# Evidence for Marxist interpretation of current crisis (uk focus)



## Bernie Gunther (Mar 2, 2012)

So, I've argued in other places for something like David Harvey's interpretation of the current crisis. I've found some very decent evidence to support some parts of that interpretation via the likes of Doug Henwood, at least for the US economy.

Where do I find some for the UK though and in general what are good resources for e.g. nice linkable graphs showing the sort of stuff you need to argue the case here say:





> All of these solved the labour problem for capital, so by 1985 capital has no labour problem any more. It may have specific problems in particular areas but globally it has plenty of labour available to it. The sudden collapse of the Soviet Union and the transformation of much of China added something like two billion people to the global proletariat in 20 years. So labour availability is no problem now and the result of that is that labour has been disempowered for the last 30 years. But when labour is disempowered it gets low wages, and if you engage in wage repression this limits markets. So capital was beginning to face problems with its market, and there were two things that happened then.


 
Now when I look for evidence of this, I don't get many graphs that show falling wages, except for wages as a share of GDP. So what am I missing here? Should I be looking at global wages? Any leads on where I'd look if so?



> The first was the gap between what labour was earning and what it was spending was covered by the rise of the credit card industry and increasing indebtedness of households. In the US in 1980 the average household owed around $40,000; now it's about $130,000 for every household, including mortgages.
> 
> So household debt sky-rockets and that brings you to financialisation, and that was about getting the financial institutions to support the household debts of working class people whose earnings are not increasing. You start with the respectable working class, but by the time you get to the year 2000 you begin to find these sub-prime mortgages circulating. You are looking to create a market. And so finance starts to support the debt-financing of people who have almost no income. But if you hadn't done that what would have happened to the property developers who are building the houses? So you try to stabilise the market by funding that indebtedness.


 
How does one demonstrate a) that there was such a gap and b) that this was how it was addressed by capital? Or do we actually think Harvey is going off on one here?

http://www.redpepper.org.uk/Their-crisis-our-challenge/

etc.

I imagine this would be useful to people besides me ... ?


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## Crispy (Mar 2, 2012)

Subscribes to thread


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## butchersapron (Mar 2, 2012)

Capital and Class Journal would be a really good start point. I should be able to give you a good hand on this stuff when i get my pc back up and running - hopefully over the weekend.


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## Bernie Gunther (Mar 2, 2012)

OK thanks butchers. you're a star.


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## Bernie Gunther (Mar 2, 2012)

What about the growth of finance capital over the post 1970 period in relation to productive capital? Anyone have a nice well-sourced graph for that?

What Harvey seems to want to argue is that due to the discipline of labour post 1970 and associated deregulation, finance capital expanded uncontrollably in power and influence, but also in volume to the point where it ran out of good investment opportunities and had to either make some by dispossession (stuff like health service privatisation) or go in for Ponzi investments (and hence precipitate the crash)


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## butchersapron (Mar 2, 2012)

Best person on this 'fix' of finacialistion is Costas Lapavitsas.  (Sorry i can only throw names at you right now).


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## Bernie Gunther (Mar 2, 2012)

butchersapron said:


> Best person on this 'fix' of finacialistion is Costas Lapavitsas. (Sorry i can only throw names at you right now).


 
OK yes. That looks like just the ticket. First one I found had a bunch of useful stuff.

http://eprints.soas.ac.uk/7325/1/TheRootsOfTheGlobalFinancialCrisis.pdf

and this

http://www.soas.ac.uk/rmf/papers/file47508.pdf

THanks


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## two sheds (Mar 2, 2012)

how does he know all this shit?

bookmarked ta too


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## Bernie Gunther (Mar 2, 2012)

butchersapron said:


> Best person on this 'fix' of finacialistion is Costas Lapavitsas. (Sorry i can only throw names at you right now).


 
He seems to be arguing something different to what I take to be the standard 'over accumulation' line Harvey is offering though. Haven't quite got my head around what he is saying, but it's interesting stuff.


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## Bernie Gunther (Mar 3, 2012)

OK, here's another one.

$ 40 trillion per annum in financial transactions, compared to the $ 800 billion needed to support international trade and productive investment flows.

Harvey sources that claim (for 2001) on Dickens, Global Shift. Any idea where to find equivalent figures online? Ideally in the form of nice punchy little graphs.


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## JimW (Mar 3, 2012)

Right Bernie, you work this all out then sum it up here in crayon bullet points for the likes of me, please.


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## ymu (Mar 3, 2012)

Krugman's been posting a lot of data on this stuff on his blog. Not from a very Marxist perspective, but making much the same arguments. I posted some of it in this thread. eg







It's harder finding UK data, esp in graphical form, but www.statistics.gov.uk has shed loads of time series. It's a very painful site to navigate - recently made a lot more painful. FOIA should work if site searches and friendly enquiries don't turn up what you need. Most of the reports have emails for their authors attached. Some of the economists on http://falseeconomy.org.uk/ would probably have a lot of this at their fingertips too.


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## Bernie Gunther (Mar 3, 2012)

Thanks ymu.

You sum up the problem I've been running into. What I'd like to be able to do is present the evidence in a simple punchy form for people who simply aren't going to be willing to make any effort. Doug Henwood is fantastically good at doing that for the US, but the UK seems to lack a resource like his stuff.

False economy is possibly the nearest thing I know of and it's really good on why the government is talking shite about austerity and cuts, but its less good at arguing the broader picture that someone like Harvey is painting.


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## ymu (Mar 3, 2012)

Bernie Gunther said:


> Thanks ymu.
> 
> You sum up the problem I've been running into. What I'd like to be able to do is present the evidence in a simple punchy form for people who simply aren't going to be willing to make any effort. Doug Henwood is fantastically good at doing that for the US, but the UK seems to lack a resource like his stuff.
> 
> False economy is possibly the nearest thing I know of and it's really good on why the government is talking shite about austerity and cuts, but its less good at arguing the broader picture that someone like Harvey is painting.


I agree about the content on false economy. I was thinking more about the authors. Many of them will know exactly where to get this stuff, and might be interested in helping make the case. False economy is a TUC front, so it's never going to be very radical, but some of those involved with it are pretty decent.


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## ymu (Mar 3, 2012)

I produced this from ONS data (need to update it - having some software problems) to illustrate that the debt panic is fallacious (the inset shows the last century, taken from a different site).






If you want help turning data into OK graphics ... Crispy would do a better job, but I'd be happy to help. Needs someone with more economic nowse than me to hunt out the right data though. I used to expose pharmaceutical company lies for a living - some of my forensic statistical skills might be transferable if there's some data that's been trickified (but they might not be, it's all fairly sub-specialist these days).


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## Bernie Gunther (Mar 3, 2012)

This is a terrific graph too.






Anyone know where to find a UK and a global version?


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## Bernie Gunther (Mar 3, 2012)

ymu said:


> <snip>
> 
> If you want help turning data into OK graphics ... Crispy would do a better job, but I'd be happy to help. Needs someone with more economic nowse than me to hunt out the right data though. I used to expose pharmaceutical company lies for a living - some of my forensic statistical skills might be transferable if there's some data that's been trickified (but they might not be, it's all fairly sub-specialist these days).


 
Does seem like it'd be a good project doesn't it? Sadly I lack the economics background too.


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## ymu (Mar 3, 2012)

I've been hunting for a UK version of that graph for ages.

The ONS will have at least some of the data required to produce it, but they don't present it in the ways we would like. Primarily, I suspect, because the middle-classes would be rioting if they saw it.


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## Bernie Gunther (Mar 3, 2012)

The site I got that income inequality graph from also has a terrific explanation of what makes it a good graph. Given the context of this thread, I'm going to quote it in full.



> *Why This Chart?*
> Here are what I think should be the principal considerations. Some are obvious, others perhaps not.
> 
> 1. _Tell the substantive story clearly_. The graph does a good job of conveying the two key aspects of the rise in income inequality over the past generation. One is the dramatic increase in incomes for households at the very top. In 1979 household income among those in the top 1% averaged $325,000 (in 2005 dollars). By 2005 that had increased to nearly $1.1 million.
> ...


http://lanekenworthy.net/2008/03/09/the-best-inequality-graph/


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## Bernie Gunther (Mar 3, 2012)

ymu said:


> I've been hunting for a UK version of that graph for ages.
> 
> The ONS will have at least some of the data required to produce it, but they don't present it in the ways we would like. Primarily, I suspect, because the middle-classes would be rioting if they saw it.


 
All the more reason why it would be a really good thing to have a site where such graphs and helpful explanatory text was easily linkable ...


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## Bernie Gunther (Mar 3, 2012)

Ok, Financial sector vs productive economy as a proportion of growth?

Anyone?


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## Bernie Gunther (Mar 3, 2012)

This looks useful

http://www.livingstandards.org/publications-data/publications/


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## Bernie Gunther (Mar 3, 2012)

Another good one.

http://www.oecd.org/site/0,3407,en_21571361_34374092_1_1_1_1_1,00.html


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## love detective (Mar 3, 2012)

Bernie Gunther said:


> OK, here's another one.
> 
> $ 40 trillion per annum in financial transactions, compared to the $ 800 billion needed to support international trade and productive investment flows.
> 
> Harvey sources that claim (for 2001) on Dickens, Global Shift. Any idea where to find equivalent figures online? Ideally in the form of nice punchy little graphs.


 
Harvey is generally pretty poor when it comes to the detail of financialisation, especially things like derivatives - this doesn't necessarily detract from his more fundamental/core marxian analysis, but it can embarrass it a bit around the edges

I would say the figure of 40 trillion per annum figure is very low (even for 2001) - the 'value' of foreign exchange transactions alone is around 4 trillion, each day!

total notional value of outstanding 'Over the Counter' derivative contracts is around 700 trillion plus another 600 trillion for exchange traded derivatives, plus to this would need to add all kinds of equity & bond trading volumes plus loans, financing and other stuff

this stuff isn't simply additive though (as notional amounts for things like derivatives are not a reflection of value or even risk) and the resultant total whatever it may be in omgadzillions doesn't really mean anything in and off itself in analytical terms - it just reflects the fact that things increasingly circulate a lot faster, in increasingly different forms and leave a lot more trace in their path than before. and that they just rattle around exponentially multiplying themselves within the sphere of circulation, leaching on an ever decreasing (in relative terms) production of value from the productive sphere.

Comparing 'total' finance capital to actual 'productive' capital is really apple and oranges - if i had a £100 and lent it to person B who then lent it to person C who then lent it to person D etc until it got to the tenth person who invested it in some kind of productive sphere - this would mean our economy would have had financial transactions of £1,000 and productive transactions of £100 - but this doesn't really mean that there is ten times more money/value existing in finance capital than productive capital - the figures just reflect the trace the original £100 has made on route to a productive home - you could collapse/net down all the inbetween steps and you'd just have a £100 that's passed through a few hands and left some obligations in its wake - this gearing up of the amounts reflects flows rather than totalities

Not saying there's no value looking at this kind of thing, but 'totals' in and off themselves don't really tell much about what's going on, it's flows, movement, process etc.. that has more of a story to tell about what's really going on


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## Bernie Gunther (Mar 3, 2012)

I think the problem is that most of us, you and butchers and the sadly missed davgraham being exceptions, don't really know enough about the political economy stuff, especially the economy part, to know how to tell the story effectively.

The more I think about this, the more I suspect that the first step is to muster some clear politically relevant economic arguments, kind of like the 'why what tories say about deficit and cuts is stupid' ones on 'falseeconomy' then put together the punchy graphs and text-bites to go with it.

Right-wing think tanks and other disinformation outlets are absolutely terrific at this. Anyone who has ever tried to battle the human wave attacks of climate change deniers online can tell you this. They can get all the 'facts' and graphs to argue their stupid shit an a nicely packaged format from just one or two Exxon-sponsored sites, so there's a really low investment of effort required to get out there with that stuff. Hence there's millions of them running around online and despite being dicks individually, as a totality they're tremendously effective in propagandising their point of view.

I don't know of any marxist or otherwise progressively leftist economics resource that's nearly as comprehensive.


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## littlebabyjesus (Mar 3, 2012)

So all that money being passed back and forth in various markets before ever doing anything 'real'  - leaving its trace in these enormous quantities - how much of an actual problem is it? It's leaving a trail of obligations in its wake. What is the net effect of those obligations on the way the money is used in the end? Does this crazy whirl function to extract actual value and if so, from whom?


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## Bernie Gunther (Mar 3, 2012)

littlebabyjesus said:


> So all that money being passed back and forth in various markets before ever doing anything 'real' - leaving its trace in these enormous quantities - how much of an actual problem is it? It's leaving a trail of obligations in its wake. What is the net effect of those obligations on the way the money is used in the end? Does this crazy whirl function to extract actual value and if so, from whom?


