Erratic Marxism stalks the EU

In Febrary 2015 in the Guardian, Greek Finance Minister Yanis Varoufakis wrote "How I became an erratic Marxist".  The gist is that he's working with European capitalism because

"Europe’s crisis is far less likely to give birth to a better alternative to capitalism than it is to unleash dangerously regressive forces that have the capacity to cause a humanitarian bloodbath."

 Maybe that doesn't sound to you like a Marxist - but he still calls himself one, and that was clearly my experience from his lectures at Sydney University in the 1990s.


In the above Guardian article, he also mentions that he found out later that his Sydney appointment was aimed at keeping out a left-wing candidate - which I find quite ironic, but the best of outcomes.

This article is based on his 2013 address (before his entry to parliament) to the 6th Subversive Festival in Zagreb,Croatia: "Confessions of an erratic Marxist". He argues that "Marx must remain central to our analysis of capitalism" but that at this point [then and now], it is necessary "to stabilise capitalism; to save European capitalism from itself".  You can watch the address here, or read his intermediate version of this article on his blog here.  You can read a more mainstream Marxist response to this ("poppycock") on a blog post from one Michael Roberts, More Erratic than Marxist, which has some debate on the issue afterwards.



(For what it's worth, the Yanis I remember looked more like this:

)

Economics, Europe, intellectual engagement, hats

I had an economics lecturer at university who gave the best course I ever attended.  It was on the history of liberalism.  A sadly misused term in the US, this does not refer to the politics of anyone who is vaguely left of centre: in  the true sense it refers to the political philosophy that underpins the western world, including capitalism.

It was the way he presented the material that mattered the most to me.  Assuming, of course, that I have no fundamental disagreement, I'm a sucker for anyone who has verve and who is intellectually engaging.  And he had that enthusiasm, he had a sharp sharp mind, and he was particularly engaging. Ultimately, his response to liberalism was... praxis.  That is, action.  A punchline that initially sounded like an anticlimax, but it had - and has - a truckload of meaning, in context.  Given the journey and the challenges he took us through in that course, I still have enormous respect for him, and would still take any course he has on offer.

So, it looks like my lecturer, Yanis Varoufakis, is now the Greek Minister of Finance.  And he's going to be central to negotiations on the future of the monetary union.

Of course, his coalition's platform is absolutely opposed to the EU-imposed austerity program in Greece.  And Yanis remains a thorough-going Marxist, whatever anyone says.  But he's a very practical person, and he understands the practical mechanics of capitalist economics very well.  I expect him to be able to face up to the best negotiators Europe has to offer, so I think the ultimate outcome is going to be good for both Greece and Europe.

PS My teenage son's values are different, and none of this matters to him.  The main credibility Yanis has with my son is his contribution to the games-maker Valve, in the economics of trade in virtual hats.

Global market capitalisation, 2011

It was a surprise to hear that Apple had overtaken Microsoft in May 2010 for market capitalisation (that's the total market worth, from the number of shares times the share price).  On the other hand, although such a figure represents the money shareholders could get for selling their shares, it is not realistic.  For one thing, as soon as a perceptible proportion of shares get sold, the price falls and that "market" worth is demonstrably not intrinsic.  And that measure also embodies public sentiment of the company, and in that respect alone, Apple is at an all-time high.

Call me sentimental, but I still like that measure of a company's "value".  The latest collation by the Financial Times is third quarter last year, and it reads as follows (they're all into the hundreds of billions):

1.  Apple (US, tech)
2.  Exxon Mobil (US, oil)
3.  PetroChina (China, oil)
4.  IBM (US, tech)
5.  Microsoft (US, tech)
6.  Industrial/Commercial Bank China (China, bank)
7. China Mobile (China, tech)
8.  Shell (Dutch, oil)
9.  Nestle (Swiss, food)
10. Chevron (US, oil)

Some of my characterisations are simplifications of course, because the larger corporations generally have fingers in several pies.  But on the above basis, four of the top ten are tech and four are oil.  The Chinese ones are said to be state-owned, which would mean that a portion of their shares trade, and the total value is based on what it would be if all were tradeable.  Microsoft was once top, and it's a surprise, given their global ubiquity, that they're now only number three technology.  It's also sobering to think how much capital is at stake in gross carbon emission.

Other useful measures are nett assets, revenue, and nett income.  On the basis of revenue, WalMart's at the top, which may not be surprising if you think of them as a grocer or trader, but retail margins can't be that high, so revenue alone - despite being much-discussed - is, I think, overrated as an indicator.

Yet these indicators are useful for different reasons, different perspectives on the global economy.  Wouldn't you think nett profit or nett assets would be more meaningful than the others?  The downside of the asset measure is that some of the large financial organisations own bulk assets, but liabilities are great too, as they're effectively holding the assets for others.  Meanwhile, however, the control of assets per se can be meaningful.  Surprisingly, nett assets doesn't seem to rate a high mention.

Apple's 2011 profits were the largest, at $25 billion, although Exxon has been making much larger profits for much of the last decade.


All info here has been sourced via Wikipedia, from Forbes and the Financial Times.

