Blog Archives

Was Marx Right about Capitalism Destroying Itself from Within?

One of the core tenets of Marx’s work is that capitalism will be undone by internal contradictions that would manifest as ever-greater crises that would eventually destroy the system from within.

As the global economy continues to unravel beneath the surface, it’s a good time to re-examine Marx’s claim. If if turns out the current version of global capitalism is indeed unraveling due to its internal contradictions, it would be valuable to understand this now rather than later.

Sartre once observed that students are only taught enough about Marx’s work to refute it. Despite the difficulty of Marx’s writings (only German philosophers can be so convoluted), its elevation to scripture by various academic tribes, and his failure to describe his “scientific socialism” alternative to capitalism in the same detail he devoted to his critique of capitalism, Marx’s work remains relevant and insightful.

Thus we continue to see articles such as Capitalism is unfolding exactly as Karl Marx predicted.

I’m not in either of the two camps, those trained to dismiss Marx’s critiques or those who devote their careers to jousting over Marxist minutiae. It’s been decades since I studied Marx in a college classroom, but I’ve continued to apply his core insights to our era.

To understand Marx’s critique of capitalism, we have to understand that he came to economics via philosophy, specifically the writings of Hegel. In other words, Marx did not approach the study of capitalism from the abstractions of classical 19th century economics (Marx was born in 1818) but from a profound interest in history, social and spiritual development and human alienation. Marx ended up devoting his life to an understanding of capitalism because it is a world-system that drives history and society.

Hegel believed human history wasn’t just “one damn thing after another;” he saw it as teleological, i.e. on a trajectory leading to higher social and spiritual development. Given this context, it’s little wonder that Marx viewed capitalism as a necessary stage of history creating the conditions for the next advancement.

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Marx, Robotics and the Collapse of Profits

Yesterday I discussed how robots only do work that’s profitable, as any enterprise buying, programming and maintaining robots to do unprofitable work will soon be out of business.

What few observers seem to grasp is that automation goes through two distinct stages of profitability: when robots/automation first replace high-cost human workers, profits soar. Observers then draw projections based on the belief that these initial profits will continue essentially forever.

But this initial boost phase of profits gushing from automation is short-lived;as the tools of automation are themselves commoditized and become available to anyone on the planet with some capital and ambition, lower cost automated competitors come to market, destroying the pricing power of the first adopter.

Once an enterprise is competing only with other automated enterprises, profits fall to near-zero as lower cost competitors emerge. Competitive advantages are small once a field has been commoditized/globalized, and there is little pricing power left except for brands that establish some cache people will pay extra to have and hold.

But everything that’s been commoditized will no longer be profitable, as the competitive advantage of replacing human workers with robots vanishes once competitors have also replaced their human workers with robots.

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Are Profit and Healthcare Incompatible?

As I have been noting for a decade, the broken U.S. healthcare system will bankrupt the nation all by itself. We all know the basic facts: the system delivers uneven results in terms of improving health and life expectancy while costing two or three times more per person compared to our advanced-economy global competitors.

U.S. Lifestyle + “Healthcare” = Bankruptcy (June 19, 2008)

Sickcare Will Bankrupt the Nation–And Soon (March 21, 2011)

How Healthcare Is Dooming the U.S. Economy (Three Charts) (May 2015)

You Want to Fix the Economy? Then First Fix Healthcare (September 29, 2016)

This chart says it all: the global outlier in low life expectancy and exorbitant cost is the U.S.

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Marx, Orwell and State-Cartel Socialism

OK, so our collective eyes start glazing over when we see Marx and Orwell in the subject line, but refill your beverage and stay with me on this. We’re going to explore the premise that what’s called “socialism”–yes, Scandinavian-style socialism and its variants–is really nothing more than finance-capital state-cartel elitism that has done a better job of co-opting its debt-serfs than its state-cartel “capitalist” cronies.

We have to start with the question “what is socialism”? The standard definition is: a political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.

In practice, the community as a whole is the state. Either the state owns a controlling interest in the enterprise, or it controls the surplus (profits), labor rules, etc. via taxation and regulation.

