Monthly Review underconsumption theory vs Marxist Human Initiative.....

[RadioRaheem84]

Can someone explain to me Andrew Kliman from the Marxist Human Initiative's position on his debating the MR school on underconsumotion? It's kind of confusing. Apparently, labor's share has risen? :confused:

Underconsumption theory, I believed was the primary theory among Leftists, at least ones in America for years. The theory is that the main purpose of capitalism is human consumption and there has been a lack for aggregate demand which has spurned the crises. Paul Baran and Paul Sweezy's theories incorporates the theories of imperialism and high tech as meeting that demand, then succumbing to financialization.

I still do not get Kliman's theory. That regardless capitalists sold to each other?

Who is right?

[Conkercorner]

I've taken a look.

The facts and figures given are pretty self-explanatory and seem to indicate manipulation and selective examination by underproductionists. I can't post links yet, so take a look at "Lies, damned lies and underconsumptionist statistics" if you want the figures showing a rise in labour share.

Now, underproductionists say that capitalist production is always intended for human consumption, and that workers spend a larger portion of their income on consumer goods than the upper or middle classes, who tend to hoard it away. This, in theory, should mean that when workers' real wages fall or workers have a lower share of the national income compared to the middle or upper class, they can't buy as many of these products for consumption and businesses do worse because they can't sell their products. This, according to underproductionists is the cause of economic crisis in capitalism.

But the figures show us that even alongside times of recent economic hardship, worker share of income is still rising. So clearly, a fall in worker share of income is not the cause of capitalist crisis. But how do businesses stay afloat when the working class can't buy their products? How are they to replace this drop in demand for consumer goods?

Instead, they create demand for investment goods- tools and machines which are produced in order to be sold in order to produce.

According to Kilman, capitalists can actually bypass selling consumer goods and sell to each other instead as investment goods in a sort of circular clownery. Products not intended to be consumed by humans, but to be used to produce more products. Production for the sake of production. So fall in consumer goods demand is offset by rise in investment goods demand,

A simple example:
Steel producing company sells steel to an industrial company. Industrial company uses steel to produce cargo ships and sells them to shipping company. Shipping company ships steel to steel company. Steel company sells steel to industrial company... and so on.

Demand for investment goods (which increase the production of a business) increases to massive levels so that capitalists can use them to produce more investment goods. There's still demand for consumption goods- but it's a lot lower than the demand for investment goods in this case. This will mean that supply of consumer goods won't actually increase meaningfully and it won't hurt the businesses because they can produce things in order to produce things and still make money.

This isn't so good for the workers. It gives companies the ability to produce more and continue to grow while keeping consumer goods' supply low and therefore prices high- but they are producing for the sake of production, not consumption. It's useless to the vast majority of people because it's just churning out crap that's used to churn out other crap- yet another idiotic contradiction of the capitalist mode of production, if correct.

But this apparently explains why a fall in working class share of income does not seem to be the cause of capitalist crisis.

I hope that made sense. :)

[RadioRaheem84]

It did make sense except that you says underproductionist instead of underconsumptionist. I got confused.

What's still bothering me though is how Kliman can say that workers share rose while wages remained stagnant? How does he ignore that? Also won't the same wage suppression be evident is the production of constant capital? Does it matter what workers are producing as long as their wages keep sinking? Isn't it the same theory? Workers are just over producing producer goods to where producers cannot even buy? A glut in demand there too?

This theory just goes against a lot of what the left has said for so long. It doesn't incorporate imperialism or other leftist theories too. I mean what is Kliman doing here? It seems like his theory is pretty out there and in the minority.

Wasn't rosa Luxembourg an underconsumptionist theorist? Isn't David Harvey a proponent of it too? Are they all just wrong?

[L.A.P.]

I don't know much about the Monthly Review and don't even know who Andrew Kilman and the Marxist Humanist Initiative even are.



