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106

Capital Goes to Market

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terms
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notes

Harvey, D. (2011). Capital Goes to Market. In Harvey, D. The Enigma of Capital: and the Crises of Capitalism. Profile Books, pp. 106-118

107

[...] What is called a crisis of 'under-consumption' results when there is not enough effective demand to absorb the commodities produced.

Workers spending their wages is one source of effective demand. But the total wage bill is always less than the total capital in circulation (otherwise there would be no profit), so the purchase of the wage goods that sustain daily life (even with a suburban lifestyle) is never sufficient for the profitable sale of the total output. A politics of wage repression only heightens the possibility of a crisis of under-consumption. Many analysts came to regard the crisis of the 1930s as primarily a crisis of under-comsumption. They therefore supported unionisation and other state strategies (like social security) to bolster effective demand among the working classes. [...]

think about this more ... this just implies that not all firms can realise a profit, right?

—p.107 by David Harvey 4 years, 2 months ago

[...] What is called a crisis of 'under-consumption' results when there is not enough effective demand to absorb the commodities produced.

Workers spending their wages is one source of effective demand. But the total wage bill is always less than the total capital in circulation (otherwise there would be no profit), so the purchase of the wage goods that sustain daily life (even with a suburban lifestyle) is never sufficient for the profitable sale of the total output. A politics of wage repression only heightens the possibility of a crisis of under-consumption. Many analysts came to regard the crisis of the 1930s as primarily a crisis of under-comsumption. They therefore supported unionisation and other state strategies (like social security) to bolster effective demand among the working classes. [...]

think about this more ... this just implies that not all firms can realise a profit, right?

—p.107 by David Harvey 4 years, 2 months ago
112

[...] capitalists, as we earlier saw, have a choice as to what they reinvest in: they can reinvest in the expansion of production or they can use their wealth to buy up assets, such as stocks and shares, property, art objects or shares in some speculative enterprise such as a private equity company, a hedge fund or some other financial instrument from which they can realise capital gains. In this case their reinvestments play no role in bolstering effective demand.

Something to think about: if the argument against raising marginal tax rates for high incomes is that these people will thus be less incentivised to "work more" and thus earn more, doesn't the same reasoning apply to falling profit rates? so they're less incentivised to reinvest productively if the rate of profit goes down, or even if it just doesn't go up enough? esp since they don't "need" to reinvest

—p.112 by David Harvey 4 years, 2 months ago

[...] capitalists, as we earlier saw, have a choice as to what they reinvest in: they can reinvest in the expansion of production or they can use their wealth to buy up assets, such as stocks and shares, property, art objects or shares in some speculative enterprise such as a private equity company, a hedge fund or some other financial instrument from which they can realise capital gains. In this case their reinvestments play no role in bolstering effective demand.

Something to think about: if the argument against raising marginal tax rates for high incomes is that these people will thus be less incentivised to "work more" and thus earn more, doesn't the same reasoning apply to falling profit rates? so they're less incentivised to reinvest productively if the rate of profit goes down, or even if it just doesn't go up enough? esp since they don't "need" to reinvest

—p.112 by David Harvey 4 years, 2 months ago

(adjective) affording a general view of a whole / (adjective) manifesting or characterized by comprehensiveness or breadth of view / (adjective) presenting or taking the same or common view

118

A synoptic view of the current crisis would say

—p.118 by David Harvey
notable
4 years, 2 months ago

A synoptic view of the current crisis would say

—p.118 by David Harvey
notable
4 years, 2 months ago