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China And The Dragon Tail Of Marx
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
The dragon tail of Marx's end-game of overcapacity and finance capital is about to shred China's fantasy that the state can micro-manage both capitalism and financialization with no contradictions or consequences.
Longtime readers know my one expertise is annoying the entire ideological spectrum in 1,000 words or less. Today is one of those days, so strap on your blood pressure monitor and prepare for full-spectrum annoyance, regardless of your ideological leanings.
Marxism is typically considered discredited outside of a few protected fiefdoms of academia which tend to engage in obscure debates over the labor theory of value and other signifiers of membership in the inner circle of deep Marxist thinkers.
Outside these cloistered academic circles, Marxism is dismissed for two basic reasons:
1. the predicted final crisis and implosion of capitalism did not occur2. the vaguely outlined post-capitalist incarnation of a stateless worker's paradise not only failed to materialize, but was used to justify destructive, murderous totalitarian regimes.
But those egregious failures of Marxist theory should not blind us to the value of his critique of capitalism. After all, he was writing in the first stages of industrialization and global finance (late 19th century), and his failure to detail a scientific socialism beyond capitalism can be chalked up to a mix of naive idealism and a paucity of theoretical models to build on.
Ironically, the one successful state that claims to be founded on Marxist principles, China, is poised to prove his analysis of capitalism's implosion was fundamentally sound. Consider two major parts of Marx's analysis of capitalism:
1. the consequences of overcapacity and competition
2. the dominance of finance capital over industrial capital
Marx foresaw that the consequence of overcapacity and competition is the collapse of profits which leads to the collapse of wages and most competitors. If there is any single word that defines China now, it's overcapacity.
This is not a new dynamic; when I first visited China in 2000, the TV set industry was already suffering from overcapacity/overproduction and a resultant collapse of profits.
What can any enterprise do when competition and overcapacity slash profit margins to near-zero? Slash payrolls and wages. Profit margins are famously razor-thin in most Chinese industries, and despite wages that are a fraction of U.S./E.U. wages, automation of production lines is the only solution to Chinese companies beset by fierce competition and overcapacity in their sector.
Automation only provides a brief competitive advantage, as one's competitors are busy lowering their input costs by automating production.
Marx understood that the end-game of overcapacity is a reduction of capacity via bankruptcy and the establishment of competition-killing monopolies. This is the stage of collapse that lies just ahead for the majority of Chinese industrial players.
The equally devastating parallel implosion of factory jobs will crush demand. The social safety net in China is threadbare compared to the West; laid off workers get little compensation or retraining; most face a return to rural villages and subsistence incomes from farm work that have dwindled to a few hundred dollars a year as a result of state policies that have made food cheaper for poor urban workers.
If there is any major economy that demonstrates the dominance of finance capital over industrial capital, it's China. The entire boom since the global financial meltdown in 2008 has been financed by cheap credit, leverage and speculative lending in an opaque shadow banking sector.
Compare China's bank assets with those of the U.S., which has an economy of roughly the same size:
It doesn't matter whether the banks are owned by the state or not; the net result is the same: massive malinvestment as productive investment is abandoned in favor of speculation.
If any nation is poised to reap the consequences of rampant financialization, it's China. In the global downturn that's just starting, China won't be able to boost capacity as a solution--the economy is already being crushed by overcapacity in virtually every sector.
It also can't turn to the financialization save of unlimited expansion of credit and dodgy leverage--financialization has already been pushed to the redline. there is nothing left except diminishing returns on additional expansions of credit and leverage.
Marx is about to demolish the fantasy in China that financialization can be controlled by the state. Losses can be covered over and the next expansion of credit is just around the corner. Nice, but credit doesn't create jobs lost to overproduction, nor does it generate profits, nor does it generate collateral for the next round of shadow banking speculation.
