Kilman's rejection of Underconsumptist theories of the Crisis.

[SpineyNorman]

Yeah I definitely agree with that, but he seems to be saying that Harvey completely ignores this and I'm not sure that's true - from my reading Harvey's starting point is that this didn't happen so a political project aimed at increasing the rate of exploitation (neoliberalism) was launched. I should probably read The Enigma of Capital again once I've read Kliman though cos it might be me that's wrong on that one.

 

[love detective]

His main gripe (in the book) with Harvey is not really about that though

Where he differs with Harvey is that Harvey puts forward the case that workers real wages in the US have declined over the last forty years or so, that this has then led to increased debt to cover the gap which in turn led to the crisis

Kliman's work shows that while actual direct wages have declined over that period, when you take into account the wider social wage and things like pension contributions & healthcare along with various welfare benefits etc plus the portion of taxes that employers pay which are then used on welfare schemes, then actually real compensation to labour at the social level have not declined over that period and instead have been pretty flat or rising somewhat

The point of all this is that he thinks that Harvey focusses to much on linking the crisis to underconsumptionist type accounts, whereas his figures show that in actual fact real wages haven't actually fallen and therefore those who point to wages falling as an underlying cause of the crisis are not correct. So Kliman points to the true cause of the crisis as a crisis of capitalism in and off itself, not a crisis of a specific type of capitalism (i.e. neo-liberalism). So he's attacking the view that is put forward (implicitly and potentially unintentionally) by the likes of Harvey which suggests the crisis is due to a specifically neoliberal and financialised form of capitalism

either way whether real wages have increased or not in that period - this has had very little impact on the reasons for the decline in the profit rate. the reasons for the decline in the profit rate is a classically marxian one. The huge increase in the composition of capital (see graph below) as a result of increased labour productivity means that while profits in the absolute sense may be rising, the level of overall outlay/capital that is required to capture that surplus value is rising at a far faster rate than the level of absolute profits, which leads to an ever decreasing rate of profit on capital invested (as less and less labour in relative terms goes into each capital circuit which means the amount of surplus value that can be screwed out of that labour is never enough to keep up with the levels of overall investment that is required - so more actual absolute labour may go into the circuit but this is an ever decreasing amount relative to constant capital inputs). this in turn discourages investment due to poorer and poorer returns which leads to sluggish growth & income and increased unemployment etc.. and while capital tries to roam about in other areas to compensate for the lack of profitable opportunities in the real economy (i.e. financialisation) ultimately somethings got to give an crisis steps in to irrationally rationalise the irrational system

 

[SpineyNorman]

I've finally got around to reading The Failure of Capitalist Production right through now. Very impressed.

I agree with the central thesis - that the underlying cause of this crisis is a low rate of profit, as a result of the increase in the organic composition of capital. That in the 1970s, when the rate of profit reduced to the level that it could cause structural crisis, the crisis that would have revived it temporarily, as it did in the 1930s, never happened. That all makes sense to me and he provides loads of empirical evidence to support what I'd always thought but didn't think I'd ever be able to demonstrate statistically - I think that's the main strength of the book.

As I understand it what he's basically saying (among other things) is that since the 70s workers compensation has remained roughly the same as a share of overall income as what it was before. That being the case, is neoliberalism not best seen as a kind of hegemonic project, aimed at removing barriers that could have prevented the system from reproducing itself? The proportion of the economic pie given over to workers remains the same, but the pie itself is getting smaller. So for the workers themselves it makes no difference whether they're getting the same proportion of a smaller pie, a smaller proportion of the same sized pie, etc - wages are still stagnating. In order to make sure this couldn't be effectively opposed we got monetarist policies not just aimed at reducing inflation but also increasing unemployment to discipline the workforce and getting rid of some of the big (manufacturing) workplaces that had proved so conducive to trade unionism. And on top of that direct conflicts that smashed the most powerful unions, anti-union laws etc. So neoliberalism didn't cause these things but it helped remove effective opposition to them. All to make sure workers didn't demand a bigger share of a shrinking pie.