 
Well, it probably generates shitloads of fees for the people involved in making it happen and attempting to keep track of the paper claims on wealth it creates.


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## littlebabyjesus (Mar 3, 2012)

Bernie Gunther said:


> Well, it probably generates shitloads of fees for the people involved in making it happen and attempting to keep track of the paper claims on wealth it creates.


It's a Keynsian employment scheme, then? Pay someone to dig a hole, then pay someone else to fill it up again?

I'm guessing this stuff is justified by those who do it in terms of 'discovering real prices', 'providing perfect information' and all that gubbins. How did we cope with setting prices before them?


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## love detective (Mar 3, 2012)

Bernie Gunther said:


> I don't know of any marxist or otherwise progressively leftist economics resource that's nearly as comprehensive.


 
Think the problem is that there are too many marxist chin scratchers who have a good understanding of this but prefer to put up barriers to it, mystifying it, professsionalising it, creating problems in it that aren't there and getting a nice comfy academic position out of it where they ponder it with people of similar ilk and exclusive conferences and the like. The last thing they want is to demystify it so that the knowledge becomes democratised, demystified and accessible in meaningful & useful ways because then the rug is pulled out from underneath them - they want to build walls around that knowledge for their own benefit, marxian analysis for them is not a tool that can be used in the way it was originally intended, they've completely inverted its purpose - it's an end in itself for them, rather than a means

i don't think the opposition has anything like that same problem which probably goes some way to explaining the difference you note (obviously the money behind some of them from corporations goes some way to explaining it as well, but i don't think it can be reduced to just that - it's ironic that the individualist right behaves in a much more collective and non-individualist way than the progressive left on this)


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## love detective (Mar 3, 2012)

littlebabyjesus said:


> So all that money being passed back and forth in various markets before ever doing anything 'real' - leaving its trace in these enormous quantities - how much of an actual problem is it? It's leaving a trail of obligations in its wake. What is the net effect of those obligations on the way the money is used in the end? Does this crazy whirl function to extract actual value and if so, from whom?


 
not really got time to go into detail on this just now - it's a good question though and one that shows the usefulness of marxian analysis to these kind of questions (the interrelationships, dependencies, contradictions and unities between the sphere of circulations & sphere of production, capital as a process, production and realisation of value - the increasing tendency to, but impossibility of, capital ever gaining autonomy from is base of labour, the difference between profit/value extraction at the individual level and at the societal level etc..)


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## ItWillNeverWork (Mar 3, 2012)

Bernie Gunther said:


> This is a terrific graph too.
> 
> Anyone know where to find a UK and a global version?


 
Haven't found anything exactly like you posted, but these do a similar job.












Alternatively, just this:


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## Roadkill (Mar 4, 2012)

Superb thread. 

http://www.ukpublicspending.co.uk/ is useful for raw numbers on the public spending side.  I especially like this:






IMO this graph should be splashed all over every billboard in the country, since it exposes better than any number of words what utter bollocks the Tories are talking about the public finances.


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## Bernie Gunther (Mar 4, 2012)

I mentioned earlier but didn't link, Doug Henwood. His stuff is almost the model for what I'm wishing the UK had.

His magazine site is here. The good stuff is in the articles section. http://www.leftbusinessobserver.com/

Also his book Wall Street, now out of print and available for download. http://www.leftbusinessobserver.com/Book_info.html

Then there's his blog: http://lbo-news.com/


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## Smokeandsteam (Mar 4, 2012)

[quote="Bernie Gunther, post: 10969326, member: 

I don't know of any marxist or otherwise progressively leftist economics resource that's nearly as comprehensive.[/quote]

Spot on. The question is why. 

Is it a question of money/resource? Is it intellectual snobbery? Or is it just not seen by the left as a priority? Or is it a mix of all 3?

I've had better tips, recommends and learnt more on here than any other resource to be honest.


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## ymu (Mar 4, 2012)

Smokeandsteam said:


> Spot on. The question is why.
> 
> Is it a question of money/resource? Is it intellectual snobbery? Or is it just not seen by the left as a priority? Or is it a mix of all 3?
> 
> I've had better tips, recommends and learnt more on here than any other resource to be honest.


Given love detective's post above, I'd say both. Rightwing propaganda makes money for someone, so it gets money thrown at it and flashy PR types get involved. With no money and limited access to popular platforms, leftwing equivalents tend to disappear up their own arse and forget how to communicate this stuff to people who haven't studied Marx.


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## Smokeandsteam (Mar 4, 2012)

ymu said:


> Given love detective's post above, I'd say both. Rightwing propaganda makes money for someone, so it gets money thrown at it and flashy PR types get involved. With no money and limited access to popular platforms, leftwing equivalents tend to disappear up their own arse and forget how to communicate this stuff to people who haven't studied Marx.



What left wing equivalents were/are there? I'm talking here about an accessible resource on Marx and Marxian economics? The type of material Bernie Gunther is seeking etc


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## two sheds (Mar 4, 2012)

detective's post above, I'd say both. Rightwing propaganda makes money for someone, so it gets money thrown at it and flashy PR types get involved. With no money and limited access to popular platforms, leftwing equivalents tend to disappear up their own arse and forget how to communicate this stuff to people who haven't studied Marx.[/quote]

It is counterproductive I think using terms like proletariat, bourgeoise and bourgeoisie particularly. I have difficulty pronouncing them let alone spelling them. I have to stop and think whenever I see them, and it's also tempting to read them in a Monty Python sketch voice. And in common with most of the british population I don't really know what they mean.

'The top 1%' is better than bourgeoisie, 'working people' is better than proletariat but I'm not altogether sure what should replace 'bourgeouis' - I'm not sure 'middle class' covers it now.


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## Bernie Gunther (Mar 4, 2012)

Well, the mental model I have is something like Doug Henwood's site. He's just as happy drawing on Keynes or Minsky as he is Marx theoretically (at least as far as I can work out) but his value comes from being outside the media and political class consensus and hence able to offer a broadly left viewpoint that he's able to back up with very accessible arguments and especially, well sourced and easily understandable facts and figures as graphs and tables.

That kind of material is incredibly valuable if you're getting into political debate online, but outside places like urban. Quite often, you'll be running into right-wingers who are a) used to being able to shout down any left arguments whatsoever, b) are used to having a strong advantage on facts and figures because they can just pull them off some really well organised and researched wingnut thinktank site designed for expressly that purpose.

What got me thinking about this was an experience where I was actually doing OK using Doug's stuff when it came to US political economy, but then to my suprise, found it harder going on UK political economy even though I live here.


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## love detective (Mar 4, 2012)

maybe his time as a libertarian/friedman admirer exposed him to and taught him the benefit of doing things the way he does


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## eoin_k (Mar 4, 2012)

How about doing a run of posters with some of these graphs?  Roadkills last effort is a good one.


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## Bernie Gunther (Mar 4, 2012)

love detective said:


> maybe his time as a libertarian/friedman admirer exposed him to and taught him the benefit of doing things the way he does


 
Could be, but the _relevant_ thing is how useful his present stuff is and (unless there's an equivalent I'm unaware of) the lack of anything similar for the UK.


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## Bernie Gunther (Mar 5, 2012)

two sheds said:


> detective's post above, I'd say both. Rightwing propaganda makes money for someone, so it gets money thrown at it and flashy PR types get involved. With no money and limited access to popular platforms, leftwing equivalents tend to disappear up their own arse and forget how to communicate this stuff to people who haven't studied Marx.
> 
> It is counterproductive I think using terms like proletariat, bourgeoise and bourgeoisie particularly. I have difficulty pronouncing them let alone spelling them. I have to stop and think whenever I see them, and it's also tempting to read them in a Monty Python sketch voice. And in common with most of the british population I don't really know what they mean.
> 
> 'The top 1%' is better than bourgeoisie, 'working people' is better than proletariat but I'm not altogether sure what should replace 'bourgeouis' - I'm not sure 'middle class' covers it now.


 
Good point about some of the standard left terminology being 'loaded language' for much of the general public. If you use it with anyone but a committed activist, you're very likely already damaging your case due to prior conditioning.

"Middle class" is slightly different, perhaps less likely to switch people off, but more likely to lead to 38 pages of pointless arguing about what it mean and hence best avoided for other reasons.

"Richest 1%" though isn't politically loaded and/or confusing though. "Poorest 95%" is also pretty clear and useful.


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## ymu (Mar 5, 2012)

Even using the word 'class' can get some people's backs up and stop them listening. Some middle-class and aspirational working-class types seem to find it offensive.


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## Bernie Gunther (Mar 5, 2012)

ymu said:


> Even using the word 'class' can get some people's backs up and stop them listening. Some middle-class and aspirational working-class types seem to find it offensive.


 
At a certain point though, you've got to use precise language. If you're talking about class you pretty much have to say 'class' but you can still be usefully persuasive in many other situations while using less loaded language.

I like graphs a lot, and perhaps partly for that reason.


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## two sheds (Mar 5, 2012)

ymu said:


> Krugman's been posting a lot of data on this stuff on his blog. Not from a very Marxist perspective, but making much the same arguments. I posted some of it in this thread. eg
> 
> 
> 
> ...


 

Good graph (the index axis should start at 0, though, which would actually make the point it makes even clearer).

It’s almost the start of a story – ‘where has our money gone?’. Working people have clearly kept up the rise in productivity almost constantly since 1950, and wages increased virtually completely in line showing years of at least some form of social justice. This seems a total answer to the people who say our problems come from working people being lazy or foreign labour being more 'efficient', because GDP per person and so productivity was going up in a straight line. People and unions have done all that has been demanded of them: end to restrictive practices, flexible working hours, … but that hasn’t been enough for the various businesses and governments.

Interesting that the change in slope started around 1970 and that it doesn’t just become a straight line with a lower slope. There are years of increase at the same rate as before, but these are followed by years of decrease that virtually wipe out the gains.

Remember, too, that prices have been going up, particularly house prices and rents, which again go from working people into the pockets of (largely) the well off.

It needs actual figures for GDP and the number of millions of people involved to be able to find how much money has gone missing. Presumably it will to some extent parallel the rise in incomes of the super rich?


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## littlebabyjesus (Mar 5, 2012)

The graph shows how recessions hit ordinary people harder than richer people. While recessions cause only a relatively small blip in GDP, they cause a major decline in median income. We're seeing that right now - I would suspect that median income is falling really quite sharply at the moment: pretty much at the rate of inflation, as wages are frozen; yet growth is hovering around zero: the rich are continuing to get richer, in other words, in this time of zero growth.

It is interesting to me that this looks like it might be a pattern that is very generally true: that median income falls more sharply than GDP in any recession.


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## ymu (Mar 5, 2012)

Bernie Gunther said:


> At a certain point though, you've got to use precise language. If you're talking about class you pretty much have to say 'class' but you can still be usefully persuasive in many other situations while using less loaded language.
> 
> I like graphs a lot, and perhaps partly for that reason.


Socioeonomic status can work, but it's a bit pompous. Rich and poor, ordinary-earners, skilled and unskilled, sometimes other words make it easier for people to focus on what you mean.


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## ymu (Mar 5, 2012)

two sheds said:


> Interesting that the change in slope started around 1970 and that it doesn’t just become a straight line with a lower slope. There are years of increase at the same rate as before, but these are followed by years of decrease that virtually wipe out the gains.


Actually, it follows GDP during the oil-shock recessions of the 1970s and levels out under Reagan and continues to do so with increasing financialisation of the economy, with consumer-spending power propped up by debt and housing bubbles. You can see the same pattern here under Thatcher, but its tough to find the data. You can look at the share of GDP going to wages though.





lbj, the long-term trend has fuck all to do with recessions.

Bernie - click the pic. That blog might have some good stuff.


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## littlebabyjesus (Mar 5, 2012)

ymu said:


> lbj, the long-term trend has fuck all to do with recessions.


The pattern I see there is that downturns or slow-downs in the economy lead to severe reduction in the median wage, while there are other periods where it grows at a similar rate to overall GDP. Companies make their profits regardless, but people only see rises where there is overall growth - and every downturn leads the lines to separate further, as the change in proportion caused during downturns is not recouped. It would appear to me that the long-term trend is like that at least ever since the decline in median income relative to gdp began.


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## two sheds (Mar 5, 2012)

From primitive Paint.net skills, the drops seem to be 1968-70, 72-74, 77-81, 87-92 and 98-2003. 

Wiki gives the recessions as 73-75 80-82 90-92 (and 2008-09) 

so no it doesn’t look like they are caused by the recessions. 

