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Monday Message Board

March 30th, 2015

Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.

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  1. Uncle Milton
    March 30th, 2015 at 08:22 | #1

    “The Queensland Labor Party should run background checks on their candidates”.

    Discuss.

  2. Megan
    March 30th, 2015 at 09:06 | #2

    Alternative sub-topic for discussion:

    “Section 64(2) of the Parliament of Queensland Act 2001 sets out the disqualifying factors for people wanting to run for election, these should be extended so that no person may run if they have any prior criminal or traffic history whatsoever.”

  3. Ivor
    March 30th, 2015 at 09:09 | #3

    Our academic economists are now in a real fix – recession stalks the globe, Piketty has picked a few juicy points never admitted by Classical or Keynesians, and now our keepers are trying to cut minimum wages and hike the GST and cut company tax.

    None of this fits into any economic model whatsoever except – greed is good.

    How can any economist explain the simple fact from the Sydney Morning Herald, 28 March, Business Page 8 that:

    there are 2325 billionaires in the world with a combined net worth almost a tenth of global GDP.

    How does this relate to any sense of reasonable payments to factors, free markets, productivity without savage exploitation and expropriation?

    Which equilibrium model of anything can produce this actual result?

    Are our economists just a bunch of liars?

  4. Uncle Milton
    March 30th, 2015 at 09:25 | #4

    @Megan

    I believe it is the non-disclosure rather than the record itself that is the problem here. If the voters want to be represented by a man with a record of domestic violence, that’s up to them, but they need to know about it first if they are to make an informed decision.

    Could be interesting times ahead. I suspect the Premier is going to be having long talks with Mr Katter Jr.

  5. Ikonoclast
    March 30th, 2015 at 09:39 | #5

    Criminal History Checking for the Qld Public Service inlcudes;

    “From 1 August 2006 a Queensland Health general criminal history check is to be conducted on
    all persons prior to being appointed for general employment, permanently or when the period of employment will exceed three (3) months.”

    Generally speaking, any person employed or seeking employment with Qld Health (and probably other departments) charged or convicted with an idictable offence will have to face a panel.

    “The Criminal History Assessment Panel (CHAP) determines the suitability of an applicant who has a disclosable criminal history to perform the relevant duties of the position for which they are recommended for appointment or ongoing appointment.”

    “Indictable offences include burglary and unlawful use of a motor vehicle …”

    Given the above, why should an MP be held to a lower level of accountability than a person seeking a PS job? All prospective candidates and/or newly elected MPs should face this process. If it’s good enough for ordinary workers then it’s good enough for the MPs. People being placed in positions of public trust and responsibility rightly face these tests. With respect to Billy Gordon we can forget his childhood offences. They ought to be disregarded. However, he twice drove a vehicle unlicenced as an adult showing disregard for the safety of others and putting other people at risk. His judgement is clearly very poor on a repeat basis. I doubt he would get a job in Qld Health so why should he get a job as an MP? Should MPs be held to lower standards than the rest of us face?

  6. Ikonoclast
    March 30th, 2015 at 10:16 | #6

    @Ivor

    I don’t think all academic economists should be clumped together in one heap. For a start, there are still academic economists who are Marxists or at least Marxian in some aspects of their thinking. In addition, many academic economists, at least in Australia, are social-democratic in perspective. The real negative criticism should be aimed at the business economists plus the ideological monetarist schools like the Chicago school.

    Don’t forget Piketty is an academic economist. He has done the work to empirically and systematically expose capitalism’s inherent tendency to ever greater inequality. Of course, Marxists knew this all along. Some (not all) bourgeois economists are very late to this realistion.

    Piketty has done sterling work to prove empirically what those with perception (or Marxian thinking) knew all along. Capitalism leads to ever greater inequality. His formula r>g really means that while r>g then inequality will axiomatically increase without extensive redistributive taxation and social spending. Furthermore, he has shown that the period where g>r was an historical once-only event associated with rapid scientific/technological growth in a system far from limits. The old standard case and the new standard case for a capitalist system embedded in a resource depleting natural system and a situation of diminishing technology returns is r>g.

    I think r>g is a far more important and indeed valid law than the “law of declining profits”. Marx always saw the the tendency of the rate of profit to fall as just that, a tendency. He also posited countervailing tendencies which could see capitalist profits rising again in new sectors, new markets and with new technology. But r>g is fundamental. Where g becomes ultimately limited as it does in a system with limits to growth, this fundamental contradiction of capitalism becomes manifest.

    If you had a car with a bad steering bias you could leave the bias alone and keep wrestling with the steering wheel to correct the bias. That is the position of people who advocate redistributive taxing and spending while retaining capitalism. Or if you had a car with a bad steering bias you could get the steering fixed. That is the position of the people who advocate worker ownership and management of the means of production. With that bias fixed there would be much less (though never zero*) need for redistributive taxing and spending.

    Also, with worker owned and managed production we would have some chance of addressing climate change and limits to growth in time. Under capitalism we have virtually 0% chance of dealing with these issues in a pre-emptive way.

    * Note: pensioners and orphans will always exist while the human race exists.

  7. Collin Street
    March 30th, 2015 at 10:41 | #7

    > Given the above, why should an MP be held to a lower level of accountability than a person seeking a PS job?

    Because MPs define the criminal law, and there’s a prospect of rather-nasty feedback.

  8. Hermit
    March 30th, 2015 at 10:45 | #8

    The guvmint wants thoughts on post 2020 emissions. They say when suffering creative block go back to what you first thought of so the early suggestion of an 80% emissions cut 2000-2050 should be a guide. That’s 1.6% a year but even if we make it just 1% we’re way behind. If year 2000 emissions (including land use) were about 550 Mt CO2e then a 14% cut takes us to 473 Mt. Actual emissions in the year to Sept 2014 were 536 Mt. Not good enough.

    Even with just 1% there are various fiddles such as excluding land use, making it per capita emissions to somewhat excuse population growth of 1-2% a year or making the start date 2005. I note enthusiasts for Big Australia such as the PM also enthuse about Big Coal. If LtG is right then Peak Oil looms which might cause a slowdown that drags coal with it. Or we might all be driving electric cars powered by solar, in which case an 80% emissions cut by 2050 will be a doddle. So I think it should be 1% a year starting in Year X of total emissions.

  9. Megan
    March 30th, 2015 at 10:45 | #9

    @Ikonoclast

    I doubt he would get a job in Qld Health

    From the information you provided, he wouldn’t have to be reviewed by CHAP under PS guidelines.

    He does not have a “disclosable criminal history”.

    Uncle Milton, the “non-disclosure” depends on what is required to be disclosed. I don’t know what the ALP’s internal mechanisms are or whether there was any material “non-disclosure” in this case. It seems the sacking from the ALP was because he gave the answer “no” to an ambiguous question asked in a certain context (i.e. talking about child support payments and tax returns – “is there anything else I need to know?”).

    Also “a record of domestic violence”, does he have such a record? Does that mean a “criminal record”?

  10. Uncle Milton
    March 30th, 2015 at 11:09 | #10

    @Megan

    From the viewpoint of a political party, what is (or should be) required to be disclosed is anything in the candidate’s past that would cause trouble for the party should it come to light later. The candidate is asking the party to endorse them as representing the party in an electorate. In return the candidate owes it to the party to come clean before the event. Why? Because if something bad comes out later there is fallout not just on the candidate but the whole party. In this instance, the existence of the government is threatened.

    If a candidate doesn’t want to come clean, citing privacy or whatever, they can always run as an independent.

  11. John Quiggin
    March 30th, 2015 at 11:36 | #11

    @Ivor

    Actually, most Keynesians have given Piketty an enthusiastic (though not uncritical) welcome. If you want an example of someone who has resolutely denied the facts pointed out by Piketty, look at the prominent Marxist economist Andrew Kliman, or Kliman’s main data source, Richard Burkhauser of the American Enterprise Institute. Kliman claims that the profit share is at an all-time low, and that CEOs are members of the oppressed working class.

  12. Ikonoclast
    March 30th, 2015 at 11:44 | #12

    Yes, the Realpolitik of it is that a potentially embarrassing past is political death. People ought to be realists before attempting to be politicians in the modern “trial by media” world. The Realpolitik of it is that parties now need more or less squeaky clean candidates (in the formal criminal sense) although at the same time they have to be morally bankrupt and inveterate liars to succeed in the political system. It’s a bizarre and antithetical combination. It pretty much equates to conventional bourgeois morality where no overt criminal record and no s e x or d r u g peccadilloes are permissible but lying and cheating especially for money and power and not getting caught doing it are permissible and indeed de rigueur.

  13. Ikonoclast
    March 30th, 2015 at 11:57 | #13

    @John Quiggin

    Some doctrinaire Marxists are blind idiots. I don’t mean Ivor. I mean Kliman if your charcterisation of him is correct. At the same time, the more perceptive and philosophical Marxians are a very different kettle of fish. I have two substantive questions for you.