What Marx did not foresee is the critical role of the state in enforcing private monopolies and the predations of financialization. While Marx understood the parasitic nature of Monopoly Capitalism, he did not anticipate the State's partnering with Cartel/Crony Capitalism. In effect, the Chinese State is now so dependent on financialization that it stripmines the citizenry to protect the financial sector from the consequences of their business model (excessive credit, leverage, fraud, embezzlement and the misrepresentation of risk). But the Chinese State doesn't merely enable the predation of its crony financiers; it also stripmines the citizenry to fund its own expansion into every nook and cranny of civil society.
The dragon tail of Marx's end-game of overcapacity and finance capital is about to shred China's fantasy that the state can micro-manage both capitalism and financialization with no contradictions or consequences. "Dragon Seeks path. Dragon whips his tail." The dragon of capitalism isn't as easy to control as bureaucrats expect.
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It has started: The brand new market in China for Western monopolies!
lol, Western hubris will meet its match in Chinese civilization.
The Asian mind is difficult to understand for Asians. They can not even describe it, it just is.
It is impossible for Westerners to understand which is why they have tried so hard to Westernize Asia.
China has a very, Very, VERY long history of turning on itself and shutting off the outside world.
Their current model need to change, and that will be a crisis - threat and opporo.
Your prophesy about the future is not a lock, by any means.
"China has a very, Very, VERY long history of turning on itself and shutting off the outside world."
China, like most civilizations has a long history of repression and control by warlords.
There is no "China", like there is no "America".
These stupid "we oughtta" articles abound on ZH and provide plenty of fear porn, affirmation of the NWO establishment, and distraction.
The coming eastern transition (yes, gasp!) is the same wolves in new silk sheeple wear.
Its all Kabuki theater.
Start reading: http://blog.redefininggod.com/
[Hint: Its not about "religion"]
When we decide not to "give permission", then it will end.
Now I understand why Knukles has refrained from sharing his literary skills on Z/H.
PriceMarx foresaw that the consequence of overcapacity and competition is the collapse of profits which leads to the collapse of wages and most competitors. If there is any single word that defines China now, it's overcapacity.
"Marx foresaw that the consequence of overcapacity and competition is the collapse of profits which leads to the collapse of wages and most competitors."
At least is appears that someone actually "read" Marx and not "vulgar Marxist" interpreters.
Yen, nobody wants truth here on ZH. They want to barf their half-baked, bellicose, wannabe understanding of what they think (based on a sixth-grade reading level) "economics" is.
I would think it sad, but then again, Marx was a contradiction anyway. An academic from wealth and privilege theorizing about "labor", while never laboring or including any ideals of equality (other than white males) in his theories (with the exception of Das Kapital, vol III).
His ideal that machines (technology) could pave the way for utopia clearly ignored the connection between greed and standing armies. I am sure he roles in his grave daily with each new DARPA revelation.
He was a sloth. He starved his own family so he could stay in bed all day.
The only effort he ever made to survive was beg for money and rent out his clothes so that others could produce.
To consider him an intellectual is to lie to yourself.
Marx is by far the smartest Marxist.
Don McClean was recently asked why he won't just tell everyone what the song American Pie is about. His primary reason -- because a lot of people would tell him he's wrong.
Bye-bye Lola. Yer neyburs will rip u a new one. Too bad I won't get the satisfaction of telling you I was right.
Are you a remora?
oHH, THIS IS THE Harbanger you speak of.
Harbanger is actuallay apretty good poster.
LTER, your both well respected posters
You guys have a personal vendetta
Sum Dum Idiot
Short $usd
Have you ever felt the caasis gflex of a M-6?
See what I mean?
He became tied for smartest when he died.
Marx did not foresee fascism. That's what we have. And the end will be implosion in a different sort than he envisioned. Every year soon will be 1984.
We have fascism, but probably not the way you think.
Fascism explained.
Sorry, don't like the article. Among other things, it's ending sentence: "The opposite of fascism is the free market", is wrong.
