The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
The Forum - On Line Opinion's article discussion area



Syndicate
RSS/XML


RSS 2.0

Main Articles General

Sign In      Register

The Forum > Article Comments > Propping up the economy > Comments

Propping up the economy : Comments

By John Passant, published 25/9/2008

In Australia unemployment remains low, the resources boom continues and housing prices have not yet fallen much. But for how much longer?

  1. Pages:
  2. 1
  3. 2
  4. 3
  5. ...
  6. 11
  7. 12
  8. 13
  9. All
"The story so far is that the US Government will spend up to $2 trillion saving this citadel - Wall St. Would it not have been better to spend that amount on public housing rather than merchant bankers?"

Er no. At least, not at the moment. The problem is that there's a housing oversupply in the US. And while in hindsight that might appeal as a notion, it does nothing for the current situation.

At least you've hit on one thing which is right:

"This is because if the banks won’t lend to each other, except at exorbitant rates, (rates which will flow through the economy,) why will they lend to us?"

Capital has to flow, and it has to flow around the world. The world has a combined economy now and at the macro level, it's all interconnected, so that in itself is the reason why something has to be done. Otherwise, as you say, the consumer will be forced to stump up for the money, and I personally don't want to be paying 80 or 90% interest (hypothetically) to provide the capital.

On a tangent for a moment: one of the commentators this morning mentioned that when there is a big dip in the sharemarket in the US, the capital gains tax (or equivelent) drops significantly. If the bailout occurs as proposed then it will be tax level neutral to the US government. I don't know how accurate that is, however if it allows the free-flow of capital to commence again, then that seems like the best $0 that they'll spend!
Posted by BN, Thursday, 25 September 2008 12:03:30 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
“Estimates are that banks and other financers have written off about $300 billion so far. While not insignificant this capital destruction is not major on a global scale.”

And what happens when “confidence” returns to the market?…

stocks go up and the $300 billion reappears on balance sheets and everything is fine again.

"Even more directly productive companies (like General Motors) which also have major finance businesses will be under pressure."

General Motors have been in the pooh for decades, cannot come to terms with building small cars, according to a colleague of mine, who worked for them in USA many years ago.

One of their biggest problems are the negotiated retirement packages they have for their ex-workers, which costs GM several billion dollars a year to maintain.

But in the end, the nature of the US economy will prevail.

I recall it was the Russians who collapsed when they realized they could not afford to finance a defense system capable of countering the (Capitalist) Ronald Reagan and his Star Wars project.

“As the spectre of wages cuts and unemployment haunts the working class, I think it is clear we are a long way from the end of the crisis.”

This crisis, that crisis, the flexability of the capitalist system is to be able to respond to change and adapt to any number of crises.

The problem with the (largely defunct) "centrally managed" economies, is their inherent central control, inflexibility and vested interests ensures that

instead of bending to handle the winds of change, they break.

Just ask any Moldovian
Posted by Col Rouge, Thursday, 25 September 2008 12:33:12 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
AIG, Fannie Mae, Freddie Mac total $300 bn.

The bail out proposal is $700 bn.

That makes $ 1 trillion. Double it and you might get close to the amount. (My public service experience has taught me the double up rule.) Professor Sachs estimates the cost as up to two trillion.

BN, when you say there is an oversupply of housing, do you mean housing stock, or for sale? Marx thought that the problem with capitalism was overproduction. Housing "overproduction" occurs becuase many Americans can't afford decent housing.

In saying that the $2 trillion would have been better spent on public housing I was making the point that capitalism has the wrong priorities - merchant bankers rather than poor Americans.

Col Rouge, I am not sure what the point is you are making about Moldavia. I do not support Stalinism, and in my article nowhere do I argue that.

In terms of the way capitalism works, periodic crisis are endemic. If allowed to work their way through, they can (like war too) cleanse the system, and the whole roller coaster ride can begin again, but from a lower base. Eventually the batteries run out and the system flatlines. (I note the head of ANZ today said if the bail out did not go through the US would go into depression. This is more apocalyptic than my article.)

The bail out prevents that "cleansing".

As to the destruction of value, I am not sure how the worthless assets in Lehman Brothers are going to revive. It's like thinking you have a Picasso and finding you paid $100 m for your daughter's kindergarten painting. The value doesn't suddenly re-appear.

In the case of capitalism those who survive get the benefit of the collapse in value by buying up assets cheaply. But on Wall St, nobody could do that or risk it. The US State is doing it instead, but it may take years (on a best case scenario) for these essentially worthless assets (rights to mortgages) to revive. Worst case? The assets (bad loans and all the derivatives attached) are irredeemably worthless.
Posted by Passy, Thursday, 25 September 2008 3:50:10 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
The total housing loans in the US is currently $1.3 trillion. Bernanke's bailout (folly) is proposed to be $700 billion or 5% of the total loans.

Subprime loans were never more than 15% of the total loans. However the next level up were Prime Loans called Alt-A and the minimum requirements to qualify for those were no assets, no income but a credit rating.

The impact of these Alt-A starting to fall over were what bought down Lehmans and are threatening the other financial institutions and the economy.

Nobody knows the extent of the default on these loans but they account for 40% of the home loans market.

It is possible 55% of all loans are at risk of default. Eleven times Bernanke's estimation.

In the US a mortgage is not like in Australia. Any liability is limited to the home and does not extent to other assets. Default merely results in the return of the keys.

The consequence of falling prices and inability OR deliberate failure to met commitments is not so great. What we are seeing now is people who think it pointless to pay for an asset that has depreciated so much it would be unlikely to ever recover, in their life time, to cover their total repayment so they are simply and 'logically' walking away.

I doubt the proposed solution will pass The Congress in it's current form and even if it does and is put in place Monday everyone will wake up on Tuesday and soon come to the realisation that very little has changed. Mistrust will then reign supreme.
Posted by keith, Thursday, 25 September 2008 3:59:04 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
John (Passy),

"BN, when you say there is an oversupply of housing, do you mean housing stock, or for sale?"

Both. House prices are falling because there is too much stock and also because there are more houses on the market than there are buyers. The statistics on this are more than abundant, for example:

http://www.realestateconsulting.com/Intelligence.aspx?quicklaunch=true&region=us

Where the statistic states that the Months Supply of Unsold Homes is 11.2, near the all time high, and it's increasing.

"In saying that the $2 trillion would have been better spent on public housing I was making the point that capitalism has the wrong priorities - merchant bankers rather than poor Americans."

And where do you think the poor Americans get their money for their purchase of the 'American dream'? From bankers of course! And for the record, where did you get the money for your house? From a bank? Hypocrite!

Again Passy your statements fail basic common sense! Plus blaming capitalism as a concept is like saying it's a birds fault that it's raining because both inhabit the sky. It's a logical fallacy and is a repetition of your overused anti-capitalist rants.

"The bail out prevents that "cleansing"."

So Passy, are you advocating the grinding-to-a-halt of the worldwide financial system? What effect do you think that will have on the average Joe in the street? Are you taking into account the effects on existing borrowers in each country that will be affected by that? For someone who goes on and on about social equality etc that seems to be an entirely hypocritical stance to be taking.
Posted by BN, Thursday, 25 September 2008 4:13:30 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Thanks BN.

I am not advocating economic cleansing, merely pointing out the consequences under capitalism of failing to allow it to follow its logical course.

To point out the failings of capitalism is not to agree with or relish the consequences. If I wrote a history of the Depression that wouldn't mean I supported its destruction of jobs and the prolonged misery it created, a misery only ended by war.

One can comment and analyse without agreeing with the consequences. In any event I don't see how the bailout will work. It doesn't address the low general rate of profit.

If that makes me hypocritical, as you call me, (the abuse starts once again, unfortunately) so be it.

I am buying my own home. I borrowed from a bank. The money the bank provides comes from the labour of workers in the productive sector.

So, BN, should we all bow to the banks and be grateful to them for making profit by transferring the surplus value workers create to others? This is trickle down theory, BN, and it doesn't work.

If there is an oversupply of housing in the US why don't they as a society enable the poor and homeless to take the unused houses over? The profit system stands in the way of the rational distribution of resources.

Increased living standards in the US will come about not by riding the coattails of capital but by fighting for better wages and conditions through strikes and so forth.

What caused this crisis BN? Was it greed, a few bad apples? They must be the great grandchildren of 1929 and the great great grandchildren of 1890. Maybe, just maybe, there is something more fundamental at work here and the problem is systemic.

The last few weeks have rocked the ideologues of capital, especially its neo-liberal variety. We might see Keynesianism make a return. It too won't be able to address the tendency of the rate of profit to fall.

Capitalism is a system of exploitation; crisis is built into it. We may be entering a new period of deep crisis.
Posted by Passy, Thursday, 25 September 2008 5:23:06 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
*One of those problems may be a spill over into the productive economy as US workers bear the burden of the Wall St madness and further reduce consumption. *

The biggest burden of course will be carried by those suckers who
lent the US, all those trillions of $. That includes the Chinese,
Japanese, Middle East etc.

Governments don't go broke and as the debt is in US$, no doubt
Bernanke will print his way out of his problems, meaning that anyone
who holds US $, is losing. The real value of the US $ will fall.

The price they will pay is that lenders might not be so keen to
lend them large amounts of money at bargain basement rates, as in
the past.

There is a big difference when it comes to Australia, the way that
I see it. I don't know if its a US regulation or just tradition,
but I gather that if people hand in the keys to their house to the
bank, thats it, the bank has no further comeback. In Australia,
you still owe the debt, so can lose your car, furniture, basically
go bankrupt.

Now lets say I overpaid for my US house and housing values dropped
by 25%. It would make perfect sense for me to hand in the keys
and buy another, cheaper house, down the street. In a declining
housing market, if a number of people do that, bingo, your banks
soon start collapsing. How big an effect this is having in the
present crisis, I am not sure.
Posted by Yabby, Thursday, 25 September 2008 9:16:10 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
There is a serious misunderstanding in some replies here.

The world is not interconnected (in the economic sense). This is a fallacy.

There are many restrictions on trade which block interconnection and in particular, labour cannot move freely. If the world was interconnected labour at the same level of productivity would be paid at the same rate. This does not apply. Workers would move where their labour earns more - but immigration policies block this.

Movements in minimum wages in one country do not follow trends in others because local politics interferes. This also blocks interconnection.

The are "connections" but not as suggested in this forum.

A truely interconnected world economy would wipe out Australian living and social standards.

Chris Warren
Posted by Christopher Warren, Thursday, 25 September 2008 10:44:19 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
"In Australia unemployment remains low, the resources boom continues and housing prices have not yet fallen much. But for how much longer?" Well John, while the green,left,labor states statutory instruments continue to restrict sustainable land supply to their chosen gullies of opportunity and thereby keep rents rising, prices will reflect the supply demand discrepancy. No this does not include the lack of confidence which family producers place in their own chance to advance their individual private lot without further unnecessary and costly regulations.
Posted by Dallas, Friday, 26 September 2008 2:28:02 AM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy,

"Capitalism is a system of exploitation; crisis is built into it."

So, you're saying that there was no exploitation or crisis in communist societies, or socialist ones, or despotic ones, or every other system of government? One wonders what the people of North Korea, China and other countries would say to a statement like that?

Another one of your poorly thought out, logically inconsistent statements.

"the abuse starts once again"

Passy, the reason you get 'abused' is because of statements like the one above. Attacking an entire system of government/economic principals is pretty much impossible even when using logically flawless arguments (if they even exist), but to do it with the poorly thought out arguments that you regularly use (not just in this article), you leave yourself open for abuse.

If I was a year 5 teacher and you were my student, I would commend you for for effort and say (without a hint of sarcasm) that you should be recommended for your spirit. However we're adults here, and a year 5 argument won't cut it.

"So, BN, should we all bow to the banks and be grateful to them for making profit by transferring the surplus value workers create to others?"

I'm not saying that at all. In ordinary circumstances, I'm an advocate of people bearing the consequences of their own actions, so I'm not chuffed at all with the US system where some people can walk away from their mortgages without the encumbrance following them. Equally, if a CEO makes a bad business decision which costs the company a significant amount of money then they should be shown the door. That's also why I'm in favour of CEOs having a heavy weighting of their remuneration being tied to KPAs.

However, these are not ordinary circumstances. And as you rightly say, the potential consequences are horrendous and can ripple around the world

T.B.C
Posted by BN, Friday, 26 September 2008 1:37:36 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
In the current crisis watch for McCain's proposal.

