Productivity and the Crisis of Capital

It is truly telling when even capitalist wonks are making the same critiques (with some of the same conclusions) of the financialization of capital as Marxists have been all along. The fellows at Minyanville fall into that category and have these interesting posts over the past two days:

Kevin Depew:

Eric Weiner in an article published in Tuesday's LA Times (Use time wisely -- by slacking off) writes, "Attitudes toward work differ not only across time but also place. Corinne Maier's appropriately slim volume, "Bonjour Laziness: Why Hard Work Doesn't Pay," advocated that workers resort to "active disengagement" at the office. It was a bestseller in France but didn't resonate on these shores."

• Yes, when it was published a year ago, Maier's book advocating laziness didn't resonate on these shores.
• But that is already changing.
• Weiner writes in the Times:
  "In his essay, "In Praise of Idleness," British philosopher Bertrand Russell proposed reducing the workday to four hours, convinced that "the road to happiness and prosperity lies in an organized diminution of work." I agree. So be creative, be happy and waste some more time. Read this article again and again. Try reading it backward. E-mail it to co-workers. Translate it into Mandarin, then back into English. Then grab a coffee and enjoy some down time."
• What is the connection with financial markets?
• Think back for a moment to the Greenspan Productivity Miracle.
• Well, the former Fed Chairman was certainly right about that.
• The U.N.'s International Labor Organization recently issued a report that found that the U.S. leads the world in worker productivity -- and by a wide margin, Weiner notes.
• So why would it change?
• Productivity, like most "financial virtues," is the products of positive social mood trends.
• As social mood transitions to negative, we can expect to see less and less "virtue" in hard work.
• Think about it: real wages are virtually stagnant, so it's not as if people have experienced real reward for their work.
• What has been experienced is an unconscious and shared herding impulse trending upward; a shared optimistic mood finding "joy" and "happiness" in work and denigrating the sole pursuit of leisure, idleness.
• If social mood has, in fact, peaked, we can expect to see a different attitude toward work and productivity emerge.
• Note that Weiner's article doesn't simply value leisure - it values "slacking off."
• The phrase itself carries negative connotations:
• Slacking - loosening, becoming less tight, less taut
• Off - disengaging, dropping, deflating
• These are not accidental connotations.
• Within a positive social mood regime this might instead be called "pursuit of leisure."

13-Sep-2007: Minyanville, Five Things You Need to Know

And later:

Prof. Depew,

I think you've hit on one of the major causes of the productivity backpedaling when you point out that workers have long been receiving deteriorating real compensation. I think that as credit dries up, they will be left to face the impact of this lack of real income growth. Credit has simply masked that impact for years (indeed, the deteriorating real incomes have probably spurred the very same runaway consumer credit growth).

But I think there is another side to the drop in productivity, which I also expect to continue in force: the business world in general seems to have forgotten how to create progress at its financial core (wisely financing innovation). If too much malinvestment predominates, then you have entire enterprises of people running around to no profitable end, regardless of how "hard" they work. Ultimately, the debt tied to malinvestment does not get paid back, at which point it effectively subtracts from the GDP, and shows up as lower bulk productivity in the economy.

In a series of mass economic bubbles, such as those which have come to dominate the U.S. economy, you have a rolling pool of malinvestment, which remains even if the current bubble changes. The bubble sucks millions of people into fictitious bubble jobs, all of which are essentially malinvestment. Just think of the hundreds of thousands of pointless and unnecessary jobs and trillions of dollars of fictitious wealth created in the housing finance bubble (ignoring the companion home building bubble).

I would place the number of such jobs in our economy at at least 5 mln, including the housing bubble, the (overpriced) health care bubble, and the Homeland Security bubble. That's a lot of productivity decline baked into the cake...

14-Sep-2007: Minyanville, Malinvestment Behind the Return of the Slacker

Pretty amazing stuff. Of course, these guys are very faithful to their religion, and believe strongly that allowing the "free-market" to work without interference from central banks (such as the Federal Reserve) or from the governments would solve all the ills of the world. They believe that the crisis is an exception to the rule, rather than the rule itself.

This is plain wrong. The financialization of capital is a natural outcome, predicted by Marx, of the capitalist system rooted in the M-M¹ circuit of money capital.

So we have:

The monetary crisis referred to in the text, being a phase of every crisis, must be clearly distinguished from that particular form of crisis, which also is called a monetary crisis, but which may be produced by itself as an independent phenomenon in such a way as to react only indirectly on industry and commerce. The pivot of these crises is to be found in moneyed capital, and their sphere of direct action is therefore the sphere of that capital, viz., banking, the stock exchange, and finance.

