Tag Archive: rate

Paying the Price: Killing the Children of Iraq
An analysis of the effect of economic sanctions on Iraq –
A film by John Pilger

A poll conducted by ComRes last year asked people in Britain how many Iraqis had been killed as a result of the 2003 invasion. A majority said that fewer than 10,000 had been killed: “a figure so shockingly low it was a profanity”, commented John Pilger, in an article in the Guardian this month.

John Pilger continued: “I compared this with scientific estimates of up to a million men, women and children who had died in the inferno lit by Britain and the US. In fact, academic estimates range from less than half a million to more than a million. John Tirman, the principal research scientist at the MIT Centre for International Studies, has examined all the credible estimates; he told me that an average figure suggests roughly 700,000. Tirman pointed out that this excluded deaths among the millions of displaced Iraqis, up to 20% of the population.

The VOAG reported in March 2010 on two studies exploring civilian deaths as a result of the invasion of Iraq. One study by Opinion Research Business, on behalf of  New Scientist estimated 1.2 million people had died. A second study conducted by Dr Burnham of Johns Hopkins University, on behalf of The Lancet, Organ of the British Medical Association, estimated that a million people had died as a result of the invasion and occupation of Iraq.

These figures were complied in 2006, and updates in 2010 revised these figures to between 1.2 and 1.6 million deaths. With a pre-war population of 22.5 million, it means that as of 2010 one in nineteen Iraqis 1/19 has been murdered by the coalition. A further 20% of the population (One in five) have been made homeless. When General Franks, the US Comander of the Coalition was confronted with these figures he famously said: “We don’t do body counts”.

These death rates are based on statistical data. They are not confined to direct violent deaths, but all deaths; deaths through disease and loss of infrastructure for example. All ‘extra deaths’ over and above what the levels would have been, had there not been an invasion.

The “shock and awe” of 1993 and the subsequent occupation of Iraq was the extension of a murderous blockade imposed for 13 years by Britain and the US. Its results were suppressed by much of the mainstream media. Half a million Iraqi infants died as a result of sanctions, according to Unicef.; with children dying in hospitals, denied basic painkillers.

John Pilger’s article concluded: “Ten years later, in New York, I met the senior British official responsible for these “sanctions”. He is Carne Ross, once known in the UN as “Mr Iraq”. I read to him a statement he had made to a parliamentary select committee in 2007: “The weight of evidence clearly indicates that sanctions caused massive human suffering among ordinary Iraqis, particularly children. We, the US and UK governments, were the primary engineers and offenders of sanctions and were well aware of the evidence at the time but we largely ignored it and blamed it on the Saddam government, effectively denying the entire population the means to live.” I said to him: “That’s a shocking admission.”

“Yes, I agree,” he replied. “I feel ashamed about it …” He described how the Foreign Office manipulated a willing media. “We would control access to the foreign secretary as a form of reward to journalists. If they were critical, we would not give them the goodies of trips around the world. We would feed them factoids of sanitised intelligence, or we’d freeze them out.”

In the build-up to the 2003 invasion, according to studies by Cardiff University and Media Tenor, the BBC followed the Blair government’s line and lies, and restricted airtime to those opposing the invasion. When Andrew Gilligan famously presented a dissenting report on Today, he and the director general were crushed.

The truth about the criminal bloodbath in Iraq cannot be “countered” indefinitely. Neither can the truth about our support for the medievalists in Saudi Arabia, the nuclear-armed predators in Israel, the new military fascists in Egypt and the jihadist “liberators” of Syria, whose propaganda is now BBC news. There will be a reckoning – not just for the Blairs, Straws and Campbells, but for those paid to keep the record straight.

For More On Iraq:
Focus On Iraq: The War Continues (January 2011)
Latest On The Iraq Occupation (March 2010)
Civilian Death Toll In Iraq And Afghanistan (March 2010)The Voag

capitalist crises mike brooksThe debate on the causes of the Great Recession

Mick Brooks, Author of Capitalist Crisis: Theory and Practice, comments here on the debate within the Committee For a Workers’ International on The Causes of the Great Recession and Capitalist Crisis.

