I'm far from an expert on credit, so I'm posting this, hoping that some of you may contribute to my education.
My understanding is that most families avoided borrowing for consumer goods, except for pianos and encyclopedias, which were considered moral consumption. Then in the 1920s, the automobile industry, facing a stagnating market, encouraged consumers to purchase automobiles on credit.
The Depression and the unavailability of consumer goods during the war left most families in the United States without much of a credit burden. Over time, an increasing share of consumption depended on credit, the absence of which would have limited economic growth.
After the early 1970s, when the great burst of inequality began, the dependence on credit as an engine of economic growth became more extreme.
20 comments:
Michael, I've cut and pasted the following (see below) for your perusal. It is my understanding that many families were in debt. The most critcal being mortgages on the family farm (including on the newly popular mass-produced tractors) and on houses. The idea and habit of consumer debt established itself by the end of the 1920s when many families had purchased cars and durable consumer items on installment plans.
Apart from householders, the business world was heavily committed through the widespread use of junk bonds, securitisation of debts and stock market speculation based on leverage.
"The forerunner of today's payment card was the 'shopper's plate', which was introduced in the USA in the 1920s. In effect, it was an early version of the modern store card. It could only be used in the shops, which issued it, and it offered shoppers a basic form of credit - 'buy now, pay later'. In this case, shoppers had to repay the money they owed in full every month...
History of Credit
http://www.moneycontrol.com/cards/cardsinfo/credith.php
Economic historians like Martha Olney have described this period as a consumer durables revolution, characterized by an increase in both the average household expenditure for durable goods and the amount of instalment credit issued to help pay for these goods.[2. Martha L. Olney, Buy Now Pay Later (Chapel Hill: University of North Carolina Press, 1991), p. 1.] A critical precursor to this revolution was a transformation of the prevailing consumer attitudes towards incurring debt, and particularly a removal of the stigma against buying on instalments. The idea of being in debt had always been looked down upon by the American public, yet the expansion of the market for consumer durables depended upon an increase in credit transactions.3 The birth of the automobile instalment finance company in 1919 provided the foundation for this transformation, creating a successful example of instalment selling in a major industry.4
The catalyst to this change, however, lay not in the mere availability of instalment credit but in the selling of the concept of debt through advertising. During the 1920s, businesses increasingly utilized advertising as a method not only to sell their products, but also as a means to convince the American public to buy on instalments. Both the quantity and the quality of advertisements which mentioned instalment plans rose significantly during this period, particularly in local publications. By 1929, these advertisements reflected the general acceptance of instalment buying as a way to finance consumption and demonstrated that this shift in attitudes had reached its completion...
The Advertising of Installment Plans. By Sharon Murphy
Essays in History. Published by the Corcoran Department of History at the University of Virginia.
http://etext.virginia.edu/journals/EH/EH37/Murphy.html
"“The boom period of the last years of the World War and the extremely inflationary period of 1919 and 1920 were like the Mississippi Bubble and the Tulip Craze in Holland in their effect upon the general public. Farm prices shot sky high almost over night. The town barber and the small-town merchant bought and sold options until every town square was a real estate exchange. Bankers and lawyers, doctors and ministers left their offices and clients and drove pell mell over the country to procure options and contracts upon this farm and that, paying a few hundred dollars down and expecting to sell the rights before the following March brought settlement day. Not to be in the game marked one as an old fogy, while paper profits were pyramided and Cadillac cars and pleasure trips to the cities took the place of Fords and Sunday afternoon picnics. Everyone then maintained that there was only a little land as fertile as the fields of Iowa, Illinois, and Minnesota, and everyone sought to get his part before it was all gone. Like gold, it was limited in extent and of great potential value. Prices skyrocketed from $100 to $250 and $400 per acre without regard to the producing power of the land… “During this period insurance companies were bidding against one another for the privilege of making loans on Iowa farms at $90 or $100 or $150 per acre. Prices of products were soaring. Everyone was on the highroad not only to comfort, but to wealth and luxury. Second, third, and fourth mortgages were considered just as good as government bonds. Money was easy, and every bank was ready and anxious to loan money to any Tom, Dick, or Harry on the possibility that he would make enough in these trades to repay the loans almost before the day was over. Every country bank and every county-seat town was a replica in miniature of brisk day on the board of trade… “The drastic deflation of Iowa loans under the orders from the Federal Reserve Board, upon which Smith Wildman Brookhart, depression Senator from Iowa, poured forth his venom, definitely marked the downward turn in the mythical prosperity of boom days. Despite our hopes for the better, conditions have grown steadily worse.”” "
August 02, 2007
Personal Story by a Lawyer from a Previous Asset Bubble. Can we Learn from the Past and How will the Housing Decline Impact You?
