imc indymedia

Los Angeles Indymedia : Activist News

white themeblack themered themetheme help
About Us Contact Us Subscribe Calendar Publish RSS
latest news
best of news



CopWatch LA


A-Infos Radio

Indymedia On Air

Dope-X-Resistance-LA List


IMC Network: africa: ambazonia canarias estrecho / madiaq kenya nigeria south africa canada: hamilton london, ontario maritimes montreal ontario ottawa quebec thunder bay vancouver victoria windsor winnipeg east asia: burma jakarta japan korea manila qc europe: abruzzo alacant andorra antwerpen armenia athens austria barcelona belarus belgium belgrade bristol brussels bulgaria calabria croatia cyprus emilia-romagna estrecho / madiaq euskal herria galiza germany grenoble hungary ireland istanbul italy la plana liege liguria lille linksunten lombardia london madrid malta marseille nantes napoli netherlands nice northern england norway oost-vlaanderen paris/Île-de-france patras piemonte poland portugal roma romania russia saint-petersburg scotland sverige switzerland thessaloniki torun toscana toulouse ukraine united kingdom valencia latin america: argentina bolivia chiapas chile chile sur cmi brasil colombia ecuador mexico peru puerto rico qollasuyu rosario santiago tijuana uruguay valparaiso venezuela venezuela oceania: adelaide aotearoa brisbane burma darwin jakarta manila melbourne perth qc sydney south asia: india mumbai united states: arizona arkansas asheville atlanta austin baltimore big muddy binghamton boston buffalo charlottesville chicago cleveland colorado columbus dc hawaii houston hudson mohawk kansas city la madison maine miami michigan milwaukee minneapolis/st. paul new hampshire new jersey new mexico new orleans north carolina north texas nyc oklahoma philadelphia pittsburgh portland richmond rochester rogue valley saint louis san diego san francisco san francisco bay area santa barbara santa cruz, ca sarasota seattle tampa bay tennessee urbana-champaign vermont western mass worcester west asia: armenia beirut israel palestine process: fbi/legal updates mailing lists process & imc docs tech volunteer projects: print radio satellite tv video regions: oceania united states topics: biotech
printable version - js reader version - email this article - view hidden posts - tags and related articles

View article without comments

Capitalism Criticism 2.0

by Volkhard Mosler Monday, Dec. 18, 2017 at 10:39 AM

"Capitalism contains crisis as rain clouds contain rain" (Jean Juares, 19th century socialist). Profits increase in the neoliberal model, not investment (Nicolas Krowall). The competitive pressure drives businessmen to reduce investments in labor and wages.


Karl Marx' Crisis Theory is More Actual than Ever

By Volkhard Mosler

[This article published on 11/9/2008 on Marx 21 is translated from the German on the Internet,]

A specter goes about again. In view of the financial crisis, Karl Marx is being rediscovered everywhere. The Frankfurt Rundschau journal recently had him on its front page. "The Bankruptcy of Capitalism" was announced on another front page. The Hamburg Morgenpost newspaper asked, "Was Karl Marx right?" Even finance minister Peer Steinbrueck told "Spiegel": "Certain parts of the Marxist theory are not inverted."

In fact, what Karl Marx and Friedrich Engels wrote 150 years ago in The Communist Manifesto seems like a description of contemporary conditions: "The modern middle-class society that generates enormous means of production and transportation is like a wizard or sorcerer that cannot control the underground subterranean forces that it created."

Crisis Theory

In a later work "Das Kapital," Marx described the law driving the capitalist system into crisis. As his central thesis, the cycle of upswings and downswings is due to the chaotic nature of capitalism based on competition. Since there is no central planning of the economy, every business tries to gain the largest possible share of the market by producing as many products as possible. This leads to constant production surpluses where more is produced than can be sold. This is reflected in the profits of businesses. Working hours are lengthened, wages lowered and jobs shifted or completely eliminated. Then the employees have less money to buy things which intensifies the crisis until the system goes into recession. Such economic crises come and go in capitalism and become worse with time.

The Falling Profit Rate

Marx discovered a special mechanism that operates behind the process of the upturns and downturns of the capitalist economy. He described this as the "law of the falling profit rate." He did not think the revenues would be lower. Rather, the relation of their investments to the profits would be reduced in the course of time. Real value arises from human labor. The value produced by workers is always greater than the wage they receive for their labor. Therefore, the businessman appropriates some of the value that his employees gain. This "surplus value" is the basis of the profit.

The competitive pressure drives businessmen to reduce the share invested in labor and wages. Instead, they invest in technology so they can produce just as much with less human labor. A capitalist can enlarge his piece of the cake by rationalizing production, increasing productivity and the constant reduction of employed workers. However, the result is disastrous for the whole system. The number of workers does not increase as fast as the investments. Still, labor is the source of profit, the energy that keeps the system alive. The crisis is already pre-programmed – if the investments become greater and greater without a corresponding expansion of the source of profit.

Marx saw that the success of capitalism in making enormous investments in the form of new assets must entail a fall in the profit rate and constantly intensifying crises.

