- Capitalism and Alternatives -

it was comprehensiive, shame about the ending

Posted by: Gee ( si ) on July 01, 1999 at 13:35:12:

In Reply to: Short points... posted by Red Deathy on June 30, 1999 at 21:10:30:

: No, they need to have more profits, otherwise they are run out of the race by other firms, and money will go to teh firms with the biggest profits, and who are making the biggest returns, shrinking mean a short term windfall (hence asset stripping), but overall, the market pushes firms to ever increase their sales and thus profits.

Your a little out of touch here, you say "money will go to teh firms with the biggest profits, and who are making the biggest returns" when these two are not necessarily hand in hand. Shrinking can make companies more profitable and have higher returns and more over - they leave gaps in their abandoned markets for other smaller firms to enter. Observe some large electronic companies like Philips, GEC and shrinkaholic Siemens - not only do they shrink, they increasingly contract with smaller companies to supply bits.

: Survival means growth, standing still is death.

A little obsessed with 'growth' when high returns means success in attracting capital, where size doesnt matter quite so much.

: I'd agree with that, but best safety is in growth.

and the best growth is available to companies protecting from competition by force (law)., the only other way is to actually be better at providing utility to consumers - thats jolly hard work, lunch with the senator isnt.

: That comes from the increasing cost of R&D.

Good way to combat them that oversized companies wot wot!

: No, but it means that when teh market is saturated, production cannot be cut back, because you'd go out of business, be competed to death. Hence why capitalism cannot *avoid* over-production, and why its not an accidental misapplication of resources.

You say 'capitalim cant avoid it' but companies can, and do. Most examples of gorss over production (food, cars etc) are strongly linked to interventions of force - CAP in Europe, motor vehicle industry protections in Japan, USA and Europe.

: Indeed, but many people are not willing to give up homes, and other 'essential' commodities in order to buy. And some people just don't have the money, and would never get it.

They dont have it (evidently) and the opportunity cost of getting it is too high. Genuine poor peoiple get a bad rap because in the west there are a significant minority of people for whom the opportunity cost (getting off ass) is just too much effort - this poisons the well for the Billion other poor, obscures the picture. People (in the west) who have experience with the deliberately poor develop an association of 'poor' with laziness which is only accurate when directed at a small percentage., wlthough im sure someone could, has, and will blame laziness on improper socialisation or something. I know Hitler did.

: Costing less means eitehr paying workers less, or improving tech,

Notably thr latter

:. But you always have to push to the limit of effective demand, otherwise someone else will. If you find a niche, fine, add an extra option in. But a niche could disapear when banks call in loans, when workers wages start falling, etc.

All markets are niche like, except those where the product is identical (eg bananas) - thats where your troubles come. take perfumes - and whilst the market is for perfume, all the products try and differentiate, become niche like. Niches grow out of product differentiation and innovation.

: I didn't say that, increased profitability might mean more workers, and increased tech might just mean deskilling for many.

and upskilling for more.

: The aim is not just to increase productivity, but to increase productivity and regain a wider Rate of Profit off it- so any increase cannot be met with a concurrant increase in wages, the ratio of wages to output must decrease.

not where the wages form a small part of overall costs. Even where the ratio of wage to profit becomes wider the wage can be going up very impressively (eg software). Lowe wages does produce higher profits (ceteris paribus) but the market rate for the kind of labor needed means just lowering wages doesnt work - there are not sufficient workers of the skills needed around.

: Except that would case overproduction, and say, 5 men are producing commodities as can't be sold.

They can, in exchange for what the other 10 fellows are making. A global economy does better where the rate of productive output increases at a roughly similar rate. Where one sector races ahead it tends to 'spill its guts' all over the market (eg electronics a few years ago) because there is insufficient wealth to exchange with, so the extra goodies become devalued. However the interpretation that this is a crisis and that production is too high is looking it the wrong way round, instead of supressing successful production its better to match it with exchangable value. If egalitarians looked at it this way I might be more open to it, but I usually hear arguments amounting to 'stop it all' which simply reduces global wealth and like it or not, that is not what people are showing interest in with their effective demand. To stop it or slow it down means those people will have to stop or slow their consumption of stuff they evidently want, and that requries either a massive change in the way individuals behave (in turn a change in values, core beliefs etc) or a vicious authoriatian approach. the first I find hugely unlikely and the second I find horrific.