    (1) Why prefer reform over transformation? Why prefer a biased system (where r>g most of the time), which requires massive tranfers to continually rebalance it, over a corrected system (worker owned and managed cooperatives for example) which would require considerably less transfer payments?

    (2) Is it not likely that under conditions of secular (long-term) stagnation that r>g will be a permanent feature of the capitalist system? Will not Limits to Growth essentially and inevitably force g (growth) down to be permanently lower than r and even possibly lower than zero?

    These are tough questions you need to answer rather than making snarks at the ratbags at the extremes of Marxist thinking. All schools of thought have their ratbags and blind ideologues. Orthodox economics has the Chicago School and the monetarists. I don’t judge all orthodox economists by those ratbags.

  14. Paul Norton
    March 30th, 2015 at 14:38 | #14

    I was the Convenor of the Candidate Review Panel of my Greens branch in the lead-up to the Queensland State election. One of the standard questions we ask prospective candidates is whether they have any past criminal convictions or other issues in their past that could create difficulties if brought up in an election campaign.

  15. Megan
    March 30th, 2015 at 15:41 | #15

    @Paul Norton

    What happens if they say “yes” (let’s say for example some minor property offences and probation breaches from their teenage years and a bit of traffic history)?

  16. Uncle Milton
    March 30th, 2015 at 15:42 | #16

    @Paul Norton

    By difficulties, do you mean that a Greens candidate who hadn’t been convicted of trespass or obstruction or something similar at a forest protest would be an embarrassment to the party?

  17. Ivor
    March 30th, 2015 at 16:01 | #17

    @John Quiggin

    I would certainly expect Kliman to reject much of Piketty, as do I.

    I also dispute some of Kliman’s TSSI (temporal single system interpretation) of Marx’s value particularly Kliman’s silly notion of intrinsic value.

    Although I haven’t read Kliman on Piketty, my knowledge of Kliman, suggests his views are probably well considered and worth digesting from a Left-Marxist point of view.

    Where have Keynesians ever noted that there is a central contradiction in capitalism, and that inequality increases due to this? Joan Robinson ??? Any living ???

    Frank Stilwell is the main academic Australian economist addressing inequality before Piketty, and he is not a Keynesian. I guess Stilwell would agree that there is a structural contradiction.

    This single point is the first differentia specifica between a Keynesian and a Marxist.

  18. Ivor
    March 30th, 2015 at 16:34 | #18

    @Ikonoclast

    I don’t think all academic economists should be clumped together in one heap. For a start, there are still academic economists who are Marxists or at least Marxian in some aspects of their thinking.

    I would put this to the test.

    Presumably those running courses in political economy, would be half-Marxists and maybe have reviewed their positions. Maybe.

    But our economists are a different breed. Excluding political economy, what percentage of Australian academic economists are Marxist?

    What is an example.

    Junankar wrote a reasonable near Marxist tract – before he moved to Australia.

    Steve Keen is no Marxist. Cliva Hamilton, Richard Dennis (Australia Institute) are not.

    We all know about international Marxist economists, – Wolff but it seems the one of the best Marxist economists trained as a geographer.

    So who of our “economists” are Marxist?

  19. Ikonoclast
    March 30th, 2015 at 17:42 | #19

    @Ivor

    This is a reply to both of your above posts. Piketty is not (so far as I can see) an ideological economist nor a political economist. He is a descriptive economist in the French sociological tradition (again so far as I can see). He makes no deep analytical interpretations and no normative judgements of capitalism per se. He simply measures how capitalism, as it has existed and exists, operates. He measures how it operates in one narrow sense but in a broad and data-deep field within that narrow sense; namely the distrubution of income and wealth over time. Obviously there are choices to be made in methods when deciding how to measure and quantify these things.

    In the above narrow sense, I think Piketty produces something useful. His formula r>g is better understood as;

    (a) when r>g under capitalism then wealth concentrates (sans redistribution); and
    (b) r>g is the standard case under capitalism in most eras.

    Only special events like revolution, war, massive inflation, massive redistribution and the one-off extreme industrial-technological growth spurt of the 20th C change the dynamics of r>g, meaning maybe a temporary g>r period or more likely reformist or reactionary change in other ways.

    My personal opinion is that r>g is a much more useful insight than the doctrinaire claims (made by some old Marxists) that the tendency of the rate of profit to fall is a law. It’s not a law, it’s one tendency with countervailing tendencies as Marx made clear.

    The formula r>g is also a tendency not a law. It’s perhaps an asymptotic law as Piketty uses the term in another context. It illustrates a tendency to a limit. The limits of the r>g tendency are reached usually at the point of war or revolution to which any unimpeded progress of r>g will lead. Not that Piketty explicitly said this last IIRC.

    The above is a roundabout way of saying academic economists don’t have to be Marxists to be useful. Piketty is useful. I agree that they fail to see the big picture (namely that problem with capitalism is entirely systemic i.e. inherent to the very system itself).

  20. rog
    March 30th, 2015 at 17:58 | #20

    John,

    Saul Eslake makes a valid point regarding widening the base on GST; amongst other loopholes that need to be tightened/removed food needs to be included; apparently it’s the wealthy that spend more on raw food.

  21. rog
    March 30th, 2015 at 18:02 | #21

    @Uncle Milton Excluding those with a criminal record means that inspite of the justice system, criminal acts can never be redeemed

  22. Megan
    March 30th, 2015 at 19:07 | #22

    @Ikonoclast

    Re: #5

    With respect to Billy Gordon we can forget his childhood offences. They ought to be disregarded.

    Under Qld law this is absolutely correct. In fact, for the general population we can also forget convictions more than 10 years ago, and under the law covering electoral eligibility everything else in his record.

    In Victoria in 1970 it was different (from Deakin Uni):

    In R v Walsh1 the Victorian Supreme Court determined that Walsh’s conviction for an offence of robbery, even though it was recorded when Walsh was a child, constituted a conviction for felony, hence making him subject to the disqualification provision contained in the Constitution Act Amendment Act. Consequently, Walsh’s election was declared void.

    When the Victorian Parliament came to enact its Constitution Act in 1975, the disqualification provisions were amended. Children’s Court priors, whether a conviction was recorded or not, no longer disqualified a person who was otherwise eligible, from being elected to either House
    of Parliament. Walsh was subsequently elected to the Victorian Legislative Assembly in May 1979 and went on to enjoy a distinguished parliamentary career, during which he held a number of Ministerial portfolios. Walsh retired from the Victorian Parliament in 1992.

    The story of Ron ‘Bunna’ Walsh is worth recounting because it serves as a timely reminder of the valuable contribution to public life that can be made by those who have a criminal record. It is of contemporary relevance because most Australian jurisdictions still provide for some form of parliamentary disqualification based on a person’s criminal history.

    I’ve already questioned the strength of the argument that Gordon should quit parliament for being “dishonest” (I think it’s a stretch to accuse him of that, and legally he is perfectly entitled to his seat anyway).

    Before succumbing to News-Ltd-Mob-Rule, I think we should ask the simple question of whether we want to go back to much stricter disqualifying rule for MPs, and perhaps also whether it is possible – or desirable – to have such a thing as a smear-proof candidate.

    As I said in the ‘sandpit’, I view this as poor treatment and the ALP bowing in fear before Murdoch’s thugs. I hate the ALP/LNP duopoly, but I certainly don’t want Murdoch running the State either.

  23. Ivor
    March 30th, 2015 at 22:10 | #23

    @John Quiggin

    Where is there evidence for this.

    Kliman writes about “compensation” received by top salaried executives, stating that he considers that most of this income:

    is arguably a share of the profits of the corporations that employ them, rather than payment for the labor services they provide.

    [ Example ]

    It would be odd for him to argue the opposite by suggesting that these people are in the “oppressed working class”.

    However normal highly skilled workers thereby receiving higher incomes may be cast as in the working class.

  24. Ivor
    March 30th, 2015 at 22:11 | #24

    @John Quiggin

    Where is there evidence for this.

    Kliman writes about “compensation” received by top salaried executives, stating that he considers that most of this income:

    is arguably a share of the profits of the corporations that employ them, rather than payment for the labor services they provide.

    [ Example ]

    It would be odd for him to argue the opposite by suggesting that these people are in the “oppressed working class”.

    However normal highly skilled workers thereby receiving higher incomes may be cast as in the working class.

  25. Ivor
    March 30th, 2015 at 22:15 | #25

    @John Quiggin

    Where is there evidence of Kliman arguing that profit share is at an all time low?

    Kliman argues that profits have declined but rebounded – which is a somewhat different matter.

    See: Kliman Profit

  26. Ivor
    March 30th, 2015 at 23:02 | #26

    @Ikonoclast

    My personal opinion is that r>g is a much more useful insight than the doctrinaire claims (made by some old Marxists) that the tendency of the rate of profit to fall is a law. It’s not a law, it’s one tendency with countervailing tendencies as Marx made clear.

