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I think McDonalds is a decent example of what IgnE is saying. McDonalds has pretty much saturated the world market for fast food joints at this point. I lived in Hangzhou, China for a few months and even there I knew of several McDonalds within walking distance of my grad school campus. If they want to expand anywhere new, they either need to cannibalize their own sales or compete with KFC for share of the same market (maybe there are some untapped markets in Africa, dunno). So if you are an investor in McDonalds/fast food, the only true investment bet you can make is that they will take market share away from their competition.
But, if you are talking about the global economy, with all of it's output, as more industries become completely saturated there exist fewer and fewer investment opportunities. Investors have no real option other than just continue to collect dividends and sit on ever increasing piles of cash (or making risky investments in new tech?). The only thing that drives real growth is population increase which we know to be unsustainable given current technology.(and/or decreasing in many part of the world)
At least that's how I'm understanding it.
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On March 20 2014 13:33 IgnE wrote:Show nested quote +On March 20 2014 11:29 JonnyBNoHo wrote:On March 20 2014 11:16 IgnE wrote:On March 20 2014 10:53 JonnyBNoHo wrote:On March 20 2014 10:07 IgnE wrote:On March 20 2014 05:12 JonnyBNoHo wrote:On March 20 2014 05:01 IgnE wrote:On March 19 2014 22:35 aksfjh wrote:On March 19 2014 13:46 IgnE wrote:
I meant that demand has hit its ceiling, not that that ceiling is high. I don't really know how you misread it given the rest of the context around it.
As far as technological innovation goes, people just aren't needed to make things anymore. You can argue that people are being "retrained" to do service industry jobs, but that's not really the same thing. Capitalism doesn't work in a society where the service industry workers rely on demand from other service industry workers so that they, themselves, can pay for services from those same workers. And I'm trying to tell you that demand is low in regards to it's potential, as in it's nowhere near any concept of a "ceiling." Also, you seem to have some tremendous misunderstanding of what an economy is. As long as work is done in exchange for other work (via wages or whatever), there is an economy. As long as the supply and demand of that work is reflected in a price mechanism, capitalism is working. It doesn't matter if that work "creates" a good or if that work provides a service. I don't think you understood what I am trying to get at. I'm not saying that services aren't commodities that can be exchanged in an economy. I'm saying that if everyone is working as a service worker, that is, living on wages obtained from working in the service industry, the economy cannot function as a capitalist economy, because capital cannot reclaim a reasonable return on investment. When a capital owner invests a certain amount in a business opportunity, he expects a reasonable return on investment, factoring in risk and potential profits, otherwise there is no point, as he might as well save his capital to look for another opportunity or spend it on his own personal consumption. Investment creates a return by creating a commodity and selling it at markup after paying the costs of inputs and labor. But where profit is produced is not always the same point where it is realized. When American corporations make a huge profit on goods produced in China, they are realizing the profit far away from where it was produced. The purchasing power of the working class, however, is limited by the wages being paid them. So the total pool of potential demand in an entirely services-dominated industry is the sum of the working class wages and the demand of capital itself for consumptive spending. But if profits come from surplus value, the total wage pool can never provide enough demand for the service industry as a whole to return a profit. So the demand has to be supplied by capital itself. Other capital owners have to either spend consumptively or buy commodities as inputs for their own business ventures from which they hope to turn a profit. This is of course a problem with all commodities, but the service industry is unique in that service commodities tend not to be that useful as inputs for other commodities. In other words, the service industry is primarily a consumptive one. This makes it increasingly difficult for capital to find a return on investment in the service industry, a restaurant for example, in an economy where the vast majority of workers/consumers are also employed in the service industry, because the total demand arising in that economy is limited by the wages of those workers. Credit of course bridges the gap, allowing someone employed in another service to buy more than his wage allows, but his repayment of that debt requires an ever increasing spiral of credit from other workers in the industry so that the economy we are describing here can grow as a whole. You can see the results of this within the last couple decades, as American capital is increasingly invested in financial instruments and other countries. The domestic services market here is saturated with investment, making further investment too risky or simply unprofitable. No he's right. Services aren't different than goods and you can absolutely have B2B services. Profits or surplus value aren't extracted from the economy. They show up as demand for either capital or consumption goods and services. Just like wages. That's the problem. As I've said already, I know that services are commodities. But my point is that the structure of a service-industry economy is particularly susceptible to one of the primary contradictions of capital: that demand from workers is limited by total wages, yet capitalism only works when surplus capital, extracted from labor, is collected. This requires that realized profits are greater than the total wage pool, because total wages are a fraction of the total invested capital. A fraction is not greater than a whole, so this is impossible if the demand comes only from wage-paid consumers. The surplus capital, then, has to be generated by the capitalist class, which supplies the required demand, by buying up commodities (including services, as investment) with the expectation of further surplus capital in the future. So there's a temporal disconnect between the demand required today and the capital realized in the future to pay for it today. Hence the connection between debt and capital accumulation. Now it's one thing when you are increasing material prosperity by building cars and refrigerators and microwaves and computers, wherein the commodities are helping to spur on further growth by enhancing the productivity of individual workers, spurring further consumption by the working class, etc. It's another thing when the commodities are primarily dead-end service-industry products that are not used as inputs for further capital investment. The service industries, as a whole, provide less growth for working-class demand, through wage growth, than other industries (perhaps because many services are an exchange of simple human labor for simple human labor, quid pro quo). This means that capitalist-class demand has to pick up the slack through reinvestment. But that requires credit today to cover the difference between the total surplus and the investment capital, with the expectation of continued profits in the future. Without that expected future return, the capitalist class won't be able to provide the demand surplus required for investment today. The cycle slows down or stops. This problem, in general, is