Growth in Decadence - What does it mean?

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Growth in Decadence - What does it mean?
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Following some positive discussion at the recent ICC online meeting which was followed up by Baboon’s attempt to dismiss any discussion about growth in capitalism, I think it appropriate to explain in more depth my arguments regarding the economic growth the capitalism has achieved and its relevance. My apologies if some of what I say is repetitive or obvious as its clear my conclusions are not - and not easily accepted by close supporters of the the ICC at least. I do not at all pretend to have all the answers, but it is however about time some in the communist left stopped turning a blind eye to reality.

Accumulation of capital is economic growth and it is an essential elements of capitalism. Why is it such a problem to convince people that accumulation takes place and that it is reflected in the GDP figures the bourgeois produces? This I do not understand!

Accumulation and growth are the inevitable products of waged labour and the generation of surplus value. However, growth and accumulation, whilst closely related, are not exactly the same thing. Accumulation is the growth of capital and is very specific, it is the generation of new constant capital that can be used in new production to create further surplus value. Accumulation is central to the creation of surplus value and hence the increased capital and an increased population. When we look at economic growth ie GDP growth this is something much broader than capital accumulation as it includes all that capitalism produces ie including all various types of waste production. Only some of that surplus product that is generated by the working class will be used in productive industry to create capital and hence new surplus value. The generation of surplus product comes however from the same process of waged labour and indicates the entire growth of capitalist society including unproductive industries. Hence GDP growth gives us a much clearer idea of the actual burden on the working class and gives us therefore a reasonably good indicator of how much capitalism achieves as total growth. To establish the extent of capital growth is problematic as it must be based on subtracting all waste production from GDP growth. A job for a professional economist?

In focusing on this full burden on the working class let us look at the actual figures for economic growth over the last 2 centuries. The purpose here is not and has never been to show 'capitalist growth is not only a rejection of decomposition but a calling into question of decadence and all the consequences that come from that', as Baboon says, but to establish a clearer view of the reality of decadence. This I have repeated several times too.  If capital accumulation and growth did not exist, we would not be living in a capitalist society

% increase of World GDP per century

In $trillion 2011

Year         GDP        % increase in period

1500         0.43

1600         0.57           33

1700         0.64           12

1800         1.2              86

1900         3.42           185

2000       63.1          1,745

2015     108.12             71

Source: https://ourworldindata.org/economic-growth

Baboon wants us to condemn these figures out of hand but are they not indicative of how capitalism has grown over the years? Of course a lot of these figures are obviously estimates (and very dependent on the method of calculation) but our interest in them is not in the precise figures but in the indication of trends. Here again is a link to the World Bank data.

https://data.worldbank.org/indicator/NY.GDP.MKTP.KD

On this link you can find the GDP growth form Yr 1 to 2000 presented by Our World in Data

https://ourworldindata.org/economic-growth

What is evident from these various tables is that there was a low rate of growth in ascendancy and a higher rate in decadence. This is clearly not what the ICC and its supporters argue and is not to be expected from a Luxemburgist perspective where levels of accumulation are said to be dependent on the quantity of non-capitalist markets. From a low base in the level of production there was certainly a high rate of profit but the mass of profit was low and the growth of capital and the economy as a whole was low. Today we have a much high rate of growth based on a much larger level of production generating a higher mass of profit from a lower rate of profit. This is actually precisely what Marx forecast on his basis of the tendency of the rate of profit to fall (TROPF) and this, as I say, contradicts Luxemburg.

One interesting point of significance here is that even a small percentage in GDP growth per year for example 3% growth per year (which is not so far from the average over the past 2 decades) means that GDP doubles in about 23 years. This can be confirmed from the World Bank’s information above.

What we have to understand from this is that the 2 periods of ascendancy and decadence are ones of historic political change not economic growth and economic decline respectively. Ascendancy is a progressive period of development but that development is not primarily about economic growth but about social and political changes and the establishment of basic capitalist systems. The rate of profit was high but from a small level of production. Decadence should be seen as not solely or automatically about economic decline because capital must keep growing – what it represents is a period of political social and economic crises that are products of its historic limitations. It is a crisis of history. We should not see decadence as itself an economic crisis nor that permanent crisis of decadence as permanent economic crisis

World Population in billions

Year           Population           % growth in period

1500              0.46

1600              0.55                          19

1700              0.61                          10

1800              0.99                          62

1900              1.65                          66

2000              6.12                        270

2015              7.35                          20

Source: https://ourworldindata.org/world-population-growth

Why have I included population statistics here? Mainly because there has been little attempt to explain why population is increasing so much in the past half century and because it can only be a complement and a product of economic growth. Marx discussed how population was increased in the 19th century by the cycles of boom and crises every 10 years and Bukharin is one of the few to address the issue of population growth and how it is related to productive efficiency in society. He argues that populations cannot increase if society cannot afford it ie when it is an inefficient producer. This is the materialist method. It does not happen because people are having more sex or are more fertile, it must relate to the productive efficiency of society and capitalism is definitely an efficient produce and it appears I has been able to support a massive increase in population.

