[Marxism] Surplus Capital

[Suresh <borhyaenid@xxxxxxxxx>]

Although Mr. Bendien was referring to the European
economic situation in discussing the decline of
productive investment relative to total capital, as I
understand it, the general trend also applies to  the
United States in recent years, as well as in the
period just before the Great Depression. Gabriel Kolko
recorded in "Main Currents in Modern American History"
that by the time of the stock market crash in 1929,
only one-third of the capital raised by security
flotations went into the construction of new
productive capacity and that the ratio of total
capital to the value of manufactured goods decreased
by one-fifth over the course of the previous decade.
Similarly, economist Giulio Pontecorvo worked out that
only $2 billion out of $8 billion in new securities
were devoted to productive investment in 1929, and
that "[domestic] corporations still relied heavily on
debt instruments to finance 'productive
expenditures'."  But in marked contrast to today,
wages and living standards sharply rose during the
period, at least outside of the agricultural sector.
While, it might once have been fashionable to see in
capitalist 'crisis' the immanent collapse of a mode of
production, one wonders if we were aren't now
glimpsing certain limits in the global economy,
perhaps not despite of, but because of increases in
productivity associated with information technology,
automation, etc.

This leads to a situation where in the United States,
the Republican-held branches of government, with a
definite amount of Democratic compliance, may be
moving forwards with social security privatization and
further reductions of taxes on investment and higher
income brackets. And ironically, the opening up of
entire new regions to capitalist penetration in the
last decade, which according to Rosa Luxemburg's
analysis is a basic necessity of the system, hardly
seems to have attenuated the tendency towards
overcapacity, declining profit-rates, and a global
downturn, since around the 1970's.

Thus, articles such as the following, from the
International Herald Tribune, which warn of impending
demographic disaster have become all too common - one
could say they serve as a kind of guilt trip for the
masses, with the press and politicians waving their
fingers at the people for having the audacity to live
longer. Lost in such discussions is any note of how
irrational a system must be for improvements in
technology and "free trade" to lead to job insecurity
and decaying public services:

News Analysis: A grim report on future grabs Europe's
attention
        
By Graham Bowley International Herald Tribune
        
Friday, November 12, 2004
BRUSSELS When Wim Kok, the former Dutch prime
minister, unveiled a scathing report here last week
warning that Europe was steering its economic future
dangerously off course, most prime ministers and
presidents listening in the hall where he spoke seemed
to want to turn a deaf ear.
.
Suddenly, though, the report has become the talk of
European halls of power, and it may yet become a
wake-up call for policy makers to spur growth.
.
"This is really strong stuff," a European ambassador
said, adding that the report struck at the heart of
his own country's problems. "This is important," he
said.
.
The chief point of the report, which is beginning to
resonate in Brussels, is that while Europe's stumbling
economies may be doing poorly now, they are likely to
fare far worse in the future, mainly due to the
Continent's deteriorating demographics. The "pure
impact of aging populations will be to reduce the
potential growth rate of the EU from the present rate
of 2 percent to 2.25 percent to around 1.25 percent by
2040," the report warned. "Already from 2015,
potential economic growth will fall to around 1.5
percent," it cautioned.
.
As a yardstick of where Europe stands in a globalizing
world, especially versus the United States, the
analysis shows that Europe has much to worry about.
...

The Kok report urged governments to explore several
alternatives, including increasing labor productivity.
But the report offered few concrete suggestions for
achieving this elusive goal, beyond governments
investing more in research and development.
.
The Kok study also urged governments to actively seek
ways of getting more people into the work force. Here,
according to Alasdair Murray of the Center for
European Reform in London, the Kok report offers two
approaches - a soft approach, like encouraging more
women to work, or a hard approach, forcing people to
work by lifting the retirement age or cutting pensions
and unemployment benefits.

"Most European countries need a bit of both," Murray
said. "But it has got to get an awful lot better if
Europe is going to maintain adequate growth."
...

Link:
<http://www.iht.com/articles/2004/11/11/business/euecon.html>


                
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