This blog-entry contains the third part of my serialization, within this blog, of the Equitist Advocacy Group's groundbreaking manifesto entitled "Malady and Remedy: What's Wrong, and What to Do About It", with my own edits added to their text, for its improvement [at least, I think so!].
In my opinion, this text is too important to be treated as any kind of "sacred text".
It needs to be improved upon, and circulated, <<samizdat>>, worldwide, in such "improved" forms -- i.e., in as many versions as are seen as being needed, by every author who thinks that [s]he can improve upon it [including this one].
Here is a link to the original version, including to its "endnotes" --
Part 3.: Malady and Remedy --
What's Wrong, and What to Do About It.
Diagnosis: What's Wrong [continued].
Hypothesis I: The Two Phases of the History of the Global System of Capital(s)
This turning point arrives when the transient capital-value gains to that plutocracy, no longer exceed, "in the net", on average, the capital-value losses to that plutocracy, for those gains, or self-expansions, of capital-value, and for those losses, or self-contractions, of capital-value that are both due to a single causative process: "the growth of the social forces of production" [Marx], i.e., the growth of the [human-social self-]productivity of capital-based industry; of industrial capital.
The gains result from temporary increments to the plutocracy's profitability, due to reductions in the costs (per unit of the commodity-output), of the labor-time, and of the other ingredients, required for the production of that commodity-output, relative to the unit costs, for the same kinds of commodity-output, of their competitors, when that unit-cost-advantaged commodity output is sold at the prevailing prices established by their competitors, or for lower prices, still covering those lower unit-costs plus a profit-margin.
These losses to capital in question arise due to the exposure of the plutocracy's businesses to their competitors' installations of superior new vintages of productivity-advancing capital "plant and equipment".
Therefore, all these losses to capital result from the non-physical depreciation, from the “moral depreciation” [Marx], from the technological-depreciation, or from the productivity-gain-induced depreciation, of such of the core plutocracy's capital "plant and equipment" assets as are confronted with competitor-installation of technologically, ‘productivitistically’ superior vintages of capital "plant and equipment" assets.
This is especially true in the case of the installation of superior such later vintages by new entrant competitors, who do not share the legacy burden that the older entrants may share among themselves, of, e.g., 50-year loans taken out to finance the purchase of the earlier, now ‘productivitistically’ inferior vintages of capital “plant and equipment” assets.
The “old entrant” competitors must still bear all of the present and future costs of paying the contractual debt-service on those old-vintages' loans, despite the fact that those old vintages have been taken out of service and scrapped, no longer making any physical contribution at all to those “old entrant” capitalists’ commodity output.
The core plutocracy comprises, by definition, the owners of the most concentrated, most consolidated, most centralized portions of world-market-system core industrial and financial capital-assets.
Their continual exposure to competition from technologically superior "plant and equipment", installed by rivals, and/or by “upstarts”, by new entrants, perhaps located in the newly-industrializing periphery of the original, core countries of capitalist development, and the net losses to their fixed capital, and to their profit-returns on that fixed capital, that such exposure increasingly entails, after this historical turning point, increasingly threatens the economic basis — the predominant capital-ownership basis, and the predominant money-control basis — of the ‘ultra-coveted’ socio-political power of this core plutocracy.
This turning point can be characterized as that of a turn or shift in the ratio of the capital-value of “fixed capital” (“plant and equipment”, which is exposed to capital losses due to ‘technodepreciation’), divided by the capital-value of “circulating capital”, for core world-market-system industrial capital.
- charges to [re-]cover the cost of the physical, “wear and tear” depreciation of “fixed capital”, e.g., of “production plant and equipment”;
- the wages “direct costs”, and;
- the “direct costs” of other “ingredients”, of other “inputs”, required by the “recipe” for the commodity-output in question;
- “indirect costs”, and “general & administrative overhead” costs [“G&A”], e.g., the costs of managerial, marketing, etc., private bureaucracies.
The physical commodity-capital output, as “circulating capital”, thus also embodies the “gains” to profitability, as “savings” to ‘“inputs costs”’, due to technological productivity gains.
The aggregate fixed-capital-to-circulating-capital ratio thus approximately measures the proportion of exposure -- the ‘‘‘cross-section’’’ of vulnerability to ‘technodepreciation’ -- of world-market-system core industrial capital.
As industrial capital accumulates over the historical time period of the global-capitalist epoch, and as the industrial capitalists grow the social forces of production -- as human ‘“social productivity”’ increases -- as reflected in the rising physical mass of industrial fixed capital, this ratio turns.
This process of competition-enforced, productivity-gain-induced, net-loss depreciation — of "obsolescence depreciation", "moral depreciation", "technological depreciation", or ‘technodepreciation’, for short — can generate (1) steady, competition-driven secular ‘techno-deflation’ of the prices of the plutocracy's commodity output, and also (2) aperiodic, e.g., crisis-driven write-downs of the "book-value(s)" of these capital-assets.
Indeed, the accelerating growth of technological productivity did just that, in the U. S., in the immediate post-Civil War period, in the ~35-year 'Long Techno-Deflation', from about 1865 to about 1900, i.e., in the period leading up to the "Great Panic" of 1907, followed by the imposition, by the plutocracy, of the “Federal Reserve System”, and of the Federal Income Tax, in 1913, and the first world-wide war, starting in 1914.
After the "turning point" as defined above — i.e., once fixed capital "outweighs" living human labor-power in the plutocracy's core industrial production mix — these processes will generate a generally-declining trend in the return on the plutocracy's core industrial capital investments.
- Example A:
From Charles Babbage's (circa 1832) book, On The Economy of Machinery and Manufactures. Even in the early-to-mid 1800s, in the U.K.'s machine-based manufacturing:
"The improvement which took place not long ago in frames for making patent-net was so great, that a machine, in good repair, which had cost £1200, sold a few years later for £60. During the great speculations in that trade, the improvements succeeded each other so rapidly, that machines which had never been finished were abandoned in the hands of their makers, because new improvements had superseded their utility." [e4]
- Example B:
From Harold Livesay's book, Andrew Carnegie and the Rise of Big Business. In the late 1800s, around 1888, in the U. S. steel industry:
"Carnegie ... [gave] his staff standing orders to replace obsolete machinery.... Bill Jones complied enthusiastically and soon had a renowned dump full of outmoded though not outworn machinery.... Carnegie once ordered Charles Schwab to rip out and rebuild a three-month-old rolling mill when Schwab said he had discovered a better design." [e5]
As noted already in Hypothesis I, lodged above, such declining profitability, tied to declining prices of general industrial output, occurred, for example, in the U. S., in the late 1800s, leading up to the imposition, by the plutocracy, of the Federal Income Tax system, and of the “Federal Reserve System”, in 1913, and of World War I, in 1914.