A more or less continuous increase in population is nothing more nor less than an extension and growth of the social system, which is possible only when the relation between society and nature has been altered in a favourable direction. It is not possible for a greater number of persons to live unless the bases of life are widened1

This is not to say that everybody is getting much better off. Certainly, The rich and capitalism itself get wealthier and wealthier but the inequalities expand ridiculously, the working class gets relatively and significantly worse off and significant sections of the world population experience extreme poverty and pauperisation.

The impact of this is that humanity experiences overpopulation in many parts of the world, poverty, destitution, famines and hunger and in other wealthier regions it is obesity, unemployment, insecure employment,

Why is the idea of economic growth such a problem to accept? For those with a background in Luxemburgist theory, it is hard precisely because her theory is based on the limitation of market expansion. From this point of view, capitalism cannot create new markets itself and that means population cannot be growing either. Quite simply the idea that markets can grow in decadence is not an understanding that can be derived from Luxemburgism. Luxemburgist theory suggests the opposite, that capitalism must decline during decadence because there are insufficient non-capitalist markets to enable accumulation to take place. The consequences are that followers believe there are insufficient markets to enable growth or that the stagnant markets places limits and barriers on growth. It is essential an economistic view of decadence based on an idea that accumulation is grinding to a halt.

Capital accumulation progresses and expands at the expense of non-capitalist strata and countries, squeezing them out at an ever faster rate. The general tendency and final result of this process is the exclusive world rule of capitalist production. Once this is reached, Marx’s model becomes valid: accumulation, i.e. further expansion of capital, becomes impossible. Capitalism comes to a dead end, it cannot function any more as the historical vehicle for the unfolding of the productive forces, it reaches its objective economic limit. 2

Luxemburg was however wrong about accumulation and reality has not followed her schema and from my point of view it is unfortunate that her influence on this topic continues. Marx on the other hand was quite clear that population growth is a product of accumulation and that continued accumulation meant further growth of productive forces, both physical and human (eg see Capital Volume 3 Chapter). His understanding of overproduction is not as an absolute limit to consumption but as a contradiction between the growth of productive capacity and the growing disparity between that and the consumptive forces ie capital and the subsistence of both the bourgeoisie and the working class. Hence that growth was an inevitable and permanent feature of capitalism.

Quote:
We have shown how the same causes that bring about a tendency for the rate of profit to fall necessitate an accelerated accumulation of capital and, consequently, an increase in the total mass of the surplus labour (surplus value, profit) appropriated by it3

Lenin was also clear about what imperialism entailed even in 1916:

Quote:
It would be a mistake to believe that this tendency to decay precludes the rapid growth of capitalism. It does not. In the epoch of imperialism, certain branches of industry, certain strata of the bourgeoisie and certain countries betray, to a greater or lesser degree, now one and now another of these tendencies. On the whole, capitalism is growing far more rapidly than before; but this growth is not only becoming more and more uneven in general, its unevenness also manifests itself, in particular, in the decay of the countries which are richest in capital (Britain).4

I am not saying this to underestimate the importance of economic crises but to put the impact in context. The decadence of capitalism does not depend on a narrow view of economic collapse.

Concerning the issue of the growth of the Chinese economy I am not particularly objecting to the term cancerous growth but I don’t think this term should just be applied to China. Yes there are specific reasons for Chinese growth in the past decades but that is always the case for any nation. In any case China is not an exception as other countries in the Far East have seen rapid growth. Also South Korea, Singapore, Malaysia, Thailand Hong Kong Indonesia, India Philippines, Papua New Guinea, Vietnam and more recently Nepal have all seen higher growth rates that the world average over the past decades.5 What is evident here is a phenomenon of global capitalism.

Why are the implications of these growth figures?

Firstly I think it is more appropriate to call all growth by capitalism cancerous not just China’s. As Kamerling recently suggested growth today is more destructive than productive. What I don’t agree is that this should be downplayed as he suggested (and I think Alf echoed this idea in the online meeting?

It needs to be understood and explained and incorporated into an analysis of capitalism’s decadence and not as an exception.

