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Listed below are comments made by U5056328 between Friday, 13th November 2009 and Wednesday, 2nd December 2009.

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A bubble, or 'stubble', of our own design 2:31pm on 02 Dec 2009 #41 Hawkeye_Pierce

Good to see that you are reading David Harvey.
He seems to have a good understanding of ficticious capital.

I suspect he would say that the authorities will attempt to inflate their way out of the crisis.
The main objective to lower real wages to restore profitability.

I would think Limits to Capital is an intermediate text, easier to read than Capital, but still not for beginners.

Have you read Joel Kovel's The Enemy of Nature?
This is a relatively easy read.
He's on the socialist wing of the Greens.
A bubble, or 'stubble', of our own design 12:10pm on 02 Dec 2009 Finance capital struggled to find productive returns on capital and via sub-prime mortgages, etc fuelled an asset boom to maintain interest/profit rates.

The debt-ladden consumers could take on no more debt - the asset bubble popped, house prices & stockmarkets fell.

The banking system had to be rescued by government money.

Government debt is borrowing from future generations.

The stimulus fuels another asset boom and so banks' profits and bankers' bonuses.

But the fundamental problem is unresolved, the profit rate on productive capital is supported by ficticious capital, i.e. rises in asset prices not genuine increases in the value of productive capital.

Now the problem is the government debt is reaching levels that are not sustainable.

Just as the consumer became saturated in debt, so too now the government.
Certainly in the UK and also probably in the US, the rate of return on government debt will have to increase, that is the rate of interest will need to go up.

As desperately as they try to avoid the necessary capital devaluation they can't get away from it.

Come the bursting of the next asset bubble the authorities can only print money and debase the currency.
Shouldn't banks work for us? 08:07am on 02 Dec 2009 #136 starry-tigger

Time is indeed at the heart of the labour theory of value.
How many labour hours to reproduce the means of subsistence.
How many labour hours to reproduce the means of production.
How many labour hours to reproduce the luxuries of the rich.

This is one way to use the concept of value to understand the reproduction of society.

Of course we can use the term value in other contexts, e.g. we value the biodiversity of planet earth.

Capitalists then take advantage of our confusion of the term value and respond with comments such as, how much you prepared to pay for earth's biodiversity, how much are you prepared to pay for clean air, etc.

It's all about a few taking control of the means of production so that the rest of us only have our labour to sell to them to survive.

Yes, go back before Marx, go back to the Stone Age, Marx regarded pre-agricultural societies as communist, in the sense that there was no economic classes controlling the very, very limited means of production.
That's not to glorify such an age.

With all the advances we've made we can have a much happier life with less produced, shared more equally, working less, with more security and without wiping out the biodiversity of this wonderful world.
Shouldn't banks work for us? 9:10pm on 01 Dec 2009 Value is a key concept.
We use the term in everyday language in different ways.
In trying to explain the workings of the capitalist economy different concepts of value have been tried - Smith, Ricardo, Marx, Marshall.

The first three had a labour theory of value.
That the only objective thing that all commodities had in common was labour.
Marshall's marginalist concept is subjective.
It is only useful in a relative sense, one commodity compared to another.
This is of no use when trying to understand the economy as a whole.

Marx's Das Kapital has three volumes.
The first explains the production of capital and the concepts of value.
The second the circulation of capital.
The third brings production and circulation together and offers an explanation of crises.

Although I recommend it, its best to read an introductory text first.
Mine was Chris Harman's "Economics of the Madhouse".
Bookmarks in London stores many similar books.
Shouldn't banks work for us? 4:23pm on 01 Dec 2009 #63 Ian_the_chopper

Indeed there is a very big difference between use value and exchange value.

There is not a single unit by which you can measure the usefulness of everything produced.

Money only has meaning in terms of commodity exchange.

Volume 3 of Das Kapital has a chapter on merchant capital, explaining that it is a form of surplus value (i.e. a share of the profits extracted in production).
Shouldn't banks work for us? 4:11pm on 01 Dec 2009 #47 Ian_the_chopper

There is the difference between Marx's labour theory of value and Smith and Ricardo's.

The classical economists had a theory that used the concrete amounts of labour and thought that this could explain prices.

Marx introduced 'socially necessarily labour' which could only be known at market. Just because a capitalist makes a commodity does not automatically mean he can sell it.

The 'socially necessary labour' is a market value, an exchange value as opposed to a use value.

Individual products can be sold above and below their 'true' values but the market (economy) as a whole cannot add value outside of production (transport is an exception that Marx acknowledged).

Capitalism in its attempt to maintain value (prevent capital devaluation in a crisis) creates ficticious capital.
This takes the form of asset bubbles and government debt - exactly what we are seeing today.

But ficticious capital has no basis in production and so does not resolve the crisis, merely transforms and postpones it.

Hence the Marxist analysis that the current capital devaluation (as big as it has been) has not resolved the crisis in the rate of profit.

More trouble for the capitalists and the especially for the workers to come.
Shouldn't banks work for us? 1:11pm on 01 Dec 2009 #21 pawns_or_players

In my opinion writingsonthewall is quite correct in that value can only be added at the point of production.

Value is a term that is much misunderstood today.

If you go back to Smith and Ricardo you will see that they used a version of the labour theory of value.
But because this showed that labour was the ultimate source of all profit it wasn't a very convenient ideology.
Hence the emergence of the vulgar economists and their marginalist version of value.
This very conveniently fitted the surface appearance of each factor of production (land, labour and capital) getting its 'just' return (rent, wage and profit).
This marginalist version is of use to microeconomists but of no use in explaining the economy as a whole, and hence the inability of today's economists to offer a coherent theory of crises.

Marx refined the labour theory of value used by Smith and Ricardo.
Hence many Marxists did forecast and can explain the recurring crises of capitalism.
Three-way on the MPC 07:47am on 19 Nov 2009 So is the new money being put into the world economy by governments being put to productive use or not?

Is the money finding its way into new production, realising new value and so productive profits?

It would appear not.

Hence the money is being put into the system to support (the banks') profit rates not real production.

This is FICTICIOUS CAPITAL.
When and how to squeeze the budget 11:26am on 18 Nov 2009 Finance capital struggled to find productive returns on capital and via sub-prime mortgages, etc fueled an asset boom to maintain interest/profit rates.
The debt-ladden consumers could take on no more debt - the asset bubble pops, house prices & stockmarkets fall.
The banking system has to be rescued by government money.
The government debt is borrowing from future generations.
The stimulus fuels another asset boom and so banks' profits and bankers' bonuses.
But the fundamental problem is unresolved, the profit rate on productive capital is supported by ficticious capital, i.e. rises in asset prices not genuine increases in the value of productive capital.
But the problem is the government debt is reaching levels that are not sustainable.
Just as the consumer became saturated in debt, so too now the government.
Certainly in the UK and also probably in the US, the rate of return on government debt will have to increase, that is the rate of interest will need to go up.
As desperately as they try to avoid the necessary capital devaluation they can't get away from it.
Come the bursting of the next asset bubble the authorities can only print money and debase the currency.
New name for a new economy? 4:12pm on 13 Nov 2009 Capitalism = ownership of means of production by a class
Communism = collective ownership of the means of production by the people

Hence,
Soviet Union, China & other 'communist' states = state capitalism, i.e. the ownership of the means of production by a class (the Communist Party)

The market version of capitalism veers between the liberalist 'laissez-faire' version and the social 'democratic' interventionist version.

Lately we are seeing a move to the latter; whatever is in the interest of the capitalist class.

It's all capitalism.

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