Measurement and crises of Capital (2013-07)

The measure

Even before apprehending the slightest figure, a question arises: how to measure wealth? Two schools then oppose each other: the neoclassical school which sets the usefulness of products as its foundation, and the Marxist school: their value. The usefulness of products is measured in quantity of goods, and their value in quantity of labor. These are two completely different measures. It is remarkable that the bourgeoisie presents wealth as a power over things, while the Marxists present it as a power over men (employing things, employing men).

Definitions

The bourgeoisie evaluates the quantities of goods in constant price, in purchasing power parity or in international dollars. Constant prices compare quantities of goods in the same country at different times, assuming that the goods each have the same price in a base year. Purchasing power parity makes it possible to compare quantities of goods in several countries but in a single year, assuming that the goods each have the same price as in a benchmark country. The international dollar is a combination of the two: it makes it possible to compare quantities of goods in several countries and at all times, assuming that the goods each have the same price as a reference year in the United States. These units are not perfect, but they do refer to quantities of goods ^[1]

In general, all prices, including current prices, represent quantities of goods.

.

In accordance with the classics, Marx gives the substance of value: work; its measure: the quantity of work or socially necessary duration of work; its units: the hour, the day, the week of average work. However, these units have mainly a theoretical use because it is not easy to establish a correspondence – even approximate – between an hour of socially necessary work and an hour of real work. Nevertheless, there is a case where an amount of socially necessary labor is exactly equal to the same amount of actual labor: when considering all of the world’s value-producing labor. All the peculiarities of real work – intensity, productivity, skill, etc. – are then melted in totality, i. e. are exactly equal to their respective averages. So, if in the world three billion real workers produced value in a year, that is exactly the same as the value of three billion average workers producing value in a year.

Note on the standard

“What do we care about a unit of value that we cannot multiply or divide without falsifying it?” To that, I will answer first that this is always the case: in one measurement, only the standard is perfectly exact (by definition), the other measurements are approximate; second, that the accuracy of the measurement can be improved by taking into account other parameters of the object being measured – here productivity, intensity, skill, etc. ; thirdly, that a satisfactory precision will be obtained if one considers large quantities suitably chosen; fourth, that important results will be obtained using only the standard without any change.

GDP

Let us return to the world product, that is to say to the world Gross Domestic Product (GDP). As we have seen, its value is exactly equal to the number of workers producing value in a year. We therefore come to the conclusion that GDP, expressed in value, is a function of occupational demography.

This conclusion is of the utmost importance. It means that the GDP grows in proportion to a determined section of the working population, that which produces value ^[2]All workers do not produce value. For this it is sufficient: that they do not create commodities or services for the market, or else they deal exclusively with the conversion of values ​​in sales … Continue reading. Since surplus value is a fraction of GDP, it is also essentially determined by the growth of that same section. Just like capital, which is made up of accumulated surplus value. In summary, the growth of capital is essentially determined by the growth of the section of the working population which creates value.

Calculation and reserve

We can therefore calculate that if the World GDP of $ 81 trillion PPP (purchasing power parity, price base: USA) was equal to 3.3 billion workers producing value for one year in 2011, then China’s national GDP of the same year, which amounts to 11 trillion PPP dollars, should correspond to 0.45 billion average workers producing value during a year (3.3 billion / 81 * 11 = 0.45 billion). Upon a conversion amount of work it can perform any calculation involving the usual economic variables (GDP, capital, etc.)

Any calculation based on the quantities of goods valued at purchasing power parity laying however the following problem: the price ratio of commodities in a country, in particular the USA, never exactly corresponds to the value ratio of those same commodities, expressed in quantity of labor. This is due to the permanent imbalance of prices in favor of the imperialists, which means that the latter very often sell their goods more expensive (above their value), while the dominated countries sell them much cheaper (below their value). See, for example, agricultural export products on the one hand and high-tech patents on the other (incorporation of over-profit into excessively high prices).

Crises

The crisis of overproduction (industrial crisis)

There is an optimal relationship between the different kinds of industrial capital ^[3]

Factories, energy (fuels, electricity…) , means of transport, stocks of raw materials or semi-finished products, etc.

and the production of consumer goods. This industrial capital allows the production of another which allows the production of another and so on, up to the production of consumer goods. This ratio is determined by technology. However, industrial capital can only be accumulated in the form of means of production, and not of consumer goods. Therefore, there is a tendency inherent in industrial capitalism to disproportionately increase the share of the means of production over that of consumer goods.

Thus, productive capacities increase, but they are essentially reinjected into the production of industrial capital, which worsens the imbalance until the crisis. The industrial capital market is then saturated, and not all values ​​can flow to the consumer market, which has developed less rapidly. There follows a generalized stampede of money capital ^[4]

Financial expression of capital (stocks, bonds, derivatives, etc.). Shareholders sell en masse, banks refuse to extend credit, insurance companies increase their premiums, etc.

out of industry, which has the effect of throwing masses of unemployed workers, slowing businesses down or bankrupting them. The consumer market is also developing more slowly, eventually stagnating or even shrinking, which aggravates and prolongs the crisis.

The crisis ends up cleaning the market of the most loss-making companies. As the consumer sector has been relatively less affected by the crisis, the industrial capital market ceases to be congested and a new cycle begins.

Crisis of “overconsumption”

As we have seen previously, consumer goods can function as consumption capital when they are rented or sold on credit. They are therefore subject to vicissitudes similar to industrial capital, especially in the form of credit crashes, when individual borrowers can no longer repay their debts.

Financial crises

It essentially constitutes a correction of the bad valuation of industrial capital or consumer capital. Financial capital is just an appraisal, an abstract valuation of industrial capital or consumer capital.

Economic crises in general

An economic crisis is the sudden correction of an imbalance that has accumulated over time: a poor allocation of resources between different industrial sectors, in particular between the production of constant capital and variable capital, a poor financial assessment of resources. Bad allocation and bad valuation often go hand in hand.

The imperialist crises

See Lenin ^[5]

Imperialism, supreme stage of capitalism, 1916.

.