ebola?
Bluelight Crew
I'm not so sure if this would do better here or in CE&P.
Nonetheless, here is an essay I wrote summarizing Baran and Sweezy's theory of capitalist crisis presented in Monopoly Capital . I would be especially interested in criticism of Sweezy's theory from bourgeois economists of various stripes.
...
In Monopoly Capital, Baran and Sweezy argue that the primary contradiction of monopoly capitalism is that the accumulation of surplus within the capitalist class, a natural tendency of monopoly capital, threatens the very process of accumulation in that it creates a demand-crisis. In its wake, this crisis of demand leaves much of the economy’s productive capacity unutilized, reducing rates of employment, rates of demand for investment in the means of production, and ultimately realizable levels of profit. We can see, then, that the central tendency of monopoly capitalism, in the absence of any stimulating force, is one of stagnation. Capitalists working within the context of monopoly capitalism have been, on some level, aware of this contradiction and the threat it presents to profits and the world-capitalist system itself. Consequently, the ruling class has made a variety of attempts to find outlets of investment and consumption which serve to absorb the surplus they have accumulated, thus stimulating demand, allowing employment rates to rise and rates of use of the means of production to approach capacity, in effect escaping the tendency towards economic stagnation. Some of these major outlets for surplus absorption include the intensive sales-effort, expansion of the welfare state and other Keynesian fiscal policies, and expansion of military spending. Although Keynesian economic policies hold much promise in the effort to combat the central contradiction of monopoly capital, Baran and Sweezy argue that Keynesian policies of the appropriate magnitude are unlivable for political reasons. Furthermore, Keynesian policies do little to combat auxiliary contradictions of monopoly capital.
In order to understand the contradiction entailed by the accumulation of surplus within the capitalist class, we must first understand the factors which cause this accumulation of excess surplus to occur. Namely, it is because of the power wielded by oligopic firms and their status as “price-makers” that the concentration of surplus within the capitalist class tends to rise, both relatively and absolutely. Because the majority of industries are dominated by only a few massive corporations, the majority of economic sectors present massive barriers of entry to would-be firms who stand to undercut the prices charged by the existing oligopoly. Furthermore, since these oligopic firms are bureaucratically rationalized and massive in size, they seek to maximize their profits in the long-term rather than seeking cut-throat price-competition in the short term (Baran and Sweezy 58). The result is a strong tendency for these firms to avoid price-competition and potentially devastating price wars. On this taboo against price-competition, Sweezy and Baran write, “Like other powerful taboos, that against price cutting has grown up gradually out of long and often bitter experience. . .As long as it is accepted and observed, the dangerous uncertainties are removed from the rationalized pursuit of maximum profits” (Baran and Sweezy 59). Thus, out of the framework of the power wielded by these oligopic firms rises a sort of group-strategy, an implicit agreement against price-competition which stands to destroy all firms in the market. The nature of this taboo has had a variety of manifestations, from tight cartels to informal agreements among firms, whereby the most powerful firm in a particular sector acts as “price-leader”, but in no case are these rationalized corporations willing to risk their livelihood in brutal price competition (Baran and Sweezy 60). Rather, the prices charged by these firms are ultimately monopolistic in nature.
This is not to say that competition is nonexistent among these firms. Rather, oligopic firms compete amongst one another over access to resources within production and commodity-trade which make a particular firm more profitable, thus increasing its power relative to its competitors (Baran and Sweezy 59). Firstly, oligopic firms are apt to compete fiercely in the arena of the sales effort in an attempt to draw customers from one oligopic firm to another. Very often, the firm with the largest profit margin, and thus the more powerful firm, is able to greatly outpace its competitors in its sales-effort because of the surplus it can afford to dedicate to sales (Baran and Sweezy 67). For example, one can think back to the early to mid-nineties when Reebok and Nike were locked in fierce competition. The battle was waged largely over the airwaves in the form of dueling commercial-spots rather than at the check-out counter in the form of dueling price-tags. Similarly, leading oligopic firms are able to devote additional resources to the development of superficially novel products which attract attention away from their competitors (Baran and Sweezy 69).
Secondly, oligopic firms, seeking to lower their production costs in comparison to their competitors and thus increase their power in the marketplace, compete in the arena of labor costs. Firms are consistently racing to find new locales which offer the cheapest possible labor and either invest in these locations or outsource to them immediately. This force, an expression of imperialism within the monopoly capitalist milieu, underlies the much discussed trend of globalization. Finally, it should be noted that there is fierce competition among the makers of producer-goods, namely to offer a piece of machinery, software, or a proprietary process which most greatly increases the profits of the consumer of these goods, who is him or herself a producer of final goods (Baran and Sweezy 70). The result of competition among firms making producer-goods has been briskly paced innovation and a consistent reduction in costs and increase in the profitability of industry overall.
