Rudd’s message: all power to the casino capitalists
Posted by Leonie, July 26th, 2009 - under ALP, Australia, Australian Labor Party, Australian politics, Casino capitalism, Economic crisis, Economics, Kevin Rudd, Labor Party, Labour theory of value, Marxism, Rudd, Rudd Government, Rudd Labor.
Kevin Rudd spent over 6000 words in the Fairfax press giving us a simple message.
Everything will go up, except for wages. The working class will pay for the crisis of capitalism.
Interest rates will rise, fuel prices will rise, food prices will rise, unemployment will rise. All of it is disguised in spin about ‘the decade of nation building’ and attacks on extreme capitalism (whatever that is) and neoliberalism.
But Rudd is a neoliberal, or fiscal conservative as he calls it.
His neoliberal economic strategy is simple; government spending increases during recessions and is cut during recovery.
For that reason the next Budget is likely to be a shocker – to supposedly free up the market to boost the recovery. In other words workers are to pay for the crisis.
The premise is that recessions are temporary aberrations which Government spending can address and that the market is the best vehicle for economic development and satisfying human need. Neither are true.
Rudd appears not to understand the business cycle (an idea Marx developed and which most economists and politicians now accept.)
Because capitalism is undemocratic and unplanned investment pours into profitable areas and there is overproduction or over-stimulation. This depresses profits and demand and recession develops.
Over time the system can correct itself, but at great cost to working people.
But Marx went further. He understood another consequence of the way capitalism is organised, what he called the tendency of the rate of profit to fall.
Labour creates profit, not capital. Yet competition forces capitalists to invest more and more in machinery and the like. This means that profit rates decline unless other factors like the destruction of capital, or falls in employment and living standards, and increases in working hours and productivity occur.
Profit rates for the last generation have been low in the productive areas of capital where value is produced. This real economy is manufacturing, mines and the like.
Profits boomed in the casino of capitalism - the finance sector and stock exchange.
But that boom was unsustainable if it was not underpinned by booming profits in the productive sector. And it wasn’t.
And isn’t.
The present ‘green shoots’ are the same. They appear to be based on a boom in the casino sector, not productive capital. Certainly confidence is returning to banking and the stock market.
But without a return to profitability in the productive sections of society a gambling boom is unsustainable.
Stimulus packages don’t address or improve long term low profit rates. Driving down living standards and destroying capital can.
Rudd’s nation building is an attempt to build up infrastructure.
After 11 years of neglect that might help at the margins. But it does nothing per se to restore profit rates.
Having transport facilities to expedite exports won’t work if the demand for exports fall.
So Rudd falls back on rhetoric. Evidently the problem is extreme capitalism. It is unclear what this means.
All capitalism is extreme – it is a form of slavery in which capitalists expropriate the value workers make.
If by extreme capitalism Rudd means unregulated profit making, then he condemns himself.
It is ‘extreme’ capitalism that he perceives will step in to save the economy as the government reduces its ‘interference’ in the markets when the recovery, he hopes, strengthens. He is making space for the cowboys to ride again.
Rudd is going to hand back complete control to the casino capitalists and attack workers. What a great strategy for further disaster.
Readers might also like to look at A W-shaped recession? and Unraveling capitalism: a return to Marx.
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Comments
Comment from Graham Young
Time July 27, 2009 at 10:45 am
John, I’ve got to take issue with your assertion that labour creates profits and capital doesn’t. How much labour do you think there is in the Windows operating system? The profit is generated almost purely from capital. Marx had some good insights, but in the idea that capital brings nothing to the table he was wrong.
Comment from John
Time July 27, 2009 at 2:18 pm
Graham
Capital itself is, as Marx described it, dead labour. But it creates no new wealth. It transfers the value of labour embodied in it.
A more insightful answer comes from Tom O’Lincoln’s redsites. He says:
Karl Marx’s three-volume masterpiece about the economics of the modern world bears the simple title: Capital. But what is capital?
Most of us think of capital in terms of things: money, for instance, or assets such as buildings, equipment and materials. Capital can take on all these forms, and others as well, including stocks of commodities. But to see it in such terms is only to see the surface.
Capital, writes Marx, “is not a thing but rather a definite social production relation, belonging to a definite historical formation of society, which is manifested in a thing and lends this thing a specific social character.”
When we analyze capital, and the society built around it, we need to begin with social relations. In the modern world economy, vast numbers of people interact to produce wealth. But this is not a system of conscious, planned harmonious cooperation. On the contrary, it is a system in which some people exploit others, and nobody has control of the whole system. Consequently, people are alienated, not only from one another but from the products of their labour.