Recently, the micro-electronics- and computer industries gave a classic example of this process. The firms that were first on the market made gigantic profits. But the prices collapsed dramatically when the productive capacity of the branch grew and more rivals entered the arena. The profit rate fell and the weakest firms like Nixdorf, for example, went under. Individual firms believe they can raise their profits through new technologies. They could do this as individual firms. However, pursuing their individual competitive goals produced the opposite effect since the common goals of all capitalists were undermined. That is what Marx meant by the contradictory nature of capitalism. This does not mean the profit rate falls continuously in the history of capitalism. If that were the case, the system would have come to a standstill long ago. Marx himself mentioned a series of "counter-veiling forces."

Counter-veiling Forces

An extraordinary increase in the exploitation rate depresses the living standards of workers. This is an example of a fact that counteracts the fall of the profit rate. Access to cheap raw materials through foreign trade is another. The price reductions or "devaluation of constant capital" are most important, according to Marx.

Increased productivity in industrial branches that produce products like machines or raw materials causes a decline in the value of their products in every branch. This decline means more than the means of production becoming cheaper. It also brings about what Marx called the "moral wear-and-tear" in the use of capital. Capitalists with older and more expensive machinery face rivals with newer and cheaper equipment and have a competitive disadvantage. The older machinery is subject to a forced devaluation. This reduces the value of constant capital and counteracts its tendency to grow.

Still, this devaluation represents a loss of value for the impacted firms. For that reason, it increases their problems at least in the short term. There are parallels here to the growth of unemployment or the reserve industrial army, as Marx described. Higher unemployment helps the capitalists in their offensive against the organization of workers in production and in this way contributes to the production of potential surplus value or profit. However, unemployment in the short term magnifies the problems of capitalists in selling their products or realizing a profit.

So there is no simple way out of these problems for capitalists. The effect of "counter-veiling forces" is strongest in crisis times. This is important to understand. When the system expands quickly and the accumulation multiplies, the growth of the organic composition of capital has the upper hand over the counteracting tendencies. As a result, the profit rate falls. Nevertheless, crises can at least temporarily help capitalism get over its problems. Considering another aspect of the system – the role of the banks – is rewarding to better understand the dynamic of the crises.

Banks, Stock Exchanges, and the Credit System

The profit of industrial capitalists does not only result from the surplus value produced by the workers. Parts of that profit go to landowners as rents, to the state as taxes and to banks and investors as interests. Industrial capitalists are ready to hand over a part of the bounty to banks and other financial institutions since they play a useful role in the system. Great sums of money must be accumulated before they can invest. Until this point is reached, they can deposit their surpluses at the bank and borrow capital if they do not have enough money.

The banking system actually helps accelerate the process of accumulation. This happens by redirecting the money from those hesitant in investing to those willing to invest.

Banks are powerful institutions and aid in accelerating the centralization of capital into great monopolies. They also help drive weak capital in the red into bankruptcy when they block their credits. The interest rate for loans rises when the upswing reaches its peak. The demand for investment loans grows. The exploitation of future profits nourishes speculative businesses on the stock exchange and in the commodity trade. Capitalist are ready to bet on increasing profits and prices enabling them to repay their debts with interests. However, the financial market and the stock exchanges are always dependent on profit or surplus value generated in production.

The financial markets represent what Karl Marx called "fictional capital." Their activities do not create any new assets or expand production. Therefore, they ultimately depend on the health of the real economy while playing with the profits gained by the workers. While the stock prices may be exaggerated, they stand in a relation to the dividends poured out by the businesses which depend on the profitability of the economy.
When profits fall, businesses reduce their dividend payouts and this lowers the price of their shares. Markets create speculative bubbles that must burst sooner or later. This has real effects.

The banks could collapse. They lend "the money of other people." The bank becomes insolvent when all the investors try to get back their money. The bank cannot survive this if the state or Central Bank does not intervene. The whole financial system can collapse as happened most dramatically in 1931. A credit-crunch as with the current 2008 financial crisis means even reliable firms cannot borrow money anymore. The possibility of revitalizing their machines or paying for their credits is taken from them. In the worst case, they could be driven into bankruptcy.

The Crisis Today

What we witness today is that the unending worldwide crisis replaces the earlier ups and downs of the economy, the constant change of upswings and downswings. The German economy has not recovered from the 1974 crisis though the country likes to present itself as an exemplary or model country of growth. The economic upturns have become flatter and shorter. They are no longer enough to substantially reduce unemployment. There are still not enough investments to overcome the crisis. This is true for Britain, France and Japan and not only for Germany.
Report this post as:
Share on: Twitter, Facebook, Google+

add your comments

European Anti-Fascist Manifesto

by Antifascism Europe Wednesday, Dec. 20, 2017 at 12:10 PM

" Create alternatives that free humanity from all forms of oppression: social, patriarcal, imperialist, racial..."
Report this post as:
Share on: Twitter, Facebook, Google+

add your comments

Local News

Chris Ballew beat up by Pasadena police J05 5:01PM

Retired LAPD Sgt. Cheryl Dorsey explains how the LAPD's Board of Rights hearings work J05 3:40PM