It is plain to see that, unlike the price-competition common among firms of the competitive capitalist era, the competitive measures undertaken by monopoly-capitalist firms serve to increase the accumulation of surplus by the capitalists. In no case does this competition benefit the proletarian consumer. Rather, the intensive sales effort and superficial innovation serves to increase demand (within the constraints of the consumers’ wages) while the race to find cheap labor and innovation of producer-goods serve to reduce costs of production Since the prices charged by these oligopic firms remain constant, their rate of profit, and thus the rate of surplus-accumulation, must rise.
There is a problem for these firms, however. If there is no outlet for the surplus accumulated by these firms, principally if the escalating accumulation of surplus is not matched with an escalation in consumers’ demand for the capitalists’ products, the entire economy stands to stagnate (Baran and Sweezy 82). Because of the tendency for surplus to accumulate in the capitalist class, during economic booms the rate of capital investment will eclipse the rate of growth in demand on the part of consumers, who are largely proletarian. Consequently, the productive capacity of the economy will eclipse the capacity of consumers to purchase its goods. Accordingly, as the disparity between productive capacity and consumptive demand grows, as surplus continues to accumulate at the top, rates of employment and investment will fall as will rates of overall production and the quantity of surplus being accumulated. Furthermore, due to the existence of overhead costs, there is a tendency for the rate of profit to fall with the rate of production, leading to further disinvestment, leading to further unemployment, leading to further decreases in demand (Baran and Sweezy 82). In sum, the central tendency of the monopoly capitalist system is one of stagnation and crisis in the absence of any outlet for its immense accumulation of surplus.
Luckily for the existence of world-capitalist system and the temporary well-being of some of those participating in it, several outlets for excess surplus accumulation have been created over the course of the last century. It is through these outlets that the economy is “propped-up”, and production may more closely approach capacity. Firstly, an enormous amount of surplus has been dumped in to the intensive sales-effort which is now a requisite to a firm’s viability. Baran and Sweezy write, “Price competition has largely receded as a means of attracting the public’s custom, and has yielded to new ways of sales promotion: advertising, variation of the products’ appearance and packaging, ‘planned obsolescence,’ model changes, credit schemes, and the like” (Baran and Sweezy 115). Thus, because oligopic firms compete largely on the basis of their sales-effort, in the past couple of decades on the basis of their branding, firms must devote a great deal of would-be profits to the advertising effort. At the same time, the advertising industry, composed of capitalists, workers, and highly paid celebrities alike, owes its very existence to money spent on advertising by capitalists working in the non-advertising sector. Because the advertising industry is funded by the productive surplus, and because the demand for advertising is created by the capitalists themselves, the advertising industry can be said to absorb this surplus, raising the rate of production towards capacity. If the advertising industry did not exist and there were no other outlet for the productive surplus, those working in the ad industry would likely be unemployed.
The immense growth of the military-industrial complex in the twentieth century can also be explained by its role in surplus absorption. Like the ad industry, the existence of the military opens a new outlet for capital investment and offers employment to those who would otherwise be unemployed. The tendency for those who lack employable skills or a future in the educational system to enlist in the military betrays the military’s role in surplus-absorption. In this way, the military, too, allows total production to further approach productive capacity. Also, the military serves an additional purpose for the capitalist class. Baran and Sweezy write, “The hierarchy of nations which make up the capitalist system is characterized by a complex set of exploitative relations. . .each unit at a given level strives to be the sole exploiter of as large a number as possible of the units beneath it” (Baran and Sweezy 179). In this international network of exploitation, the military serves its purpose, furthering the accumulation of capital on the part of the particular nation making use of its military. The militaries of the first-world nations, in particular, have been used to insure that cheap labor and natural resources in the third-world may be secured by multinational corporations based in the first-world. Military force can be used to ensure that the political conditions of third world nations remain stable and that the prices of labor and natural resources remain low, carried out under the rhetoric of free trade. When third-world governments present barriers to capitalist accumulation, third-world revolutions may be funded by first-world nations and friendlier governments may be installed. It is in part through the existence of the military that imperialism continues.