There's the trade side of it too - liberalization, deregulation of finance - and these are maybe best seen as means of allowing capital the freedom it needs to seek out the pockets of profitability that might exist around the world. In a lot of ways this was a reaction to what was already happening - with the Eurodollar markets taking control currency trading away from the Bretton Woods institutions etc.

So in other words neoliberalism is an attempt to make the system work under these conditions rather than the thing that created the conditions in the first place. Hardly a new idea but I'm just thinking about the ways in which this works at the minute.

I'd had some sympathy with underconsumptionist arguments before I read this but I've got to say now that they don't stand up to scrutiny. I had thought that the rate of profit fell to a dangerously low rate by the 70s and capital wasn't destroyed as it needed to be to revive it. But that in the 1980s, by increasing the rate of exploitation, this was revived to an extent. But that by increasing the rate of exploitation they reduced consumer demand and that was the (direct) cause of the last crisis. I now don't think that's the case but I do get very irritated that he seems to think anyone who has any sympathy for underconsumptionist arguments must be a reformist and keynesian. Especially as if they'd increased the rate of exploitation to get over the problem of a low rate of profit then keynesian solutions wouldn't help because they'd just take you back to the issue of low profit again.

I just think that at times he's deliberately controversial and (I suspect deliberately) says things in such a way as they could be easily misinterpreted.

I'll give an example. He says that the proportion of investment spent on productive capital went up over the period to the financialization thesis can't be correct. People misunderstand this and think he's saying that there was no increase in investment in finance - but there was. In fact both went up and they were able to both go up because people were borrowing more (a financial transaction) to fund production. Just a couple of extra sentences could have prevented that from being misinterpreted. I do get the impression that he does it on purpose so that people will attack him for it and then he can suggest he's being persecuted for being the last true Marxist in academia.

 

[xslavearcx]

Have only started reading this thread so apologies if this has already been posted.. Anyways i came accross this in Capital Volume 2 the other day and wonder if it bears relevance to the issues raised here. Seems on my reading to be challenging the notion of underconsumption

http://www.marxists.org/archive/marx/works/1885-c2/ch20_01.htm#4

Bottom of section 4

Every crisis at once lessens the consumption of luxuries. It retards, delays the reconversion of (IIb)v into money-capital, permitting it only partially and thus throwing a certain number of the labourers employed in the production of luxuries out of work, while on the other hand it thus clogs the sale of consumer necessities and reduces it. And this without mentioning the unproductive labourers who are dismissed at the same time, labourers who receive for their services a portion of the capitalists’ luxury expense fund (these labourers are themselves pro tanto luxuries), and who take part to a very considerable extent in the consumption of the necessities of life, etc. The reverse takes place in periods of prosperity, particularly during the times of bogus prosperity, in which the relative value of money, expressed in commodities, decreases also for other reasons (without any actual revolution in values), so that the prices of commodities rise independently of their own values. It is not alone the consumption of necessities of life which increases. The working-class (now actively reinforced by its entire reserve army) also enjoys momentarily articles of luxury ordinarily beyond its reach, and those articles which at other times constitute for the greater part consumer “necessities” only for the capitalist class. This on its part calls forth a rise in prices.

It is sheer tautology to say that crises are caused by the scarcity of effective consumption, or of effective consumers. The capitalist system does not know any other modes of consumption than effective ones, except that of sub forma pauperis or of the swindler. That commodities are unsaleable means only that no effective purchasers have been found for them, i.e., consumers (since commodities are bought in the final analysis for productive or individual consumption). But if one were to attempt to give this tautology the semblance of a profounder justification by saying that the working-class receives too small a portion of its own product and the evil would be remedied as soon as it receives a larger share of it and its wages increase in consequence, one could only remark that crises are always prepared by precisely a period in which wages rise generally and the working-class actually gets a larger share of that part of the annual product which is intended for consumption. From the point of view of these advocates of sound and “simple” (!) common sense, such a period should rather remove the crisis. It appears, then, that capitalist production comprises conditions independent of good or bad will, conditions which permit the working-class to enjoy that relative prosperity only momentarily, and at that always only as the harbinger of a coming crisis. [Ad notam for possible followers of the Rodbertian theory of crises.—F.E.]

