on their loans, and some even struggling to cover the interest. It is a similar thing to 1 million plus zombie mortgages, where the borrower has only managed to pay the interest on their loan, and has no means to repay the capital sum, and is thereby likely to lose their house.
As in Marx's day, this easy money is used for speculation, be it in property, as above, or to blow up share and bond price bubbles, which themselves detract from productive investment.
Once commodity capital has been realised via the sale of
commodities, the money that results is only potential
money-capital. Marx says that simple reproduction remains
a major part of expanded reproduction. In other words, a
large part of the money goes to cover the unproductive
consumption of the capitalists and other exploiters. The money
first goes into bank deposits, from where it can enter the circuit
of capital again, or else it can be used for consumption, or else
become simply fictitious capital continually circulating around
the property, bond and share markets, blowing up speculative
bubbles.
"On the other hand pressure on society's available productive capital. Since elements of productive capital are for ever being withdrawn from the market and only an equivalent in money is thrown on the market in their place, the effective demand rises without itself furnishing any element of supply. Hence a rise in the prices of productive materials as well as means of subsistence. To this must be added that stock-jobbing is a regular practice and capital is transferred on a large scale. A band of speculators, contractors, engineers, lawyers, etc., enrich themselves. They create a strong demand for articles of consumption on the market, wages rising at the same time. So far as foodstuffs are involved, agriculture too is stimulated. But as these foodstuffs cannot be suddenly increased in the course of the year, their import grows, just as that of exotic foods in general (coffee, sugar, wine, etc.) and of articles of luxury. Hence excessive imports and speculation in this line of the import business. Meanwhile, in those branches of industry in which production can be rapidly expanded (manufacture proper, mining, etc.), climbing prices give rise to sudden expansion soon followed by collapse. The same effect is produced in the labour-market, attracting great numbers of the latent relative surplus-population, and even of the employed labourers, to the new lines of business." (p 319)
Over Cooked Kippers
The real story of Thursdays elections is the extent to which 24 hour news, as entertainment, now represents a threat to democracy. In a world in which news presenters have become entertainers, and the presentation of the news has become more important than its content, where the need to be continually saying something, no matter how many times its been repeated, now matter how banal, but always to have to make it sound as though its new and dramatic, its no wonder that the rather poor performance of UKIP has to be blown up to be made out to be in some way a political earthquake. It is the political equivalent of the attempt during Winter to make a fall of snow into a news item; to make more than an inch of snow into a calamity. It is the equivalent of the presentation of everything as being the worst, best, longest, since …. even if …. was only last year!
UKIP, or more precisely Nigel Farage, is largely a media created phenomenon. That's not to say they are based on nothing. And, its important for Labour, in particular, to understand what they are based on. There is probably around 25-30% of the British population that suffers from a fairly ingrained racism. You only have to talk to ordinary people to hear it quite readily. Its not the hard racism of organisations like the BNP, or their predecessors. Its a racism born of British chauvinism and cultural backwardness. Its witnessed among much of the same group in other forms of backwardness in respect to sexism and homophobia, for example. And, its not restricted to those with right-wing views.
All of us will have come across the trade union militants, and workers who hold otherwise left-wing views for whom this is the case. In the past, the Militant Tendency were renowned for pandering to it, refusing to push support for various issues where it was felt it might undermine their support amongst such workers. The same approach, of failing to challenge reactionary views, for fear of alienating potential supporters, arose both with the Militant and with the International Socialists, over Ireland, in the 1970's. A classic manifestation of the phenomena was, in 1968, when some of the most militant workers in the country, the London Dockers, marched in support of Enoch Powell, who had been sacked, after giving his "Rivers of Blood" speech. Many of us will even have come across Labour Party members who hold generally left-wing views, but who still hold chauvinistic views on race, gender and sexual orientation.
These views sit more comfortably with the right-wing views of the Tories, they fit neatly with the narrow minded world view of their petit-bourgeois and backward working-class membership and electoral base, but they are by no means confined to their supporters. UKIP was able to appeal to them first because it grew out of them, and its free market policies which it keeps quiet more recently, appeals to them. The reality is, however, that for the majority of working-class voters, and particularly for those who have a more generally left-wing orientation, it is the class affiliation and the greater concern over the bread and butter economic issues that determines their vote for Labour, and not these other concerns. What further complicates matters is that the message that left-wing socialists have given to workers on this issue has been confused and murky too. In Germany too, in the 1930's, many workers who had supported, and even been members of the Communist Party switched straight across to the the Nazis, and for a similar reason, that the Stalinists had tried to appeal to the same nationalistic sentiments that the Nazis based themselves on.
Organisations like the Communist Party, and the SWP are not racist, and yet some of the messages they send out are both nationalistic and racist. The Communist Party, like all Stalinist parties has always been, to use Trotsky's definition, "National Socialist". That is it has based its programme on the idea of a National Road to Socialism, which is an extension of Stalin's idea of "Socialism In One Country". The manifestation of that was in the Communist Party's advocacy of the Alternative Economic Strategy, which was a left-nationalist strategy based on a popular front with British capital, around the idea of import controls to protect inefficient British companies, and investment by the British state, in those companies, out of workers taxes, in return for the trade union bureaucracy getting its feet under the boardroom table, so as better to ensure the exploitation of British workers.
Both the CP and the SWP/IS adopted a similarly nationalistic stance in the 1975 referendum on the EEC, arguing for withdrawal, thereby presenting British capital as in some way a better alternative for British workers than European capital, the British state as in some way less a capitalist state than an European state. The CP has also always shied away from the idea of opposing immigration controls, again thereby placing the responsibility for the problems of British capital on foreign workers. Both adopt a Popular Frontist strategy when it comes to opposing fascism, and both are happy, within that context, to utilise nationalistic ideology and imagery, for example conjuring up the image of British Imperialism against Nazism in WWII, for that end.
Its no wonder then, particularly given the abysmally low level of political culture in Britain, that many workers can associate these kinds of nationalistic and even racist stances as being in some way radical and anti-establishment. A more recent example is the wheeling out again of the thoroughly reactionary NO2EU.
Its from this ideological and cultural swamp that reactionary forces, such as the BNP and UKIP, suck up their support. It was always likely to be the case, therefore, that having drained the Tory swamp with its focus on the EU, UKIP's further progress would see it begin to drain the Labour swamp. In fact, many of us will be aware that a number of existing UKIP councillors elected over the last 10 years, are themselves former Labour mavericks, again often from a supposed left-wing position. UKIP have openly said they are following the Paddy Ashdown strategy of trying to build up a base in Local Government. They seem to also be following the Liberal approach of saying Leftish things in Labour areas – or at least hiding as deep as possible all of their right-wing, free market policies – and Right-wing things in Tory areas. They also appear to have no problem proclaiming themselves "Libertarians", whilst having the most illiberal views on almost everything other than the liberty of capital to move freely and exploit workers unimpeded.
But, the reality is, for all the media hype, in respect of the local government elections, UKIP have not brought about some kind of political earthquake. Their performance is not really an advance from the position that the BNP were in a few years ago. In fact, unlike UKIP, which currently is nowhere near being able to control a single Council, the BNP were close to having a majority in a number of councils like Stoke, close to getting their supporters elected to positions of Mayor and so on. Given that UKIP have basically hoovered up the BNP diaspora, both in terms of its members and its voters, UKIP's performance is, in reality sub par. Despite the media hype, UKIP have done markedly worse this year than they did last year.
The turnout for the local elections was around 35%. Past experience suggests that the majority of people, who are going to vote UKIP, did so in these elections, just as was the case, in the past, with the BNP. That means that their actual support is flattered by these elections. Even if all the people, who voted UKIP, in these elections, did so, in a General Election, which they almost certainly will not, their actual share of the vote would then fall in half, in a General Election, when twice as many people vote. But, the reality is that, in a General Election, many of the Tory voters, who voted UKIP, will return to the Tory fold, keen to keep out Labour. But, for the reasons set out above, an even greater number of traditional Labour voters, who may have voted UKIP, as a protest, will vote Labour, come the General Election.
Its important for Labour to understand this, so as not to be goaded into making concessions to what is, in fact, only a minority view, and a minority view whose strength is very limited, compared to the greater concern, of those workers, in relation to issues such as jobs and wages. Some of those left-nationalists, in the Labour Party and TU movement, who would be keen to accommodate the siren calls, for a more Little Englander stance, over the EU, will be happy to use UKIP's vote, to press for an accommodation, with its reactionary ideas, on those issues. Labour should resist them. The key for Labour, to the next election, is to stand out against UKIP's reactionary nationalist solutions, to argue for internationalist solutions across Europe, based around the need to address the problems of workers in respect of jobs and living standards, across Europe, by attacking the real causes of those problems rooted in capitalism, not by attacking other workers, or blaming foreigners in general. A good start would be for Labour now to be vigorously and openly strengthening its links with other workers parties across Europe, around a programme to address these issues, at a European level, against austerity, for example.
The only way to fight a race to the bottom by individual national economies, that destroys jobs and living standards, is to abolish national economies, not to reinforce them, by re-establishing national borders. The answer to wages being undercut is to establish a high level of Minimum Wage, common across the whole EU, along with common benefits paid across the EU, funded from a central EU state budget, in the first instance, until such time as workers across Europe can establish their own worker owned and controlled social insurance scheme.
The fact is that Labour did not lose large numbers of votes to UKIP, as did the Tories. Labour failed to win seats in those areas, where, in the past, low turnouts would have let in the BNP, who picked up the votes of those backward layers. Labour should not accommodate those elements. It should offer them an alternative to the reactionary solutions groups like the BNP and UKIP offer for their problems. But, in fact, Labour had considerable success in the local elections, that you would never have known about by listening to the 24 hour news media. Labour clearly took votes from the Liberals who are now running towards oblivion, whilst the Tory vote in many areas also collapsed.
Yet, to listen to all of the media hype you would think that Labour had been losing seats left, right and centre. One reporter in the Midlands I heard talk about Labour having a bruising night, simply because they had failed to actually take control of the Council. If winning large numbers of seats, whilst your opponents are losing them represents getting a bruising, god knows how they thought the Tories and Liberals must have suffered. But, of course, that was not the pre-ordained narrative for the news celebrities. That story had to be that UKIP had carried the day, and Labour had done badly. And, if the story could be extended to the idea that Labour had done badly because its led by that geek Miliband all the better, because that reinforces the other meme that the media has pushed, that Labour chose the wrong Miliband, and for failing to choose the media's preferred brother, Labour must now be made to pay.
How much more entertaining is it, after all, to reduce politics, and the rather serious business of choosing the leaders of the country, down to being nothing more than a beauty contest, where the media's chosen targets are one by one thrown out of the House, for not being telegenic enough, being too geeky and so on. If fact, why not skip the actual elections, and simply have the leaders appear in front of Simon Cowell and a panel of other judges, and then have premium rate phone lines to vote for your chosen celebrity politician. We are after all part way to that with the party leaders shows at the last General Election. Maybe Sky News, and the BBC News Channel could find ever more entertaining ways of presenting it, because, after all, the reason most people don't vote is because its too boring. We could have Parliament on Ice, or Celebrity Come Committee Stage.
The real story was that Labour, who already had many more seats than UKIP, and for whom the task of increasing its share, therefore, was harder, not only won many more seats than UKIP, but it won more seats than UKIP held in total! The real story was that the Tory vote collapsed, much of it going to UKIP, and posing a far greater problem for them than for Labour. The real story was the death of the Liberals, and not before time. The real story is that, come the next election, it will, more than ever before, be not a three horse race, let alone a four horse race, but a straightforward fight between Labour and Tories. Come the General Election, both UKIP and the Liberals will not even be also rans.