: Yes, sometimes new markets emerge,

Pretty consistently

: War simply turns the clock back, it does no favors - it destroys capital.

: In growth terms, yes, it is good, especially if your side wins, because it creates room for expansion, if *your* assets haven't been destroyed.

Hence my distaste for nationalism and national politics. The net difference is a loss of capital, but you end up with a bigger share of a smaller pie.

: It does happen, but it doesn't mean the end of capitalism, it just means its hit a periodic hitch in the cycle, the trend of growth is upwards, but with periodic slumps that badly hurt the working class, '68, '73, '82, '90(ish)- the 1930's. Capitalism picks up afterwards, but the dmage is socialised first.

The working class recovers pretty well too, I know Ive said it time and time before but compare a working class household now with one from 1899. you cannnot argue they suffer unless you say they 'suffer' in terms of money volume difference with the exceptionally rich.

: No, because the rate of profit is the rate of added value, and as an industry progresses, less value is added.

More value is added, and cyclically bolstered by innovation among other things.

: But once organisation has been invented/done, its value drops.

Except that they dont stay the same. they are re-valuing constantly.

: Thats teh dead labour, labour allready done else place, repositories.

Nothing wrong with that. Should a bridge fall once it has been made? Its value is in its utility to others, the value in creating a machine is in its usefulness plus longevity, all for $395.95

: and mechanisation filters back all the way through teh production system, less value is being added overall, and less value is being realised on the market.

More value (utility to consumers) is added, if you mean that many products (eg videos) are cheaper in terms of exchange value then all the better for a consumer who now has to work one week for a video, rather than a month.

: No, because although more can be put out, less labour is added by humans. Machines don't add value, they simply transform themselves, and donate value.

Doesnt really counter that unit profit can and does go up for soem prods, and down for others - its not a universal law.

: The point was not to damn machines, but rather to source the point of unemployment. Its doesn't reside with lazy workers, but with market conditions. Machines are marvellous, and make work easier, except workers don't experience them as such, since they are a de facto threat to their livelihoods.

Except they are not as we see below. It may mean no more money wrench factory line work, but the 'scrap heap' is eagerly petitioned by other employers. hence what I said about McJobs in the original post.

: I mean people hired to help break a strike. And they can be hired for unskilled work, and as things progress, it means more skilled folks have a harder time finding emplyement...

People who 'help break a strike' by working for a lower wage than the strikers send an importany challenge to the strikers in questioning the validity of their demands, pretty much "if Im happy to do it what do you expect", throwing bricks at their cars and through their home windows displays the frustration of strikers in essentially saying "you must sacrifice yourself for me". Valid strikes are those where no one else is remotely happy to work for them, then the employer is sent a message that they have got it all wrong and better buck up their ideas etc.

: Nothing you've said disprooves what i offered as general trends (some of it confirms it). Mostly your points have arisen out of the generality of the post, more than any inherent flaws in the argument.

It was disappointing to read this assertion after I had shown that companies dont automatically grow until they burst, that machines dont destroy all peoples wages and that exchangable value doesnt have some pre-detemined ceiling - all of which are fairly fundamental assumptions in your original model. I would be interested to know the source of this model and its current application and analysis because I think its far too narrow to be applied universally. You might successfully apply it to one industry sector or some company casestudies but it doesnt really extend to global economic activity. I know its an important part of your understanding of how the world works, and I would not simply deny it out of hand (i didnt) but I think you should question it more closely before asserting that the above points arise "out of the generality of the post, more than any inherent flaws in the argument"

Follow Ups:

  • Really? Red Deathy Socialist party Uk July 01 1999 (3)
    • jawol Gee si July 01 1999 (2)
      • Nein! Ach! Red Deathy Socialist Party UK July 01 1999 (1)

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