Mick Brooks, September 2013
Since the outbreak of the Great Recession Marxists have debated its cause. This is a vital theoretical issue for understanding the world around us.

The debate centres around the issue as to whether the present crisis is caused by falling profits as explained by Marx’s law of the tendential fall in the rate of profit (LTFRP), dealt with in chapters 13-15 of ‘Capital Volume III’. Others argue that the crisis can be explained as one of underconsumption.

This debate is bubbling under within the ranks of the CWI. The leadership of the CWI (as of the IMT) take what I would characterise as an underconsumptionist position. Already two blogs are circulating inside the ranks of the CWI that advocate the LTFRP explanation, in addition to an excellent short film, and debates are beginning to take place in the localities. Signs of intelligent life? It looks like it. Check out:
Marx returns from the Grave,
Socialism is Crucial, http://socialismiscrucial.wordpress.com/

It should be explained at the outset that all parties agree that a crisis of capitalism takes theform of overproduction, of unsold goods, as it says in the ‘Communist Manifesto’. Overproduction and crisis, however, are not permanent features of capitalist production. It remains to be explained why capitalism dips into crisis when it does.

The leadership, reacting to criticism, has resorted to an ‘underconsumptionist’ explanation of the cause of crisis. The crisis is caused, according to a quote from Chapter 30 of ‘Capital Volume III’ by “the poverty and restricted consumption of the masses.” (As one of the bloggers, CrucialSteve, points out this was actually a bracketed note added by Engels into the original text.)

The problem with the underconsumptionist explanation is that there is a permanent tendency for capitalism to restrict the purchasing power of the working class, because it is a system based on profit. Underconsumptionism therefore has no explanatory power as an explanation of crisis.

In any case not all commodities are produced for workers – pallet trucks and computer numerically controlled machine tools are capital goods bought by capitalists. There are also luxury goods consumed only by capitalists such as yachts and private jets. Why should there be a specific outbreak of overproduction of consumer goods intended for workers’ consumption such as jumpers rather than pallet trucks or yachts? Empirically crises of overproduction usually break out in the capital goods industries. Investment is the most volatile element in national income.

The opposition bloggers within the CWI have a powerful argument in their favour – the rate and mass of profit in the major capitalist countries fell sharply prior to the onset of crisis in 2007. Marx’s theory is confirmed! To take the case of the USA: “The US Bureau of Economic Analysis (BEA) shows that in the 3rd quarter of 2006 the mass of profits peaked at $1,865bn. By the 4th quarter of 2008 it bottomed out at $861bn.” (Brooks – Capitalist crisis; theory and practice, p.32)

The facts confirm Marx’s analysis of the LTFRP as the fundamental cause of crisis. Why should this cause surprise, since we all agree that capitalism is a system of production of profit? The school of Marxian economists who support this analysis view the falling rate and also mass of profit only as an underlying cause of crisis. Essentially the argument is about levels of causation in the crisis. What about the financial aspect of the crisis – the housing bubble, crazy loans and collapsing banks? Of course this was all very important. These specific factors profoundly influence the depth and nature of the downturn. Every crisis is a unique event with its own characteristics. But, with or without a ‘financial crisis’ the fact that the mass of profits in the USA, the most important capitalist country, halved over two years would have provoked a big collapse of output in any case.

How does the leadership of the CWI deal with the detailed criticisms of their approach thrown up by the advocates of the importance of the LTFRP as an explanation of crisis? Lynn Walsh argues in ‘Socialism Today’ that profit and investment have become disconnected in recent decades. “Despite the staggering increase in the share of income taken by the top 1% in the US, investment declined.”(‘Socialism Today’, November 2012) So profits (with the share of the top 1% as a proxy) are supposed have soared at the expense of working people, but this has not translated into productive investment. Walsh concludes, “This factual data, in our view confirms the analysis of a crisis in capital accumulation put forward in ‘Socialism Today’ over many years” (ibid.).

If true, this is not an explanation for a pattern of booms and slumps. It presents a stagnationist perspective for the future of capitalism, a permanent slowing down of the rate of accumulation. Is the CWI serious about decades of stagnation? How do they explain the present crisis, where investment fell as a result of the fall in profits?