But, the media could not present that story, because its not entertaining. It does not appear as something new. Farage and UKIP have been feted, by the media, because they provide the news channels with the opportunity of providing entertainment, even if, in doing so, and presenting the winning of 160 seats by UKIP, out of 4000 plus, as a landslide, whilst presenting the 2100 seats, won by Labour, as a disaster, means they essentially misinform the electorate, and undermine the democratic process.
The BBC website, for example, stated,
"UKIP's support surges, with Labour also making gains as Tories and Lib Dems lose seats in the English local elections."
But, the fact was that it was not a matter that "Labour also made gains". Not only did Labour win nearly 15 times as many seats as UKIP, it actually gained 338 seats compared to the 160 gained by UKIP. Labour gained 6 Councils to control 82 councils overall, whereas UKIP is nowhere near controlling any Council. The BBC wheeled out John Curtice to argue that, despite all this, Labour had only increased its vote by 3-4%, which is not enough to guarantee a majority. But, what he failed to point out was that the Tories had lost around 13% of the vote, and the Liberals had collapsed. A 3-4% swing to Labour might not be enough, if the Tories vote had held up, but it hadn't. The fact it has been drained to UKIP directly benefits Labour, because nowhere is UKIP going to be in contention to win seats, certainly not from Labour. Meanwhile, the Liberals can now only win Parliamentary seats in Tory areas, because their mask has slipped and their true free market face has been revealed.
But, who would know any of this from our news media, because it is only interested in politics as entertainment, in personalities not politics. If we allow our politics to continue to be commoditised in this way, to allow the News channels need to sensationalise and trivialise all news simply in order to justify their existence as providers of entertainment, and thereby to undermine our democracy, we will have only ourselves to blame when what was something of a sham to begin with, is no longer even that.
Labels: BBC, Bourgeois Democracy, UKIP
Northern Soul Classics - I'm Gone - Eddie Parker
Another monster sound from the godfather of northern soul, Eddie Parker.
A Rise In The Mass Of Capital and Profit (3)
The increase in the mass of capital is important not just because it means also a growing mass of variable capital, and therefore, of surplus value. It is important, because, as Marx points out, beyond the initial development of capitalism, based on privately owned, individual capitals, it is the mass of profit that is determinant of accumulation, not the rate of profit. That is so for several reasons.
In Capital I, Marx described the historical process of capital accumulation. First, the direct peasant and artisan producers are expropriated by individual capitalists. Second, the very process of capitalist competition brings about a concentration and centralisation of capital. This establishes a relatively few big capitalists in a position where they and their families exercise a monopoly of private capital, as even the smaller capitalists begin to be swallowed up. However, as the process of accumulation and concentration and centralisation of capital proceeds, even these very big, individual, private capitalists are not big enough, and cannot mobilise sufficient capital. The monopoly of private capital becomes a fetter on further progress. In order for capital to proceed further, this fetter must be "burst asunder". It is, in the shape of socialised capital, which takes the form initially of the joint stock company, and the co-operative, in which large numbers of individuals, including workers and the middle class, pool their individual capitals, and utilise credit to establish mammoth collective capitals. Now, this socialised capital begins to swallow up the big private capitals themselves. The expropriators are themselves expropriated. This process, of the development of socialised capital, itself then proceeds to establish the limited liability company, the multinational corporation, the trusts, and even the state capitalist enterprise.
This development is significant for several reasons. Firstly, as stated above, by the time capital reaches these mammoth proportions, the increase in the mass of profit has long since become more important than changes in the rate of profit, because any fall in the rate of profit, for these companies, is more than compensated by the rise in its mass of profits. The stage has been reached that Marx described when he stated,
"The rate of profit, i.e., the relative increment of capital, is above all important to all new offshoots of capital seeking to find an independent place for themselves. And as soon as formation of capital were to fall into the hands of a few established big capitals, for which the mass of profit compensates for the falling rate of profit, the vital flame of production would be altogether extinguished. It would die out." (Chapter 15, p 259)
And, as he says, for these giant socialised forms of capital, that is precisely the case. In fact, for these huge corporations, not only does their profit not enter the process of establishing the average rate of profit, but in practice, the category of "profit", within them, itself disappears, as Marx sets out later in Capital III, as the social function of the individual capitalist is replaced by that of the professional manager, paid wages, whilst the shareholding capitalist, the coupon clipper, receives not profit but interest, on their money-capital, in the form of dividends.
"But in the sense that these capitals, although invested in large productive enterprises, yield only large or small amounts of interest, so-called dividends, after all costs have been deducted. In railways, for instance. These do not therefore go into levelling the general rate of profit, because they yield a lower than average rate of profit. If they did enter into it, the general rate of profit would fall much lower. Theoretically, they may be included in the calculation, and the result would then be a lower rate of profit than the seemingly existing rate, which is decisive for the capitalists; it would be lower, because the constant capital particularly in these enterprises is largest in its relation to the variable capital." (Capital III, Chapter 14, p 240)
The mass of capital is significant, for these mammoth capitals, not just because, as Marx points out, the potential for accumulation, out of a low rate of profit, on a big capital, is still greater than that from a high rate of profit on a small capital, but because this large mass of profit is decisive, for the bigger capital, in the battle of competition.
"We have shown how the same causes that bring about a tendency for the general rate of profit to fall necessitate an accelerated accumulation of capital and, consequently, an increase in the absolute magnitude, or total mass, of the surplus-labour (surplus-value, profit) appropriated by it. Just as everything appears reversed in competition, and thus in the consciousness of the agents of competition, so also this law, this inner and necessary connection between two seeming contradictions. It is evident that within the proportions indicated above a capitalist disposing of a large capital will receive a larger mass of profit than a small capitalist making seemingly high profits." (Capital III, Chapter 13, p 224-5)
"Even a cursory examination of competition shows, furthermore, that under certain circumstances, when the greater capitalist wishes to make room for himself on the market, and to crowd out the smaller ones, as happens in times of crises, he makes practical use of this, i.e., he deliberately lowers his rate of profit in order to drive the smaller ones to the wall." (ibid p 225)
But, the profits of these mammoth socialised capitals do not participate in the process of formation of the average rate of profit for another reason. That is because their huge size means that barriers, both to entry and to exit, of these spheres are established. No one can simply set up as a mass car producer, for example, because the capital required to do so is so large that only some form of socialised capital is capable of mobilising the minimum level of resources required. But, similarly, such a capital, having invested billions of dollars, in this sphere of production, cannot simply withdraw it, because the rate of profit has fallen below the average. In other words, the productive-capital, involved in these spheres, cannot simply flow to where the highest profits are to be made. Later, I will examine Marx's comments, in relation to this expansion of stock capital, as a countervailing force to the falling rate of profit, and how later developments have resolved the issue of the immobility of this productive-capital, and developed the means for providing an average rate of profit.
Finally, I want to demonstrate why it is that the introduction of new machines leads to accumulation of capital, rather than to these machines simply replacing the existing machines and labour-power.
If we take the situation described earlier, where a machine with 36 spindles could replace 9 machines with 4 spindles, it was demonstrated that, as well as the 9 machines, this would mean also that the workers that operated them could also thereby be replaced. In other words, the wages of 8 workers, equal to £8,000 could be saved, alongside £8,000 in machines, if just one new machine, and worker, were employed, to produce the same output as 9 machines and 9 workers.
But, consider the following. If the firm has to produce 100,000 units, to meet the requirements of its working period, and achieves this in 9 weeks, with 9 machines and 9 workers, it will achieve the same thing, in the same time, with the 1 machine and worker. In this time, to produce the 100,000 units, it will need, say 10,000 kilos of cotton. Now, suppose, instead, it uses the released capital to replace all of its original 9 machines. It now produces the 100,000 units in just 1 week. In that week, it processes the same 10,000 kilos of cotton, so the capital it advances on materials, for this new shorter working period, is the same as it advanced for the 9 week working period. True, compared with employing 9 workers instead of the 1, its wage bill must be more, but, it now only advances variable capital for 1 week rather than 9 weeks too. The variable capital, needed for 9 workers for 1 week, is no more than for 1 worker for 9 weeks.
In other words, the advantage of using the released capital, to replace all of the machines, rather than simply replacing 9 with 1, and of reducing the workforce, so as to simply produce at the old level, is that the working period, for the capital, is reduced to a ninth of what it was, and consequently, the capital advanced, for this much shorter period, for both variable capital, and circulating constant capital, is no more than was previously advanced for 9 weeks. The difference is that 9 times the quantity of commodities are produced, nine times the amount of surplus value is produced, and the total size of the laid-out capital is also nine times bigger than it was. Because the annual rate of profit is the total surplus value produced for the year, measured against the capital advanced for one turnover period, therefore, both the mass and the rate of profit, must then rise massively.
For any given scale of production, the amount of advanced capital decreases in proportion to the turnover period (or inverse proportion to the number of turnovers). The annual rate of surplus value increases, similarly.
By the same token, for any given amount of advanced capital, the scale of production rises, the higher the rate of turnover.
"It generally follows from the foregoing investigation that the different lengths of the turnover periods make it necessary for money-capital to be advanced in very different amounts in order to set in motion the same quantity of productive circulating capital and the same quantity of labour with the same degree of exploitation of labour." (p 318)
When the workers withdraw means of subsistence from the market, they put money into it. For the reasons set out previously, however,
"But since the money wherewith the B labourer pays for his means of subsistence, which he withdraws from the market, is not the money-form of a value produced and thrown by him on the market during the year, as it is in the case of the A labourer, he supplies the seller of the means of subsistence with money, but not with commodities — be they means of production or means of subsistence — which this seller could buy with the proceeds of the sale, as he can in the case of A." (p 318)
B's workers have wages, which they use to buy commodities, but the commodities they produce themselves do not appear in the market for another year. So, B workers may have potatoes produced by A workers, but the money paid as wages to A workers from that sale, may find no wheat, for example, produced by B workers, to buy, for another year. Given that exchange, as we saw at the beginning of Volume I, is really the exchange of an amount of labour-time by A, for an equal amount of labour-time from B, it can be seen how this situation can lead to crises and disproportions.
"If we conceive society as being not capitalistic but communistic, there will be no money-capital at all in the first place, not the disguises cloaking the transactions arising on account of it. The question then comes down to the need of society to calculate beforehand how much labour, means of production, and means of subsistence it can invest, without detriment, in such lines of business as for instance the building of railways, which do not furnish any means of production or subsistence, nor produce any useful effect for a long time, a year or more, while they extract labour, means of production and means of subsistence from the total annual production." (p 318-9)
One of the reasons the USSR collapsed was that it invested huge amounts of social labour-time in this way, that sucked value out of its economy in the short term, but only put it back in the long-term. Its industry was massively geared to heavy capital goods production, with long turnover periods. It also operated as a massive sort of Welfare State, as a means of reconciling the fact that the workers were the ruling class, and yet control was in the hands of a workers bureaucracy. It had large numbers of doctors, scientists, teachers, as well as the hospitals, schools and universities to go with them, and virtually free public transport. Not only did this suck value out of the rest of the economy to provide the necessary means of production for these enterprises, as well as to provide the means of subsistence for those that worked in them, but the costs of building these facilities, and of educating and training those that worked in them, required yet more resources to be sucked out of the economy. Although, all these things put value back in the economy, they do so only over long periods of time.