SETI, Open source, and the socialisation of productivity

What does SETI have to do with Microsoft's furrowed brow?

We all know the Search for Extra-Terrestrial Intelligence, whereby the universe is scanned for signals throughout the electromagnetic spectrum which can be interpreted as originating with intelligent life. Some of us have run SETI@home: you download a screensaver, which runs in the background, borrowing your unused computer time to run a parcel of number crunching for SETI. Everybody wins: only your idle computer time is used, and it can have some wider community benefit - you may even be responsible for the first discovery of extraterrestrial life.

That was the first distributed grid computing project to gain widespread publicity. But the software is now available to turn any general project requiring major computer time into a socialised project. The Herald recently ran an article on Australian use of such software: specifically, BOINC, The Berkeley Open Infrastructure for Network Computing. The article said over 32,000 Australians were currently running BOINC projects, out of 1.7 million people worldwide.

The scope is tremendous, not just for general scientific research, but also for any community-sector project that may not otherwise have the resources to get off the ground.

For the moment, here's a list of projects you may wish to take part in. Those are all scientific research, mainly in biology, physics and maths, but there's also a World Community Grid, which is specifically aimed at humanitarian projects.

As for Microsoft, the other side of community computing is software: open source, to be specific: generally an open source project is contributed to by many, with no profit-oriented copyright - and generally available for free. Open Office may be the most famous - a direct competitors to Microsoft's Office suite. And as a method of developing software that is freely available to all, it has gained acceptance in most areas of my professional focus, business intelligence. Apart from the well-known mySQL database, there are also open source tools available for most related areas. As well as database and BI software, there's also ETL, data profiling, and so on.

Over time, you should expect prices to tumble in all types of software directly affected by open source initiatives. Yes, the likes of Microsoft can expect some buffering from these forces due to brand-name strength. But yes too, Microsoft is worried enough that they are already working on alternative revenue streams, including jumping into the cloud. Those alternatives shouldn't see a collapse of capitalism any time soon, but the long-term trend can only benefit the public, particularly those who might not otherwise be able to afford such computer resources, particularly in the developing world.

In a wider sense, distributed computing and open source are simply harbingers of a globalisation and socialisation of productivity, for the benefit of all.

James Hardie's lack of corporate ethics

I doubt company directors and CEOs ever consider themselves thugs. Generally, they would claim their only aim is to protect shareholders' funds; often they claim that as their overriding legal obligation.

Yet James Hardie's managers indulged in thuggery - and they've been caught out.

With a significant liability on their books due to ongoing and emerging claims from their asbestos business, they sought a way to limit that liability. What better way than to sequester set funds in a trust, then high-tail it off to a foreign jurisdiction?

Which they did, reincorporating from Australia to the Netherlands. Yet thuggery it is, since they left behind insufficient cover for current and future victims.

"As a sufferer of asbestosis since 1992, I have no sympathy for their public humiliation. They brought it on themselves by their contemptible behaviour."
..."Big deal. You can guarantee they will not be driving cabs for a living."

- letters to the editor, SMH, 22-Aug-09

The specific crime was a mere technicality. The ten directors were punished because they approved a media release (claiming the trust was "fully funded") which was inaccurate, but deemed to be intended to affect the market.

Penalties were fines of $30,000 to $350,000, and being banned from CEO and board positions for five to fifteen years. The latter tends to have the greatest effect - on their careers. All have left James Hardie; some have resigned other management positions. However, a couple of them are working in the US, where the bans don't apply.

Their defence: each one of them claims they didn't read or don't remember reading the draft press release. Those claims were judged not to have been genuine.

And the James Hardie business (building supplies) has started to rebound from the recession already.

Financial crisis and Marxist mis-steps

On ABC Radio National recently, I listened to a discussion on the financial crisis, between an orthodox economist, a Marxist, and a mediating compere.

The crisis has taken different characteristics by turns:
- from the aggressive selling of mortgages in the US to people who could not afford to service the loans,
- the wrapping up (and obscurement) of those non-performing loans into complex financial instruments which were sold around the world, led to
- a crisis in confidence between financial institutions, who could not sufficiently trust other institutions, leading to
- a great slowdown in the circulation of financial capital, which caused
- a collapse of the viability/stability of many financial organisations (due to bad debts and reduced access to credit), which caused
- globalised recession, with the attendant bankruptcies and unemployment.

Only the last point (but not specifically global) is a recurrent feature of capitalism – the booms and busts so usually cyclic. The others are a particular chain of events. The fact that the complex, toxic financial instruments were circulated around the world is what led to the crisis becoming deep and global.

Because the crisis has been deeper than anything since the 1930s depression, governments around the world have been taking uncommon action to reduce the impact of the recession. This includes classical Keynesian stimulation measures (to encourage faster circulation of money to get the system pumped up again). But it has also included governments supporting major industries: as well as financial institutions (which supply the lifeblood to capitalism), industries that are core to a nation's production - the US auto industry, for example.

Some assistance to industry has taken the form of loans, some as guarantees, some as handouts - and sometimes governments have taken a stake in the corporation - partial or full nationalisation.