What has been almost a tradition is to think that each crisis is worse than the last and that this is it!! Capitalism cannot recover from this crisis you know!! Trouble is that it always has so far hasn’t it? This problem of overestimating the impact of economic crisis is a problem of immediatism.

I think it is necessary for us to ask not just why there was a crisis or to restate that capitalism cannot solve its contradictions but also to ask why did capitalism recover - even temporarily? Why have we always been wrong to see collapse coming?

Recover it does and my suggested explanation is the feature that renewed accumulation and growth is an essential part of capitalism. I do not pretend this is some great theory, its a minor issue all things considered. But it will keep happening until it actually does collapse – but there again haven’t all revolutionaries in the past said that it is the working class that will bring about the end of capitalism before that happens? So, in making this point, I am not suggesting that the core contradictions of capitalism don’t continue to exist nor that capitalism can solve its economic crises nor that each crises doesn’t leave new problems that can only escalate. Of course these remain.

The final point I want to make is probably the most important in that the economic growth taking place should not be seen as somehow positive. The idea that because crisis are bad does not mean that growth is good. For example most of the waste production that capitalism has developed can be done away with. Growth may enable capitalism to maintain itself but it does not solve capitalism’s contradictions and in fact it just exacerbates the contradictions which is what we are seeing in society today and threatens major problems for the sustainability of industrial society

I think that the concept of ‘Growth as Decay’ that the ICC used in a title for an article is an important concept because it points to the negative impact of growth (although as I said, I do not think the ICC explained the issue at all well). In this stage of mature or late capitalism, we need to recognise growth itself as a fundamental contradiction of capitalism. It is the enormous growth it has achieved so far that is now a threat to humanity and to the natural world. Growth today is more destructive than productive precisely because we can see today the major impacts that this growth is having upon our environment and on humanity. Marx discussed the impact of capitalism on the air and the soil but nowadays we can see the devastating impact of over-industrialisation, pollution of the environment, over-fishing, over-reliance on meat, and over-population and so on is having have on the earth’s mineral resources, on the climate, the seas and on diversity in nature. We have recognised the danger that nuclear weapons hold for us but so has the bourgeoise and today we are already at a point where the environmental damage that capital is creating is in danger of becoming irreversible.

One task of communism will be to reduce and redirect industry to protect the earth and not to expand the productive forces as was thought in earlier phases of capitalism.

 

1Bukharin Historical Materialism

2Luxemburg 1916 Anti-Critique available at https://www.marxists.org/archive/luxemburg/1915/anti-critique/ch06.htm accessed 14.4.21

3 Marx Capital Vol. 3 Chapter 13

4Lenin, 1916 Imperialism, The Highest Stage of Capitalism, Chapter 10

5Our World in Data, Change in GDP 1960-2020 https://ourworldindata.org/economic-growth

d-man
Again just a note on forum

Again just a note on forum management, there are plenty of threads on the decadence topic (eg here's one, in which I put various points against GDP), so there's no need to create new ones IMO.  

Link wrote:
Why is it such a problem to convince people that accumulation takes place and that it is reflected in the GDP figures the bourgeois produces?

Accumulation is about the realisation (and re-investment) of surplus-value. The concept of surplus-value is not accepted by most bourgeois economists today, I think. When they look at GDP figures, they don't see surplus-value. How do they explain that GDP rose from one year to the next? Apparently they don't require the concept of surplus-value.

 

d-man
stupid question

I seriously am asking for the supposed connection between GDP and surplus-value, that Link apparently assumes is obvious to a child.

link wrote:
One interesting point of significance here is that even a small percentage in GDP growth per year for example 3% growth per year (which is not so far from the average over the past 2 decades) means that GDP doubles in about 23 years.

Well, what does that say about surplus-value?

I've seen calculations for the US rate of surplus-value (RS) that are way over 200%, ie S is more than double V. The component share in GDP of personal consumption expenditures (which I take as indicator of V) is way above 60%. I naively ask: if V=60%of GDP, with a RS=+200%, then, it seems to me, S must be +120% of GDP. If all of S was invested, GDP would already more than double within one year (and not take eg 23 years, which Link finds noteworthy).

Link
Surplus value is the new

Surplus value is the new value or profit created by the labour process (although its not the same mathematically as what a business would call its profit) and is part of Marx’s analysis of how capital works. It is the source of value used to generate new capital accumulation.  In Marx’s terms the total value of capital produced in say a year is c+v+s

GDP is a calculation done by bourgeois economists and accountants which measures the total value of all goods and services produced with a national economy usually in a year. . This is not a measure of the profit made on those products but neither is it the same as total value of capital produced in a year. GDP is quite imprecise in many ways in that different methods of calculation are used by different countries and it includes a rather strange collection of types of economic activity. GDP is therefore an indicator of growth but it includes values that marxist see as coming from unproductive industries and hence it is a larger figure than what we would see as capital accumulation.

