[OPE-L] That hissing? It's the sound of bubblenomics deflating

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Wed Oct 10 2007 - 19:59:58 EDT

With due respect, Paul, this is nice poetry but it doesn't really wash as economic science in my opinion. I fully agree with you about the importance of the physical dimensions of capital, revealed in wars, which is the real substructure of all the transactions built on it, but you know as well as I do, that Marx recognised that a "thing" is not capital by virtue of its intrinsic qualities, but by virtue of a social relation, a social relation which defines the power of property to lay claim to (command) income, labour and its products (or however else you might poetically word the same idea). Ultimately, Marx argues that capital is this social relation itself, i.e. a monopolisation (or privatisation) of ownership and access gives this social power to command income, labour and products.

Just have a look for instance at the long-term trend in the total volume of capital tied up in securities and other financial "products" plus cash deposits and reserves, versus the total volume of capital tied up in shares (stocks) for the USA, Europe, Japan, China etc. since 1980, distinguished by type of activity. Also, look at how the assets of the superrich of this world are actually placed. You will see that "entrepreneurial capital" is actually the minor portion of aggregate capital holdings. There is in aggregate lacklustre growth in value terms in the ""productive" sector of the rich countries. In many previous posts I have illustrated this with data to hand.

The original neoliberal idea was that you get inflation down, then you get interest rates down, you get wages down, then the competitive position of business improves, then you get more productive investment and more jobs, resulting in economic growth rates that return us to the level of the 1960s. Whereas some improvements have happened, however, the overall reality is far from what was anticipated. That is what you have to explain, and that is also what Robert Brenner tries to explain (in a too GDP-focused way, as I have argued with a bit of accounting sense). 

What ultimately matters is not the form that capital takes, but the security of ownership, the conservation of its value as part of this, and the ability to get an acceptable income from it. If effectively idle capital would automatically flow into job-creating production, all economists could go home, but the fact is that it doesn't. Then you have to explain why it doesn't. Never in the history of the world has there been such an uneven and unequal development of capital surpluses and deficits, of supply and demand, of distribution of resources generally. Never in the history of the world has there been such a mass of capital that just rakes in interest or property income. In an overall sense, the explosive growth of credit is in good part precisely the means to bridge the gap.

How can you "accumulate" wealth? In a previous post, I went into all the different modalities of that, but the short of it is, that there are abstractly these "main" ways:

- you can simply take wealth off somebody else by some method (no net addition to total wealth, just a redistribution)
- you can trade (exchange) something in some way, on the basis that you buy cheap(er) and sell dear(er) (again, in aggregate, mainly a redistribution)
- you can produce something new and extra ( a net addition to wealth, though we can have disputes about the nature of the "products"). 
- you can be a beneficiary of unilateral grants of some sort (could be a net addition to wealth, or a redistribution, depending on the form it takes - this aspect is emphasised by Bill Clinton recently)

Which form of accumulation takes prominence, or how these modalities are specifically combined, just depends on the "total socio-economic context", and the relative returns from the given type of accumulation activity. Of course, it is not true - and I never argued this - that all wealth accumulation is capital accumulation, but that is the principle of the thing. What Marx adds is an analysis of how these modalities are specifically combined in the capitalist mode of production. But the mode of production is only one aspect of economic life. The other aspects are the mode of distribution, circulation and consumption. If you forget that, you end up with whacky analyses of the totality of what's happening.


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