In short, too few workers were employed in productive activity that put value into the economy in the short term – let alone the problems of that value being diminished because of poor quality etc. - and too many were involved in activities that only returned value in the long term. Democratic rather than bureaucratic planning may make that problem worse rather than better. If asked, most workers would vote for more, better hospitals, schools, teachers, doctors etc. Its not so easy to get across what the real cost of achieving that is. When you are expressing a preference in a vote, rather than actually spending your money, its easy to vote for things you'd like rather than things you can afford.
In fact, when workers express their real preferences for what they wish to consume, i.e. how they vote with their wallets, they frequently demonstrate a higher preference for allocating available social labour-time in the production of motor cars, football and other forms of entertainment, TV's and electronic equipment, more than for education or healthcare.
That is because, when individuals verbally express a preference it is usually a preference for what they think 'society', i.e. everyone else should do. So, individuals might vote for an increase in public transport, because they think everyone else should use it, leaving the roads clear for them! The consequence is that such democratic planning at a detailed level, would almost certainly result in major dislocations because these macro decisions, allocating available social labour-time would inevitably be at variance with the millions of micro decisions of consumers of how they wished to spend their money. It would lead to the emergence of a black market economy, as a means of meeting the needs of consumers that were not being met, as a result of inadequate production, as well as waste of resources in all those areas that were likewise over produced.
The Law of The Tendency For The Rate of Profit To Fall - Part 9
In Part 7, it was demonstrated how a rise in the organic composition, brought about by technological change, results in the creation of a relative surplus population. Improved machines, were able to process the same quantity of materials, with just one ninth of the previously employed workers, or put another way, if the same quantity of machines and workers are employed, then nine times the previous quantity of material is processed. But, this same process means that the rate of turnover of capital rises nine-fold, a given quantity of output is produced in a ninth of the time. Consequently, the circulating capital turns over faster, and it was seen that as a result of this process, £8,000 of advanced capital, equal to the variable capital of the eight workers replaced, was released.
But, as Marx says, particularly in periods of rapid technological change, new lines of production are being established all the time. And Marx comments,
"...new lines of production are opened up, especially for the production of luxuries, and it is these that take as their basis this relative over-population, often set free in other lines of production through the increase of their constant capital. These new lines start out predominantly with living labour, and by degrees pass through the same evolution as the other lines of production. In either case the variable capital makes up a considerable portion of the total capital and wages are below the average, so that both the rate and mass of surplus-value in these lines of production are unusually high. Since the general rate of profit is formed by levelling the rates of profit in the individual branches of production, however, the same factor which brings about the tendency in the rate of profit to fall, again produces a counterbalance to this tendency and more or less paralyses its effects." (Capital III, Chapter 14 p 237)
Its precisely because in these new lines of production it is variable capital which makes up a considerable portion of the total capital, that any given quantity of capital employs a larger number of workers than would be the case were the capital employed elsewhere. That also means that in these new lines, this low organic composition of capital leads to a much higher than average rate of profit, which in turn impacts the aggregate social organic composition of capital, and rate of profit. But, this also impacts the further accumulation of capital.
The basis of this process is fairly straightforward, and flows from what Marx has already outlined. The tendency for the rate of profit to fall arises from the growing social productivity of labour, such that a given mass of labour processes a growing mass of material. But, within this process, a growing mass of profit leads to a growing total mass of capital, including a growing mass of variable capital. But, within each industry, there comes a point where the falling rate of profit creates strong incentives for its own expanding mass of profit to be used not for the further expansion of that industry, but to be utilised in the creation of some new industry. Marx described this centrifugal tendency of capital counteracting the tendency towards further concentration and centralisation in Capital I.
The process of reproduction within the industry ensures that it continues to be able to reproduce its own variable and constant capital, so that it is able to continue to produce on at least the same scale. But, suppose the percentage organic composition of capital in this industry is 80 c: 20 v. Then, each £1,000 of profit will employ four times the value of constant capital as variable capital, £800 to £200. But, suppose the available surplus value is used to invest in some new line of production, where the organic composition is instead 20 c : 80 v. Now, for every £1,000 of surplus value invested, £800 is invested in living labour, and only £200 in buying constant capital. In short the same amount of surplus value employs four times as much labour-power as if it was invested in the previous line of business. This is a powerful force, soaking up the relative overpopulation "freed" from the previous occupation. What is more, the surplus value produced in the original industry continues to be pumped out, in equally large masses each year, and is thereby available for investment in this new industry year after year. Moreover, in this new industry, with the same rate of surplus value, this lower organic composition of capital produces itself proportionately larger amounts of surplus value.
For every £1,000 invested in the old industry, only £200 of surplus value is produced, with a 100% rate of surplus value, But, in the new industry, £1,000 of investment produces £800 of surplus value. As Marx describes, this much higher rate of profit, in the new industry, thereby acts increasingly to raise the average rate of profit. This process, whereby the released capital employs the relative surplus population in these new industries, is also the process by which these new industries validate the capital in the old industries. This process by which ever new use values are being developed, also means that the living standards of workers must continually rise – taking into consideration temporary fluctuations. At the same time this process transforms the nature of labour itself, as will be described later. It it what Marx calls the "Civilising Mission of Capital".
The Grundrisse, Chapter 8
3) The Turnover of the Variable Capital from the Social Point of View
Suppose A and B each employ 100 workers. They are paid £1 per week, making up the £100, laid out as capital by both. The workers work 10 hours a day, 6 days a week, for 50 weeks, making 300,000 hours worked for both A and B, 600,000 hours in total for society.
However, A's workers were paid £500 out of A's capital. Moreover, as stated previously, in order to use these wages, to buy means of subsistence, the latter must exist. If, as in the case previously cited, where the workers produced and consumed potatoes, the workers are paid in advance, the capitalist would need to have a store of potatoes available to give them, before they started work. If they are paid a week in arrears, they must produce enough, in that week, to cover their consumption, or else again the capitalist must have a sufficient stock to meet their needs.
The fact that they are paid in money rather than potatoes does not change this fundamental requirement. If 100 workers work 6,000 hours in the week, and are paid £100, they will, in this time, produce an output worth £200, which is, let us say, 200 kilos of potatoes. They require 100 kilos per week, to reproduce their labour power. They spend their £100 of wages buying these 100 kilos of potatoes, leaving the other 100 kilos, worth £100, in the hands of the capitalist.
In the case of capitalist A, he must have a money-capital of £500 available to pay as wages, because his product requires, not 1 week, but 5 weeks, to produce and sell. But, once the second 5 week turnover period begins, what the worker receives, in wages, is not new capital, advanced by capitalist A, but only his own value returned to him.
To return to the potato example, the capitalist advances 100 kilos of potatoes, to the workers, for the first week, as wages, to sustain them. But, during that week, they produce 200 kilos of potatoes. What the capitalist provides them with, in week 2, therefore, is only 100 kilos of the very same potatoes the workers had themselves produced the previous week! That 100 kilos was the value of their labour-power, expended during that week, and reproduced in the value of their output, alongside the surplus value. What they have received back is only their own value. Its important to understand, however, the difference between the position of the variable capital and the constant capital here, and not to understand the value of the variable capital, reproduced in the value of the end product, as in some way simply a transfer of the value of the labour-power. The labour-power does not transfer its value to the product, in the way that the constant capital does. In determining the value of the commodity, it is not comprised of the value of the constant capital, plus the variable capital plus the surplus value. That was the mistake that Adam Smith made, in viewing the value of the commodity back to front, as made up of these factor costs. It is rather comprised of the value of the constant capital transferred to it, plus the new value created by labour. The factor costs, revenues, are then derived out of this value.
The labour-power creates NEW value, equal to the labour it performs. It is conceivable, therefore, under some exceptional conditions, that, if the value of labour-power is very high, the new value created could be less than the value of the labour-power, used in its production, resulting in negative surplus value, i.e. losses. For example, suppose workers work for 10 hours per day, and thereby create 10 hours of new value. However, because of a crop failure, for example, the price of the food they require soars, so that it requires 12 hours of labour per day to cover the subsistence needs of the worker. The worker will continue to be creating 10 hours of new value per day, but the value of their labour-power will have risen to 12 hours, leaving the employing capital with a daily loss equal to 2 hours. The capitalist will see at the end of the period that their capital has shrunk rather than grown.
Suppose, a farmer has constant capital in the form of seeds equal to 10 tons. They are planted by his workers, who as with the potatoes above, are also paid in kind, with 10 tons of grain held as variable capital by the capitalist. The workers undertake a year's labour, but due to a crop failure, only 15 tons of grain is harvested. Whilst the capitalist started out with a capital of 20 tons of grain, at the end of the year, he has a capital of only 15 tons. Their commodity was not sufficient, to reproduce the constant capital of 10 tons, and the variable capital of 10 tons, consumed in its production. Although the workers had produced new value, this new value was not enough, because of the crop failure, to reproduce the value of their labour-power, leaving the capitalist with a loss equal to 5 tons of grain. He would either have to inject additional capital, to buy additional grain, or else would have to reduce the scale of his operation. Instead of his capital self-expanding, it would have contracted.
Marx does not generally analyse such a situation, because the condition for capital as a whole is that workers not only produce this positive new value, but this positive new value is greater than the value of their labour-power, so that it also produces a surplus value on top of it.
The same is true where the worker is paid money wages. After the first turnover period, the value of their labour-power is realised in the value of the commodity they produce. The money form of that value, simply returns to them as wages.
But, for B, the turnover period is a year. After 5 weeks, the labour-power has created new value that has been transferred into commodity-capital, but has not been realised. So, when B's workers receive their wages after week 5, it is not a return of their own value, but the advance of new additional capital. B's workers cannot receive a return of their own value until the end of the year, when the product is sold. Then, its sale reproduces the value of the labour-power consumed in its production, so that the variable capital then exists to pay wages for the next year.
"The shorter the period of turnover of capital — the shorter therefore the intervals at which it is reproduced throughout the year — the quicker is the variable portion of the capital, originally advanced by the capitalist in the form of money, transformed into the money-form of the value (including, besides, surplus-value) created by the labourer to replace this variable capital; the shorter is the time for which the capitalist must advance money out of his own funds, and the smaller is the capital advanced by him in general in proportion to the given scale of production; and the greater comparatively is the quantity of surplus-value which he extracts during the year with a given rate of surplus-value, because he can buy the labourer so much more frequently with the money-form of the value created by that labourer and can so much more frequently set his labour into motion again." (p 317)
Stealth Bear Market
Back in November last year, I started a series of posts entitled How High Can Stocks Go? . It looked at the fact that over the last 30 years, the real period of speculation was during the 1980's and 90's, rather than as most people believe over the period of massive money printing over the last 10 years or so. In part 1 of that series, I pointed out that, "between 1980 and 2000, the Dow Jones Index rose by three times as much on an annualised basis, as it did in the high growth post war boom period from 1950 to 1980." I also pointed out that there appears to be a 13 year cycle for stock market crashes, and 2013 was the next year in that series. It may appear that that has not yet happened. Maybe, but there has, in fact, across the globe already been a series of significant stock market corrections. In the US, the Russell 2000 index, has fallen by more than 10%, putting it in bear market territory. In addition, renowned technical analyst Ralph Acampora has described conditions as being a "stealth bear market", in which he says we could be facing a mega crash of around 25%, and market guru David Tepper has said that although he would not short the market, he certainly would avoid being "too friggin' long" at the moment too. Meantime, George Soros has apparently sold out of all his positions in the big banks.
