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September 18, 2019



"There is much to admire in this piece. But I fear it understates the problem with capitalism."

Martin Wolf as an investigative economics analyst is impressively incisive and creative, but he is also an employee of the world's most indurated advocate of free markets and resolute supporter of globalisation and globalist policies. Perhaps, therefore, he has to moderate his message for the audience of his medium.

I am delighted though when a (formerly?) convinced centrist like Martin Wolf manages to produce a critique of capitalism with so little understatement.


qwertboi: perhaps it is the fact that Martin Wolf is such an "advocate of free markets" that he is so upset with monopolies and rent-seeking (as Adam Smith was...)

If you think that free marketers think the economy is in a good place, then you probably don't listen to them, only to the caricature drawn by their opponents.

Luis Enrique

I still find the whole concept of financialisation confusing. There is a familiar idea that we can't all get rich by cutting each other's hair. I don't see how in aggregate people can make money by taking bets against each other. Take a secondary market for e.g. antiques. If prices rise, owners can get rich but the money they can extract from selling has to equal the money others put in from buying. In finance, the industry as a whole can get rich from fees, some actors can get rich at the expense of other actors. There's something about the idea that we have abandoned the real economy in favour of financialisation that doesn't add up to me. Although I recognise I need to go away and read up on it properly.

Luis Enrique

sorry, where above I wrote "in finance as a whole ..." I should have caveated "unless your returns come from the real economy ..."

Luis Enrique

I went to read that Roberts piece. As always I am stumped as to why anyone thinks this idea of exploitation is useful.


that just says if you take revenues and subtract the wage bill (ignoring intermediate goods) then what's left over can be split between capitalists of various sorts (equity and debt).

Where does taking this definition of profit and calling it exploitation get us? The idea that capitalists earn their money by combining capital with labour and keeping what's left over after paying the workers looks like a statement of the bleeding obvious to me.

The idea Roberts dislikes - rents - looks more useful to me. Some level of rK is OK, above that not OK. If you like, you could say capitalist exploit workers when they make rents by exploiting workers' weak bargaining positions. Don't make rents when workers are able to bargain for higher wL and keep rK down to a minimum.

Luis Enrique

but my earlier comments above about financialization I think resemble Robert's doubts about the idea "financial profits are not a subdivision of surplus-value".

(I guess profiting from lending to finance consumption might be considered not subdivision of surplus value?)

Luis Enrique

[I apologise for live blogging Luis reads a blog here]

The difference between the financialisation idea Roberts dislikes, and this idea he likes:

" “Faced with falling profitability in the productive sphere, capital shifts from low profitability in the productive sectors to high profitability in the financial (i.e., unproductive) sectors. But profits in these sectors are fictitious; they exist only on the accounting books. They become real profits only when cashed in."

is not obvious.

Chris could you write something about how the idea that profits from the productive sectors has been falling can be reconciles with the idea that:

"non-financial corporations like General Motors, Caterpillar, Amazon, Google, Microsoft, big tobacco and big pharma and so on still make their profits from selling commodities in the usual way. "

and seem to be making out like bandits?


"There's something about the idea that we have abandoned the real economy in favour of financialisation that doesn't add up to me."

I sometimes wonder if our betters are gradually retreating into feudalism once more, after all the obvious, foolproof solution to economic stagnation is simply to redistribute wealth more widely.

If you've sufficient fixed assets there's no real point in growing the economy that other people might consume - this might explain the more uh, neo-eugenecistic subtexts in modern bourgeois discourse.

Egmont Kakarot-Handtke


The real trouble with Capitalism: stupid/corrupt economists
Comment on Chris Dillow on ‘The trouble with capitalism’

For the full text (4950 characters) see here

Egmont Kakarot-Handtke

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