In fact there is a simple explanation for this alleged disjunction between profits and investment: the profit figures quoted are wrong. Michael Roberts has meticulously chronicled the rate of profit since the Second World War in his blog. Nobody has challenged his figures, which attempt to look beneath conventional statistics to work out a Marxian rate of profit.

Roberts concludes: first that there has been no return to the fabulous profits enjoyed by capitalists during the golden years of the post-War boom; and secondly that the rate of profit today in 2013 remains below that of 2007 before the onset of the great Recession. Andrew Kliman also carefully shows (in ‘The failure of capitalist production’) that the reason for lower investment in the years since 1974 is lower profits. There is just less to invest. Simples.

The CWI leadership buttress their ‘explanation’ as to why investment has been lower with recourse to the notion of financialisation. As Lynn Walsh argues in the same article, more and more funds have been gobbled up by financial shenanigans in preference to investing in industry. There is no mystery here. In so far as more “profits disappeared into the financial sector” (ibid.), that is a response to lower pickings to be made in production – because of the LTFRP itself.

Increasing exploitation of the workers over recent decades has not led to increasing rates of accumulation because of financialisation, it is asserted. This is part of the analysis of a whole school of thought, regarding itself as Marxian, which sees the current crisis as one of the neoliberal form of capitalism rather than capitalism as a whole. In fact this is the conventional wisdom of the majority of academic Marxist economists. A whole new stage of capitalism is supposed to have developed since about 1980, buttressed by the holy trinity of globalisation, neoliberalism and financialisation.

Dumenil and Levy’s book – ‘The crisis of neoliberalism’, 2011 – is an example. Phil Hearse writing in Socialist Resistance, the publishing house of the so-called Fourth international, also refers to “a neoliberal ‘regime of accumulation’”. The logic of this approach seems to be that neoliberalism should be destroyed rather the capitalist system overthrown. As we see, the CWI leadership has swallowed this analysis whole. By accepting the interpretation of this school the CWI is on a slippery slope indeed. We’re with the opposition within their ranks on this one.Socialist Fight

Join-The-SWPThe Socialist Party Debates: The Tendency For The Rate Of Profit To Fall Vs Underconsumptionism.

The VOAG can’t help but notice the growing debate inside the Socialist Party (SP). The VOAG’s inbox had just quietened down following an avalanche of emails during the recent SWP splits. Now it seems it’s the Socialist Party’s turn to spam the living daylights out of us all.

The VOAG has already heard rumours of people being banned from the Socialist Party’s International Summer School, now I understand the SP’s NC is removing members from the SP Facebook group and banning all discussion relating to Marxist economics. (1)

As Bruce Wallace, one of the leading dissidents put it: “Under the pretext of agreeing to comradely debate, the critical material of oppositionists is being censored and repressed while public attacks on us are made by the leadership”. How SWP. (2)

And just like the SWP debacle, the argument is being conflated with a general dissatisfaction with internal party democracy. One dissident quotes Lenin: “Criticism within the limits of the principles of the Party Programme must be quite free, not only at Party meetings, but also at public meetings. Such criticism, or such “agitation” (for criticism is inseparable from agitation) cannot be prohibited”

What’s it all about.
 At the root of the argument are different perspectives regarding the relative importance in Crisis Theory (why capitalism goes into cyclical recessions) of “The Tendancy For The Rate Of Profit To Fall” (TRPF) and “Overacculation /Underconsumption”. Another SP dissident, calling himself Crucial Steve, writes on his blog:

“According to Lyn Walsh [editor of the SP’s monthly Socialism Today], the current crisis is one of over accumulation and lack of demand. Peter Taaffe writes in issue number 157 “The capitalists refuse to invest because there is no ‘profitable outlet’. In this sense, it is a crisis of ‘profitability’. Not because profits have dropped or there is a ‘tendency’ for the rate of profit to decline. Both the rate and the absolute amount of profit have increased it seems, even during this terrible crisis”.” (3)

Crucial Steve (Steve Dobbs) counters: “Marx was very clear that the accumulation of capital and the Tendency of the Rate of Profit to Fall were in fact “two expressions of the same process”. As capital accumulates, the organic composition [fixed capital over variable capital] rises and the rate of profit tends to fall. Thus to speak of over accumulation without reference to the rate of profit is somewhat “one-sided”, shall we say.