Regarding your statements of rate of surplus value and v as 60% of GDP you could do with identifying your sources. This figure for v sounds high to me but as you say it is only an indicator and it must include the means of subsistence for everybody in society not just the working class. I think it is highly unlikely that the general social rate of surplus value is 200% of the cost of labour - although perhaps not impossible in individual cases of say luxury items. As I say perhaps you could identify the source and if possible how this figure was calculated.

What is impossible is that surplus value could be greater than 100% of GDP. If you look at the figures I provided you will see that GDP never doubles in a year and it current rate of growth is about 3% as I said.

(First sentence corrected) The rate of profit is a calculation based on the relationship between the surplus value created and the cost of constant capital and labour that created it ie sv/(c+v) presented as a percentage. Below is a link to an article by Maito that is often used to give an indicator of the calculation of rate of profit in marxist terms although this still needs to be read with a certain caution too. I am not suggesting the need to read all the boring technical bits but look at the intro and the conclusion for summary ideas and there is one graph in the text that shows the general social rate of profit and how it has been falling over the past century and more.

https://mpra.ub.uni-muenchen.de/55894/1/

 

d-man
Link wrote: I think it is

Link wrote:
I think it is highly unlikely that the general social rate of surplus value is 200% of the cost of labour - although perhaps not impossible in individual cases of say luxury items. As I say perhaps you could identify the source and if possible how this figure was calculated.

For the figure of the rate of surplus-value, on a previous thread (that I referred to above), I had referenced this paper by Jonathan Cogliano: https://www.researchgate.net/publication/320073683_Surplus_Value_Product...

For earlier years, a comparably similar figure is in Moseley, eg see tables here: http://www.mtholyoke.edu/~fmoseley/RRPE.html

And also in Measuring the Wealth of Nations: The Political Economy of National Accounts by Anwar M. Shaikh, E. Ahmet Tonak Cambridge University Press, 28 Nov 1996.

According to these sources the rate of surplus value in the US today would be well above 200%.

How did they calculate this figure, I don't exactly have comprehended. I just take it as a basis to estimate the size of surplus-value (which is what interests us with Luxemburg). Accordingly the size of surplus-value is (at least) twice the size of the value of variable capital.

As an incidator of the size of the value of variable capital, I took consumption expenditures, and I googled to find what % of GDP it is. Answer by google:

"Household consumption is about 60 percent of GDP making it the largest component of GDP besides investment, government spending and net exports. There are, however, large differences across countries that can range from about 45 percent of GDP to over 80 percent of GDP. "

So my reasoning is, that if v=60%of GDP, and s is double of v, then s must be =120% of GDP.

Quote:
What is impossible is that surplus value could be greater than 100% of GDP. If you look at the figures I provided you will see that GDP never doubles in a year and it current rate of growth is about 3% as I said.

That is assuming that GDP (growth figures) tell us anything about surplus-value. This is an assumption I'm challenging you to substantiate.

I provided my reasoning to estimate the size of surplus-value, and I'd appreciate if you or anyone show/explain why it would be impossible that it be greater than the size of GDP. If my result is so obviously absurd (and this absurd result I brought up to show the irrelevance of GDP), then it should be all the easier to dismiss my stupidity.

 

 

 

Link
Whatever angle we approach

Whatever angle we approach the issue from, surplus value can only be a part of GDP.  Surplus value is one part of total capital produced with a period and total capital must be less than GDP because at very least  it doesnt include any waste production. If you think of surplus value as the profit made  and GDP is the total value of products produced in the same period, then profit cannot be greater than the sales value.

Give me a bit of time to look at the links for the stats you provided.

d-man
But even if GDP in reality

But even if GDP in reality did more than double within one year, surplus-value would never reach 100% of GDP. This, however, is simply because the initial capital value (before the first year) had an element that isn't derived from surplus-value. With an initial GDP (before growth) of 100, then, even if GDP grows eg 2,000% each year and reaches an astronomical figure of 100 trillion, there will be always presevered the initial capital value (which as a percentage will approach, but never reach, 0% of GDP) that wasn't surplus-value.

