From: cwarren@peg.pegasus.oz.au
Newsgroups: aus.politics
Date: 30 Aug 92 00:45 EST
Subject: Re: Support What Property Rights???
Nf-ID: #R:peg:996200258:peg:996200267:000:16903
Nf-From: peg.pegasus.oz.au!cwarren    Aug 30 00:45:00 1992








            Capitalist Property
            
            Contrary to what Lam and Suter think, a sensible description
            of capitalist property, as distinguished from other forms of
            property such as, feudal property, anarchist property, and
            socialist co-operative property, is not something to be
            churned out overnight.
            
            Those who cry for such a thing have not in the past showed
            any ability what-so-ever to follow even the simplest line of
            logic.  For them, their beliefs and crypto-capitalist
            ideology are more important than any amount of world
            reality.
            
            However some points ought to be made.
            
            Firstly, capitalism is a world system which creates
            prosperity in some countries by propagating opposite
            conditions elsewhere.  Averaged-out over time and over all
            capitalist countries, capitalist economic success is
            practically zero.  It amounts to no more growth that
            obtained by any other economic system.  It only produces the
            appearance of "miracle" economic growth by artificially
            concentrating the benefits of natural economic development.
            
            What capitalist "success" there was such as British
            capitalism, was built on colonial exploitation.  US
            capitalism was based on, initially, cheap resources of a
            virgin land which allowed it to deliver into the European
            markets but subsequently based on exploitation of the third
            world and weaker middle ranking economies.
            
            We cannot look only at the high standard of living of a
            minute fraction of capitalism ie. those countries
            represented by Australia and the G7 countries.
            
            If Tasmania was the only source for electricity and the rest
            of Australian wage rates were 50 cents an hour, then
            Tasmanian living standards would soar as small quantities of
            Tasmanian production extracted, in exchange for electricity,
            much of the wealth from other Australian states who would at
            the same time, be sliding into penury.  This is the same
            "three card trick" being played out today by the rich and
            powerful capitalist economies on the rest of the starved and
            over-worked world.
            
            You can have a wealthy, liberal-democratic, western
            capitalist society (like ours) PROVIDED that the economy
            receives on average, a net positive inflow of economic
            resources.  Leading Australian capitalists are well aware of
            this.  As Sir Arvi Pavo once said; "The continued
            functioning of Australia depends on a massive inflow of
            overseas money" (IPA Review, June-August 1989).
            

            While ever this flow (which takes many forms) persists you
            cannot show tendencies towards capitalist crisis, or even
            much domestic injustice.  This applies particularly to
            Australia and Western societies, which have received net
            positive inflows of economic resources.  But, except for the
            following exception, the tragedy for capitalists is that,
            what flows into one country has to firstly flow out of
            another.
            
            While individual countries may be termed "open", the
            capitalist system itself has to make economic sense by
            "balancing" within a finite set of members.  In this sense
            capitalism has to operate in a "closed" system.  This means
            that the beneficial inflow into the West was obtained by
            emptying many Third world economies.
            
            In theory, it is possible to conceive of an exception where
            growth is provided for through expansion into new territory
            with a growing population.  Under such circumstances
            production one day can be sold later, in conditions of
            increased demand simply because the population has expanded.
            The availability of credit also helps.  Any healthy demand
            one day because of credit, is matched by later expanded
            production from new resources which come from new territory
            and/or new population (and which are therefore not
            increasingly more difficult to extract).
            
            We all know that there have been circumstance in the so-
            called New World, where capitalism has boomed and produced
            more wealth than previously considered possible.  But these
            circumstances are not replicable nor sustainable.
            
            Today it is not as easy to acquire new land and natural
            resources as it once was and we cannot expect to have the
            benefit of a continuously growing population.  Perceptions
            arising from such delusions are behind the inane
            propositions of at least one hopeless capo' contributor on
            this network who constantly tries to talk about current
            circumstances by evoking the 19th century.
            