    Marx made it very clear this was a Law. He stated that the gradual growth in constant capital in relation to variable capital must necessarily result in the gradual fall in the rate of profit.

    It is this law that causes crisis.

    On the other hand r>g just causes greater inequality but no necessary structural crisis or structural financial crisis. r>g applies to slave production and feudal economies which did not necessarily collapse based on internal structural contradictions. In fact slavery and feudalism persist in some tribal areas today.

  27. Ikonoclast
    March 31st, 2015 at 07:59 | #27

    @Ivor

    Did Marx made it clear that TRPF (tendency of rate of profit to fall) is an invioable law? I have my doubts. David Harvey does mention that in the Grundrisse, “Marx lists a variety of other factors that can stabilize the rate of profit ‘other than by crises’.”

    However, it is clear that there is a fallacy, or a number of fallacies, if the TRPF thesis is taken as invioable law. I strongly suspect that the overarching fallacy is a fallacy of composition of the form “TRPF occurs in individual cases therefore TRPF must be an over-arching feature of the entire system”. In point of fact, the system always finds ways to overcome TRPF by innovation.

    Another part of the fallacy is the labour theory of value. It is not only labour (human physical and mental labour) which creates value. Energy as useful work (especially via automation) and natural replication also create value. The moral argument against capitalism is not solely based on a labour theory of value. Not only is it the case that each person’s labour product ought to be her/his own it is that what nature provides is the equal right of all.

    The fundamental contradictions of capitalism exist in its push for endless growth (violates the limits to growth in a finite system) and in its intrinsically anti-democratic nature which makes decision-making in the interest of all the people impossible.

    The capitalist is a predator. Predator-prey relationships in nature illustrate that the predators’ “profit” can be taken indefinitely in a stable, productive system. The predator simply cannot accumulate wealth (increased predator numbers) indefinitely. There is a natural limit to preying that is all. The predators can continually take a “profit” not greater than the amount which allows the continued reproductive success of the prey.

    The logic of the capitalist system at the pure material level is the same as a predator-prey system in nature. The logic of the capitalist system at a formal system level (capital-finance-ownership) is quite different from nature and is indeed antithetical to natural processes. Without going into it in depth, suffice it to say that the unsustainability of capitalism derives from its having a formal system which posits nature (the biosphere) as limitless. It does this by positing that growth in capitalist wealth accumulation ought to be limitless.

  28. John Quiggin
    March 31st, 2015 at 08:03 | #28

    @Ivor

    Reread the article. This is the viewpoint Kliman attributes to his critics, and sets out to refute.

  29. Paul Norton
    March 31st, 2015 at 09:06 | #29

    Uncle Milton @16, very good!

    Megan @15, I think it would depend on what the issues were, but if it were the sort of examples you cite, and we had good grounds for thinking they’d subsequently made a clean fist of things, that almost certainly wouldn’t be an obstacle to preselection. In such cases what’s most important is that forewarned is forearmed if the local tabloid goes fishing.

  30. Paul Norton
    March 31st, 2015 at 09:09 | #30

    Also, if a prospective candidate is honest about such matters, that definitely says something positive about their character

  31. Ivor
    March 31st, 2015 at 09:12 | #31

    @John Quiggin

    Good heavens! What is this about? You may need to be more specific.

    In this article, Kliman argues generally against critics, but agrees with critics on the point I cited.

    Kliman writes:

    Yet as critics of the article note correctly, the official employee-compensation numbers themselves might be misleading. Those numbers include “compensation” received by top salaried executives, most of which is arguably a share of the profits of the corporations that employ them, rather than payment for the labor services they provide.

    If you “arguably” “share” in capitalist profits you are not an oppressed worker.

    Kliman’s use of the word “correctly” means he is not trying to refute this point.

    Kliman then continues with a nested “if” statement:

    If CEO’s received employee compensation, one could argue that the demonstrated failure of “profits” to rise at the expense of “compensation” is a statistical mirage since, if …..

    Here he is presenting his critics position that (supposedly) CEO’s receiving incomes as workers artificially drags down the measurement of profit.

    Kliman then specifically states that the assertion that CEO’s were receiving employees compensation – was false. See:

    First identifies the assertion;

    the assertion that supermanagers were hogging substantially larger and larger shares of employee compensation.

    Then declares the assertion is false;

    this assertion turns out to be unfounded

    You need some other source to justify:

    CEOs are members of the oppressed working class

    The ploy of playing that CEO’s are members of the oppressed working class sounds more like a line from Jeremy Clarkson.

  32. John Quiggin
    March 31st, 2015 at 09:32 | #32

    As I said, Kliman is attempting (very weakly, IMO) to refute the argument, not putting it forward. The statement that CEOs are members of the oppressed working class is a summary of my own interactions with him, but it’s obvious from what you’ve already cited that he is (as I said) doing his best to deny the facts put forward by Piketty.

  33. Uncle Milton
    March 31st, 2015 at 09:36 | #33

    The G8 has withdrawn its support for Christopher Pyne’s university funding reforms. Genuine change of mind or a case of reculer pour mieux sauter?

  34. Ikonoclast
    March 31st, 2015 at 09:58 | #34

    @Ivor

    It appears to me that Professor John Quiggin has misinterpreted Kliman’s article somewhat. However, I disagree with Kliman if he also asserts (implicitly in the article under question or explicitly elsehwere) that the tendency of the rate of profit to fall is a Law.

    Professor Richard Wolff states (and I agree with him) that;

    “Regarding the argument of Marx about the “tendency for the rate of profit to fall” (TRPF) – in his Capital, Vol 3, Chapters 13-15, as I recall – Marx shows that this tendency is just that: something that “tends” to happen unless and until contradictions with that tendency and/or “counteracting tendencies” undermine the TRPF.

    Items (1) through (4) above [not listed in this quote] represent some of the contradictions and counteracting tendencies that transformed the TRPF into a short period when profits instead rose. As the European crisis persists and draws the already crisis-weakened world economy back down into broad decline – after an incomplete and weak recovery for a few months before April, 2012 – the TRPF reasserts itself.

    The subtelty of Marx’s arguments is lost if readers transform what he calls a “tendency” into some absolute that must always occur. Those chapters in Capital, Vol 3 are entitled tendency, contradictions in the tendency and counteracting tendencies precisely to avoid the interpretation that Marx was describing something that would always occur.”

    A “tendency” no matter how strong is not a Law. A (scientific) Law describes inflexible relationships. A scientific law is a statement based on repeated experimental observations that describes some aspects of the universe. A scientific law always applies under the same conditions and implies that there is a fixed “causal” relationship involving its elements. For philosphical reasons too complex to go into here the word “causal” must be in quotes as it is not quite the right word.

    An economic system is a multivariate system with many unknown and imperfectly known variables. Causality is also contestable in a multi-feedback system or set of systems. No mechanistic or deterministic Laws (beyond physical laws, thermodynamic laws and perhaps some ecological and biological laws as they effect the economy) can be invoked or assumed in relation to our extant economy or any economy. That is why careful writers like Marx talk about tendencies not laws in such contexts.

    Since middle age, I have had a tendency to get fatter. However, it is just a tendency and there are countervailing tendencies. Periodic “crises” and “panics” of dieting and exercise have for years lead to a boom and bust bodily economy for me (commonly called yo-yo dieting). These have interrupted the upward trend for long periods by replacing it with a rising and falling graph with a flat overall trend. Currently, I am at a peak (unfortunately) that has plateaued (small mercy) for a considerable period (not so good). Where will the next movement be? I don’t know. There is no clear Law to describe these tendencies or my very variable “will power”. If I died soon (hopefully unlikely) where would my weight trend go? My live weight would instantly go to zero. My dead weight would quickly go to zero by decay or (much more likely) cremation. Where’s my tendency to get fatter then? It’s certainly no Law. 😉

  35. Nevil Kingston-Brown
    March 31st, 2015 at 10:09 | #35

    r>g is just a mathematical abstraction of “inequality between capital and labour is increasing”. Piketty mistakes his description for a causal analysis.

  36. Nevil Kingston-Brown
    March 31st, 2015 at 10:14 | #36

    As I understand it, Richard Burkhauser’s claim, repeated by Kliman, that profit share is falling and worker’s share rising rests on including welfare state transfers as part of the worker’s share.

  37. Ivor
    March 31st, 2015 at 10:29 | #37

    Kliman is not a reasonable representation of Marxism. He is similar to Steve Keen, fixated.

    I have listened to him at conferences in London, and found him more obscurantist and tendentious than revelatory.

    I would not be surprised that your representation of his view is a simple misunderstanding.

    It is not reflected in any source I am aware of – properly digested.

    None-the-less Piketty needs a dose of cross-examination and Kliman is pursuing this. this is useful.

    It may be possible to associate CEO’s with the working class but you would need to separate out their income as coming from actual skill, then rent from their monopolisation of this skill, and then the extra earnings from profits from capital.

    My view is that CEO’s are in a middle class and will attack workers when capital desires.

