Tag: political economy

Due to popular demand (which I cannot understand for the life of me), today’s piece will discuss chapters 4 and 5 in Karl Marx’s Capital, volume I. On the surface, these two chapters appear simple and in many senses unimportant.  

However, that would be erroneous to conclude. These two chapters clarify two important circuits that are essential to understand the capitalist economic system and to distinguish it from earlier modes of production. Trade and money existed before capitalism itself, so what distinguishes capitalism from ancient slave societies, feudalism, and pre-capitalist mercantile economies?

Karl Marx

In addition, Marx describes the different functions of money differentiating money as a unit of account or medium of circulation (circuit of commodities) from money in its role as capital (circuit of capital). Additionally, these chapters introduce the notion of surplus value, the self-expansion of capital, and the notion of a transfer of revenue between capitalists as distinct from the creation of surplus value and end on a cliff-hanger before Marx’s explanation of the creation of surplus value which links his discussion in chapter 1 on the value of commodities to the labour process itself.

All references come from Karl, Marx (1867) Capital Volume I,  Penguin Classics, 1990.

Yes, comrades, we need to talk about crises again, the term recession simply does not explain what is really going on! Just in case you might not have noticed or perhaps the mainstream media where you live ignored it, the obvious has happened and the end of the so-called recession has disappeared into the fantasy novel. Once again there is a slowdown in growth and the financial markets are not particularly happy. This time, Germany and China are showing signs of slowdown. Globalisation has not ended the potential towards crises in the capitalist economic system; in fact, the greater interconnectedness of the world economy has exacerbated the situation and ensured that the contagion spreads.  

For those who believe the fantasies of neoliberal economics, the shock of these latest failures of neoliberalism must come as a surprise. But for those of us that have been warning of the stupidity of squeezing wages and destroying work conditions, rising inequality in income and wealth, the dangers of export-led growth when wage incomes are being squeezed meaning that unless governments become the sole purchasers of goods and services that are being produced (and they are not) that obviously there comes a point when working people cannot purchase goods and services as their incomes are too low, wiping out of savings  has happened and personal indebtedness leads to default and bankruptcy. Neither of these things helps to maintain capitalist growth, accumulation and profitability in the long run; forget that, it hasn’t even lasted in the short run.

I will be giving a run through on what is going on and why our lives feel as though we are living through the Shock Doctrine (which we are) then address the proposals of dealing with persistent unemployment under capitalism from the Left on which there is significant disagreement.

Here we present a simple solution to see that a fad is the result of the same type of behavior that causes any other good to be purchased. It is the characteristic of the good, and the interaction of the various agents with their neighbors that causes the peculiar pattern of behavior that is called fad.

Is Reaganism such a good and as a commodity is its commodity fetishism available for analysis beyond its intangible assets. Yet Reaganism is tangible and attempts to memorialize the commodity extend materially far beyond the cinematic and the televisual nature of the Great Communicator. The fad of VooDoo(sic) Economics is a useful example of how to discuss intangible assets as forms of virtual capital. The production and reproduction of the Reaganist myth is its own market. Its production of character/reputation and trust/reciprocity is of course legendary and its diffusion to the North American form of teabaggery continues with the institutional support of right-wing venture capital like the Kochs.

In the United States, commentators frequently equate supply-side economics with Reaganomics. The fiscal policies of Ronald Reagan were largely based on supply-side economics. During Reagan’s 1980 presidential campaign, the key economic concern was double digit inflation, which Reagan described as “Too many dollars chasing too few goods”, but rather than the usual dose of tight money, recession and layoffs, with their consequent loss of production and wealth, he promised a gradual and painless way to fight inflation by “producing our way out of it”.