inherent to the reproduction of capital, no matter the commodity. And there are other ways to provide that demand in the real world, like housing and real estate development, consumer credit, foreign investment, financial products in credit markets, etc. But a pure service-industry economy, as I've been talking about, runs into demand problems. It is an extremely fragile "capitalist economy" subject to shocks of all kinds, as it is more akin to a slave economy, where labor is traded for labor amongst consumers, but bought by the social power of capital in the ruling class. This goes back to the necessity of capital to continually reproduce itself, for a capitalist economy to grow exponentially in perpetuity. Your proposition seems to be that service industries are less capital intensive, leaving a lot of capital unneeded. If true, capital will get used as consumption (one way or another). There's no requirement for capital to reproduce itself, either in a macro or micro sense. Service industries tend to be much more stable than goods industries btw. They don't suffer the same investment and inventory booms and busts. You may also be a bit confused as to where demand comes from - capital income adds to demand, it's not just about worker's wages. "Capitalists" aren't Martians that suck money from Earth to Mars. On March 20 2014 00:09 JonnyBNoHo wrote:On March 19 2014 11:26 IgnE wrote:This post about the book on China, extolling the virtues of modularity and multinational firms that focus on design, misses the point. China has become the manufacturing headquarters of the world and operates under a serious import deficit with little internal demand relative to its production capacity. What this means is that sustained world demand for Chinese goods is the only thing propping up China's growth rate. American corporate profitability is so high right now because of technological innovation that has drastically cut labor requirements and outsourcing to places like China where the production costs, which while still lower now, were dramatically lower a decade ago. The national review article sees it as a positive thing that US-based firms can still collect the bulk of value by agilely positioning themselves away from physical production and towards portfolios of intellectual property. The reality is that this is essentially a transfer of wealth from Chinese factories towards American corporations, driven by the debt-financed spending of American consumers. The bottom 99% of the American population which has seen stagnant wages for the last couple decades are responsible for sustaining the demand keeping the whole thing going. This is problematic on many levels. Most importantly perhaps, any financial shock in an increasingly vulnerable, increasingly connected global financial network that creates a drop in demand is going to set off a chain reaction, destroying the profitability of a rapidly expanding Chinese manufacturing sector and the profitability of American corporations which depend on being able to sell their foreign-made high-margin goods to the credit-class of America. But it also speaks to one of the inherent contradictions of capital. Capital depends on consumption of new goods in order to realize a rate of return. In order to turn labor power into increased capital, someone has to buy the new goods being produced. When you have an entire underclass (i.e. "the 99%") that hasn't seen any increases in wages to supply the demand for rising profits, you need credit to bridge the gap between today's value and tomorrow's expectation. If those wages never go up, eventually the mounting pile of debt becomes too unwieldy and collapses. Technological innovation and outsourcing, in combination with vastly increasing debt levels, these past couple decades have allowed American capital to retain a profitable return on investment by cutting manufacturing costs, because they can afford to extract more of the labor value from a Chinese laborer than they can from a God-fearing American. China's production costs are rising though, and it won't be easy to continue cutting production costs. On the other end, however, you are hitting the upper limits for consumer demand in the United States. Something is going to give eventually. Don't forget that profits are also high because interest rates are low, and that bonds are part of the capital structure too ... and ~100% of the population has seen income growth, ... and that US manufacturing's decline is over-hyped - manufacturing hasn't declined, just the number of jobs. One last thing - mounting debt is over-hyped as well. It was a problem in the last cycle, but a lot of the long term buildup in debt is related to interest rates falling. Debt service / financial obligation costs for households haven't seen the same increase as debt levels. Right now, debt costs are down to multi-decade lows... hardly a recipe for collapse! It seems like you're taking reasons why we had a recession and assuming that the same situation still exists and extrapolating from there. What's the national debt like now compared to 2007? Household debt hasn't seen increases but maybe that's because the public sector is absorbing the debt for now? It still is essentially a promise of future economic growth to spur current economic growth. ![[image loading]](https://dl.dropboxusercontent.com/u/72070179/debt.PNG) source You've said before that you capital doesn't have to reproduce itself. I have no idea what you mean, unless you mean something as trivial as it's not a law of nature that capital has to reproduce itself or the universe implodes. The fact is that if capital doesn't reproduce itself, capitalism as we know it breaks down. Without a return on investment, there is no incentive to invest anywhere and you end up with something more like feudalism or some post-capitalist zero growth environment than the capitalism we have today. You haven't explained yourself so I won't put words in your mouth, but your statement as written is wrong on its face. Capital seeks to reproduce itself. If it isn't reproduced, the economy as we know it ceases to function. I said in my post that demand comes from wages and from capital reinvestment. I did not say nor did I imply that demand only comes from wages. My point, in fact, was that it's impossible for capital to reproduce itself if demand only comes from capital. To your question, you're saying things like This goes back to the necessity of capital to continually reproduce itself, for a capitalist economy to grow exponentially in perpetuity. No, capitalism doesn't demand exponential growth until the end of time. If you're talking return on investment, that's different from growth. You can have a return on investment without growth. Could you define what you mean by capital reproducing? Is that like a return on investment that gets reinvested? As for the graph of debt you linked. It looks to me like total debt is still well above 2007 levels. You say this is good news? It's come down from the peak. I don't think it really matters though. Debt is a lot cheaper now than it was then. Edit: I'm not sure what you mean by this: My point, in fact, was that it's impossible for capital to reproduce itself if demand only comes from capital. You're arguing that in a world that doesn't exist there would be a problem? Even if true (I'd have to think about it) who cares? Extrapolating an abstraction to the breaking point isn't very meaningful!! I meant "wages" not "capital." If anyone doubts that we are in a serious capital accumulation crisis, wherein capital has no readily available sources of reinvestment, look no further than the $1.5 trillion in cash reserves that American corporations have sitting on their books. How can you have a return on investment without growth? Rapidly depreciating assets?