It will resonate with the vast majority of the electorate, will leave Obama a figure of ridicule, and deliver rather decisively the Presidential election to McCain.

Basically after working all weekend, doing the work the US taxpayers pay and expect him to do, he'll propose lending the bank's the US$700 billion.

Obama will be the bloke who supported giving away US$700 billion, and who told everyone to call him if he's needed.

The Congress will support McCain's proposal because giving away $700 billion is just to much for the US taxpayers to swallow.
Posted by keith, Friday, 26 September 2008 2:43:56 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
BN

You quote me:

"Capitalism is a system of exploitation; crisis is built into it."

Then you say:

'So, you're saying that there was no exploitation or crisis in communist societies, or socialist ones, or despotic ones, or every other system of government? One wonders what the people of North Korea, China and other countries would say to a statement like that?

You suppositions about my views are sophistry. Where do I say there is or was no exploitation or crisis in "communist" (ie Stalinist) countries? This springs from your own imagination and has no basis in fact.

Marx described socialism as the self-emancipation of the working class. Socialism is the democratic control of society through truly democratic vehicles so that production occurs to satisfy human need, not make a profit.

I have consistently supported thsoe who rose up against the Stalinist dictatorships, from East Berlin in 1953, to Hungary in 1956, to Czechoslovakia in 1968, to Poland in 1970, 1980 and beyond and the revolutions with overthrew the Stalinist regimes in eastern Europe and the USSR in 1989-1991 to name a few. I have written on OLO predicting the working class overthrow of the Chines dictatorship in the coming years.

I view these Stalinist abominations not as socialism but as its opposite, state capitalism. The state exploits workers, accumulates and reinvests their surplus in heavy industry and does so through the prism of competition - military competition with the West. The revolutions of 1989 to 91 were classic examples of economic crisis in Stalinism - the exact same economic crises that periodically grip so called neo-liberal capitalism. Here are two articles on Russia and state capitalism:

1. Chris Harman "Russia: how the revolution was lost" http://www.marxists.de/statecap/harman/revlost.htm

2. Peter Binns "The Theory of State Capitalism" http://www.marxistsfr.org/history/etol/writers/binns/1975/01/statecap.htm

Workers played no role as workers in the expansion of stalinism in Eastern Europe, China, Cuba, Vietnam, Laos etc.

BN, why not try to rebut the labour theory of value or the tendency of the rate of profit to fall which I mention in the article instead of falsely painting me as a stalinist?
Posted by Passy, Friday, 26 September 2008 7:31:18 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Thanks for pointing out the slight differences in the US and Australia over housing "foreclosures". I don't think that detracts from the argument - people are abandoning their houses leaving lenders and the holders of the securitised loans with losses as housing prices spiral downwards.

Today the estimates of value lost are now approaching $1 trillion, not the $300 bn I mentioned. Things change rapidly in a week as the financial system continues its fast-slow melt.

Some Republicans are now opposing the bailout.

It is true (as I mention in the article) that Chinese and Middle East sovereign wealth funds invested heavily in the investment banks and derivatives based on securitised loans. So the impacts will flow throughout the world. China recently cut interest rates to help growth.

It is also true that the US could export the burden through inflationary measures like printing money.

But a major impact will be on US taxpayers initially and working class Americans, and this too has the capacity to flow through to the rest of the world.

And global credit will tighten and become more expensive, cutting production and future production.

I disagree with Keith that this crisis will favour McCain. Obama is strengthening his lead in the polls. People blame the Republicans - the party of tax cuts for merchant bankers and de-regulation of the finance industry - for this mess and see McCain as an insider for the last 35 years who has supported the failed policies of Bush.

Chris Warren (from the MEAA??) argues that we are not a global world. He implies that globalisation of labour would destroy our present living standards (I think. Apologies if that is not your argument.) I support the globalisation of labour. Australian workers have more in common with Chinese workers than we do with Rudd, Turnbull, Lowy, Fortescue, Packer, Murdoch or Fairfax. A union movement in Australia under rank and file control prepared to fight to defend wages and conditions would be able to improve our living standards and export them offshore. Unions today are poodles cuddling up to a rotweiller.
Posted by Passy, Friday, 26 September 2008 7:53:47 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy

I'd gladly pay Australian workers the same wages as Chinese workers. Can I adopt their work practises as well?

If you really think it possible to raise Chinese wages and conditions to the same level as those in Auastralia. You are fanciful.
Posted by keith, Saturday, 27 September 2008 6:55:46 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Not sure what you mean Keith.

My point was that the best way to raise living standards is for unions to fight for them through strike and other industrial action rather than rely on some form of trickle down theory of wages. Tom Bramble from Socialist Alternative (www.sa.org.au) is his new Cambridge University press book (released yesterday) on the Way Forward for the Trade Union Movement gives an historical analysis of the last 50 years and concludes that when rank and file workers take control of their union and take industrial action to win gains, the union movement both in numbers and in ability to increase living standards is at its highest.

He compares for example the Your Rights at Work Campaign - top down, with tokenistic demos, massive advertising at the expense of rank and file involvement and ultimately a failure because the ALP has kept most of Workchoices - with the 1969 campaign to free Clarrie O'Shea. In the latter case there were rolling general strikes, (organised by 17 left wing unions and their rank and file) that freed O'Shea after 5 days and saw the penal powers become a dead letter for ten years.

A return to militancy and a bottom up approach holds the key to defending our wages and conditions (especially if the Australia economy, as I suspect it may, goes into recession as a consequence of the crisis in the US spreading worldwide). That enables workers coming to Australia (e.g. on 457 visas)to benefit from a strong union movement and its defence of wages and conditions and sends an international signal (including to Chinese workers) that the way forward is to organise and strike.

One the question of a possible recession in Australia, what do people make of the $4 bn bailout by Swan of non-bank lenders here, to stimulate competition? Is this a sign of confidence or fear or something else?
Posted by Passy, Sunday, 28 September 2008 8:35:21 AM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy “Col Rouge, I am not sure what the point is you are making about Moldavia. I do not support Stalinism, and in my article nowhere do I argue that.”

But the consequence of what you “promote” and “support” has ended up with Stalin and others of his ilk.

That is the danger in what you support and promote.

“In the case of capitalism those who survive get the benefit of the collapse in value by buying up assets cheaply.”

Actually it is those who plan and anticipate who survive, the greedy go to the wall.

Whereas In the case of the socialist state which has ownership of everything

everyone merely exists, regardless of the foresight and no one is allowed to benefit.

“Capitalism is a system of exploitation; crisis is built into it. We may be entering a new period of deep crisis.”

Kennedy dealing with the Cuban Missile situation
was a “crisis” for western capitalist system.
this is merely a “bump in the road”

And socialism is a system which deliberately represses the individual and where the members of the central committee become an aristocracy and the most ruthless becomes a lot more than a titular monarch (regardless what the original plan is).

Norman Mailer was brief

“The function of socialism is to raise suffering to a higher level."

Thomas Sowell was forthright

“Socialism in general has a record of failure so blatant that only an intellectual could ignore or evade it.”

Churchill was always succinct

"It is a socialist idea that making profits is a vice. I consider the real vice is making losses."

And as to those “socialists” who have left any enduring “legacy” I would quote HH Munro

“Great Socialist statesmen aren’t made, they’re still-born.”

Keith re McCain “Basically after working all weekend, doing the work the US taxpayers pay and expect him to do, he'll propose lending the bank's the US$700 billion.“

I agree

Like you said, Obama and the democrats wanted to just throw them the money.

But McCain and the republicans, rightly, don’t do “giveaways” with public funds.
Posted by Col Rouge, Sunday, 28 September 2008 11:15:57 AM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
*Socialism is the democratic control of society through truly democratic vehicles so that production occurs to satisfy human need, not make a profit.*

Passy, right here, is frankly where your argument is flawed. As
a consumer, I judge the products that I buy, by results, not by
ideology, motivation, or what drives them. I don't care if you or
anyone else, make a profit or not. I vote accordingly, with my
wallet.

The key to Capitalism is that it allows individual innovation and
thus productivity, like no other system that you have been able
to show. In other words, if two companies are making widgets
and one does so profitably and is the widget that I as a consumer
want to buy, then I don't care if your socialist widget is well
meaning and that nobody makes a profit, its results that matter.
Only competition and innovation will produce those kinds of results.

What is happening on Wall St right now is not a failure of capitalism,
more a failing of democracy, but alas, its the best system that
we have.

For 8 years now I have claimed that the Bush-Cheney team, are little
more then a bunch of dummies. History is clearly proving me correct!
Cheney has told us before, that the US $ is not their problem, but
the world's problem. He may yet eat his words and the people who
voted for Bush-Cheney, will pay a huge price for their mistake,
as we now can see.

Every industry and human endevour, will attract crooks. It is the
role of Govt to establish and impliment rules, so that they cannot
function and that those who break the rules, are locked up.

Clearly democracy failed here, for Wall St has been full of crooks
and now the American people will pay a huge price, for getting
their judgement so wrong. That is democracy at fault, not
capitalism. Those of us us said "I told you so" might be
smartarses, but Americans can only blame themselves right now.
Posted by Yabby, Sunday, 28 September 2008 2:33:32 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Col Rouge and Yabby

Thanks.

If capitalism is so fantastic, why are 3 billion people malnourished and 1 bn starving when the world produces enough food to feed everyone. Why were the gains of the last 20 years in lifting people out of poverty wiped away by the market increasing food prices markedly? The starving don't have the luxury of "voting with their wallets".

The idea that Lenin or Marx led to Stalin is wrong (and I don't care how many Churchill quotes you put here, that doesn't prove the point.) I suggest reading the Binns article on State captialism or How the Revolution was lost (the two I quoted previously). Stalin was the gravedigger of the revolution. He established state capitalism in Russia (much as the mercantilists did in England centuries before) and Stalin's rule echoes and repeats the bloody and dictatorial establishment of capitalism across the globe, including England and Western Europe.

Wall St is an example of the market playing out its logic. If it is true the rate of profit is lower now than a decade ago, and certainly much lower than the 60s, then the drive for "adequate" profits will see more Wall Streets, I susepct, as opaque and seemingly non-risky investments with high returns are floated through other sectors of the economy. But the returns in the end depend on the rate of profit and extraction of value from worekrs.

One consequence of Wall St will be smaller wallets (or what is in them) if our unions let the bosses get away with job cuts and wage cuts.

And again, any thoughts on the non-bank lenders "bail out" by Swan to the tune of $ 4bn? Obviously The Labor Government thinks interest rates will rise into the future. So even if the RBA cuts rates, the benefits will not be passed on to consumers becuase the banks will say their cost of finance has gone up on the market.

The term bail out in this context is not exact but it will do.
Posted by Passy, Sunday, 28 September 2008 3:05:07 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy “The idea that Lenin or Marx led to Stalin is wrong”

Except, that is what actually happened.

“If capitalism is so fantastic, why are 3 billion people malnourished and 1 bn starving when the world produces enough food to feed everyone.”

I would note, capitalism is not universally pursued and most of those who starve are in countries which remain the model of their old communist sponsors. Zimbabwe springs to mind, a country run by a minority white government which endure 15 years of sanction s and every body was fed.

“Universal suffrage” was forced upon Rhodesia and Mugabe came to power. Mugabe has overseen the dissipation of the wealth he inherited and produced famine and starvation, using, like his mentors, Lenin and Stalin as a tool for political compliance.

The obvious response is… if socialism/communism was so wonderful an alternative:

Why did Lenin and stalin both resport to starving their own people?
What did Pol Pot achieve apart form mass murder in the name of Cambodian socialism?
How many millions were deliberately starved to death in China under Mao and in North Korea since socialist/communism took over.

If socialism was a “workers nirvana”, why was it necessary for the East Germans to build the wall which ensured their citizens could not freely emigrate?

What happened to Hungary in 1956?

What happened to Czechoslovakia in 1969?

Passy, for all your finger poking and accusations, the model of socialism, which you seek to promote, produced not what you promise but a political abomination which has been largely abandoned by those given a choice.

Having a choice is what life is really about, choosing where to live, what to be, how to care for ones family, who to elect and what to say.

What you promote, whilst appealing to the notion of “universal equality”, is a lie and produces only the horror of repression in its most evil form.

