On Your Marx

[RonBoyd]

An interesting article about "The ravening US consumer appears to be finished as the world's buyer of last resort."

n+1: On Your Marx

Marxists differ in the details of their accounts of the postwar economy, but the story, which ends for now in the cliffhanger of the first contraction of the world economy since 1945, goes something like this: The so-called Golden Age of postwar capitalism from 1950–70—a time of rising wages, profits, and investment—was the product of special and perishable circumstances. The wartime destruction of the Japanese and German productive base meant that, with the resumption of peace and renewed growth in demand for non-military goods, all the major industrial economies could for a time thrive without threat to one another. But the maturation of European and Japanese industry toward the end of the ’60s spelled the return of mutually destructive competition. Firms producing internationally tradable goods (cars, electronics, et cetera) could only survive by reducing prices, which in turn reduced profitability. And yet the capital sunk in manufacturing plants was enough to make capitalists reluctant to exit a given product line in spite of reduced profitability. Besides, governments don’t like to see big firms fail even when they can’t compete. (The Obama administration has lately proved almost as indulgent of GM as the state-directed Japanese banks have always been of Japanese industry.) And the more recent advent of China as a manufacturing power only exacerbated the situation, as the Chinese (to quote Brenner) “continued to expand capacity faster than it could be scrapped system-wide and to rain down torrents of redundant, increasingly high-tech goods upon the world market.”

The motor of accumulation has been sputtering for nearly four decades, and its coughs can be heard again now that the roar of combusting paper wealth is dying down. This doesn’t mean capitalism or even growth is at an end. Economists of all kinds have pinned their hopes on the transformation of laboring and saving Chinese into hardy consumers. In any case, the US consumer—a ravening appetite in a paper house—appears to be finished as the world’s buyer of last resort. It would add a nice dialectical twist to the future history of our period if it could be said that, around the time the post-Maoist Chinese took up shopping, the post-bubble Americans turned to studying Marx.

 

[Gone4Good]

The so-called Golden Age of postwar capitalism from 1950–70—a time of rising wages, profits, and investment—was the product of special and perishable circumstances. The wartime destruction of the Japanese and German productive base meant that, with the resumption of peace and renewed growth in demand for non-military goods, all the major industrial economies could for a time thrive without threat to one another.

I know of no credible economic model that suggests the destruction of your trading partners is good for economic growth. But, I guess, that is an unavoidable conclusion if you start with the hypothesis that economic competition is self destructive . . . it is not.

What I find interesting is that we're apparently so desperate for intellectual support for our deeply-held fears that we're approaching an economic end-of-times that we'll even turn to the discredited Marxists to provide it.

 

[Bikerdude]

What I find interesting is that we're apparently so desperate for intellectual support for our deeply-held fears that we're approaching an economic end-of-times that we'll even turn to the discredited Marxists to provide it.

Sounds like a "buy" signal to me.

 

[Gone4Good]

Now that I think about it, all that it would take to recreate the "Golden Age" economic conditions as described above is a couple of thousand cruise missiles targeting Chinese factories.

Let a new Golden Age begin!

 

[HFWR]

Sounds like a "buy" signal to me.

Or a "bye" signal...

 

[RonBoyd]

Now that I think about it, all that it would take to recreate the "Golden Age" economic conditions as described above is a couple of thousand cruise missiles targeting Chinese factories.

I know of no credible economic model that suggests the destruction of your trading partners is good for economic growth.

??

Did you read the article?

Discredited? Perhaps. I don't know. I am not a student of Marx and I lack your familiarity with his philosophies but I sense some truths in the article.

... land price is a claim on future revenue treated as a present-day asset. “Mortgages,” Marx said, “are mere titles on future rent.” And Harvey completes his thought: “Land price must be realized as future rental appropriation, which rests on future labor” (our italics). The big risk, naturally, is that you will attribute to real estate far more present-day value than can later on be returned to it by labor (in the form of the portion of total income devoted to housing). A bubble occurs not when people pay for real estate with money they don’t yet have—as always happens, given the availabilty of credit—but when they pay with money they will never have, out of wages they will never receive—out of wages no one will ever receive.

 

[Gone4Good]

Did you read the article?

Sure did. And from what I can gather the thrust of the article has more to do with Keynsian demand curves then Marxist class struggles. But mostly he's just taking the same old "false post-war prosperity, built on a mountain of debt" theme and trying to make it sound new.

But to the extent the problem is an excess of global supply driven by an exploitation of the "proletariat" by the "bourgeoisie", nowhere is that more true than in the mercantilist policies of Maoist (a variation of Marxism), China.