The opposite of fascism is freedom. Freedom does not require a pure free market, but there is no such thing as a free market when human beings with their corruption, bribery, etc are concerned. But I don't feel like debating all night about it.
That's free market in the broadest sense - meaning free competition of ideas instead of everyone having to be on the same page.
Fascism is a 'how'...ideology is a 'what'. The primary principle of fascism is there in its namesake: the binding and control of individuals.
Great point GMadScientist, but I think that the 'what' gets brushed aside for self-interest. It would be a great experiment to see if vastly different ideologies all started to look the same after being completely 'fascized'.
Fascism creeps into any power structure at the late stages, it's a common reaction to loss of power regardless of ideology.
It's also important to separate the public face of an ideology from it's implementation...that 'brushing aside' is usually just the former giving way to reveal the latter.
https://www.youtube.com/watch?v=qCieWKgwUXY
If you read Marx understanding what Fascism is, he was actually talking about Fascism everytime he brought up Capitalism.
Back then there were no terms for it. It was called Mercantilism after Marx, and until Benito came around and popularized it as Fascism is wasn't even talked about other than as being Nationalism.
So same thing, then? Capitalism = fascism?
No, capitalism is understood as the market being the determiner of pricing with the ability for co-op's and trusts to be formed. Fascism is Corporations and government protected services.
Fascism is a nlthingburger compared to Naziism.
Karl Marx has almost zero understanding of political party and the move from "communalism" to outright comminism was catastrophic.
Not so with National Socialism. This "rationalized" Marx as nothing less than the State itself became subservient to the ideology...one which included national consciousness but in no way was it "nationalistic."
Hitler regularly remarked on how nationalism remained such a strong force in this "post ideological world view.". But that did not mean he snuffed out this " sentiment.". Indeed he did the exact opposite to truly horrific consequences.
The existence of the internet very much has the "feel" of an organizational tool who's goal it is to solve our human problems...rather than as it should be where we use the machine to help solve our problems and this does indeed happen.
So history to date is not encouraging when it comes to the digital domain "being our friend."
Quite the opposite actually...
The primary difference between Communists and Fascists are that the fascists allow some free markets. Otherwise, they are virtually identical.
They are both Zionists from what I can tell. That's all that matters in the long run. Zionists are pro-war.
I understand where you're coming from with this analysis.
What I don't understand is why they'd do it in the first place. I forgot which poster said it, but he posited that the ussr and ussa were run as giant experiments on mass control.
But if global depopulation is the end goal, why the wasted century with a billion debt and trinket consumers deleted from the market place under Marxist ideology? Obama's cousin Odinga, Mugabe and others all schooled in east Germany. The results are obvious. Only after millions of Vietnamese were poisoned and killed are they buying insurance from western marketplaces.
The Vietnamese, Kenyan and Zimbabwean marketplaces were removed from the markets for no good reason.
My point is if the Zionists are out to control the world, and to an extent already do, why do they suffer you? Suffer the necklaces in south Africa for Nigerian illegal immigrants and capitalists? Suffer the wasted time before they implement the end game!
Or maybe they aren't in control...
If the goy offend them and they have neutron bombs, why are you alive?
Capitalism is a power structure. Fascism is what those with that power can do.
Nonsense, there is no inherent power in Capitalism. Power is what happens when you abuse positive and negative rights, and dumb down a populace on what they are.
Even a cursory glance at labor history under capitalism would reveal that wage laborers have virtually zero rights positive or negative to assert against capitalists.
Perhaps you need to be more specific about which positive and negative rights to which you were referring.
"Marx did not foresee fascism."
Nah, the lazy fucker! He was not half as prolific as you.
He only made the title of "father of economics".
Btw, Hegel and the Frankfurt School (unbeknownst to the Rand Corp. idiots here), did foresee Capitalism dialectically evolving into its highest form - Fascism.
All of this is way over the bonehead level of thinking here.
I'll just get called a goddam, Jew-loving communist!
And that is just for "reading" any of it.