But, on the basis of GDP growth figures, you also can't know or imply, that surplus-value constitutes 99% of GDP, or 3%, or even just 1% of GDP, because whatever the growth was during the past year(s), now (in the new year) it counts as invested variable/constant capital (as past surplus-value), and not as actual newly created surplus-value (which is what we should be trying to find, if we're interested in Marx/Luxemburg's problem).

My objection is beyond the mere need to also consider the unproductive component in GDP. That still relies on GDP. If like Marx (and Luxemburg) we're interested in surplus-value, and we want to bring in data/figures, then it is on the person who brings these figures to show precisely how these figures are relevant to the problem of surplus-value.

 

Link
Dman i am afraid i am totally

Dman i am afraid i am totally confused by your last contribution. 

You asked me in a previous contribution why surplus value or profit cannot be greater than GDP and i have explained this.  I will say it again however.  Capital cost plus costs of components/raw materieals plus labour costs plus profit equals the value of the product.  This is correct expressed in terms of bourgeois economics The only way that profit can be great than the value of the product is if the other costs are less than zero eg minus costs.  This is impossible.  This is also true is we look specifically at Marx's formula too.  Profit equals value of product less capital costs and less current costs and  less labour costs.  Please say whether you disagree or agree with this?

I provided statistics in my first contribution which shows that GDP has never increased by over 100% year or year.  This is empirical evidence. Do you agree or disagree with these statistics?

What is the Marx/Luxemburg problem that you are seeking to understand?

What is it the problem of surplus value that you are trying to understand?

d-man
Link wrote: You asked me in a

Link wrote:
You asked me in a previous contribution why surplus value or profit cannot be greater than GDP and i have explained this.  I will say it again however.  Capital cost plus costs of components/raw materieals plus labour costs plus profit equals the value of the product.  This is correct expressed in terms of bourgeois economics The only way that profit can be great than the value of the product is if the other costs are less than zero eg minus costs.  This is impossible.  This is also true is we look specifically at Marx's formula too.  Profit equals value of product less capital costs and less current costs and  less labour costs.  Please say whether you disagree or agree with this?

I agreed, but not due to anything GDP (growth rates) can tell us about the share of surplus-value. The reason is simply due to your/our assumption that the intitial GDP (before growth) contained a certain (unknown) quantity of capital-value that isn't derived from surplus-value. Hence mathematically, whatever the growth, even if GDP more than doubles a year, the share of surplus-value in GDP will never reach 100%.

Quote:
I provided statistics in my first contribution which shows that GDP has never increased by over 100% year or year.  This is empirical evidence. Do you agree or disagree with these statistics?

But as I point out, even if GDP more than doubled a year, the share of surplus-value could never reach 100%. If I showed you real statistics, that showed an increase above 100% annual growth, it still would not follow that the share of surplus-value has reached 100% of GDP. 

Quote:
What is the Marx/Luxemburg problem that you are seeking to understand?

What is it the problem of surplus value that you are trying to understand?

The issue of surplus-value, if we try to look at empirical reality, is how do you get an idea of its status (realised, invested, and intitial size, and size in subsequent cycles). You're implying that GDP tells us something about it, whereas I don't see you making any effort to substantiate, and nobody will be able to do so I think.

With the same rate of surplus of 200%, even if I take variable capital as a share of GDP to be 40% (instead of 60%), it would give a surplus-value share of 80%; and you'd say 80% growth is possible, but GDP for the present year already includes 40% variable capital, so adding 80%, gives us at least already 120 (which is 20 above the full 100 GDP) for the present year (still +constant capital).

Just another objection to GDP: the critics of Luxemburg hold, that she failed to see how the production activity during whatever period (one year, or during a quarter, or during a century, or during a week), entails a flow of different cycles of accumulation, of different stages, so that one firm, starting its own new cycle, realises/buys the surplus-value which another firm just produced as its final stage in its own cycle. Trying to take a random snapshot (of 1 year or whatever) of this total process, will not be able, by definition I think, to tell us anything about the status of the whole surplus-value, however accurate the statistics are.

Link
Quote: I agreed, but not due

Quote:
I agreed, but not due to anything GDP (growth rates) can tell us about the share of surplus-value

Apart from the idea the sv could not be greater than GDP which is just stating the obvious, I have never suggested that gdp can tell us about the share of sv. It is you that keeps bringing this up without explaining why

Quote:
The issue of surplus-value, if we try to look at empirical reality, is how do you get an idea of its status (realised, invested, and intitial size, and size in subsequent cycles). You're implying that GDP tells us something about it, whereas I don't see you making any effort to substantiate, and nobody will be able to do so I think.

No I am not implying anything of the sort.