But I know that the Monthly Review economists are supposed to be underconsumptionists, a theory rooted in Sismondi, and Paul Sweezy is a "Keynesian Marxist". I guess Sismondi's underconsumptionism theory asserted that economic crises were rooted in that: if the industrialists pay the workers (who are the majority of the population) low wages in order to produce greater surplus-value, the majority of consumers will not even be able to purchase commodities, thus not realizing the surplus-value produced. This crisis theory dealt with the realization of surplus-value, which was opposed to the Ricardian falling rate of profit theory. That is: as more capital is accumulated, the capitalist will increasingly invest accumulated capital into 'constant capital' (equipment, machinery, etc.) to cut labor costs ('variable capital'). This is called "the rise in the organic composition of capital". However, surplus-value can only be extracted from variable capital, and the rise in the demand for industrial materials during a boom causes the price of these goods to rise, thus constant capital eating up more of the circulating capital. This ignites a crisis in producing surplus-value. Marx's crisis theory was more dialectical (though incomplete), and qualified aspects of both theories into something that could not just be summarized.



There's this blog called "critiqueofcrisistheory" that is great second-hand reading of Capital Vol. 3





Sent from my Windows Phone using Tapatalk

[RadioRaheem84]

So you're saying that it's both? I emailed the Monthly Review school and they reject the label given to them by the MHI as underconsumptionist. They said that their theory is one of over-accumulation, not underconsumption. They also reject Keynesianism and rebutted their opinions in a piece called Listen Keynesians, It's the System.

They also rebutted the idea that they're underconsumptionists in the article the Fallacy of Crude Underconsumptionism.

http://monthlyreview.org/2013/01/01/capitalism-and-the-fallacy-of-crude-underconsumptionism



The fallacy of the theory of the workers’ inability to buy back their whole product is apparent if we reflect that a large part of this product takes the form of means of production (raw materials, buildings, machines, etc.) which workers do not and could not consume and which, under capitalism, can be put to productive use only by capitalists. A portion of this output of means of production replaces what is used up (raw materials) or worn out, and the latter is paid for from depreciation charges. The remainder, constituting a net addition to the stock of means of production, is paid for out of the capitalists’ surplus value.

This does not mean, however, that overproduction is impossible or that Ollman is wrong to call it capitalism’s “classic contradiction.” The problem is, in truth, an extremely complicated one, which accounts for the fact that it has been the center of heated and voluminous debates ever since the early days of capitalism.

Marx divided production into two categories, Department I producing means of production and Department II consumption goods. As already noted, the demand for the output of Department I comes entirely from capitalists. Capitalists also contribute part of the demand for the output of Department II, but a much larger share comes from workers. Given the nature of capitalists as profit-maximizers and unremitting capital accumulators, they “naturally” seek to pay workers as little as they can get away with, and continually to raise their (the capitalists’) own rate of accumulation. This means that normal capitalist behavior acts continuously to restrain the increase in demand for consumption goods (Department II) and at the same time to enlarge the demand for means of production (Department I).

Many economists (including some Marxists) have argued that there is no contradiction here, that no necessary relationship exists between the feasible growth rates of the two departments. Put in other terms, what they are saying in effect is that capitalists can successfully and profitably build up Department I (production of means of production) regardless of what is happening to consumption. The Russian Marxist Tugan-Baranowsky, who wrote around the turn of the century, went so far as to contend that capitalism could function smoothly even with a steady decline in the volume of consumption: all that would be necessary would be that means of production should be used to produce even larger quantities of means of production, thus taking up the slack generated by the shrinkage of Department II.

Other economists—including, we believe, a large majority of Marxists—have rejected this line of reasoning, holding that for the system to work smoothly the two departments must in the long run grow in tandem. They agree that for a while Department I can expand as though it were independent and that this can and repeatedly does give capitalists the illusion that the more profits they make and the faster they accumulate, the more prosperous the economy will be. (Reaganomics is based squarely on this illusion!) But the reality is that these are periods of overproduction which cannot be sustained. Sooner or later—many factors, technological as well historical in a broader sense, affect the length of time—the weak growth of final demand for consumption goods works its way through the system and brings the boom to an end. Understood in this sense, overproduction is indeed a very real consequence of the normal functioning of capitalism and can appropriately be called the system’s “classic contradiction”—though it is of course far from being the only, or even the main, contradiction of capitalism.

Marx himself did not spell out a theory along these lines in any detailed or systematic way. But there are numerous passages scattered through his writings which are fully consistent with such a theory and, so far as we are aware, none which contradict it. But the final test of the validity of the theory is not what Marx or any other economists have said or implied, but the last two hundred years of capitalist history. And in this respect it seems to us that the verdict in favor is quite clear and unambiguous.