And yes, Fascism is what we have. Try finding "Friendly Fascism", by Bertram Gross (served in Roosevelt and Truman administrations) for the perfect description of today's Amurica.
PS I up-voted you LetThemEatRand
Oh, the all-knowing Frankfurt School!
Sorry, but all those (including Marx) are just fuckers trying to build theories around how to NOT have competition, instead of asking how free and fair competition can be enabled and maintained.
Which in the end arises from their fear of losing their elevated positions, to competing newcomers.
So I've been doing more research into the events of 9/11. Blue pills must be some incredibly powerful shit for people to believe the official story.
We believe what we want to believe. More importantly, we believe what we are told to believe.
This 9/11 article seems pretty effective to wake most people.
reading the article above, it sounded often as if he was describing the good ol' US of A...
rare few people are talking about how to deal with automation ... some people are incapable of keeping up with high tech world... i'm not complaining, I was a EE with graduate work in Systems Engineer(ing).. However, I opted out almost entirely. To me, the hamster wheel was BS, so... I believe the plan is to super nova the markets, then reinvent / align under a new world currency...
anyway regarding china (some history / relation to NWO and corps / etc.._), some informative, well researched info by a nerd named james corbett
https://www.youtube.com/watch?v=5M1KD7Dnq4s
Best of luck without access to those little red light memory-erasers from "Men in Black".
"I believe the plan is to super nova the markets, then reinvent / align under a new world currency..."
Bingo! We have a winner!!!!
Its all Kabuki theater.
Start reading: http://blog.redefininggod.com/
[Hint: Its not about "religion"]
I call bullshit. How can people freely trading cause anything predicted by Marx? How can anyone say that China is a free-market?
It sounds like the definition of capitalism being used is not free markets but cronyism, central banking, monopoly fiat currency, and fractional reserves. Marx promoted a central bank.
No one has free markets today, we are far closer to the socialism promoted by Marx than we are to free markets, and thus it is socialism that is to blame for any problems today, so why try to imply that free markets cause the problems predicted by Marx?
Socialism and communism are NWO creations, the people who promote them are useful idiots, and Marx was a NWO shill.
What I think most of us refer to as capitalism is really a free market, something that has probably never existed under the control of any government. I see free trade as organic, like plants growing towards light. A market of exchange will occur under almost any perceivable economy, no matter how distorted or manipulated by ideology or simple greed. In an effort to minimize some of the most destructive potentials of freedom, most agreed to some basic restraints, primarily honesty, but also some limits mostly to do with monopolies.
Marx saw the potentials of freedom and sought to limit its destructive capabilities by basically subverting natural human tendencies. He believed he could change us through indoctrination, and force if necessary. The result is more destructive than anything that a free market could ever provide. But given the goal is to defeat free trade to prevent destruction, the resultant destruction can be of no other cause than freedom itself. The only hope that communism has ever had is through the complete control of information, though propaganda, by overcoming the destruction with false optimism, a sense of duty in sacrifice, and the demonization of any other system that might provide a competing vision, much less actual proof.
And THAT will never change.
Marx wanted to indoctrinate? I think you mean Lenin and his folk.
In terms of "free markets", not only have there never been "free" markets. There are no "markets" in the sense that the term has meant to describe unfettered transactions between individuals.
The term market is meaningful only to TPTB and they invented it to represent a framework to impose laws and regulations on transactions between two or more people, two companies, two nations, etc. The notion of a freely functioning market is absurd. There are only freely functioning individuals engaging in transactions. Anything beyond that is laws, regulations, and control with the intent by TPTB to extract a portion of the transactions for doing absolutely nothing.
In this respect, the term "market' should be defined as the aggregate laws, regulations and controls imposed on individual transactions by TPTB to extract money in exchange for nothing.
Now, who wants a market-based economy?