Edit - oh tut that's US graph isn't it, the Wiki recessions are for UK.


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## two sheds (Mar 5, 2012)

Wiki gives recessions in the US as 1945, 1949, 1953, 1958, 60-61, 69-70, 73-75, 1980, early 80s, early 90s, early 2000s, late 2000s.

My word what a lot of recessions you’re much better at them than we are. They are a better match so it may be effect of recessions after all  but if so something happened after 1960s that passed on the effects of the recession to incomes.


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## littlebabyjesus (Mar 5, 2012)

That suggests perhaps that recessions are perfectly functional for capital under certain conditions - the conditions that in the us have prevailed since the end of the 60s.

To link that to the earlier discussions of the massive rise in the volume of transactions, this change does date in the us from the time that the bretton woods system ended and there was an explosion in the volume of derivatives as they were deregulated. I don't know exactly what mechanism would link one to the other, but there does appear to have been a considerable empowering of capital over labour. Maybe it is nothing more sophisticated than that - the freeing of restraints on capital flows taking place at the same time as labour organisation has had ever more constraints imposed upon it.


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## ymu (Mar 6, 2012)

Neoliberalism passed you by, then?


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## revol68 (Mar 6, 2012)

littlebabyjesus said:


> That suggests perhaps that recessions are perfectly functional for capital under certain conditions - the conditions that in the us have prevailed since the end of the 60s.
> 
> To link that to the earlier discussions of the massive rise in the volume of transactions, this change does date in the us from the time that the bretton woods system ended and there was an explosion in the volume of derivatives as they were deregulated. I don't know exactly what mechanism would link one to the other, but there does appear to have been a considerable empowering of capital over labour. Maybe it is nothing more sophisticated than that - the freeing of restraints on capital flows taking place at the same time as labour organisation has had ever more constraints imposed upon it.


 
yeah seriously, read up on neo liberalism, Harvey's "A Brief History of Neo Liberalism" is great.


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## Bernie Gunther (Mar 6, 2012)

Trouble is, Harvey is not always completely careful to say things that are readily shown to be true.

For example he often says things that sound like 'real wages fell post Thatcher creating a demand problem that capital solved using a credit boom' but I have found it far from easy to locate evidence to support the 'wages fell' (fell as share of GDP sure, but not vs say Retail or Consumer Price Index) part of that.

He also makes what sounds like a straightforward 'Overaccumulation' argument when talking about the barriers Capital was trying to overcome by moving towards financialisation, but the best links I can find on that (see post #7, credit to butchers) argue for something different and more complicated.

Doesn't mean he's not valuable in a big-picture sort of way and maybe the mistakes above were mine in misunderstanding Harvey (please show me how if they were) ...

... but for the specific purposes outlined in the OP, that's a problem.


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## love detective (Mar 6, 2012)

to be fair to Harvey (and i do have criticisms of him in other areas) when he talks about wages, he generally says things like 'real wages stagnant or falling' and it's quite a wide sweep of things he's trying to encapsulate in those few words - in terms of the position both across neo-liberalised countries, the spread of wages within a particular country and more generally the share of output that goes to labour - whether it's sloppy phrasing or just an attempt to capture the macro situation in just a few words i don't know (he often says things that are wrong, but I don't actually think he means them in that way, just phrases it wrongly, or mixes up things in a bit of a fuddery duddery way)

For example in the US and based on official numbers you could pretty much make the case that the median real wage is lower today in real terms than it was in the late 1970's (see Figure 1 on page 17 of this report) and if you look at the lower percentiles of wage distribution below the median you see a definite drop in real wages at those levels. The UK position hasn't been as severe as the US over that period, but again if you break out wages into the different percentiles while there hasn't been a drop since the late 1970's there's a definite stagnation (when compared with actual productivity/output/gdp growth etc.. - see figure 12/pages 28/29 of the same report). Also in the UK over a shorter period real wages are starting to fall (at the median level) - real wages in 2011 are less than they were 6 years ago, you need to go back to the 1920's to find a similar period where real wages have fallen over a 6 year period.

Also I suspect these figures mask a worse situation - mainly because a lot of these figures are calculated using a standard inflation rate across all income levels to rebase nominal wages to real wages across the period surveyed - this assumes that someone on a high, median or low wage experiences the same level of inflation. The true position however is that 'personal' inflation is higher the lower paid you are and vice versa, so a lot of those figures for real wages for the lower percentiles of the wage distribution actually mask a much higher erosion of real wages

edit-the other thing these kind of figures hide is what wages have to be spent on - a real wage in 2011 will have to cover all kinds of things that were covered by the 'social wage' in the 1970's, not only things relating to healthcare/childcare/education/housingwelfare/benefits etc.  but also post retirement 'expenditure' etc - so the wider picture is likely to point to more of a drop than just the narrow real wage data


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## littlebabyjesus (Mar 6, 2012)

Bernie Gunther said:


> Trouble is, Harvey is not always completely careful to say things that are readily shown to be true.
> 
> For example he often says things that sound like 'real wages fell post Thatcher creating a demand problem that capital solved using a credit boom' but I have found it far from easy to locate evidence to support the 'wages fell' (fell as share of GDP sure, but not vs say Retail or Consumer Price Index) part of that.
> 
> ...


 
Well it seems to me that there are questions that need answering here. Does financialisation serve to suppress wages, or is it simply the attack on labour power that does that. Also, what is the cause and effect here? Does excess suppression of wages cause recession, or vice versa - or, more likely, do the two reinforce each other. I would think that labour power, where unions have been squashed, will never be weaker than during a downturn, explaining why ordinary workers do worst during a recession. But I would also suggest that inbetween recessions, things work out so that capital feels no need to suppress wages wrt gdp. After all, doing so does create the problem with demand that needs to be solved by increased credit, which itself is storing up trouble that will itself lead to recession - if you can make sufficient profits while also paying enough to maintain demand, that seems a sensible thing to do.

I think Harvey's overall story is undeniable: suppression of wages leading to expansion of credit. But I think the mechanisms by which this happens do need explaining, and a possible link with what happens specifically during recessions and slowdowns deserves attention, imo.


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## revol68 (Mar 6, 2012)

> But I would also suggest that inbetween recessions, things work out so that capital feels no need to suppress wages wrt gdp. After all, doing so does create the problem with demand that needs to be solved by increased credit, which itself is storing up trouble that will itself lead to recession - if you can make sufficient profits while also paying enough to maintain demand, that seems a sensible thing to do.


 
yes because capitalism isn't a notoriously short sighted system driven by competition. one of the main effects of deregulation, privatisation and financialisation is to remove what little room capitalism has to manage itself through the state.

have you read Harvey LBJ?


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## ymu (Mar 6, 2012)

littlebabyjesus said:


> But I would also suggest that inbetween recessions, things work out so that capital feels no need to suppress wages wrt gdp. After all, doing so does create the problem with demand that needs to be solved by increased credit, which itself is storing up trouble that will itself lead to recession - if you can make sufficient profits while also paying enough to maintain demand, that seems a sensible thing to do.


What revol said, plus, can you read graphs? There is a clear divergence between productivity and wages after the 1970s, regardless of recessions on the way. What happened is a massive ideological shift, such that neoliberalism became the dominant form of capitalism.

And yes, the need to use credit to prop up consumption is exactly what happened. Hence the current mess.


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## littlebabyjesus (Mar 6, 2012)

revol68 said:


> yes because capitalism isn't a notoriously short sighted system driven by competition. one of the main effects of deregulation, privatisation and financialisation is to remove what little room capitalism has to manage itself through the state.
> 
> have you read Harvey LBJ?


I've read bits, but I'm not sure you've really answered my point. My point was particularly about the specific conditions of recession and the functional role this may play in the suppression of wages.

All this stuff may seem obvious to you, and I've already been told that this has 'fuck all' to do with recessions. I suspect that recessions are central to the process. This is what I'm addressing here.


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## littlebabyjesus (Mar 6, 2012)

ymu said:


> What revol said, plus, can you read graphs? There is a clear divergence between productivity and wages after the 1970s, regardless of recessions on the way. What happened is a massive ideological shift, such that neoliberalism became the dominant form of capitalism.


Instead of patronising me, maybe you could read my posts a little more carefully. There is a clear divergence between productivity and wages - and that divergence occurs at points of recession - while it is merely maintained in between. That was my point.

Can you read graphs?


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## two sheds (Mar 6, 2012)

ymu said:


> You can look at the share of GDP going to wages though.


 

Apart from the spike around 1976 it's flat until 1980, drops at 81–88, 92-97, 2002-2008. The alternative way of looking it is a flat period, then a major drop between 76-97 and recovered slightly with a flattish period since then.

UK recessions from Wiki: 73-75 80-82 90-92 (and 2008-09)

Either way, wages as a share of UK GDP looks much less like it’s related to recessions than the US one.

And of course the individual peaks/troughs are likely to be random effects.


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## littlebabyjesus (Mar 6, 2012)

two sheds said:


> Apart from the spike around 1976 it's flat until 1980, drops at 81–88, 92-97, 2002-2008. The alternative way of looking it is a flat period, then a major drop between 76-97 and recovered slightly with a flattish period since then.
> 
> UK recessions from Wiki: 73-75 80-82 90-92 (and 2008-09)
> 
> Either way, wages as a share of UK GDP looks much less like it’s related to recessions than the US one.


It looks like a very different pattern, yes. Mind, what is the relation between median wage and wages as a proportion of gdp? We're not quite comparing like with like.


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## revol68 (Mar 6, 2012)

LBJ i'm not getting your point, why would anyone be shocked that recessions see wages and GDP further diverge, afterall capitalist/investors tend to hold off throwing their money into a new round of production, instead it remains within the financial sector (a rather significant part of the UK's GDP, no?) and that's before we get into how a recession provides conditions perfect for the further disciplining of labour, not just in wages but in terms of repossessions and people getting further into debt.


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## littlebabyjesus (Mar 6, 2012)

I don't expect anyone to be shocked. I was merely interpreting a graph that was presented, following on from something that two sheds had said. I was told in no uncertain terms that it was 'fuck all' to do with recessions.

I was just exploring the idea. This is the theory forum after all.


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## two sheds (Mar 6, 2012)

Yes, it's whether recessions give the mechanism for siphoning off the money - lots of bargains available in a recession if you've got money sort of thing.


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## revol68 (Mar 6, 2012)

didn't some rich guy in the 1920's say that "In a crisis, assets return to their rightful owners"


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## Idris2002 (Mar 6, 2012)

revol68 said:


> didn't some rich guy in the 1920's say that "In a crisis, assets return to their rightful owners"


 
Herbert Hoover, president of the USA, if memory serves.


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## ymu (Mar 6, 2012)

littlebabyjesus said:


> I've read bits, but I'm not sure you've really answered my point. My point was particularly about the specific conditions of recession and the functional role this may play in the suppression of wages.
> 
> All this stuff may seem obvious to you, and I've already been told that this has 'fuck all' to do with recessions. I suspect that recessions are central to the process. This is what I'm addressing here.


 
Wages are notoriously sticky in recessions. It's one reason why internal devaluation (the only 'successful' outcome austerity can aim for when unemployment is high and interest rates low because exporting your way out is the only option left) is so difficult to achieve. Recessions certainly help to keep wages low, but much more important factors include a generally high level of unemployment, a weak benefits system,keeping immigrants out of the legal workforce and barred from the benefits system for years on end, short-term contracts, zero hours contracts, and so on.

If you look at that graph above, wages and productivity diverged once and for all with Reagan and Thatcher. There is precious little evidence of wages rising in the boom years nor falling with recessions. There is, perhaps, some evidence that they stall more during recessions, but that's about it.

Increases in productivity have meant the bosses pocketing more and the population being able to buy less, which led to an explosion of credit, which has now collapsed. Exposing the inherent flaw in capitalism that Keynes tried to correct last time this happened. He didn't just bang on about government replacing private demand in a recession. Stronger unions and a benefits system were supposed to keep wages at a minimum level so that capital could not exploit the workers in the same way as they can in economies like India and China. Consumer-based economies cannot function like that.

This time around, we have globalisation. Austerity can work because the consumers can be relocated overseas. There is no doubt that globally, wages need to get fairer, but what seems more likely is that they will simply shift until the West becomes full of sweatshop economies supplying rich markets overseas and unable to afford to buy what we make, with people emigrating to find better paid work elsewhere.


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## ymu (Mar 6, 2012)

It's this graph I'm talking about. Shows the influence of ideology well, as do most graphs of anything wage or tax-related over the last 50+years.


