Mid-term

Received this response to the Mid-term exam, from power-lifter/class-struggle militant Broletariat  :

"The falling cost of energy in the US as a result of the shale revolution was supposed to encourage the relocation of operations from both domestic and foreign companies.  For example numerous energy intensive firms, such as petrochemical companies, were expected to build new plants in the US as a result of changing economics."

Overproduction from too much Capital invested into shale resulted in the falling cost of energy. Therefore more investment into yet more efficient means of production was expected. Cheaper labour locally doesn't hurt either (changing economics).

"At the same time, technological breakthroughs encourage even old economy companies such as carmakers to expand or shift production to the US to take advantage of the latest trends."

Sounds like yet more investment which will inevitably result in overproduction to me. Also cheaper labour prices in US seems to be masked as the 'latest trend'.

  "Quantitative easing was supposed to encourage manufacturers to expand capital expenditures given the low cost of capital."

Interest rates are low because the rate of profit is low to encourage more investment to lead to more overproduction down the road.

Overproduction is an episodic moment, as opposed to  a chronic condition, in capital accumulation.

Overproduction is always threatening valorization. Movement of Capital everywhere is always trying to dodge overproduction by investing in more production typically, or by destroying the means of production exceptionally (perhaps not though, my conception of destroying the means of production is pretty single-mindedly aware of world wars as an example of such destruction).

Overproduction is the overproduction of use values beyond the effective demand of society. 

The overproduction of use-values merely implies the overproduction of the means of production as capital. Capital is unconcerned with the use-values it may produce, indeed, Capital is unconcerned with even the exchange-values it may produce, so long as these exchange-values will enable a favourable rate of profit. The root problem of overproduction is the overproduction of the means of production as Capital, which you have very well emphasized. Because there are too many means of production, the value invested into them cannot be realized except by choking wages or kicking the problem down the road by investing in more means of production if at all possible.

Overproduction of capital is separate from overproduction of commodities.  It has a different origin, and different resolution.

I think this was answered sufficiently above. The origins and resolutions are the same.

Overproduction occurs when capital runs up against the limits to population growth.

This sounds like an echo of Rosa Luxemburg's saturated market theses. Needless to say, production is always an act of consumption as well, so population growth is not the limit. Capital itself is its own limit to growth.

Overproduction cannot reach "criticality" until capitalism has penetrated the entire globe. 

I think this is patently false as multiple instances of crisis have occurred before the penetration of capitalism into the whole world.

 

I'm sorry Arty but I liked my format for answering the questions better than giving a single essay for my answers in section B. Fail me if you must :(\

No failure,  Brol'-- extra-credit in fact for structuring the responses in the manner you thought best explained the issue.  One thing:  be careful with this:

 Needless to say, production is always an act of consumption as well, so population growth is not the limit. Capital itself is its own limit to growth.

Same argument-- "production is always an act of consumption" has been used in an attempt to refute the possibilities of generalized overproduction under capitalism.    Production always conditions consumption, but is not necessarily coterminous, proportional, coincident with, nor the purpose of, capitalist production.   

Excellent answers,  and a gratifying moment for teachers everywhere.

S.Artesian 
February 14, 2016 

 

Short Course Midterm: Grades, Curves, Pass, Fail

Section A:  Demystify the following statements

1. "The falling cost of energy in the US as a result of the shale revolution was supposed to encourage the relocation of operations from both domestic and foreign companies.  For example numerous energy intensive firms, such as petrochemical companies, were expected to build new plants in the US as a result of changing economics."

2. "At the same time, technological breakthroughs encourage even old economy companies such as carmakers to expand or shift production to the US to take advantage of the latest trends."

3.  "Quantitative easing was supposed to encourage manufacturers to expand capital expenditures given the low cost of capital."

Section B: True or False, or both, or each exists in the other

1. Overproduction is an episodic moment, as opposed to  a chronic condition, in capital accumulation.

2. Overproduction is the overproduction of use values beyond the effective demand of society. 

3. Overproduction of capital is separate from overproduction of commodities.  It has a different origin, and different resolution.

4. Overproduction occurs when capital runs up against the limits to population growth.

5. Overproduction cannot reach "criticality" until capitalism has penetrated the entire globe. 

Section C:  Essay 

In a single essay, explain the reasons for your answers in question 1-5 in Section B. 

Lesson 10

Received from D:

"China Labour Bulletin detected a “massive upsurge” in worker unrest in 2015, recording 2,774 such incidents, twice the previous year’s figure. 

“Part of what is going on here is they are trying to figure out a way to send this message to workers that strikes are going to be treated increasingly as criminal events, which has not really been the case that much over the past 15 years,” Friedman said."

http://www.theguardian.com/world/2016/feb/02/he-xiaobo-the-latest-victim-of-chinas-crackdown-on-labour-activists

Thank you, D. 