 

[ziggy29]

This snippet is similar to what I've said for years:

The so-called Golden Age of postwar capitalism from 1950–70—a time of rising wages, profits, and investment—was the product of special and perishable circumstances. The wartime destruction of the Japanese and German productive base meant that, with the resumption of peace and renewed growth in demand for non-military goods, all the major industrial economies could for a time thrive without threat to one another. But the maturation of European and Japanese industry toward the end of the ’60s spelled the return of mutually destructive competition.

In the second half of the 20th Century, we built a safety net and entitlement program which could only remain sustainable as long as the economic conditions of this era remained in place. Much of the immediate post-war American prosperity was built on a lack of global competition for manufactured and other goods. It was no accident that unions reached their peak in this time period -- there was much less threat of pricing themselves out of competition, simply because there was so little global competition in their line of work. Unions could demand wage increases beating inflation, fully paid health insurance, job security and a glorious defined benefit pension plan -- and get it. That's how strong the economic times were, and that's how tight the labor market was.

Once Europe was rebuilt, emerging markets started emerging, it was the beginning of the end of that era, one where business could give labor a great (and improving) deal and continue to be very profitable because of global pricing power.

And by the 1970s this era was clearly coming to the end (and by the 1980s it was pretty obvious to anyone with a pulse), yet the programs and promises we put into place during the "glory years" of postwar economy remained in place. The private sector (which directly faced the pressure of lower-cost foreign competition) couldn't maintain it, and the public sector only continued it through excessive debt and the power to tax. The problem is that the public sector is funded by the private sector's tax revenue, so the public sector simply can't keep growing and offering more when the private sector's ability to pay for it is weakening -- and has been for at least a couple of decades.

We've got to get out of denial, as much as it hurts. We can not continue policies that assume growth can and will return to what we saw in the first quarter-century after WW2.

But mostly he's just taking the same old "false post-war prosperity, built on a mountain of debt" theme and trying to make it sound new.

Not *built* on a mountain of debt, but only *maintained* by a mountain of debt once the "global economy" started to rev up. Reality began to change but our safety net, entitlement programs and public pension plans did not, or did so too late and in a perfunctory manner. Wishing the U.S. labor market could get the same deal it got in 1960 does not make it so. The genie of globalism is out of the bottle.

 

[IndependentlyPoor]

I admit, the only book I have read about Marxism is a comic book.
Amazon.com: Marx for Beginners (9780375714610): Rius: Books
But it was pretty good!
It seems like he was on to something, defining value in terms of labor, but it also seems like he went too far. Communism doesn't seem inevitable now, not that it ever did.
It is just so hard to find something to read about Marx that isn't packed full of jargon. Jargon that reminds me of the story of the emperor's clothes. I am not convinced that anybody understands it.
If anybody knows of an explanation of Marx that isn't circular (doesn't use Marxist jargon to explain Marxism) please let me know.
My big question about Marxism is: did he understand the enormous productivity increases made possible by cheap energy and advancing technology, or was he limited to the idea of trading manual labor for manual labor? I make shoes by hand and sell them to buy bread and candles made by hand.

 

[dex]

An interesting article about "The ravening US consumer appears to be finished as the world's buyer of last resort."

As populations age they spend less on consumer goods. That along with the current recession and fears; it is not surprising that people are consuming less.
The question is: Will this trend continue?

There will be a short period of increased consuming due to the pent up demand but the increase in taxes (and possibly VAT) that will lower spending again.
The key is demographics - age and children.

 

[haha]

For an historical perspective on this period, I would recommend a look at the lives of several of the intellectuals who created the idea framework for the Bolshevik Revolution. A good book is To The Finland Station, by Edmund Wilson, a distinguised historian and artful writer. It is likely to be found in any city library, and is also available new and used at Amazon.

Amazon.com: To the Finland Station (New York Review Books Classics) (9781590170335): Edmund Wilson, Louis Menand…

Ha

 

[Onward]

did he understand the enormous productivity increases made possible by cheap energy and advancing technology

I'm not a Marx scholar, but I think it's safe to say he didn't at all anticipate the dramatic rise in standard of living that workers in capitalist systems have seen in the past century and a half. If you've got your Lexus and big-screen, why bother with a revolution?

I'm more interested in what he wrote about the psychology of the individual worker--particularly (bear with me: I'm doing this from memory) how workers under capitalist systems become distanced & estranged from the products that eventually emerge from their labors. That is, there's no easy way to see how your day-to-day activities at work are connected to the company's final outputs. There's no longer any pride in workmanship or quality. Workers barely know or care what's actually being produced.

Now that seems prophetic to me.

 

[Bikerdude]

I'm more interested in what he wrote about the psychology of the individual worker--particularly (bear with me: I'm doing this from memory) how workers under capitalist systems become distanced & estranged from the products that eventually emerge from their labors. That is, there's no easy way to see how your day-to-day activities at work are connected to the company's final outputs. There's no longer any pride in workmanship or quality. Workers barely know or care what's actually being produced.

Sounds more like a worker in a Yugo factory.