Back in 2008, when I predicted the outbreak of the Financial Crisis , just before it happened, I did so on the basis of observation of specific activity in the market at the time, that suggested to me that there was an imminent and serious situation. I don't see anything similar today, but I do see a whole series of underlying conditions that make the bursting of all the massive bubbles in shares, bonds and property inevitable in the not too distant future. I think that when those bubbles do burst, the effect may be an even more mega crash than Acampora is predicting, or even larger than Marc Faber's recent prediction that markets could be facing a 1987 style crash.
The inflating of all these bubbles occurred in the 1980's and 90's, but the money printing of the last ten years has been intended to keep them inflated. Between 1980 and 2000 the Dow rose by 1,000%, yet, despite the massive money printing, of the last decade, it has only risen by 60%, between 2000 and today. The money drugs are becoming less and less effective at keeping the bubbles inflated, as I pointed out in my post QE etc Sign Of Desperation. And that is what the money printing is intended to do, to keep the bubbles inflated, so as to protect the banks, rather than to stimulate the economy, just as the UK government's "Help To Buy" scam is intended to keep the property bubble from bursting, so as to protect the banks. The reason is the banks are insolvent, and as soon as the asset price bubbles burst, that insolvency will become apparent, and no amount of liquidity will make up for their lack of capital.
What does suggest that some huge market event might be not too far away – besides the fact of the 13 year stock market cycle, the fact that stock markets have been in an unprecedented five year bull market, and that on a series of valuation measures such as the Cyclically Adjusted Price Earnings, Tobin's Q and so on, they are already significantly over valued – is that since May 2013, markets have been moving up and down, in fairly large amounts, at fairly regular intervals. A look at the charts of nearly every major stock market over that period looks like a saw blade, and they are all currently at the top of a tooth, rather than the bottom. There seems to be a tug of war going on, reflecting underlying sentiment and concerns, which is also reflected in a rotation of the shares being held. As Acampora says, underneath the outward appearance the market is being torn apart.
That itself is a result of the effects of the huge quantity of liquidity that has been pumped into markets. Instead of the markets experiencing a cleansing purge, the excess liquidity has kept all boats afloat. That together with the low levels of interest rates, and artificially low levels of rates available to savers, as a result of deliberate government action, means that money managers have increasingly limited places to put money. That is one reason that, in a search for yield, money has been increasingly moving into the purchase of junk bonds, itself something that presents risks down the line. Its also part of the reason for the ludicrous situation that the yield on peripheral European sovereign bonds is now lower than for US Treasuries!
This is another reason to believe that some kind of big market event might be about to occur. That is the markets just seem to be acting in very odd and unpredictable ways. Nearly every market commentator has thought that the dollar would be rising, as would the US Treasury yield, as the Federal Reserve tapered QE. Globally interest rates are rising. Yet, the US 10 Year Treasury has fallen in recent weeks from 3%, to below 2.5%, and the dollar has failed to rise against the Pound, or Euro. Part of the reason for this is global uncertainty because of Ukraine, Turkey and so on, but part again also seems to be down to the unpredictable effects of all the money printing, because the low yields, on peripheral European bonds, seems to be largely down to an expectation that the ECB is about to engage in its own QE, buying up those bonds, and thereby pushing up their price, giving an immediate capital gain to their owners. At the same time, tapering means that emerging markets that have benefited from QE, are now suffering, and money is flowing out of them towards developed markets, until such time as interest rates, in the former, reach high enough levels to cause it to wash back in the opposite direction. In fact, its this unstable sloshing around of these huge amounts of liquidity, looking for marginally higher levels of yield, that creates a potential for sudden shocks.
But, this is not 2008. The conditions that existed then do not exist now. The global economy remains in a boom phase of the long wave cycle, but it has suffered damage in the heartlands from that crisis, that it has not recovered from. The damage to confidence has meant that levels of consumption and investment are subdued, whilst in some areas, that has been compounded by austerity measures by conservative governments. Official interest rates are already at rock bottom, and globally market rates are rising, as global productivity growth slows, and the general annual rate of profit begins to slowly turn down. Official interest rates of 0.5%, do not mean much to the 25% of the population in Britain, for example, who at some point have had to turn to Pay Day Loans, with rates of up to 4000%, or the much larger number who rely on credit from their credit cards at rates of up to 30%. In fact, the money printing used to keep the banks afloat after 2008 has made that situation worse not better.
The property market is a clear example. Germany is now suffering its first property bubble since the Weimar Republic; the US, where prices fell 60%, has seen the return of speculation, which in turn is making homes unaffordable to buyers once more; in the UK, everyone now recognises that an unsustainable bubble exists, particularly in London, and the majority sentiment is now that it would be a good thing for house prices to fall rather than rise, yet outside London, in many places, all the intervention is merely preventing the bubble from bursting dramatically rather than inflating it further. Every day, I get e-mails from a range of estate agents locally, for example, listing a series of properties that have had a further £20,000 knocked off their price.
In coming weeks, I will be resuming the series on "How High Can Stocks Go", and monitoring the market action closely.
Labels: Capital, Financial Meltdown
Northern Soul Classics - I Really Love You - Jimmy Burns
Time for a big 'un from Wigan. With this monster from Jimmy Burns.
In Part 6, it was demonstrated how the very process that lies behind the rise in the organic composition of capital, and the tendency for the rate of profit to fall, the rise in social productivity, consequent upon technological change, causes fixed capital to fall as a proportion of the laid-out capital, but to rise as a proportion of the advanced capital, and this is a reflection of the increase in the rate of turnover of capital, which this same process brings about. That very same process, brings about not a fall, but a rise in the annual rate of profit, and the process also releases advanced capital. In the example, given £8,000, of the original £27,000 of advanced capital, was released, or 29.63% of the original advanced capital. This released advanced capital is then free to be invested either in further accumulation in existing lines of production, or else in new lines of production. Either way, the consequence is to increase the mass of capital mobilised during the year. It is this process that Marx outlines as a necessary corollary of the tendency for the rate of profit to fall, which thereby produces not just an increase in the mass of capital, but also an increase in the mass of profit itself. In turn, this increased mass of profit facilitates accumulation, on an even more extended scale, and this, in turn, also raises the level of social productivity.
"The fall in commodity-prices and the rise in the mass of profit on the augmented mass of these cheapened commodities is, in fact, but another expression for the law of the falling rate of profit attended by a simultaneously increasing mass of profit." (Capital III, Chapter 13, p 231)
Some of this new investment, particularly by capital in new lines of production, will be in new types of technology, not generally adopted, and this capital will enjoy above average profits, in the period before these new methods are adopted, and before additional capital has entered these new lines, so as to bring about an average rate of profit.
Those capitalists who operate with the latest technology and techniques, but which have not yet been widely adopted, as was seen in Capital I, are able to sell at a market price above their individual price of production, and thereby to obtain a profit above the average until such time as competition reduces it.
"During this equalisation period the second requisite, expansion of the invested capital, makes its appearance. According to the degree of this expansion the capitalist will be able to employ a part of his former labourers, actually perhaps all of them, or even more, under the new conditions, and hence to produce the same, or a greater, mass of profit." (Capital III, Chapter 13, p 231)
The basis of this, as was suggested earlier, is that the increased productivity of the new machine, reduces the turnover period for the particular capital. That results in a release of capital. But, if the released capital is used to buy additional machines, or simply to replace the existing number of machines with their improved equivalent, this can be achieved without any rise in the advanced circulating capital. All that happens, as will be shown later, is that the circulating capital, advanced for materials and labour-power, is advanced for a shorter period of time, due to the rise in the rate of turnover. The capitals that adopt this technique earlier, capture more market share, so that any subsequent over-production, affects those capitals worst that had not adopted the new technique. They are the ones who go bust, and whose capital then gets reallocated to other activities.
The rise in the mass of profit even as the rate of profit is falling was described earlier.
"The number of labourers employed by capital, hence the absolute mass of the labour set in motion by it, and therefore the absolute mass of surplus-labour absorbed by it, the mass of the surplus-value produced by it, and therefore the absolute mass of the profit produced by it, can, consequently, increase, and increase progressively, in spite of the progressive drop in the rate of profit. And this not only can be so. Aside from temporary fluctuations it must be so, on the basis of capitalist production." (Capital III, Chapter 13 p 218)
In fact, the process of capitalist production is inconceivable without this growing mass of capital, and of profits, i.e. without accumulation. But, this very process of accumulation is also filled with dialectical contradictions. The mass of use values, be they means of production or means of consumption, that need simply to be reproduced, in order that society should maintain its current level of production and consumption, continues to grow larger.
In order that capital can be accumulated, additional labour-power must be employed. Given any existing technical composition of capital, the quantity of labour to be employed, is not determined by the value of the means of production, but only by its physical quantity.
"And the additional labour, through whose appropriation this additional wealth can be reconverted into capital, does not depend on the value, but on the mass of these means of production (including means of subsistence), because in the production process the labourers have nothing to do with the value, but with the use-value, of the means of production." (ibid p 218)
But, the value of the means of production and consumption continue to fall, because of that same law of the increasing productivity of social labour that stands behind the fall in the rate of profit. As the value of means of production falls, so any given amount of surplus value can accumulate more of them, and so the demand for additional labour-power rises. As the value of means of consumption falls, so the rate of surplus value rises, so that more surplus value is available for accumulation.
"Accumulation itself, however, and the concentration of capital that goes with it, is a material means of increasing productiveness." (ibid p 218)
"It therefore follows of itself from the nature of the capitalist process of accumulation, which is but one facet of the capitalist production process, that the increased mass of means of production that is to be converted into capital always finds a correspondingly increased, even excessive, exploitable worker population. As the process of production and accumulation advances therefore, the mass of available and appropriated surplus-labour, and hence the absolute mass of profit appropriated by the social capital, must grow." (ibid p 218-9)
This conclusion is the same as that developed in Capital I, that as productivity rises, which brings about increased accumulation, which in turn brings about increased productivity, so capital must, other things being equal, expand by increasing amounts in order to employ the same quantity of labour-power.
"Consequently, the possibility of a relative surplus of labouring people develops proportionately to the advances made by capitalist production not because the productiveness of social labour decreases, but because it increases. It does not therefore arise out of an absolute disproportion between labour and the means of subsistence, or the means for the production of these means of subsistence, but out of a disproportion occasioned by capitalist exploitation of labour, a disproportion between the progressive growth of capital and its relatively shrinking need for an increasing population." (ibid p 222)
But, its precisely because this process of creating a relative surplus population arising from the growth of social productivity arises as the other side of an equivalent release of advanced capital, that enables new lines of production, as well as accumulation to proceed. The consequences of the development of this relative surplus population will be addressed separately later, but its worth looking briefly at some of them.
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Registering: A physician's order is required at the time of registration. Series or reoccurring tests can be ordered and kept on file in the Registration Dept., for the patient's convenience. After the registration staff has obtained the necessary information, you will be directed to the Laboratory. A Laboratory Phlebotomist will greet you and proceed with the specimen collection.
Hocking Valley Community Hospital has a full service laboratory offering timely, accurate, state-of-the-art testing. Our staff is dedicated to a high level of technical expertise and excellent customer service. The Laboratory maintains a staff of qualified Clinical Laboratory Scientists, Medical Laboratory Technicians, and Phlebotomists on a 24-hour per day basis.


