[Quinny]

I've posted this topic to get an understanding of a socialist's perspectives on the relationship between peak oil and the crisis of capitalism. It's particularly aimed at those marxiists on the left who believe that capitalism still has significant time left to run. Without mentioning names AD would seem to fit that bill

It seems to me that we are reaching a point where resource constraints are such that the continual growth needed to sustain the system is impossible and that the system is close to collapse. I admit to being surprised at the resilience that the system hs shown so far, but still believe we are getting close to systemic collapse.

I respect the views of those who say that they believe there is still lots of profits to wring out of far eastern workers, but find it difficult to square this with the effects of resource depletion on 'real' wealth creation. IMHO the gulf that has opened between real wealth and 'money' is so vast solely because of the ingenuity of the bankers to come up with schemes that give the illusion of growth. The creation of wealth in the 'real' economy is a actually flat and growth in GDP (meaningless anyway) is eaten up by commodity inflation and the 'tax' of higher energy costs.

What analysis makes some believe that there is still significant time left to run for capitalism?

[AgentR11]

The reason this can go on for a very long time:

The Capitalist governments/structures control the following:

1.) The numerical value of the amount of currency in circulation.
2.) The formula that computes inflation.
3.) The mechanism that sets the interest rates.

Growth, for the purposes of a capitalistic system, can be sustained through directly increasing #1, and understating #2. As long as all the players have no choice but to participate, this works. So what happens if they stop wanting to participate? You tweak #3 such that sitting on deposits costs you about 3%-5% / yr in purchasing power.

So... what are they doing right now?
1.) QE1 / QE2 increased this, QE3+ is being simultaneously denied and contemplated.
2.) Inflation calcs exclude the very products that have suffered significant increase in $/unit cost.
3.) Interest rates are as near to zero as you can imagine, and some banks are charging large depositors a fee to hold their money.

In other words, we're at full throttle in sustaining capitalism without real growth, and intend to do so for a very long time. Our GDP is showing weak but positive as a result. Weak but positive on the balance sheet is more than sufficient to kick the can down the road.

[Sixstrings]

$this->bbcode_second_pass_quote('AgentR11', 'I')n other words, we're at full throttle in sustaining capitalism without real growth, and intend to do so for a very long time. Our GDP is showing weak but positive as a result. Weak but positive on the balance sheet is more than sufficient to kick the can down the road.

[dolanbaker]

Has growth really stopped?

I suppose it depends on your viewpoint,
from the west - the answer is most likely - yes
from the BRICs - no

but Globaly has it stopped growing? I'm not sure! It depends on whether the growth in the BRICs is greater than the decline in the West.
Assuming oil is the prime driver, then the answer is probably "global decline" or at best stagnation.

[americandream]

I can understand your predicament Quinny. It's a difficult one seeing as we appear to be on the brink of quite revolutionary change. However, we have only to turn to that other precedent to capitalism, feudalism (which still lingers in significant swathes across the world) to really get a feel for just how difficult it is to predict the timing. Feudalism still persists in large areas and has not quite reached its zenith as was the case in Europe, which suggests a rationale for why these areas are increasingly being annexed (sometimes by rendering them into supplicants as in Saudi, sometimes by force (Libya and Iraq for example.)

Thus we draw some general guidelines from observing the interactions between these two systems (and of course, state capitalist opportunists such China) to obtain some broad and reasonably consistent understanding.

The leading indicator for me thus is global capitalism's resourcing profile buttressed up against these developments and what that tells me about the likelihood of its surplus profile (not forgetting input from labour surpluses in China and it's own capitalisation picture as number one FDI destination.)

All of this is of course being accompanied by unprecedented volatility in the West, the end of investment and the rise of speculation and ofcourse, mercantilist backlashes in America, much of which is being formented by, ironically, global capitalists....and the mercantilist agenda which looks suspiciously like the whittling down of the state. Whittling away of the state!!! Now where did I read that. On cue, I give you...one Karl Marx. The above looks suspiciously like the playing out of globalism...cycles and all

When is this likely to reach some maturation? I don't know but I hazard guesses. I'ld be expecting to see real signs of decoupling in, at the earliest, 3 decades. By then, all outstanding feudal territory will have been mapped and mined, all surplus in China, India, Latin America and Africa will have been exhausted, at current rates of growth, so will consumer potential in those regions. Capital will have strip mined and exhausted this planet of all potential, workers will have been fully optimalised as cheap labour and consumers and the basis for an organic rise of the sorts of consciousness that trigger systemic changes will have emerged.

Edit: My apologies. "state capitalist China" should read "state mercantilist China". It's these inconsistencies that cause confusion when readers read these analyses and I apologise. I strive to avoid them but sometimes fail.

