- Capitalism and Alternatives -
Recapitulation on Crises.
Posted by: Red Deathy ( Socialist Party, Uk ) on June 30, 1999 at 15:04:34:
OK, a brief run down on the Marxian critique of the Market System, and why it fails to meet human needs.Crisis
1:All firms must pursue growth above all else:
i)In order to compete for capital investment and give good returns to shareholders.
ii)In order to be able to keep up to date with latest production techniques, innovations and cutting edge technology.
There can be no standing still. Gorwth of growth's sake is the order of the day.
2:the Law of No Profit, No Production
i)Simply put, if a capitalist cannot profit from production, they will not produce.
ii)Given, then, that profit means that sale must be geared to where the money is, this Law means that Capitalism only meets effective demand, not needs.
3:Overproduction
i)In order to prusue growth capitalism *must* expand production to the point of the limit of effective demand.
ii)Once effective demand is reached, capitalists cannot stop, nor stand still (See 1), but must keep on producing.
ii) i.e. they must exceded effective demand, 'overproduce'. This means that they:
a-Must cut costs to increase sales.
b-produce goods that they cannot sell.
Both of which entails a loss. And brings them into conflict with the Law of no profit, no production.
4:Wages & Workers.
i). In order to off-set costs, the capitalist must do one of several things (or combine them).
a-Increase productivity, without increasing wages (make the workers work harder, for an *effective* pay cut.
b-cut wages- give the workers a real pay cut.
c-lay-off workers.
d-merge with a competitor (probably in order to do all of the above).
e-Invest in new machinery.
(f-diversify- this is a commonly offered suggestion, which neglects that all capitalists are in the same boat, and that other firms occupy alternative markets.)
ii)Effectively, we may say, then, that the workers work themselves out of a job, working hard to produce overproduction, and then being sacked because of it.
iii)Because the workers make up a large number of the consumers, these *necessary* tactics restrict effective demand further, and exacerbate crisis.
5:All this continues until:
i)War ocurs and destroys goods to clear the amrkets agains.
ii)Several big manufacturers go bust, clearing the markets for their competitors to grow again.
iii)Suffice mergeers achieve the same effects.
The Declining Rate of Profit
Now, as can be seen above, the drive to expand, coupled with crises, has two main effects:
1:It concentrates ownership intoever fewrer hands.
2:It means an ever changing, ever increasing investment in technology.
Now, and for this we must take the Labour theory of value (For which folks can see posts Passim) as given.
i)Labour is the only source of value, i.e. only Human labour *adds* value.
ii)Machines do *not* add value, they merely transfer value from themselves to the product.
iii)Machines can be though of as i>repositories of dead labour.
iv)As machines become more complex, the speed up production, but lessen the amount of value *added* to goods in production (Less human labour is added).
v)These machines become more and more expensive, and less and less profit per goood is made.
vi)the Rate of Profit (Which can be expressed as the value of the good, divided by the cost of machinery, and the cost of wages) begins to go down.
vii)This means that big profits can only be made by either sacking, working workers harder, or cutting their wages as above. With the same consequences to efective demand.
viii)a Good example of this Process is J. Sainsburies over here (UK) where despite making millions in profits, they still had to lay staff off because the profits weren't big *enough* compared to rivals.
ix)This leads to a phenomena of 'Surplus Population'. As workers are replaced by machines, or deskilled, production grows regardless. Economic growth contains no concurrent *need* for emplyment growth any more. nor is economic growth tied to population growth (as once was). If workers cannot be employed, used, to make a profit (Law of no profit no production) then they are not used.
Unemployment
As we have seen, workers are laid off, made unemplyed, whenever capital can find no use for them (irrespective of welfare, although, it must be said, when wages and conditions are driven very low, and it become spreferable to take welfare than do the shitty work, capital will begin to bark, and complain about welfare rates, because we won't work for utterly shite wages unless we have to). If we cannot work at a profit to capital, we are not permitted to work at all, and are put into enforced idelness. In the UK, for over 20 years, we have had a constant pool of 2 million unemployed, coupled with low inflation, something unheard of. no use can be found for these people, and so they are left to rot and kicked around by the state. They have a use, though, in that as a block, they can undermine wages claims, provide scab labour, and help keep wage claims in check (since we can't get above our market price). The same applies somewhat in parts of the US, there are people who will never work, so the state doesn't bother to teach them, but leaves them to rot instead.in't life as a commodity grand?
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