Millennials have been unfairly saddled with the dubious reputation for being self-centered, disloyal employees. The fact is their goals and passions and needs in the workplace aren't all that different from the Baby Boomer and Gen X generations that precede them.
And that's welcome news for skeptics about the drive and dedication of millennials, since — according to the U.S. Bureau of Labor Statistics — they will, in about five years, make up roughly 50% of the U.S. workforce. As digital natives, millennials can bring considerable value to work environments in the midst of a digital revolution. So employers need to understand what motivates millennials and what type of work environment will enable them to flourish.
That may not be quite the Herculean task once assumed.
According to a recent study by the IBM Institute for Business Value, the differences among Millennial, Gen X and Baby Boomer employees have been grossly exaggerated. The study surveyed 1,784 employees from organizations across 12 countries and 6 industries and compared the preferences and behavioral patterns of millennials with those of the Gen X generation (aged 35–49) and Baby Boomers (aged 50–60). The findings show that the three generations have very similar career aspirations, needs and attitudes. What's more, the attitudes and characteristics of millennials in the workplace are often mischaracterized.
Here are five common myths about millennials in the workplace – some of which reveal interesting and rarely – acknowledged insights about older workers, too.
Myth #1: Millennials' career goals and expectations are different from those of older generations.
Millennials have numerous and varied goals. They desire financial security, seniority, inspirational leadership, clearly articulated business strategies and performance-based recognition and promotions — just as much as Gen X and Baby Boomers do. Similarly, the other generations are just as interested as millennials in working with a diverse group of people.
This indicates that many changes being made to "millennialize" the workplace will – most likely – be welcomed by multiple generations, too.
Myth #2: Millennials want constant acclaim and think everyone on the team should get a trophy.
That may have been true on their childhood rec soccer leagues, but millennials have grown up – and want to be treated that way. When asked what makes a "perfect boss," millennials said they want a manager who's ethical and fair and also values transparency and dependability. Lower on the list of importance is a boss who recognizes their accomplishments and asks for their input.
Actually, Gen X employees, more than millennials, think everyone on a successful team should be rewarded. And millennials are no hungrier for pats on the back than their Gen X colleagues.
Myth #3: Millennials are digital addicts who want to do — and share — everything online, without regard for personal or professional boundaries.
This notion isn't supported by the data. For example, when it comes to learning new skills at work, Millennials prioritize face-to-face contact over digital options. As for respecting professional boundaries in social media, it's the younger generation – not Gen X or Boomers – who are most likely to draw a firm line separating their personal and professional lives.
Myth #4: Millennials, unlike their older colleagues, can't make a decision without first inviting everyone to weigh in.
Actually, millennials are no more likely than many of their older colleagues to solicit advice at work. Both Millennial and Gen X workers have a desire to tap a variety of sources to inform their decisions – much more so than independent-minded Baby Boomers.
As the business landscape becomes more interconnected and complex, businesses would be well served to leverage and promote the technological and human resources that enable strong collaboration and interactions in decision-making.
Myth #5: Millennials are more likely to jump ship if a job doesn't fulfill their passions.
The survey data reveals that all three generations change jobs for similar reasons. Millennials, Gen X'ers and Baby Boomers all cited the same top four motivating factors for changing jobs: to enter the fast lane (by far the most popular for all generations), shoot for the top, follow one's heart, or save the world.
Like their elders, millennials care about getting ahead and making a difference. And while nearly one-thid of them have already had five or six jobs, that seems to be less about wanderlust and more a reality of the post-Recession economic malaise that the nation endured until recently.
These debunked myths and other evidence suggest that the secret to attracting millennials and creating a workplace where employees of all ages can thrive is to not rely on generational clichés. Rather, the trick is to treat everyone like an individual.
A useful guide in making the right decisions for modifying existing policies, improving technologies, and instilling a more collaborative culture can often be found in workforce data analytics.
Using data analytics, human resource executives can predict which employees – of all generations — are most likely to leave. Big Data can also help determine effective financial rewards for high-value employees, and can help recruiters pinpoint which candidates would be most successful in various open positions.
As business leaders consider data-generated insights for clues on how to change their organization to appeal to millennials, they must also be mindful of the impact any shifts will have on older workers. But in many respects, as the survey spotlighted, what's good for millennials will be good for the other generations, too.
Carolyn Heller Baird is a Global Research Leader in the IBM Institute for Business Value.