  38. Ikonoclast
    March 31st, 2015 at 10:38 | #38

    Footnote: The continually interrupted and reversed tendency of the rate of profit to fall via capital overaccumulation (as much as anything) condemns capitalism to periodic crises but is not in and of itself the factor which condemns capitalism to ultimate collapse. The factor which condemns capitalism to collapse is its intrinsic propensity to endless growth which exhuasts resources and destroys environments. Capital seeks endless growth as that is the nature of competing capital. It is an endlessly escalating battle where anything less than growth for an “individual capital” means decay and death for that capital. All capitals to survive long term must grow. This means the entire system must grow indefinitely which is of course an impossibility.

    The other source of capital’s contradictions is the issue of the control of inputs, production and consumption. Were all the people to control these elements, then the destruction of the environment would be felt AND acted upon (because the people are essentially diffuse and everywhere) and factored in to decisions. In other words, negative externalities are truly considered only under conditions of full worker and citizen democracy. Where a small elite makes the production decisions and takes disproportionate wealth, “enclave immunity” to negative externalities exists and persists for a long time. It becomes permissible and indeed desirable to trash most of the world environment while small benign, “pristine” and lavish environments can be maintained in enclave or metropole fashion.

    Of course, there are limits to “enclave immunity”. Climate change is the big ticket item in this regard but there are many other natural factors which will degrade “enclave immunity” including the exclaved and excluded ravening hordes. Are zombie movies really an expression of the fear of under-fed, excluded hordes? In conditions of exclusion, both hopelessness and fundamentalism (political or religious) spread like a zombie infection. Specifically, hopelessness comes first. This leads to apathy and self-destruction or to violent radicalisation depending on internal nature and external influences.

  39. Ivor
    March 31st, 2015 at 11:33 | #39

    @Nevil Kingston-Brown

    If people want to make a point about what Kliman or Wolff or any other supposedly say, then they need to provide a reference.

    It may be useful to look at factor shares data from some global database.

    If you eliminate all the artificial boost due to trillions of QE, you may find that the leading capitalist stock market indexes, after CPI adjustment, have actually fallen or alternatively the period of doubling has lengthened.

    It may be useful to look at after-tax minimum wages and after-tax average wages and compare to the henderson poverty line. This may show that household shares have fallen presumably implying that profits-share has been maintained or increased?.

    Kliman is probably wrong on this point (and others), but we should not simply provoke his views on Piketty.

    Piketty’s r>g (and associated formula) are not the root analysis we need. Picketty’s main fault is that he aggressively insists on not making a distinction between wealth and capital see his page 47).

    This misunderstanding cascades all the way through his book.

    @Ikonoclast

  40. Ivor
    March 31st, 2015 at 11:34 | #40

    @Nevil Kingston-Brown

    If people want to make a point about what Kliman or Wolff or any other supposedly say, then they need to provide a reference.

    It may be useful to look at factor shares data from some global database.

    If you eliminate all the artificial boost due to trillions of QE, you may find that the leading capitalist stock market indexes, after CPI adjustment, have actually fallen or alternatively the period of doubling has lengthened.

    It may be useful to look at after-tax minimum wages and after-tax average wages and compare to the henderson poverty line. This may show that household shares have fallen presumably implying that profits-share has been maintained or increased?.

    Kliman is probably wrong on this point (and others), but we should not simply provoke his views on Piketty.

    Piketty’s r>g (and associated formula) are not the root analysis we need. Picketty’s main fault is that he aggressively insists on not making a distinction between wealth and capital see his page 47).

    This misunderstanding cascades all the way through his book.

  41. Ivor
    March 31st, 2015 at 11:44 | #41

    @Ikonoclast

    Marx specifically states it as a Law in ch.13 vol 3, Capital titled:

    “The Law Itself”, and elsewhere.

    he develops his model and then explicitly states that:

    … this gradual growth in the constant capital, in relation to the variable, must necessarily result in a gradual fall in the general rate of profit given ….

    [p318, Penguin Classics ed.]

    The fact that we have balloons, satellites and planes that can stay high in the sky above the earth does not mean that the Law of Gravity is not a law but a tendency.

    Maybe someone can spot anywhere where Marx says the structural fall in profits (due to worsening disproportionality of capital to labour) is a tendency.

    Marx generally used “tendency” w.r.t. countervailing issues. In any case, is there a meaningful difference between a “necessary tendency” and a “law”?

  42. John Quiggin
    March 31st, 2015 at 13:56 | #42

    @Ivor

    I’d rather argue with the American Enterprise Institute directly (since they have some influence) than deal with the second hand presentation of the same arguments by Kliman (who doesn’t). I just pointed to him as someone who, in your words, has never admitted the juicy points raised by Piketty.

  43. ZM
    March 31st, 2015 at 14:14 | #43

    This morning there was an article in The Age about an article in The Economist about criticism of Piketty that asserts he overlooked that the increase in r since the 1970s was primarily in housing wealth rather than non-housing wealth (the rate of return of which has been relatively stable according to this).

    This was used in The Age and The Economist to argue that instead of a general wealth tax policy interventions should concentrate on the housing market — such as cutting out red tape and NIMBYism.

    I wondered if this criticism of Piketty was accurate?

    And I do not think having less controls on housing development and less concern with heritage and neighbourhood character is a very good solution to inequality — although I agree we do need more affordable housing with appropriate services and infrastructure.

    http://www.theage.com.au/business/the-economy/inequality-is-growing-in-our-own-backyards-20150330-1mb83o.html

    http://www.economist.com/blogs/freeexchange/2015/03/wealth-inequality

  44. ZM
    March 31st, 2015 at 14:15 | #44

    This morning there was an article in The Age about an article in The Economist about criticism of Piketty that asserts he overlooked that the increase in r since the 1970s was primarily in housing wealth rather than non-housing wealth (the rate of return of which has been relatively stable according to this).

    This was used in The Age and The Economist to argue that instead of a general wealth tax policy interventions should concentrate on the housing market — such as cutting out red tape and NIMBYism.

    I wondered if this criticism of Piketty was accurate?
    And I do not think having less controls on housing development and less concern with heritage and neighbourhood character is a very good solution to inequality — although I agree we do need more affordable housing with appropriate services and infrastructure.

    http://www.theage.com.au/business/the-economy/inequality-is-growing-in-our-own-backyards-20150330-1mb83o.html

  45. Ivor
    March 31st, 2015 at 14:35 | #45

    @John Quiggin

    Yes, I would avoid Kliman unless you want to drown in leftist sectarian Marxism.

    But some of his points may be useful.

  46. Ikonoclast
    March 31st, 2015 at 15:03 | #46

    @Ivor

    The fact that Marx wrote something is not proof that it is true or that it remains true beyond his own epoch. We have to pass a more critical eye than that over Marx’s works. Knowledge marches on and history marches on. There have been many developments in science, technology, extant forms of capitalism and the availability of economic data since Marx’s day.

    The new data and new developments easily put to rest the idea that TRPF is a universal law for all epochs of capitalism. TRPF is an historical artefact if anything. It is an artefact of one form of organisation of industrial capital (and industrial capital only) before the advent of full automation, robotisation and the employment of amounts of inanimate power which now vastly dwarf human muscle power (by several powers of ten). These factors I mention have introduced a qualitative as well as a quantitative change into the character of capitalist production.

    There is no intrinsic reason that less material surplus of goods and services (including the profit component) can be drawn out of a near fully automated system powered by inanimate energy forces and run by a tiny operating crew. There is no valid claim that inanimate or non-human processes cannot produce significant surplus value themselves under current modern technology with minimal though not zero human mental and physical labour power.* The increase of constant capital (buildings, plant, automation and machinery) over variable capital (human labour) does nothing in itself to explain the over-accumulation of capital. There would be no over-accumulation if displaced workers were employed and remunerated elsewhere in human and environmental services (for example) or even simply given adequate living stipends to be citizens.

    The problem rather arises in the place where I located it (and where Marx located it orignally for he is correct on this point). The problem arises with the ownership of the means of production and thus the power to (mis)-allocate resources which accrues to the owning elite at the expense of the masses.

    * Final Note: There is no way that a labour theory of value encapsulates and accounts for all the value produced in the modern age. Marx’s TRPF was approximately valid under the conditions of early industrial capitalism as he knew them. It is no longer even approximately valid. The labour theory of value itself was originally approximately valid. It too is no longer even approximately valid.

    The fact that the labour theory of value does not hold any longer does not in any way legitimise capitalist ownership of the means of production. Where labour is not the generator of surplus value, natural capital and natural processes are the generators and this surplus does not rightly belong to a small sub-set of humans (owners) any more than does the labour surplus. More precisely a sort of dialectic is involved. Value and surplus value are created by the interaction of human labour and natural resources/processes. Labour is useless without resources and resources are useless without labour (or at least work be it machine-work or human-work). Technology leads to capital deepening and a reduction in variable (human) capital. Technology is a lever precisely as a lever is technology.