The real reason 3 billion people are malnourished, 1 bn starving is because they put faith in lying politicians who promise ‘equality in a socialist nirvana’, instead of honest truths of capitalism.
Posted by Col Rouge, Sunday, 28 September 2008 4:02:12 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
*why are 3 billion people malnourished and 1 bn starving when the world produces enough food to feed everyone.*

Hang on Passy, you are getting your ideologies all confused here.
You can't blame capitalism on people having 11 kids that they can't
feed, as the Vatican/Govts ban family planning in their countries.
You can't blame capitalism if more people in the third world don't
grow more food. They have soil, they have rain, they have labour.
What they generally lack is land tenure and microcredit. What
many also lack is markets, due to the fact that they have been
corrupted by EU/US dumping of agricultural products. Last time
I checked, the US/EU were throwing something like 300 billion $ at
agriculture, hardly freemarket economics, more like political
pork barrelling. In fact there would hardly be a global industry,
more distorted by politics, then agriculture.

*Wall St is an example of the market playing out its logic.*

No, Wall St is an example of democracy not working as we would
like it to. Dummies were voted into office, who allowed crooks
to operate freely. Now the American people have a price to pay
for their bad judgement. Americans can only blame themselves, they
voted for these guys not just once, but twice.

*if our unions let the bosses get away with job cuts and wage cuts.*

I remind you that the bosses are nothing but chief workers, who have
their snouts in trough a little closer then the others. The owners
of most big companies, certainly in Australia, are in fact other
workers with super fund investments.

*So even if the RBA cuts rates, the benefits will not be passed on to consumers becuase the banks will say their cost of finance has gone up on the market.*

Given that there is no incentive to save in Australia, we borrow half
our funds from overseas lenders. If banks have to pay more for those
funds, why should they not pass on those rising costs?

Give people an incentive to save, which our tax system does not,
then money for housing would-be-cheaper.
Posted by Yabby, Sunday, 28 September 2008 4:17:10 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy,

Firstly, it was really nice to see you come out fighting in your last comment to me. I'm glad to see you willing to get out and fight for what you believe in.

A couple of points:

1) I notice that you didn't respond to the question in my last comment - what exactly do you think banks do? You're ramblings about worker excess don't really give me an idea of your thoughts on it.

2) "One the question of a possible recession in Australia, what do people make of the $4 bn bailout by Swan of non-bank lenders here, to stimulate competition? Is this a sign of confidence or fear or something else?"

In my eyes, it's more tokenism from the ALP. They got in for the wrong reasons and they're demonstrating that they're more about symbol than substance. My two complaints are that we can't get rid of them fast enough, and also that there isn't really a suitable alternative.

3) "If capitalism is so fantastic, why are 3 billion people malnourished and 1 bn starving when the world produces enough food to feed everyone. ... "voting with their wallets"."

See, this is the crux of where you're barking up the wrong tree. We humans don't have a great history of long term cooperation, and have an even worse record of seeing eye to eye. Your position really requires the very vast majority of people on the planet to agree to adopt socialism in some form (and the things that go with that - coming below) and to keep going with it. Which, frankly, is unachievable.

One of the reasons why we will never have a majority of the people going for socialism is that man is inherently a greedy character. Greed has existed in civilisations since before the Greeks and Romans, ancient Chinese and Japanese, and even in the tribal African areas, and that's not because of Capitalism, but because it's man being man.

T.B.C.
Posted by BN, Sunday, 28 September 2008 6:41:24 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Ideas like that remind me of a scene from a sci-fi movie where one character from the past asks a 'future' person how much it cost to build their ship, with the response being that in his time, man had moved past the concept of money. Given that that was 400 years in the future, perhaps that's an achievable timeframe, but nothing short of that is realistic. And all the trade union militancy will change that.

Anyway, the point is that Capitalism isn't the solution to world hunger, but neither is socialism because it's inherently unachievable on a wide scale.

4) "Give people an incentive to save, which our tax system does not,
then money for housing would-be-cheaper."

Here is a really important point - people need to be held responsible for themselves and need to be given the tools and environment to do that. I'll grant that with the growing tax churn (and 'our' love of it) that the environment isn't very conducive to people helping themselves, and Australians are generally bad at saving anyway, however Socialism is a very bad idea if we want people to take some responsibility for themselves. Especially given that if people aren't willing to look after themselves, how can they be expected to look after others (as socialism would require)?

You have to face it Passy - you're in a minority with a stance that needs to be adopted by the majority before it could seriously be considered, and which goes against thousands of years of history and which can be argued is part of our makeup. It's not going to happen.

The recent failures about things like free trade, the 'bailout', carbon emissions and other things show that we are not a species which could universally adopt something like Socialism. I think you need to recognise that if you beat your head against a brick wall then you're not going to win - as they say "your head will cave in before the wall will"
Posted by BN, Sunday, 28 September 2008 6:46:59 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
BN Yabby and Col Rouge

Marx wrote about the self-emancipation of the working class.

Eastern Europe - no self emancipation there, rather Soviet troops. So no socialism.

China, - no working class involved as working class in the revolution; rather a group of de-classed peasants in the Red Army. So no socialism there.

Vietnam ditto.

Cuba - no working class as working class invvolved there. (Castro only declared himself a Marxist Leninist two years after the 1959 revolution. That was to gain Russian support after the US blockaded Cuba.

Cambodia - no working class as working class there so no socialism. In fact Col, it was the US, not lefties like me, who supported Pol Pot.

Russia in 1917 was a workers' revolution. 4 million workers dragged along 100 million peasants. But civil war, 14 invading countries, (including Australia) and the failure of the revolution to spread to Germany - without a revolution in Germany, Lenin said, we are defeated - saw the working class destroyed and the Bolsheviks substitute themselves for the class. Stalin arose from this defeat of the revolution.

Just because a group calls itself socialist doesn't make it so. The ALP used to have (or still has) a socialisation clause in its Constitution. Clearly the ALP is no more socialist than the Liberals.

Similarly with the various communist parties - essentially they were middle class or de-classed peasant movements using the name communist to show they were the real nationalists prepared to take armed insurrection to get their goal of a national unified state. In fact, becuase they used the Stalinist model of crude accumulation to compete with the West (and in the case of China, with the USSR too), they established state capitalism. That was their historic role, not establishing socialism but capitalism.

Over time state capitalism becomes a drag on the productive forces and this produced the conditions for successful political revolutions; but not economic ones because it is merely a sideways step from state capitalism to "market" capitalism.

TBC
Posted by Passy, Monday, 29 September 2008 3:47:32 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Part 2

I supported the workers against the monolith in 1953, 1956, 1970, 1980-81 and then with the successful revolutions of 1989 to 1991. I supported Chinese workers in 1989, the dress rehearsal for the future when they sweep away the butchers of Beijing.

The overthrow of these East Euroepan adn Russian Stalinist abominations was a step forward for humanity and for socialism.

So I counterpose not Stalinism to capitalism but socialism (the self emancipation of the working class through own democratic state of worekrs councils with the right of instant recall and organising society to satisfy human need) to capitalism. Only then can we be freed from the constraints of the profit motive and all that goes with it - deep economic crises, wars, global warming, starvation.

As to starvation, my point is simple. We produce enough to adequately feed the world. Why don't we? becuase it is not profitable to do so. # bn are malnourished because the market means they don;'t have any money, ie they are people who can't vote with their wallets.

Anyway, I am running out of space and this is my second post.

The Wall St financial crisis may well spread to China, given the interrelationship of US and Chines capital and the fact the US is a major market for Chinese exports. That will impact on us. Rising interest rates will dampen business and consumer activity leading to higher unemployment and attempts to cut wages. The US may simply export inflation.

May we be cursed to live in interesting times.

As Rosa Luxemburg wrote many years ago, the choice for humanity is socialism (of the liberationist, democratic and human needs satisfying variety) or barbarism.
Posted by Passy, Monday, 29 September 2008 3:56:30 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy, the many failed attempts that you list to introduce your
brand of socialism and all those failures, it seems to me that the
workers biggest enenemy is not Capitalism, but those many Govt/Political officials, who have shafted your workers, for their
own self interest. Clearly you are dreaming about human nature,
if you don't realise that self interest matters, as Keating wisely
noted.

So you might be pushing up daisies for a long time, before your
dream would ever happen. Govt officials will milk those workers
for every cent, as your list shows.

So see the bright side! You live in a country where workers can
make serious money, if they choose to. Look at the mining industry.
You live in a society that hands out over 90 billion$ in social
welfare benefits. 40% of the population get more hand outs then
they ever pay in tax. You live in a country where people have
the choise to aspire to anything, but are mollycoddled if they
decide to sit on their arses.

You live in a country where workers now virtually own nearly
every major Australian corporation, through their super funds.

Clearly workers have never had it so good, thank your lucky stars!

What interests me is what drives your thinking? Is it just envy?
The fact that some guy has more then you? Why should that matter,
if you are doing ok?

Passy, no matter how much food we send the third world, they have
even more babies due to better health, so it solves nothing. Even
old Bob Geldorf had to think a bit, when after twenty years, all
he has was double the number of Ethiopians and he'd solved nothing.

You have to identify the cause of the problem and deal with it.
Putting some plasters on it, is not going to solve it, which is what
you are suggesting.
Posted by Yabby, Monday, 29 September 2008 7:28:54 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy “Marx wrote about the self-emancipation of the working class.”

What Marx wrote about never happened, it is all theory and no substance. Marx lived and died in London because he thought his ideas would most likely flourish in UK. He was wrong about that and wrong in just about every other thing he wrote about.

So what you are telling us is all the “communist” outcomes were nothing to do with the working class, in whose names the revolutions were initiated.

So who is to ensure your “working class” aspirations is not going to end up the same way?

“Just because a group calls itself socialist doesn't make it so.”

From which I could observe that

you call yourself “socialist”

but that does not make it so

I am a libertarian capitalist. I have no hidden agenda, no entryist revolutiobnary pretending to be a libertarian capitalist.

One of the best things about libertarian capitalism, is devolves power and authority.

The worst thing about socialism is it centralizes power and authority and from the centralization of power and authority come the communists and other vermin, to exploit the system which socialism built

Remember Lenin said

“the Goal of socialism is communism”

That is what he meant
Lenin (not Stalin) also said

“While the State exists, there can be no freedom. When there is freedom there will be no State.”

I vote for freedom

Bugger the state.

YAbby posts some insightful and considered views, if you don't like what I have said at least listen to his (more moderate) exposition.
Posted by Col Rouge, Tuesday, 30 September 2008 9:11:11 AM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Improving rather than propping up the economy

The paradoxes to resolve include
1. the need to continually increase consumption, when the ecological threats require reducing consumption;
2. the major sources of wealth as unearned rises in property values and financial manipulations - neither contributing to the common good;
3. limiting the factors in production to capital and labour, continuing the old false assumption that a third invisible factor, material resources, are infinite and only to be measured by labour costs in using them.
4. The costs of goods do not reflect their 'future cost' on the environment.
5. In a sustainable economy, our re-use and maintenance of products will be as important as buying them. Jobs will need to buy less, but also there will be no place for jobs that produce waste - the economy must be able to pay for the jobs that are really needed, rather than only the ones that can return short-term profits.
Posted by ozideas, Tuesday, 30 September 2008 10:34:46 AM
Find out more about this user Visit this user's webpage Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Yabby and Col Rouge

Thanks for keeping up the arguments.

Maybe the self-emancipation of the working class has never been tried (although 1917 was an attempt, I think). But events like 1953 in East Berlin, 1968 in Czechoslovakia, 1956, 1970, 1980 in Poland, May 68 in France, Portugal in 1974, Tienanmen Sq in 1989, Eastern Europe in 1989 to 1991 contained the beginning of such a possibility.

The Communist Manifesto is in parts a panegyric to captialism. Marx saw the wealth and productivity capitalism had created as the basis for a better society, as he put it from each according to their ability to each according to their need. (This is in part why the Russian revolution failed, since the material base was in developed Europe and their revolutions, particularly in Germany, failed.)

I don't suffer from envy or tall poppy syndrome. I just think the way society is currently organised leads to sub-optimum outcomes for all of us. I think human liberation depends on community, not some warped notion of the individual divorces from society. Reading Marx and Engels, then Lenin, Luxemburg and Trotsky (for example) opened my eyes to an alternative society based on respect, equity and justice in which all are fed, housed and fit (or able to receive decent medical treatment.) Once that happens people can then participate as citizens of the world in the democratic debates about production, the future and so forth. (As you can see I think Australia and similar countries have a limited democracy. we are denied entry to the realm of production.