Since none of your comments are related to my original text on this thread perhaps it would be better to start a new thread on this topic so that you can explain yourself fully

d-man
I'm commenting on the

I'm commenting on the exasperated sigh in your original post, namely where you wondered why you fail to convince people that

Link wrote:
... accumulation takes place and that it is reflected in the GDP figures the bourgeois produces?

I'm asking you to explain *how precisely* is accumulation (which involves knowing something about the status of surplus-value) reflected or connected with GDP. At most you have specified, that GDP includes a certain figure of surplus-product, that is greater than (re-invested) surplus-value. This is merely a negative specification, which pretends that if we figured out the share of wasteful surplus-product, then we would have a "better" reflection of accumulation (ie surplus-value) in this modified/cleaned-up GDP version. You only imply/specify, that GDP would be smaller, but this leaves out the explanation for precisely how GDP reflects accumulation. It was an irrelevant point, also in your view I think, as you go on to take the growth rate of GDP, rather than GPD itself, as a reflection of accumulation. How does a percentage of GDP growth "reflect" the status of the realisation/re-investment of surplus-value? I express the opinion, perhaps a helpful suggestion to you even, that for us to see in the GDP growth figure a reflection of the status of accumulation, you would be interested in finding out the share of surplus-value in GPD.

Quote:
I have never suggested that gdp can tell us about the share of sv. It is you that keeps bringing this up without explaining why

Because of the lack of a good specific asnwer to the exasperated question (from your original comment, which I quoted) on your part, I went ahead myself, and tried to put myself in your shoes. I suggested, just as a possible example, that in order to help you explain specifically how accumulation is reflected in GPD (more exactly, its growth figure), it would perhaps be useful to know the share of sv in GDP. There is no need to acknowledge that GDP itself doesn't tell us about the share of sv. Rather, what do you think of my suggestion that, by taking in account the figure of the share of sv in GDP, one could make your figure of GPD growth rate tell us something more specific about/better reflect accumulation? It seems that it doesn't interest you. For me this was just a generous suggestion, that would help convince people of why you find GDP growth figure relevant (to disprove Luxemburg and so on). As I'm not the one advocating your position on GDP, I'm not going to further spell out how the share of sv could make GDP growth figure into meaningful reflection of accumulation, beyond the musings that I already have posted.

 

Link
My apologies dman I didn’t

My apologies dman I didn’t understand you were trying to help me.

Regarding the issue of gdp and accumulation what I said was:

Quote:
Accumulation of capital is economic growth and it is an essential elements of capitalism. Why is it such a problem to convince people that accumulation takes place and that it is reflected in the GDP figures the bourgeoisie produces? This I do not understand!

What I meant here dman is that I don’t understand why some left communists who ought to have a good awareness of what is going on in society are so resistant to the data that says capitalism is growing continually. The fact is that the existence of accumulation (which all marxists ought to accept) and the empirical content of GDP figures both say growth is talking place. I wasn’t asking for an explanation of their relationship.

I do find it frustrating as you say that various left communists are just stuck repeating the formula that decadence means economic crisis because there are fewer extra capitalist markets and therefore if you dare mention growth it means you must  be denying decadence and saying that capitalism can solve its crises and be a permanent system. This is how Baboon responded to the reports of the recent ICC forum but it is not just him that put forward this nonsensical approach to discussion.  I don't think this is a matter of different interpretations, it is matter of the need to continually test ideas against reality and not hide heads in the sand.

It is an approach that is simply remaining blind to the real world - GDP and  accumulation keep on growing despite not fitting into the ICC formula

d-man
Quote: The fact is that the

Quote:
The fact is that the existence of accumulation (which all marxists ought to accept) and the empirical content of GDP figures both say growth is talking place. I wasn’t asking for an explanation of their relationship.

You aren't asking for an explanation of their relationship, because, as I wrote, you apparently assume it exists and is an obvious one, known even to a child, who shouldn't be asking about it, as the child ought to already know it. Or it is not an obvious relation, and you yourself don't know how precisely GDP growth figures relfect the process of surplus-value being realised and re-invested (accumulation), and aren't able to explain it, but you assume others, smarter people, do know and are able to explain it, hence you don't have to. I admit, that I'm not one of those smarter people, but I also am so bold as to question whether those smarter people really exist. And I think I have made various minor other objections to GDP also on previous threads, that nobody has addressed (just a tiny example; if a firm goes bankrupt, ie fails to accumulate, its product so far for that year still is included in GDP, just as a car can still be sold, even though its producer no longer existed for years).

d-man
US GDP growth 2000-2010

The statistical construction itself of the GDP figure is also not without its critics. An alternative GDP figure incidentally given in a study specifically focused on US growth between 2000-2010, would imply the official growth figure was over-estimated by 45% (just 11,5%, instead of official 16,7%).
 