What's wrong with corporate cash holdings? If they thought it was useless on their books, it would likely be used for dividends. A lot of them, like Apple for example, have fought shareholders over their cash. They think keeping it has some merit. They want to invest more in R&D, make acquisitions and they know their iPad and iPhone don't have infinite lifespans as super-profitable products.
You don't need growth to have a positive ROI because growth isn't the only variable in the math. If a particular asset won't experience growth (or negative growth), just pay less for it (for example) and you'll still have a positive ROI.
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Cayman Islands24199 Posts
buy treasury bonds and finance government spending.
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BERKELEY, Calif. — Delivering a rare speech for a Republican at this bastion of liberalism, Kentucky Sen. Rand Paul on Wednesday was given multiple standing ovations by the left-wing audience after railing against government surveillance and warning the students: “Your right to privacy is under assault.”
“I am here to tell you that if you own a cell phone, you’re under surveillance,” he told the crowd.
Paul’s address at the Berkeley Forum on the campus of the University of California at Berkeley focused on the National Security Agency’s collection of telephone metadata and the debate over privacy.
During his remarks, the potential 2016 Republican candidate discussed California Sen. Dianne Feinstein’s claim that the CIA had spied on her congressional staff, and announced that he plans to call for a special committee on Capitol Hill to investigate the domestic spying by government agencies.
“No one should be allowed to invade your privacy,” Paul said. “That’s why I’m announcing today that when I return to Washington, I will push for a select committee styled after the Church Committee that investigated the abuses of power of the intelligence committee in the 70s. It should be bipartisan. It should be independent, and wide reaching. It should have full power to investigate and reform those who spy on us in the name of protecting us.”
Added Paul: “It should watch the watchers.”
That Paul decided to take his libertarian-leaning message to one of the most liberal campuses in the country is no mistake. He is actively making an effort to appear before crowds that have not been supportive of Republicans to demonstrate his ability to appeal to a broader electorate.
Source.
And so it begins. Finally, a prominent national republican is tapping into the popular libertarian sentiments that are shared by huge swathes of the electorate.
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On March 21 2014 01:37 xDaunt wrote:Show nested quote +BERKELEY, Calif. — Delivering a rare speech for a Republican at this bastion of liberalism, Kentucky Sen. Rand Paul on Wednesday was given multiple standing ovations by the left-wing audience after railing against government surveillance and warning the students: “Your right to privacy is under assault.”
“I am here to tell you that if you own a cell phone, you’re under surveillance,” he told the crowd.
Paul’s address at the Berkeley Forum on the campus of the University of California at Berkeley focused on the National Security Agency’s collection of telephone metadata and the debate over privacy.
During his remarks, the potential 2016 Republican candidate discussed California Sen. Dianne Feinstein’s claim that the CIA had spied on her congressional staff, and announced that he plans to call for a special committee on Capitol Hill to investigate the domestic spying by government agencies.
“No one should be allowed to invade your privacy,” Paul said. “That’s why I’m announcing today that when I return to Washington, I will push for a select committee styled after the Church Committee that investigated the abuses of power of the intelligence committee in the 70s. It should be bipartisan. It should be independent, and wide reaching. It should have full power to investigate and reform those who spy on us in the name of protecting us.”
Added Paul: “It should watch the watchers.”
That Paul decided to take his libertarian-leaning message to one of the most liberal campuses in the country is no mistake. He is actively making an effort to appear before crowds that have not been supportive of Republicans to demonstrate his ability to appeal to a broader electorate. Source. And so it begins. Finally, a prominent national republican is tapping into the popular libertarian sentiments that are shared by huge swathes of the electorate. We'll see if he can keep hold of that support through social issues and government programs. Leaving SSM to states isn't the most popular position. He could lose support when his stance on abortion is highlighted. The famous libertarian position on drugs might alienate some of Republican traditional base.