Ozideas is correct about externalities and how those who create them don't pay for them. I think we need to be careful about the scarcity argument. For example what prevents us moving holus bolus to solar power - cost and profitability. The profit system is a drain on the further development of society.


Finally, human nature is not immutable. It changes from society to society and system to system. You are viewing everything through the prism of the present profit driven anti-human system.
Posted by Passy, Tuesday, 30 September 2008 6:46:07 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
*as he put it from each according to their ability to each according to their need*

This is the problem Passy. If you introduce a system which limits
people to use their ability, everyone loses, as productivity and
innovation go out the window. If some democratically elected bunch
of workers had decided that Bill Gates had no talent, you would likely
not be typing on your cheap computer. The list is endless.

*we are denied entry to the realm of production.*

Rubbish. Do you have a good idea? Do you have a great business
plan which cosumers would vote for with their wallets? If you do,
then there is plenty of venture capital out there, to help you
bring it to realisation. If you are dreaming, they will tell you too.

*I think human liberation depends on community, not some warped notion of the individual divorces from society.*

Well society is great and we enjoy being part of it. But would I
work as hard for a company as I would for my own business? Absolutaly
not. Not unless it was to my benefit to do so. Study the basics
of evolutionary psychology, if you want to understand humanity for
what it is.

*For example what prevents us moving holus bolus to solar power - cost and profitability.*

So what happens if somebody discovers a system to do the same at
half the input cost? You have wasted all those resources with no
gain. Everybody loses. So standard of living goes down.

*inally, human nature is not immutable. It changes from society to society and system to system.*

Thats what some feminists said when they tried to get little boys
to play with dolls etc. It did not work, some things are instinctive,
ignore them at your peril
Posted by Yabby, Tuesday, 30 September 2008 7:09:45 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
I must admit the failure of the Reps to pass the bailout was a surprise. The consequences, if this were a final decision, could be catastrophic in the very short term for world capitalism. (The bailout may only postpone the inevitable and make the next crisis worse in capitalist terms.)

I suspect however that some deal will be concocted which sees the bailout in a similar form passed.

I heard John Symons from Aussie Home loans (or formerly from there?) predict that the crisis meant the RBA would cut interest rates by 50 points (perhaps before their next meeting in October) but that the increasing cost of capital (banks are reluctant to lend to each other so forcing the lending rate up) would see the banks maybe pass on half that to consumers, ie 25 points.

As I said, I think there is a long way to go before this crisis plays itself out.

Is this really such as sensible way to organise society? All these economic crises, wars, mass starvation and incredible alienation among working people?
Posted by Passy, Tuesday, 30 September 2008 7:23:22 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy,

"from each according to their ability to each according to their need"

This statement has been taken apart ever since Marx uttered it. There's no need to go through that again

"I just think the way society is currently organised leads to sub-optimum outcomes for all of us"

A while ago I mentioned communism, socialism, despotism and (i think) some other systems of government - the point was that in every mode of government, there are winners and there are losers. So this statement would still be true in a socialist environment depending on your point of view.

"...opened my eyes to an alternative society based on respect, equity and justice in which all are fed, housed and fit (or able to receive decent medical treatment.)"

I'd suggest reading both The Fountainhead and Atlas Shrugged to provide the alternative perspective (tho I'd say that reading John Galts rehashing of the whole thing 2/3rds of the way can be skipped in the latter of those two). There is virtue in pushing yourself forwards and gaining the rewards for your own efforts.

"...human nature is not immutable.It changes from society to society and system to system."

Some things change, but not everything can or will. As I noted earlier, greed has been part of our society for thousands of years and across all parts of the world, and additionally, so is lazyiness. Which is yet another reason why socialism is inherently flawed when it comes to humans. It'll work just fine for ants tho
Posted by BN, Tuesday, 30 September 2008 7:34:03 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy “You are viewing everything through the prism of the present profit driven anti-human system.”

Actually the prism I view the world through is not simply a “profit-driven” experience but far more holistic.

I value the element of personal sovereignty in all things the most important consideration.

That means I support a woman’s right to abort if she chooses, she alone then bears the consequences of that decision, just as I support a persons right to decide on their preferred employment and to wear the consequences (and rewards) of that choice.

So too, how I will live, the size of house I occupy and the type of car I drive are all choices I will make, without the input or direction of some half-witted bureaucrat appointed by a here-today-gone-tomorrow politician in Canberra or Spring St.

Likewise I am fully capable of choosing where my children will be educated, what hospital to attend, how much I can put in my superfund, how much insurance I need (income protection, life etc).
For myself I also chose which country I would live, what arts events I will support, if I exercise my freedom of speech and post on OLO… the list is endless

I do not need a political system to tell me I am not allowed to profit from the goods and services I supply

because that “political system” does not have the intellect to foresee future opportunities and does not have the monetary discretion to satisfy the demands of my clients, even if it could foresee anything.

“All these economic crises, wars, mass starvation and incredible alienation among working people”

And have gone on since the beginning of time and changing the economic system will not deter them.

Financial crisis happen every ten years, it is a generational thing, not much different to an economic spring-cleaning.

Despite the wealth generated from capitalism, we still have starving people but look at the political systems which prevail where people are suffering, mostly half-baked quasi-socialists or tribal driven idiots who would be far better off if we exported some real capitalist pragmatism to them.
Posted by Col Rouge, Wednesday, 1 October 2008 2:33:57 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Col Rouge

To me, your comments just prove the point. The ideology of individual sovereignty reinforces the present profit based system. It is of course a myth since society is inextricably intertwined. Without the whole structure of society, provided and sustained by the activity for example of millions of workers in Australia day in and day out, there could be no "individuality".
Posted by Passy, Wednesday, 1 October 2008 9:01:48 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy,

"Without the whole structure of society, provided and sustained by the activity for example of millions of workers in Australia day in and day out, there could be no "individuality".

Yes, but that only works if each member of the society takes responsibility for themselves. Imagine a society where everyone said "it's not my fault - you deal with it". Not a very harmonious society.

For society to work, individual must face up to their own responsibilities, as Col mentioned in his previous post. Being in a society doesn't absolve you of your own responsilities - it further reinforces them as your actions then also flow on to the others in the society.

On to other things, I notice that you haven't yet responded to my questions about what you think goes on in a bank - is there a reason for that?
Posted by BN, Thursday, 2 October 2008 12:44:37 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy, it seems to me what throws you, is the word "profit".

At the end of the day, we should all be able to make a living for
ourselves, so be compensated for our endevours. For some reason
you think its fine for workers to want ever more profit for their
wages, for after all, they are selling their labour. But if its
a small businessman selling his services, be they his labour, his
risk taking, his inginuity, his products or services and wanting to
make a profit, to you its somehow evil.

To me that speaks of basically flawed ideology! Kind of like
religion really, full of emotion and faith but lacking reason.
Posted by Yabby, Thursday, 2 October 2008 1:54:47 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
BN

I thought I had answered your question about banks. I'm a little busy with other things at the moment so will try to read back over the question and my response and come back to it and explain perhaps in clearer terms in the next few days.

I also don't understand your argument about individual responsibility in the context of my arguments against the mythology of the individual divorced from the rest of society. I don't see the two as related arguments at all. Certainly I am not opposed to concepts of individual responsibility but we need to be careful in what context they are used. Conservatives use the argument to bash the victims of colonialism or the narrow family unit or whatever their target is.

I read Ayn Rand years ago. And? I suspect her philosophy and that of the Friedmanites and others of similar ideological bent is going down the gurgler faster than a Wall St bank's profits.

Yabby, profit is the process whereby bosses expropriate the value their workers create and use that to reinvest. In other words the drive in capitalism is to exploit workers (through the wages system and ownership of the productive forces)) and reinvest that stolen amount in new machines to make more profit.

I am using this in the context of big business - eg BHP, Telstra, Woolworths, News ltd etc. Small business, depending on it size and structure, has element of that and elements of the owner's own labour.
Posted by Passy, Thursday, 2 October 2008 10:00:00 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Ok Passy, so clearly you would include say Coles, in your list of
evils, making a profit.

Lets say you spend 100$ at Coles. How much do you think goes to
profit and how much goes to expenses, wages, super, insurance, rents,
etc. etc. ?
Posted by Yabby, Thursday, 2 October 2008 10:22:03 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Yabby

Read Marx to answer that question about profit versus rent, interest, wages, dividends etc. in general terms. He talks about the surplus value workers create then being divided up and expropriated by financiers, landlords, shareholders etc and returned in part to workers and the remaing bit becoming profit. Of course everyone fights over their share of the surplus that workers create, since they all want the biggest share possible. None of that detracts from the fact that it is the labour of workers which created the surplus.

Capital creates no new value.

Another factor in all of this is the tendency of the rate of profit to fall. If my assumption about labour creating value is correct, then let's look at what drives capitalism. The drive is for profit for reinvestment.

In essence this plays out as seeing machines as cost saving and profit building compared to labour, so more is invested proportionally in capital than labour. But if labour is the only creator of value this must mean that over time (and assuming countervalining tendencies like cutting wages and lengthening the working day have run their course)the rate of profit falls.

Certainly that appears to be the case since the halcyon days of the 60s. General profit rates in Australia and the developed world are lower than they were a decade ago, and much lower than 50 or 40 years ago.

Even higher profit rates in China prove the point. They attract more and more investment and this then drives down over time the profit rate. And not every bit of global capital can invest in high return areas like China.

In other words the very way capitalism is organised leads to economic crises. There is a cancer at the heart of capitalism.
Posted by Passy, Friday, 3 October 2008 8:59:22 AM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Ok Passy, you clearly don't know the answer, as I expected. As a
matter of interest, its around 2%, versus costs of 33% or so.

The point is that profit hardly matters, efficiency matters and you
only achieve that through competition. Go to those Govt depts where
people stand around doing very little all day. They lack competition
in their lives!

That 2% profit in other words, can easily be picked up in efficiency
gains, in comparison to inefficient systems, consumers being the
ultimate winners.

You are still analysing the world as it was 100 years ago, but the
world has changed, your ideology is out of date. Today plenty of
workers also own capital, own shares. Everyday tradesmen,
bricklayers, plumbers, etc. If you read an analysis of
people in America who have made a million $, its simply people who
have learnt to spend more then they earn. They don't buy the big
cars, the flash clothes etc, just everyday people who want to get
ahead, running a small business or working for some company. Your
worker-capitalist divide simply does not apply anymore, as it did
100 years ago, when the working class were downtrodden and the rich
dominated.

The point of capital is that if we save our pennies rather then
blow it at the pokies, then take a calculated business risk with it,
to provide goods or services to consumers, it is not unreasonable
to expect a return on it. Anyone can do it.

Sure margins in many industries have dropped, all to the benefit
of the consumer, whose standard of living rises. Why should that
be bad? The thing is, anyone is free to innovate and invest their
capital in ways which benefit themselves through higher returns and
consumers in things which they feel would benefit their lives.
Everyone votes with their wallet, everday democracy in action!

What you are telling me is that I don't know what is best for me.
You apparently want teams of workers to vote on what they should
produce, what I should buy, where I should buy it, etc.
Posted by Yabby, Friday, 3 October 2008 8:11:13 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Yabby, you say: "As a matter of interest, its [profit - JP] around 2%, versus costs of 33% or so."

Coles workers are paid the amount that makes up the socially necessary labour time to bring them and the next generation to work.

Say that takes three hours per day of work. That means the other 5 hours per day is taken by the boss as surplus. This surplus then goes to capitalists like the banks, landlords, institutional and other shareholders. What's left is profit - in Coles case (and I have no reason to doubt you) 2%. This is a very bad return on investment. They'd do better selling off Coles and investing it in say US treasury bonds or gold or cash or even Woolies.

Wesfarmers paid too much for Coles. They borrowed to do so, so now they have a huge interest bill. So the wealth the Coles workers create goes in the main to the banks.

Workers didn't cause this. Wesfarmers/Coles management - a small unelected minority of society - did.

In essence all you are arguing is that the surplus workers create should be re-directed from the banks to the company. That doesn't address the fundamental issue - surplus value arises from the fact that workers create more value than they are rewarded for, and this surplus value is then stolen from them by the various parties, including Coles itself.

Presumably Coles will say the RoI will improve as their restructuring continues. This just means less to the Banks, more to Coles to re-invest.

On another point, how much do farmers who supply Coles and Woolies get compared to the final price in the supermarket?