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Native American entrepreneurship has been growing in leaps and bounds over the last few decades. As in Canada among First Nations, tribal government has often taken the lead in building and cultivating tribe-owned businesses. At first, this tended to be in gaming, particularly casinos. Make no mistake, Native American casinos are big business. Tribal gaming is now is a $30B industry (from 2015 data), involving over 350 casinos operating on tribal lands in 28 states.
However, among tribes there is a growing realization that there are limits in gaming. There is a real problem of market saturation in certain areas. In other words, there are only so many people interested in gambling in a specific area. Thus, to their credit, many tribes are expanding and diversifying their economic development ventures beyond gambling (and tobacco) and into energy and resource development, as well as other areas. Some Native American tribes are capitalizing on government minority preferences to engage in government contracting. Some geographically isolated Native American tribes are looking online where some are doing very well in online financial services. Other—usually younger—Native American entrepreneurs are finding opportunities in other digital businesses. Native American and First Nations have one advantage in living together as a community—people are looking out for each other and the good of the tribe, so often revenues from Indigenous owned ventures funnel into the cost of government or other public services, or gets re-invested in other enterprises to keep the virtuous cycle of money flowing.


Eric Belletto is the music director for St. Bernard Middle School. From classroom music exercises to performing in concerts, Mardi Gras parades, and more, Mr. Belletto helps students to succeed in the exciting and rewarding world of the fine arts.
Since receiving his music education degree and teaching certification from The University of New Orleans in 2010, Mr. Belletto has been a part of the talented faculty at St. Bernard Middle School. He truly enjoys teaching the children who are a part of the rich culture of our community.
In his music classes, students will be challenged to learn to play a band instrument properly, to read and understand the language of music, and to participate in group activities and performances as a productive team member. Being in band helps students to build character and a good work ethic; it gives students a multitude of skills that they can use beyond the school setting, and it is also a lot of fun!
So, keep your ears open, because if you do, you just might hear the awesome sounds of Mr. Belletto and the St. Bernard Middle School Eagle Band coming your way!


