[Marxism] An increasingly precarious role for the global hegemon

["Jurriaan Bendien" <andromeda246@xxxxxxxxx>]

Tom wrote:

"But the rhetoric served its real purpose -- convincing workers to tighten
their belts."

The current bourgeois discourse about "low savings-ratios", quite a funny
metaphor, performs a similar ideological function I think. The discussion
conveniently abstracts from different income classes, and from the fact that
those who borrow the largest amount, are those who own the most assets and
have the highest potential earnings. It shifts the blame for indebtedness to
ordinary working folks and governments, and provides a rationale for
policies aiming to lower and regiment ordinary consumer spending, and
increase privatisation. In Australia of course you have a large fall in
measured consumer confidence at present, in which interest rates are an
important factor.

In his book Capital, Marx talked about the bourgeois ideology of getting
rich through frugality and thrift. This is mainly a nonsense, and in reality
it is very much the reverse - you get rich precisely through borrowing large
amounts of capital, and investing it at a higher rate of return, while
meantime accumulating net income from that capital. It requires no
production, only real estate for which there is a demand. The mystification
of indebtedness occurs, because there is no social clarity about who the
debtors are, who the creditors are, what form the debt takes, what the
annual repayment liability is, and how debts relate to net worth and
earnings potential. Obviously, you have to distinguish between:

- government domestic debt and government external debt, by sector
- business domestic debt and business external debt, by sector (indurtail,
financial, import/export oriented etc.)
- household modestic debt and household external debt, by sector
(distinguishing between classes of asset holders).

But almost nobody does any serious analysis of this kind. As I said though,
for the vast majority of ordinary consumers, their "savings" consist of
various forms of insurance/retirement schemes plus mortgages, and this is
the same in Europe, Japan, the USA and Australasia, although the proportions
of after-tax income saved do differ somewhat in different countries (but
even then many of those differences disappear, if you examine the different
systems and data more closely).

The reality is that between a quarter and a third of the Western working
class has no real savings at all, and this is also reflected in political
moods. For instance, hundreds of young rioters from poor Paris suburbs
disrupted a demonstration by 9,000 French leftwing high-school students
("bolo's") on March 8, beating teenagers to the ground, and stealing their
mobile telephones and cameras.

"Rrubinelli" claims that I suggest "a decline in investment  in US
securities" but I do not suggest that. The general world trend in the last
five years has indeed been a shift of capital from shares to securities, and
the longer-term trend is an increase in the share of securities in total
capital placements. There has been a boom in the foreign acquisition of US
Treasury paper, but my source mentions there is now less attraction among
foreign investors specifically for US stocks (industrial equities).
Essentially, a higher dividend rate (distributed profits) is now being used
to offset lacklustre share-price appreciation (capital gain), but even
higher dividend pay-outs aren't able to change the ratio of capital invested
in stocks and capital invested in securities significantly, or the unequal
trend in their relative growth rates.

Jurriaan




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