I ask that to highlight that my way of seeing the world - various capitalists fighting for a greater share of the surplus workers create - is a valid way of viewing the world and explains the tensions between farmers, lenders, shareholders and company capitalists, but their unity in opposition to workers getting better wages and conditions and retaining jobs
Posted by Passy, Saturday, 4 October 2008 8:00:10 AM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
*So the wealth the Coles workers create goes in the main to the banks.*

Actually not so, but of what does go the banks, who gets what? The
Govt takes a huge chunk in tax, for Govts spend something like 40%
of GDP, which comes from taxes. All those Govt office workers want
salaries. But who owns the banks and is paid what remains? Well
workers of course, through their super funds, for they make up the vast
majority of shares held in banks on their behalf. So virtually every
worker in Australia with a super fund, would benefit from bank profits,
although most would not even be aware of it.

Next, who are the landlords? Mostly RITs, again listed on the ASX,
again largely owned by super funds, on behalf of workers. Those
corporations which you hate, might have overpaid managers, but they
are largely owned by workers.

*Wesfarmers paid too much for Coles.*

Most of Coles was in fact bought with no more then paper. Coles
shareholders received Wesfarmers shares. Yes some money was
borrowed. Importantly, crappy management was dumped, we’ll see
if the new managers can get it right. If they can’t, they will lose their
jobs.

Waste, poor logistics and ignoring consumers was the problem at Coles,
profit hardly came in to the equation.

*They'd do better selling off Coles and investing it in say
US treasury bonds or gold or cash or even Woolies*.

What good does that do anyone? Woolies used to be a basket
case, if you remember. What Coles needs is a complete reorganisation,
with good management, so that is what is happening, but it will take a
while, as there is so much that needs fixing. Consumers will benefit
and workers will benefit, for they too are the largest shareholders in
Wesfarmers.

*how much do farmers who supply Coles and Woolies get compared to the final price*

That depends on the supply chain. The longer and more complex that it is, the less they get. There is no set figure.
Posted by Yabby, Saturday, 4 October 2008 11:56:09 AM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Yabby

You and I have very different world views.

Workers don't own companies through super funds. The funds do.

Workers don't control the companies their super funds have shares in. Bosses do.

The financial crisis means that workers retirement plans are in disarray as the share market strips billions of dollars of wealth from older workers approaching retirement, encouraged by Costello et al.

The bailout has passed. I doubt it will work, and so apparently does Wall St since the market rose in anticipation and fell on the reality (ie when the bailout passed.) Some commentators are saying $900 bn - the new cost - may not be enough.

750,00 Americans have lost their jobs since January. The contagion is spreading into the productive economy rapidly. Australia's unemployment is forecast to rise markedly and soon.

1914 and 1929 are two years causing me nightmares (figuratively.)

The world is becoming multi-polar economically yet is unipolar militarily. (The US spends as much as the next forty nations combined on arms and armies.)

Russia is flexing its muscles and adopting a Monroe doctrine for its backyard. China now contributes 10 percent of world GDP compared to the US with 20 percent.

The financial crisis could see a desperate US lash out. Iraq was in part an attempt to control the supply of oil to China. The US will look for other targets to help restrain and encircle China.

With so much military and hardware at its disposal, the US may attempt to retain economic dominance through military means. The decline of a superpower is always a dangerous time, especially if the emerging powers are held back by established spheres of power. 1914 with 1929 is explosive.

Already fascist groups are winning an audience - eg Austria.

And we have a union leadership for whom the strongest action they can take is tepid television commercials.

At a time when we need a strong left and strong unions to fight for better wages, conditions and defend jobs and social gains in health and education, the left is at its weakest.
Posted by Passy, Saturday, 4 October 2008 10:22:14 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
*Workers don't own companies through super funds. The funds do.*

Passy, its not my fault if you don't understand the system :)

Super funds administer those funds on behalf of the owners, which
are the workers. If you don't like your super fund, you are free to
take your money and go elsewhere, no different to money that you
have in a bank account.

*Workers don't control the companies their super funds have shares in. Bosses do.*

There are in fact many industry funds, where trade unions have a huge
say in how they are run, on behalf of workers. If you have a quibble
about how your super fund invests its money, you are free to ring them
up and tell them why, free to remove your money and go to a fund
of your liking, or even free to form your own super fund, if you comply with all the laws involved.

*The financial crisis means that workers retirement plans are in disarray as the share market strips billions of dollars of wealth from older workers approaching retirement*

Those same workers were not complaining when companies made record
profits and their super funds were growing at 20% a year. You have
to take the good with the bad. Over time, unless your money is in
a dud fund, you are still doing ok. I bought plenty of shares
10 years ago, that are now still worth 3 times as much as then,
so have clearly been profitable. Super funds would be no different
to little old me, doing my own thing. In fact, they should be doing
even better then me.

*750,00 Americans have lost their jobs since January*

Perhaps they should stop and wonder why they voted for dummies
like Bush and Cheney. Do not confuse the basics of capitalism with
dud politicians. Americans are now getting what they voted for,
so are paying a price for that. I told them that 8 years ago,
but sadly they took no notice :)
Posted by Yabby, Saturday, 4 October 2008 11:20:36 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
I know full well how super funds operate Yabby.

I disagree that workers control the companies through their funds or union reps.I have as much control over my investments and the decisions my fund makes as I as a worker have in my workplace. None.

As the financial crisis spreads into world wide recession and possibly depression, worekrs are victims of playing the game without yet understanding the need for a completely new game with new rules. However the basic instincts of class are coming through in the US, with the discussion and debate about the bailout being in class terms, ie Wall St versus Main St.

The crisis in the US financial markets is not due to Bush being a dud (which he is.)

It is due to systemic problems in capitalism, in the very way it is organised. The competitive drive coupled with the fact labour produces the wealth of society leads to a tendency for the rate of profit to fall. This can be offset by productivity increases, lengthening the working day (but that has limits) cutting wages and conditions, crises which destroy the value of capital and allow the survivors to pick up the remains at prices below real value, war, which physically destroys capital but most of these alternatives are code for human (ie working class) misery. As Lenin said, capitalism can survive any crisis if the working class is prepared to accept the costs. (Or words to that effect.)

You say: take the good with the bad. Why are there good times and then bad times? And viewed from the perspective of most of humanity, there are no good times.

BN, as a former teacher of banking law many years ago, I am trying to think how to formulate an answer to your question. I assume you mean retail banking, not investment banking for example. But I do want to go further than just a simple pro-capitalist analysis, and look at the reality of what is occurring (or at least the reality from my viewpoint.)
Posted by Passy, Sunday, 5 October 2008 8:55:34 AM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
*I have as much
control over my investments and the decisions my fund makes as I as a worker have in my workplace.
None.*

That is only because your personal share in say BHP, is miniscule. Other workers
clearly don’t agree with you, for as a group, they largely own major companies.
Super funds act as their representatives at AGMs. If the majority
of workers were unhappy enough to try and do something about things, they could,
for they are the ultimate owners and dominant shareholders. Profits go back to them,
the workers.

*The crisis in the US financial markets is not due to Bush being a dud *

Of course it is. For if the correct regulations would have been in place, which is
what politicians are meant to do on behalf of the public, the crisis would not have
happened.

*The competitive drive
coupled with the fact labour produces the wealth of society leads to a tendency for the rate of profit to fall.*

Which leads to higher efficiency, cutting out waste, which leads to higher productivity, with gains in standard of living and a better deal for consumers,
which means workers.

The proof of the pudding is in the eating. Workers in the West are doing
better then ever before, are richer then ever before and those in developing countries
have rising standards of living. You have offered no alternative that can do the
same, apart from a bit of ideology that is outdated by 100 years of change in
the real world.

*Why are there good times and then bad times?*

Because people are fallible and make mistakes. If they are in positions of power
and make large mistakes, lots of people pay a heavy price. Americans were sucked
in and voted for Bush/Cheney not once, but twice. Now not only Americans are
paying a price for that, the world is. That is the problem with democracy, its not
perfect, but it’s the best system that we have. Russians for instance, paid a heavy
price when they voted for Yeltsin, ignoring a much smarter guy like-Gorbachev
Posted by Yabby, Sunday, 5 October 2008 12:33:40 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
BN

A quick response - off to watch 4 Corners on tax havens. I didn't make the final cut for it unfortunately.

Banks take deposits and act as paying and receiving gents. They lend to business and home buyers (int eh main). Lending to business was their initial role. In Australia 50% of loans are covered b deposits, 25% by other short term loans and the other 25% by long term loans. So they create money too.

The following comes from Socialist Worker in the UK from 27 Nov 2007. The writer argues:

Financial markets and financial institutions play a very specific role under capitalism. They help coordinate the system, moving capital to wherever it can make the greatest profit.

An individual capitalist may not be able to see where the best profits can be made, anywhere in the world, but the financial markets, collectively, can do this, taking money and redistributing it according to the returns it can make.

Theoretically, financial markets make capitalism work “better” – they will hunt the places where highest profits can be made, and so (theoretically) boost profits throughout the system.

However, the financial system carries two great risks. First, it can misjudge real profits and simply indulge in speculation, with financial markets talking themselves into a frenzy of ever increasing share prices, based on not much more than the whims of traders. These are called “bubbles” and the consequences, when they burst, can be dramatic.

Second, the speed and flexibility with which the financial system can find profits may also turn it against capitalism as a whole, rapidly transmitting a crisis in a single economy into others. This is known as “contagion” – the crisis in one region spreading very rapidly to others.

JP again. So banks merely re-distribute the surplus value (or part of it) workers create. They do not add to that surplus.
Posted by Passy, Monday, 6 October 2008 7:32:20 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
The RBA might today cut by 1 percent. The markets are factoring a one per cent cut in by the end of the year anyway so why not do it now?

None of the actions address the real issue - the stagnant rate of profit.

To do that the ruling class will, in light of their economic crisis, attack workers' wages, conditions and jobs savagely. The solution is to abolish the profit system and the instability and destruction inherent in it and replace it with a democratically planned economy run by workers - socialism.

The first step is for unions to defend wages, conditions and jobs. Given the failure of the union leadership to do this over the last twenty five years, unless the rank and file organise independently of the ACTU and other discredited leaders, then we could all going down with the ship of capitalism.

Yabby, you say:

"The proof of the pudding is in the eating. Workers in the West are doing better then ever before, are richer then ever before and those in developing countries have rising standards of living. You have offered no alternative that can do the same, apart from a bit of ideology that is outdated by 100 years of change in the real world."

Actaully between 1975 and 1995 real wages in the US stagnated and for the last four or five years have fallen. (Cutting wages or holding them stable has been one of the strategies of the US ruling class to address the poor profit rate.)

In Australia the wages share of national income is now at its lowest in over 40 years. Remember, this happened during an unprecedented boom. What is likely to happen to wages now that the Australian economy could possibly go into recession?

The food price increases of the last year have wiped out all the gains made over the the lat thirty years in bringing the developing and under-developed world out of poverty.

As the global capitalist economy free falls into recession or perhaps even depression, maybe the ideas of Marx are still relevant.
Posted by Passy, Tuesday, 7 October 2008 5:29:31 AM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy “It is of course a myth since society is inextricably intertwined. Without the whole structure of society, provided and sustained by the activity for example of millions of workers in Australia day in and day out, there could be no "individuality".”

Society was “inextricably intertwined” as you put it along time before the notions of socialism were considered.

The difference between a free, libertarian society and one under the yoke of government conformity (socialism) is the

“inextricable intertwining” is a natural occurrence brought about because people seek to exchange goods and services etc.

That inextricable intertwining can be achieved privately, without the intercession of governments or bureaucrats or any other form of meddling by those obsessed with running other peoples lives (instead of running their own).

In days gone past the village miller was one of the first examples of the “division of labour”.

The “inextricable intertwining” is merely a manifestation of greater division of labour and remains something which does not demand nor require government intercession at any level.

As for “individuality” of workers, I engage personally, in a form of trade which is very unique and which separate businesses seek my services to supply, on contract lasting from 3 to 9 months at a time. Not many others successfully do what I do.

Therefore, I am prepared to offer myself as an individual who is, humbly, unique, to counter and deny your claim of “no individuality”.

“As the global capitalist economy free falls into recession or perhaps even depression, maybe the ideas of Marx are still relevant.”

