21 December 2015 — The Wolf Report: Nonconfidential analysis for the anti-investor
Too many, too few; Too few, too many
1. Once upon a time, the Goldilocks characters in this parable of the abattoirs called capitalism, were kept busy telling us how there were too many of us. Too many people. There were too many people for the Club of Rome; there were too many for spaceship Earth; there were too many for the ‘carrying capacity’ of this planet; there were just too damn many. Of us…..although, let’s face it, Goldilocks was a white girl, so the real meaning was… ‘there’s too many of them.’ Too many of those with darker eyes and darker hair and darker skin. Too many of them.
2. But that was then, and this is now. Now, the Wall Street Journal, and the Financial Times feature articles on the “dwindling work force,” “too few people,” “labor shortages,” the “graying” of (Japan, the EU, the US) and the peril of declining birth rates. Now, apparently, there are too few of us, us being the young us, and not young as in ‘state of mind’ young, or ‘young at heart,’ but actually young. Really young. Young in body young. Young on your driver’s license young. Young enough to work for the next 40 or 50 years.
According to the WSJ, there aren’t enough young people in … China. That’s right, 1.4 billion people, and not enough young ones entering the work force to meet the needs of industry.
Because the Goldilocks capitalists are just that– capitalists– they explain all things all the time by referring to supply and demand. “Labor shortage” is a function of supply and demand, supply being the declines in population growth and the reduced numbers of young people participating in the labor force.
Labor shortages explain for Goldilocks why wages have increased in China and why unemployment for those in their 20s is at record levels in Europe. You see, the increase in wages due to labor shortages in Europe drove wages to the point where production was no longer profitable. Amazing isn’t it that the increased wealth that the bourgeoisie have awarded to themselves, the stock buy-backs, dividends, special pay-outs, hasn’t made production unprofitable, isn’t it?
Labor shortages explain why Goldilocks is in Vietnam, why the Philippines have become so attractive, and why the minimum wage in the US has been so minimum for so long. (see above)
For Goldilocks, labor shortages explain the increase in temporary, and part-time employment. (see above)
For Goldilocks, labor shortages explain lay-offs. (see above)
Labor shortages explain overproduction for Goldilocks. If labor shortages didn’t exist there would be more “effective demand” and consequently maritime freight rates wouldn’t be below break-even points; oil would be at $100 per barrel; copper would be back to $7000 per ton; and the asset-backed-securities markets would have never imploded. Raise your right hand and repeat after Goldilocks…
3. When the Goldilocks bourgeoisie are talking anything, they’re talking about profit and right now. So the problem isn’t lack of population growth, it’s lack profit growth. The problem isn’t a labor shortage, but the exhaustion, more than less, of the abilities mechanisms, arrangements, relations of extracting increasing amounts of surplus value to translate into growth in the increment of total output, in the rate of value expansion.
Since 2011, the United States, despite holding unit labor costs and overall wage and benefit growth flat, the growth of the total value of output per production hour has been, at best, miniscule.
Overproduction is the inability of accumulation to sustain profitability. That bears repeating.
After 2008, China articulated a “shift” in its economy. The FDI-export model was to be supplanted by development of the domestic market. Household consumption would replace fixed capital formation as the prime economic driver.
However, no such transformation has occurred. Between 2007 and 2011 the share of real GDP claimed by household consumption declined more than 10 percent. The share of GDP claimed by gross capital formation increased 25 percent during the same period.
Overproduction is the inability of accumulation to sustain profitability.
China cannot increase the “domestic market,” and household consumption, as long as 40 percent of the population is tethered to the rural economy; agricultural productivity remains low; and the average size of agricultural units is less than 2 hectares.
Productivity requires the expulsion of labor from the land, no less than productivity requires the reduction of labor in the industrial production process. These simultaneous impulses of capital in both the industrial centers and the rural areas put the truth against the myth that China has a “labor shortage,” or that increased wages are damaging accumulation.
The Goldilocks East and the Goldilocks West have run up the inside of the walls of the cage of their own making. Increasing the relative amount of surplus value extracted during the working day is necessary to restore ratios of profitability so impaired by accumulation. The means for increasing that relative amount of surplus value is more intensive accumulation that impairs profitability.
Under such conditions, the long-term tendency of the decline in profitability converges with and is manifested in the sudden collapse of the capitalist markets, the inability to sustain a recovery, and the pressing need for liquidation of the capital values embedded in the means of production. Socialism or barbarism? That’s one way of putting it, a little too philosophical for me. Let’s try “Arson or Revolution.” This time, the three bears better eat Goldilocks.
December 21, 2015