- Harry Magdoff and Paul Sweezy

[RadioRaheem84]

This was not an interpretation of recent economic history that I found particularly appealing, and I knew that proponents of the conventional wisdom mis-measure the rate of profit. But I had no reason to believe that their measures were overstating the rise in profitability instead of understating it. Nor did I doubt that their other empirical claims were based on fact. Yet in the course of my research, I found that:
1. US corporations’ rate of profit did not recover in a sustained manner after the early 1980s. Their before-tax rate of profit has been trendless since the early 1980s and a rate of profit based on a broader concept of profit, more akin to what Marx meant by “surplus-value,” continued to decline.
2. Neoliberalism and financialization have not caused U.S. corporations to invest a smaller share of their profit in production. Between 1981 and 2001, they devoted a larger share of their profit to productive investment than they did between 1947 and 1980 (and the post-2001 drop in this share is a statistical fluke). What accounts for the decline in the rate of accumulation is instead the decline in the rate of profit.
3. U.S. workers are not being paid less in real terms than they were paid decades ago. Their real pay has risen. And their share of the nation’s income has not fallen. It is higher now than it was in 1960, and it has been stable since 1970.

http://www.marxisthumanistinitiative.org/economic-crisis/new-book-the-failure-of-capitalist-production.html

These are Kilman's main points. So the rich did not get richer during the 80s?

There was no neoliberal assault on workers during the 80s throughout?

Investors weren't worried about putting their money into productive economy vs the financial assets? The fortune 500 didn't seem to see the inclusion of more and more Wall St financiers during the 80s?

Wages did not decline for the large swathe of workers during this time period? We're actually making more money today than we were in the 1960s during the period of greater union participation?

I mean what is Kliman talking about here? His points almost refute everything the left has been talking about in terms of their declining share and the political assault on workers through austerity.

No "underconsumptionist" Marxist thinks that the crises will be solved by raising wages or spending on some Keynesian new deal measure. That argument has been thoroughly defeated time and time again by the MR school and other proponents.


Thus, what the crisis has put on the agenda is the need for policies such as financial regulation, activist (“Keynesian”) fiscal and monetary policies, and perhaps financial-sector nationalization, rather than a change in the character of the socio-economic system.


- Kliman


Still, such warnings fell on deaf ears. Those economists still generally working in Keynes’s own tradition, like Tobin, Galbraith, and Minsky—who understood that capitalism did not naturally tend toward full employment—remained committed to the idea that an active state could stabilize the system, removing its worst irrationalities. The great majority of economists, however, had abandoned Keynes altogether along with the need for affirmative government and had returned under one mantle or another, to the pre-Keynesian belief in the automatically equilibrating capitalist market economy. Keynes was relegated to a “special case” (as Schumpeter had declared) related to periods, now viewed as impossible, of deep depression.9 The question “Can ‘It’ Happen Again?” which Minsky asked, and Magdoff and Sweezy gave a qualified Yes to, was generally dismissed as no longer even worth raising.

-Monthly Review, http://monthlyreview.org/2010/04/01/listen-keynesians-its-the-system-response-to-palley
Keynesianism and the active state; progressive taxation, high wages, social welfare, according to MR were a short period. To go back to this is impossible. It's therefore needed to abolish capitalism altogether. When "underconsumptionists" like MR and David Harvey mention the theories of neo-liberalism and financialization of the economy, they do not mean that all we have to do is just insitute an active state to recoup the workers losses.

It really sounds like Kliman's theories could be easily picked up by a right wing proponent of capitalism as a way to denounce what the left has worked for to propose. I think the Marxist Humanist Initiative is doing a disservice by conflating the works of the MR school with liberal economists, just because there may be some agreements although with differing solutions.


And some, like the works by Foster-Magdoff and Harvey, also stress the supposed facts that workers’ share of total income declined and that this led to a lack of demand that was covered over by rising debt. From such a perspective, the crisis appears not to be a crisis of capitalism, but a crisis of a specifically neoliberal and financialized form of capitalism. I do not think the facts are consonant with these views, and I trust that disinterested readers will find, at minimum, that this book’s empirical analyses call such views into question.