Not in a fit, the only thing about a Marxist society,

it cannot “recede” any further than where it starts, from the stagnation and mediocrity of a system with
no incentive,
no reward,
no excellence,
no passion and
no point,

only wall to wall mediocrity

We are born to “live”, “love” and “make choices”

Marx never aspired to that level of human experience, he stopped at merely “existing"
Posted by Col Rouge, Tuesday, 7 October 2008 7:27:29 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Thanks Col Rouge.

It seems I was the only person to predict a one percent cut. I had written shock and awe in there too as part of the RBA strategy but edited it out because my comment went over 350 words. I basically thought that if the Australian economy was about to begin a slide into deep recession (as some economists are predicting)the RBA would provide some shock and awe with a one per cent cut to stimulate the economy because the banks would have to pass on a substantial amount of the cut.

I still think that the pressure in the long term in Australia may well be to increase rates as the US exports the cost of the bailout to the rest of the world through inflation.

Col Rouge, I suggest you read some of the early Marx, with his soaring passages about liberation and its possibilities, or even his views on the division of labour and how in a real human society we would poet, farmer, hunter etc in one day.

Again, you mistake Stalinism for Marxism. They have nothing in common. Stalinism and the slow destruction of the soul it created mirrors the same processes going on in the West. Not surprising since alienation is inherent to capitalism, which is what the West and stalinism both are.
Posted by Passy, Tuesday, 7 October 2008 9:31:05 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
*and replace it with a democratically planned economy run by workers - socialism.*

Hehe Passy, you really do live in fanatsy land. Next those workers
apoint leaders, next those leaders screw the workers, for their
own selfish interests, as we have seen time and time again.

Power corrupts, absolute power corrupts absolutaly, so we have the
dear Leader living it up in North Korea, whilst his people starve,
etc etc.

What we have in say Australia today, is that if banks or BHP make
record profits and pay record dividends, those dividends are
paid to workers super funds, 1 trillion $ and growing is sitting
there, in their names, as ultimate owners of these large companies.
Marx never even dreamed of this kind of possibility or outcome and
its not allowed for in your dogma, so you don't know how to deal with
it.

Passy, you are free to put your wierd ideas to the Australian
public if you wish, at any elections. You might get the donkey
vote and a couple or so more, thats about it. Dream on!

I know what is good for me, you don't. I will work if there is a
reason and an incentive to work. No profit means no work!
All very simple but it is clearly beyond you.
Posted by Yabby, Tuesday, 7 October 2008 10:10:19 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
BN

I note the IMF predicts that the bailout would cost at least doouble the $700 bn estimated. Ihe old double up rule is coming in to play.

Yabby, I mean no disrespect, but an image of the Black Knight from Monty Python came into my mind when I read your latest post. As the castle of capitlaism collapses there you are on the bridge screaming "Come back and I'll bite your bloody arms off."

You seemed obsessed with superannuation and the idea this gives workers control of companies. We have no control over those companies. I'd like BHP to go totally renewable next year, or the year after, or the year after, or the year after ... Fat chance of me or my super fund or any group of super funds imposing that, or even getting it on the agenda.

Super funds hold about $1 trillion in assets, most but not all of them in Australia.
Australia's GDP is about $1.1 trillion. Assume the return on net productive assets in Australia is five per cent. That means that total net productive assets in Australia is about 20 trillion. In other words super funds have investments totalling about 5% of the total net productive assets in Australia. That's not huge.

I would need to look up offical figures to confirm, but even if the figure is a ten per cent return, then super funds would hold only ten per cent of productive assets in Australia.

Part of the 9 percent super gurantee came from workers foregoing wage inceases. Thoe wage increases are lost forever.

In addition we subsidise super funds and superannuants about $30 bn a year through tax exemptions etc. In the next year or so this figure will surpass what we spend on the pension.

And now super funds are having their worst year, possibly ever, (so why did I retire and defer my benefit till November?) so much so that fund values are now back to what they were 3 years ago and the fall may have only just begun.
Posted by Passy, Wednesday, 8 October 2008 8:19:04 AM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy thank you for suggestion I read Marx.

I will wait until the movie comes out… then realized, it has…

“A day at the races”

Regarding “Stalinism for Marxism. They have nothing in common.”
It is like this

Marxism begat Stalinism
just as Lenin wrote
“the goal of socialism is communism”

The idea that you can set up a centrally controlled authoritarian government in the name of “Socialism” which will not succumb to the despotism and tyranny which is “Stalinism” is to suggest that

If you a sink piece of iron into acid, it will not corrode.

The nature of socialism has an inescapable and fatal defect. That defect being the centralized control instituted and required by socialism is vulnerable to entryism and takeover by more malevolent forces than the “gullible souls” of socialism can resist.

Really confirming Lenin’s observation to the nature of his “useful idiots”

“Stalinism and the slow destruction of the soul it created mirrors the same processes going on in the West.”

Hardly, the socialist souls were raped and destroyed by communists, who were, far from mirroring the “capitalists”, seen to collapse before the overwhelming superiority and strength of capitalism.

As for "slow destruction of the soul", my soul thrives ion capitalism, I achieve what I want to acheive and am who I choose tobe. I am not constrained by the uniformity of socialism (nor the third rate uniforms, so popular among socialists)
I must agree with Yabby, your idealism is fine for text books but even before Cromwell was promoted by his “levelers”, to the role of Lord Protector and hence to despot in chief and Robespierre introduced the “Terror” in the name of Liberty, Fraternity and Equality, the forces of “socialism have been the cause of almost as much misery as the Communists they repeatedly get overrun by.
Posted by Col Rouge, Wednesday, 8 October 2008 1:26:06 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
*As the castle of capitlaism collapses*

Passy, I remind you that the present problems were caused by bad
politics. I certainly don't see the US as you do, or they would
not prop up their production of say ag products, with huge subsidies.
So capitalism in name only, not in what they do.

Have you also noticed what is happening with smart investors? They
are licking their lips at bargains waiting to be bought. Warren
Buffett has now spent 6 billion of his 45 billion cash hoard, just
last week. Does it look like he is panicking? There is huge cash
there, waiting for bargains, but IMHO its too early to buy just now,
wait until people have to sell. Those who got it wrong are panicking,
not those who got it right. Just as expected.

* Fat chance of me or my super fund or any group of super funds imposing that, or even getting it on the agenda.*

Look up the share registry of the top 20 shareholders in nearly all
listed ASX companies, they appear in every annual report. They are
nearly all super funds, local and overseas funds. They have the
power to sack the board, enforce their vote, tell the companies to
do whatever they want. They represent the owners, which are the
workers. You convince all those other workers that you are right,
then they have the power, but I doubt if you can do that, so you
just blame the system.

*so much so that fund values are now back to what they were 3 years ago*

Umm so what? Before that you had had 15 years or so of growth.
Are you so greedy Passy, that you are never satisfied and always
want more?

I note that some of the Rio workers now want to go on strike.
125k-200k$ a year and they still want to strike. How greedy are
these people?
Posted by Yabby, Wednesday, 8 October 2008 7:42:24 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Thanks Col Rouge

A day at the races would have more chance of success than investing in capitalist enterprises or ventures at the moment.

I can almost imagine Rudd announcing we are investing the Budget Surplus on the favourite in the fourth at Sandown.

Yabby, stop trying to defend the indefensible. How many superannuation fund investors actually influence let alone control one top 200 company? None. How many funds actually control one top 200 company (Together since they have limits on how much they can invest individually). None.

I wonder how much my super fund investments went down today? I pity the next generation of workers who will have to fund the baby boomers in retirement. The cost will be staggering.

Ah, isn't capitalism grand? We are on the path to the possible immiseration of all. As the AFR asked a few weeks ago, can it survive?

Rio Tinto workers are super exploited and merely trying to win back some of the surplus value they create which their boss company then steals from them.

I am not greedy. I have lived off the sale of my labour power for the last 30 years. I have been forced to set aside amounts from my wage into a super fund for 30 years and want to live in retirement on a decent pension, as I want all retirees to.

The consequences of the collapse of the Australian and world stock markets mean that is becoming less likely each day. That's not greed; it is merely responding to the expectations created in super by a range of people over many years, including Costello in the last two years.

My loss of forthcoming pension income is but one small example of the misery that will hit workers around the world in the form of unemployment, longer hours, lower wages, less conditions, if we let the bosses get away with that. As the BLF used to say, if you don't fight you lose.
Posted by Passy, Thursday, 9 October 2008 4:02:54 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
*A day at the races would have more chance of success than investing in capitalist enterprises or ventures at the moment.*

Passy, because you do not understand some things, does not mean they
are not so. You should put down Marx and pick up Value Investing 101 :)

You only need to read Alan Kohler's Eureka Report to realise how
many self managed super funds are all cashed up, ready for when
bargains in the market appear. Warren Buffet has been "keeping
his powder dry" for years, waiting for moments like these. Some
of the young, gullible turks thought he was old fashioned. Now they
are learning the hard way, what value investing is all about.
Its a great time for value investors!

You really don't know much about what goes on in the real financial
world. There would not be a CEO of a major publicly listed company,
who does not spend a fair amount of time trying to impress institutional investors (super funds),
for if they go against him
and don't support his company, he will soon lose his job. IMHO
the super funds actually have too much power and often force CEOs
to make short term profit decisions, over long term wise investment.
These guys of course want to impress unitholders like yourself with
their healthy figures, so that they get a pay rise.

OTOH, when they are behind a company with their assets, they can
work magic. Ralph Norris only had to pick up the phone this week
to a few of them, to raise the 2 billion $ to buy Bankwest. What
a bargain! The board of any company is driven by what shareholders
think, because if they pull out, the company price crashes and the
CEO will soon get the chop.

You must have a crappy super plan. When I retire, I will own shares
like BHP for the next 20 years or so. What they are worth today
hardly matters to my retirement plans, unless I can buy some more
if they are cheap.

125-200K$ is exploiting workers? Hehe.
Posted by Yabby, Thursday, 9 October 2008 8:16:51 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy “A day at the races would have more chance of success than investing in capitalist enterprises or ventures at the moment.”

Darn it, just when I think I am being too obvious…

The reference was to Marx and the movie starred Groucho, Harpo & Co…

As for “investing in “capitalist enterprises”

I am sure Yabby will agree with me that the time to buy is NOW.

Far more shares going cheap then a few months ago.

Banks are looking particularly good.

However, I have my personal targets already set, I know exactly where I will be investing, the return and the growth are spectacular, the best I have ever seen

but I do not need to share, so no insider tips.

The benefit of capitalism is its ability to adjust and recover, its called the market effect.

The danger to capitalism comes when some here-today-gone-tomorrow politician gets in on the act and decides to play ‘grace and favour’ with taxpayers funds.

That screws everything.

It’s like building up the banks of the Yangtze river,
The solution works for a while but the silt still build up the bottom and eventually the banks break.
The ensuing flood is far worse than if the banks had been left alone and allowed to break as normal. (btw ‘banks’ is the correct word, regardless of how much of an unfortunate pun it seems)

Socialism is all about government building up the river banks then watching helplessly as their efforts are seen to be futile and more damaging than doing nothing.
Posted by Col Rouge, Thursday, 9 October 2008 9:05:37 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Col Rouge I understood your reference to a day at the races and was turning it on its head to highlight the irrationality of capitalism. Maybe stepping outside your arrogant framework and recognising others are not stupid might help you address some of the issues I am raising. BTW, I used to wear a badge from Paris May 1968 - je suis marxist, tendence Groucho.

Socialism is not about Government. It is the self emancipation of the working class.

The present Government interventions look to me like a return to the failed Keynesian policies of the past. You can mouth all the platitudes you like but you refuse to address the fundamental issue - the problem is the profit system itself. Crises are inherent to capitalism.

To quote from a submitted op-ed piece by one of my comrades:

"Even heavy duty state intervention is unlikely to solve the world’s current economic problems for two reasons.

"First, the problems are not simply financial. As Henryk Grossman put it in 1929, before the stock market crash, the very laws of capitalist accumulation impart to accumulation a cyclical form and this cyclical movement impinges on the sphere of circulation (money market and stock exchange). The former is the independent variable, the latter the dependent variable.

"More ‘transparency’ and better regulation of banking won’t deal with the underlying issue which is the rate of profit across the entire economy.

"During the long boom, capital intensive investment meant that outlays on employing workers declined compared to business spending on machinery, equipment, buildings, raw materials and other goods used in production.

"Yet it is only the labour of workers that creates new value. The rate of profit fell and the period between the mid 1970s and the early 1990s saw the deepest global recessions since the 1930s. Profit rates have recovered somewhat, largely thanks to neo-liberal policies that squeezed more work out of employees and, especially in the United States, led to declining real wages.