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## love detective (Mar 6, 2012)

agree with ymu about recessions not being the key thing here, they are just noise around a more fundamental movement/dynamic

to interpret the downward shift of value going to labour as being purely to do with recessions is a very narrow economic/economist interpretation of what's going on, which misses the much more richer, explanatory factors around the political-economic/qualitative shift in the balance of class forces between capital & labour

while recessions may (or may not) have provided cover for the ongoing execution/implementation of this strategy, they are by no means the driver behind it

If you look at the same data but with income split out between males & females - the gap is even more marked for males


Similar graph for UK here




edit: to add though i don't think capitalism's problems can be boiled down to a straight reading of what has happened in the last 30-40 years - crisis & rupture has been an almost permanent feature of capitalism from the get go, the explanations for these are multi-faceted and a straight/crude underconsumptionist one doesn't get behind all the various contradictions within capital that result in and produce the regular explosion of crisis that capital both fears & needs


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## deke t lefel (Mar 6, 2012)

Roadkill said:


> Superb thread.
> 
> http://www.ukpublicspending.co.uk/ is useful for raw numbers on the public spending side. I especially like this:
> 
> ...


WAR, what is it good for?
well, increasing public debt for starters


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## Bernie Gunther (Mar 8, 2012)

Thing is though, a subtle nuanced account isn't going to get a chance to convince anyone to question the received neo-liberal wisdom without some sort of hook to convince them to read it in the first place and get their head around those nuances.

What I like about Harvey, e.g. in that RSA cartoon is that he's accessible.

Similarly, what I like about the sort of nice punchy graphs we see above is that they're accessible.

Just the inquality of income one by itself says 'you're being screwed'

So it seems to me that it should be possible to string a few together to tell at a crude level the story of 'this is how you're being screwed, and maybe a bit of why too'


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## deke t lefel (Mar 9, 2012)

Roadkill said:


> Superb thread.
> 
> http://www.ukpublicspending.co.uk/ is useful for raw numbers on the public spending side. I especially like this:
> 
> ...


would it be possible to extend that graph back to the thirty years war between 1618 to 1648?


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## littlebabyjesus (Mar 9, 2012)

That's an impressive graph, but does anything from before the 19th century really count? After all, there was no income tax, so those impressively high figures won't really be a reflection of UK gdp at all, will they? Even today, working out gdp is a contested process. Before 1800 - well, I'd like to see the process they used to work out those figures. They may well not really mean much.

Best not to overstate a case, imo, with figures you can't back up well.


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## deke t lefel (Mar 9, 2012)

yeah, proof is needed, better get down to some number crunching


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## littlebabyjesus (Mar 9, 2012)

Best to avoid anything from before the 20th century, tbh. The very concept of gdp only dates from the 1930s, I believe.

Also, you should never talk about public debt without also talking about private debt - which is the real problem. Currently, household debt is over 100 percent gdp in Britain. This is much higher than govt debt and much more of a problem. Government debt is far more sustainable than private debt, and a far preferable way for any society to hold its debt: pool the risk. That's the side of the argument that is so often left out in many mainstream debates. Fuck public debt - currently we have a private debt crisis, and public debt has been rising in an attempt to offset this. That's the real story.


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## deke t lefel (Mar 9, 2012)

littlebabyjesus said:


> Best to avoid anything from before the 20th century, tbh. The very concept of gdp only dates from the 1930s, I believe.
> 
> Also, you should never talk about public debt without also talking about private debt - which is the real problem. Currently, household debt is over 100 percent gdp in Britain. This is much higher than govt debt and much more of a problem. Government debt is far more sustainable than private debt, and a far preferable way for any society to hold its debt: pool the risk. That's the side of the argument that is so often left out in many mainstream debates. Fuck public debt - currently we have a private debt crisis, and public debt has been rising in an attempt to offset this. That's the real story.


for clarity, what are the definitions of public debt, private debt and government debt?


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## deke t lefel (Mar 9, 2012)

and household debt


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## littlebabyjesus (Mar 9, 2012)

deke t lefel said:


> for clarity, what are the definitions of public debt, private debt and government debt?


Generally speaking you can divide it three ways:

Govt debt = money owed by the govt, such as bonds.

household debt = money owed by individuals, such as mortgages and credit cards

business debt = money owed by businesses on loans

This is complicated by the question of how to deal with the debts owed by financial services. In the UK, the figure is about 350 percent in total ignoring financial service debt (which some excuse on the basis that London is an international financial centre) or somewhere over 400 percent if you don't ignore that. Either way, govt debt is not a large proportion of the country's overall debt.

And the crucial point is that govt debt should in no way be privileged over other kinds of debt. For instance, if the govt borrows a load of money to build houses, that counts as govt debt. If instead those houses are financed by mortgages, that comes in the household debt column. Yet both debts have been used to do the same thing - and the govt debt is secured on a lower interest rate, with prospective tenants not liable for the debts directly.

In other words, it is far from obvious that govt debt should come down. There are good arguments to say that it should go _up_.


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## deke t lefel (Mar 9, 2012)

so where do private debt and public debt fit into that analysis?


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## littlebabyjesus (Mar 9, 2012)

They are all debt. Private debt is something owed by individuals. Public debt is something owed by the collective. In that sense, a company debt is in between these two - it's owed by a collective that is a small subset of the overall state collective.

For money to exist, these debts (promises from one party to another) need to exist. Debt is, in and of itself, a necessary thing for our system of money. Far better for the liability to be held at the collective level - it makes for an easier and less stressful life for everyone.


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## deke t lefel (Mar 9, 2012)

is financial service debt, public or private?


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## littlebabyjesus (Mar 9, 2012)

deke t lefel said:


> is financial service debt, public or private?


Private - unless it's a state-owned bank. The fact that the state guarantees deposits in private banks muddies the issue.

This is an example of a clear contradiction. Private risk-taking is underwritten publicly. All banking should be nationalised or permitted only by regulated mutual societies. For anything else to be allowed is anachronistic - the moral hazard of such a situation gives banks as a whole and bankers as individuals an incentive to take bad risks. It's an absurd situation. All banking should be nationalised.


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## deke t lefel (Mar 9, 2012)

so debt is debt?


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## littlebabyjesus (Mar 9, 2012)

'Debt' is another way of saying 'money'. 

It is a promise from one person/group to another. It is a means of representing an amount of value that you are owed - and that means can be transferred from one individual/group to another in the form of a loan, if  the first individual/group wishes to defer their consumption. Facilitating this transfer of consumption is the legitimate role of a bank.


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## deke t lefel (Mar 9, 2012)

and time is money


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## littlebabyjesus (Mar 9, 2012)

There is a legitimate sense in the idea that money should decline in value over time if nothing is done with it. Gessel expanded on this idea, although inflation serves the same purpose.

Put simply: you painted a wall in January. By June, the paint's starting to flake a bit, and come the following January it will need to be painted again.

As you move into the future, the value of what you did for your money generally declines. Entropy sets in, and more work is needed to offset it. So, if you didn't use your money to pay someone else to do something or to loan to someone else to pay a third party to do something, it is only right that the value of the money you were paid for your job should go down as the value of what you did goes down.

That keeps money circulating, which keeps people doing things, which is good.


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## deke t lefel (Mar 9, 2012)

littlebabyjesus said:


> It is a means of representing an amount of value that you are owed


therefore, it is the issuer of money who is in debt


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## littlebabyjesus (Mar 9, 2012)

deke t lefel said:


> therefore, it is the issuer of money who is in debt


Anyone who makes a promise is in debt.


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## deke t lefel (Mar 9, 2012)

so who underwrites debt?


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## Roadkill (Mar 9, 2012)

deke t lefel said:


> would it be possible to extend that graph back to the thirty years war between 1618 to 1648?


 
No, because the national debt in the modern sense dates back to the 'Glorious Revolution' settlement of 1688, which gave control of the public finances to Parliament rather than the King, and then the creation of the Bank of England in 1694.  The period before that isn't really comparable.


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## littlebabyjesus (Mar 9, 2012)

Another graph that would be useful in contextualising debt would be one showing the periods of outstanding debts, public and private. IME people find the idea of a country's debt totalling 400 percent gdp worrying. But a person who's taken on a mortgage that is 4x their annual salary is in 400 percent debt too. It just means that the equivalent of the next four years' work is already owed to someone else - but if you're paying it back over a much longer period than that, it's not necessarily unmanageable.

Not a Marxist point, but one that often gets lost in debates - and is overlooked either through ignorance or deliberately by people who should know better. Not all debt is the same, far from it.


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## Roadkill (Mar 9, 2012)

littlebabyjesus said:


> Best to avoid anything from before the 20th century, tbh. The very concept of gdp only dates from the 1930s, I believe.
> 
> Also, you should never talk about public debt without also talking about private debt - which is the real problem. Currently, household debt is over 100 percent gdp in Britain. This is much higher than govt debt and much more of a problem. Government debt is far more sustainable than private debt, and a far preferable way for any society to hold its debt: pool the risk. That's the side of the argument that is so often left out in many mainstream debates. Fuck public debt - currently we have a private debt crisis, and public debt has been rising in an attempt to offset this. That's the real story.


 
You're absolutely right about private debt, not public debt, being the problem.  I disagree, however, about public debt prior to the twentieth century being best avoided.  I'd say the fact that public debt is lower than for most of the last 300 years is a pretty strong argument to use against Tories wittering on about how awful the situation is now.  Moreover, that graph makes it possible to point out that a high level of public debt evidently did not hinder any of the stronger periods of economic growth in modern history, be that the 1850-73 'great Victorian boom' to the 'long boom' after 1945.  It's a useful exercise in getting the current situation into perspective.

Yes, the concept of GDP is a modern one, and the figures given are therefore economic historians' estimates, but I don't see why that invalidates things.  Just because the concept wasn't worked up until the twentieth century doesn't mean it cannot be applied to previous periods.


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## littlebabyjesus (Mar 9, 2012)

Fair enough. I was just a little skeptical about how those figures were arrived at. As long as you're comparing like with like - or estimated like - you're right.

I heard the point made the other day that if the Victorians had been in this current situation - slump, spare capacity in the workforce, cheap loans - they'd be 'rebuilding the world'.


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## Roadkill (Mar 9, 2012)

littlebabyjesus said:


> Fair enough. I was just a little skeptical about how those figures were arrived at. As long as you're comparing like with like - or estimated like - you're right.
> 
> I heard the point made the other day that if the Victorians had been in this current situation - slump, spare capacity in the workforce, cheap loans - they'd be 'rebuilding the world'.


 
Tbh, alarm bells start ringing in my head when people talk about what 'the Victorians' might have done. 'Victorian' is such a reductive term, and it all too often comes bound up with all sorts of assumptions about how people thought and how the economy and society worked that are frankly a bit weird. Reducing a long period of time (and most people use 'Victorian' to refer to pretty much any time from the defeat of Napoleon to the outbreak of World War I!) to one label is about as illuminating an exercise as bracketing the whole period since the early 1950s as 'Elizabethan'!

</off-topic>


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## magneze (Mar 9, 2012)

Indeed, knowing that the country had much higher debt in previous years which it clearly survived is quite instructive. I sent that graph to my Dad and he was surprised. The rhetoric is that the debt is disastrous when in fact the "cure" is the disaster.

As an aside, I'm finding this thread great. Am currently in the process of reading Capital alongside David Harvey's companion. In Chapter 3 at the moment. Learning a fair bit about money.


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## littlebabyjesus (Mar 9, 2012)

Roadkill said:


> Tbh, alarm bells start ringing in my head when people talk about what 'the Victorians' might have done. 'Victorian' is such a reductive term, and it all too often comes bound up with all sorts of assumptions about how people thought and how the economy and society worked that are frankly a bit weird. Reducing a long period of time (and most people use 'Victorian' to refer to pretty much any time from the defeat of Napoleon to the outbreak of World War I!) to one label is about as illuminating an exercise as bracketing the whole period since the early 1950s as 'Elizabethan'!
> 
> </off-topic>


Fair enough. I took it to mean the Victorians who built the railways, the tube, the sewers. That kind of grand infrastructure project was undertaken through taking out debts. That's perhaps the point.


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## camouflage (Mar 9, 2012)

Bernie Gunther said:


> So, I've argued in other places for something like David Harvey's interpretation of the current crisis. I've found some very decent evidence to support some parts of that interpretation via the likes of Doug Henwood, at least for the US economy.
> 
> Where do I find some for the UK though and in general what are good resources for e.g. nice linkable graphs showing the sort of stuff you need to argue the case here say:




Looking forward to watching this one, I love these sketched RSA lectures


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## deke t lefel (Mar 9, 2012)

Roadkill said:


> No, because the national debt in the modern sense dates back to the 'Glorious Revolution' settlement of 1688, which gave control of the public finances to Parliament rather than the King, and then the creation of the Bank of England in 1694. The period before that isn't really comparable.


the reformation, culminating in the thirty years war, ushered in the age of reason and the age of capitalism; by the end of the seventeenth century, the bookkeepers had really started to get to grips with the public finances


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## Roadkill (Mar 9, 2012)

deke t lefel said:


> the reformation, culminating in the thirty years war, ushered in the age of reason and the age of capitalism; by the end of the seventeenth century, the bookkeepers had really started to get to grips with the public finances


 
True, but until the 'Glorious Revolution' there was no such thing as the national debt: it was the crown's debt, which it often didn't pay!