Quote:
Once the official output figures are adjusted and aggregated, the recent performance of U.S. manufacturing looks very different from the official figures.148 As Figure 33 shows, manufacturing real value added actually fell by 11.0 percent from 2000 to 2010, which, in turn, implies that GDP actually grew by only 11.5 percent over the period, and not the officially reported 16.7 percent GDP growth.

Worse Than the Great Depression: What the Experts Are Missing About American Manufacturing Decline     

by Robert Atkinson, Luke A. Stewart, S. Andes, Stephen Ezell less     Published 2012

d-man
Fix, Nitzan and Bichler

The picking of a particular base-year (for constructing a chart of real GDP) can lead to at least a 30% over-estimation, according to Blair Fix (see figure 3 in link below), over the period 1947-2018: 

Quote:
... we can quantify the uncertainty in the growth of ‘real’ GDP caused by unstable prices. Figure 3 shows the results. Over the last 70 years, there is roughly 30% uncertainty in the growth of US GDP per capita.

Notice that the official measure of US ‘real’ GDP is at the upper end of the range of uncertainty. We doubt this is a coincidence. In fact, it is common for national governments to boost GDP growth by changing the base year. India recently showed a small increase in GDP growth by choosing a new base year. While this boost was small, it can sometimes be spectacularly large. Nigeria, for instance, recently changed its base year from 1990 to 2010. As a result, real GDP doubled, making Nigeria the largest economy in Africa. Base-year changes have led to similar boosts to GDP growth in Ghana, Kenya, Tanzania, Uganda and Zambia.

https://economicsfromthetopdown.com/2019/12/15/why-we-should-abandon-real-gdp-as-a-measure-of-economic-activity/

Nitzan and Bichler comment on this figure:

 

Quote:
Curiously, the official measure of real GDP is right at the upper range of this uncertainty. Is
this a coincidence? Or have government statisticians simply chosen the method that yields
the maximum growth (so as to appease their superiors)?

...

Note that this estimated range of uncertainty assumes that at least one of the years since 1947 was a
“correct” base year. However, if that assumption is false – in other words, if the “correct” set of relative
prices was never mirrored in prevailing market prices – the range of possible real GDP measures can be
much wider. Worse still, if we reject the very notion that there is a “correct” set of relative prices to start
with, estimating the uncertainty range becomes impossible if not totally meaningless.

Real GDP: The Flawed Metric at the Heart of Macroeconomics

They go over a lot of other problems (such as the quality improvement in a product, as is also mentioned in the Atkinson et al.'s study I linked in my previous post).

Already previously Nitzan had written about the various problems. Just for an obvious example, against the assumption that price indices  can be denominated in some neutral, a-historic units of  'quality', he wrote in his conclusion:

Quote:
The  nature of this problem is best  illustrated in reference to long-term historical comparisons. Economists often examine  price and  quantity  series that extend over  a century or  more but the meaning of  such comparisons is unclear. For instance,  how  should  we  interpret the  measure  of  real  GNP  in 1882 when  denominated  in  '1982  prices?'  Most  commodities produced in 1882 were  simply unavailable in 1982 and hence could not have '1982  prices.

Price and Quantity Measurements: Theoretical Biases in Empirical Procedures
Nitzan, Jonathan. (1989). Working Papers. Department of Economics. McGill University. Vol. 89. No. 14. pp. 1-24.

 

d-man
dp

dp

d-man
non-market GDP growth

In a previous thread on Luxemburg, Link asserted that a lot of the so-called "non-capitalist markets" actually are due to capitalism (or arose in a process together with capitalism), and hence should be classified as capitalist markets. I tried to counter this, by pointing to markets that existed before the modern capitalist era. However, in general it seems almost by definition true, that prior to capitalism a lot more in the world economy was a non-capitalist and even non-market mode of production. Hence in creating a historical world GDP figures (in 19th century, or even in 1000CE, etc) economists seem to base their calculation on a family subsistence' amount of goods (and give these a price, x estimated population size), and I just note this as another potential factor that undermines GDP, merely on its own criteria.

If one holds that large parts, if not the majority, of the world prior to 1914 (or still decades later) had no capitalist economy, and perhaps even not a market economy at all, then comparing the growth rates of certain of these geographical regions (eg South East Asia) during, say 1814-1914 and 1914-2014, obviously doesn't involve a comparison in the growth rate of the same economic system. It's like comparing growth rates (over some time range, say a 100 years) once in feudal and then in capitalist England. It seems evident, that you'll find the growth rate in capitalism to be higher, than in the time when the country was largely still a non-capitalist economy. And of course the economic system even within one region isn't homogeneous (ie in the evolution of the growth rates of certain sectors, one should seek to compare only over the period when that sector has become capitalist).