"Even so, the rate of profit did not recover to the levels of the long boom."
Posted by Passy, Friday, 10 October 2008 4:46:09 AM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy,

"Socialism is not about Government. It is the self emancipation of the working class."

There's two problems withthis statement:

1) Socialism has to be about government - you can't foist Socialism on the people and expect them to lump it. If they don't embrace it then by it's own nature, socialism fails.

The big problem you face is that there isn't a mechanism to get socialism into government: Have you noticed that there isn't a major Marxist Socialist party in this country? Have you ever noticed how the public reacts to the mere suggestion of that style of policy?

If it isn't put to the people and if they don't adopt it, then it's not going to happen.

2) "Emancipating the working class": see, you've missed the mark here too. Howard was wrong on many things and was on the nose for a long time as a result (and would've been booted out earlier if there had've been a credible alternative), however he was right about the aspirational voter: the evidence for that is all around us - McMansions, huge credit card debts etc. The workers want more, they want to raise themselves up and move ahead in the world, both in terms of status and material possessions.

That runs contrary to what you're proposing.

It's not going to happen Passy. You've got to come into the real world at some point.

"Yet it is only the labour of workers that creates new value"

If you seriously think that the only way to increase the creation of "value" is by throwing more and more workers at things, then you've missed the entire industrial and computer revolutions. If you're trying to say that (say) 10 (wo)men working produces the same number of units of something as 10 (wo)men working on a production line, then you're out of your head.

'Management' (who I'll remind you are also workers) also create value by (amongst other things) investing in tools to increase the efficiency of those who will use the tool.

You're arguments haven't gained any clarity Passy. This is getting very silly.
Posted by BN, Friday, 10 October 2008 12:13:43 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
BN, Yabby, Col Rouge

You don't grasp my arguments because they are outside your thinking and life experience.

I didn't write about the crisis of capitalism just to end up discussing value investing or the Marx brothers. (Can't resist this from Column 8. Groucho is walking past a restaurant and sees his former wife. Quick as a flash he says "Marx spots the ex.")

As to value investing, I'll mention that to the 3 bn people suffering from malnutrition, or the one billion of them starving. That should cheer them up no end.

I hope the companies you invest in survive the coming depression.

BN the labour theory of value is simple. You are right from an individual capitailist's perspective that what each company wants is more efficient workers (eg through new technology) to out compete for a while its rivals. But viewed from a systemic perspective that very competitive drive forces companies to invest more and more proportionally in capital than in labour. If labour is the source of value in the realm of production, then this means (unless those countervailing tendencies I mentioned briefly above come into play) that the profit rate must fall.

Low profit rates in the US and other developed countries have created this present crisis. Capital looks for better returns and flooded into the financial sector which offered high risk but high return investments (based on the fallacy of continuing house price increases). Yet the finance sector cannot offer such extra amounts for long periods because that sector produces no value (the real economy does) and so is dependent on getting a share of the surplus workers create in the real economy. The low rate of profit in the real economy flows necessarily through to the finance sector over time.

Look around you. Why is capitalism going to hell in a hand basket? It's not because Bush is a dud. Roosevelt didn't end the Depression with his Keynesian approach. War did with its massive spending on arms and physical destruction of capital. My fear is 1914 and 1929 are being rolled into one today.
Posted by Passy, Sunday, 12 October 2008 11:47:42 AM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy “You don't grasp my arguments because they are outside your thinking and life experience.”

“Out with the pixies” you mean?

“As to value investing, I'll mention that to the 3 bn people suffering from malnutrition, or the one billion of them starving.”

Those starving are often the victims of despots and authoritarian regimes (like Zimbabwe, not a capitalist economy), where 'tribalism' is a more significant social influence than “capitalism”.

Why is it that these starving people seek to obtain residency under the horrors "capitalism" -

the last time I looked, more people are trying to move to live "under capitalism" than there are those trying to "escape capitalism".

But tell me, how many did Lenin and Stalin starve to death to enforce a political objective?

“Why is capitalism going to hell in a hand basket?”

It is not.

Capitalism will survive.

Governments playing fast and loose to engineer and enforce socialist expectations (like everyone living in their own home when they cannot be held responsible for making loan repayments) and doing it with taxpayers money will not.

“My fear is 1914 and 1929 are being rolled into one today.”

That is what Gorbachev felt back in 1991

That battle has been fought and the swill lost.
Posted by Col Rouge, Sunday, 12 October 2008 12:50:09 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy,

"If labour is the source of value in the realm of production"

Yes, but Passy, it's not only workers who produce value. You even acknowledge this! Your whole argument falls apart on this point alone!

I noticed that you didn't respond to my point about there not being a viable socialist party in this country, and that shows that you're in a state of denial. You need to acknowledge that unless people are on board with Socialism, it's doomed to failure. At least with Capitalism, those who choose to push themselves further can do so. The situation that we have currently is that they are 'punished' with higher and higher tax rates, which helps those who can't/don't.

"Why is capitalism going to hell in a hand basket?"

LOL. It's not. We're having a long overdue correction. I'm looking forward to the state of the various markets in 5 years time - one dollar invested today will be worth many more.

I would, however, remind you that socialism has failed consistently over the last couple of decades in every country that has tried it. Even if it's not Socialism in the style you would like, it consistently fails.

This is getting silly now Passy. You've failed to convinced anyone of anything on these posts of yours. All that has happened is that you've been consistently beaten up. Take the hint, both of the lack of support on these threads and the lack of a major socialist party, that you're barking up the wrong tree.
Posted by BN, Sunday, 12 October 2008 3:53:18 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
BN

You are right. There is no mass revolutionary party in Australia. I am trying to build one, along with the other 250 members of Socialist Alternative. Today's very tiny minority can be tomorrow's majority. The point for the revolutionary Left is to patiently explain our democratic ideas and why capitalism is in crisis. Since our analysis does acknowledge the crisis ridden nature of capitalism (something inherent to the system) our ideas have the potential to reach a wider audience. You of course refuse to look reality in the face as the system collapses around you. Like Schumpeter you seem to be a fan of creative destruction - but at what cost?

I haven't been beaten up. No one has laid a punch on me. A few right wingers or neo-liberals have failed to understand let alone address what I am saying. Abuse is not rebuttal.

It's the crisis of profitability, stupid. That's a reference not to you BN, but a reminder to me, a la Clinton, that I need to keep making the point about the low profit rates in the developed world. No amount of bail outs is going to address that. It is likely the attacks on workers will soon increase markedly to drive down our living standards and restore profit rates. But it may be too little to save the system since the last twenty five years have basically been a re-distribution of wealth from labour to capital. There may be no blood left in the stone.
Posted by Passy, Sunday, 12 October 2008 4:11:52 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy

Your posts have remained courteous in spite of provocation. I too am concerned about the repercussions of the "bail-out" that it will fail to protect low income people and is not concerned with culpability of the banks, politicians and stock players.

You also present your case rationally and reasonably. The economic crisis has shown that huge monopolies just drag everyone else down when the balance of trade is exploited. I am all for the healthy type of competition and innovation that is achieved by small business - much easier to regulate and less room for exploitation.

"U.S. mortgage lenders, freed from regulatory oversight, were able to misleadingly market high-interest subprime loans to millions of American families. Those families, for their part, had little choice but to sign on the dotted line. In a deeply unequal United States, with workers taking home a record low share of the nation’s income, far fewer families could report enough income to qualify for a traditional mortgage.

In short, inequality cooked up the current Wall Street meltdown. Any serious attempt to end this meltdown — and prevent another — has to recognize inequality's role."

http://www.toomuchonline.org/articlenew2008/sept22a.html
Posted by Fractelle, Sunday, 12 October 2008 4:29:57 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy,

"Today's very tiny minority can be tomorrow's majority."

Have you noticed that across the world, the number of Nazi, Communist and Socialist parties diminishes as each year rolls on? Have you noticed that even the great Communist and Socialist communities are adopting (albeit slowly and with the pain that comes with change) free market ideals with only a few stragglers hanging on? Have you noticed that there aren't new Socialist societies springing up?

What does that tell you?

I'll remind you that Australia isn't going to be the socialist building ground that you want: Australians want to exclusively improve themselves - the evidence is everywhere. I'll remind you of credit card debt, McMansions and all the other things which are the anathema of what you're espousing.

"...the crisis ridden nature of capitalism..."

And the crisis riddled nature of every other system of government. No system of government or religion is crisis proof. You seem to think along the lines of the 'workers paradise', but that, in and of itself, is a fallacy. Man is not capable of paradise of any flavour.

Your already tiny minority is getting smaller and the world has moved on. So should you.
Posted by BN, Sunday, 12 October 2008 5:01:32 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
*No one has laid a punch on me.*

Passy, stop kidding yourself. If after 100 years of this stuff, you
have 250 people backing you, its time for a major rethink. A few
slogans repeated again and again, are not going to convince people.

*It's the crisis of profitability, stupid.*

Passy, if profitability was higher, the poor and others would pay more
for their consumer goods, their standard of living would drop.
The thing is, today machines do most of the production, lots of workers do little
but push a few buttons. Only around 10% of
the workforce is in manufacturing, the massive growth has been
in services.

Today there are industries employing alot of people, which we had
not dreamed of, 25 years ago. Think of the internet and all its
associated activity, think of mobile phones, etc. etc. Fact is
that most people don't want to stand on production lines, doing
boring work, so we have to import those on 457 visas, as in the
meat industry.

A bit of a slowdown in WA will actually be welcome, for things were
getting out of hand here. There were just too many developments,
too much growth, too much chaos because of it. When train drivers
earning 200'000$ a year go on strike, then things are perhaps too
healthy and its time for a reality check.

*And the crisis riddled nature of every other system of government.*

BN- exactly! There is no fairy land out there, we are human, mistakes
are made.
Posted by Yabby, Sunday, 12 October 2008 9:10:11 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
To come back to this statement

Passy “You don't grasp my arguments because they are outside your thinking and life experience.”

I do not know BN, never met him or Yabby or yourself.

I do not presume to determine what “life experiences” they may have endured or reveled in to bring them to the point where they express the values they hold.

Likewise, you do not know me nor the life experiences which helped formulate my views

but they included studying by kerosene lamp because of rolling blackouts when the UK miners, lead by the scumbag communists (Gorman and Scargill) decided they would hold the nation to ransom and do their best to bring down the democratically elected conservative government.

It is the style of “Socialists” to treat those with an alternative perception of "life" and the "experiences" it brings as if they had never had a thought in their lives and they are, thus, somehow lacking.

You laud a process which has been proven to lead to the worst forms of corruption and mass starvation.

You denigrate capitalism and belittle it with fraudulent claims to its shortcomings, re the billion people starving etc.

The misery and missed opportunity which comes from enforced socialist leveling reduces what could otherwise be a “life experience” to a mere existence.

All human advancement has come from the dedication of individuals to pursue their own personal goals and agendas, regardless of and sometime despite (socialist) governments.

Such individualism is discouraged in the system of socialist uniformity

and that is why capitalism works better than socialism, because it encourages the individual and rewards innovation and invention,

to the ultimate betterment of all.

Yabby “There is no fairy land out there, we are human, mistakes are made.”

And that is another strength of capitalism, no where to hide,

Share holders hold their executive to account.

Governments have years and heaps of opportunities to hide their mistakes and the tax payer / electorate is none the wiser.

Lenin and Stalin both did it, five year plan after five year plan.
Posted by Col Rouge, Monday, 13 October 2008 8:56:55 AM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Thanks Col Rouge, BN and Yabby

You are my triumvirate.

We see the world differently - you through the lens of capital and me through the lens of labour.

Col you say: Lenin and Stalin both did it, five year plan after five year plan.

Stalin began the first five year plan in 1930. It was an attempt to develop Russian industry at the expense of workers living standards. Stalin cut wages by 50% fto use the surplus they created to develop more and more heavy industry. "What the west has done in a hundred years we must do in ten" he said. In other words he fast forwarded the development of capitalism in the USSR through cheap and also forced labour,and collectivisation which drove peasants off the land into the cities. Read Capital Volume 1 when Marx describes the history of the establishment of capitalism in Europe. It is eerily similar to the Stalinist period and the first five year plan. Why? Because it is the same process.

Col, in 1930 when the first five year plan began, Lenin had been dead for over 6 years.

