File spoon-archives/marxism-thaxis.archive/marxism-thaxis_1998/marxism-thaxis.9801, message 168


Date: Sat, 10 Jan 1998 11:18:48 +0100
From: Hugh Rodwell <m-14970-AT-mailbox.swipnet.se>
Subject: M-TH: Japan, the Tigers and overproduction crises


There have been some very important posts tying together the questions of
overproduction crises and Japan and the nature of possible solutions.
Yoshie on the strategic importance of Japan (and South Korea) for
imperialism after WWII, permitting a *political* and *strategic*
revitalization of their economies and with it access (for Japan at least)
to imperialist status, if not Super Power status. Dave B extending this to
the German revival (same process of strategic boosting by the US, the
victorious imperialist power of WWII). Then Rakesh quoting Tilla Siegel on
Mattick and the mechanisms of crises of overproduction of capital and their
effects.

Further to all this -- in a previous post I wrote on overproduction crises:

>>It's overproduction of CAPITAL, that can't be invested at a rate of profit
>>that's considered good enough.

Rakesh responded:

>This seems to be quite subjective. As long as the rate of profit is
>positive, why would it not be considered good enough. Why overaccumulation
>if the rate of profit is, say, 8%, instead of 15%?

Subjective in what sense?

The reason rates of profit can be considered not good enough is
competition. If a company decides it would be happy with a return of 8% but
the general return is 15%, its investors would desert it. This of course
assumes an open stock market with at least some free capital swilling
around between companies on the basis of empirical performance statistics.
The competition between investors looking for the best return for their
movable capital equalizes out the rate of profit. In doing so it creates an
expectation in relation to the level of the rate of profit, which becomes
fetishized into the micro-economic internal rate of return and the like --
the automatic write-up added to the costs of production.

There is an additional constraint. That's the ever-present liferaft of the
rate of interest on government bonds. If the rate of profit sinks too far
investors will leap over to bonds, and less and less investment will take
place -- until the government finds it can't get the money to pay the
interest and there's a total crisis.

So if the profit rate is falling, that is, the rate of return on investment
looks less and less attractive or less and less secure, at the same time as
interest rates are not very attractive either, there's a huge amount of
unused cash piling up in company coffers -- "hot" money -- that typically
ends up being lent out short term or in quick speculative deals until
something more promising turns up. These short-term deals can sometimes
being incredibly corrosive and dramatic, of course, as the Swedish and
Italian currency crises a couple of years ago demonstrated (just one
example among many).

This abundance of "hot" money, as in the late 1980s, chases around
inflating share or bond speculation and consequently prices, if there's no
real substantial investment for it to go into. So an overproduction of
capital leads to both a) too many goods for the market to absorb at
"normal" prices and b) too much cutthroat competition to invest in the good
bits of the economy, driving up share prices and driving down returns. The
shrinking of the consumer market is a result of all this quite a long way
down the line. Say big car companies all decide to open huge new factories.
This means that they're producing too many cars for the market too fast. So
they've got to cut back on costs to save what profits they can, and thus
they fight to raise productivity and reduce the workforce. If the mass
market commodities all do this, you get a general situation where there are
hugely increased numbers of commodities available and hugely diminished
numbers of buyers. And if the number of commodities produced is cut back,
this means even less workers receiving wages they can buy with, and fewer
goods being sold on which a profit can be made. And it's a vicious downward
spiral.

This competition between investment capitals is why Austro-Marxist
solutions proposing a lower general rate of profit for the common good are
so utopian. For a socialist society, or a proto-socialist one, 8% or 2% or
any positive rate of profit/surplus that covered costs and provided for
upkeep and research and new investment would be fine. But with capitalism
it doesn't work this way (except in so far as really big companies can take
a temporary lowering of profits for strategic reasons, ie gaining market
share or crushing competitors -- as long as their major shareholders agree
with the procedure). Investment decisions aren't made with the good of
society in mind, or even the good of the capitalist system in mind (unless
the government is forced to move a little in this direction by political
pressures (nationalization, knowledge/science infrastructure etc) or
indulges in and encourages spectacular non-productive investment such as
arms etc).

So even though all investment decisions are subjective, in that they're
made by individuals who decide whether a certain course of action is
acceptable or not, they are  still very severely constrained by the
external pressure of thousands of other decisions driving them in a certain
direction.

Capital III gives the basic mechanisms at work here (including, for
Bodysack's information, dozens of pages on credit), and Rosdolsky helps
with the more modern aspects of it -- he is particularly good on the
reciprocal impact of use value production up against its social limits on
an aggregate social and world scale and exchange value production in crisis.