If they were serious they would outlaw banking. But no they are going to turn Russia and China into what the US was before it was taken over by the NWO. They have more potential than any two nations ever had and the NWO is tits up broke.
laid off workers get little compensation or retraining - Wrong
most face a return to rural villages and subsistence incomes from farm work - Also wrong
that have dwindled to a few hundred dollars a year as a result of state policies that have made food cheaper for poor urban workers. - Entirely wrong.
what a fucking idiot.
Nah - what Marx failed to recoginize was this:
THE PERFECT STORM (see p. 59 onwards)
The economy is a surplus energy equation, not a monetary one, and growth in output (and in the global population) since the Industrial Revolution has resulted from the harnessing of ever-greater quantities of energy. But the critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel. http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf
The imperial state and its cronies could not sell people on Monarchy, Feudalism and its Aristocratic system so they invented the fantasy world of Crony-Capitalism and Social-Marxism to sell the people on Utopias where, somehow, magically, the Corporations or the State would provide for all. Little did the people realize, or maybe they did realize long ago, that the masters of these Capitalist-Marxist Utopias are the same masters they had before. Same crap - different century.
It all comes down to the control of money and the answer is for the people to choose otherwise. Either the people wake-up and stop using their Phony Fiat and choose to take monetary matters in their own hands, or the "people" will continue to be enslaved by the murder state and its phoney fiat. Bitcoin anyone?
Here we go. Good to see I'm the only one who doesn't buy into the obfuscating academia promoted by the slave masters to convince the populace that something new and better has been brought to the table. At the end of the day, once the prosperity of the masses has been corralled into the hands of a few, by the same means it always is, the facade wears thin and you meet the new boss, same as the old boss. These ism arguments should be buried, for they are long dead.
Also if that chart presenting bank deposits is supposed to demonstate Chinese ineptitude then perhaps it would be wise to include a axis for loan creation as well.
CHN's 2nd thru 5th Quintile Wages are increasing steadily. They just recently pulled off a miracle of getting "some sort of collective wage increase" for a reported 800 Million out of their 1.2 or so Billion.
As they brush aside/reuse the Vacant Towns and other ill conceived projects, I believe they'll continue to grow on a Per Capita Basis where their domestic consumer purchasing power(unenhanced by excessive debt) will eventually be sufficient to sustain a healthy portion of their economy.
My neighbor is growing bamboo. Fucking rookies.
"My neighbor is growing bamboo. Fucking rookies."
Especially when they could be growing super-soldiers in vats....
China when it shifted away from an extreme Command and Control Economy delivering real hunger towards some degree of free market, their leaders have been driven by Pragmatism.
Marxism has never been its guiding ideology, It is mainly the Western Academia/Media that goes labeling and spinning out of failures of Marxism or alien belief systems. China is Agnostic. These analyses are akin to the Freudian association of any behavior with SEX.
Yes, China is caught with an export model that is not delivering and internal debts that have leveraged that model and hard infrastructures. (Internal debts that need haircuts mean that you shave bald and not someone holding the scissors).
Transition is going to be painful. A pain that the leaders are gingerly managing. Managing to ensure that less and not all people shall revert back to poverty. The old, the unskilled and the minority tribes will be as usual collateral damages (A coming crescendo of cries from the human rights groups).
Paradoxically, the Empire (US) is giving them plenty of time to transit. If they emerge stronger than the Empire and allies, the favor will not be returned.
P.S. There is no financialized economy in that the State Banks are just allocators of credits to chosen segments and have bad debts building from the real economy's decline but NO kegs of explosives (derivatives) in their basements.
Can't wait for the crony capitalists to cannibalize each other to death.
"What Marx did not foresee is the critical role of the state in enforcing private monopolies and the predations of financialization. While Marx understood the parasitic nature of Monopoly Capitalism, he did not anticipate the State's partnering with Cartel/Crony Capitalism. In effect, the Chinese State is now so dependent on financialization that it stripmines the citizenry to protect the financial sector from the consequences of their business model (excessive credit, leverage, fraud, embezzlement and the misrepresentation of risk). But the Chinese State doesn't merely enable the predation of its crony financiers; it also stripmines the citizenry to fund its own expansion into every nook and cranny of civil society."