  47. Ivor
    March 31st, 2015 at 15:29 | #47

    @Ikonoclast

    I think you may need to review this with at least some references.

    You cannot deal with this issues based on duelling opinions.

    Any statement such as:

    The fact that Marx wrote something is not proof that it is true or that it remains true beyond his own epoch.

    lacks rigor.

    It all depends on what was written, which anyone is free to contest with references, evidence and analysis.

    Anyone can set up a simple spreadsheet model of capitalism and show it soon collapses. Just assume that all business expenditures are recovered by final consumption expenditures.

    On the other hand Marx’s model of simple reproduction with department I and department II continues infinitely. Marx’s flow ensures that all business expenditures are covered by consumption expenditures.

    I see no substantive change with modern capitalism apart from credit, paper money, and exploitation of oppressed labour offshore.

    For Marx, money was specie. He excluded trade and credit issues from his work intending to cover these later, but he died.

    Marx did not support the labour theory of value – this was a classical theory (John Locke, Adam Smith etc). Marx developed a different “socially necessary labour theory of value” where this quantity is determined by competitive markets provided there is no “alien power or barrier” to market forces. [cf. Capital vol 3, ch 45. Penguin ed. p895-896]

    Attacks on Marx are a dime a dozen. They all usually misinterpret him and you can always attack someone by misinterpreting them.

  48. Donald Oats
    March 31st, 2015 at 16:11 | #48

    The Age of Entitlement is alive and well, for some: job employment agencies will now be able to place jobseekers in contracts lasting as few as four weeks, and will be incentivised with cash rewards for doing so. To wit:

    Employment service providers will be offered cash incentives to place jobseekers in short-term positions as well as longer term ones under changes announced by the federal government on Tuesday.

    The new “jobactive” system will offer service providers a payment for filling four week-long vacancies, as well vacancies lasting 12 or 26 weeks.

    Four Corners had a program recently which outlined the scale of corruption of the Jobs Services Australia system; they showed clear evidence of falsification of jobseeker forms to say they attended training (when they didn’t), or forms with cut-n-paste signatures forged to claim the jobseekers were still placed at a particular job (when they weren’t), and so on.
    Given the bleeding of taxpayer cash on this Howardistic shambles of a privatised employment services sector, you would think the current government would look long and hard at the cost/benefit of such short term placements being admissible, and would install proper checks and balances, as they like to say. But that isn’t likely, is it? No, no red tape! No red tape! And so we will lose even more cash on subsidising small businesses, offering the crumbs of gaining experience when that isn’t what it is truly about.

    Unemployment is at its highest in 12 years, and this is the kicking jobseekers get, through no fault of their own. Where is the real incentive for job services sector agents to actually reduce the unemployment rate? Perversely, the incentive is the opposite: keep the churn in job seeker chum going, and the money rolls in—just not for the job seeker.

  49. Donald Oats
    March 31st, 2015 at 16:19 | #49

    @Ikonoclast
    I think the withdrawal of support is because the bill, in its current form, does not go far enough. The Go8 most definitely want deregulation by the bucket load; they figure they are now in a great negotiating position with the government, so long as they can shift a couple more pollies to their cause.

    Beyond that, I’m fairly sceptical of de-politicised committees under this government. A look at the appointed heads of various departments, commissions, review boards, public boards, advisory groups, etc, and a pretty strong whiff of favours for friends emanates, certainly a biased selection towards like-minded individuals rather than a diverse base. It’s infantile behaviour.

  50. Donald Oats
    March 31st, 2015 at 16:21 | #50

    Hmm, that’s weird: I clicked on the Reply button for Uncle Milton’s post and ended up with Ikonoclast instead. My apologies for the mix-up.

  51. Ikonoclast
    March 31st, 2015 at 16:29 | #51

    @John Quiggin

    The AEI will never listen to any case that is not for pure unfettered montarist capitalism. Not sure how arguing with them would achieve anything.

  52. John Quiggin
    March 31st, 2015 at 19:24 | #52

    @Ikonoclast

    I have no thought of convincing the AEI. The aim is to convince the uncommitted that the AEI is talking nonsense.

  53. John Quiggin
    March 31st, 2015 at 19:29 | #53

    The thing about the falling rate of profit is that in the early 19th century, the rate of profit was visibly falling, and all economists knew it. Marx wasn’t claiming to have discovered the falling rate but to have explained it and to have shown how it would lead to the final crisis of capitalism.

    But, the rate of profit stopped falling a long time ago, and capitalism has survived a lot of crises. So, the TPRF is now an article of faith rather than part of a serious economic analysis.

  54. Ikonoclast
    March 31st, 2015 at 19:45 | #54

    @Ivor

    Marx could not have foreseen all the developments which would affect his theory. Capitalism, even industrial capitalism, was formatively young when Marx worked and macroeconomic data was scarce. Some aspects of Marxism have stood the test of time and some have not. I see no evidence of a falling rate of profit to date. Piketty found returns to capital surprisingly constant over 200 years or so. The rapid growth of the mid-twentieth century and the concomittant profit surge was a one-off anomoly due to rapid demographic and technological growth. That demographic and technological surge will never be repeated due to limits to growth (this last is my assertion not Piketty’s).

    But I certainly agree that capitalism is the problem. It’s an untenable system in the long run. The external contradiction is with limits to growth. The internal contradiction is to do with its undemocratic control (oligarchic command) of the means of production. These two contradictions are linked as undemocratic command of production means environmental damage and hard environmental limits are disregarded for short-term, elitist and “enclavist” (or metropole-centered) benefit. With full democratic command of production, issues other then economic issues are actually considered. Social and environmental issues also get consideration from the the workers who exist not only at work but also live their lives in families, neighbourhoods and environments affected by production decisions.

    The oligarchs don’t care about such issues. They live in protected enclaves and are buffered from almost all negative externality feedback… until it is too late for anything to be done to arrest a total catastrophe. By the time the oligarchs start feeling environmentally induced pain it will be far too late.

  55. Ikonoclast
    March 31st, 2015 at 19:47 | #55

    @John Quiggin

    My mistake. It was a foolish misinterpretation on my part: typing fingers in top gear and brain in neutral.

  56. Ivor
    March 31st, 2015 at 21:48 | #56

    @John Quiggin

    Here is the real problem.

    So, the TPRF is now an article of faith rather than part of a serious economic analysis.

    That statement looks like more an article of faith than the analysis underpinning the falling rate of profit.

    No-one expects the rate of profit to fall while there are countervailing tendencies. When profits decline capitalists make changes and avail themselves of countervailing tendencies which increase productivity. As long as there is scope for countervailing tendencies profits will not fall.

    Every economics undergraduate probably runs into a tutorial question on long-run entry in a free market, and shows how profits decline or are competed away.

    Even Piketty recognises that profits must decline but for countervailing tendencies (productivity increase, population increase) [Piketty, page 228f].

    And further. Alfred Marshall similarly noted that as the proportion of product to labour and capital increases that this “is likely to be accompanied by a fall in the rate of profits” [Principles of Economics, 8th edition, Macmillan, p511].

    Stilwell covers the falling rate theory at page 139 of his Sydney University textbook “Political Economy the Contest of Economic Ideas”]

    The Journal of Australian Political Economy cited evidence that US profit rates declined from 1947 to 1985 [JAPE 25, (October 1989) p47, fig 1.]

    need I go on …. why not?

    Many other points of view are at: Wikipedia – falling profits

    If the rate of profit did not fall we would have had no need for Thatcherism or the Australian Accord, and Japan would not be the disaster it now is. There would be no need to inject debt or otherwise fiddle with the value of money, if capitalism maintained profits.

    It is obvious – if capital increases but wages stay the same – the rate of profit must fall.

    Similarly, if capital increases more than wages increase – the rate of profit must fall.

    The only ways the rate of profits can stay constant is if;

    there is no accumulation of capital; or

    the amount expropriated from workers increases (or relatively so) in appropriate proportion to the increase in capital; or

    there is some other permanent, sustainable countervailing tendency.

    But you would not even need to increase expropriation or seek for other countervailing tendency if the rate of profit falling ceased a long time ago.

  57. Ivor
    March 31st, 2015 at 21:49 | #57

    @John Quiggin

    Here is the real problem.

    So, the TPRF is now an article of faith rather than part of a serious economic analysis.

    That statement looks like more an article of faith than the analysis underpinning the falling rate of profit.

    No-one expects the rate of profit to fall while there are countervailing tendencies. When profits decline capitalists make changes and avail themselves of countervailing tendencies which increase productivity. As long as there is scope for countervailing tendencies profits will not fall.

    Every economics undergraduate probably runs into a tutorial question on long-run entry in a free market, and shows how profits decline or are competed away.

    Even Piketty recognises that profits must decline but for countervailing tendencies (productivity increase, population increase) [Piketty, page 228f].