I wish holidays could last forever.
But they don't. That's ok because I am so grateful for all the places I've seen, all the things I've done and all the food I've eaten. I've loved it all.
So tell me, what's top of your things-to-eat and places-to-go list?


text:
Las Vegas Nightclub Executive Slapped With Sexual Harassment Suit
A little over two weeks ago in this space, we wrote about the ongoing legal disputes between nightclub and restaurant executive Michael Morton and the Palms casino-hotel.
With news of employment litigation now proceeding against Morton, his legal problems have suddenly become more complex. On Dec. 13, a fired employee filed a sexual harassment suit against Morton and his N9NE Group, which runs clubs and restaurants at the Palms in Las Vegas.
The Las Vegas Sun reports that a former art director for N9NE, Leslie Culler, alleges she was fired this summer because she rejected sexual advances by Morton and other N9NE executives.
Morton is in litigation with Palms owner George Maloof Jr. over allegations of wrongdoing involving their joint venture, N-M Ventures. That joint venture was named as one of the defendants in Culler's suit.
Her sexual harassment suit makes allegations detailing a wide variety of sexual advances by Morton and other men employed by N9NE:
Culler claims she was repeatedly grabbed and touched inappropriately by Morton and others during company functions
Culler alleges Morton held her at a work-related party at the Palms and attempted to kiss her
In another alleged incident, Morton is said to have "brutishly grabbed the defenseless plaintiff's breasts"
Culler also claims Morton grabbed her buttocks
Another executive is accused of offering the plaintiff money to expose herself to him
One of Morton's business partners is also alleged to have inappropriately touched her breasts
Culler alleges that employees who participated in sexual encounters with Morton were rewarded and those who declined were punished.
The plaintiff alleges more than 200 instances of sexual harassment in her eight years of employment.
Resource: Las Vegas Sun: "Nightclub executive, company hit with sexual harassment lawsuit": December 13, 2010