 

[love detective]

Quite a technically comprehensive article by Kliman, in a kind of follow up/on from his recent book, demolishing the Monthly Review pushed underconsumptionist myth

More Misused Wage Data from “Monthly Review”: The Overaccumulation of a Surplus of Errors

The controversy over the underlying causes of the Great Recession has profound political implications. Marx’s theory of capitalist crisis has revolutionary implications, since it suggests that the crises result from the normal functioning of the system and are inevitable under it. In contrast, underconsumptionist theory lends itself to efforts to make capitalism work better.

I realize that much of this article will conflict with the preconceptions of people who have heard a great deal about the alleged success of the “neoliberal” assault on the working class, the supposed decline in workers’ share of output, their stagnating “wages,” and so on, but less about research that challenges these notions.

I plead with such readers to put their preconceptions aside and evaluate what Magdoff and Foster wrote, and what follows, on the basis of the evidence, the soundness with which the evidence is interpreted, and the cogency of the arguments. In a situation like this, it is wrong to dismiss evidence and arguments that conflict with what one already “knows” about this issue, or about the world in general, because what one “knows”––the question of whether it is actually correct or not––is precisely what is at issue.

 

[oskarsdrum]

Interesting debates on this thread, as well as Michael Roberts blog, Carchedi's "Marxist multiplier" etc.

One big thing that seems to be missing from the Kliman-Carchedi-Roberts position is situations where the state doesn't merely tax value from capitalists, but actually produces surplus value itself. This I think is the core of "green Keynesianism" as a tentatively possible route out of crisis, and is also relevant to the Norwegian and Venezuelan cases, where value from oil production fulfils a similar role.

The thing is, to the extent that the state can produce surplus value itself, the distribution of this value can be politically determined without hitting profit *rates*. Indeed it can actually improve profit rates at times by smoothing demand cycles and decreasing the amount of wasted production.

Of course it does reduce the mass of profit, because certain areas of production are taken out of the profit system. But rates not mass are the issue right?

It also separates profitability from social crises somewhat, since falls in profit --> capitalist investment cause less unemployment, loss of production and the rest of it.
Of course, that doesn't solve any of the political issues surrounding states, classes, society and socialist strategies. But it does suggest that the barriers are political rather than economic.

Pros of Kliman in my view:

- TSSI
- Focus on profit rates
- Empirical rigour

On labour and value creation. The "law of labour value" doesn't apply to anything that's copyrighted, does it (music/films being the most extreme case)? That's strucuturally decoupling labour time from price by institutional means. Seems very dogmatic to deny an effect of this on exchange value.

 

[oskarsdrum]

I meant to add, as an underconsumptionist of sorts I've finally accepted that there's something to K's point about the "social wage" including pensions being the relevant consideration too. Fair play to the fella.

 

[love detective]

quite a reasonable article by Kliman out today - which is tangentially related to the critique of underconsumption

Post-Work: Zombie Social Democracy with a Human Face?

summary is all that's required really to get the point of it

The basic flaw in the thinking of Kalecki, Graeber, and the zombie social democrats now, and of the Mitterrand government three decades ago, is political determinism. They think that the capitalists control capitalism––not the other way around––so that the system can become something it’s not once different people with different priorities assume control of it.

I on the other hand think that historical experience and a bit of reflection show that the system has a “logic” of its own, so that what must be replaced is the system itself, not just the current personifications of it. Technological possibilities notwithstanding, there isn’t going to be much progress toward a post-work society, or indeed a lot of other good stuff, until we grapple seriously with the fact that capitalism operates as it does because of its autonomous logic, not because of the specific priorities of those who happen to be running the system at any particular moment. If we don’t deal with this problem head-on, the inspiring post-work vision will simply degenerate into a slogan used by wannabe personifications of capitalism to win support for their efforts to replace the current personifications.

 

[Bernie Gunther]

They think that the capitalists control capitalism––not the other way around––so that the system can become something it’s not once different people with different priorities assume control of it.

Nail ... head ... etc.

 

[articul8]

SP(EW) leadership takes on Kliman:
http://www.socialistparty.org.uk/ar...s-of-capitalist-crisis-reply-to-andrew-kliman

Style doesn't do them any favours - guily by association, anti-intellectualism, strawman arguments...