Capital Vol. I, Ch. 3, Karl Marx, 1967

and:

It is to finance-capital that the capitalist future belongs. But this, both in the international struggle of competition and in the internal class struggle, means the most brutal and violent form of capital.

Finance-Capital and Crises, Karl Kautsky, 1911

The best solution is to overturn the system itself and replace it with a socialist system based on the logic of human need, as opposed to the exploitive capitalist system which is only interested in profit.

Businesses Advance Socialism in China

Excerpts from an article by Li Qian from China Daily:

When China opened up to the world over 20 years ago, Wei Jianhua joined the Communist Party of China (CPC) because of its social ideals. A decade later, she became an owner of a chemical manufacturing corporation – a private enterprise.

At the end of last year, more than 2.86 million party members work in privately owned enterprises, including 810,000 running their own businesses, shows figures released by the Organization Department of the CPC Central Committee.

Party members going into private businesses, especially those who left state-owned enterprises and government positions once became a national hot topic starting from the early 1990s when the country deepened development towards the market-oriented economic system.

[...]

The businesswoman's conversion has led to a fresh interpretation of socialism with Chinese characteristics. The CPC's constitution states that human society should eliminate the exploitation of the labor class, and calls on party members to establish businesses that are owned by all citizens or a collective of people.

But for Wei and many other Communist entrepreneurs, serving the people and country could be practiced in other ways.

"I believe the key issue is how to properly allocate profits to benefit the society," Wei said. "My company didn't receive a single penny from the government, but provides job opportunities and products. And we're committed in shouldering social responsibilities.”

[...]

"I feel I'm not a pure businessperson. When commercial interests conflict with social duties, I'll definitely place responsibilities ahead," Wei explained. "It's not just me, actually there are a great number of private business owners who have the same philosophy as me."

[...]

In the Sixteenth National Conference of the CPC in 2002, private owners and individual entrepreneurs were labeled for the first time as "Builders of Socialism with Chinese Characteristics".

"My heart was moved when I heard the news," Wei recalled. "I immediately felt my life was fulfilled."

China Daily: Red capitalists keep socialism alive

Red Cross (TM)

A heart warming story of capitalism at its best. Perhaps J&J should consider a somewhat more creative logo instead of slapping a copyright on a symbol that has been used for thousands of years. But no...

From the Wall Street Journal:

Johnson & Johnson filed suit against the American Red Cross and some of its licensing partners claiming the charity misused the cross design that is its signature emblem, which also appears on J&J's first-aid kits and bandages.

The health-care products company alleges that the Red Cross licensed the eponymous design to for-profit companies that sell medical products -- such as first-aid kits and hand sanitizers -- and infringed J&J's trademark. The suit was filed yesterday in Southern District Court in New York.

In the suit, J&J asked the court to have all licensed products with the red-cross emblem destroyed and to permanently enjoin all sales of products bearing the emblem on first-aid, safety-preparedness and related products. The New Brunswick, N.J., company also seeks punitive damages and payment of its legal fees. J&J said it tried for several months to resolve the issue with the Red Cross, but that those efforts failed.

Wall Street Journal: Red Cross Is Sued by J&J Over Signature Emblem

Its funny, but the only product I can think of which uses the red cross are Band-Aid's, which I didn't even know was a J&J brand until I read this article.

IRAs Enable the "Ownership Society"

The American Spectator has a "compelling" article on how American free market capitalism actually reduces racism. Some highlights below:

[...]
We saw the marginalizing effects of socialism with the favoritism shown to Great Russians in the Soviet Union. We see it again today in France, Europe's grandest exponent of continental socialism, its cities in flames because of the lack of economic opportunity exacerbated by race discrimination that is in turn enabled by its stratified and heavily regulated economy. Ireland, Europe's most market oriented economy, has no such issues.
[...]
The American Spectator: Capitalism, Socialism and Race

It is interesting that the only IRA the American Spectator (AS) seems to be aware of is the one that involves stock market equities. Indeed, it boggles the mind to see that the AS is holding up Ireland as an example of racial peace in Europe! Perhaps they think that Fox News has us all too worried about those swarthy Muslims to remember the sad saga of class driven race violence that has wracked Erie for over 100 years.

