Re: bankruptcy

[Jim Devine <jdevine03@xxxxxxxxx>]

I wrote:
>>> To Marx, bankruptcy (in the sense of going out of business, not the
>>> technical definition) was central to his predictions about the trend
>>> of a capitalism unfettered by a powerful labor movement or a
>>> democratically-run state (as like nowadays). It was a symptom of
>>> systemic _success_ (from a capitalist point of view). Accumulation
>>> coincides with the concentration and centralization of capital and
>>> increasing inequality between classes, as the smaller and weaker
>>> capitalists are driven out of business and into the proletariat. This,
>>> he predicted, would lead to increased societal tension and
>>> eventually class antagonism.

David S.:
> If I remember correctly, Marx though capitalism was going to break-down because it was too hard for the capitalists to make a profit.  All of that ruinous competition driving down profits.  I am still waiting.<

Marx's "falling rate of profit" prediction was never a full-blown
prediction, since it's a partly worked-out and mechanical numerical
exercise in an unpublished and unfinished manuscript (volume III of
CAPITAL). There are reasons why the rate of profit tends to fall, but
these typically evoke counter-tendencies. So it isn't a secular trend.

What I was referring to was his CAPITAL volume I prediction (also seen
in the MANIFESTO, co-authored by F. Engels). That prediction was that
the normal tendency of capitalism was to increase the inequality of
income and wealth distribution (and/or unemployment). Along with other
factors, this encourages resistance to capitalism. In Marx's rosy
scenario, it leads to proletarian revolution. However, he never really
developed the psychological component of the last prediction, so it's
mostly wishful thinking that was backed by empirical evidence at the
time.

Of course, in the long haul this hasn't worked out in practice. In the
richer (imperialist) countries, this is because workers have been able
to organize and counteract the normal tendency of capitalism and
because the imperialist countries have been able to dump a lot of
their problems on the imperialized countries. Still, the prediction
worked pretty well until the 1930s. Then, the prediction seems to be
working again after 1970, except for the crucial element of mass
proletarian resistance.

me:
>>> In the airline biz, bankruptcy of major carriers is a symptom of the
>>> workings of Marx's prediction. The airlines (e.g., Southwest, JetBlue)
>>> that have succeeded in driving down wages, benefits, and even safety
>>> costs drive out the ones that have treated their workers with a
>>> modicum of decency (rather than as interchangeable parts), likely
>>> because of pressure from unions.
>>>
>>> As for societal tension, this can be seen in the attitudes we've seen
>>> from employees at United Airlines (an airline that's been under
>>> financial pressure for quite some time). When my wife once asked a
>>> "customer service agent" whether or not she'd be late to her plane,
>>> the agent tartly said "how fast can you run?" This is just one
>>> example.

David:> I see no evidence that airline deregulation is leading to
either (1) centralization that will permit monopoly pricing, or (2)
ruinous competition that results in the absence of service.  I see a
very competitive market in which there are winners and losers, but the
essential functionality of the system continues unabated.<

The system works (is "functional") at the expense of lowering wages
and benefits (and ripping off pension funds). It's moving from the old
"Sears & Wards" model of oligopolistic competition to the new Wal-Mart
"race to the bottom" model.

David: >Your criticism of Southwest and JetBlue of driving down wages
assumes that there is a certain "just" wage airline employees are
entitled to.  The problem is that the "just" wage they were used to
was a result of the pre-1978 regulated oligopoly situation, so in my
book that "just" wage was a fiction.  Like I said, it is taking a
generation for expectations to coincide with reality.<

Do we have another dyslexic lawyer? I never said anything about
justice or "just" wages. My complaint is that whatever the final
result, workers and customers are suffering from the transition costs
(a factor typically ignored in static-minded economics of the NC or
"libertarian" sort) while the most ruthless competitors (JetBlue,
Southwest) are being rewarded for being ruthless.

(Of course, the airlines are simply representative of the general
trend, since the neo-liberal policy revolution of the late 1970s and
1980s.)

Speaking of which, it's a mistake to think that the old CAB-organized
airline cartel was simply a gift to the airlines and their unionized
employees. It was part of the national defense system and the postal
system. Further, it was perceived at the time (correctly, IMHO) that a
monopoly system was needed to create a nation-wide airline system that
helped create a unified national market. Finally, the CAB cartel was
competitive. There was a lot of non-price competition (e.g., over the
quality of service). What was ruled out was price competition and
competition to cut wages. And the system was very "functional."

>>> Since bankruptcy laws simply slow down the trend, maybe we should
>>> follow the libertarian lead and get rid of them. To Marx, they delay
>>> the development of capitalism, while to libertarians it prevents the
>>> attainment of the True Efficiency that the Invisible Hand blesses us
>>> with. Further, it seems to me that the bankruptcy lawyers have been a
>>> coddled caste at the expense of the public. In return for exalted
>>> salaries, they help ameliorate the allegedly savage conditions of the
>>> fang-and-claw social struggle. In this new Gilded Age, this is at best
>>> an anachronism: only those who are well-connected and noble should be
>>> protected from their creditors. The unemployed lawyers could easily
>>> get jobs as wardens or guards in debtors' prisons. ;-)

> Your rhetoric is mixing personal and business bankruptcy.<

The "smiley" [;-)] is supposed to indicate that the paragraph was a
joke. Anyway, if we're going to get rid of one kind of bankruptcy, it
is simple justice [that word!] that the other should be abolished,
too.

>However, thank goodness for bankruptcy law.  If it didn't exist, I
would simply be another overeducated underemployed intellectual ready
to refashion the world.<

Frankly, I don't think lawyers will ever be unemployed (except for new
ones). They create demand for each other.

If the last point about the "overeducated underemployed intellectual"
is somehow a stab at me, it missed. I don't want to forcibly
"refashion the world" from the top down following a predetermined
ideal recipe (the way the IMF or Maggie Thatcher or George W. has
done, for example). Rather, I want to mobilize the dominated classes
to democratically change the world in the direction that ends their
domination, in their own terms. As with the socialist anthem, the
Internationale, I reject "condescending saviors."

--
Jim Devine
"Segui il tuo corso, e lascia dir le genti." (Go your own way and let
people talk.) -- Karl, paraphrasing Dante.