There is a perfectly legitimate argument that socialism has been tried and failed. I wish you could make it so I could rebut it. But to say that history has changed so much is to miss the fact the world is still divided between labour and capital.

Even the examples Col Rouge gives of the decline for example of Nazism are incorrect. At the last Austrian election recently the two fascist parties got 29% of the vote in total.

The global crisis may see fascism arise again in strength, with some agreeing that "finance capital" rules the world.

What about South America and the leftist Governments in power there, expressing the hope of workers and peasants for a better world. (Let me add that none of them are socialist or communist in the sense I use of the self emancipation of the working class. They may challenge the rule of private capital but appear to be substituting state captialism for it.)
Posted by Passy, Monday, 13 October 2008 2:21:27 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
*But to say that history has changed so much is to miss the fact the world is still divided between labour and capital.*

That is the thing Passy, the world has changed dramatically in
100 years. 100 years ago, your theories of the division of capital
and labour applied. Not today.

100 years ago there were very few people with money, today they
are everywhere. I once saw a survey of who has wealth in Australia
and was amazed at how much those grey nomads, in their 50s-70s,
have tucked away.

Look around you. Where people used to have nothing and work in
a factory, today you have contractors, self employed people running
their own businesses, people own real estate, super, 40% own
shares directly. The millionaire next door is very much alive and
common as chips.

So your old division of labour and capital is largely obscure,
certainly in the West. Labour and Capital are intertwined these
days.

But then it also comes back to human nature. Give everyone 100k$,
one person will turn it into a million, the other will blow the lot
in a short time. We can even test for this in three year olds,
with the marshmallow test.

So you will will always have some rich and some poor, by the very
nature of humanity. The best we can do is to give them every
opportunity to help themselves, but like the horse to water, we
can't make it drink.
Posted by Yabby, Monday, 13 October 2008 3:27:28 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy “Col, in 1930 when the first five year plan began, Lenin had been dead for over 6 years.”

An insignificant error on my part, especially when Lenin’s intentions were curtailed only by the occasion of his death. However, we can see how he had fostered the idea from statements such as

“But the most brilliant confirmation of the correctness of Lenin's words has been provided by our five-year plan….”
http://www.marx2mao.com/Stalin/RFFYP33.html

wanna split more hairs?

“Even the examples Col Rouge gives of the decline for example of Nazism are incorrect.”

I have not mentioned “Nazism”

But pleased you brought it up

We can consider the treaty of Brest-Litovsk and later the Molotov–Ribbentrop Pact,

and observe how the reprehensible interests of socialism were in accord with the despicable perversions of fascism, working together against the interests of individual freedom and democratic libertarian capitalism

I recall Stalin only opposed Hitler following Germany’s launch of Barbarossa.

As for South America, “and the leftist Governments in power there, expressing the hope of workers and peasants for a better world.”

Why are most of the workers and peasants queuing up to get up to Mexico and into USA, if their “leftist governments” are so wonderful?

“(Let me add that none of them are socialist or communist in the sense I use of the self emancipation of the working class. They may challenge the rule of private capital but appear to be substituting state capitalism for it.)”

Of course, “Chicken little”,

Passy must never place himself in a position where his theories could actually be tested or measured against a “real life” example,

“Factual accountability” is the destroyer of whimsical fantasy and certain to cause Passy’s “sky to fall in”.

Yabby “but like the horse to water, we can't make it drink.”

You should know better, the socialist way is not to water the horse but to deny it water until it submits to the will of the party.

It has worked for Lenin, Stalin, Pol Pot, the Kim Il-sung dynasty, Robert Mugabe etc…..
Posted by Col Rouge, Monday, 13 October 2008 4:31:02 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
At the risk of sounding like I'm bignoting myself, I'll respond to this:

Passy “You don't grasp my arguments because they are outside your thinking and life experience.”

Relevent to this discussion, my life experiences include being the global lead for a piece of HR/Payroll software, and as a result, I've been around the world a bunch of times, including spending a couple of years in third world countries. So I've seen the 'best' countries and the 'worst' countries, and all manner of government styles. The best countries are those who interfere the least with peoples individual lives.

In addition, and probably more relevent, I spend a lot of time with C-level (usually CFO/CHRO) and senior managers (and via some conferences, leaders in other fields), and what I've noticed is that those who are most successful (and this applies to sports people, entrepreneurs, 'ordinary people', developers etc) are those who make it happen for themselves and don't wait for someone else to give it to them. That's one of the reasons why I'm an advocate of capitalism - you succeed because of your own actions. It's also why I'm against socialism - i'm against the notion of people gaining benefit without doing the work to earn it.

Back to the discussion - this is long, but worth listening to: http://bloggingheads.tv/diavlogs/14744 It shows that it's the more social ideas which exacerbated the sharemarket crash. If the more lefty politics hadn't been involved in Freddie Mac etc then this would've been a less traumatic experience.
Posted by BN, Monday, 13 October 2008 4:39:46 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
My dear triumvirate

Look, I am not trying to be disrespectful, but this appears to me to be a dialogue of the deaf. I can say as many times as I want that stalinism is not socialism (with a set of arguments to justify that) and Col will reply that it is.

I can explain the labour theory of value in simple terms and get responses rejecting out of hand that theory.

I do argue that there is a tendency for the rate of profit to fall. Not too many address that issue in reply.

I can and do argue that the crisis is one of profitability, and if it is, then no amount of neo-liberal, or Keynesian, or mercantilist interventions (can you have neo-liberal interventions? I think so) will cure the problem. Only things like the destruction of capital (physical or in value), new technology and other means of cheapening food, clothing and housing etc, driving down workers' living standards and lengthening the working day can rescue profit rates.

Your response is likely to be "let the market rule and this is as good as it gets (and any socialist alternative is even more dangerous.)

So be it. Can we agree to disagree? I know that Col may well say that my philosophy is inherently evil, but that is like saying that fascism is the offspring of capitalism and so capitalism is as inherently evil as fascism. (In fact fascism is one of the state variants arising from capitalism, while Stalinism is a state designed to create capitalism.)

Any way, I think the current plan to increase liquidity (by guaranteeing interbank loans and guaranteeing bank etc deposits) may work in the short term, but since it doesn't address stagnant profit rates isn't really a solution in capitlaist terms - the sorts of atrocities I mentioned above like war and driving down living standards, and making us work longer.

TBC - on the life experience discussion.
Posted by Passy, Tuesday, 14 October 2008 2:54:33 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
And BN, in terms of life experience I was a young boy going to his first anti-Vietnam demo at 16, resolving not to register for national Service, and being saved from having to make a decision on that with Whitlam's election just under a year before I turned 20.

9 years in the ATO, 9 years in a law faculty teaching and researching and then 9 years back in the ATO. (Do I have a nine year itch?) I led international tax new law measures, ran an international area giving precedential advice and also an area giving banking and finance advice.

My life experience from all of that teaches me that most of the "successful" business people are imbued with a sense of their own self-importance, are narrow thinkers, fixated on the short term and total individualists who care only about themselves. They are driven by profit to the exclusion of all else.

The real doers are on the shop floor or its equivalents, and they have the ideas, energy (until it is ground out of them) and experience to lead and decide and manage.

I came to be a revolutionary socialist through union activity - the best activists were the revolutionaries and their arguments made real sense to me about the way forward for the campaigns and then more broadly for society. And of course then reading the writings of Marx and Engels and Lenin and Luxemburg and Trotsky etc and later socialist thinkers opened my eyes to a different reality that goes beyond surface analysis.

I am a socialist of the heart.
Posted by Passy, Tuesday, 14 October 2008 3:01:07 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
*I am a socialist of the heart.*

Ah your first mistake Passy. The heart pumps blood, nothing
more. :)

Clearly you have done well by capitalism, by what you write, you are
in your mid 50s and ready to retire. Life is a breeze!

Yes, capital can be destroyed in market economics, but capital
can be created too. The most permanent thing in life is change,
get used to it.

Look at it this way Passy. If you make say bottle tops and you
are pretty useless at doing so, others can do it better, faster,
cheaper, why should consumers subsidise your enterprise?
For that is essentially what you want and look how well state
run factories went in China. Even they have turned to market
economics, despite their communist ideology. The reason is
quite simple, it works.

If profit rates fall, so innovate or shut it down. One of the
things that competition creates is the need for innovation.
I constantly marvel at new products, where some guy has really
thought through the design to the last detail, unlike some of
the shoddy rubbish we'd be sold, when we had high tariff barriers.

Consumers are winners and workers are consumers.

*They are driven by profit to the exclusion of all else.*

Actually not so. Look what the worlds two richest men are doing,
after having made money. Gates and Buffet are giving it all to
charity! What you have in humans is still a deep hunter-gatherer
instinct. 500 grandmothers back, we still lived in caves.
Going out to make a killing was our way of life. Today people
play and follow sport for the same reasons, or make money for
the same reasons. $ is simply the way they measure how well
they are doing. But when the challenge is gone, there is nothing
more to prove, those people often become huge philanthropists.
Posted by Yabby, Tuesday, 14 October 2008 9:13:24 PM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Passy “Look, I am not trying to be disrespectful, but this appears to me to be a dialogue of the deaf. I can say as many times as I want that stalinism is not socialism (with a set of arguments to justify that) and Col will reply that it is.”

My point is not that Stalinism is Socialism, it clearly is not

BUT

Socialism has, CONSISTENTLY fallen under the jackboot of tyranny, from Stalin and a myriad of others all the way to Mugabe,

To the matter of deafness, are you ‘signing’ for yourself in that statement?

However, I do respect your passion Passy.

It is something we share (despite our differences) and the world would be a far less interesting place without it. My values respect your right to choose your passion, socialism would ultimately see mine outlawed as anti-social.

If we are having a ‘show and tell’, I was an art student at 17 but “switched” and became a qualified accountant by 22 (5 years which shaped me) and have worked for myself for the past 20 years in the area of financial advise, systems and financial prediction, helping in steering the energy of people who want to achieve better outcomes.

I believe the most effective “driver” in this world is personal energy, be it expressed as self interest, passion or whatever.

The old adage “one volunteer is worth ten pressed men” sums it up perfectly.

You will achieve a lower level of output results (monetary or otherwise) with the same resources when they are collective directed by “representatives”, compared to when they are “managed with a personal interest”.


The passion of self interest (volunteer), is lacking in “representatives” (pressed men) who are distracted to jockey for political power, unauthorized or unwilling to take the bold risks needed to achieve excellence.

Passy, focusing on the “equitable distribution of wealth” misses the point that

Government is a supporting / enabling process, subordinate to the electorate;

not something designed to direct the electorates freewill and energy.
Posted by Col Rouge, Wednesday, 15 October 2008 8:53:47 AM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
Yabby and Col Rouge

You make the valid point that from the point of view of individual capital, the drive to innovate, use better technology etc can be profitable. But from the point of view of the system as a whole it is this very drive that creates the conditions for the tendency of the rate of profit to fall.

I think there are two aspects here. one is the boom/bust cycle (something Marx identified many years ago). Becaase capitalism is unplanned and decisions are made by unelected people who own and or control the means of production, when an area becomes very profitable investment flows into it. Since this investment is unplanned, the result is over-investment and this drives down profitability in the area and there is over-production. The boom becomes a slump.

The second feature is the periodic crises which grip capitalism. I remember last year stirring in the ATO and talking about Krontiev long waves - which I think are not valid - and ended up arguing (to make people think outside their comfort zones) that we were heading for a major slump some time around 2010, give or take a few years. The evidence?

1890, 1930, 1970 (to some extent)so another forty years on was 2010.

Leaving aside the fortuitous forty connection it seems clear to me based on historical evidence that capitalism does experience cataclysmic economic (and military) crises regularly. The question economically is why, and I think stagnant profit rates explain the present crisis, as my article tries to argue.

The show and tell stuff was trying to understand where people's views come from but not in a crude deterministic way (since Lenin, Trotsky, Luxemburg, Marx and Engels were not workers but intellectuals, and in Engels case a boss.)

The guiding principle here to my mind is Marx's comment that it is not consciousness which determines being but being which determines consciousness.
Posted by Passy, Thursday, 16 October 2008 7:26:05 AM
Find out more about this user Recommend this comment for deletion Return to top of page Return to Forum Main Page Copy comment URL to clipboard
  1. Pages:
  2. 1
  3. 2
  4. 3
  5. ...
  6. 11
  7. 12
  8. 13
  9. All

About Us :: Search :: Discuss :: Feedback :: Legals :: Privacy