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## SpineyNorman (Mar 9, 2012)

littlebabyjesus said:


> ...if you can make sufficient profits while also paying enough to maintain demand, that seems a sensible thing to do.


 
Is that even possible? If you're making a profit then you're paying workers less than the value of the stuff you're producing, so there will never really be sufficient demand, surely? Isn't that one of the most fundamental contradictions of capitalism? I guess they can minimise the demand deficit (if that's the right term) but it can never be eliminated, just managed with various sticking plasters like consumer debt and stuff like that.


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## littlebabyjesus (Mar 9, 2012)

That's a good point, sn. Is that a reason for the inevitability of recessions, I wonder. I've never seen an entirely convincing argument to show why boom and bust cycles are inevitable (history seems to show that they are inevitable). Be good to read one.

The profits have to go somewhere and do something, though, so if you're keeping demand up by lending out your profits, that could work short-term. Long-term, would that mean that the loans continue having to become larger and larger - meaning that asset prices need to be inflated? There then comes a breaking point where confidence collapses, asset values fall and ever-increasing loans become impossible. That's the point at which recession is reached, I suppose. But then recessions are functional to the capitalist if they can use them to squeeze workers sufficiently that the profits keep coming in - and then those profits have to go somewhere, so they start loaning out again, and another cycle begins.

Where I'm not clear on Harvey's/Marx's analysis of this is in the unsustainability of this boom and bust model. Could it not be perfectly sustainable all other things, such as energy availability!, being equal?


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## deke t lefel (Mar 9, 2012)

Roadkill said:


> True, but until the 'Glorious Revolution' there was no such thing as the national debt: it was the crown's debt, which it often didn't pay!


or more often than not, couldn't pay due to the expense of war

parliament was only allowed to exist in order to collect taxes for the monarch; increased crown debt necessitated the collection of more taxes through parliament and, as a consequence, the rise of parliamentary power


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## Roadkill (Mar 9, 2012)

deke t lefel said:


> or more often than not, couldn't pay due to the expense of war


 
Yes, except that much of the debt was incurred for war in the first place.  The military was by far the biggest item of expenditure for governments throughout that period.  Anyway, this is straying rather off the point of the thread, i think...


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## ymu (Mar 9, 2012)

littlebabyjesus said:


> That's a good point, sn. Is that a reason for the inevitability of recessions, I wonder. I've never seen an entirely convincing argument to show why boom and bust cycles are inevitable (history seems to show that they are inevitable). Be good to read one.


 
Because not everyone has equal knowledge and because investors aren't always rational. Housing is particularly prone to bubbles because it drags in small private savings and because the cost of servicing the debt is offset by saving on rent.

Market theory says that poor investment decisions are balanced with by the 'smart money', the arbitrageurs who take the gains when someone else loses. But you can only make money out of other peoples' poor investment decisions if you get in before the bubble inflates, or if you bet on the bubble bursting. In both cases, there is an incentive to manipulate the markets to either create bubbles or to cause them to burst. There are several banks being investigated for this sort of behaviour.


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## littlebabyjesus (Mar 9, 2012)

Does capitalism not need the boom and bust cycle, though, as an inevitable result of loaning the value they've taken from workers back to them at interest? The fact that they are charging interest means that the overall size of the loans needs to keep going up in order to keep them serviced - and as long as there is overall growth, the size of the profits continues to grow so there is capital there to be loaned out in ever-increasing amounts. And the only way to facilitate these increasing loans is to increase the value of assets - an asset bubble that directly corresponds in size to the size of capital's profits. No surprise here, perhaps, that during the early 2000s, average wages did not go up even though the economy was growing, but the value of assets continued to go through the roof.

In effect people are robbed twice. During the boom, some of the value of their work is not paid to them in wages but rather loaned to them against the notional value of an asset. Then during the bust, that asset is devalued in such a way that it is either taken away from them, or they are left in a situation where they cannot recoup the money they've paid out on the loan by selling the asset. And who is it that can buy houses during a recession? Those with the ready cash to do so - capitalists! - who get themselves a bargain.


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## ymu (Mar 9, 2012)

Yes, I think that's about right. Growth has been lower in the neoliberal economies in the last thirty years than during the interwar period, but the booms have been boomier and the busts bustier, and it's the 'smart money' that gets rich in a crash. A less stable economic system suits those with power.


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## littlebabyjesus (Mar 9, 2012)

This might be a tad simplistic, but would there not be a strong inverse correlation between asset bubbles and wages as a share of gdp? In Germany, for instance, house prices are significantly lower than in the UK. Does that correspond to a higher share of gdp being paid in wages? Asset bubbles might be a pretty good indicator of the level of exploitation in a country.


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## Old Gergl (Mar 9, 2012)

lbj, have you considered actually reading Capital yet? I seem to remember you dug your heels in when butchers suggested it. I've joined a reading group for vol 1 (to make sure I get round to it this time  ), we're only on ch 3 so if you want to join us... I've invited Magneze too.


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## littlebabyjesus (Mar 9, 2012)

I realise that I'm probably reinventing the wheel with some of this.  I can only apologise.

I've not read Capital yet! I have read a fair bit of Harvey, but he doesn't entirely satisfy me with his explanations. There seem to be holes. His point that capital always has to find somewhere to go is a good one though.


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## deke t lefel (Mar 9, 2012)

Roadkill said:


> Yes, except that much of the debt was incurred for war in the first place. The military was by far the biggest item of expenditure for governments throughout that period. Anyway, this is straying rather off the point of the thread, i think...


possibly, although it's important not to put the cart before the horse - it is usually the excessive expenditure and destruction of war that guides economic policy


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## Roadkill (Mar 9, 2012)

deke t lefel said:


> it is usually the excessive expenditure and destruction of war that guides economic policy


 
Rather a sweeping statement, that.  Which period are you talking about?  If the eighteenth century and earlier, then it's probably an anachronism to talk of 'economic policy' at all; if the nineteenth then I'd dispute that war had much to do with economic policy for most of the time; if the twentieth, much as war has been important, ideology, social imperatives and non-military-related economic developments (e.g. the Great Depression, 1973 oil shock, and so on) have probably been more significant.


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## deke t lefel (Mar 9, 2012)

Roadkill said:


> Rather a sweeping statement, that. Which period are you talking about? If the eighteenth century and earlier, then it's probably an anachronism to talk of 'economic policy' at all; if the nineteenth then I'd dispute that war had much to do with economic policy for most of the time; if the twentieth, much as war has been important, ideology, social imperatives and non-military-related economic developments (e.g. the Great Depression, 1973 oil shock, and so on) have probably been more significant.


the Legal Tender Act of 1862 in the US was a direct result of the US Civil War and led to the National Banking Acts of 1863 and 1864
the Great Depression.... between two wars, enough said
the 1971 Nixon Shock was due to excessive expenditure during the Vietnam war
the 1973 oil shock was a response to the re-arming of the Israeli military by the US (facilitated by the Nixon Shock)
de-regulation after 9/11
the list goes on........


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## littlebabyjesus (Mar 9, 2012)

You can place any event next to a war, though. 'deregulation after 9/11' seems a bit weak, tbf.


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## Roadkill (Mar 9, 2012)

littlebabyjesus said:


> You can place any event next to a war, though. 'deregulation after 9/11' seems a bit weak, tbf.


 
Exactly.  Not even all of the examples deke t lefel gives can be attributed solely and/or directly to war, and one could come up with plenty of other developments that had little to do with it.  Tbh I'm having difficulty seeing where deke t lefel is going with this...


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## deke t lefel (Mar 9, 2012)

Roadkill said:


> Superb thread.
> 
> http://www.ukpublicspending.co.uk/ is useful for raw numbers on the public spending side. I especially like this:
> 
> ...


isn't it a bit of a coincidence that the public debt reaches a peak just after the end of the Napoleonic Wars, then reduces substantially, particularly during the Long Depression at the end of the nineteenth century, increases during World War 1, reduces again during the Great Depression, increases again during World War 2, reduces and flattens up to 2001 and starts rising again during the Afghanistan and Iraq Wars?

warfare increases public debt and public debt strongly influences economic policy


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## Crispy (Mar 9, 2012)

deke t lefel said:


> warfare increases public debt and public debt strongly influences economic policy


No doubt. Although only warfare on that scale. Our recent meddling in the middle east is peanuts by comparison.


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## littlebabyjesus (Mar 9, 2012)

Britain has started and fought two wars in the last decade. But it still spends less on the military now than it did during the Cold War.

Also, look at Japan. 200 percent public debt now. It doesn't spend much on its military at all and is involved in no wars.

Yes, war is a massive factor in an economy and big wars always mean big public debt. But it isn't the only factor in an economy, and it's not the only thing that can cause big public debt.


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## deke t lefel (Mar 9, 2012)

Crispy said:


> No doubt. Although only warfare on that scale. Our recent meddling in the middle east is peanuts by comparison.


trillions of dollars to the US though


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## ItWillNeverWork (Mar 9, 2012)

deke t lefel said:


> trillions of dollars to the US though


 
Still relatively low as a percentage of GDP though.


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## deke t lefel (Mar 9, 2012)

yeah, it's where it's being spent that counts though, during a war, it's usually spent abroad


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## Bernie Gunther (Apr 6, 2012)

Some useful stuff on the relative decline of UK manufacturing and growth of the financial sector and its relationship to the production of inequality and poverty.



> Decisions on where to locate employment are increasingly dominated by where clusters of firms and people offer either prosperous markets and skilled employees, or low costs and large numbers of relatively low-skilled people. Relatively little employment now needs to be located near raw materials, and continuing reductions in transaction and transport costs as technology advances reduce the need for industries to be near ports. It’s all about where the right people are.
> 
> The need to locate near prosperous markets will become even more compelling for many of the new service industries over the next 20 years. In many places a virtuous cycle, whereby businesses set up where there is a ready market and more customers are attracted because there are lots of suppliers offering a wide choice, will continue to develop. At the most local level such processes are visible often on a daily basis in gentrifying areas, where rates of leisure and retail outlets often multiply exponentially over a short period of time. Across larger areas the same process occurs with big business, whether it be legal firms or biotechnology industries Consequently, it has become increasingly compelling for employment to become concentrated in particular areas.<snip>
> 
> The employment strategies of many financial services firms offer a good example of the increasing inequality that is likely to develop between places. They will pay an extremely high price for some key workers to be present at the heart of the flow of information (e.g. in the City of London). At the same time, low-skilled, low-paid employment in their call centres is based in other less affluent locations.


http://www.jrf.org.uk/sites/files/jrf/1859350909-6.pdf

Links below mostly credited to a friend on another board.

*BBC doc about Thatcher and Roll-Back*
http://www.bbc.co.uk/blogs/adamcurtis/2011/09/the_curse_of_tina.html

Including the video of this tasty morsel. Thatcher's economic advisor basically admitting to strong suspicions that unemployment was in fact a deliberately cultivated weapon for class-warfare in the minds of Thatcher and her closest chums.