[americandream]

$this->bbcode_second_pass_quote('Sixstrings', '')$this->bbcode_second_pass_quote('AgentR11', 'I')n other words, we're at full throttle in sustaining capitalism without real growth, and intend to do so for a very long time. Our GDP is showing weak but positive as a result. Weak but positive on the balance sheet is more than sufficient to kick the can down the road.

[AgentR11]

If there is real growth.. why is the interest rate on deposits zero or negative?

Surely those deposits could chase some of that growth instead of bombarding every credit worthy, middle class family with desperate flyers from *big* banks, begging us to refinance and borrow more money at embarrassingly low interest rates.

I think we're further along the globalism path than americandream might suspect; real growth has gone to zero, and what is happening now is what remaining improvements to profits that can be achieved, are being achieved by drastically reducing the expense of wages and benefits. Technology and its pervasiveness are now allowing keyman employees to work, or at least be aware of work 24/7; with engineers and typists and bookkeepers and phone support people doing his bidding all around the globe at $10/day. So what does a corporation need? It needs its board and management structure, it needs some department heads and closely guarded product people; and the rest is produced by a thousand robots in China, or a thousand nameless Indian laborers in an un-airconditioned aluminum sided shack that no American, Englishman, or European will ever see.

There is no growth, there is only the squeeze.
Only question for folks: Squeezer or Squeezie.

[Sixstrings]

$this->bbcode_second_pass_quote('AgentR11', 'I')f there is real growth.. why is the interest rate on deposits zero or negative?

[americandream]

$this->bbcode_second_pass_quote('AgentR11', 'I')f there is real growth.. why is the interest rate on deposits zero or negative?

Surely those deposits could chase some of that growth instead of bombarding every credit worthy, middle class family with desperate flyers from *big* banks, begging us to refinance and borrow more money at embarrassingly low interest rates.

I think we're further along the globalism path than americandream might suspect; real growth has gone to zero, and what is happening now is what remaining improvements to profits that can be achieved, are being achieved by drastically reducing the expense of wages and benefits. Technology and its pervasiveness are now allowing keyman employees to work, or at least be aware of work 24/7; with engineers and typists and bookkeepers and phone support people doing his bidding all around the globe at $10/day. So what does a corporation need? It needs its board and management structure, it needs some department heads and closely guarded product people; and the rest is produced by a thousand robots in China, or a thousand nameless Indian laborers in an un-airconditioned aluminum sided shack that no American, Englishman, or European will ever see.

There is no growth, there is only the squeeze.
Only question for folks: Squeezer or Squeezie.

[Pops]

Let me talk this out and you guys tell me where I'm wrong.

Capitalism itself doesn't require growth, it only requires private ownership of the means of production (or ownership of some resource) and that the product be sold or rented for a profit, preferably in a free market.

Capital accumulation however does require growth and at some level of reinvestment of profits, capitalism produces growth - profit from profit.


I own some land and a cow, that's the capital, I grow some cow and have some left over, that's the profit, hopefully there is a market for cow and the markets demand for cow sets the value.

I guess it would still be capitalism if the government (or a monopoly corporation) set the cow price, or controlled the cow selling place or even owned the cow selling place as a for profit enterprise but as long as I get to profit from my capital, that's capitalism.

Right?


The "growth" thing is only required for accumulation of capital. But if I make just enough cow to keep me full and have some to trade to my neighbor for toothpicks and occupy my time eating and picking my teeth instead of making babies I'll keel over from a MI at 60 and our 1.8 kids can then sit on the same porch and pick their teeth for their 3 score. No growth required.

Capital accumulation can happen without growth but it requires taking the capital of others unfairly, unfairly is a subjective word but hitting someone over the head and taking their wallet is certainly unfair and so is, say, payday loans whose effective APR can be in the thousands of percent, or manipulating a market so that demand appears to be higher than it actually is.

No growth is no problem as long as you don't have in mind cornering the market in capital or making a profit without making anything as in interest or gambling in whatever form.

As it turns out capitalism is alive and well. So well in fact that while we've been bickering about and gay marriage and welfare queens and who has a valid birth certificate, the capitalists have acquired just about everything that can turn a profit except the government - and they are doing a good job keeping us talking so they can privatizing that.

AD always talks about capital going into paper gambles and that's fine since oil fueled growth will make those all smoke. But I do worry about privatization of government assets right about now.

Really the only problem with capitalism is the moral one: how much profit is fair to make from labor, what is the limit to fair dealings with laborers, how much cost should society bear to enable capital's profit, how much restriction should there be on capital accumulation, if any. I also worry about capital being scared right now and buying real assets like farmland and water rights.


I like capitalism, unlimited capital accumulation not so much.