An example of fad economics occurred in 1980, when a small group of economists advised Presidential candidate, Ronald Reagan, that an across-the-board cut in income tax rates would raise tax revenue. They argued that if people could keep a higher fraction of their income, people would work harder to earn more income. Even though tax rates would be lower, income would rise by so much, they claimed, that tax revenues would rise. Almost all professional economists, including most of those who supported Reagan’s proposal to cut taxes, viewed this outcome as far too optimistic. Lower tax rates might encourage people to work harder and this extra effort would offset the direct effects of lower tax rates to some extent, but there was no credible evidence that work effort would rise by enough to cause tax revenues to rise in the face of lower tax rates. … People on fad diets put their health at risk but rarely achieve the permanent weight loss they desire. Similarly, when politicians rely on the advice of charlatans and cranks, they rarely get the desirable results they anticipate. After Reagan’s election, Congress passed the cut in tax rates that Reagan advocated, but the tax cut did not cause tax revenues to rise.

As against this, the commodity-form, and the value-relation of the products of labour within which it appears, have absolutely no connection with the physical nature of the commodity and the material relations arising out of this. It is nothing but the definite social relation between men themselves which assumes here, for them, the fantastic form of a relation between things. In order, therefore, to find an analogy we must take flight into the misty realm of religion. There the products of the human brain appear as autonomous figures endowed with a life of their own, which enter into relations both with each other and with the human race. So it is in the world of commodities with the products of men’s hands. I call this the fetishism which attaches itself to the products of labour as soon as they are produced as commodities, and is therefore inseparable from the production of commodities.

– Karl Marx, Capital, Volume I

As one can perhaps see, the transgressive role of the State in the struggle among classes will become the key problem for making this critique work as will the impending institutional arrangements making that State ubiquitous and global.

“”In this present crisis, government is not the solution to our problem; government is the problem.

-Ronald Reagan

Reaganism was a political perspective in the United States based on a friendly-seeming, grandfatherly-type ex-actor telling us that government could do no good, and then proceeding to become the head of the executive branch of the United States government, drastically expanding the public debt as he saw fit. Why anyone believed it is beyond us.

Prominent lies promoted by Mr. Reagan include:

The “free market” is always more efficient than the government at providing solutions to problems. (See universal health care)

The “government” is incapable of solving a country’s problems (See Hurricane Katrina)

Some woman somewhere on welfare had a Cadillac and a color TV. (He made this up).

Hardworking blue collar Americans should hate suffering poor Americans for eating their tax dollars instead of working their asses off for giant corporations themselves. (See trade union)

The “rich” are a beleaguered and overtaxed suffering demographic. (Who pay well for political campaigns!)

In Britain, there was a very similar political movement referred to as “Thatcherism,” named for the Iron Lady who advocated the same principles. The impact of this was slightly less than that of the States.

In Marxist philosophy, however, the term Cultural Hegemony describes the domination of a culturally diverse society by the ruling class, who manipulate the culture of the society – the beliefs, explanations, perceptions, values, and mores – so that their ruling-class worldview becomes the worldview that is imposed and accepted as the cultural norm; as the universally valid dominant ideology that justifies the social, political, and economic status quo as natural, inevitable, perpetual and beneficial for everyone, rather than as artificial social constructs that benefit only the ruling class

                    We live in a Tea (Party) service economy

The embodiment of those social constructs in the past decade are our pseudo-revolutionary objects of derision and humor, the teabaggers (aka Tea Party patriots and its libertarian factions). Cultural work has been often times difficult for many since its socially embodied labor derives from a multitude of divisions as well as a variety of controversies often dialectically dichotomous and intellectually challenging: for example cultural studies versus political economy approaches to critical theory. This is too small a space to solve the problem (it can be solved) but to point to some rudimentary examples like the personality Cult of Reagan to show the need for ecumenical approaches to critical analysis.

Come below the fold to see if we can’t disentangle the whole mess:

OCTOBER 27, 1980 More than two dozen papers drop Trudeau’s comic strip Doonesbury “The Mysterious World of Reagan’s Brain,” a week-long sequence that runs on the eve of the 1980 election. One of those papers, The Indianapolis Star, receives 850 calls of protest before it agrees to reinstate the strip.