            Australian capitalism cannot possibly exist without either a
            growing population, acquisition of fresh natural resources,
            or a positive inflow of economic benefit from outside.
            Should capitalism it exist without these circumstances it
            will only be in a terminal phase, going through "death
            throws" depicted by declining real wages, militarisation,
            and riots in the cities.  Ideological anarchy of capitalists
            produces the street anarchy of those dispossessed by
            capital, wages anarchy for those still in work, and acts of
            military anarchy by destabilised old-capitalist regimes such
            as Yank-land and Jap-ville.
            
            There may be an argument that capitalism can survive without
            the benefit of population, or territorial growth, or an
            inflow from outside, but I haven't seen it so here is a good


            opportunity for our crying capitalists to do something
            useful.
            
            If we assume that there is 1) no inflow of economic benefit
            from outside the economy, 2) a stable population, and 3)
            finite natural resources, then inside an economy,
            capitalists only make capitalist profit by expropriating
            wealth produced by others.  This is the nub of the issue
            for, if it is true for one closed economy, then it must be
            true for all closed economies and, unfortunately, the world
            as a whole is just that - closed.  So on a world scale, our
            assumptions are in fact real life parameters.
            
            Now we will look at capitalism in a closed economy.
            
            Economies normally have millions of workers and billions of
            currency units.  To make matters easy we will use numbers
            convenient for demonstration purposes.
            
            Take a closed economy with 1,000 workers, average wage $100,
            and production of 5000 tons of commodities some of it
            machinery and some of it consumer items.
            
            Let there be 1000 workers, 100,000 wages, and 5000 capital
            consumed and consumer goods purchased "finally".
            
            Now when a business purchases and consumes materials or
            machinery the cost of acquiring the machine and materials is
            passed on as a component of the final selling price of the
            item produced.  This ensures the business can replace these
            items and thereby stay in business.
            
            This means that if our 5000 Capital is divided into 1000
            capital and 4000 consumer goods, the whole 5000 must be
            represented in the final selling prices of items produced.
            If the 5000 Capital is divided into 2500 capital and 2500
            consumer goods then again, business passes on the need to
            recoup the whole 5000 through selling the items produced.
            This applies under both capitalism and socialism.
            
            So when a business produces an item it naturally throws into
            society (through its own purchases) cash equal to the cost
            of producing the item.  This is the basic principle inherent
            in the "circular flow".
            
            If it took 100,000 wages, and 5,000 capital to produce (@
            10% growth) 115,500 product, then wages and capital should
            each be augmented by 10%.  Then 10% more goods would be
            sought in a balanced fashion, by 10% more wages, and 10%
            more capital expenditure.  No-one would be cheating anyone.
            Those who purchased and enjoyed life through consumer items
            would receive 10% greater enjoyment and businesses who
            sought growth through additional capital expenditure would
            have 10% greater opportunity.  There should be no serious
            economic crisis in this system.  The ratio of capital

            expenditure to wages expenditure would remain reasonably
            constant.  The rate of profit would also stay reasonably
            constant, and wages would therefore buy the same proportion
            of social wealth as before.  Only the quantity or quality
            would change.  In addition there would arise conditions
            within which a free market mechanism could be trusted to
            allocate resources in both a socially equitable and an
            economically efficient manner.
            
            But then along comes the bloody capitalist.
            
            Now capitalists demand that all production belongs to
            capital and must not be shared between capital and labour.
            
            But more than this, if wages can be induced to take less,
            the rate of profit for capital rises above the growth rate.
            Just because workers hone their skills so they produce a
            certain amount does not, under capitalism, give them any
            right to their production.  It belongs to capital.
            
            This process is similar to feudal property rights where
            serfs' produce did not belong to serfs themselves but was
            expropriated by a system of feudal property rights.  Some
            went to the church, some to local lords and the rest went to
            the monarch.  Under capitalism, capitalists may take no role
            in production but still demand 10% augmentation of wealth
            even when the economic growth rate is below 10%.
            
