Archive for the ‘Golden prices’ Category

Modern Money

July 1, 2018

By the time of the U.S. presidential election in November 2020, historical experience and the condition of global money markets suggest that the current global economic boom will probably have run its course. While the latest government economic figures show the current boom continuing in the United States and Europe, serious crises have already hit the currencies of Argentina and Turkey.

The dollar after a period of weakness has begun rising against the euro and other currencies and against gold. This sudden dollar strength is not only the result of rising U.S. interest rates. Trump’s threat to impose high tariffs on a whole range of commodities starting on July 6 has set off a flight into the dollar due to its role as the international means of payment. We have seen many such flights into the dollar over the years whenever a crisis threatens, whether political, military or economic.

If no compromise is reached by July 6 and Trump’s tariffs – and the retaliatory tariffs of competing nations – go into effect, it is possible that some commodity sales will fall through, which could trigger an international credit crisis. If severe enough, such a crisis would quickly throw the global capitalist economy into recession. This is all the more likely given the very late stage in the current industrial cycle, which has made the global credit system increasingly fragile even in the absence of a trade war. Whatever happens in the short run, Trump’s economic nationalist “America First” policies are undermining the entire world order that has prevailed since 1945. But that is the subject for another post.

Because capitalist economic crises tend to manifest themselves first in the spheres of currency and then credit, many reformers have sought cures for crises through reforms to the currency and credit systems. This creates the illusion in the minds of middle-class reformers, who stand between the two main class camps of modern society, the capitalist class and the working class, that the contradictions of capitalist society can be overcome through reforming the credit/monetary system. The U.S., in particular, has produced numerous monetary reform movements.

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The Current U.S. Economic Boom in Historical Perspective (Pt 2)

May 6, 2018

Trump’s attempts to reverse the decline of U.S. capitalism

In April 2018, the U.S. political world was shaken by the news that Paul Ryan, the Ayn Rand/Austrian school-inspired Republican speaker of the U.S. House of Representatives, would not be running for re-election in this year’s mid-term race. Ryan claimed he was retiring at the age of 48 from politics “to spend more time with my family.”

It is widely believed, however, that Ryan is retiring from Congress because he fears a humiliating defeat at the hands of his Democratic Party opponent, the construction worker, trade unionist, and “Berniecrat” Randy Bryce. Over the last year, many of Ryan’s constituents were no doubt shocked to learn that their handsome, genial congressperson wanted to take away their health insurance.

It seems likely that Ryan, who is believed to harbor presidential ambitions, plans to lie low, make lots of money in the private sector, and count on the public forgetting (with the assistance of the mass media) about his attempt to throw tens of millions of people off their health insurance. At a later day, Ryan will be poised to reenter electoral politics and ride a new Republican wave, perhaps all the way to the White House.

But how could there be another Republican wave in the aftermath of the ever-growing debacle of the Trump presidency and the self-exposure of the Republican Party on the health insurance issue? To assume that a Republican comeback is impossible, would be to ignore the lessons of the last great “progressive” victory in U.S. politics—the election in November 2008 that brought into the White House the first African-American president, combined with solid Democratic majorities in both houses of Congress. However, at the end of Obama’s triumph lurked the racist Donald Trump, backed by Republican majorities in both the Senate and the House.

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Three Books on Marxist Political Economy (Pt 13)

December 3, 2017

The value of labor power

The value of labor power is determined by the value of the means of subsistence workers must consume to reproduce their labor power. This includes the developing labor powers of their children, who in time will replace them on the labor market. At the minimum, the means of subsistence must enable the workers to live and raise their children in the biological sense.

Like all commodities, means of subsistence have three values. One is their use values necessary for the reproduction of human labor power. Among these are food, shelter and clothing. Second is the amount of (abstract) labor, measured in some unit of time, necessary under the prevailing conditions of production to produce the means of subsistence. Finally, the commodities that go into the value of labor power have a value form or money price, called the wage.

Regardless of the epoch, there is always a quantity of the means of subsistence below which human life cannot be sustained. As we saw last month, industrial capitalists operating in southern India can pay a wage so low that their workers will be unable to buy warm clothing and winter heating while still expecting them to survive biologically. However, industrial capitalists operating in Siberia, Russia, must pay a wage sufficient to allow their workers to purchase a winter coat and pay for heating. Otherwise, the workers will perish.

Even if workers are barely able to survive biologically, they might still not be able to produce children and raise the next generation of workers. So the biologically determined minimum wage must in addition cover the costs of bearing and raising children. These factors establish a level of wages below which the real wage cannot fall for any extended period of time.

If wages were to fall below the level necessary to buy food, the working class would be extinct within a few weeks, and so would the capitalist mode of production. Without workers, surplus value cannot be produced, and without the production of surplus value, there can be no profit, and without profit there can be no capitalism.

If bosses paid the workers just enough to maintain the workers’ lives but not enough to raise the next generation of workers, the number of available workers would progressively decline, which would also lead to the extinction of the capitalist mode of production. This biologically determined minimum wage is the level to which capital always attempts to depress the actual wage. In the absence of counter-pressure from the side of the workers, the biologically minimum wage will constitute the actual wage.

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Three Books on Marxist Political Economy (Pt 10)

September 10, 2017

History of interest rates

A chart showing the history of interest rates over the last few centuries shows an interesting pattern — low hills and valleys with a generally downward tendency. During and immediately after World War I, interest rates form what looks like a low mountain range. Then with the arrival of the Great Depression of the 1930s, rates sink into a deep valley. Unlike during World War I, interest rates remain near Depression lows during World War II but start to rise slowly with some wiggles through the end of the 1960s.

But during the 1970s, interest rates suddenly spike upward, without precedent in the history of capitalist production. It is as though after riding through gently rolling country for several hundred years of capitalist history, you suddenly run into the Himalaya mountain range. Then, beginning in the early 1980s, interest rates start to fall into a deep valley, reaching all-time lows in the wake of the 2007-09 Great Recession. Clearly something dramatic occurred in the last half of the 20th century.

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