Brad DeLong made an interesting point about my earlier message here about productivity.
http://delong.typepad.com/delong_economics_only/2007/09/productivity-an.html
http://econospeak.blogspot.com/2007/09/mysterious-productivity-lead-of-us.html
He said that the Chinese (using my earlier example) are making the shoes for five dollars because they have not yet developed brands to market them for themselves. When they do, the US GDP will go down accordingly.
This process seems to be already beginning. The idea behind the expectation of the future success of US intellectual property economy was people in the
I'm reminded of an exchange between Boswell and Samuel Johnson:
"Very little business appeared to be going forward in
"Sir (said Johnson) "We are a City of
But already,
How long will it be before Chinese brands win a reputation for quality? Some older people may recall when Japanese cars were considered junk.
I think De Long got it backward. Brands and other "intellectual property" are a form of privilege or artificial property that enables TNCs to erect toll-gates between the producers in the Chinese sweatshops and the consumers in the West who pay an umpteen-thousand percent brand name markup.
ReplyDeleteThe production facilities, as Naomi Klein observes, have been outsourced. The only thing Nike retains control of are branding and corporate finance. A major part of the global corporate economy, likewise, depends on such artificial rights of property as toll-gates to collect tribute on those actually doing the work.
One of these days, maybe the Chinese workers will realize they've already got the production faclities under their direct control. All they have to do is disregard the Nike brand name. They can produce identical shoes for the local market at a fraction of the price without the brand markup, and also pay themselves several times more.
What we need isn't Third World producers outdoing Western capital at its own business model (brand-name commodities for the long-distance export market). What we need is a world where both Westerners and Third Worlders buy affordable shoes produced near where they live.
Brad de Long said: "No individual American worker is doing anything different and more productive than he or she did in the past. Yet economy-wide productivity is up.."
ReplyDelete'Productivity' is IMHO an abstract notion whose complexity is almost never grasped.
How 'productive' is it to spend one's life in a pastime that involves the production of excessive goods and services? Or in the consumption of products made by technology and processes that do not allow nature to regenerate?
This is now a CRITICAL question. The world's forests are in a very dangerous state of depletion, as are the fisheries, the fresh water sources, key mineral deposits, and others.
Could it be that the activity of organising one's life so that one has time to write and think on these topics is far more productive than being in paid employment to increase one's 'standard of living'? (meaning to increase one's consumer consumption).
As I write I'm relaxing and the clothes are drying on the rack, the vegetables are growing in the garden, the forest is dropping a harvest of firewood for the stove and creating mulch to fertilise the garden, the sun is shining through the northern windows heating the living area and the wallabies are keeping the grass down in our yard and paddock.
Yet where would you find such a happenstance be described as 'productivity' in studies and writings on economy.
PS: I note that Brad de Long's article is entitled 'Productivity and Trade'. My above comments relate to a form of trade avoidance. So, in that sense it is related.
ReplyDelete'untrade'. More productive than 'trade'.
brenda
ReplyDeletewhile i agree with your point of view very much, it should be pointed out that there are parts of the world where the forests no longer drop firewood in sufficient quantities for local needs.
Global trade has historically been a source of acrimony between distinct political entities. Whether it was a competition to market grain, cloth, or whatever product. More recently, with the advent of manufacturing, trade takes on a bifold character. After the acquisition of the raw materials there is the product and the means of production. In effect there are three aspects to the market in global trade countinig in the raw materials. So each aspect becomes a ppotential source of acrimony between potential trading partners. Of course partner is a fleetinig concept. Corporate America appears to have decided some fifteen years or so ago to partner up with China so that each entity could specialize in what it does best and cheapest. So much for the partnerships with the rest of the third world. I wonder what the Mexicans are thinking lately. So the Chinese do the manufacturing with absurdly cheap(read there abused and oppressed) labor. The geniuses in corporate America do the marketing and financing. Nice balance. Only the American worker suffers. The corporate titans take home huge earnings and can buy specialty goods rather than Chinese manufactured crap. The Chinese Communists, err capitalists?? commissars??(whomever it is that gets the gold in China) are now awash in capital.
ReplyDeleteWhy would anyone think that those same chinese people, now awash in capital, wouldn't go to the next step? Marketing and distribution are likely just around the corner. Why would the people in control in China want to share that part of the economic pie? They'll need no partners from corporate America. They'll need no bankers outside of the banks in China. They'll need no MBAs from Wharton or Harvard. They're probably sendinig their children there now in order to develop their own corporate elite. Then our geniuses in corporate America will begin to understand the nature of global trade and eventual loss.
same jack?