Cde. Crucial sets out his stall: “According to the statistics, the rate and the absolute amount of profit have not increased as the SP would have it. As anyone who has worked with management in the private sector will tell you, capitalists are concerned with the rate of return. So naturally, the projected rate of profit will determine investment. A fall in return and a subsequent fall in investment can also lead to a drop in the mass of profits. We can see empirically that the fall in the mass of profits precedes a fall in investment prior to a recession”.

Crucial quotes Walsh in Socialism Today No.161: “How, as socialists, should we regard a stimulus package or programme of public works? In the face of mass unemployment and the prospect of prolonged economic stagnation, the leaders of workers’ organisations should indeed be calling for a massive programme of public works to provide jobs and stimulate growth. Effective economic stimulus would require a big increase in social spending, increasing pensions and other benefits. Tax rates for the wealthy and big corporations should be substantially increased, with a levy on the uninvested cash piles of big companies. Effective measures should be taken against tax evasion and avoidance”. (4)

The SP’s official position, that the current crisis is one of over accumulation and lack of demand, implies that the answer is to inflate the economy by increasing salaries and public spending, in order to spend ones way out of crises. In other words, classic Keynesianism. We at The VOAG reject this approach and agree with Marx, that capitalism has structural contradictions that cannot be resolved by keynesian economics or reformism.

Socialist Fight breaks it down.
To get some help understanding this argument, let’s visit the pages of this month’s Socialist Fight:
Let us first of all set out the proposition according to Marx: “The progressive tendency of the general rate of profit to fall is, therefore, just an expression peculiar to the capitalist mode of production of the progressive development of the social productivity of labour. This does not mean to say that the rate of profit may not fall temporarily for other reasons. But proceeding from the nature of the capitalist mode of production, it is thereby proved a logical necessity that in its development the general average rate of surplus-value must express itself in a falling general rate of profit. Since the mass of the employed living labour is continually on the decline as compared to the mass of materialised labour set in motion by it, i.e., to the productively consumed means of production, it follows that the portion of living labour, unpaid and congealed in surplus-value, must also be continually on the decrease compared to the amount of value represented by the invested total capital. Since the ratio of the mass of surplus-value to the value of the invested total capital forms the rate of profit, this rate must constantly fall”. Karl Marx, Capital vol. 3, chapter 13.

TFRP is the central plank of Marx’s revolutionary economic theories. He formed his theory in opposition to the closely related theories of the so-called “iron law of wages” and underconsumptionism, and sharply counter-posed TFRP to them. The Iron Law of Wages is a proposed law of economics that asserts that real wages always tend, in the long run, toward the minimum wage necessary to sustain the life of the worker. Karl Marx attribute the doctrine to Lassalle (notably in his Critique of the Gotha Programme, 1875), but credited the idea to Thomas Malthus in his work, An Essay on the Principle of Population.

Marx did not have several theories of capitalist crisis, he had one: TFRP. Marx attacked the “iron law of wages” in two lectures to the international Working Men’s Association in 1865. The argument was that the “iron law” meant the absolute immiseration of the working class which led to a lack of demand for commodities and hence a crisis pushing prices below the value of commodities finally squeezing profits.

This is closely allied to underconsumptionism. Of course it has an immediate reformist implication; there is a Keynesian solution to the crisis of capitalism. All we need to do is raise wages and pump more money into the economy and the crisis will be solved. The underconsumptionist tells us there is plenty of money available but the capitalists just won’t invest. So implicitly all we have to do is force them to do so or get the government to do so on their behalf. It is this reformist conclusion that Bruce Wallace has correctly identified in the line of both the CWI and the CPGB. The notion that they won’t invest because the rate of profit is too low is beyond them.