 

[RonBoyd]

Sounds more like a worker in a Yugo factory.

Or at Wal Mart:

http://www.early-retirement.org/forums/f27/wal-mart-vs-whole-foods-48854.html#post907069

or at... every other place I have visited in the past several years (decades?) including most, but not all, online businesses.

 

[IndependentlyPoor]

For an historical perspective on this period, I would recommend a look at the lives of several of the intellectuals who created the idea framework for the Bolshevik Revolution. A good book is To The Finland Station, by Edmund Wilson, a distinguised historian and artful writer. It is likely to be found in any city library, and is also available new and used at Amazon.

Amazon.com: To the Finland Station (New York Review Books Classics) (9781590170335): Edmund Wilson, Louis Menand…

Ha

Wilson is great. Looks like it is off to the library for me.

 

[HFWR]

There's no longer any pride in workmanship or quality. Workers barely know or care what's actually being produced.

Now that seems prophetic to me.

Let's face it. As we've noted in past discussions about the few [-]lying[/-] lucky souls who have had a career they actually enjoy, punching out parts on an assembly line will eventually sap the life from you, even if you're the conscientious type who takes pride in your work. Mundane work and unappreciative if not hostile management do not a worker's paradise make...

Or, as I like to say, if it was fun, they wouldn't call it work.

 

[ziggy29]

Or, as I like to say, if it was fun, they wouldn't call it work.

And they wouldn't have to pay you for it...

 

[Bultacoman]

"I'm more interested in what he wrote about the psychology of the individual worker--particularly (bear with me: I'm doing this from memory) how workers under capitalist systems become distanced & estranged from the products that eventually emerge from their labors. That is, there's no easy way to see how your day-to-day activities at work are connected to the company's final outputs. There's no longer any pride in workmanship or quality. Workers barely know or care what's actually being produced."

That is interesting. the company I started working for a few months ago had an employee appreciation day as part of "Our company Give Back Week". It was a week of work and activities aimed towards giving back to the community and to cancer patients and families. One of the activiities was a walk for local charities. We had 4000 employees participate (The company donated $100,000 for the efforts). The boss didn't ask people to participate and no names were recorded. The course had no official start or finish. It simply wound around the campus. We were told to start whereever we wanted and finish at the same spot. Barbeque was served to all employees, whether you walked or not, at the end of the day.

The appreciation day was held at AT&T Park (SF Giants home). We make oncology drugs and heard from survivors who had used our drugs. The emphasis was on how our daily work affects people. Then the bands came on (Natasha Bedingfield, The Fray, and Counting Crows) along with food and free rides at the Giants County Fair.

Earlier in the week, we had a small group off-site meeting which emphasized how we impact the development of compounds aimed towards treating certain illnesses (cancer in my group). This is part of a continuing effort to assure empoyees that what we do matters. This is the first company I have worked for that does this effectively.

Perhaps I have a different outlook towards these activities and efforts now then I would have had a few years ago. My wife is a three year cancer survivor. I would like to be part of an effort that makes sure that nobody else has to go through what my wife did.

 

[Bikerdude]

And they wouldn't have to pay you for it...

As a Russian factory worker once said when interviewed, "They pretend to pay us and we pretend to work".

 

[Gone4Good]

Let's face it. As we've noted in past discussions about the few [-]lying[/-] lucky souls who have had a career they actually enjoy, punching out parts on an assembly line will eventually sap the life from you, even if you're the conscientious type who takes pride in your work. Mundane work and unappreciative if not hostile management do not a worker's paradise make...

Or, as I like to say, if it was fun, they wouldn't call it work.

And yet there are very few, if any, workers in developed capitalist countries who would be better served by trading their job responsibilities and conditions for those that existed during Marx's time. Or for those of most Marxist leaning countries throughout history, for that matter.

 

[IndependentlyPoor]

Marx, hedonics, and the price of tea in China

I wonder what old Karl would have thought of the amazing improvement in affordability of electronics as measured in the number of hours of work required to purchase a gadget. Huge increases in productivity as well as cheap foreign labor (I imagine Karl would have weighed in here) has powered this increase in affordability of manufactured goods, with electronics as one of the best examples.
The Good Old Days Are Now: Radio Shack Version « The Enterprise Blog
I am not quite sure how this fits in with the American Enterprise Institute's politics, but the article's comparison is interesting on its own.

 

[Onward]

what old Karl would have thought of the amazing improvement in affordability of electronics

"Billige elektronische Geraete ... sind das Opium des Volkes."

"Cheap electronic devices are the opium of the people."

From "A Contribution to the Critique of Hegel’s Philosophy of Right," 1844

 

[IndependentlyPoor]

"Cheap electronic devices are the opium of the people."

From "A Contribution to the Critique of Hegel’s Philosophy of Right," 1844

Color me stoned.