Dave ties this more general issue to questions of the current crisis and
possible Keynesian solutions:

>It is Japan, and to a
>lesser extent the Tigers and Germany, which have been able to prolong
>state intervention and moderate the law of value longer than most,
>which now have to be exposed to the cut and thrust of the semi-naked
>law of value courtesy of US multinationals.
>
>Yoshie is also right to refer to US hegemony as strategic and not
>just based on indebtedness. The US ruling class  has restructured along
>neo-liberal lines, has as strong dollar and can pay its creditors  by screwing
> its own workers and those in NAFTA and its linked proxies. It also dominates
>the IMF and World Bank, and the free trade agencies of WTO and the
>impending MAI. It is sitting pretty to bankrupt and buy up half of Asia at
>bargain basement prices.
>
>Add to that the  fact that the US has won the cold war
>and can use the whip of the restoration of capitalism at horrific
>cost in the former Eastern bloc to drive home submission to market
>forces against state planning in Asia. This is crucial in the US's
>ability to repartition Asia at the expense of Japan and the EU who
>are in a much weaker position.

In other words, the best outcome of the crisis for US capital would be a
god-almighty destruction of some (in the ex-workers' states in particular)
and the moral depreciation and devaluation of other (in Japan and the
Tigers) capital. War without the bombing and the invading soldiers.

Now a lot of people have pointed to the apparent lack of resistance on the
part of national bourgeoisies to being shafted. I think this probably
exaggerates the control of US imperialism and underestimates the potential
for inter-imperialist rivalry, but we shall see as the crisis develops.
After all, capital was multinational even before WWI, remember, as Lenin
tells us in Imperialism. It was more so after WWI, and yet WWII exploded
even as important representatives of imperialism were talking about "peace
in our time". Let's just say that the military aspects of the present
crisis are not particularly prominent as yet, and the battle lines between
the US imperialist bourgeoisie, pro-US comprador bourgeoisies, pro-block
European and West Pacific Rim imperialist bourgeoisies and pro-national
local bourgeoisies have not been drawn up.

So let's look at the role of the working class, with Dave:

>Critically, it will be the role of the
>working classes in Asia, especially China, who will react to this
>intensified imperialist domination and spark off resistance.
>
>This poses the question of how do workers try to defend their jobs
>and conditions.  Rather than blocing with their nationalist bosses to
>fight off imperialism, the working class must go directly for workers control
>of their economies. This will of course drive their nationalist
>bosses straight into the arms of  the imperialists as their local
>agents, and reinforce the class as opposed to the national basis of
>their fundamental interests in fighting for a workers state and
>socialism.

This final sentence is a bit unclear to me. I think it means to say that
the working class will turn against any proposed nationalist bourgeois (or
petty-bourgeois) solutions (largely because the national bourgeoisie will
not be united on these solutions, given large pro-US comprador sectors),
and fight for the expropriation of the bourgeoisie on a socialist
programme.

There is a fundamental thing missing in that case, and that's the absolute
necessity for an internationalist approach and programme on the part of the
workers. The need for a programme calling for the immediate linking of
workers' struggles against multinationals and against imperialist policies
in all enterprises and all countries. The fight would not just be for a
socialist Korea, say, but for a socialist federation of East Asia (or the
whole West Pacific Rim) or whatever constellation/s took most concrete
shape in the struggle.

As Dave writes, the role of the Chinese working class and rural proletariat
will be absolutely crucial in this. We can also assume that any real
movement in the Far East would also -- at long long last -- galvanize the
Indian proletariat into revolutionary action on a national and
international basis.

>We can illustrate such a fight by reference to an important struggle
>facing workers everywhere today - the MAI push to dictate total freedom
>of movement in an out of the semi-colonies and weaker imperialist states.
> The MAI basically seeks to prevent nation states from given preference to
>national as opposed to multinational investment. It seeks to set up a body
> of "international" law governing trade and investment which will bind
>weaker, oppressed states. Workers must oppose the MAI on the basis
> of fighting for workers control of their local economy by means of
>measures for  economic and social planning against the law of value.
>Today, under the conditions of a increasingly destructive
>inter-imperialist trade and military warfare, and when the law of value
>destroys more potential  value than it creates, every means of imposing
>workers controls on market forces is a progressive step.

Very true. Once again we must drag out the basic Marxist propositions (from
1847, when Marx and Engels directly addressed the issue, see Collected
Works vol 6, especially articles 13, 19, 20 and 21) on free trade and
protectionism, and understand that these are both items on a *bourgeois*
agenda. The interests of the working class lie in setting a completely
different agenda, of workers' control and ultimately expropriation of
bourgeois ownership of the means of production and distribution. Of
international social planning and cooperation in the management of wealth,
in its production and distribution.

Cheers,

Hugh




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