> *Curtis*: For some economists who were involved in this story, there is a further question: were their theories used to disguise political policies that would have otherwise been very difficult to implement in Britain?​​*Budd*: The nightmare I sometimes have, about this whole experience, runs as follows. I was involved in making a number of proposals which were partly at least adopted by the government and put in play by the government. Now, my worry is . . . that there may have been people making the actual policy decisions . . . who never believed for a moment that this was the correct way to bring down inflation.​​They did, however, see that it would be a very, very good way to raise unemployment, and *raising unemployment was an extremely desirable way of reducing the strength of the working classes* -- if you like, that what was engineered there in Marxist terms was a crisis of capitalism which re-created a reserve army of labour and has allowed the capitalists to make high profits ever since.​​Now again, I would not say I believe that story, but when I really worry about all this, I worry whether that indeed was really what was going on.​


http://www.newstatesman.com/blogs/the-staggers/2010/07/class-war-budd-thatcher-cuts

*Financial sector share of GDP:*

http://www.thecityuk.com/assets/Uploads/Economic-Contribution-of-UK-Financial-Services-2010.pdf
http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/qb110304.pdf

*Financial debt as % of GDP:*

http://www.economist.com/blogs/graphicdetail/2012/01/daily-chart-8
http://www.mckinsey.com/Insights/MG...Markets/Uneven_progress_on_the_path_to_growth

*Balance sheets and leverage:*
http://www.pwc.com/gx/en/banking-capital-markets/assets/PwC_Banking_in_2050.pdf
http://www.imf.org/external/pubs/ft/gfsr/2011/01/pdf/text.pdf
http://www.fsa.gov.uk/pubs/speeches/at_cass_slides_170310.pdf
http://elibrary-data.imf.org/Report.aspx?Report=4160279
http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-SF-07-047/EN/KS-SF-07-047-EN.PDF

*Inequality*
http://www.scribd.com/doc/25873703/How-unequal-is-Britain
http://www.guardian.co.uk/news/datablog/2010/jan/27/national-equality-panel-inequality-data
http://sticerd.lse.ac.uk/case/_new/publications/NEP.asp


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## love detective (Apr 7, 2012)

Bernie Gunther said:


> Including the video of this tasty morsel. Thatcher's economic advisor basically admitting to strong suspicions that unemployment was in fact a deliberately cultivated weapon for class-warfare in the minds of Thatcher and her closest chums.


 
There was an IWCA piece on this a few years back


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## rorymac (Apr 7, 2012)

Excellent thread .. wish I had something to offer !


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## Roadkill (Apr 8, 2012)

deke t lefel said:


> isn't it a bit of a coincidence that the public debt reaches a peak just after the end of the Napoleonic Wars, then reduces substantially, particularly during the Long Depression at the end of the nineteenth century, increases during World War 1, reduces again during the Great Depression, increases again during World War 2, reduces and flattens up to 2001 and starts rising again during the Afghanistan and Iraq Wars?
> 
> warfare increases public debt and public debt strongly influences economic policy


 
My apologies - I completely forgot to reply to this.

it's absolutely no coincidence that most of the peaks of debt coincide with the end of major wars: you can pretty much track the alternating periods of war and peace in the eighteenth century by the ups and downs of the graph, for instance.  Government borrowed to fund war, and paid down the debt in peacetime.  Contemporaries agonised long and hard over whether this was a good thing or not.  But it's not only war that influences debt.  You can spot the impact of the Great Depression in that graph, for example, and I suspect some of the smaller peaks on the generally downward-sloping curve after 1815 were due to recessions as well. Nor is it only debt that influences economic policy: you've also got to consider ideology, social policy, strategy both geopolitical and in terms of domestic policy, and so on and so forth.  It's IMO far too neat to draw a straight line between war, debt and economic policy.  There are so many other factors at work.


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## Bernie Gunther (Apr 13, 2012)

One of the things I find myself arguing a lot in the sort of circumstances envisaged in the OP is that

"You're talking about X (e.g. fiscal austerity policies imposed via debt) as though it's some sort of natural law, but in fact its neo-liberal ideology being applied via institutions over which that ideology has acquired hegemony"

Has anyone got any good stuff to share to help with making that sort of case?

For example, could one argue: 'It's ideology because e.g. Keynes wouldn't have agreed that austerity is the only possible response to Greek debt' or something like that?


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## elbows (Apr 14, 2012)

There should be a lot of general stuff out there that discusses the idea that economics is not a natural science. e.g. http://www.sbs.utexas.edu/resource/onlinetext/Definitions/economicsNOTscience.htm

And regarding austerity I would expect that there are many critiques of IMF policy going back decades that should cover this topic.

I haven't had time to read any of the articles yet, but the freely available special austerity issue of the Cambridge Journal of Economics ought to have something too, many of the articles have promising titles.

http://cje.oxfordjournals.org/content/36/1.toc


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## elbows (Apr 14, 2012)

Bah, just noticed that many of the articles are not freely available, but some relevant ones are.


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## ymu (Apr 17, 2012)

Bernie Gunther said:


> One of the things I find myself arguing a lot in the sort of circumstances envisaged in the OP is that
> 
> "You're talking about X (e.g. fiscal austerity policies imposed via debt) as though it's some sort of natural law, but in fact its neo-liberal ideology being applied via institutions over which that ideology has acquired hegemony"
> 
> ...


Krugman's blog is chock full of evidence that Keynesianism works and austerity does not, and that there is an ideological thang going on - much of it international, and some of it UK-based and taking the piss out of Osborne directly.

Searches on Keynes, Keynesian and austerity (separately or together) should bring up loads of stuff. Stimulus and military also will bring up some good entries (he's been banging on a lot about the GOP claiming that gov spending can't create jobs, but objecting to cuts in the military budget on the grounds that it will cost jobs). Very Serious People is one phrase he uses a lot to describe the people who are making stupid decisions based on ideology.

It's all a bit snippety (hence my not finding you the links directly because there's loads of them, but it's an easy blog to skim-read), but he's very good about providing links to more detailed sources.

He's slightly weird, in being a committed capitalist and a partisan Democratic Party supporter who is definitely guilty of letting the Dems off the hook when he criticises the GOP, and he misses a lot of obvious points because of it, but many of the arguments he makes, and especially the evidence he uses, fit well into the Marxist narrative (from my ignorant perspective, anyway).


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## Bernie Gunther (Apr 17, 2012)

The latest tactic I've run into is violent objection to the use of the term 'neo-liberal' on the grounds that 'it's just an insult' and/or that it's too vague to be meaningful, which is interesting.

I think part of the issue is that outside of places like Urban, many people find the idea of a politics that isn't just Lab/Con or Rep/Dem partisanship weird and disturbing and as I generally want to talk about neo-liberalism to describe what the above parties have in common in order to point out what I think is wrong with it, or to challenge someone talking as though neoliberal ideology is natural law (especially in an economic context) using the term causes some people to experience meltdowns.


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## phildwyer (Apr 17, 2012)

Bernie Gunther said:


> One of the things I find myself arguing a lot in the sort of circumstances envisaged in the OP is that
> 
> "You're talking about X (e.g. fiscal austerity policies imposed via debt) as though it's some sort of natural law, but in fact its neo-liberal ideology being applied via institutions over which that ideology has acquired hegemony"
> 
> ...


 
It's ideology because every previous civilization in history would have looked at the entire infrastructure of capitalism as a monstrous abomination.


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## ymu (Apr 17, 2012)

Bernie Gunther said:


> The latest tactic I've run into is violent objection to the use of the term 'neo-liberal' on the grounds that 'it's just an insult' and/or that it's too vague to be meaningful, which is interesting.
> 
> I think part of the issue is that outside of places like Urban, *many people find the idea of a politics that isn't just Lab/Con or Rep/Dem partisanship weird and disturbing* and as I generally want to talk about neo-liberalism to describe what the above parties have in common in order to point out what I think is wrong with it, or to challenge someone talking as though neoliberal ideology is natural law (especially in an economic context) using the term causes some people to experience meltdowns.


This is very true, even for what were mainstream capitalist ideas. I tried to explain the Post War Consensus and Keynesianism to my Dad and he grumbled about my 'extremist politics' before changing the topic. But that's normal for Dad. Much more worryingly, I then had much the same conversation during a brief Twitter spat with Evan Harris (the Lib Dem MP who lost his seat in 2010). He dismissed my 'extremist politics' after I sent him a bunch of links on austerity vs Keynes to back up my argument. He didn't respond further after I asked him if a senior Lib Dem was seriously dismissing Keynes as an extremist ... 

Which I had known then that Twitter has no permanent archive. Pure comedy gold.


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## Falcon (Apr 19, 2012)

Bernie Gunther said:


> The latest tactic I've run into is violent objection to the use of the term 'neo-liberal' on the grounds that 'it's just an insult' and/or that it's too vague to be meaningful, which is interesting.


The same thing is happening in neoclassical economics, which is the economic framework of neoliberalism. It doesn't have to be - there are dozens of alternative economic schools from which it can choose. But perpetual exponential growth is a necessary assumption in neoliberalism, for reasons alluded to in Bernie's OP, and for which it needs a sufficiently plausible theory to account for the finite nature of resource on a spherical planet with a thin crust and thinner atmosphere.

Neoclassical economics uniquely provides this via its theories of resource scarcity, arrived at via its various deranged propositions about biophysical reality which are an embarrassment to anyone with a grounding in the physical sciences or scientific method (which is to say - not policy makers and other decision making consumers of neoliberal/neoclassical policy advice). That is why neoliberals funded the early neoclassical schools on the provision they developed these ideas, and embraced them and their proponents.

Needless to say, these theories aren't holding up too well as the realities of the thin crust and thinner atmosphere assert themselves, and neoclassical economics is taking a pounding. So efforts are afoot in the neoclassical camp to object to the term, as a device for Keeping Calm and Carrying On. But it's easy to defeat. The irreducible core of neoclassical economics assume three axioms: methodological individualism, methodological instrumentalism, and methodological equilibration (broadly, the system acts like a perfect individual would, that theories are not necessarily descriptive of reality and better if they don't, and everything wants to be in some sort of balance and will return to it if perturbed). These are fully reflected in any flavour of mainstream economics you care to mention. It is this observation which refutes the claim that mainstream economics is not neoclassical economics. (Since these axioms are ideological in nature rather than empirical, it is also a basis for proving that neoclassical economics and hence neoliberalism is ideological, irregardless of specious arguments about vagueness).

More interestingly, it is the specific defects in these necessary features of neoclassical economics that account for the persistent inability of mainstream economics to illuminate economic and social reality. For example, the three core axioms of neoclassical economics are logically inconsistent — starting with the first two axioms leads to a shapeless demand curve, which violates the third axiom. To protect the core theorem of equilibrium, neoclassical economics is forced to advance a protective fourth axiom — a constant Engel curve — which is not observable in reality. Since reasoning in economics takes place deductively rather than (as in the physical sciences) inductively, the logical absurdity inherent in its irreducible core axioms propagates into all theories deriving from them. A neat little proof by falsification.

Where all that gets you on your original OP, Bernie, I don't know. Since all economic activity (other than the minor sort associated with selling photocopy insurance policies to each other) derives ultimately from converting natural wealth into material wealth, and given the malfunction currently unfolding in the natural wealth system, Harvey's analysis (Human Frailty, Institutional Frailty, False Economic Theory, Cultural, Policy) seems myopically anthropocentric to me (unless he is meaning more by Economic Theory than he hints at). Seems he is looking under the lamp post for the keys because that is where Marxist light currently shines most brightly...


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## two sheds (Apr 23, 2012)

Interesting graph ymu posted above from the Richard Murphy article: “There’s plenty of money, it’s just been put out of reach” (http://www.taxresearch.org.uk/Blog/2011/12/05/theres-plenty-of-money-its-just-been-put-out-of-reach/).

Murphy used a single trend line downwards from left to right, but this looks misleading, as it suggests a gradual decline. To me, it looks like a a relatively flat period followed by a drop and then (so far) another flat period.


From the early 60s onwards wages averaged almost 60% of GDP. Then, in seven years from 1980 to 1987 they dropped by 5% (partially from privatization reducing wages?) and evened out after that. There was a sizeable blip around 1976-77 for some reason that eludes me – it looks like there must have been something specific.

Murphy gives GDP at about £1.4 trillion a year, so UK workers have around £100 billion less in their pockets. He says the gap has been filled by increased consumer borrowing to maintain living standards, from companies making “excess profits” which, rather than being invested have simply lent them out. The result was more debt and greater inequality.

He says it’s untrue that the money has ‘run out’, it’s just gone to the rich, who tend to avoid tax, so government income has gone down and the money we are borrowing now is to cover that. We would have neither debt nor economic crisis if we had more equality .

The graph as I've drawn it also matches almost perfectly the Gini inequality index Itwillneverwork posted above.



I must say that overall I preferred the US graph of GDP versus productivity. People understand that many have been forced to take over more work, often from other people who have been sacked in ‘efficiency drives’.


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## ymu (Apr 24, 2012)

I think the spike in the 1970s was a severe shock to GDP caused by the oil crisis - it's due to GDP diving rather than wages getting high and then being cut again. The 'shock' that the neoliberals used to change the world. You can see it in this graph of UK GDP - recessions due to the oil crises of the 1970s followed by a series of recessions caused by big finance (housing bubbles, dot.com speculation etc). Lower GDP growth overall, bigger booms, bustier busts, with the 'smart money' benefiting by being able to clean up when the bubbles burst. Which is why they're still pushing policies which make us, on average, poorer.






The busts are bigger than they were pre-Thatcher, but also less frequent and more likely to dip below zero growth (ie recession). I assume that reflects the role played by cheap credit and dragging private savings into the stock market (via the "tell Sid" selloffs, mortgages, PEPs, ISAs etc). Staving off the bust by pumping up the bubbles bigger, meaning that they burst more spectacularly.