    And further. Alfred Marshall similarly noted that as the proportion of product to labour and capital increases that this “is likely to be accompanied by a fall in the rate of profits” [Principles of Economics, 8th edition, Macmillan, p511].

    Stilwell covers the falling rate theory at page 139 of his Sydney University textbook “Political Economy the Contest of Economic Ideas”]

    The Journal of Australian Political Economy cited evidence that US profit rates declined from 1947 to 1985 [JAPE 25, (October 1989) p47, fig 1.]

    need I go on …. why not?

    Many other points of view are at: Wikipedia – falling profits

    If the rate of profit did not fall we would have had no need for Thatcherism or the Australian Accord, and Japan would not be the disaster it now is. There would be no need to inject debt or otherwise fiddle with the value of money, if capitalism maintained profits.

    It is obvious – if capital increases but wages stay the same – the rate of profit must fall.

    Similarly, if capital increases more than wages increase – the rate of profit must fall.

    The only ways the rate of profits can stay constant is if;

    there is no accumulation of capital; or

    the amount expropriated from workers increases (or relatively so) in appropriate proportion to the increase in capital; or

    there is some other permanent, sustainable countervailing tendency.

    But you would not even need to increase expropriation or seek for other countervailing tendency if the rate of profit falling ceased a long time ago.

  58. Ivor
    March 31st, 2015 at 22:04 | #58

    @Ikonoclast

    Capitalism may well collapse based on limits to growth and conflict with democratic standards.

    This will save humanity from having to be confronted with the hellish reality of a structural crisis.

    If progressive politics can abolish capitalism before its crisis tendencies burst forth – so much the better.

  59. Jordan
    April 1st, 2015 at 05:51 | #59

    Profits of financial sector are 40% it went up from historically 8-13% of all profits.
    There are profits from stocks too, what part of total profits paper asset profits are?

    Why there is decline in economic activity? Ah, yes, there is no profits in productive industries so there is no investment. There is too much supply allready.

    TPRF is alive and strongest now but only in real economy.

  60. Ikonoclast
    April 1st, 2015 at 08:06 | #60

    I think it would be more useful to talk about the tendency of the rate of profit to oscillate. Surely, that is the historical record.

    Michael Roberts says; “I don’t think that I or other supporters of Marx’s law (TRPF) as the basis of the cause of crises have ignored the countervailing tendencies to the tendency of the rate or profit to fall as capital accumulates. That’s because the law is both the tendency and countertendency.”

    So Micheal Roberts (whom David Harvey has called “monomaniacal” with respect to the TRPF) says “the law is both the tendency and countertendency”. This puts the debate in far more interesting and potentially valid territory. It now becomes (as I said above) “the tendency of the rate of profit to oscillate”. Thus the “law” is misconstrued if it meant to imply that the rate of profit (while oscillating) tends to fall in the long, long term (over many decades and even centuries).

    The large periodic oscillations of capitalism (meaning in the down-cycle, depressions and major recessions) constitute one of its defining features. The rate of return on capital falls as capital over-accumulation occurs. A depression or major recession and/or war destroys capital in bulk and solves the over-accumulation crisis.

    This inherent contradiction is at heart a contest between capital and labour for profits and wages. If capital is too successful for its own good it causes the linked crises of capital over-accumulation/over-production and low wages which mean inadequate aggregate demand. This inherent contradiction in and of itself will not necessarily lead to the collapse of capitalism. Capital can re-constitute itself after each such crisis and has done so to date. Government that is even minimally democratically responsive also plays a role in saving capital from itself by re-distribution and other macroeconomic measures.

    The real and final contradictions of capitalism are linked. One, the capitalist system by its internal logic is committed to endless growth. After each crisis, it grows anew to new heights. Competing capitals (companies, firms, conglomerates, transnationals) must grow or be supplanted by capitals which will grow. Two, a system predicated on endless growth cannot continue in a finite environment (the earth’s biosphere). A levelling to a more or less steady-state or oscillating plateau is required or else overshoot and collapse will occur.

    The elite (who are the oligarchs and their elite managers, econocrats and technocrats) control the bulk of the decisions about production because they essentially own and control the productive apparatus. The elite are insulated from the common human pain and the environmental negative externality damage of their decisions. Only the disempowered people feel that pain and damage immediately. The elite, insulated from this pain and damage in their financially and physically protected enclaves of great wealth, are free and indeed attracted and induced to inflict ever worsening human pain and environmental damage. They don’t see it, they don’t feel it and when they do they ignore or deny it.

    Only a true democratisation which includes worker control of the productive apparatus (and so means decisions are made with economic, social and envirionmental costs and benefits all accounted for and accounted for for everyone) can overcame this terminally damaging dynamic of capitalism and its inherent character which is antithetical to common human good and a liveable, survivable environment.

  61. Collin Street
    April 1st, 2015 at 08:25 | #61

    > Ah, yes, there is no profits in productive industries so there is no investment.

    There’s no profit because there’s too much competition. The lower prices through competition have to come from somewhere, and where they come from is the profit of the owners.

    The drive for competition has destroyed the profitability of any industry it’s applied to. That’s what it’s supposed to do: If that makes it impossible to actually run a business that does anything useful then so be it, I guess.

    [the only answers are communism or dirigisme.]

  62. Ikonoclast
    April 1st, 2015 at 08:30 | #62

    @Ivor

    Footnote to my above post (which I hope you read). Our views are not so far apart really. Part of the problem is Marx’s now archaic and somewhat idiosyncratic terminology.

    The TRPF is really (if one even follows Micheal Roberts) the Tendency for the Rate of Profit to Oscillate. There are a great number of tendencies (forces) and counter-tendencies (counter-forces) tending to move the profit rate down and up. These include both micro and macro effects.

    The OCC (organic composition of capital) is another misleading term. “Marx argues that a rising organic composition of capital is a necessary effect of capital accumulation and competition in the sphere of production, at least in the long term. This means that the share of constant capital in the total capital outlay increases, and that labor input per product unit declines.” – Wikipedia.

    This means a rising OCC entails more capital (machinery) and less humans (labour). To me this is a rise in the INORGANIC composition of capital if one is being literal in the biological and chemical senses. Marx should have termed it the ICC (the inorganic composition of capital).

  63. Ikonoclast
    April 1st, 2015 at 08:35 | #63

    @Collin Street

    Other answers (for the capitalists) are imperfect competition, oligopoly, monopoly, price fixing and cartel behaviour. You can’t assume perfect or free markets. They don’t really exist anywhere.

  64. Ivor
    April 1st, 2015 at 10:12 | #64

    @Ikonoclast

    Yes there are counter tendencies – but the point is they are unsustainable, and due to the accumulation of capital at a constant rate – must increasingly become available at an exponential rate.

    Anyway it may be too late as our capitalist keepers have taken us to the brink – or so it seems according to this view:

    http://www.ft.com/intl/cms/s/0/2554931c-ac85-11e4-9d32-00144feab7de.html#axzz3W0eMHaTQ

    I think we can blame all those who dare make such claims as:

    So, the TPRF is now an article of faith rather than part of a serious economic analysis.

  65. Ikonoclast
    April 1st, 2015 at 11:21 | #65

    @Ivor

    I think we might have to agree to differ a bit. I see a tendency for the rate of profit to oscillate (boom and bust) at least until environmental limits are reached. Capital is destroyed in the bust (mainly paper values) but real capital (plant and equipment) might also be destroyed, broken up and obsoleted. A new cycle begins after much capital (especially paper wealth) is destroyed. I do not locate the final contradiction of capitalism in this process in itself. The fundamental dialectic is that the formal system of capitalism (as ownership and finance) operates in the real system of the environment. The axioms of capitalism (for a formal system really has axioms) are not “analogically congruent” (my term) with the laws of the environment (especially the laws of physics, thermodynamics and ecology).

    For a formal system (like capitalist ownership and finance with very limited democracy ) to interact successfully with a real system, the formal system must be at least substantially “analogically congruent” with the real system. Let me explain this by an example. Maps and plans that work (allow us to travel and build successfully) do work because they are analogically congruent with physical reality. For example, drawn plans may have 2 space dimensions but they use special techniques (floor plans and elevations for example) to show how to build in 3 space dimensions. There is an “analogical congruity” between good plans and reality in terms of 3d space being depicted in such a way that information can be successfully transferred from the plan to reality.

    The whole point of analogical congruity in a formal system (be it plans, language or mathematics for example) is to allow the successful and accurate transmission of information both ways. I mean from the formal system to reality and from reality back to the formal system. If a formal system (capitalism) posits endless growth in a finite real system (the biosphere) then this is a fundamental disjunction which does not allow the transmission of ultimately viable orders (orders are information) from the formal system to the real system nor for accurate transmission of feedback information from the real system back to the formal system.

    The final contradictions of capitalism inhere in its endless attempts to accrue (endless growth) and the endless struggle between capital and labour but most especially in the control of production by the elites for their own purposes which purpose are antithetical to the interests of the workers and antithetical to the interests of maintining a livable, sustaining environment.