But the man does telegraph a swift end to the abuses of the NSA.
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On March 21 2014 01:51 Danglars wrote:Show nested quote +On March 21 2014 01:37 xDaunt wrote:BERKELEY, Calif. — Delivering a rare speech for a Republican at this bastion of liberalism, Kentucky Sen. Rand Paul on Wednesday was given multiple standing ovations by the left-wing audience after railing against government surveillance and warning the students: “Your right to privacy is under assault.”
“I am here to tell you that if you own a cell phone, you’re under surveillance,” he told the crowd.
Paul’s address at the Berkeley Forum on the campus of the University of California at Berkeley focused on the National Security Agency’s collection of telephone metadata and the debate over privacy.
During his remarks, the potential 2016 Republican candidate discussed California Sen. Dianne Feinstein’s claim that the CIA had spied on her congressional staff, and announced that he plans to call for a special committee on Capitol Hill to investigate the domestic spying by government agencies.
“No one should be allowed to invade your privacy,” Paul said. “That’s why I’m announcing today that when I return to Washington, I will push for a select committee styled after the Church Committee that investigated the abuses of power of the intelligence committee in the 70s. It should be bipartisan. It should be independent, and wide reaching. It should have full power to investigate and reform those who spy on us in the name of protecting us.”
Added Paul: “It should watch the watchers.”
That Paul decided to take his libertarian-leaning message to one of the most liberal campuses in the country is no mistake. He is actively making an effort to appear before crowds that have not been supportive of Republicans to demonstrate his ability to appeal to a broader electorate. Source. And so it begins. Finally, a prominent national republican is tapping into the popular libertarian sentiments that are shared by huge swathes of the electorate. We'll see if he can keep hold of that support through social issues and government programs. Leaving SSM to states isn't the most popular position. He could lose support when his stance on abortion is highlighted. The famous libertarian position on drugs might alienate some of Republican traditional base. But the man does telegraph a swift end to the abuses of the NSA.
The core sentiments of the conservative base aren't going to change overnight. We're probably half a generation away or so. Still, the groundwork has to be laid.
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Rand Paul opposes abortion in almost every case, wants to get rid of federal educational standards, seems to be somewhat opposed to same-sex marriage, to ACA and to immigration on several levels.
I guess it's nice that he wants to get some control over the NSA but I don't think that outweighs all the other crap above.
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The main problem with IgnE's point is that he is mixing up different problems that all have their own difficulties. I think there are no link between innovations (in the strict sense) and capital accumulation. The relationship between capital and wage does not follow economical law : it's a political matter. Trying to explain over accumulation through the evolution of innovations is a mistake : it is only when the "dead work" (the machine) is used to maximize profit (and only that), and that there are no contrary forces (like a high marginal taxation rate, or a high economic growth) that it leads to overaccumulation.
I don't believe there is anything in the inner nature of innovations that necessarily leads to overaccumulation and unemployment in the long run. This technicist point of view does not feel right when compared to history. On the other side, I think IgnE is absolutly right when he is saying that there is a crisis of overaccumulation. I'm even surprised to see jonny argue against it when I showed him empirical evidence of it some pages ago.
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On March 21 2014 02:13 WhiteDog wrote:
The main problem with IgnE's point is that he is mixing up different problems that all have their own difficulties. I think there are no link between innovations (in the strict sense) and capital accumulation. The relationship between capital and wage does not follow economical law : it's a political matter. Trying to explain over accumulation through the evolution of innovations is a mistake : it is only when the "dead work" (the machine) is used to maximize profit (and only that), and that there are no contrary forces (like a high marginal taxation rate, or a high economic growth) that it leads to overaccumulation.
I don't believe there is anything in the inner nature of innovations that necessarily leads to overaccumulation and unemployment in the long run. This technicist point of view does not feel right when compared to history. On the other side, I think IgnE is absolutly right when he is saying that there is a crisis of overaccumulation. I'm even surprised to see jonny argue against it when I showed him empirical evidence of it some pages ago.
Lol, what did you show? A data point that supported your argument? As if there are none that counter it?
You're cute.
Edit: you talking about your graph showing capital to gdp rising? That's not empirical evidence of over accumulation...
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On March 21 2014 02:27 JonnyBNoHo wrote:Show nested quote +On March 21 2014 02:13 WhiteDog wrote:
The main problem with IgnE's point is that he is mixing up different problems that all have their own difficulties. I think there are no link between innovations (in the strict sense) and capital accumulation. The relationship between capital and wage does not follow economical law : it's a political matter. Trying to explain over accumulation through the evolution of innovations is a mistake : it is only when the "dead work" (the machine) is used to maximize profit (and only that), and that there are no contrary forces (like a high marginal taxation rate, or a high economic growth) that it leads to overaccumulation.