Lesson 9

Lesson 9 is.....where you (plural) develop your own lessons for the short course on overproduction and submit them to TWR for presentation as Lessons 10, 11,.......x.

You can submit then anonymously, with a pseudonym, your name, no name, for withholding/publication as you see fit.

S. Artesian
February 1, 2016

Address all correspondence to:  sartesian@earthlink.net

Short Course on Overproduction, Lektion Acht

The Wall Street Journal, Friday, January 29, 2016

  Slowdown in China Chills Germany 

German exports to the important Chinese market are suffering their sharpest drop in a quarter of a century, casting a shadow over Europe's biggest economy and showing the global impact of China's slowdown.

With new order from China and other emerging economies sagging, German businesses fear the bad news is only beginning, data and surveys released in recent days suggest.

Two charts complement 1000 words, more or less.  In this case less.

Russia, we know about.  Sanctions.  Price declines for natural gas and oil, which account for 1/3 of Russia's GDP.
China, the big chill.
Brazil, last century's China, in deep recession.
Eurozone, a domestic market, more or less, for Germany.
The UK, the benefits to Germany of an uncommon currency.
The US, see above. Vielen Dank, Herr Draghi...und Frau Yellen

And the difference  in China's imports:

Metals, autos and auto parts, machinery all down.  Some decline due to China's own development? Due to production from foreign direct investment?  Perhaps some, but certainly not to at these volumes, at these rates.

Clothing, pharmaceuticals, food up.  Pharmaceuticals a bit higher on the value chain.  Food and clothing?  Despite the rhetoric repeated periodically since 2008, about China developing its domestic market, that consumption will replace exports as the driver of the economy, the reality is that the domestic market is severely circumscribed by low productivity in agriculture made manifest in the small size of the average agricultural production unit.  

 German exports to the US and many other markets are still growing.... But with much of Europe still licking its would from the eurozone debt crisis, business confidence in Germany is vulnerable to continued cooling in Asia.

"The overall situation in China is depressed," said Ulrich Reifenhäuser, a management board member at machinery Reifenhäuser Group..."I see very few orders in the near future."

...Barring an improbable spike in December, German exporters took a bigger hit than during the 1997 financial crisis when exports to China fell 2.4%.

Above all, capital-goods sales to Chinese factories are down, as overcapacity there takes its toll on investment spending.  And German and other European companies say they expect exports to weaken further...

"China is suffering from massive overcapacities," said Olaf Stalfort, head of sales and marketing at SMS group which builds steel plants and rolling mills.  "The consolidation of the Chinese steel industry is still ahead of us," he said....

At DELO, a company near Munich that makes adhesives for electronic devices, exports to China have risen about 10% since April.  "The Chinese would rather cut back on food than make do without their smartphones," said DELO managing partner Sabine Herold.

You wanna bet?  See latest sales figures for the IPhone 6.

Ms. Herold said complacency about China's economy would be a mistake and her company is trying to expand elsewhere.  "We are targeting Vietnam, Indonesia, the Philippines and Thailand."

Clever. Going after the same territory that Japan went after for its the Greater East Asia Co-prosperity Sphere.

Meanwhile:

China's Workers Fall Back on the Countryside They Left

As jobs dry up in Chinese cities, migrant laborers are bearing the brunt of the country's economic downturn

In years past, China's rural economy has soaked up unemployed returnees as they bided their time for another urban stint.  This time, however, Beijing is struggling to prop up growth that has sputtered to its slowest pace in a quarter century.  Worse, as China has pushed to urbanize, rural areas are no longer able to absorb so many returnees.  Roughly 55% of China's 1.37 billion people now live in cities, compared with just under 18% in 1978.

Older workers say that they can't live off the unproductive farmland they still own and have neither the skills to switch jobs nor the capital to start businesses...

The disparity between rural realities and urban dreams has "created a peculiar dilemma for migrant workers," said Wu Guijun, a migrant worker turned labor activist in the industrial Shenzen.  "They find themselves caught between cities that are too costly to live in and villages that are impossible to return to."

One consequence is rising worker unrest.  Job losses and unpaid wages, particularly in China's construction and manufacturing sectors, have fueled thousands of protests over the past year.  The turmoil has worsened in the weeks before the New Year as migrant workers press their deadbeat employers for unpaid wages before heading home....

"In this day and age, it's impossible to just live off the land," said Yu Dengliang, a 43 year old construction worker from a small village in central Henan province, whose earnings have fallen by more than two-thirds in the past year.  His small cornfield typically yields a few thousand yuan in revenue a year, grossly insufficient for his family of four.

"We have no pension, no savings.  What business can we start?  Who would lend us the money?" said Mr. Yu as he waited outside a railway station in Beijing for a 10 hour train ride home."