ReplyDeletedifferent thread now hard to reach: i agree with you. except i was not repeating because i like to repeat myself. i was repeating not because "they" disagreed with me, but because they completely failed to understand my argument.
as i think did you. i do not endorse the intermediate projection "speculation." i only point out that IF that projection is true THEN the required tax raise is very small.
but you are right, repetition is not succeeding as a tactic. i might have to resort to enhanced repetition.
The way I see it, Chinese manufacturing is a form of slavery. Some people in the US own a bunch of slaves in China, that's all. There must be studies of the US economy prior to the civil war, the current situation shouldn't be too different.
ReplyDeleteA typical arguments in defense of neoliberalism is very similar to that in defense of slavery: the third world workers are better off being brutally exploited by us then they would've been otherwise; it's inevitable; the slaves are content, they adore their masters.
abb1
ReplyDeletei do not know. and i do not approve of the chinese way. i don't even buy their stuff. but
it seems to me the important definition of slavery is that if you escape the legal system catches you and brings you back.
my guess is that in china, the workers, not counting the future organ donors, have the option of walking away.
it may be a hollow option.
or it may be that your rhetoric makes the important point.
Coberly, I appreciate your point about the dearth of forest wood around many parts of the world. Could it be that the constant drive for industrial 'productivity' caused this situation in the first place?
ReplyDeleteAnd what about the availability of clean, safe drinking water? How does the following situation come into measures of 'productivity'?
"Using the Freedom of Information Act, US Public Interest Research Group investigated major facilities' (industry) compliance-or lack of it-with established federal limits on pollution discharges [into the US' fresh water]. The average facility discharged pollutants in excess of its permitted limit by over 275 percent, nearly four times the legal limit. Nationally, 436 major facilities exceeded their limits at least half of the time during the study's timeframe. Thirty-five facilities exceeded their permits during every reporting period. Seven states allowed more than one
hundred violations of at least 500 percent....Today more than 40 percent of US waterways are unsafe for swimming and fishing..
"the US military and its private
contractors, generates more hazardous waste annually than the five largest international chemical companies combined, accounting for one-third of the nation's toxic waste. Furthermore, the US military is among the most frequent violators of environmental laws.
The Department of Defense (DoD) has sought and received exemptions from a number of crucial public health and environmental laws..."
Sources:
ReplyDeleteEnvironment News Service, March 24, 2006
Title: "Factories, Cities Across USA Exceed Water Pollution Limits"
Author: Sunny Lewis
http://www.ens-newswire.com/ens/mar2006/2006-03-24-05.asp
AlterNet, August 4, 2006
Title: "Military Waste in Our Drinking Water"
Authors: Sunaura Taylor and Astor Taylor
http://www.alternet.org/envirohealth/39723/
Brenda
ReplyDelete(first) i don't know how those forests got depleted, but i suspect in some cases at least it was just overpopulation.
in most of the cases it would have been industrial use.
not sure that was avoidable....until now.
as for the water, my daughter worked for a paper company which took care to dump its waste into the river after dark. so it would be diluted, i suppose, before the inspectors showed up in the morning on their announced visits.
but you are preaching to the choir.
Michael,
ReplyDeleteBranding may facilitate sales but what does it have to do with the relative productivity of labor?
Aren't we really talking about differentials in the reproduction cost of labor, a 'standard of living arbitrage', and unequal exchange, i.e. capitalism's normal uneven development though with much being captured not by national firms but (nominally national) transnational corps.?
Coberly said: "..my daughter worked for a paper company which took care to dump its waste into the river after dark. so it would be diluted, i suppose..preaching to the choir."
ReplyDeleteOkay. You're on the other side of the planet but clearly living in the same world as I am.
John asked about the relationship between branding and productivity. Let me give you an example: toward the end of the 19th century, the economy was in a decade-long depression, then known as the Great Depression. Companies got together and formed cartels or trust. People would buy many food products as commodities, just scooping them out of barrels at the store.
ReplyDeleteBiscuit producers formed Nabisco (National Biscuit Corporation or Company, I forgot which) and oat producers produced Quaker Oats.