The point about TFRP is that it is a revolutionary theory; capitalism is in crisis because it has these fatal structural flaws; private ownership of the means of production and a system of production for individual profit which has this inescapable tendency to fall and halt production through lack of investment. Only a rationally planned socialised economy based on production for need will overcome the ever recurring [and increasing] crises of capitalism. War on a global scale is the only thing that will temporarily solve this crisis for the capitalists; a much smaller group of monopoly capitalists will now have their profits rates restored before they fall again and the next conflagration is prepared. That is the history of the twentieth century. The same iron laws apply to the twenty-first. (6)

1. http://howiescorner.blogspot.co.uk/2013/07/is-shttp://howiescorner.blogspot.ocialist-party-heading-fo-split.html
3. http://socialismiscrucial.wordpress.com/2013/07/15/ted-grants-notes-on-marxist-economics/
4. Ibid
5. https://suacs.files.wordpress.com/2013/08/socialistfightno14.pdf
6. Ibid

Acknowledgements and Thanks
Many thanks to Ray Rising for providing a selection of print-outs regarding the Tendency for the Rate of Profit to Fall.

The VOAG would like to acknowledge Socialist Fight for their article “Ticktin, Taaffe and Underconsumption” in Socialist Fight No.14 some of which is reproduced here.

Thanks also go out to Socialist Fight for their excellent Open Meeting on the “Tendency for the Rate of Profit to Fall” which The VOAG attended. For details of future Socialist Fight meetings contact: Socialist_Fight@yahoo.co.uk.The Voag

Banks to knock £19 billion off their tax bill despite taxpayer bail out

Despite being rescued by taxpayers during the crash, UK banks will avoid paying £19 billion of tax on future profits by offsetting their losses during the financial crisis against their tax bills. This is equivalent to more than £1,100 for every family in the UK, a TUC report says today (Monday).

The TUC report – The Corporate Tax Gap – says that as well as benefitting from an £850 billion bailout from taxpayers and the Bank of England during the recession, banks are able to offset their £19 billion of tax losses between 2007 and 2009 against paying tax on future profits.

The report, authored by tax specialist Richard Murphy, has calculated this double subsidy from the accounts of five UK high street banks – HSBC, Royal Bank of Scotland, Barclays, Lloyds TSB and HBOS (later Lloyds Banking Group) – and HM Revenue & Customs (HMRC) data.

The Corporate Tax Gap warns that banks could soon be paying a lower rate of tax than small businesses. The corporate tax gap – the difference between the rate of tax set by the Government and the actual rate companies pay – has grown by an average of 0.5 per cent a year over the last decade. Between 2000 and 2009, the effective corporation tax rate fell from 28 per cent to 21 per cent, much deeper than the headline rate cut from 30 per cent to 28 per cent, says the report.

With the Government planning to reduce corporation tax to 24 per cent, the UK’s largest companies, including banks, will soon be paying an effective tax rate of 17 per cent – three per cent lower than small businesses, who are less able to exploit loopholes and therefore pay a headline rate of 20 per cent. As a result, the UK will soon have a regressive corporation tax regime, says the report.

The TUC has calculated that the banks’ £19 billion double subsidy could pay for the following cuts between now and 2015:
*Switching the indexation of benefits from RPI to CPI (£5.84 billion)
*Housing benefit (£1.77 billion)
*Tax credits (£3.22 billion)
*Child benefit for higher rate taxpayers (£3 billion)
*Estimated cuts to the science research budget (£3 billion)
*Estimated cuts in HMRC resources to tackle tax avoidance (£2.1 billion).

TUC General Secretary Brendan Barber said: “Banks caused the global financial crash and triggered the recession that produced the deficit. Yet not only did they take almost a trillion pounds from taxpayers to bail them out, they are now using the losses caused by their irresponsibility to cut their tax bills for years to come”.

 The Government’s bank levy is small change compared to this huge loss as the business-as-usual bonus levels show. It’s double bubble for the banks, but huge cuts, job losses and VAT increases for ordinary families. Small firms have every right to be angry too. Not only are they finding it hard to get credit from the banks, soon they will be paying more tax on their profits than the banks and other big companies.
Botom-Of-Post - Protest