I’ve often said the left is essentially dead–or moribund (I love the word). Certainly the old left looks dead very much like Polly Parrot in the Dead Parrot sketch.

But there’s something simmering below the surface that those of us who are veterans of the old left can take heart in–massive numbers of people are unhappy and disillusioned. They lack any framework for their disillusion other than things like buying guns but I think we have a chance to step into an opening.

There are two issues only a new revivified left can work with: 1) massive criminality of all the major actors in the political economy; and 2) the lying mainstream media. That’s the only issues we need. We don’t need to talk about the debt or the deficit or “entitlements” or imperialism or any of that. Yes those are issues that are important, more or less, but not as important as the fact our society is run, at the top, by criminals. And it is not that this is hard to determine. The evidence is overwhelming and we don’t even have to go to the assassinations of the sixties or 9/11 or anything like that. No just the simple facts as they are The government and the media allowed massive fraud to occur in both Democratic and Republican administrations.

In 2006 one third of all lending were “liar’s loans” meaning that these loans were deliberately created out of falsified income statements and property appraisals. Washington Mutual, Andrew Cuomo (when he was AG of NY) found out, had created a blacklist of honest appraisers that were never to be used. Regulators, the FBI and many others consistently warned that there would be a financial crisis because of massive fraud going on. I knew it, though I’m hardly that well-connected I just happened to know a Wall Street guy who tole me in 2005 that the whole thing was going to blow in the next few years because Wall Street was creating fraudulent instruments.

In the S & L crisis there were 1000 FBI agents investigating criminals at the top and there were over 1000 convictions even though many particularly high profile suspects got away due to political influence. But in the more recent crisis that was 70 times greater only 120 agents were assigned to mortgage fraud!!!! On the surface this looks like massive criminality and I can assure you that a clear case with loads of evidence beyond anything that I’m indicating here can prove that the basis of our current political economy is naked criminality in almost every sphere, to be sure, but particularly prevalent in the financial industry. I’m also confident that there is no possible counter-argument.

The fact this is so obvious has to automatically indict the mainstream media from Fox News to PBS for covering up and refusing to cover the truth about the financial crisis which, as I said, is stunningly obvious. It will then quickly be seen how corrupt the media is. Not the reporters who do what they can but who have editors that continually and systematically discourage them to pursue stories that might make powerful people look bad (other than celebs, but they are toys of powerful people so they don’t count). When people understand that, for the most part, they are being fed a pile of turds everyday that they then have to pretend to eat–man, no wonder people are stressed and the U.S. leads the world in mental illness.

All we have to do is hammer away at those two issues ONLY and then the unassailable wall around the imperial court will break. We don’t have to talk about income inequality just criminality–not about class-struggle just criminality–not about the environment just criminality. We don’t have to argue with Tea Baggers about anything–just say that crime is a bad thing dontcha think? No argument. Sure a few will say, but it was Acorn that caused the crash, gov’t bureaucrats who wanted to put people in homes–you say sure AND those banks made a lot of money falsifying information, corrupting appraisers, originators. There’s no absence of proof and no possible counter-argument to the central fact that our problem is not Republicans or Democrats or private enterprise of the government our problem is criminal gangs have taken over–over and out.

Ours is a period of profound social crisis: our social discourse and political “possibilities” rigidly limited by a narrow ideological hegemony, political system failures, continuous economic dislocation even in “boom” or “growth” years, an increasingly precarious worklife for an ever-growing proportion of the population, an increasingly damaged natural world, and an increasingly violent and fragmented social world.  Concepts like class consciousness, social solidarity, and a sense of enduring community have largely disappeared, or, more accurately, been expunged from our social reality.  This interconnected web of problems is what I’ve taken to calling the 21st Century Social Crisis.  This crisis has its origin in the collapse of the 20th century’s once highly successful social compromise between the powers of capital and of the people, what I call the 20th Century Synthesis.