A final and perhaps more communally useful avenue for the absorption of surplus has been the expansion of the civilian government. Be it through “transfer-payments to groups which can somehow make good their claims for special treatment,” including farmers who receive subsidies and welfare recipients, or direct government purchases of goods and services, such as the federally funded construction of the interstate highway system, the government is able to draw funds from the surplus through taxes and stimulate demand through its spending (Baran and Sweezy 143). In this way, the civilian government, too, is able to push production up towards its capacity. It would seem at first glance that through the pursuit of Keynesian economic policies, through the expansion of the economic activities of the government, it would be possible to absorb the excess capitalist surplus and in the process fund socially beneficial services such as universal healthcare and a robust system of welfare for the unemployed. Baran and Sweezy argue, however, that Keynesian policies of this magnitude would simply be politically unviable. Because the state is controlled almost entirely by a moneyed oligarchy, the legislation it churns out benefits largely the interests of this oligarchy (Baran and Sweezy 165). Because this moneyed oligarchy is the capitalist class itself, legislation which stands to benefit the populace but encroaches on the domain of private industry faces formidable legislative opposition. Increased military spending, on the other hand, which both provides an outlet for excess surplus and protects capitalist interests abroad, has had no trouble getting through congress and the senate.
Conversely, and in the defense of Keynesian liberals, there now exist nation-states in Western Europe which have enacted relatively large programs of government spending and heavy taxation-schemes under the banner of Social-Democracy. Through these programs, nations such as Switzerland and Sweden have escaped many of the harmful effects surrounding the stagnation that stems from concentration of surplus at the top, namely high rates of poverty and unemployment. Unfortunately, these nations are beginning to scale-back the magnitude of their social programs, the ruling elite seizing additional surplus in the short-term under the banner of free trade. Furthermore, even Keynesian fiscal policies do not present a solution to another fundamental capitalist contradiction, that of the looming environmental crisis. Capitalism, as a growth-based system, cannot flourish indefinitely on a planet with a finite quantity of natural resources. These contradictions stem from the fundamental logic of the world-capitalist system and their resolution will only be realized through transition towards another system.
ebola
Nonetheless, here is an essay I wrote summarizing Baran and Sweezy's theory of capitalist crisis presented in Monopoly Capital . I would be especially interested in criticism of Sweezy's theory from bourgeois economists of various stripes.
...
In Monopoly Capital, Baran and Sweezy argue that the primary contradiction of monopoly capitalism is that the accumulation of surplus within the capitalist class, a natural tendency of monopoly capital, threatens the very process of accumulation in that it creates a demand-crisis. In its wake, this crisis of demand leaves much of the economy’s productive capacity unutilized, reducing rates of employment, rates of demand for investment in the means of production, and ultimately realizable levels of profit. We can see, then, that the central tendency of monopoly capitalism, in the absence of any stimulating force, is one of stagnation. Capitalists working within the context of monopoly capitalism have been, on some level, aware of this contradiction and the threat it presents to profits and the world-capitalist system itself. Consequently, the ruling class has made a variety of attempts to find outlets of investment and consumption which serve to absorb the surplus they have accumulated, thus stimulating demand, allowing employment rates to rise and rates of use of the means of production to approach capacity, in effect escaping the tendency towards economic stagnation. Some of these major outlets for surplus absorption include the intensive sales-effort, expansion of the welfare state and other Keynesian fiscal policies, and expansion of military spending. Although Keynesian economic policies hold much promise in the effort to combat the central contradiction of monopoly capital, Baran and Sweezy argue that Keynesian policies of the appropriate magnitude are unlivable for political reasons. Furthermore, Keynesian policies do little to combat auxiliary contradictions of monopoly capital.
In order to understand the contradiction entailed by the accumulation of surplus within the capitalist class, we must first understand the factors which cause this accumulation of excess surplus to occur. Namely, it is because of the power wielded by oligopic firms and their status as “price-makers” that the concentration of surplus within the capitalist class tends to rise, both relatively and absolutely. Because the majority of industries are dominated by only a few massive corporations, the majority of economic sectors present massive barriers of entry to would-be firms who stand to undercut the prices charged by the existing oligopoly. Furthermore, since these oligopic firms are bureaucratically rationalized and massive in size, they seek to maximize their profits in the long-term rather than seeking cut-throat price-competition in the short term (Baran and Sweezy 58). The result is a strong tendency for these firms to avoid price-competition and potentially devastating price wars. On this taboo against price-competition, Sweezy and Baran write, “Like other powerful taboos, that against price cutting has grown up gradually out of long and often bitter experience. . .As long as it is accepted and observed, the dangerous uncertainties are removed from the rationalized pursuit of maximum profits” (Baran and Sweezy 59). Thus, out of the framework of the power wielded by these oligopic firms rises a sort of group-strategy, an implicit agreement against price-competition which stands to destroy all firms in the market. The nature of this taboo has had a variety of manifestations, from tight cartels to informal agreements among firms, whereby the most powerful firm in a particular sector acts as “price-leader”, but in no case are these rationalized corporations willing to risk their livelihood in brutal price competition (Baran and Sweezy 60). Rather, the prices charged by these firms are ultimately monopolistic in nature.