- Andrew Kliman,
http://www.marxisthumanistinitiative.org/economic-crisis/new-book-the-failure-of-capitalist-production.html


Our own perspective is different. The root problem, as we see it, is not neoliberalism but capitalism itself. Neoliberalism (the economics of Hayek, Friedman, etc.) did not emerge as a dark conspiracy to drag capitalism from high growth rates and vibrancy; it became the orthodoxy when the system was in tatters in the 1970s, and when (bastard) Keynesianism was the establishment doctrine in disrepute. The choice before nations in that decade of crisis was to turn sharply to the left and go beyond existing monopoly capitalism to some variant of socialism, or turn hard right.

What room there might have been at one time—and even then inscribed within the larger domination of center-over-periphery in the world economy—for a genuine Keynesianism, associated with social democracy of the Scandinavian variety is, in our view, now gone. The deepening stagnation of the mature, monopolistic economy, and the growth of financialization in an attempt to leverage up the system, represent the failure of the capital accumulation process at the system’s rotting center. The capitalist system as a whole is approaching its historic limits and needs to be transcended if the real needs of humanity (and the earth) are to be addressed.


- Listen Keynesians, it's the System.
http://monthlyreview.org/2010/04/01/listen-keynesians-its-the-system-response-to-palley

In short I think Kliman really misrepresented the MR school and has started a petty war over nothing. It turned from a decent debate on what came first the chicken or the egg, to basically accusing the MR school of fudging numbers and siding with liberal economists to advance a liberal theory.

[RadioRaheem84]

Wow I thought a topic like this would've sparked a huge debate. There's never any real talk on the matter. Anyone?

[Zanthorus]

This theory just goes against a lot of what the left has said for so long. It doesn't incorporate imperialism or other leftist theories too. I mean what is Kliman doing here? It seems like his theory is pretty out there and in the minority.

Wasn't rosa Luxembourg an underconsumptionist theorist? Isn't David Harvey a proponent of it too? Are they all just wrong?

Yes, but honestly who cares? Why is what the left believes the barometer for truth? Have you ever considered the possibility that people 'on the left' might occasionally be wrong?


They also rebutted the idea that they're underconsumptionists in the article the Fallacy of Crude Underconsumptionism.Except they say at the end that they're basically underconsumptionists, "the weak growth of final demand for consumption goods works its way through the system and brings the boom to an end" is precisely a statement of underconsumptionism. They're doing exactly what Kliman is accusing them of when they imply that capitalism is somehow ultimately geared towards the end-consumer. If we're accusing Kliman of aiding the enemies of the left, it's worth noting that a focus on the consumer as a driving force in capitalism is a very potent part of bourgeois ideology, if we focus on consumption rather than production, for example, it's easy to miss the importance of what goes on between workers and capitalists. The relation between those components is after all primarily a relationship of production.

The cause of overproduction, or so the argument as I understand it goes, has nothing to do with demand for consumption goods, it has to do with the fall in the rate of profit. The rate of profit is calculated by dividing surplus-value by the initial investment of constant and variable capital s/(c + v). The basic problem is a rise in constant capital over time equates to a bigger number on the wrong side of the divider and a smaller rate of profit. Since the rate of profit is what motivates investment, it's decline equates to a decline in investment and eventually Department I production breaks down on it's own.

[RadioRaheem84]

Yes, but honestly who cares? Why is what the left believes the barometer for truth? Have you ever considered the possibility that people 'on the left' might occasionally be wrong?

Except they say at the end that they're basically underconsumptionists, "the weak growth of final demand for consumption goods works its way through the system and brings the boom to an end" is precisely a statement of underconsumptionism. They're doing exactly what Kliman is accusing them of when they imply that capitalism is somehow ultimately geared towards the end-consumer. If we're accusing Kliman of aiding the enemies of the left, it's worth noting that a focus on the consumer as a driving force in capitalism is a very potent part of bourgeois ideology, if we focus on consumption rather than production, for example, it's easy to miss the importance of what goes on between workers and capitalists. The relation between those components is after all primarily a relationship of production.

The cause of overproduction, or so the argument as I understand it goes, has nothing to do with demand for consumption goods, it has to do with the fall in the rate of profit. The rate of profit is calculated by dividing surplus-value by the initial investment of constant and variable capital s/(c + v). The basic problem is a rise in constant capital over time equates to a bigger number on the wrong side of the divider and a smaller rate of profit. Since the rate of profit is what motivates investment, it's decline equates to a decline in investment and eventually Department I production breaks down on it's own.