Through advertising, these goods became not just commodities, but brands. Suddenly, their prices rose dramatically, registering what, today, would be an increasing productivity. Nobody, except possibly the advertisers or the marketers, which really producing anything more, but branding created higher prices and thus more productivity.
perelman
ReplyDeletei don't know. but wouldn't buying your oats in a box instead of a barrel be buying a guarantee there would be no mouse parts in it?
i'll go back and check prices at my local co-op, but i am pretty sure their barrel prices are higher than the brand's.
my guess is that in china, the workers, not counting the future organ donors, have the option of walking away.
ReplyDeleteI understand that often they can't walk away: their documents are taken from them and sometimes they're locked up in the factory compound.
I don't think that the critical issue is branding so much as it is distribution and direct access to the retail outlet. Designing the product or its method of production is certainly no serious obstacle to the Chinese, or any other primary labor source such as India. The producers in either country, which presently provide the cheap labor to global corporations, need only to develop their own distribution channels in order to then cut out those global partners.
ReplyDeleteabb1, it's not corporate America that owns the Chinese laborer, though they are currently able to take full advantage of that source of cheap labor at the expense of the American work force. The Chinese political apparatus seems to have discovered the wonders of capitalism and the effectiveness of combining that with a totalitarian regime that has chosen the cloak of "communism" as its rationale. A minute sector of the Chinese people are enjoying the fruits of that cheap, virtually slave, labor. I hate to bring up the point, but do you recall the term "Cooley wages?" It referred to the exploited early Chinese immigrants in this country. They worked for slave-like wages. Now they don't have to travel quite so far to be taken full advantage of.
The economic structure can not be separated from the political structure of a country. One serves the purpose of the other, and both serve the purposes of the ownership class. It's no different than feudal Europe. It works better for the capitalists here because we call it democracy, though Bush and Company seem to be impatient with even that little bit of an obstacle to their royalist intents.
Given the recent recalls for Chinese toys and such, it will take some doing to get Chinese goods to have a rep for quality. OTOH, Hyundai cars in the US were viewed as hunks of junk as recently as 10 years ago, while today some of them are in the top ten for quality as rated by J.D. Power, and one is competing hard with Power's longtime #1, the Lexus.
ReplyDeleteBTW, many people view Japan as this sort of pathetic place, since their growth was officially flat for a decade after the collapse of their real estate bubble. However, they have moved far ahead of the US in broadband and consumer electronics, and indeed Lexus has long been the best car in the world, while Detroit has sunk into a miasma of SUV production.
abb1
ReplyDeletei hadn't known that. sounds more like slavery.
we have a bit of that here.
seems like we need an international brotherhood of slave rescuers. i wonder what they would call that.
Micheal,
ReplyDeleteSorry, should have been more specific but I was asking about change in volume output, not price, per unit of labor time.
Agree that market creation/expansion and commodification are synonymous but branding, as part of marketing and advertising, is just branding, is unproductive, and even if part of competition does not seem to me to enhance labor productivity but could as well be an attempt to offset a lower than avg or stalled productivity.
Jack,
ReplyDeleteYou might find what Bob Baugh (Executive Director, AFL-CIO Industrial Union Council)
wrote in the WP a few months ago interesting:
With Japan and Korea we had to engage in competition with their own corporations. Today, China accounts for 42.6 percent of our non petroleum goods deficit. Over half those goods come from U.S. firms doing business in China.
Juan, sorry I got your name wrong. The point is that productivity measures are based on the product of physical productivity times the price. So, it does not matter in terms of productivity measures if you produce more or charge more.
ReplyDeleteMichael Perelman said:
ReplyDelete"The point is that productivity measures are based on the product of physical productivity times the price..."
Clearly then 'productivity' doesn't exist for goods and services that remain unpriced or free.
And if the definition of 'productivity' is so narrow then how useful is any discussion on the subject?...except to point out the ridiculous nature of the concept.
ReplyDelete'Brand'. How many times have I heard business people say that protester objections to the destruction of Tasmania's native forests will harm Tasmania's 'brand'. (So, that was all about the harm civil protest does to our 'productivity').
juan,
ReplyDeleteThat is the situation now, American firms having their products manufactured by the Chinese and taking full advantage of their exploited population. But the Chinese are building a huge pile of capital. What will there be to stop them from finding more direct access to our market without the help of those US firms? Does it seem unlikely that the Chinese will develop their own investment banking system that may soon be looking for "opportunities" to put all that deficit income to work for themselves? Will Mattel become a subsidiary of some Chinese corporation? Why not??