    Capitalism might theoretically be of endless duration IMO, albeit riven by cyclical upheavals; an egregious one of which could possibly destroy the system, if the environment were infinite. However, the environment is limited and those invioable limits are very close now. It is the analogical incongruence batween the axioms of capitalist ownership and finance and the physical and biological laws of the real world which means that capitalism will fail. Capitalism is an arbitrary unempirical formal system fundamentally out of step with empirical reality.

  66. Tim Macknay
    April 1st, 2015 at 11:41 | #66

    It seems strangely apposite to this thread that today’s edition of Prosh (the University of Western Australia’s annual satirical newspaper) is entitled ‘The Marxist Ejaculation’. 😉

  67. Ivor
    April 1st, 2015 at 12:04 | #67

    @Ikonoclast

    I must be too old-fashioned. You are adopting a very subjective approach that can be easily contradicted with the same veracity.

    At this stage people should be looking for explanations based on hard evidence and concrete analysis.

    Maybe you would be better off criticising Marx.

    If you want to say;

    Capitalism might theoretically be of endless duration IMO

    then what is the objective basis?

    As a subjective opinion it is a waste of time and can be easily contradicted by an equally valid subjective opinion:

    “capitalism theoretically may not be endless”

    Most people will be bored with this sort of dueling opinions.

  68. Ikonoclast
    April 1st, 2015 at 15:40 | #68

    @Ivor

    There is nothing theoretical about my saying;

    (1) Capital over-accumulation is wiped out by depressions. Capitalism takes off again after depressions. This is empirical fact. It has happened a number of times. It does not prove it will always happen nor does it prove it finally won’t happen. (Point 3 proves the latter.)

    (2) The rate of profit under capitalism to date has cycled over the long term and has not shown a consistent downard trend. Again this is empirical fact. It has happened a number of times. It does not prove it will always happen nor does it prove it finally won’t happen. (Point 3 proves the latter.)

    (3) The biosphere is finite therefore capitalism or any other system which seeks to grow indefinitely in the biosphere will not be able to do so.

    My statements are all strongly rooted in historical and empirical facts. Clearly the combined or synthesised Marxian-physical-ecological aspects of my thinking do not follow standard and received Marxist orthodoxy. I pay attention to developments since Marx.

  69. Ivor
    April 1st, 2015 at 15:54 | #69

    @Ikonoclast

    OK, but some concrete references would help.

  70. John Quiggin
    April 1st, 2015 at 16:03 | #70

    The average real rate of return to corporate equity is around 6 per cent and this has been true, as far as can be determined, ever since the late 19th century. So, there is no apparent tendency for the rate of profit to fall, at least if “the rate of profit” has its usual meaning, which is the only one that matters to the owners of capital.

    Here’s some data showing both the medium-term variability and the long-term stability referred to by Ikonoklast. The data refers to the equity premium, that is the excess return over that for government bonds (around 1 to 2 per cent real, again very stable over long periods)

    http://www.theskilledinvestor.com/ss.item.10/how-stable-have-common-stock-equity-risk-premiums-been-over-time.html

  71. Collin Street
    April 1st, 2015 at 18:12 | #71

    Ikonoclast :
    @Collin Street
    Other answers (for the capitalists) are imperfect competition, oligopoly, monopoly, price fixing and cartel behaviour. You can’t assume perfect or free markets. They don’t really exist anywhere.

    If you adopt these as a matter of public policy you’re back at dirigisme. If you adopt these as a matter of nod-and-wink public policy — where we are now, I’d say — you’re running nod-and-wink dirigisme. If you actually enforce your anti-anti-competitive laws against all violators you’ll blow up your economy, which is widely regarded as a Bad Thing.

  72. Megan
    April 1st, 2015 at 21:29 | #72

    ALP Qld senator Jan McLucas (the one who stepped down from the junior ministry after News Ltd and LNP allegations were raised against her over her Canberra living arrangements and travel allowance claims), is quoted in a Guardian article today about Billy Gordon:

    McLucas, Gordon’s former employer, says the embattled MP should have told her and the Labor party about his juvenile history. If Gordon had been upfront about it, she says, it would have been an opportunity to show “how a young man with a difficult history found the right path”.

    So she is essentially saying that his story could have been spun positively. Well, couldn’t the ALP have taken that approach when News Ltd and the LNP started the recent hatchet job on him?

    Instead they hung him out to dry and demanded he resign from the parliament. Nice to have the family of true believers standing shoulder to shoulder with you.

    After all, the “domestic violence allegations” have yet to be tested or established and Billy Gordon not only denies them but welcomes the police investigation.

    So shouldn’t you stand by a colleague who has been, as you yourself have, the subject of allegations originating from News Ltd working with the LNP? No, apparently. “Allegations” are all it takes to require your resignation:

    But had Gordon told her of the domestic violence claims, she would have ruled out any political career for him. “He can’t be a public figure with allegations of domestic violence,” she says.

    Just to repeat: these are “allegations”, just like the “allegations” about Jan McLucas rorting her travel allowance and living away from home allowance.

    The ALP is hopelessly compromised. They are double-standards hypocrites and everyone knows it.

  73. Ikonoclast
    April 2nd, 2015 at 09:22 | #73

    @John Quiggin

    However, we should not forget that this steady rate of return (r) has returned to the “natural” condition of r > g as Piketty demonstrates. This implies the need for government re-distribution by taxes and welfare if ever greater immiseration is to be avoided. This in turn implies we currently tacitly accept a system with a “steering bias” which veers towards ever greater inequality. Only by applying a steady steering pressure (governmental control) against the bias of capitalism do we get capitalism to “go straight” as it were.

    Any engineer dealing with a system with a severe bias which needed excessive outside inputs (efforts, expenditure, energy) to perform in the required manner long term, would then seek to re-design the system such that the inherent bias was removed. So, we have to ask ourselves the following question. Is capitalism so effective at mobilising productive effort that net productive effort after the costs of corrections (wealth redistribution etc.) is still greater than the net productive effort of any other system?

    The questions do not end there. In a finite world, we do have to ask the question about capitalist growth. I mean specifically quantitative growth as more and more material infrastructure and consumer goods. Is capitalism predicated upon endless growth? I tend to think it is because that is how it performs in practice. This is not enough to prove it is predicated upon endless growth. However, its nature as a formal system with certain axioms of ownership and financial accounting seems to be predicated on an endless return on capital and thus expansion of capital: at least until the unplanned and generally unwanted busts. Could the current system of (capitalist) ownership run a steady state economy? I don’t know without more investigation and more thought but it seems to me unlikely at first glance.

    Another movement of concern is increasing automation. I mean this in the sense that where industrial capitalism first exploited the worker, late stage automated capitalism will discard more and more workers altogether. The immiserated class will not be poor workers but a vast unemployed under-class for whom automated capitalism has no need at all (except perhaps for some part-time service workers and servants).

    While the productive apparatus is owned by a rich elite decisions are made only on the basis of profit and capital returns to the rich elite. “Wealth buys resources including politicians” is how I saw it expressed by one writer. The lower (insert rising percentange here) and the sustaining environment itself get no real consideration from the 1%.

    So rather than redistribute wealth after the current ownership-production system has made a misallocation why not change the ownership-production system?

    Since the right has stolen the word “reform” we must “transform” our system.

  74. Ivor
    April 2nd, 2015 at 10:11 | #74

    @John Quiggin

    This is, of course, entirely consistent with Marx’s analysis.

  75. jungney
    April 2nd, 2015 at 18:15 | #75

    @Ikonoclast

    Is capitalism predicated upon endless growth?

    Yes, it is. The answer is no riddle. It is in Locke, who was a shareholder in some American corporate adventure, maybe the East Virginia Company, whose vision of America, by first hand experience, was of a cornucopia of forests, lakes, rivers, prairies and free protein (buffalo, migratory species of birds – ducks and geese and pigeons – whose multitude literally “darkened the skies” for weeks on end.

    The children of Locke, the liberals, neoliberals and libertarians, are captives of this vision of unending plenty. Their utopia of cornucopia, an old human vision, is bankrupt but they are so stupid, uneducated and historically uninformed as to be resistant to this advice.

    Your prognostication t’other day as to the likely short human future in our current trajectory is accurate only in so far as you count in as human those who are not. That is, we will have a short and unpleasant future only so long as you allow an equal voice to subhuman idiots (the ethically and morally incompetent) who constitute the ruling oligopoly and their lickspittles.

  76. J-D
    April 3rd, 2015 at 15:56 | #76

    Ivor writes ‘This is, of course, entirely consistent with Marx’s analysis.’

    I am interested by the inclusion in that sentence of the phrase ‘of course’.

    Is there a difference between the sentence ‘This is entirely consistent with Marx’s analysis’ and ‘This is, of course, entirely consistent with Marx’s analysis’? If so, what is that difference? I don’t know, but I wonder.