The problem with equating the community with the state is the community is a completely different order from the centralized state, which is operated and controlled by a self-serving clerisy class that institutionalizes benefiting the few at the expense of the many.

The more accurate definition of socialism is: the means of production are owned and controlled by those who produce the goods and services.

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What the Pundits Don’t Get About Trump

The typical bourgeois mainstream media pundit is confused and alarmed by Donald Trump’s ascendancy. The typical pundit is a member of the petit bourgeois who has zero contact with the working class in America, other than saying “hello” to his/her auto mechanic, hair salon employee, etc.

The standard-issue pundit has an overweening sense of their own insight due to their academic/media success; nobody gets air time for confessing “I’m clueless.”

Their failure to grasp Trump’s appeal has revealed their absolute lack of insight and understanding of the real world beyond the media, Wall Street and D.C.

The conventional MSM pundit compares Trump to the politicos of the past and finds him wanting. He’s no FDR, Reagan, etc., they pout.

The pundits are outraged by Trump’s success as a candidate because in their blindered view of the political/economic landscape, he shouldn’t be successful and so something is amiss with the Universe.

The standard petit bourgeois media hack is comfortable with the conventional politico stereotype: Slick Willy I feel your pain small-town mayor gone bigtime, check; ambitious, duplicitous Lady Macbeth (Hillary), check:

Lady Macbeth suppresses her instincts toward compassion, motherhood, and fragility — associated with femininity — in favour of ambition, ruthlessness, and the singleminded pursuit of power.

frat-boy fly-boy, got a nickname for everybody, just put one over on you grin G.W. Bush, tail-end of a dying dynasty, check; idealistic insider/outsider Bernie Sanders, fired up by injustice but unwilling to challenge the Democratic Party’s favored cartels, check, and a crowd of also-rans climbing the hilltops in a rainstorm, hoping political lightning strikes their me-too campaigns, check.

Trump doesn’t fit into any stereotype of recent campaigns, and so the perplexed pundits have attempted to label him a demagogue or Id-fueled populist without a “real” agenda–that is, a candidate that should have burned out in the first week ot two of the campaign.

They don’t get it, and the reason why they don’t get it is because they are rooted in the petit bourgeois technocrat class that aspires to insider status within corrupt cliques of centralized power. The pundit burnishes their credentials with the usual petit bourgeois baubles–advanced degrees from “respected” universities, books published by “respected” New York publishing houses, and fellowships from “respected” poverty-pimp foundations funded by guilt-ridden plunderers and their dilettante offspring.

The media punditry’s relationship with the working class is akin to their relationship with China: they visited Shanghai once and stayed in a luxe hotel and were entertained by bigshots in the glitzy bars and cafes. Satisfied with their shiny new profound knowledge of China, they return home filled with insights into a nation they’ve never actually visited– what they visited was the Hollywood tour version of China, not the actual nation.

The petit bourgeois media, so easily impressed with institutional “respect” and other fabrications of the ruling class, demeans the working class supporters of Trump as lumpenproletariats, which Marx described thusly:

Alongside decayed roués with dubious means of subsistence and of dubious origin, alongside ruined and adventurous offshoots of the bourgeoisie, were vagabonds, discharged soldiers, discharged jailbirds, escaped galley slaves, swindlers, mountebanks, lazzaroni, pickpockets, tricksters, gamblers, maquereaux [pimps], brothel keepers, porters, literati, organ grinders, ragpickers, knife grinders, tinkers, beggars — in short, the whole indefinite, disintegrated mass, thrown hither and thither, which the French call la bohème.

Rather than describe the working class, this describes the political class of the U.S.A. to perfection.

What the blindered media pundits don’t grasp is their self-satisfied class of country-club Republicrats and ersatz we-feel-your-pain Demopublicans is the real enemy of progress, for what Trump supporters understand that the technocrat class of social climbers fails to grasp is the only way to progress from here is to tear down the institutions of privilege that the technocrat class defends and aspires to join.

This is why the media is as much the class enemy of the working class as the incestuous, corrupted and corrupting pool of swindlers, fakes, apparatchiks, lobbyist/brothel keepers and grifters that populate Washington, D.C.