redpajama_set_name: RedPajamaCommonCrawl


text:
Q: Получение и вставка значения элемента с использованием делегирования Написал следующий код для получения значения из input и вставки этого значения в label и в обратном порядке. Но почему то происходит сбрасывание значения введенное в input и тем самым значение не сохраняется, в чем ошибка?

function change(e) {

  if (e.target.tagName == 'TD') {
    if (activeEl) {
      activeEl.classList.remove('edit');
    }

    activeEl = e.target;
    var label = activeEl.querySelector('.column-label');
    var input = activeEl.querySelector('.column-input');

    if (activeEl.classList.contains('edit')) {
      label.textContent = input.value;
    } else {
      input.value = label.textContent;
    }

    activeEl.classList.add('edit');
  }
}

var table = document.getElementById('table');
var activeEl;

document.getElementById('table').addEventListener('click', change);
table {
  margin: 40px auto;
  // border-spacing: 40px;
  border-collapse: collapse;

}

td {
    padding: 40px;
    border: 1px solid #000;
}

input {
  display: none;
}

.edit input {
  display: block;
}

.edit label {
  display: none;
}

        1<input type="text" class="column-input">

        2<input type="text" class="column-input">

        3<input type="text" class="column-input">

        1<input type="text" class="column-input">

        2<input type="text" class="column-input">

        3<input type="text" class="column-input">

        1<input type="text" class="column-input">

        2<input type="text" class="column-input">

        3<input type="text" class="column-input">

A: В логике.

var table = document.getElementById('table');
var activeEl;

function change(e) {
  if (e.target.tagName == 'TD') {
    if (activeEl) {
      activeEl.classList.remove('edit');
      var label = activeEl.querySelector('.column-label');
      var input = activeEl.querySelector('.column-input');
      label.textContent = input.value;
    }

    activeEl = e.target;
    var label = activeEl.querySelector('.column-label');
    var input = activeEl.querySelector('.column-input');
    input.value = label.textContent;
    activeEl.classList.add('edit');
  }
}

document.getElementById('table').addEventListener('click', change);
table {
  margin: 40px auto;
  // border-spacing: 40px;
  border-collapse: collapse;
}

td {
    padding: 40px;
    border: 1px solid #000;
}

input {
  display: none;
}

.edit input {
  display: block;
}

.edit label {
  display: none;
}

        1<input type="text" class="column-input">

        2<input type="text" class="column-input">

        3<input type="text" class="column-input">

        1<input type="text" class="column-input">

        2<input type="text" class="column-input">

        3<input type="text" class="column-input">

        1<input type="text" class="column-input">

        2<input type="text" class="column-input">

        3<input type="text" class="column-input">

redpajama_set_name: RedPajamaStackExchange