When I read the above it occurred to me that this is no different than what is happening in the West.
East meets West in the sociopathic greed fest blow-off top.
Marx didn't see anything. He was a looser that lived at home with his parents. The communist manifesto is a rant of a school shooter. The only way he was ahead of his time was being a millineal.
Marx saw the future of darwinian evolution. He expounded upon that worldview. Hitler took Hegel, darwin, and marx to their maximum potential.
Tiananmen redux coming soon.
Marxism is discredited??? Would these few feifdoms be all universities in the US? After, all the deaths in Soviet Union and China, it should be discredited. Zerohedge post so much anti-war garbage then it post this dribble. If you want to go to war, sign up for communism.
If there is any major economy that demonstrates the dominance of finance capital over industrial capital, it's China.
Economists, none of whom ever get it right, all of whom must declare themselves right, must constantly add adjectives to their terms to try to be right. Thus we have "finance" capital and "industrial" capital. When they made their first incorrect assertion, "capital" alone was the only term they used.
Before this ends we'll have an economic language like German words ... where they just keep glueing words together until they become too long to use.
The lies people tell themselves to digest the meaninglessness of Engel's writing is entirely amusing.
First lie, that Marx wrote any of it.
Secondly, that Marx could think while he and his family starved.
Thirdly, that it's EVERYONE else who just doesn't understand Engel's work.
Luckily, folks like LTER end up starving just like Marx and his children.
Not every economy requires constant "growth" to survive. China and Russia will take care of themselves. After the dollar is no longer globally accepted the USA will get to "pay off" (default) once, and then start begging the IMF for loans in yet another "All is well! fiat currency"....
Actually you are quite wrong about Marxism being dismissed. Marxism is alive and well. Internationalism and socialism , the precursor to Marxism is very much alive. Globalism is simply another name for it. The comminst planks are being implemented one by one. Rhetoric is used to change terms but the basic ideology is very much there.
During the 17th and 18th century, French philosophers and political theorists refined the concept of "The Social Contract" that must exist between the Governors and the Governed. In the United States, the framers of our Constitution applied pragmatism to the ideals expressed in our Declaration of Independence that good governance was possible only if done so with the consent of the governed.
Economics should never be separated from Politics. After Providing for the Common Defense, an economic policy that is focused on Promoting the General Welfare should be the primary responsibility of Government. "A government of the People, by the People, and for the People": Good governance means just that.
Every person should get a fair rate for the effort that he or she makes. The measure of what determines a fair rate should not be the lowest going wage for similar work that a capitalist should uncover; but rather it should be based upon what is the full retail value of the product or service being produced by the collective effort of the individuals involved.
Every person of working age, who seeks gainful employment, should be able to find it within the jurisdictions of the country in which he/she lives. If there is not enough gainful employment available, it should be the responsibility of government to adjust its economic policies and regulations so that gainful employment opportunities are increased and that the under-employed are assisted in their efforts to get gainful employment.
To promote these two elements, which are essential to a stable and productive society, globalism must always be subordinated to nationalism; and the perquisites of the privileged should not be excessive. Capitalism can flourish and be rewarded as long as the benefits accrue proportionately. If the percentage gains in the "mean average" increases above the percentage gains in the "median average", government should realize that the economy (society) is losing its balance with respect to the social contract.
Capitalism and socialism can an should co-exist within a national economy. Leave it to a democratically-elected government to balance the two of them, always placing the General Welfare of the Governed as the paramount consideration.
Stop whoring for Wall Street.
http://www.showrealhist.com/yTRIAL.html
http://patrick.net/?p=1223928
"In effect, the Chinese State is now so dependent on financialization that it stripmines the citizenry to protect the financial sector from the consequences of their business model"
Sounds like the U.S.