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## Bernie Gunther (May 4, 2012)

I'm trying to find some decent information on the more recent developments following on from Ecuador's debt audit, selective default and restructuring.

Also interested in sources and thoughts around debt audits and associated matters more generally, in respect of both the Caribbean and Latin American countries who have been there and the possibility of Portugal, Italy, Ireland, Greece, Spain et al having to go there.


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## Bernie Gunther (May 6, 2012)

This looks very interesting, albeit offering little hope for: "let's make capitalism less horrible by following that nice Mr Keynes's ideas ... "



> The rate of profit—that is, profit as a percentage of the amount of money invested—has a persistent tendency to fall. However, this tendency is reversed by what John Fullarton, Karl Marx, and others have called the “destruction of capital”––losses caused by declining values of financial and physical capital assets or the destruction of the physical assets themselves. Paradoxically, these processes also restore profitability and thereby set the stage for a new boom, such as the boom that followed the Great Depression and World War II.
> 
> During the global economic slumps of the mid-1970s and early 1980s, however, much less capital value was destroyed than had been destroyed during the Depression and the following World War. The difference is largely a consequence of economic policy. The amount of capital value that was destroyed during the Depression was far greater than advocates of laissez-faire policies had expected, and the persistence of severely depressed conditions led to significant radicalization of working people. Policymakers have not wanted this to happen again, so they now intervene with monetary and fiscal policies in order to prevent the full-scale destruction of capital value. This explains why subsequent downturns in the economy have not been nearly as severe as the Depression. But since so much less capital value was destroyed during the 1970s and early 1980s than was destroyed in the 1930s and early 1940s, the decline in the rate of profit was not reversed. And because it was not reversed, profitability remained at too low a level to sustain a new boom.
> 
> ...


http://www.marxisthumanistinitiativ...ook-the-failure-of-capitalist-production.html


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## Firky (May 6, 2012)

Cracking thread.


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## love detective (May 6, 2012)

Bernie Gunther said:


> This looks very interesting, albeit offering little hope for: "let's make capitalism less horrible by following that nice Mr Keynes's ideas ... "
> 
> 
> http://www.marxisthumanistinitiativ...ook-the-failure-of-capitalist-production.html


 
Kliman does some good stuff (and that latest book of his is pretty much full of the type of empirically focussed stuff you were asking for in the OP, albeit US focussed)

There was a thread here about some promotional talks he was doing in the UK about this book (well the real reason he was in the UK was to take part in Ashley Banjo's secret street crew, but keep that to yourself)


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## two sheds (May 6, 2012)

ymu said:


> I think the spike in the 1970s was a severe shock to GDP caused by the oil crisis - it's due to GDP diving rather than wages getting high and then being cut again.


 
Yes, good point.


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## ItWillNeverWork (May 14, 2012)

I need help figuring out how to analyse the following graph I put together. It charts unemployment against the net rates of return for all UK non-financial corporations from 1971-2010. The period from 1971 to the early 90's gives strong support to a Marxist interpretation that pits the interests of labour against that of capital, but what about the period from the early 90's until now? Any theories to why there is such a change in the correlation at that point?
​​


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## ItWillNeverWork (May 14, 2012)

OK, I've re-scaled the chart and zoomed in on the period 1992-2010. It is clearer now that the positive correlation between unemployment and corporate profitability still exists, but in a looser way. The crucial divergences from the norm are between 92 and 97 when rates of return keep rising despite falling unemployment, and 2008 when everything goes tits up anyway.

​


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## ymu (May 14, 2012)

Not sure, but the 'non-financial' bit might have something to do with it? The 80s and 90s was when most of the deregulation happened, capped off by Brown in the very early years of New Labour. It's since then that the economy has become so reliant on the financial sector, at least in terms of its nominal contribution to GDP.

E2A: the point being that many parts of the financial sector are much more profitable than other sectors because of the barriers to entry and because of taxpayer guarantees which allowed them to take risks with no downsides. The expansion of that sector is likely to have hit profits elsewhere in the economy (because it has to suck in money from somewhere - it doesn't create anything new).

Econometrics is fiendishly tricky though, and anyone who is competent at it knows it can't really prove much anyway. It's precisely the same set of methods as used in medicine for non-experimental data, and it has precisely the same problems when it comes to interpretation. It's easy to build a model which gives the answer you wanted, and even if done honestly, it's very difficult to know whether the model you have built reflects the reality that you are trying to explain.


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## love detective (May 14, 2012)

ItWillNeverWork said:


> I need help figuring out how to analyse the following graph I put together. It charts unemployment against the net rates of return for all UK non-financial corporations from 1971-2010. The period from 1971 to the early 90's gives strong support to a Marxist interpretation that pits the interests of labour against that of capital, but what about the period from the early 90's until now? Any theories to why there is such a change in the correlation at that point?
> 
> View attachment 19145​


 
Looks like you've got your datasets the wrong way round

The line that says that it is net rate of return on your graph (the blue one) looks to me like it actually represents unemployment and the line that says it is unemployment (the orange one) looks like rate of return

Which inverts the picture and presents what I would see as a more expected position (i.e. a higher 'profit rate' in that period bringing about higher demand for all elements of 'capital', including labour. which explains the lowering unemployment in the UK from mid 90's onwards. Note however the profit rate used in all of these kind of statistics is pretty much a fictitious one and unlikely to represent the true underlying profit rate which would more likely to be decreasing than increasing over that period)


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## ItWillNeverWork (May 14, 2012)

love detective said:


> Looks like you've got your datasets the wrong way round
> 
> The line that says that it is net rate of return on your graph (the blue one) looks to me like it actually represents unemployment and the line that says it is unemployment (the orange one) looks like rate of return
> 
> Which inverts the picture and presents what I would see as a more expected position (i.e. a higher profit rate will always bring about higher demand for all elements of 'capital', including labour)


 
Well spotted, I've labelled it incorrectly. It's just the colours that are mixed up though, so unemployment is blue as you say. Even so I'm still confused as to why 1992-7 shows such a deviation from trend. I can't but help think ymu is onto something with the rise in the influence of the financial sector, but this is a graph of non-financial corporations. 

eta: I've corrected the colour legend on the graphs now.


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## ItWillNeverWork (May 14, 2012)

love detective said:


> which explains the lowering unemployment in the UK from mid 90's onwards. Note however the profit rate used in all of these kind of statistics is pretty much a fictitious one and unlikely to represent the true underlying profit rate which would more likely to be decreasing than increasing over that period)


 
I'm not sure I understand what you mean by 'true' profit rate, sorry.


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## ymu (May 14, 2012)

ItWillNeverWork said:


> Well spotted, I've labelled it incorrectly. It's just the colours that are mixed up though, so unemployment is blue as you say. Even so I'm still confused as to why 1992-7 shows such a deviation from trend. *I can't but help think ymu is onto something with the rise in the influence of the financial sector, but this is a graph of non-financial corporations.*
> 
> eta: I've corrected the colour legend on the graphs now.


Yeah - I'm saying that financial corporations are essentially parasitic on the real economy. If more money is going to them, the real economy is probably making less.


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## love detective (May 14, 2012)

ItWillNeverWork said:


> Well spotted, I've labelled it incorrectly. It's just the colours that are mixed up though, so unemployment is blue as you say. Even so I'm still confused as to why 1992-7 shows such a deviation from trend. I can't but help think ymu is onto something with the rise in the influence of the financial sector, but this is a graph of non-financial corporations.


 
i would suggest the deviation from expected is not the 1992 to 2007 period as you suggest, but the period before that, i.e. 1975 to 1990 - and the correlation of high unemployment with high profit rate in that period probably reflects the use of unemployment as a naked/explicit/political tool for disciplining labour in the early phase of neoliberalism.

Once that job was done and the framework of deregulation and market liberalisation put in place, that allowed for a bubble period where it was thought that things were all rosy & bright, reflected in what appeared to be an increasing rate of profit (on paper at least), which in turn brought with it a demand for labour which is pretty much what I would expect to see, i.e. high profit rates bringing with them an increased demand for all elements of 'capital' thus an increased demand for labour and reduced unemployment

So i would expect these two indicators (all other things being equal) to be negatively correlated not positively correlated

This expectation also generally fits in with the more deeper marxian explanation for the tendency of the rate of profit to fall which although is rooted in productivity & technological development that expels labour from the production process (which is also really indirectly relevant here), correlates a low profit rate with a reduced (relative) involvement of labour in the production process - i.e. the lower the profit rate the higher the unemployment rate


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## love detective (May 14, 2012)

ymu said:


> Yeah - I'm saying that financial corporations are essentially parasitic on the real economy. If more money is going to them, the real economy is probably making less.


 
this is partly what i mean by a fictitious profit rate - the period IWNW refers to sees an increasing profit rate going to non-financial corporations not a reducing one, so the figures themselves do not reflect a parasitic effect, in fact they do the opposite.

So on paper (and therefore in actual distorted reality, where representation trumps reality) there is a spillover effect, i.e. everyone wins (in terms of capital in all spheres) - a bubble in finance while in reality is sucking value away from other areas is not actually looked at in these terms until it bursts, which means until that time the bubble effect spills over and high 'paper' profits in one sphere brings with it high 'paper' profits in other spheres.

Which is what we see in the period from the mid 90's onwards, an 'increasing' profit rate in that time (for non-financial and financial companies) coupled with a reduction in unemployment due to higher 'profit rates' bringing with them a demand for all elements of 'capital'


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## ItWillNeverWork (May 14, 2012)

love detective said:


> i would suggest the deviation from expected is not the 1992 to 2007 period as you suggest, but the period before that, i.e. 1975 to 1990 - and the correlation of high unemployment with high profit rate in that period probably reflects the use of unemployment as a naked/explicit/political tool for disciplining labour in the early phase of neoliberalism.
> 
> Once that job was done and the framework of deregulation and market liberalisation put in place, that allowed for a bubble period where it was thought that things were all rosy & bright, reflected in what appeared to be an increasing rate of profit (on paper at least), which in turn brought with it a demand for labour which is pretty much what I would expect to see, i.e. high profit rates bringing with them an increased demand for all elements of 'capital' thus an increased demand for labour and reduced unemployment
> 
> ...


 
OK, I think I get you now in regards to what relationship should be expected from a Marxist standpoint. So in terms of the 80's when labour was being disciplined, how was it possible for profit rates to be maintained (or at least have the appearance of being maintained) whilst this disciplining took place?


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## love detective (May 14, 2012)

not sure of the top of my head - but my point is that this period would be the period that is ripe for investigation as to why a relationship that is expected did not transpire (also i don't think it's just a marxian standpoint that would expect this relationship, would be more widespread than that i think)

i would guess though that it was something to do with the step change that happened in that period, a much more naked & explicit use of political & economic tools by the state to ultimately increase unemployment (to bring down demand and cure inflation etc..) and doing so in a kind of monumental step change, so this ended up increasing unemployment structurally and much more 'politically' than would be the case otherwise. (this doesn't mean however that it's only at certain times that capital is supported by extra-economic/political means, just more that it was a step change phase)

Also guessing that while this was going on, the opening up and liberalising of spheres where commodification never previously went provided new markets/opportunities which supported the profit rate (and also in general high unemployment pushing down wages etc however at some point this would then start to turn around).

Also i'm guessing the resultant recession of the early 1980's destroyed a lot of capital (in value terms) which would help increase/support the profit rate subsequent to that

So in those early neo-liberal years, unemployment was the tool used to break labour and usher in the neo-liberal period.I think at some point in the nineties though, high unemployment, although having achieved the purpose it was used for in the 1980's which was to break organised labour, began to not do the traditional job it was supposed to do (i.e. exert downwards wage pressure on the employed, as a significant chunk of unemployed had no intention of working, or were incapable of doing so even if they wanted to) - which then ushered in the whole drive to force people to work, JSA, workfare etc.. and re-establish the 'proper' historical role of unemployment as the reserve army (and not a stagnant one that couldn't pressurise those in work)

Not properly though this through systematically so just saying things of the top of my head, and there is the danger in these kind of things that you can find explanations to fit anything and everything just ends up contradicting everything else

ETA: have edited the above a bit since posting originally as lots of things jumping around in my head that's not properly distilled into a coherent explanation (and still haven't done so either)


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## ymu (May 14, 2012)

> significant chunk of unemployed had no intention of working


??

Not sure that's true. IIRC VP posted up some DWP research somewhere that estimated 80-100k 'persistent work avoiders', which is a drop in the ocean compared to the total number of people unemployed.


