a smart capitalist speaks

This is an interesting quote, but I really wish people would post sources when they post things like this. Just seeing a fragment quoted out of context without any indication of its source makes it difficult for interested readers to follow up and dig deeper (and also can make the poster seem suspect, irrespective of the poster's intentions, since this is a frequent tactic of dishonest individuals who misrepresent people by quoting things out of context).

I admire much of what aaron says. But I dislike his use of that leftist cliche, "crisis". Imperialism in crisis. Capitalism in crisis.

Leftists have been saying that capitalism is in crisis almost since it began. In the US, serious charges of "crisis" have been made since the early Seventies. A thirty-year run of crisis? Sounds pretty good. Eventually, you lose credibility, like millenialists who keep pushing the date back as the world repeatedly fails to end.

The word "crisis" is supposed to refer to a point of imminent change, when the situation will quickly get either much better or much worse. Neither has happened for thirty years. (The position of the working class has slowly gotten worse, but capitalism seems to be chugging along just fine, and if anything is healthier than it seemed in the early Seventies.) So it hasn't been a crisis.

I don't think that the Bubble is entirely false, but I like what Greg Palast had to say in "The Best Democracy Money Can Buy" (pp. 299-300):

The Bubble Theorem is the creation of good-hearted souls of the Left made ill by the orgy of monstrous increases of wealth for a few and begging bowls for the many.... Yet the 2001-2002 "collapse" of the stock market barely dimpled the overall rise of equity values seen over the decade.

The belief that a Price Must Be Paid is religion, not economics - Calvinism dressed up in Marxist clothing. What the Bubble-heads fail to accept is that the class war, as Messrs. Bush and Clinton have told us, is indeed over - but not because we have reached a happy social entente. Let's face it, the working class has been defeated soundly, convincingly, absolutely.

...

Not coincidentally, the rise in the riches of the rich matches quite well with the wealth lost by production workers through the shrinking of their share of the production pie. U.S. workers are producing more per hour (up 17 percent since 1983) while keeping less of it (real wages are down 3.1 percent). So there you have it: The market did not rise on a bubble of fictions but on the rock-hard foundation of the spoils of the class war.

'a':
thanks for the response.

I'll agree with you that bandying around the word "crisis"--or hitching too much politically to its existence or lack thereof--can be problematic. It is true that as long as capitalism has been named and analyzed as such there have been people declaring that it's in crisis. This line of argument can border on tautological since many anti-capitalists (and in particular, marxists) understand capitalism as a system of perpetual crisis--to exclaim that it's in crisis, then, becomes little more than a restatement of the catechism and hardly a sign of rigorous analysis.

Two years ago I had never declared that capitalism was in crisis, and put no stock in it being or not being crisis-prone. Having done a lot of reading and research on the state of the global capitalist economy in the past year and a half, I now occasionally shout "crisis!!" on a crowded web-site because there seems to me to be preponderant evidence that capitalism is, indeed, in a meaningful sense of the word, in crisis, but even more so, because I feel like laughing at all those who gloat that capitalism--american style--is omnipotent and irreproachable. I guess you could say I'm counter-gloating. Constructive? Probably not terribly....

My dictionary defines 'crisis' as "an unstable or uncertain time or state of affairs". Now, by this definition, crisis seems like an appropriate description of capitalism today. The short list of "challenges" now facing capital that I scribbled above are something more than what could be emunerated in 1993 or 1983. Many radical theorists--and even some not-so-radical theorists--define the US' post WW2 boom as lasting from 1945-1973, and, while there are many many differences in opinion as to why profits in manufacturing began to decline in the late 60s (i remain agnostic), almost all agree that the crisis of the 70s was, first and foremost, the direct result of profit lethargy in the manufacturing sector. Once capital could no longer maintain growth and rate of profit that existed from the mid 40s through the late 60s, the incentives to intensify the war on the working class increased massively, starting in particular in the late 70s with Volcker's engineered recession and Carter and Reagan's attacks on the social wage, to capital's union-busting, accelerated flight to cheap-labor sources, general work speed-up, etc etc--all the way up to Clinton's "welfare reform" and deregulation to Bush's good ol' boy giveaways to capital.

Whereas between 1945-73 corporate profits and real wages rose concurrently, since around 1973 there's been a break-down. Between 73-95 real wages for American workers declined while sustained rate of profit for capital, certainly helped by the full-scale war waged against labor, has been far less impressive than it was in the post-war boom.