Not long ago, journals, electronic and print, were reporting on the looming shortage of labor in China; on the downside of the one-child policy; on depleting the supply of labor from the countryside which in turn was creating upward pressure on wages.

There is no shortage of labor.  No pension, no savings have been the social basis for China's economic "miracle,"  and this "broken rice bowl," replacing the iron rice bowl, has given all it can to the accumulation of capital.  China's emerging, and emergent bourgeoisie, now face the problem the bourgeoisie have been incapable of resolving for one hundred years; the problem which, whenever capital makes even a feeble gesture towards, explodes in class war; the problem of revolutionizing the relations of agricultural production, of emancipating labor from subsistence, starvation, scarcity-- emancipating labor from capital itself.

S. Artesian
January 31, 2016

Lesson 7: Écoute et répète

Not so long ago many were marveling at the "economic miracle" that was China.

Many noted China's immense accumulation of foreign currency reserves, most of which were in dollars.

Many asserted that China's outsize holdings of US Treasury debt instruments, and holdings of US government sponsored agencies debt, made China the banker for a declining, decaying, US capitalism that was parasitic not just upon the labor of workers inside and outside its borders but parasitic on the "emerging market" capitalisms-- the BRICS-- with China the biggest brick in the bloc.

A few disagreed. 

A few argued that China held US currency reserves, that it invested those holdings in US debt markets; but...

In reality, China owned almost none of those currency reserves.

A few argued that China's holdings of US debt securities were nothing more than reserves against claims made upon it, China, by capitalists foreign and domestic for their hard currency earnings generated through foreign direct investment, through production for export.

A few argued that the People's Bank of China held in essence demand deposits.

A few argued that China invested in US debt securities because those securities were liquid, that China's currency reserves were, in essence, friable, requiring but little pressure to crumble and become a river of dust, draining away.

 Écoute et répète:


The Wall Street Journal, Thursday, January 28, 2016

Beijing Moves to Slow Money Outflows

China is ramping up efforts to halt a flood of money leaving the country in response to an economic slowdown, moves that risk undermining Beijing's ambition to elevate the yuan's profile on the world stage.

Its latest steps involve curbing the ability of foreign companies in China to repatriate earnings, shrinking the pool of Chinese yuan available for banks in Hong Kong to make loans, and banning yuan-based funds for [sic] overseas investment, people with direct knowledge of the matter said. 

The measures, most of which haven't been publicly disclosed, follow efforts by China's central bank to discourage investors from betting against the yuan and to crack down on overseas money transfers.  They're sparing no effort to prevent capital outflows,' said a senior Chinese banking executive close to the the central bank..." 

The people with direct knowledge said the People's Bank of China, the central bank, also is considering ways to lure money back to the country, including letting foreign residents and companies buy certificate of deposit for fixed periods.  Currently they are restricted to ordinary deposit accounts....

In its latest efforts, the central bank instructed banks on the mainland to require more detailed documentation from corporate customers to remit profits back to their home countries...

Écoute et répète

S.Artesian
January 28, 2016

This is Where It Gets You....

This where all the puffery about "saving Europe," about the nobility of the project for a united Europe; where all the sham (self-)advertising for a "real movement" for a "true" European union; where all the gasbags passing all that wind about "European democracy" gets you...if  you're not one of them, those noble, puffing, evangelizing, gasbags spewing the noble gas...

It gets you penned in Turkey or Jordan; or it gets you drowned between Turkey and Greece; or it gets you penned again in Greece; or it gets you turned back at the borders of a supposedly borderless Europe; or it gets you separated from your valuables, from any valuables you might have happened to salvage from your home before it was pulverized, bulldozed, bombed, torched, willy-petered,  by the great noble united, democratic Europe with the value realized to "offset" the cost of.......keeping you penned.

You wealthy bastards fleeing ISIS, or Assad, or the government of Iraq, or the Taliban, or Mubarak, Morsi, or el-Sisi or the government of Afghanistan, or the decimation of subsistence economies in Africa, courtesy again of those great western democracies, hand it over. 

Welcome to Denmark: Up against the wall and empty your pockets.  Now strip.  You need a shower.  After that, you will see our camp dentist who will remove any gold fillings you may have in your teeth.  You will receive a bill for his services, which you can pay in installments, or with that boatload of diamonds you swallowed on your way through Macedonia.

Or it gets the mass of you...expelled, mass expulsions being so humane that Donald Trump hasn't even thought of it.  Yet.  But since he knows what he knows from watching cable or satellite news-- soon to be unveiled by the Make America Great Again candidate, mass expulsions of those who weren't in the US when it was great.... whenever that was.  Never?  Never say never, or you'll get expelled too.

This where the whole shitload of "democratic politics" of "labor politics" of "left-winging" it, of "socialist" parties of the old type, of "people's parties" of the new type, gets you-- paying Jacks-the- Rippers for the costs of their razors.

S.Artesian
January 28, 2016