 

[butchersapron]

I've just read the first half. It's embarrassing.

 

[butchersapron]

That is appalling. Like a religious tract.

 

[articul8]

Wallace etc are preparing a reply and it will be pretty savage. Interesting that it is playing itself in public

 

[butchersapron]

Is it? Not sure what 'it' even is.

 

[love detective]

i saw that piece this morning and had a quick scan through and thought it was dreadful, real cringe inducing stuff - not read it properly yet

Also one of the graphs that they use in the piece (by Husson) which shows the rate of profit rising throughout the neo-liberal period has since been repudiated by Husson himself as being incorrect (edit: after looking into this it appears it's not the case afterall)

 

[articul8]

Is it? Not sure what 'it' even is.

well alright it's not front page news (even in the Weekly Worker), but the factional organising is wide open on Wallace's is blog and on Facebook beyond the CWI page:
http://69.195.124.91/~brucieba/

Essentially the faction criticising the EC is saying that in practice the CWI leadership is abandoning Marxism in favour of using their position in the union bureaucracies to promote a warmed-over Keynesianism as a practical alternative - and the creeping "underconsumptionism" is the theoretical spadework necessary to justify it.

The EC is claiming Wallace (and Kliman for that matter) don't understand Trotsky's arguments for the transitional programme, and hence is coming out with a "one solution revolution" ultra-leftism which would isolate the party from even advanced layers of the class.

 

[love detective]

Great line this from the SP EC

...which is the conclusion that the working class would also come to with our help over time

 

[butchersapron]

Just uploaded

Can Income Redistribution Rescue Capitalism?

On Monday, September 16, Marxist-Humanist Initiative (MHI) will host a public discussion of Andrew Kliman’s just-published pamphlet, “Can Income Redistribution Rescue Capitalism?,” which challenges Monthly Review’s account of the latest capitalist economic crisis. The claims made by the Monthly Review school have dominated the U.S. Left’s thinking for decades, but the pamphlet argues that its account of the crisis, and others that similarly attribute the crisis to rising income inequality, are riddled with a great many serious deficiencies – factual, theoretical, and political. The pamphlet suggests that the crisis is instead rooted in the decades-long decline in profitability and associated problems within capitalist production. What is at stake is whether the prevalent Left goal of income redistribution could actually solve the current economic crisis and prevent the recurrence of similar crises. Before embracing such notions, it would do us all good to carefully scrutinize the factual and theoretical claims that underlie them.
Open discussion will follow presentations by the author and Mike Dola.

 

[SpineyNorman]

Fuck's sake

 

[love detective]

Not only is it a woefully poor article, but part of it seems to be a plagiarised (directly in parts) from other people

This for example:-

In order to prove that the working class's share has not fallen - contrary to what most workers instinctively believe and feel - Kliman invokes the evidence of Martin Feldstein, then president of the National Bureau of Economic Research, who wrote that it is a "measurement mistake" to "focus on wages rather than total compensation," and that it "leads to a mistaken view of how the shares of national income have evolved."

What Kliman does not say is precisely who Feldstein is. He is, in fact, an extreme reactionary economist who has dedicated his life to defending and prettifying US capitalism.

Marxists, it is true, often quote bourgeois economists when these economists' research exposes some of the truths about capitalism and its exploitation of the workers. But it is another thing entirely for a Marxist to quote reactionary economists when they use statistical data in a way that actually strengthens their defence of capitalism. Kliman's conclusion is strongly in line with Feldstein's natural ideological bias.

http://www.socialistparty.org.uk/ar...s-of-capitalist-crisis-reply-to-andrew-kliman

Kliman disagrees. He thinks that if anything the rate of surplus value, at least in the U.S., has fallen over the last 40 years. In attempting to prove this, he quotes economist Martin Feldstein as an authority. Feldstein wrote that it is a “measurement mistake” to “focus on wages rather than total compensation.” Feldstein complains that this has “led some analysts to conclude that the rise in labor income has not kept up with the growth in productivity.” (p. 153)

Kliman doesn’t inform his readers that Martin Feldstein is an extremely reactionary economist who has dedicated his life to defending and prettifying U.S. capitalism, though he does mention that he was the head of the National Bureau for Economic Research. (2)

Marxists, beginning with Marx, have often quoted bourgeois economists when these economists’ research exposes some of the truths about capitalism and its exploitation of the workers. When the hired apologists for capitalism are obliged to admit a portion of the truth about the exploitative nature of capitalism, it is especially telling. The more reactionary the particular apologetic economist is the better.