[Outcast_Searcher]

$this->bbcode_second_pass_quote('Pops', '
')Really the only problem with capitalism is the moral one: how much profit is fair to make from labor, what is the limit to fair dealings with laborers, how much cost should society bear to enable capital's profit, how much restriction should there be on capital accumulation, if any. I also worry about capital being scared right now and buying real assets like farmland and water rights.

I like capitalism, unlimited capital accumulation not so much.

[AgentR11]

I think your example falls more into the mercantilism aspect that americandream is talking about. Make something, sell something, profit is different between sale price and cost of good sold. Capitalism would be the investor who uses his cash, leveraged, to participate in the production of an assortment of calves owned by different people, whether by direct means, or by means of the mortgages and business loans used to finance those operations. The investor doesn't really "do" anything, aside from deciding whether an operation is likely to be profitable or not in the future. A wrong answer in that decision results in the investor losing money as loans fail to pay; a right decision yields him a profit based only upon that which he had at risk.

Its gambling... but with better odds than Vegas.

[americandream]

$this->bbcode_second_pass_quote('Pops', 'L')et me talk this out and you guys tell me where I'm wrong.

Capitalism itself doesn't require growth, it only requires private ownership of the means of production (or ownership of some resource) and that the product be sold or rented for a profit, preferably in a free market.

[Cid_Yama]

This continuous growth meme has just been a myth to placate the masses and explain how they too will benefit from Capitalism. (In the very long run.)

It's never been true. It's always been best pirate wins.

He who can buy his way best, gets his way to the detriment of all others.

So it really does come down to best criminal enterprise, that owns the pols and judges, so they never have to worry.

It's never been about competition in a free marketplace, it's always been about eliminating the competition through rigged markets, regulations, permits and so forth.

Surely, no matter what they say, everyone knows this to be the case.

They always pretend that Elliot Ness and the inept and thouroughly bought police forces of the 1930's rounded up and eliminated all the organized crime.

Does anybody really believe the whole Untouchables myth?

They just stopped killing each other openly and put on business suits.

So there IS no crisis in Capitalism. It may retrench regionally, and the guns may come back out, but it's still best crime boss wins.

[americandream]

@ Cid.

Under all my academic analysis, that alas is the harsh truth.

[Cid_Yama]

I'm just sick and tired of this whole free market jive, where they imply that free means fair, until you push them.

Then they say, "whoever said the world was fair." Well, actually they did in their descriptions of the economics of Capitalism.

There is nothing free or fair about it. Capitalism is extortion, and protection, and blackmail, and rigged gaming tables.

[AgentR11]

$this->bbcode_second_pass_quote('Cid_Yama', 'T')here is nothing free or fair about it. Capitalism is extortion, and protection, and blackmail, and rigged gaming tables.

[americandream]

$this->bbcode_second_pass_quote('AgentR11', '')$this->bbcode_second_pass_quote('Cid_Yama', 'T')here is nothing free or fair about it. Capitalism is extortion, and protection, and blackmail, and rigged gaming tables.

[Shaved Monkey]

Just saw a great documentary on planned obsolescence.
Its the engine that drives capitalist consumer society
It needs cheap energy cheap resources and cheap easy money.
So good luck to capitalism its going to need it.

"Earth provides enough to satisfy every man's need, but not every man's greed." (Mahatma Gandhi)

http://www.youtube.com/watch?v=endUcoHsCVY

[Quinny]

Thanks for all the inputs. I suppose my perspective is that Oil and cheap fossil fuels are such a limiting factor that they will continually cause sudden shock contractions which means that there will either be systemic collapse or a cycle of continual crises each one getting worse that will undermine peoples confidence in the system leading to an upsurge in organisation by labour.

The first alternative, although not necessarily Mad Max territory will be horrific and would IMO be more likely to knock us backwards towards feudalism or totalitarianism. This would potentially sustain a mercantilist/capitalist system for longer but at the cost of civilisation with the cruelist pirates at the top.

The second which seems to be the way things are playing out at the moment will lead to a general awareness that the games up and produce leaders to organise the general population. The problems for these leaders will be that they will still have the MSM and press continually counteracting their arguments, and they will also a to many a pretty distasteful agenda to put forward. 'Managing the downslope' would not be an easy campaign to win and democratic socialists would find elections an uphill struggle. Another major problem is the dislocation of producer and consumer. I used to argue that western workers were stupid because they wore there consumer hat to the polls, but to a large extent it's the only hat they've now got. How do you organise the workers into revolutionary councils when there are none? Moving forward in this scenario requires socialist leadership in movements like Transition Towns and Green political movements. The left also need to dump the idea of growth as a solution, whether as a means of gradual redistribution or in it's current role of 'deficit reducer'.

I still see nothing to convince me that PO will not be a economic catalyst accelerating the world towards a crisis of global capitalism.