They don't stress underconsumption, they stress over accumulation.


Some fundamentalist Marxian political economists continue to adhere—in our view, mistakenly, given changed conditions—to Marx’s theory of the tendential law of the rate of profit to fall due to rising organic composition, which was directly applicable in the nineteenth century but not in the twentieth. Part of the reason for clinging to such views (which were not, however, prominent in Marxian economics until the 1970s) no doubt has to do with the way in which it is commonly interpreted as an absolute economic “breakdown theory,” which appears to justify a revolutionary politics as a mechanical, even automatic, response. For many, the classical falling rate of profit theory seems immune to reformist politics and should be advanced precisely for that reason. Thus, Rick Kuhn, who recently received the Isaac and Tamara Deutscher Memorial Prize for his book Henryk Grossman and the Recovery of Marxism, strongly emphasizes the importance of the classical Marxian tendential law of the falling rate of profit as a “breakdown theory” of capitalism (à la Grossman); using this notion to distinguish it from Marxian analyses impacted by the Keynesian revolution, and thus of an allegedly more “reformist” nature. As Kuhn himself states, “The logic of his [Grossman’s] theory of breakdown is still self-evidently anathema to those committed to a reformist path to socialism, let alone proponents of a stable and humane capitalism.”25

Yet, although it is reasonable to talk today of a partial breakdown of the accumulation process under conditions of monopoly capital and industrial maturity, no absolute economic breakdown of the system is to be expected. The most likely prospect (outside of global environmental collapse or nuclear holocaust) is one of long-run economic stagnation in the advanced capitalist economies, coupled with continuing financial instability, heavy military spending (and war), a growing sales effort, etc. The system “issues into a stationary state that constantly threatens to break down” but never really does, since stagnation can continue more or less indefinitely, even with growing hardship for those at the bottom of society. Such conditions are likely to last, and indeed worsen—absent effective political organization with the aim of putting the economy and society on a new, more egalitarian and sustainable, i.e., socialist, foundation.

This assessment does not reflect an “underconsumptionist” argument on our part, as Palley suggests, but rather an overaccumulationist one.26 Indeed, we stress the fact that it is the accumulation, or savings-and-investment process, that is the problem. Simple promotion of higher wages or income redistribution will, no doubt, provide some welcome relief to a portion of society—to the very limited extent that this can be achieved within the system—but such measures will not solve the underlying problem. Much more revolutionary social changes are needed. Palley’s radical “structural Keynesian” position, which lies in the tradition of orthodox Keynesianism and argues for something like a new New Deal as the ultimate solution, is one that we cannot accept in full, simply because it excludes the root problem: the accumulation of capital itself.27

From the article linked above Listen Keynesians.

All in all while MRs take on Marxism may seem like it's similar to bourgeoisie liberal economists it's really not. In fact I think that the MR school really added to Marxism by making it less dogmatic and less mechanical than what the falling rate of profit proponents propose.

[Zanthorus]

They don't stress underconsumption, they stress over accumulation.

OK, first point, you accused Kliman of attacking MR over nothing in an earlier post, but in the first paragraph of your quote they reject the tendency of the rate of profit to fall as a driving force behind crisis, so it's clear that there is a fundamental disagreement here regardless of any name calling.

Secondly I don't know the specifics of MR's particular version of crisis theory, but the statements you've posted from them so far bear all the hallmarks of what has been traditionally criticised under the banner of underconsumptionism, including the idea that Department II production ultimately drives Department I production, and even an explicit statement that the cause of crisis is the weak demand for consumption goods. Whether or not the 'stress' is on the problem of overaccumulation or underconsumption is really more of a linguistic retort than an attempt to refute the accusation.

Can I give a suggested reading - An Introduction to the History of Crisis Theories by Anwar Shaikh (http://www.contra-versus.net/uploads/6/7/3/6/6736569/crisis_theories.pdf) - if nothing it might give you a broader perspective than the one you have currently.

[Thirsty Crow]

The issue is with the thesis, confirmed in my book on limited data, of the tendency of the rate of profit to fall.

In short, MR deny it and consider it, at least to my knowledge, logically defective. Kliman defends it within the paradigm of the Temporal Single System Interpretation (of the argument put forward in Das Kapital).