Now this is where the debate comes in. Classical Marxist analysis points to a crisis of over-production - too many goods produced, too little money in the hands of workers to purchase the goods. This in turn leads to the evolution of capitalism eventually into communism. Government nationalisation of industry - for capitalistic reasons (which somewhat precludes the recent nationalisations in Latin America by left-wing governments) - can be seen to be a direct harbinger of the classical crisis.


Be that as it may, the Marxist in the radio programme - a visiting Canadian professor - was asked for some insight into the current crisis. The best he could to was the classical viewpoint, that it was a crisis of overproduction. Which it is not. Recession can be characterised like that, to an extent. And in this case, it is quite stretching the point to shoehorn the current events into classical Marxist crisis theory.

It would have been very hard to predict the emergence of the particular characteristics of this crisis. Yet Marxian analysis takes many forms, of which prediction is only one.

In the article Crisis in capitalist society, David Held, a British analyst of globalism, writes*:"a distinction must be drawn between, on the one hand, a partial crisis or collapse and, on the other, a crisis which leads to the transformation of a society or social formation." Held notes that government attempts to “regulate economic activity and sustain growth”, especially from the 1950s to the 1970s, “deepened the state's involvement in more and more areas”. But the trend after that was largely towards deregulation, bar regulatory regimes intended to foster competitive (rather than anti-competitive) corporate behaviour. Held characterises several forms of crisis, based on loss of political (popular) legitimacy. Ultimately, however, he calls for “a differentiated analysis of international conditions which form the constraints on, and the context of, the politics of modern societies”. Held himself concludes that it is hard to see that an analysis of transformation crises can “take the form prescribed by classical Marxism with its emphasis on, for instance, history as the progressive augmentation of the forces of production or history as the progressive evolution of societies through class struggle**.”

Which would tend to suggest that Held is not (or no longer) a classical Marxist (and his final sentence is a giveaway: "the theoretical tools of Marxism are inadequate as a basis for a theory of crisis today"). All this is to say that therein lies a multitude of differential interpretations from the Marxist end of the spectrum – only one part of which adheres to the traditional analysis of ultimate crisis.

In particular, to suggest that the current crisis is a classical one of overproduction is laziness, at the very least, and intellectual dishonesty at the worst. Don't expect all Marxian analyses to have the same faults.

For what it's worth, I don't see any clear endgame in current events; so far, it seems like just a major hiccup in the course of capitalistic history. Will there be any significant transformative changes by the time economic systems return to balance? I can't see that, although I would suggest the biggest potential effect may relate to the hangover of government debt. And government is, I contend, the main arena for class struggle today.

*Held, David: Crisis in captalist society, in Bottomore, Tom (ed.), 1991: A Dictionary of Marxist Thought (2^nd ed.), Blackwell, Oxford.

**I would here note that class struggle should not be simplistically characterised as, for example, struggle between manual workers and wealth owners, but better the struggle between people qua wage-earners and forces - and people - that specifically propel the agglomeration of capital.

Capital crises are now global

The current financial meltdown has provided soapboxes on the BBC and other news sources for all manner of "analysts"/"commentators". To paraphrase some I've heard in the last few days:

"The worst capital crisis since world war two". - surely he exaggerated.

"Everything will be hunky dory once the US banks have all released their results. Then everyone will know the extent of exposure to sub-prime debt - it will be quantified - and the market will settle down". He was either bignoting himself with extravagant claims or, more likely, trying to talk a little calm into the jittery markets. As if that quantification will calm the nerves of goold old bipolar capitalism. More likely to send the markets into fresh spirals, in fact.
This is where numbers meet emotion head on. It is _not_ a rational business; markets thrive on self-perpetuating sentiment.

"It's a crisis of credit." Possibly a more apposite comment. The world now runs on inter-linked credit, and that's where it all started: with the packaging of high-risk (sub-prime) loans with other standard debt into inscrutible financial instruments which nobody really understood. Those instruments were spread out (sold) onto the global market before the risk factors started unravelling - that is, low-documentation (and thus high-risk) US borrowers started defaulting. It's exactly akin to a contagion in its incubation period spread around a financial world that is more tightly interconnected than ever before.

So all the capitalists have caught cold. (Australia's sharemarket closed down each day for over two weeks solid, including the biggest one-day fall since September 11 2001).

But it's no laughing matter for the average punter: we're all capitalists now by default, since so many of us have their superannuation at stake. But is it time to worry? Not really: all you need is perspective. This chart will demonstrate that in a historical context, these earthquakes are just blips.
And so the US fed dropped interest rates by a whopping 75 basis points (0.75%) - while meeting outside their regular schedule, on a public holiday to boot. One commentator said this was against the script - it wouldn't have happened in Greenspan's time.

Which may not be a bad thing - it seems to have worked for the moment. The Australia market is recovering, although some say it's too late to avoid a US recession.

I expect it to provide the markets with a temporary fillip only. But that may be what the Feds are seeking: a pause, while nerves are calmed.

Is it all under control? The US Federal Reserve tries. The EU tries (by releasing swathes of liquidity onto the market). But the game is becoming faster and harder all the time as global markets increasingly integrate; and rules are changing all the time.