This is not to say that competition is nonexistent among these firms. Rather, oligopic firms compete amongst one another over access to resources within production and commodity-trade which make a particular firm more profitable, thus increasing its power relative to its competitors (Baran and Sweezy 59). Firstly, oligopic firms are apt to compete fiercely in the arena of the sales effort in an attempt to draw customers from one oligopic firm to another. Very often, the firm with the largest profit margin, and thus the more powerful firm, is able to greatly outpace its competitors in its sales-effort because of the surplus it can afford to dedicate to sales (Baran and Sweezy 67). For example, one can think back to the early to mid-nineties when Reebok and Nike were locked in fierce competition. The battle was waged largely over the airwaves in the form of dueling commercial-spots rather than at the check-out counter in the form of dueling price-tags. Similarly, leading oligopic firms are able to devote additional resources to the development of superficially novel products which attract attention away from their competitors (Baran and Sweezy 69).
Secondly, oligopic firms, seeking to lower their production costs in comparison to their competitors and thus increase their power in the marketplace, compete in the arena of labor costs. Firms are consistently racing to find new locales which offer the cheapest possible labor and either invest in these locations or outsource to them immediately. This force, an expression of imperialism within the monopoly capitalist milieu, underlies the much discussed trend of globalization. Finally, it should be noted that there is fierce competition among the makers of producer-goods, namely to offer a piece of machinery, software, or a proprietary process which most greatly increases the profits of the consumer of these goods, who is him or herself a producer of final goods (Baran and Sweezy 70). The result of competition among firms making producer-goods has been briskly paced innovation and a consistent reduction in costs and increase in the profitability of industry overall.
It is plain to see that, unlike the price-competition common among firms of the competitive capitalist era, the competitive measures undertaken by monopoly-capitalist firms serve to increase the accumulation of surplus by the capitalists. In no case does this competition benefit the proletarian consumer. Rather, the intensive sales effort and superficial innovation serves to increase demand (within the constraints of the consumers’ wages) while the race to find cheap labor and innovation of producer-goods serve to reduce costs of production Since the prices charged by these oligopic firms remain constant, their rate of profit, and thus the rate of surplus-accumulation, must rise.
There is a problem for these firms, however. If there is no outlet for the surplus accumulated by these firms, principally if the escalating accumulation of surplus is not matched with an escalation in consumers’ demand for the capitalists’ products, the entire economy stands to stagnate (Baran and Sweezy 82). Because of the tendency for surplus to accumulate in the capitalist class, during economic booms the rate of capital investment will eclipse the rate of growth in demand on the part of consumers, who are largely proletarian. Consequently, the productive capacity of the economy will eclipse the capacity of consumers to purchase its goods. Accordingly, as the disparity between productive capacity and consumptive demand grows, as surplus continues to accumulate at the top, rates of employment and investment will fall as will rates of overall production and the quantity of surplus being accumulated. Furthermore, due to the existence of overhead costs, there is a tendency for the rate of profit to fall with the rate of production, leading to further disinvestment, leading to further unemployment, leading to further decreases in demand (Baran and Sweezy 82). In sum, the central tendency of the monopoly capitalist system is one of stagnation and crisis in the absence of any outlet for its immense accumulation of surplus.