But for a Marxist to quote reactionary economists when they use statistical data in a way that actually strengthens their apologetic views of capitalism is rather unusual, to say the least. While we can’t prove that American capitalism has grown more exploitative simply because Feldstein (3) claims it hasn’t, Kliman’s conclusion is strongly in line with Feldstein’s natural ideological bias.

http://critiqueofcrisistheory.wordp...apitalist-production-by-andrew-kliman-part-3/

 

[Idris2002]

The NBER looks like a non-partisan or perhaps even public body - but it was set up in FDR's time by anti-New Deal captains of industry. So yes, it probably is geared to the defense of reaction on all fronts.

The specific points it makes, or that people make on the basis of its research, however, need a rebuttal of their own: you can't just cut to the chase and assume that because it's a point from the reaction machine that it must be wrong. You have to prove it wrong.

"Edna, these children have no future. . . Prove me wrong kids, prove me wrong!"

 

[love detective]

Re the plagiarism - the SP today added this footnote to the piece

Andrew Kliman has criticised us for not crediting Sam Williams for the points of his we cite when the document was originally posted on 20 September, 2013. We are happy to do so and did so in earlier drafts, but this was inadvertently omitted from the text when it was initially posted.

weasel poor excuse by the sounds of it

 

[articul8]

Why did they slightly reword rather than quote his original formulations then? Caught out

 

[butchersapron]

Sub-editors fault again.

Busted.

 

[deke t lefel]

quite a reasonable article by Kliman out today - which is tangentially related to the critique of underconsumption

Post-Work: Zombie Social Democracy with a Human Face?

summary is all that's required really to get the point of it

interesting how capitalism is almost credited with a life of its own
for the love of money!

 

[love detective]

it's an accurate observation though - similar to how religion is (or was)

just like religion, capitalism is a set of relations produced and reproduced entirely by human beings which in turn leads to the alienation and externalisation of all that is good and powerful in those who produce it

it produces a system that dominates all those who produce it (both capitalists and labour), so much so that to all intents and purposes even though objectively it doesn't have a 'life' of its own, the system functions in such a way that is almost indistinguishable from something that has been endowed with a life of its own

 

[Hocus Eye.]

Isn't it about time that a mod corrected the typo in the spelling of Kliman's name in the header of the thread?

 

[butchersapron]

interesting how capitalism is almost credited with a life of its own
for the love of money!

It has a series of internal drivers that forces owners of capital to act in a certain way. This appears as choice and is the source of the naturalisation of capitalist relations. It's the opposite of freedom but appears as total freedom.

 

[deke t lefel]

it's an accurate observation though - similar to how religion is (or was)

just like religion, capitalism is a set of relations produced and reproduced entirely by human beings which in turn leads to the alienation and externalisation of all that is good and powerful in those who produce it

it produces a system that dominates all those who produce it (both capitalists and labour), so much so that to all intents and purposes even though objectively it doesn't have a 'life' of its own, the system functions in such a way that is almost indistinguishable from something that has been endowed with a life of its own

the wheels of capitalism certainly seem to be turning outside of human consciousness, however, if capitalism has taken on some sort of autonomous logic, acting as if it has a life of its own, then this has most likely been imparted on it by humans; capitalism is an effect not a cause

 

[love detective]

if capitalism has taken on some sort of autonomous logic, acting as if it has a life of its own, then this has most likely been imparted on it by humans

that's what I explicitly said in the post that you replied to!

capitalism is an effect not a cause

Well clearly if something is given life by something else then that thing is an effect of the thing that gave life to it, that's just saying the same thing back in a different way

however I would say that a capitalism that is established is both cause and effect in that it is both determining and determined, conditioning and conditioned etc..