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. ?

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.

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.

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

*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.

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.