Luckily for the existence of world-capitalist system and the temporary well-being of some of those participating in it, several outlets for excess surplus accumulation have been created over the course of the last century. It is through these outlets that the economy is “propped-up”, and production may more closely approach capacity. Firstly, an enormous amount of surplus has been dumped in to the intensive sales-effort which is now a requisite to a firm’s viability. Baran and Sweezy write, “Price competition has largely receded as a means of attracting the public’s custom, and has yielded to new ways of sales promotion: advertising, variation of the products’ appearance and packaging, ‘planned obsolescence,’ model changes, credit schemes, and the like” (Baran and Sweezy 115). Thus, because oligopic firms compete largely on the basis of their sales-effort, in the past couple of decades on the basis of their branding, firms must devote a great deal of would-be profits to the advertising effort. At the same time, the advertising industry, composed of capitalists, workers, and highly paid celebrities alike, owes its very existence to money spent on advertising by capitalists working in the non-advertising sector. Because the advertising industry is funded by the productive surplus, and because the demand for advertising is created by the capitalists themselves, the advertising industry can be said to absorb this surplus, raising the rate of production towards capacity. If the advertising industry did not exist and there were no other outlet for the productive surplus, those working in the ad industry would likely be unemployed.
The immense growth of the military-industrial complex in the twentieth century can also be explained by its role in surplus absorption. Like the ad industry, the existence of the military opens a new outlet for capital investment and offers employment to those who would otherwise be unemployed. The tendency for those who lack employable skills or a future in the educational system to enlist in the military betrays the military’s role in surplus-absorption. In this way, the military, too, allows total production to further approach productive capacity. Also, the military serves an additional purpose for the capitalist class. Baran and Sweezy write, “The hierarchy of nations which make up the capitalist system is characterized by a complex set of exploitative relations. . .each unit at a given level strives to be the sole exploiter of as large a number as possible of the units beneath it” (Baran and Sweezy 179). In this international network of exploitation, the military serves its purpose, furthering the accumulation of capital on the part of the particular nation making use of its military. The militaries of the first-world nations, in particular, have been used to insure that cheap labor and natural resources in the third-world may be secured by multinational corporations based in the first-world. Military force can be used to ensure that the political conditions of third world nations remain stable and that the prices of labor and natural resources remain low, carried out under the rhetoric of free trade. When third-world governments present barriers to capitalist accumulation, third-world revolutions may be funded by first-world nations and friendlier governments may be installed. It is in part through the existence of the military that imperialism continues.
A final and perhaps more communally useful avenue for the absorption of surplus has been the expansion of the civilian government. Be it through “transfer-payments to groups which can somehow make good their claims for special treatment,” including farmers who receive subsidies and welfare recipients, or direct government purchases of goods and services, such as the federally funded construction of the interstate highway system, the government is able to draw funds from the surplus through taxes and stimulate demand through its spending (Baran and Sweezy 143). In this way, the civilian government, too, is able to push production up towards its capacity. It would seem at first glance that through the pursuit of Keynesian economic policies, through the expansion of the economic activities of the government, it would be possible to absorb the excess capitalist surplus and in the process fund socially beneficial services such as universal healthcare and a robust system of welfare for the unemployed. Baran and Sweezy argue, however, that Keynesian policies of this magnitude would simply be politically unviable. Because the state is controlled almost entirely by a moneyed oligarchy, the legislation it churns out benefits largely the interests of this oligarchy (Baran and Sweezy 165). Because this moneyed oligarchy is the capitalist class itself, legislation which stands to benefit the populace but encroaches on the domain of private industry faces formidable legislative opposition. Increased military spending, on the other hand, which both provides an outlet for excess surplus and protects capitalist interests abroad, has had no trouble getting through congress and the senate.
Conversely, and in the defense of Keynesian liberals, there now exist nation-states in Western Europe which have enacted relatively large programs of government spending and heavy taxation-schemes under the banner of Social-Democracy. Through these programs, nations such as Switzerland and Sweden have escaped many of the harmful effects surrounding the stagnation that stems from concentration of surplus at the top, namely high rates of poverty and unemployment. Unfortunately, these nations are beginning to scale-back the magnitude of their social programs, the ruling elite seizing additional surplus in the short-term under the banner of free trade. Furthermore, even Keynesian fiscal policies do not present a solution to another fundamental capitalist contradiction, that of the looming environmental crisis. Capitalism, as a growth-based system, cannot flourish indefinitely on a planet with a finite quantity of natural resources. These contradictions stem from the fundamental logic of the world-capitalist system and their resolution will only be realized through transition towards another system.
ebola
Last edited:
But if you are assuming that after the fossil fuel runs dry, we'll revert to a decentralized lifestyle, free of "governmental" institutions, I think you are wrong. It isn't oil that keeps people complacent. There will always be a certain percentage of humans devoted to organization on a grand scale, who view the world from an airplane window so to speak. We are ruled by people playing SimCity, and i think there will always be willing players.............Well, I think I'm going off on a tangent now 