Technocrat pundits scratch their well-educated heads and wonder why Trump enthusiasts would vote for a bombastic scion of wealth. Let me help you, gentle confused pundits: Trump comes across like a plumber who’s struck it rich: he’s got a beautiful (immigrant) wife (second, third or fourth, who’s counting, the guy has it made), he speaks his mind regardless of who’s offended, and he doesn’t bother with bean-counter trivialities like a carefully scripted agenda that includes all the key demographic groups.

Trump tells people he doesn’t need their campaign contributions, but millions of dollars in small donations flood in anyway.

Many of the working class supported G.W. Bush, but they now understand he betrayed them and the nation; hence Jeb Bush’s $100 million campaign flop.

The working class supported Slick Willy because they knew his type–lady’s man, snake charmer, greasy go-to guy for the monied class in town, a guy on the make every waking second. Slick Willy was relentless, sweating, oozing, seething wth ambition–a guy you could see though but also a guy who had big dreams and worked them hard.

His wife, on the other hand, is as phony as a 3-dollar bill, incapable of irony or shame, a zealously self-absorbed chameleon who changes her accent, message, clothing and language to appeal to whomever she’s addressing at the moment, a technocrat-lawyer who believes in nothing but her own entitlement and will to power.

Trump supporters are 100% confident their vote won’t change; Hillary’s supports–not so much. Should the storm-troopers of the Democratic Party’s elites crush Bernie Sander’s nomination with super-delegate trickery, Sander’s supporters will not vote for Lady Macbeth.

For what Sander’s and Trump’s supporters share is the understanding that the status quo that Hillary represents to a private-jet/$200 thou speaking fees perfection has failed everyone but the elites and their technocrat servants, and the centers of power must be completely disrupted if anything is going to change.

The class war is already underway, and the petit bourgeois media is clueless.

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Plunge Protection Teams of the World, Unite!

Central bankers are watching Marx’s dictum all that is solid melts into air play out in global stock markets with a terror informed by the scalding memories of 2008’s global financial meltdown.

Once the trap-door opens, there is no bottom without prompt action by the world’s Plunge Protection Teams–the plausible-deniability action heroes of the hyper-speculative status quo who leap into action when global stock markets threaten to melt down.

After half a decade of ceaseless saves, we all know the mechanics of Plunge Protection.

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China and the Dragon Tail of Marx

The dragon tail of Marx’s end-game of overcapacity and finance capital is about to shred China’s fantasy that the state can micro-manage both capitalism and financialization with no contradictions or consequences.

Longtime readers know my one expertise is annoying the entire ideological spectrum in 1,000 words or less. Today is one of those days, so strap on your blood pressure monitor and prepare for full-spectrum annoyance, regardless of your ideological leanings.

Marxism is typically considered discredited outside of a few protected fiefdoms of academia which tend to engage in obscure debates over the labor theory of value and other signifiers of membership in the inner circle of deep Marxist thinkers.

Outside these cloistered academic circles, Marxism is dismissed for two basic reasons:

1. the predicted final crisis and implosion of capitalism did not occur

2. the vaguely outlined post-capitalist incarnation of a stateless worker’s paradise not only failed to materialize, but was used to justify destructive, murderous totalitarian regimes.

But those egregious failures of Marxist theory should not blind us to the value of his critique of capitalism.

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What’s the Source of Soaring Corporate Profits? Stagnant Wages

What if all the low-hanging fruit of outsourcing jobs and financialization have already been plucked by Corporate America?

The connection between soaring corporate profits and stagnant wages is both common sense and inflammatory: common sense because less for you, more for me and inflammatory because this harkens back to the core problem with the bad old capitalism Marx critiqued: that capital dominates labor and thus can extract profits even as the purchasing power of wages declines.

(What Marx missed because he was early in the cycle was capital’s dominance over the central state’s political machinery–a topic covered here in The Purchase of Our Republic.)

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The Alienation of Work

The emerging economy is opening up new ways to reconnect workers to their work and the profits from their work.

One of the most striking blind spots in our collective angst over the lack of jobs is our apparent disinterest in the nature of work and how work creates value. This disinterest is reflected in a number of conventional assumptions.

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