I don't believe there is anything in the inner nature of innovations that necessarily leads to overaccumulation and unemployment in the long run. This technicist point of view does not feel right when compared to history. On the other side, I think IgnE is absolutly right when he is saying that there is a crisis of overaccumulation. I'm even surprised to see jonny argue against it when I showed him empirical evidence of it some pages ago. Lol, what did you show? A data point that supported your argument? As if there are none that counter it? You're cute. Edit: you talking about your graph showing capital to gdp rising? That's not empirical evidence of over accumulation...
Really ? The increase of capital to income from 300% to 600% is not a proof of overaccumulation ? You're a hero. That's a proof that the capital is taking a higher % of the wealth created than wage. It's, by the way, a proof that one of the deepest belief of economists (that the repartition of the wealth created between wage and capital is constant) is not true (and yes, even Keynes believed that, and it was considered as one of the few empirical law in most economic textbook).
And the fact that the rate of return on capital is on average 5%, while the growth is (at best) 2%, is not a proof too ?
Here : http://www.hup.harvard.edu/catalog.php?isbn=9780674430006
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On March 21 2014 03:41 WhiteDog wrote:Show nested quote +On March 21 2014 02:27 JonnyBNoHo wrote:On March 21 2014 02:13 WhiteDog wrote:
The main problem with IgnE's point is that he is mixing up different problems that all have their own difficulties. I think there are no link between innovations (in the strict sense) and capital accumulation. The relationship between capital and wage does not follow economical law : it's a political matter. Trying to explain over accumulation through the evolution of innovations is a mistake : it is only when the "dead work" (the machine) is used to maximize profit (and only that), and that there are no contrary forces (like a high marginal taxation rate, or a high economic growth) that it leads to overaccumulation.
I don't believe there is anything in the inner nature of innovations that necessarily leads to overaccumulation and unemployment in the long run. This technicist point of view does not feel right when compared to history. On the other side, I think IgnE is absolutly right when he is saying that there is a crisis of overaccumulation. I'm even surprised to see jonny argue against it when I showed him empirical evidence of it some pages ago. Lol, what did you show? A data point that supported your argument? As if there are none that counter it? You're cute. Edit: you talking about your graph showing capital to gdp rising? That's not empirical evidence of over accumulation... Really ? The increase of capital to income from 400% to 600% is not a proof of overaccumulation ? You're a hero. That's a proof that the capital is taking a higher % of the wealth created than wage. It's, by the way, a proof that one of the deepest belief of economists (that the repartition of the wealth created between wage and capital is constant) is not true (and yes, even Keynes believed that, and it was considered as one of the few empirical law in most economic textbook). And the fact that the rate of return on capital is on average 5%, while the growth is at 2%, is not a proof too ? Here : http://www.hup.harvard.edu/catalog.php?isbn=9780674430006
Maybe igne is correct, but not for the right reasons. As long as he points to numbers like coprpate cash holdings as evidence, I'm not convinced. Do you have any evidence on hand that doesn't require me to buy Piketty's book? >_>
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On March 21 2014 03:56 aksfjh wrote:Show nested quote +On March 21 2014 03:41 WhiteDog wrote:On March 21 2014 02:27 JonnyBNoHo wrote:On March 21 2014 02:13 WhiteDog wrote:
The main problem with IgnE's point is that he is mixing up different problems that all have their own difficulties. I think there are no link between innovations (in the strict sense) and capital accumulation. The relationship between capital and wage does not follow economical law : it's a political matter. Trying to explain over accumulation through the evolution of innovations is a mistake : it is only when the "dead work" (the machine) is used to maximize profit (and only that), and that there are no contrary forces (like a high marginal taxation rate, or a high economic growth) that it leads to overaccumulation.
I don't believe there is anything in the inner nature of innovations that necessarily leads to overaccumulation and unemployment in the long run. This technicist point of view does not feel right when compared to history. On the other side, I think IgnE is absolutly right when he is saying that there is a crisis of overaccumulation. I'm even surprised to see jonny argue against it when I showed him empirical evidence of it some pages ago. Lol, what did you show? A data point that supported your argument? As if there are none that counter it? You're cute. Edit: you talking about your graph showing capital to gdp rising? That's not empirical evidence of over accumulation... Really ? The increase of capital to income from 400% to 600% is not a proof of overaccumulation ? You're a hero. That's a proof that the capital is taking a higher % of the wealth created than wage. It's, by the way, a proof that one of the deepest belief of economists (that the repartition of the wealth created between wage and capital is constant) is not true (and yes, even Keynes believed that, and it was considered as one of the few empirical law in most economic textbook). And the fact that the rate of return on capital is on average 5%, while the growth is at 2%, is not a proof too ? Here : http://www.hup.harvard.edu/catalog.php?isbn=9780674430006 Maybe igne is correct, but not for the right reasons. As long as he points to numbers like coprpate cash holdings as evidence, I'm not convinced. Do you have any evidence on hand that doesn't require me to buy Piketty's book? >_>
Well it's a 1100 pages book that basically only gives numbers and analysis on the subject. It is also really complicated because the question is very different in each countries, as every countries have very differents structures of capital (lands costs less in the US than in Europe for exemple, for obvious reasons, so it naturally undervalue capital assets overall, plus natural growth is higher, so you need some various new variables to offer a full picture of capital accumulation and inequalities in the US).