The things workers create are taken away from them, and become foreign objects. These then return to dominate their creators as an alien power. For example, the products of human labour are exchanged in the market place, yet the labourers have no control over the exchange process. On the contrary, market fluctuations come to dominate them and other human beings. Similarly, humans through their labour create the complex machines that dominate people on the factory floor. Most importantly, workers are subordinated to the constant drive to accumulate more and more commodities, and more and more means of production.
It is a world, writes Marx, where “the social character of labour appears to us to be an objective character of the products themselves,” and a “state of society, in which the process of production has mastery over man, instead of being controlled by him.”
Marx also analyzes this situation from another angle. He argues that in capitalist society, living labour is dominated by “dead labour”, since the things we have created in the past are the embodiment of our own past labour. “Capital is dead labour, that, vampire-like, only lives by sucking living labour, and lives the more, the more labour it sucks.” From this point of view, capital appears as a relation between ourselves and our own past labour (and that of past generations). Our slavery to things is a slavery to our own past. We are, one might almost say, enslaved by ourselves – and this alienated situation expresses itself in the form of a slavery to the products of our own labour.
Such a situation could not continue if it depended on the acquiescence of human beings. The necessary condition for our subjection to our own past labour is that this subjection be presided over by a particular section of society – the ruling class – which becomes the human embodiment of our slavery. Our rulers, however, do not merely preside over a static world, leaving it as they find it. They are also the agents for the accumulation and concentration of dead labour through the exploitation of living labour.
This passage from Marx sums up the argument thus far:
Capital is not the sum of the material and produced means of production. Capital is rather the means of production transformed into capital, which in themselves are no more capital than gold or silver is money. It is the means of production monopolised by a certain section of society, confronting living labour-power as products and working-conditions rendered independent of this very labour–power, which are personified through this antithesis in capital.
So capital is a social relation. It is not a static relation, for capital takes on many forms. A firm may invest its money in machinery, labour and raw materials. In the labour process that follows, it will secure the production of a stock of commodities, which in turn will be sold on the market. From the sale a profit ensues, which in turn is reinvested. Capital, therefore “is not a simple relation, but a process, in whose various movements it is always capital.”
So Graham to me it makes no difference whether the amount of capital and labour involved are large and small. The end result is that living labour produces the value that becomes in some for profit and this is then reinvested in an endless process of accumulation.
This is as true of other capital intensive industries (eg mining) as it is of Windows (a virtual monopoly by the way.)
Comment from Arjay
Time July 27, 2009 at 8:34 pm
What Kevin failed to mention was that your wealth is in your people and when you diminish their aspirations and time to be educated,you also lose real productivity both in terms of creativity but also in social degardation,ie more crime and poverty of both the mind and spirit.
John ,I agee with you on many things but disagree on the mode of getting there.Communism is not the answer nor is our present form of capitalism.
The revolution has begun,so let’s work out a fair system that gives the individual freedom and autonomy.The individual presently is enslaved by the corporates and big Govt.Bigger Govt is not the answer.
If you want to see Ben Bernanke squirm,see http://www.youtube.comwatch?v=2VCy0lU1g
Alan Grayson Grills Ben Bernanke on Foreign Landing.
Comment from John
Time July 27, 2009 at 9:00 pm
Arjay
Marxists are about the withering away of the state, not its expansion. A bigger capitalist state is just that, a capitalist state ruling in the interests of capital.
Comment from Arjay
Time July 28, 2009 at 8:58 am
John,see if you can find out what % of money we as a country are allowed to create for ourselves.After WW1 Germany was sent broke by the banks and the rest of the west paying war reparations.Hitler abolished the International Res Banks controlling his money and printed his own.They would not recognise his new currency in trade,so Hitler used a trade bartering system. Hitler was then able to make Germany a powerful country.
Which Banks in Aust can practise the fractional Reserve system of banking?The RBA only creates a small amount for our needs.
When we borrow from these banking cartels much of it is computer generated.Eg the IMF just created $1.4 trillion.What % of money can we create for ourselves since our balance of payments deficit of $ 660 billion which Kevin will add another 300 billion to, is mostly due to borrowing.
We seem to live in fear of Standard & Poors and Moodys down grading our credit rating.These clowns gave Fannie May and Freddie Mac a AAA credit rating.
The other fear is the devaluing of our $.We should also know what the international banking agreements are,since they have our Govts in a perpetual state of debt,unable to provide infrastructure or basic services.
Comment from Arjay
Time July 27, 2009 at 12:48 am
I think the real control happens in the US.Kevin or any of our leaders just do as they are told.
Neither kevin or John Howard had the courage to give the ACCC any real power to deal with the corporates.
Even Obama gets told what to do.He wants to give the Fed Foxes more power over business and the Fed Res caused the GFC.
Power lies with those who have the most money.