Within this, another issue is, maybe surprisingly, what's profit anyway. Historical cost versus current replacement cost and some other issues I'm not that familiar with, but so far Kliman's analysis of data seems persuasive.

And the debate is miles away from scholastic quarrels. It's hugely important in its implications for the understanding of capital.

[MEGAMANTROTSKY]

Wow I thought a topic like this would've sparked a huge debate. There's never any real talk on the matter. Anyone?
There is no longer any "real talk" because the Marxist posters or specialists who would have had something to say have long since been banned. There isn't much left.

[RadioRaheem84]

Banned? What? Why? I'm guessing the majority in here are of the 'falling rate of profit' belief. But I think this stresses a mechanical view of capitalism and in some regards denies theories of neo-liberalism, neo-imperialism, wage stagnation, I mean pretty much the entire edifice of what the left has built up as its defense.

[MEGAMANTROTSKY]

Banned? What? Why? I'm guessing the majority in here are of the 'falling rate of profit' belief. But I think this stresses a mechanical view of capitalism and in some regards denies theories of neo-liberalism, neo-imperialism, wage stagnation, I mean pretty much the entire edifice of what the left has built up as its defense.
Why don't you read what Kliman has to say in his "The Failure of Capitalist Production" and see if he's still "mechanical". Nothing like that came up in my own reading.

As for the banning, only the "administration" can answer those questions.

[reb]

I actually have no idea why you are defending a bourgeois idea of capitalist crisis in the form of capitalist accumulation/under-consumption. Kliman argues in favor of the idea that it's the organic composition of capital, the way that capital progresses which also includes wage-stagnation and all of the stuff you mentioned, that determines crisis. Unless you think that capital will expand forever under the right circumstances with no crisis.

[Thirsty Crow]

Banned? What? Why? I'm guessing the majority in here are of the 'falling rate of profit' belief. But I think this stresses a mechanical view of capitalism and in some regards denies theories of neo-liberalism, neo-imperialism, wage stagnation, I mean pretty much the entire edifice of what the left has built up as its defense.
The point about the prevailing theories of neoliberalism on the left were that they need to be denied since they're junk anyway, and most of all it is wage stagnation as cause of crises that is pure and simple crap.
And the point about mechanical nature of....well I dunno, something, is bogus since it's the way the thesis is 1) conceptualized and then 2) verified or disproven.

[RadioRaheem84]

I don't think anything in the MR school suggests that the problem is due to wage stagnation or to anything that can be fixed by an active state. They argue that that this:


If we turn to Marx’s text without any such preconceived notions, then it quickly becomes clear that Marx’s considerations do not yield any unified theory of crisis, but contain rather disparate thoughts on crisis theory.33 The most general formulation of capitalism’s tendency to crisis is completely independent of the “law of the tendential fall in the rate of profit”; rather, its starting point is the immediate purpose of capitalist production, surplus-value or rather profit. Here, a fundamental problem becomes apparent:

The conditions for immediate exploitation and for the realization of that exploitation are not identical. Not only are they separate in time and space, they are also separate in theory. The former is restricted only by the society’s productive forces, the latter by the proportionality between the different branches of production and by the society’s power of consumption. And this is determined neither by the absolute power of production nor by the absolute power of consumption but rather by the power of consumption within a given framework of antagonistic conditions of distribution, which reduce the consumption of the vast majority of society to a minimum level, only capable of varying within more or less narrow limits. It is further restricted by the drive for accumulation, the drive to expand capital and produce surplus-value on a larger scale…. The market, therefore, must be continually extended […] the more productivity develops, the more it comes into conflict with the narrow basis on which the relations of consumption rest. It is in no way a contradiction, on this contradictory basis, that excess capital coexists with a growing surplus population.34 [italics added]

Here, Marx points out a fundamental contradiction between the tendency towards an unlimited production of surplus-value, and the tendency toward a limited realization of it, based upon the “antagonistic conditions of distribution.” Marx is not advocating an underconsumptionist theory here, which only takes up capitalism’s limitations upon the possibility for consumption by wage-laborers, since he also includes the “drive to expand capital” in society’s power of consumption.35 It is not only the consumer demand of the working class, but also the investments of businesses that determine the relationship between production and consumption. However, the limitations upon the drive for accumulation are here not further substantiated by Marx. To do that, it would have been necessary to include the credit system in these observations. On the one hand, the credit system plays a role here, which Marx worked out in the manuscripts for book II. The realization of surplus-value in an amount of money beyond the capital advanced as c + v is ultimately made possible by the credit system.36 On the other hand, that which was already clear to Marx in the Grundrisse must also be systematically assimilated: “in a general crisis of overproduction the contradiction is not between the different kinds of productive capital, but between industrial and loan capital; between capital as it is directly involved in the production process and capital as it appears as money independently (relativement) outside that process.”37