The question is also about the trend : are there any forces that prevent an over accumulation (like Marx foresaw in its time) ? Or, to rephrase this question from a more historical point of view, why Marx's predictions were wrong and thus why capital accumulation stopped itself in the XXth century ?
But here is a short graph that I linked before on the evolution since 1970.
![[image loading]](http://delong.typepad.com/.a/6a00e551f080038834019b0328b6bc970d-pi)
I'd like to note the time period is really small, you need to compare it in the long run, and analyse it with political and economical history to really gives a good sense of what is happening.
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For the record, I pointed to corporate cash holdings and capital accumulation as a tangentially related, but separate issue, from the one I was talking about. I guess I should have made that clear but it was late and the thread was dead.
As for the cash holdings point, how is "the cash holdings are offshore and are subject to taxes upon repatriation" a defense against the point that the cash holdings are evidence of a lack of investment opportunities?
"If strong American growth was around the corner we would see it being used." Well it's not, so they hold on to it. That's kind of my point.
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On March 21 2014 03:41 WhiteDog wrote:Show nested quote +On March 21 2014 02:27 JonnyBNoHo wrote:On March 21 2014 02:13 WhiteDog wrote:
The main problem with IgnE's point is that he is mixing up different problems that all have their own difficulties. I think there are no link between innovations (in the strict sense) and capital accumulation. The relationship between capital and wage does not follow economical law : it's a political matter. Trying to explain over accumulation through the evolution of innovations is a mistake : it is only when the "dead work" (the machine) is used to maximize profit (and only that), and that there are no contrary forces (like a high marginal taxation rate, or a high economic growth) that it leads to overaccumulation.
I don't believe there is anything in the inner nature of innovations that necessarily leads to overaccumulation and unemployment in the long run. This technicist point of view does not feel right when compared to history. On the other side, I think IgnE is absolutly right when he is saying that there is a crisis of overaccumulation. I'm even surprised to see jonny argue against it when I showed him empirical evidence of it some pages ago. Lol, what did you show? A data point that supported your argument? As if there are none that counter it? You're cute. Edit: you talking about your graph showing capital to gdp rising? That's not empirical evidence of over accumulation... Really ? The increase of capital to income from 400% to 600% is not a proof of overaccumulation ? You're a hero. That's a proof that the capital is taking a higher % of the wealth created than wage. It's, by the way, a proof that one of the deepest belief of economists (that the repartition of the wealth created between wage and capital is constant) is not true (and yes, even Keynes believed that, and it was considered as one of the few empirical law in most economic textbook). And the fact that the rate of return on capital is on average 5%, while the growth is (at best) 2%, is not a proof too ? Here : http://www.hup.harvard.edu/catalog.php?isbn=9780674430006
No, accumulation is not over accumulation. Really it's true, just stop and think (assuming you can!) for a minute!
And no 5% roc and 2% growth isn't proof either. Are you trying to hold that constant and extrapolate? If so, that would be really foolish!
Why would the ratio of capital to wage income be constant? Seems like one of those "we think it's a law until it isn't" kind of things (same crap you're pushing).
Edit: you know that r > g is just a 'rule of thumb' for accumulation and that it isn't always accurate, right?
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On March 21 2014 04:04 WhiteDog wrote:Show nested quote +On March 21 2014 03:56 aksfjh wrote:On March 21 2014 03:41 WhiteDog wrote:On March 21 2014 02:27 JonnyBNoHo wrote:On March 21 2014 02:13 WhiteDog wrote:
The main problem with IgnE's point is that he is mixing up different problems that all have their own difficulties. I think there are no link between innovations (in the strict sense) and capital accumulation. The relationship between capital and wage does not follow economical law : it's a political matter. Trying to explain over accumulation through the evolution of innovations is a mistake : it is only when the "dead work" (the machine) is used to maximize profit (and only that), and that there are no contrary forces (like a high marginal taxation rate, or a high economic growth) that it leads to overaccumulation.