As these large parts of the world weren't capitalist yet, then one can't say that their (estimated) relatively lower GDP growth rate (back then) should be counted as part of ascendant capitalism, as if their low growth was the responsiblity of capitalism, as if their poor performance must be included in the "total" picture, as if not counting the non-European economies were a biased oversight or deliberate exclusion. We can start looking at these regions' growth rate (for evaluating the "health" of their capitalist evolution) only during the time that they are capitalist. Should the alleged spectacular high growth during the tranformation process itself, of them "becoming" capitalist, be already credited to the account of capitalism (in general)? I think Link will answer yes. It follows then, that the low GDP growth in the era prior to this transformation process or expansion of capitalism, by definition can't be credited to the account of capitalism (and can be excluded from historical evaluations of capitalism). But must the high growth in the transformation process of these regions be credited to the account of (specifically) decadent capitalism? If that were the case, then the regions wouldn't have had an ascendant (expansive) phase of capitalism. They would have had a low growth non-capitalist phase, and without transition, their high growth phase immediately belongs already to their decadent phase of capitalism. If the high growth of these regions does belong to their ascendant phase of capitalism, then, if the analysis of decadence of capitalism is correct, there is no difficulty in reality yet. We just have to wait a period for these regions to move out of their ascendant phase into a mature phase. When their mature phase has persisted long enough, only then do we become able to make comparisons in their capitalist evolution (as concerns GDP growth). We would likely expect to see a lower growth compared to their expansive phase (which would simply align with decadence theory). But if instead we see an even higher growth (compared to their expansive phase), then this reality would pose a problem for decadence theory. Not many of us will predict the latter scenario I think, and live to see it fulfilled.

MH
the need for a debate on growth in decadence

It should be perfectly possible for Marxists to have a debate on economic growth in capitalism's “downward curve of development” (Engels), and this shouldn't really need to be re-stated in the ICC's forum.

I’m not sure I agree with everything Link is saying, but through discussion with him on this and related topics over time I also know how easy it is to find oneself sometimes talking at cross purposes.

As a starting point, I think he correctly identifies decadence as “a period of political social and economic crises that are products of its historic limitations”. This seems to me entirely consistent with Marx’s description of decadence as “antagonisms, crises, conflicts and disasters” (Letter to Vera Zasulich, second draft, 1881). This is clearly not the same thing as economic decline or collapse.

On the other hand, I think when he says that “We should not see decadence as itself an economic crisis” I think we need to be very clear that capital’s phase of descent at the most profound level is an economic crisis; it is a historic crisis of accumulation that manifests itself in “antagonisms, crises, conflicts and disasters”; above all it is a crisis of accumulation that results in “a period of limitless wars” (Luxemburg).

But I completely agree this still leaves us with the need to explain the phenomena of growth in decadence; above all the post-WW2 boom and the growth of the East and Southeast Asian economies from the 1980s and 1990s. Has the ICC produced a clear and coherent analysis of these phenomena, supported by empirical evidence? If so, its supporters can simply point us to them and the debate can proceed at a more informed level.

 

(edited)

d-man
To me Link acknowledged

To me Link acknowledged inflation to be a feature of decadence, and that's an economic phenomenon, so perhaps he's not against an economic interpretation in general of decadence, but specifcally against eg the Luxemburgist one. But it's perhaps significant that, from a point apparently criticising just Luxemburg, he is willing to "overreach" and stake such a broader disagreement. Luxemburg's book was sub-titled 'an economic explanation of imperialism', and so perhaps, leaving aside decadence, Link could possibly even dispute that imperialism has an economic basis. On the other hand, I recall that you, MH, feel the ICC stresses too much the political (bloc-formation) factor in its analyses.

The ICC site has links to the internal debate on the post-war boom in its Theory section, and there have been tons of forum threads on decadence, so there is no reason to re-state that debate is permissible in the abstract.

One can philosophically muse about the meaning of the term "growth" (/decline), whether this is even an intelligent category (what would Hegel say?). Or one can muse if the growth of eg a tumor falls under general cell growth. Or, if outside biology, the term growth can apply to a category like "value" and its accumulation. And if this way of reasoning is too unproductive, one may hope for better debate by pointing to statistics, or to satellites and population numbers. I don't think in the latter way it has proven productive either.