The great 95-00 "hi-tech boom", that we were all supposed to be so impressed by and which market ideologues claimed was capital's vindication, turned out to be a speculative frenzy and bubble of awesome magnitude. (While a section of the working class in the late 90s saw some wage inflation, for most, the 90s boom meant, more than anything, exploding housing costs, long work-hours, increased indebtedness, etc etc.)

In addition to waging intensified war on the working class, capital has attempted to overcome profitability problems through expansion in space and time (not that this is entirely new). Radicals spend a lot of time emphasizing the imperialist nature of American foreign policy--this is in a sense, the 'space' dimension. But the temporal fix--through debt and finance--also seems really significant. I don't claim to fully understand this stuff, but there seems to be a move toward the pumping up of asset bubbles and massive infusion of debt in lieu of sustained, rising profits (the life-blood of capital). The American economy, as i stated above, sits on $31 trillion of debt; the average US household saw its credit card debt increase from approximately $2,800 to $8,100 between 1990 and 2002. Corporate debt has increased at a similar astronomical pace. In the past couple of years, as capital spending stays in the gutter (think: excess capacity all around), housing prices have continued to rise, rise, rise, stimulated by cheap financing. Indeed, housing inflation has been what's kept "consumer spending" still going as mortgage debt blows off the roof (and unemployed folks take out equity on their homes to buy dinner!). As US assets look increasingly risky to foreign investors (who own an increasing portion of US debt), the threat of a credit crunch seems very real....

Where this will all go is unclear, and, yes, capital may mull through this latest "rocky patch". We know how it will attempt to do this: by wrenching more out of workers for less.

there's more to say as always (on Palast one quick thing: the working class may have suffered terrible defeats in the past decades, but to say it has been defeated "absolutely" is utter bullshit, and particularly irritating coming from a left-liberal who, from what I can tell, has know substantive criticism of "organized labor" in the US).

but since it's late and i'm not even sure that 'a' is listening i'll call it a night.

sorry for being long-winded.

Oh, and to "curious", the author of the above quote is Doug Noland (not Nolan, sorry) and he can be read here in the top left column (i recommend this site for news on the economy):

http://prudentbear.com

> but since it's late and i'm not even sure that 'a' is listening

Of course I am. Great explanation. Thanks.

> Having done a lot of reading and research on the state of the global capitalist economy in the past year and a half,

Any particular sources or authors you'd recommend?

> capital has attempted to overcome profitability problems through expansion in space and time ... the temporal fix--through debt and finance ...

Hmm. I always understood capital's expansion through time more literally. The move to more 24-7 services (including, of course, stock trading), the acceleration of production, communication and transportation improvements, just-in-time manufacturing, etc. Real-time monitoring of global production is an example of both time and space compression. The Internet is an example of time compression and, in some ways, a total obliteration of the significance of space (distance).

What intrigues me and what I have not heard a lot of analysis of is capital's latest expansion by smashing taboos. People the world over are horrified by the idea of privatized water systems, a recent "growth" avenue for capital. Even people in the West, to whom the natural world has long ago been made profane, sense a certain sacredness inherent in water, its symbolism of life, that makes its use as a commodity for profit offensive at a deep level. At the same time, though, Americans have increasingly bought bottled water at prices higher than that of gasoline.

Another barrier or taboo that capitalism is breaching is that of the body. Tattoos, piercings, and other body modifications used to be a seedy niche, a gray-market business. Now they're commonplace. Far worse is the expansion of plastic surgery to make women in silicone-copy clones of a certain unrealistic ideal. At least traditional body-mods are (or used to be) about looking different, about non-conformity and individuality.

The other major taboo is related to both the first two - DNA. Perhaps this can viewed as another element of space expansion - expanding down into the microscopic reaches of the cell, and colonizing the "territory" of bio-information. Capital is attempting to "own" even naturally occurring sequences of DNA that may serve as markers for disease, and is altering and re-mixing DNA in order to "own" newly created organisms. This expansion into microscopic space is also seen in attempts at "nanotechnology".

Another prominent trend is continuing proletarianization, not just in the Third World, but in the West as well. See "The Maturing of Capitalist Agriculture: Farmer as Proletarian" by R.C. Lewontion, in Hungry for Profit: The Agribusiness Threat to Farmers, Food, and the Environment. Capital is also re-conquering some elements of the petty bourgeousie, e.g. doctors, who may still be well-paid but whose control over their work is being eliminated by HMOs.

The author of that article is R.C. Lewontin, a famous evolutionary biologist.