I don't believe there is anything in the inner nature of innovations that necessarily leads to overaccumulation and unemployment in the long run. This technicist point of view does not feel right when compared to history. On the other side, I think IgnE is absolutly right when he is saying that there is a crisis of overaccumulation. I'm even surprised to see jonny argue against it when I showed him empirical evidence of it some pages ago. Lol, what did you show? A data point that supported your argument? As if there are none that counter it? You're cute. Edit: you talking about your graph showing capital to gdp rising? That's not empirical evidence of over accumulation... Really ? The increase of capital to income from 400% to 600% is not a proof of overaccumulation ? You're a hero. That's a proof that the capital is taking a higher % of the wealth created than wage. It's, by the way, a proof that one of the deepest belief of economists (that the repartition of the wealth created between wage and capital is constant) is not true (and yes, even Keynes believed that, and it was considered as one of the few empirical law in most economic textbook). And the fact that the rate of return on capital is on average 5%, while the growth is at 2%, is not a proof too ? Here : http://www.hup.harvard.edu/catalog.php?isbn=9780674430006 Maybe igne is correct, but not for the right reasons. As long as he points to numbers like coprpate cash holdings as evidence, I'm not convinced. Do you have any evidence on hand that doesn't require me to buy Piketty's book? >_> Well it's a 1100 pages book that basically only gives numbers and analysis on the subject. It is also really complicated because the question is very different in each countries, as every countries have very differents structures of capital (lands costs less in the US than in Europe for exemple, for obvious reasons, so it naturally undervalue capital assets overall, plus natural growth is higher, so you need some various new variables to offer a full picture of capital accumulation and inequalities in the US). The question is also about the trend : are there any forces that prevent an over accumulation (like Marx foresaw in its time) ? Or, to rephrase this question from a more historical point of view, why Marx's predictions were wrong and thus why capital accumulation stopped itself in the XXth century ? But here is a short graph that I linked before on the evolution since 1970. I'd like to note the time period is really small, you need to compare it in the long run, and analyse it with political and economical history to really gives a good sense of what is happening.
You know a lot of capital accumulation in the US is driven by international forces rather than a Marxian setup, right?
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The ratio of capital to wage income isn't constant. I think WhiteDog has been saying that for a while now. Capitalism as we know it drives wealth inequality and wealth concentration. The middle class in the United States in the postwar period was a capitalistic anomaly, partially driven by heavy taxes and redistribution during the pre- and post-war periods and partially driven by complete American domination of world markets as the global hegemon.
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On March 21 2014 04:12 JonnyBNoHo wrote:Show nested quote +On March 21 2014 03:41 WhiteDog wrote:On March 21 2014 02:27 JonnyBNoHo wrote:On March 21 2014 02:13 WhiteDog wrote:
The main problem with IgnE's point is that he is mixing up different problems that all have their own difficulties. I think there are no link between innovations (in the strict sense) and capital accumulation. The relationship between capital and wage does not follow economical law : it's a political matter. Trying to explain over accumulation through the evolution of innovations is a mistake : it is only when the "dead work" (the machine) is used to maximize profit (and only that), and that there are no contrary forces (like a high marginal taxation rate, or a high economic growth) that it leads to overaccumulation.
I don't believe there is anything in the inner nature of innovations that necessarily leads to overaccumulation and unemployment in the long run. This technicist point of view does not feel right when compared to history. On the other side, I think IgnE is absolutly right when he is saying that there is a crisis of overaccumulation. I'm even surprised to see jonny argue against it when I showed him empirical evidence of it some pages ago. Lol, what did you show? A data point that supported your argument? As if there are none that counter it? You're cute. Edit: you talking about your graph showing capital to gdp rising? That's not empirical evidence of over accumulation... Really ? The increase of capital to income from 400% to 600% is not a proof of overaccumulation ? You're a hero. That's a proof that the capital is taking a higher % of the wealth created than wage. It's, by the way, a proof that one of the deepest belief of economists (that the repartition of the wealth created between wage and capital is constant) is not true (and yes, even Keynes believed that, and it was considered as one of the few empirical law in most economic textbook). And the fact that the rate of return on capital is on average 5%, while the growth is (at best) 2%, is not a proof too ? Here : http://www.hup.harvard.edu/catalog.php?isbn=9780674430006 No, accumulation is not over accumulation. Really it's true, just stop and think (assuming you can!) for a minute! And no 5% roc and 2% growth isn't proof either. Are you trying to hold that constant and extrapolate? If so, that would be really foolish! Why would the ratio of capital to wage income be constant? Seems like one of those "we think it's a law until it isn't" kind of things (same crap you're pushing).
You know, you don't need to act like a dick everytime you are arguing on something that you don't entirely understand.
They believed it was a "law" because it makes the entire economic system sustainable in the long run (by itself). If the accumulation of capital is higher than growth, it means that capital in the long run will accumulate wealth at a higher rate than the production, and thus that a crisis of overproduction is possible. Your argument against that is that capitalists also use their money, but that is not the matter here, because you think in stock and we should be thinking in flux and in the long run : if their remuneration is higher than the overall wealth created, it means in the long long run, if the trend stays the same, the accumulation on flux in cpaital remuneration will give birth to a situation where wages will be reduced to 0.
If there is no economic laws for wealth distribution between the factor of production, it also means that the remuneration of the factor of production does not follow a law by itself, and thus that wealth distribution is political and thus needs political intervention.
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On March 21 2014 04:16 WhiteDog wrote:Show nested quote +On March 21 2014 04:12 JonnyBNoHo wrote:On March 21 2014 03:41 WhiteDog wrote:On March 21 2014 02:27 JonnyBNoHo wrote:On March 21 2014 02:13 WhiteDog wrote:
The main problem with IgnE's point is that he is mixing up different problems that all have their own difficulties. I think there are no link between innovations (in the strict sense) and capital accumulation. The relationship between capital and wage does not follow economical law : it's a political matter. Trying to explain over accumulation through the evolution of innovations is a mistake : it is only when the "dead work" (the machine) is used to maximize profit (and only that), and that there are no contrary forces (like a high marginal taxation rate, or a high economic growth) that it leads to overaccumulation.