Jack asks: "What will there be to stop [China] from finding more direct access to our market without the help of those US firms?
ReplyDeleteThe charms of today's 'structural finance' and its evolving domino effect across the globe?
Peak oil?
The US dollar decline and all that is associated with it?
http://www.indiadaily.com/editorial/11-21b-04.asp
Also, in China as in the United States (and elsewhere) "a commitment to growth without concern for the environment, with rampant consumerism, and widening disparities of wealth may well herald the dawn of a nightmare era of mutually assured ecological destruction."
[Too Big to Fail?
Foreign Policy in Focus
www.fpif.org ]
This is where I read this: http://www.businessweek.com/2000/00_40/b3701119.htm
ReplyDeleteQuote:
...What's more, the factory gave Liu an expired temporary-resident permit; and in return, Liu had to hand over his personal identification card. This left him a virtual captive. Only the local police near the factory knew that Chun Si issued expired cards, Liu says, so workers risked arrest if they ventured out of the immediate neighborhood.
[...]
Liu also found that Chun Si's 900 workers were locked in the walled factory compound for all but a total of 60 minutes a day for meals. Guards regularly punched and hit workers for talking back to managers or even for walking too fast, he says. And they fined them up to $1 for infractions such as taking too long in the bathroom.
Endquote
This is one of the Wal-Mart factories.
"Sir (said Johnson) "We are a City of Philosophers: we work with our Heads, and make the Boobies of Birmingham work for us with their hands."
ReplyDeleteI wonder if that doesn't describe most of the commenters here. Which would raise a question in my devious little mind whether "we" contribute more to the welfare of workers than the marketers for Nike who seem to have found a way to keep them working... if not in their own factories, then at least whereever they can find work so they can buy those beautiful swooshes.
don't get me wrong. i am much fonder of professors than marketers, but given that i am the sort of person who left to his own devises would "farm" feral pigs and distil corn for "ease of storage" and call it a day, i have to wonder if anyone really has another (much less better) idea for keeping the economic world turning...even if not quite so fast.
i quite agree with abb1 that something needs to be done about that. are one billion workers so powerless (are a hundred million Americans?)
or is there something about human beings that make them so easy to control by a determined class of "bosses"?
is this an economics question, or a marketing problem?
Brenda,
ReplyDeleteIf we're talking about labor productivity and not simply measurement methodologies, then we are talking about production, the transforming of nature by humans, a rate presently defined as output/labor input, does not require price and
which obviously also has to do with society's REproduction* of itself
a process that is not sustainable on the basis of unproductive labor
shuffling a mountain of money around, for example, can be measured as more or less efficient but that shuffling is not directly productive -- no society can REproduce itself on that basis.
if we say that labor of money shuffling has productivity, we have confused ourselves into believing that all activity is productive.
differently, just because an activity - say banking - has become necessary does not at all mean that it is directly productive even if it is claimed to be, accepted as, and measured.
but i think you were actually trying to get at natural forces, say bacterial processes, that are free?
* social REproduction can be seen as both 'in general' and 'in particular' - the capital system's production and reproduction of itself is evidently distinct from that of feudal reproduction though likely not so distinct during the transition.
Jack,
ReplyDeleteChina has already developed its own sovereign investment fund, so has Russia, so have a number of other states. Here's a July Forbes article:
http://www.forbes.com/markets/2007/07/26/sovereign-wealth-funds-markets-equity-cx_po_0726markets16.html
China is trying to determine what to do about a condition of overcapitalization which we very much have helped bring about.
Unlike the above article, I don't assume linearity but that crisis will intervene.
I also don't think of 'those American companies' as having any nationality but as concrete manifestations of capital's realization of its global (a-national) nature. Or, we still think of economies as national even though there have been tremendous interpenetrations, not just international trade and interdependencies but a partial transcending of these*. We still seem to assume identity of economic borders and political jurisdictions when capital has no border other than its inherent self-destructiveness, has no country other than profit...
The AFL-CIO exec was talking about America having to compete with (nominally) American firms , by which he meant America having to compete with what grew out of it, having to compete with the not-national.
By generating/driving greater nationalism(s), probably also stronger tendencies towards state capitalisms...natural reactions to an economic denationalizing...the global-economic/national- political contradictions sharpen up
*market internalization takes place, does it remain a market? intra-firm transfers = trade?