An Ex-Cop Talks About Police Shootings J05 3:39PM

Do Nukes Kill? J02 4:40PM

Letter: Support Proportional Representation for the California State Legislature J01 1:23PM

Community Rallies in Santa Barbara in Solidarity with Inmate Firefighters D22 9:59PM


The Video ICE Wishes Was Never Made Public D22 8:39PM

Mitchell Englander going after homeless people D18 5:24PM

“Animaniacs in Concert!” with Voice Artist Rob Paulsen, Sat., Jan. 20 in Santa Clarita D18 4:30PM

The Eagle Rock Peace Vigil Marks 15 Years N27 11:23AM

12/2-3 LA Binational Conference To Cancel NAFTA and Unite Workers Of Mexico and the US N27 3:44AM

Winter 2017 National Immigrant Solidarity Network Monthly News Alert! N26 9:22PM

Nuclear Shutdown News November 2017 N26 4:23PM

Report Back on November 18th Counter Demonstration Against Anti-Muslim March N20 10:57AM

Report Back on November 18th Counter Demonstration Against Anti-Muslim March N19 7:12PM

National US Gov as wellas EPA slow to act on Abandoned uranium Mines Cleanup in Southwest N15 10:50AM

OUR HOUSE Grief Support Center Hosts 9th Annual Comedy Fundraiser N14 10:47AM

BUSTED: Watch LAPD cops plant drugs in black suspect’s wallet – unaware body cams were on N10 5:32PM

lapd shootings 1998 - 2015 N06 11:21PM

“Oh Say Can You See” How the LAPD Singing the National Anthem Cost the Dodgers WS Game 7? N03 7:30AM

Car drives into immigration protesters outside Rep. Ed Royce's office in Brea N02 2:06PM


LAUSD, Privatization, Charters And The Fight To Defend Public Education Education Conferen O04 12:10PM

Afghan Women Read founded 1977 S27 9:42PM

[France] The State Attacks Indymedia-Grenoble and Indymedia-Nantes… Solidarity! S25 5:18PM

Segregation in the City of Angels: A 1939 Map of Housing Inequality in L.A. A15 7:44PM

Justice Dept. seeking info, IDs on 1.3M visitors to protest website A15 1:04PM

More Local News...

Other/Breaking News

Tax Reform in the US: Trump's Attack on America J18 4:05AM

Paraphysique du No Future J18 2:14AM

Is Economic Speculation a Form of Structural Violence? J16 6:07AM

De Malik Oussekine à Rémi Fraisse, éréthisme policier J16 5:01AM

Epilogue: Pakistan on the chopping block in 2018? Zahir Ebrahim | Project Humanbeingsfirst J15 3:16PM

Friends J14 4:13PM

Pro domo J13 9:06PM

Part 3: Honduras Coup Repeat Update 15 December 2017 to 31 December 2017 J13 4:26AM

Paraphysique du fait divers J12 6:20PM

Brazil wants true justice for Lula! J12 4:14PM

Trilogy Exposing Crimes by fbi et al J11 8:22PM

The Shortwave Report 01/12/18 Listen Globally! J11 4:33PM

The Trump Election J11 4:43AM

Advocates for Terror: Why Ahed Tamimi and Her Family are No Heroes J10 9:47PM

Trial Starts for Woman with Erb’s Palsy Punched in Face Repeatedly by LAPD Officers J10 1:38PM

Dear District Attorney Jackie Lacey, Prosecute Killer Cops, Signed: Your Constituents J09 10:09PM

Free Fire Battlegrounds Diamond Cheats J09 3:44PM

“Animaniacs in Concert!” with Voice Artist Rob Paulsen, Sat., Feb. 3 at the Tilles Center J09 11:41AM

BDS Palestine Movement J09 8:07AM

Rotule doublement cassée, ouverte, joyeux anniversaire J09 12:21AM

Anosognosie généralisée du capital J08 12:42AM

Great solidarity action today J06 10:22PM

How a Supreme Court Ruling Could Embolden Police Retaliation Against Political Speech J05 3:37PM

Baltimore Students Offer Solutions to Stop Police Brutality J05 3:35PM

Judge Orrick on Sanctuary Cities, 28 pp J05 1:12PM

The Perfect Totalitarian Rule: Orwell J05 3:55AM

The Shortwave Report 01/05/18 Listen Globally! J04 4:59PM

2 Alabama Hospitals as well as State of Mississippi file class action suit vs. opatecomp J02 7:17PM

More Breaking News...
© 2000-2003 Los Angeles Independent Media Center. Unless otherwise stated by the author, all content is free for non-commercial reuse, reprint, and rebroadcast, on the net and elsewhere. Opinions are those of the contributors and are not necessarily endorsed by the Los Angeles Independent Media Center. Running sf-active v0.9.4 Disclaimer | Privacy