I don't believe there is anything in the inner nature of innovations that necessarily leads to overaccumulation and unemployment in the long run. This technicist point of view does not feel right when compared to history. On the other side, I think IgnE is absolutly right when he is saying that there is a crisis of overaccumulation. I'm even surprised to see jonny argue against it when I showed him empirical evidence of it some pages ago. Lol, what did you show? A data point that supported your argument? As if there are none that counter it? You're cute. Edit: you talking about your graph showing capital to gdp rising? That's not empirical evidence of over accumulation... Really ? The increase of capital to income from 400% to 600% is not a proof of overaccumulation ? You're a hero. That's a proof that the capital is taking a higher % of the wealth created than wage. It's, by the way, a proof that one of the deepest belief of economists (that the repartition of the wealth created between wage and capital is constant) is not true (and yes, even Keynes believed that, and it was considered as one of the few empirical law in most economic textbook). And the fact that the rate of return on capital is on average 5%, while the growth is (at best) 2%, is not a proof too ? Here : http://www.hup.harvard.edu/catalog.php?isbn=9780674430006 No, accumulation is not over accumulation. Really it's true, just stop and think (assuming you can!) for a minute! And no 5% roc and 2% growth isn't proof either. Are you trying to hold that constant and extrapolate? If so, that would be really foolish! Why would the ratio of capital to wage income be constant? Seems like one of those "we think it's a law until it isn't" kind of things (same crap you're pushing). You know, you don't need to act like a dick everytime you are arguing on something that you don't entirely understand. They believed it was a "law" because it makes the entire economic system sustainable in the long run (by itself). If the accumulation of capital is higher than growth, it means that capital in the long run will accumulate wealth at a higher rate than the production, and thus that a crisis of overproduction is possible. If there is no law, it means that the remuneration of the factor of production does not follow a law by itself, and thus that wealth distribution is political and thus needs political intervention.
Entirely speculative, unless you're making the 'hold constant and extrapolate' mistake.
Edit: yeah, you're extrapolating. Stop, just stop!
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On March 21 2014 04:22 JonnyBNoHo wrote:Show nested quote +On March 21 2014 04:16 WhiteDog wrote:On March 21 2014 04:12 JonnyBNoHo wrote:On March 21 2014 03:41 WhiteDog wrote:On March 21 2014 02:27 JonnyBNoHo wrote:On March 21 2014 02:13 WhiteDog wrote:
The main problem with IgnE's point is that he is mixing up different problems that all have their own difficulties. I think there are no link between innovations (in the strict sense) and capital accumulation. The relationship between capital and wage does not follow economical law : it's a political matter. Trying to explain over accumulation through the evolution of innovations is a mistake : it is only when the "dead work" (the machine) is used to maximize profit (and only that), and that there are no contrary forces (like a high marginal taxation rate, or a high economic growth) that it leads to overaccumulation.
I don't believe there is anything in the inner nature of innovations that necessarily leads to overaccumulation and unemployment in the long run. This technicist point of view does not feel right when compared to history. On the other side, I think IgnE is absolutly right when he is saying that there is a crisis of overaccumulation. I'm even surprised to see jonny argue against it when I showed him empirical evidence of it some pages ago. Lol, what did you show? A data point that supported your argument? As if there are none that counter it? You're cute. Edit: you talking about your graph showing capital to gdp rising? That's not empirical evidence of over accumulation... Really ? The increase of capital to income from 400% to 600% is not a proof of overaccumulation ? You're a hero. That's a proof that the capital is taking a higher % of the wealth created than wage. It's, by the way, a proof that one of the deepest belief of economists (that the repartition of the wealth created between wage and capital is constant) is not true (and yes, even Keynes believed that, and it was considered as one of the few empirical law in most economic textbook). And the fact that the rate of return on capital is on average 5%, while the growth is (at best) 2%, is not a proof too ? Here : http://www.hup.harvard.edu/catalog.php?isbn=9780674430006 No, accumulation is not over accumulation. Really it's true, just stop and think (assuming you can!) for a minute! And no 5% roc and 2% growth isn't proof either. Are you trying to hold that constant and extrapolate? If so, that would be really foolish! Why would the ratio of capital to wage income be constant? Seems like one of those "we think it's a law until it isn't" kind of things (same crap you're pushing). You know, you don't need to act like a dick everytime you are arguing on something that you don't entirely understand. They believed it was a "law" because it makes the entire economic system sustainable in the long run (by itself). If the accumulation of capital is higher than growth, it means that capital in the long run will accumulate wealth at a higher rate than the production, and thus that a crisis of overproduction is possible. If there is no law, it means that the remuneration of the factor of production does not follow a law by itself, and thus that wealth distribution is political and thus needs political intervention. Entirely speculative, unless you're making the 'hold constant and extrapolate' mistake.
You know what possible means ?
Edit : Yeah let's stop thinking, it could end badly.
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EPT