And sorry AS, the USA is not less racist than European societies and it certainly does not owe any of the dubious progress that it has made to capitalism! Today in America, among males age 25 to 29, 12.6% of blacks were in prison or jail, compared to 3.6% of Hispanics and about 1.7% of whites (from a 2004 report on the US DOJ website, also see comments and thank you for the corrections). In addition, nearly every black political leader in America has been assassinated or discredited due to the effects of institutionalized racism.

This magazine and other publications like it are examples of why it is so very important for socialists and progressives to fight to gain access to the public debate. If we do not, this sort of pseudo-journalism filled with lies and distortion will define the terrain of human thought and continue to destroy our world.

A socialist perspective gives us the context, intellectual honesty and political bravery to fight racism by addressing its root cause - capitalism.

Anti-Unionism is the Date Rape of Corporate Crime

This was posted some time ago at the TPM House of Labor blog, but I just reread it and thought it clever and on target, so am reposting it:

Even most liberals deny anti-union crime is widespread or deny that it's even a serious crime at all and anyways the folks doing it are such swell people, we can't expect us to like treat them like criminals, do you? If unions have been decimated in American workplaces, it's must really be their fault-- they must have been asking for it. You know, when you wear such pretty medical care and pension funds, employers are just being normal, red-blooded capitalists when they wipe out unions to get at them.

Anti-Unionism is the Date Rape of Corporate Crime
7-Dec-2005, Nathan Newman

Christian Socialism

Christian socialism has long been a topic of interest to me. I am very active in my church and diocese and was batised as an adult. Nevertheless, my class conciousness and understanding of historical forces that comes with that often come in conflict with the doctrines of organized religion, specifically the Christian church.

I was contacted today by a comrade in Oregon who runs the blog Willamette Reds. A series of posts on Christian socialism caught my eye, an excerpt of which follows:

There exists among the oppressed the task of making God exist. By this I mean that we share a faithfulness to the Gospels and to Tradition as well as a consciousness and means to use the Gospels and tradition in order to provoke and struggle for justice. In that struggle the matter of God is revealed as both ever-present and distant, as intimate as Father and Comrade and as distant Unknowable Other.

The only certain path to Theosis, individually or socially, is through this struggle. Other paths lead there, but none are as certain as the path of the loving struggle for justice. The matter of God is both Beginning and End, both Path and Destination. Constructing that path from a capitalist society forward is the task of making God exist.

More...

Obviously this is not Marxist scientific socialism, but compelling nonetheless. I have to say "Amen brother! Throw the money changers out of the temple!"

I highly recommend visiting the Willamette Reds blog.

Massive Protests at G8 Summit

Over 250,000 people have converged on Edinburgh, Scotland to protest the G8 Summit. This was the largest political demonstration in the history of Scotland. Over 250 international members of the CWI and International Socialist Resistance participated in various events including the large march on Saturday.

Unfortunately, police intimidation has lead to some unfortunate events. Sean at To The Barricades (one of my favorite blogs by-the-way) brings us coverage of the G8 protests in Scotland:

During the Carnival For Full Enjoyment in Scotland today police violently attacked demonstrators (oh, I'm sorry, "clashed with" as if it is ever an even struggle) leaving 21 injured. Several fainted. Scores were arrested.

More...

Old Glory

The cult of Old Glory came about at a time when plutocrats were terrified of losing power.

The excellent history presented below, was posted on Flag Day over at the Mutualist Blog, but is equally relevant on the eve of the 4th of July.

Mutulaist Blog: Free Market Anti-Capitalism

Since this is the High Holy Day of American Fatherland-worship, I thought I'd say something about how utterly unAmerican the Pledge of Allegiance is.

Not only is America one of a very few countries in the world where swearing a loyalty oath to the State is a regular quasi-religious ceremony in the government schools, but the Pledge is a radical departure from America's previous political culture.

Read more...

Economic Hit Man

John Perkins wants us to wake-up and “shape-shift” our world.

When you look around, you know that this world of human societies was created by sleeping people, because awake, aware, conscious people would create a very different world. (Perkins, http://www.johnperkins.org)

Perkins is the author of the best selling Confessions of an Economic Hit Man (EHM for short), published in 2004 by Berrett-Koehler Publishers, Inc. EHM purportedly chronicles Perkin’s early life and career with the Boston based engineering firm Chas. T Main, Inc. (MAIN). It tells the tale of a man who, at least in his early life, was wracked with insecurity and conflict and seemingly very little backbone.