    In my opinion, everything is consistent with Marx’s analysis. Profits going up? Consistent with Marx’s analysis. Profits going down? Consistent with Marx’s analysis. Rate of profit stable? Consistent with Marx’s analysis. Rate of profit oscillating? Consistent with Marx’s analysis. Revolution succeeds, revolution fails, revolution does not happen? Each one consistent with Marx’s analysis.

    The entire purpose of Marx’s dialectical analysis, as I perceive it, is to make whatever happens consistent with whatever the dialectical analyst was saying beforehand. No matter what prediction you make, and no matter what actually happens, you can always apply Marx’s dialectic afterwards to prove that you’ve been right all along.

  77. Ivor
    April 3rd, 2015 at 20:48 | #77

    @J-D

    It would seem that something is very wrong with your perception.

  78. J-D
    April 4th, 2015 at 06:29 | #78

    @Ivor

    In a letter to Engels in 1857, Marx wrote ‘It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way.’

    (There’s that ‘of course’ again!)

  79. Ivor
    April 4th, 2015 at 07:10 | #79

    @J-D

    People deliberately quoting words out of context are trolls.

    You quoted out of context. Any schoolboy can set you right.

    Marx was indicating that he was only standing-in for the usual correspondent and relying on rumours presumably deliberately spread by the government to maintain unrest.

    Given the uncertainty, he therefore worded his text appropriately so as to ensure he did not make an ass of himself.

  80. J-D
    April 4th, 2015 at 08:33 | #80

    @Ivor

    Ah, I see.

    What you’re saying is that when Marx wrote ‘I have, of course, worded my proposition as to be right either way’, what he meant, ‘in context’, was not ‘I have, of course, worded my proposition as to be right either way’, but actually ‘I’m only standing in for the usual correspondent and relying on rumours’; even though those two sentences look as if they’re dissimilar, ‘in context’ they’re really the same thing.

  81. Ivor
    April 4th, 2015 at 09:24 | #81

    @J-D

    No. You are just making stuff up.

    If you want to make a substantive point, try it.

    Attacks on Marx are a dime a dozen, and J-D doesn’t even get to this level.

  82. J-D
    April 4th, 2015 at 14:15 | #82

    @Ivor

    If you want to make a substantive point, try it.

    My assertion is that Marxist dialectical analysis is a device which can be used, no matter what happens, and no matter what the analyst may have said beforehand, to prove in the aftermath that the analyst was right all along.

    To show that my assertion is false, all anybody has to do is produce examples where a Marxist dialectical analyst has acknowledged, in hindsight, that a Marxist dialectical analysis has been proved wrong.

    You are under no obligation to discuss my assertion. Equally I am under no obligation to discuss any assertions you feel like making.

  83. Ivor
    April 4th, 2015 at 16:37 | #83

    @J-D

    Your assertion is incompetant.

    What happens is always true.

    What an analyst says beforehand does matter.

    And whether an analyst proves whether they were right or wrong depends on what they said beforehand. This is simple empiricism which is at the core of Marxist dialectical materialism. Knowledge comes from experience and scientific understanding of experience.

    If you assert otherwise then you are talking about something of your own perception and private manufacture.

    A simple childish act of vanity.

  84. J-D
    April 4th, 2015 at 17:17 | #84

    @Ivor

    I note that you have not produced examples where a Marxist dialectical analyst has acknowledged, in hindsight, that a Marxist dialectical analysis has been proved wrong.

  85. Ivor
    April 4th, 2015 at 18:21 | #85

    @J-D

    That would be rather stupid.

    Hindsight is not available beforehand.

    Silly.

  86. April 5th, 2015 at 03:52 | #86

    Prof Q, Megan, anyone – can anyone remember the name of that commenter who got banned here fairly recently, and who loved making patronising comments to or about Megan? I think he may be operating over at CT, only now it’s me he is targeting in particular.

  87. J-D
    April 5th, 2015 at 06:58 | #87

    @Ivor

    I am aware that hindsight is not available beforehand.

    But hindsight is available, and there’s nothing stupid or silly about using it.

  88. Ikonoclast
    April 5th, 2015 at 09:27 | #88

    @Val

    I don’t want to mention his original nickname here in case I get it wrong and impugn someone unfairly. Although he pretends to have some progressive ideas much of his thinking seems to be neocon underneath. There is a particular strand which seems consistent with far right ideas. This is the strand of undisguised contempt for greens, feminists and even it seems all females. He is a cyber bully. Pretty sad but also disturbing when an adult behaves like that.

  89. jungney
    April 5th, 2015 at 11:19 | #89

    A most comprehensive political review of Syriza at the LRB.

  90. Ivor
    April 5th, 2015 at 11:35 | #90

    @J-D

    You are confused. Hindsight concerning a proposition is not available when a proposition is made. Hindsight always comes later. You cannot use hindsight to change the past. Basic, basic, basic. I cannot use the hindsight I will have next week to make propositions today.

    Being aware that hindsight is not available beforehand is not adequate. So what?

    It is how you use it that is relevant. Hindsight is only useful as valuable past experience.

    Those who prance around the place using “20-20” hindsight do not understand the nature of knowledge. By definition, no-one has hindsight when making propositions. They only have experience. Experience and analysis is the basis for predictions.

    You cannot argue something was wrong simply based on hindsight if conditions change. Something that is true now may not be true in some later aftermath.

    There are no social or political truths that hold for all time. All truths are based on conditions.

    All truths evaporate if the conditions change (either fairly or unfairly).

    Marxism uses historical experience and scientific method. It does not rely on hindsight or waiting for the aftermath.

    In fact Marxism is often known as historical materialism – the exact opposite of hindsight mongering and aftermath confusion.

    Anyone who tries to pretend that something was wrong based on hindsight is either naive or falls into the category of denialists. We have seen these opportunist elements in the climate debate.

    Sometimes they will use false data to pretend that propositions in the past were false such as cigarette lobbyists.

    As with climate and nicotine, we need a profound, scientific understanding, not to be provoked by the likes of J-D.

  91. alfred venison
  92. J-D
    April 5th, 2015 at 14:04 | #92

    @Ivor

    In scientific practice there is nothing unusual about a theoretical analysis (developed and advanced at one point in time) being rejected as a result of later scientific work.

    Even some of the greatest names in the history of science have been affected. Newton relied on a theoretical concept of space and time which is now rejected on the basis of later scientific work. Darwin offered a theoretical view about the mechanism of biological inheritance which is now rejected on the basis of later scientific work.

    The fact that this happens demonstrates that scientific analysis is not solely a technique for proving that you’ve been right all along.

    If there were examples where a Marxist dialectical analysis was rejected as a result of later work, that might demonstrate that Marxist dialectics is not solely a technique for proving that you’ve been right all along. I’d just like to see the examples. You don’t seem to have any.

  93. Ivor
    April 5th, 2015 at 15:13 | #93

    @J-D

    I am not aware of any examples where “a Marxist dialectical analysis was rejected as a result of later work” of the same calibre.

    Most changes are due to cultural shifts as society went from steam power to electricity and then to computerisation. The analysis remains.

    You are asking for an example of your own imagination.

  94. jungney
    April 5th, 2015 at 16:58 | #94

    @alfred venison
    Thank you a.v. Every claim of Žižek’s is defensible. He may be the last revolutionary but he certainly is the first for these times. I liked the conclusion:

    The clash of cultures should not be overcome through a feeling of global humanism, but rather through overall solidarity with those struggling within every culture. Our struggle for emancipation should be coupled with the battle against India’s caste system and the workers’ resistance in China. Everything is dependent on this: the battle for the Palestinians and against anti-Semitism, WikiLeaks and Pussy Riot — all are part of the same struggle. If not, then we can all just kill ourselves.

    That’s how I operate.

  95. J-D
    April 5th, 2015 at 19:21 | #95

    @Ivor

    If you’re not aware of the thing I’m asking for existing outside my imagination, that tends to confirm my point.

  96. Ivor
    April 5th, 2015 at 20:15 | #96

    @J-D

    If the thing you imagined existed – you would have provided an example.

    You did not.

    You only confirm your own imaginations, base assertions, and series of confusions.

    It is meaningless for anyone to confirm their own fantastical constructions.

  97. J-D
    April 6th, 2015 at 10:06 | #97

    @Ivor

    I assert that there are no examples of X.

    You say that you know of no examples of X.

    As far as I can tell, you think you’ve shown that I’m wrong. If so, your reasoning is faulty.

  98. Ivor
    April 6th, 2015 at 16:10 | #98

    @J-D

    Crazy!

    If “there are no examples” – then “X is wrong”.

    But YOU proposed X.

    Therefore, YOU are wrong.

  99. John Quiggin
    April 6th, 2015 at 17:34 | #99

    I think the J-D vs Ivor dispute needs to go to the sandpit, and future interactions between the two of you should also go there. I’ll open a new one.

  100. Chris O’Neill
    April 6th, 2015 at 18:05 | #100

    @Megan

    or traffic history

    Traffic history?

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