Juan said: "but i think you were actually trying to get at natural forces, say bacterial processes, that are free? * social REproduction can be seen as both 'in general' and 'in particular' - the capital system's production and reproduction of itself is evidently distinct from that of feudal reproduction though likely not so distinct during the transition..."
ReplyDeleteCould you paraphrase that Juan? I'm not sure what you meant here.
Brenda,
ReplyDeletenote the asterisk,,,the second sentence is not meant to follow the first in your post but is associated with the beginning of my earlier post and was intended to make the earlier and very general statement slightly less so. all society's must reproduce themselves but that general process can be/has been through very different sets of dominant social relations.
a super-shorthand way to differentiate the reproduction of capital(ism) is to note that this is the first social system of production and reproduction to suffer crises of abundance, of too much.
i can't recall the name but believe a keynesian, years ago commented that 'the tragedy of investment is that its useful' or something close to that, which was referring to overinvestment, too much productive capital and the negative consequences this brings about. marxists would call this an overaccumulation crisis - overproduction crisis, and understand that it is not simply a matter of market size, insufficient effective demand.
anyway, production and reproduction can be seen as transhistorical, as can labor productivity. But doing so misses large differences such the shifting from production for use by direct producers to production specifically for exchange and capitalism's generalization of this, that is, the rise and generalization of commodity production including the commodification of labor power. misses technological revolutions and what brought them about as well ....
a transhistoric or a-historic frame of reference also promotes notions that what is has always been and will continue ad infinitum, that it is not historically limited.
and yes, off track.
so far as natural forces like running water, wind, bacteria, etc, think of the roles these have played, think of what would not be possible without them.
to have anything to do with productivity though, they must be appropriated, which also varies across different 'modes of production and reproduction' -- within a system of commodities and private property, nature itself is progressively privatized, monopolized, bought and sold, depreciated.
Thanks, Juan.
ReplyDeleteI'm reading 'The Negative Return Economy' by Catherine Austin Fitts at present. It gives some good background on the current economic crisis. It spans the last century in describing the changes that shaped the political economy in the US.
http://www.scoop.co.nz/stories/HL0408/S00277.htm
An excerpt:
"“..Since the failure of Continental Illinois in the early 80s, the government has informally made it clear that it stands behind the banking system. This was made even more explicit with the bailout of Citibank in the early 90s and the implicit subsidy that the entire banking industry received as a result. Nor are financial institutions the only ones to enjoy this kind of support. Both Lockheed Martin and Chrysler have been effectively saved from insolvency by the taxpayer in the past, presumably due to their status as major defence contractors… Such a system places a significant value premium on sheer size, if for no other reason than what the banking system cheerfully and disingenuously refers to as the “too-big-to-fail” doctrine. But for industrial firms, too, there is significant value in having a contracting relationship with the Pentagon. Not only is there the economic nirvana of cost-plus contracting but, if you are big enough, your fundamental business risk is underwritten for national security reasons. Thus, there is a tendency for firms to migrate their businesses to military rather than purely civilian markets; today the Boeing Company is a perfect case study of this in action. And a result is that civilian business in sector after sector has been driven into insolvency or into acquisition by the very national security industry that is ostensibly protecting them. [xiv] … The dynamics of cost-plus contracting are such that profits rise as costs rise. [xv ] .."
This last item is a perfect example of the operation of Janos Kornai's "soft budget constraint" in the US economy.
ReplyDeleteBarkley, thanks. I've brought up some of Kornai's writing on the topic of 'soft budget constraint'. Very interesting and topical.
ReplyDeleteThe often forgotten about 1969-71 recession pretty definitively marked the ending of the long expansion. State guarantees of liquidity and contracts then, but progressively moreso since, with permanent crisis management becoming the fiscal crisis of the State and nearly unremitting pressures on working and middle classes, are indicative of what has been a long run crisis of the capital system and the inability to solve this through greater subventions, socialization of costs to capital.
ReplyDeleteDe facto privatizing of the State* while nationalizing/globalizing costs while also struggling to loot the already wretched and dispossessed has been a desperation.
'Too big to fail' becomes 'too big to bail'.
*(increasing complexity of that being managed/ greater division of labor among public 'managers'/ greater dependence on industry specific lobbyists for 'correct' information and their de facto taking over)
nutshell: The State has never been a class neutral arbiter; in its struggle to provide and perpetuate 'the general conditions for social reproduction', it can assist in undermining these, which includes 'itself'.
ReplyDelete