After several years with the Peace Corps, Perkins joins MAIN as an economist. His basic role is to produce economic forecasts for less-developed countries (e.g. Third World, or LDCs) that exceed reality. The purpose of these reports is to allow the LDC to qualify for loans from the World Bank, IMF or other large international lending organization. The reason this is important for his company, MAIN, is that one of the restrictions of this money is that engineering firms from the developed countries (DCs) like the USA have to be hired to do the work.

In the case of MAIN the projects were all focused on US engineering firms and we see this type of scenario is very common as in Iraq and Afghanistan today. MAIN is a similar company to Halliburton, but where Halliburton largely focuses on logistics and oil field engineering, MAIN specialized primarily in power generation projects, like hydroelectric dams for instance.

The subject matter Perkins covers is well documented in other sources. Some reviewers have suggested that Perkins is a conspiracy theorist. One point he continued to highlight in the book separates him from the conspiracy crowd quite specifically, as shown by the following excerpts:

Some would blame our current problems on an organized conspiracy. […] Members of a conspiracy can be rooted out and brought to justice. This system […] is driven not by a small band of men, but by a concept that has been accepted as gospel: [that] economic growth benefits humankind and [produces] widespread benefits. (Perkins, EHM pp xii) […]

The corporatocracy is not a conspiracy, but its members do endorse common values and goals. [Its] function is to perpetuate and continually expand and strengthen the system. (Perkins, EHM pp xiii) […]

This [is] a close-knit fraternity […] with shared goals, and the fraternity’s members moved easily and often between corporate boards and government positions. (Perkins, EHM pp 26)

Perkins is describing something well know to us all, and although he labels it the corporatocracy it is in fact simply capitalism or the capitalist system or simply Capital. Many people confuse the idea of someone being rewarded for hard work with capitalism. If this where what capitalism was, a sort of meritocracy, it would probably not be so bad.

In a meritocracy people would be rewarded for being hard workers and developing their talents over time. Those with more talent and who work harder would rise to the top of society. However, anyone who possesses any senses at all (you most certainly don’t need all of them) can plainly detect that it is quite the opposite case under capitalism. The most talentless, banal, and corrupt people rise while many others fall. In fact, the people at the very top, who we rarely hear about, are among the most indolent, being paid for doing no work at all based on their accumulated capital through the continued exploitation of labor.

In his book, Perkins describes a portion of the mechanisms that make this possible, specifically focusing on how the Third World is exploited through a process of neo-colonialism (though he rarely if ever used this term). Over the past 50 years, the forces of Capital dominant in the US have used economics as a key tool of empire building. Perkins tells this story from a personal, albeit simplistic, viewpoint that is informative if not compelling.

Perhaps the most effective feature of the book is that, like Machiavelli’s Prince, it personalizes the experience of the players in the game of geopolitics. Perkins gives a personal glimpse into the lives of Omar Torrijos, Jamie Roldós and the Saud family of Saudi Arabia. He shows how personal desires and weaknesses are part and parcel to keeping the system running. He also shows that the basest motives are what drive and fuel the system.

Reading EHM, and knowing about Perkin's background, I found myself wondering about the veracity of the narrative. I have come to understand that that issue is irrelevant. Regardless on whether this is a non-fiction narrative, or instead a well thought-out parable, the underlying truths are right on target. Considering the amount of cultural currency the book has at this time, this is indeed a very good thing.

Confessions of An Economic Hit Man can be found at Powells.com (union friendly) or your local library.

Good for Laughs and Lashings of the Old Ultraviolence

This ought not come as any surprise.

Wednesday's New York Times ran a story highlighting the results of a study which compares the psychological profiles of business leaders and those of psychopaths. The results show that the personality types are quite similar. Having had to actually worked with these sorts of people, I can attest to the veracity of the study...

There has been anecdotal and case-study evidence suggesting that successful business executives share personality characteristics with psychopaths. The question is, are the characteristics that make up personality disorders fundamentally different from the characteristics of extreme personalities we see in everyday life, or do they differ only in degree?

In 2001, I compared the personality traits of 39 high-ranking business executives in Britain with psychiatric patients and criminals with a history of mental health problems. The business managers completed a standard clinical personality-disorder diagnostic questionnaire and then were interviewed. The information on personality disorders among criminals and psychiatric patients had been gathered by local clinics.

In fact, the business population was as likely as the prison and psychiatric populations to demonstrate the traits associated with narcissistic personality disorder: grandiosity, lack of empathy, exploitativeness and independence. They were also as likely to have traits associated with compulsive personality disorder: stubbornness, dictatorial tendencies, perfectionism and an excessive devotion to work.

For the entire editorial click here. I first read the story here.