            The key to this lies in the fact that workers do not receive
            wages according to the value of what they product.  They
            receive a set fee which only reflects the cost of
            maintaining their lifestyle made up of food, housing,
            health, clothing, and household goods etc.  This "basket of
            commodities" represents the cost of an average worker.  What
            workers actually produce is irrelevant.
            
            An analogy with economic growth in agriculture will
            demonstrate this.  A wheat farmer, unable to afford an
            horse, may be able to produce 5 tons of wheat and 10 tons of
            hay.  Now if an horse costs 3 tons of hay for feed and 1 ton
            of wheat forgone in the time necessary to look after the
            horse, and make harness etc, then we say the cost of the
            horse is 4 tons.  The horse receives 3 tons of wages.  But
            the work the horse does, its one horsepower, may increase
            productivity 8, 9, or 10 tons.  But the horse doesn't care,
            it will work as long as it is happy for wages which only
            represent the cost of keeping it fit and well.  The extra
            production belongs to the farmer.
            
            Capitalists effect this same exploitation but against their
            fellow man.  Workers get wages in accordance with what will
            keep them fit and well.  What they produce by their
            "labouring power" is a separate matter.  Capitalism is based
            on exploiting a difference between what it takes to keep

            workers working (wages) and the value of their labour-power
            (skill, effort, hours worked etc).
            
            This leads to an economic implosion, for workers end up
            producing more and more but become less able to purchase.
            Real wages become incapable of purchasing the final
            consumption goods produced and credit becomes more prevalent
            as a means of maintaining retail sales.  Today two incomes
            are needed in order to buy what a single income once bought
            and credit is forcing more and more into personal
            bankruptcy.
            
            Capitalist property is able to restrict wages only because
            under a capitalist system, all capitals compete against each
            other.  If one capitalist decided to pay high wages then his
            selling price would be higher than his competitors so he, or
            she, would lose market share and the where-with-all to pay
            high wages.  If another capitalist pays cheap wages then all
            capitalists, competing in the same market, will also pay low
            wages or else all their customers will switch to the
            alternative supplier.
            
            Workers on the other hand must work for a capitalist or else
            go homeless and live in destitution.  This means that any
            contract made between wages and capital is made under stress
            and any capitalist which does not utilise this fact, finds
            that they produce less efficiently than the rest.  Only
            trade unions are able to lift the negotiating position of
            workers and more often than not, in the past, arbitration
            found a socially acceptable compromise solution.
            
            But this is no longer possible.  Capitalists, following
            capitalist property motives, not social equity, now seek to
            lower wage-costs by increasing the proportion of third world
            wages that go into Australian manufactures.  This puts
            arbitration under great stress, relegating it to a position
            of little more than an anachronism from the past.
            
            Obviously capitalist property is causing great harm to
            Australia but worse is likely in the future.  The capacity
            to expand debt, to increase population, to find new
            resources, to sell yet another car model or brand of
            toothpaste, is diminished.  A capitalist who paid $100 to
            produce a commodity is starting to find it more and more
            difficult to locate someone with $110 to purchase it.  We
            have now entered a recession which may yet usher in a period
            of long decline into economic oblivion.
            
            In summary then, in a closed economy, whatever is produced
            must be paid for out of wages and only wages.  All
            intermediate business expenditures are recouped by sales of
            the final consumer good or service.  But capitalism only
            makes a profit if capital expropriates part of wages and
            turns it into capital.  By taking this slice out of wages,
            capitalists disrupt firstly, consumer spending and finally

            the entire economy.  The rate of return on capital must fall
            as capital piles up if at the same time wages decline.
            
            This expropriation is required by the logic of capital as it
            occurs within capitalism.
            
            Circumstances brought about by population growth, trade and
            credit, etc only delay the inevitable collapse.
            
            All this can be avoided if there was no expropriation from
            wages to capital ie there was no capitalism.  Instead
            capital would provide great benefit through facilitating
            growth, given only that it earned its own rewards.
            
            
            CHRIS WARREN




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