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## love detective (May 14, 2012)

well the full sentence was:-




			
				love detective said:
			
		

> significant chunk of unemployed had no intention of working, or were incapable of doing so even if they wanted to


 
for the purposes of my point though, the reasons are not particular important. what's significant is the resultant outcome which was/is a substantial amount of unemployed, completely disconnected from the labour market, which means they don't play the role that historically the reserve army of unemployed is meant to play for capital. this situation explains the push from the mid (?) 1990's onwards to force people to work - from JSA in the mid 1990's through to workfare in the here & now


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## ymu (May 14, 2012)

Yeah, I was just picking up on the wording playing into standard capitalist propaganda. I do know that wasn't your intent, but it makes me twitchy when I see stuff like that.


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## love detective (May 14, 2012)

going off topic, but this is part of the problem with the left today - prickly topics like this are either avoided completely or tip toed around egg shell like, and when anyone does dare to raise them in a critical sense,the stock response is that it is playing into standard capitalist propaganda (rather than actually trying to understand what is really going on within society, blinkers off, something that requires approaching the situation with an open mind, not pre-templated/conceived dominant and over arching ideas as to why things are like why they are. A successful vindication of this approach is the IWCA analysis of multiculturalism which at the time had them derided as racists by the rest of the left, but now is pretty much the standard 'progressive' view) - this kind of default binary thinking employed by the left is part of the problem, not the solution

to point out that there is a certain amount of ingrained and structural no-work ethic within elements of the working class, who have adapted themselves to life on benefits and are often actively hostile and a debilitating influence on the wider working class is not reactionary - it's just pointing out what is happening - and to go on to examine what, if anything, are the consequences of this for the wider working class is also not reactionary, it should be part & parcel of what the left does, but it doesn't.

This doesn't replace an analysis and critique of the wider social forces at play here, it merely supplements it to gain a better understanding of what's going on - rather than the default outright vindication of people who can't do anything wrong just because they are working class (a view that people never seem to have a problem with doing when it comes to attitudes to working class police, bailifs, racists/fascists etc, but other elements which have an equally destructive and debilitiating impact on working class communities seem to get a much easier time of it for some reason)


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## ymu (May 14, 2012)

I don't have a problem with pointing it out. I just think it's important to also point out that the numbers are tiny even by comparison with what a capitalist would regard as 'full employment'. 4% unemployment, isn't it? 100k people is <0.3%.

We should worry about those who are criminals and signing on in order not to become officially non-existent, and the inter-generational effects of worklessness, but specifically wanting to force people who don't want to work into jobs that are desperately needed by those who do want to work is a bit fucking strange, IMO.


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## ItWillNeverWork (May 15, 2012)

I think I may have solved the puzzle.







If unemployment is high then wages get depressed as people undercut each other for jobs. As a result, the profit share of GDP goes up. _Absolute_ profits may be lower when there is under-utilisation of labour, but as a percentage of GDP it makes complete sense because GDP is lower when unemployment is high. In terms of the period after 91/92, the relationship still holds between profits/wages/unemployment, but because of a rise of 'other' incomes (rent and net taxes on production apparently) the net rates of return - which is what my chart shows - goes higher and so looks as if it diverges from trend.


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## Bernie Gunther (Aug 2, 2012)

love detective said:


> well the full sentence was:-
> 
> 
> 
> for the purposes of my point though, the reasons are not particular important. what's significant is the resultant outcome which was/is a substantial amount of unemployed, completely disconnected from the labour market, which means they don't play the role that historically the reserve army of unemployed is meant to play for capital. this situation explains the push from the mid (?) 1990's onwards to force people to work - from JSA in the mid 1990's through to workfare in the here & now


 
Intuitively, it seems like you have a point there.

Is the "disconnected from the labour market" bit demonstrable though?

What would count as evidence for it?


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## love detective (Aug 2, 2012)

well I would say that the introduction & existence of things like JSA and workfare in themselves would count as evidence for this

otherwise, why would they be imposed?


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## Pickman's model (Aug 2, 2012)

the thing about people on jsa is that since 2000 it has become progressively harder for anyone on jsa to either maintain their skills or to gain new ones. in the past - the 80s and 90s at least - people on the dole could be sent on courses, some of which were actually useful. i got a city & guilds diploma in computer applications in 2000, which is still proving useful now, for example. several years later when i asked about going on another course i was told they were no longer available and i was packed off to kennedy scott to learn (again) how to do a cv prior to being packed off to action 4 employment. so you have the growth of a section of society which is progressively deskilled and demoralised, individualised, who are shoved off into workfare shit. not really an answer to anything, just an observation that many people who've been through the jsa mill will be (imo) often softened up for management by their experiences.


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## Falcon (Aug 4, 2012)

littlebabyjesus said:


> Private debt is something owed by individuals. Public debt is something owed by the collective. In that sense, a company debt is in between these two - it's owed by a collective that is a small subset of the overall state collective. For money to exist, these debts (promises from one party to another) need to exist. Debt is, in and of itself, a necessary thing for our system of money. Far better for the liability to be held at the collective level - it makes for an easier and less stressful life for everyone.


I've dipped back into this thread in the course of pursuing research into the Marxist account of the relationship between the economic system and the matter/energy system. I think it seems relevant to note that there is an underlying assumption which might not be true: that money, as a unit of account, has retained integrity and objective value. Analysing the current crisis in terms of marxist notions of the internal contradictions of capital accumulation, specifically in terms of the excessive power and misallocation of finance capital, only make sense from an _a priori_ assumption that finance capital retains integrity as a unit of account throughout your analysis. If it doesn't, then the behaviour of various measures of money - income, GDP, profit, etc. have no meaning - under Marxist or any other ideological analysis.

The point is prompted by LBJ's otherwise helpful post. LBJ distinguishes between private and public debt, and correctly identifies the role of debt in establishing the foundation of the current financial system. But LBJ fails to distinguish between debt and _liability (_and, indeed, uses them as substitutes, which they very far from being). Debt is that which is legally required to be repaid, and for which collateral, traceable to something of value in the matter energy system, exists. Liability is merely an obligation to pay.

It's a vital distinction. Debt is (at least notionally) anchored in the real world. Liability is what you create after your financial system becomes disconnected from the real world. Government bonds are debts. As those undergoing the revision of their pensions, health care provisions, benefits, and allowances will tell you, pension, health care and old age costs, etc., are liabilities, underwritten by nothing of value in the matter energy system. Yet those payments are essential components of the metrics I understand Bernie is interested in.

The OP, Harvey refers to the "one thing we missed" as being systemic risk. Actually, this is not true. We missed several things, one of which was the wholesale transfer of the global political economy from a debt based system to a liability based system (predicated on future wealth i.e. an inter-temporal equity withdrawal scheme) - one not envisaged or accountable for (as far as I can tell - please correct me if I'm wrong) by Marxist analysis. Indeed, in the conventional interpretations I've seen, Marx appears to repudiate the necessity of the integrity of the matter energy system i.e. the need to distinguish between debt and liability.

In my view, it's not possible to conduct any kind of analysis which fails to recognise that.


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## deke t lefel (Aug 14, 2012)

it does seem that insurance is right in there with interest and inflation when it comes to influence on money supply

wasn't the recent crisis largely an inability to meet insurance liabilities?

the problem was temporarily solved by quantitive easing - shovelling money into the system from the inside (no doubt combined with a degree of horse trading) with money backed by the labour force of the issuing body..... taken from future benefits, pay and pensions


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## Bernie Gunther (Sep 6, 2012)

Interesting article by Doug Henwood on profits, capital investment and investor gains. US-centric but I suspect at least indicative of tendencies elsewhere.


















> Despite the strong recovery in cash flow, to record-breaking levels, firms are investing at levels typically seen at cyclical lows, not highs. Some cash flow is going abroad, in the form of direct investment, but still you’d think returns like these would encourage investment. Instead, they’ve been shipping out gobs to shareholder. Here’s a graph of what I call shareholder transfers (dividends plus stock buybacks plus proceeds of mergers and acquisitions) over time:
> 
> Though not at the preposterously elevated levels of the late 1990s and mid-2000s, transfers are at the high end of their historical range. Instead of serving the textbook role of raising capital for productive investment, the stock market has become a conduit for shoveling money out of the “real” sector and into the pockets of shareholders, who besides buying other securities, pay themselves nice bonuses they transform into Jaguars and houses in Southampton. Is this a decadent phase of American capitalism, where its owners choose to liquidate rather than accumulate?


 
http://lbo-news.com/2012/06/26/profitability-high-and-maybe-past-its-peak/

Seems like investor profits are being maintained at the expense of the real economy (and of society in general)?


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## butchersapron (Sep 6, 2012)

Yes, Doug was pointing out this tendency well before the crisis and its interesting to see that if anything the trouble since 2007/8 have led to an acceleration of this dynamic in crisis conditions.

In the spirit of the threads intention to use marxist ideas to investigate the crisis, here's some quick thoughts on the idea of a _lumpen-bourgeois_. Andre Gunder Frank came up with this idea to describe the ways in which local elites acted in the post-colonial world when there was still a sort of economic dominance from the traditional colonial states Essentially they worked to further the long-term interests of the latter in exchange for short term financial returns to themselves - thereby retarding the growth of a normal independent capitalist development in those countries. (latin america was his primary example and it was tied largely to export of raw materials). Clearly there are many problems with the theory - the idea of an independent capitalist sector and the idea of a series of stages of capitalist development states must pass through - and the whole thing was seen through his underdevelopment prism which is fatally flawed for many reasons.

Despite these flaws, i think the idea of a section of capitalist and political class acting in a manner which puts the whole wider system under serious strain or threat is one worth considering. We've see a multi-year investment strike in the real economy allied with the siphoning off of potential investment to speculation and shareholder payouts, and the _political representatives_ of this fraction of capital busily creating the conditions and context where the real-economy cannot recover but financial-capital grows stronger whilst simultaneously undermining the consent needed for normal capital operations, the carrying out of the functions that build that consent (widespread decent, health education, welfare, leisure etc).

The lumpen bourgeoisie seem to be more than a local appendage of wider power relations today, but actually the dominant power and their lumpeness means that they're unable to adequately, as a whole. see the situation that they're helping create - or if they can they are unable to do anything about it due to the meshing of a) the short term imperatives built into their dynamics and b) the level of power they've attained which boosts the weight and influence of the latter against attempts by the wider capitalist class or their political representatives to wind them in. ( edit: The world market is something that would need to be looked at here as well)

I am aware that this has left out the other side of the equation - the working class - apart from one brief mention of conditions of consent, i'll see if i can fill this in later, but i guess it would have to look at the finacialisation of domestic and household economies and social reproduction as a tactical response on the part of capital to the challenges to the real economy in the 60s and 70s, the fall in the av rate of profit as result of these challenges, the rise in the social wage and so on.

edit: btw if anyone is interested in the sort of thing in the last para and are in bristol today then you should try and get yourself down to bifo at the arnolfini this evening.


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## butchersapron (Sep 6, 2012)

Last one before i shut up for a while Crisis and Revolution in Europe, just translated into english written by Observatorio Metropolitano "Cuting-edge analysis of today's financial crash, the soveriegn debt crisis and the implications for contemporary social movements" - only skimmed this morning but looks on first glance to be very strong on financialisation and the effect this is having/is planned to have on social reproduction through the dismantling of public services/the social wage.


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## revol68 (Sep 11, 2012)

butchersapron said:


> Last one before i shut up for a while Crisis and Revolution in Europe, just translated into english written by Observatorio Metropolitano "Cuting-edge analysis of today's financial crash, the soveriegn debt crisis and the implications for contemporary social movements" - only skimmed this morning but looks on first glance to be very strong on financialisation and the effect this is having/is planned to have on social reproduction through the dismantling of public services/the social wage.


 
cheers for this.


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## co-op (Sep 12, 2012)

love detective said:


> well I would say that the introduction & existence of things like JSA and workfare in themselves would count as evidence for this
> 
> otherwise, why would they be imposed?


 
Isn't some of this explained by the huge real income cuts in wages at the bottom end? In the 70s you could buy a house in London by working as unskilled labour on a building site. Wages for that kind of casual work have just _collapsed_ in the last 30 years, compared to say the cost of housing they are down 90% or more. When I was last sub-contracting landscaping jobs 7-8 years ago you could get a Bosnian for £30 a day in London. Obviously that's at the really shitty end of the stick but there were plenty of people employing them and local workers are having to compete with that.

JSA and workfare and so on can be explained just because you really have to be a fucking masochist to work at the bottom end now, so if you're near the bottom end you're way better off on benefits.

I haven't heard IDS talking much about increasing wages as a way of making you 'better off working.'


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