So a systematic treatment of crisis theory cannot therefore follow immediately from the “law of the tendency of the rate of profit to fall,” but only after the categories of interest-bearing capital and credit have been developed. The theoretical position for crisis theory suggested by Engels’s editorship is definitely wrong, but this suggestion has been extremely influential: many Marxist approaches to crisis theory completely disregard credit relationships and consider the root causes of crisis to be phenomena that have nothing to do with money and credit.

http://monthlyreview.org/2013/04/01/crisis-theory-the-law-of-the-tendency-of-the-profit-rate-to-fall-and-marxs-studies-in-the-1870s

[RadioRaheem84]

OK, after further reading I can see where the debate lies.

I am going to use my hometown of Houston as an example to help understand this better. I am sure all of you have been reading how much Houston is the golden city all the financial rags have been touting because of it's growth and boom largely due to its recession strong sectors; oil, energy, medical, shipping.
Most of the growth and boom is centered around business making deals with business; vendors for oil and gas, energy and medical equipment. The job growth has been two fold; professionals working in these fields or high skilled labor working for vendors and shipping. The rest of the jobs have largely been low skilled labor; service, retail, etc.

Wages are up but so is poverty, so here I see wages rising. Houston in my opinion, and to borrow from David Harvey, is growing unevenly geographically. The low wages, while risen, are still not enough to live off of even though Houston has a comparably low cost of living for a major city. They're still pretty stagnant like the rest of America's wages. I see that as being a huge problem and this growth spurned by private business is limited in scope. So I guess here is where an underconsumptionist would come in to say that in order to solve this, we need an active state to remedy the inequalities.

Is this an example of despite there being large scale inequality growing, it's still not a breakdown of capitalism? It's not a crisis until the commanding heights enterprises in the city break down? Because I don't see them breaking down soon so this situation, even though dire inequalities can be seen in the distance, doesn't constitute a crises per se?

God I hope this is making sense to any of you as I am having a field day wrapping my brain around all this. Something internal has to bust within these industries in order to actually constitute a crises? Please help.

[MEGAMANTROTSKY]

OK, after further reading I can see where the debate lies.

I am going to use my hometown of Houston as an example to help understand this better. I am sure all of you have been reading how much Houston is the golden city all the financial rags have been touting because of it's growth and boom largely due to its recession strong sectors; oil, energy, medical, shipping.
Most of the growth and boom is centered around business making deals with business; vendors for oil and gas, energy and medical equipment. The job growth has been two fold; professionals working in these fields or high skilled labor working for vendors and shipping. The rest of the jobs have largely been low skilled labor; service, retail, etc.

Wages are up but so is poverty, so here I see wages rising. Houston in my opinion, and to borrow from David Harvey, is growing unevenly geographically. The low wages, while risen, are still not enough to live off of even though Houston has a comparably low cost of living for a major city. They're still pretty stagnant like the rest of America's wages. I see that as being a huge problem and this growth spurned by private business is limited in scope. So I guess here is where an underconsumptionist would come in to say that in order to solve this, we need an active state to remedy the inequalities.

Is this an example of despite there being large scale inequality growing, it's still not a breakdown of capitalism? It's not a crisis until the commanding heights enterprises in the city break down? Because I don't see them breaking down soon so this situation, even though dire inequalities can be seen in the distance, doesn't constitute a crises per se?

God I hope this is making sense to any of you as I am having a field day wrapping my brain around all this. Something internal has to bust within these industries in order to actually constitute a crises? Please help.
Kliman does not simply analyze wages, but total compensation. This includes not only wages and salaries, but also health and retirement benefits.

[RadioRaheem84]

Kliman does not simply analyze wages, but total compensation. This includes not only wages and salaries, but also health and retirement benefits.

Yes, I know he said that, but while wages remain stagnant, he is saying this was supplanted with benefits?