http://drhousingbubble.blogspot.com/2007/08/personal-story-by-lawyer-from-previous.html
““During the year after the great debacle of 1929 the flood of foreclosure actions did not reach any great peak, but in the years 1931 and 1932 the tidal wave was upon us. Insurance companies and large investors had not as yet realized (and in some instances do not yet realize) that, with the low price of farm commodities and the gradual exhaustion of savings and reserves, the formerly safe and sane investments in farm mortgages could not be worked out, taxes and interest could not be paid, and liquidation could not be made. With an utter disregard of the possibilities of payment or refinancing, the large loan companies plunged ahead to make the Iowa farmer pay his loans in full or turn over the real estate to the mortgage holder. Deficiency judgments and the resultant receivership were the clubs they used to make the honest but indigent farm owners yield immediate possession of the farms… We realize after the “great debacle” that foreclosures did not peak until 1931 or 1932. So it took 2 to 3 years for the pent up excess credit to hit the market… “Men who had sunk every dollar they possessed in the purchase, upkeep, and improvement of their home places were turned out with small amounts of personal property as their only assets. Landowners who regarded farm land as the ultimate in safety, after using their outside resources in vain attempts to hold their lands, saw these assets go under the sheriff’s hammer on the courthouse steps… “During the two-year period of 1931-32, in this formerly prosperous Iowa county, twelve and a half per cent of farms went under the hammer, and almost twenty-five per cent of the mortgaged farm real estate was foreclosed. And the conditions in my home county have been substantially duplicated in every one of the ninety-nine counties of Iowa and in those of the surrounding states.”..
August 02, 2007
Personal Story by a Lawyer from a Previous Asset Bubble. Can we Learn from the Past and How will the Housing Decline Impact You?
http://drhousingbubble.blogspot.com/2007/08/personal-story-by-lawyer-from-previous.html
"…securitization of credit. Some people think this is a recent innovation, but in fact it was the core technique that made possible the dangerous practices of the 1920. Banks would originate and repackage highly speculative loans, market them as securities through their retail networks, using the prestigious brand name of the bank -- e.g. Morgan or Chase -- as a proxy for the soundness of the security. It was this practice, and the ensuing collapse when so much of the paper went bad, that led Congress to enact the Glass-Steagall Act, requiring bankers to decide either to be commercial banks -- part of the monetary system, closely supervised and subject to reserve requirements, given deposit insurance, and access to the Fed's discount window; or investment banks that were not government guaranteed, but that were soon subjected to an extensive disclosure regime under the SEC. Since repeal of Glass Steagall in 1999, after more than a decade of de facto inroads, super-banks have been able to re-enact the same kinds of structural conflicts of interest that were endemic in the 1920s ..
'The Alarming Parallels Between 1929 and 2007'. Testimony of Robert Kuttner Before the Committee on Financial Services
Rep. Barney Frank, Chairman, U.S. House of Representatives, Washington, D.C. October 2, 2007
http://www.prospect.org/cs/articles?article=the_alarming_parallels_between_1929_and_2007
"In the 1920s, however, high-yield bonds flourished. Tempted by the skyrocketing stock market in the 1920s, companies issued bonds with high interest rates in order to raise money by cashing in on booming stock profits and the robust economy. When the market collapsed in 1929, many companies defaulted on the low-grade bonds, and many investment-grade bonds were downgraded to junk status. For forty years, Wall Street shunned high-yield bonds. In the late 1970s, Milken, as an investment banker with Drexel Burnham, rediscovered their potential..
US History Encyclopaedia from Answers.com
http://www.answers.com/topic/high-yield-debt?cat=biz-fin
“The tug-of-war between Washington and Wall Street reached its peak in late March of 1929. The Federal Reserve took steps to limit how much banks could lend for buying stocks. Interest rates doubled, which should have discouraged borrowing, “But people who dreamed of 100 percent profit in a week were not deterred by an interest rate of 20 percent a year,” President Hoover recalled. “When the public becomes mad with greed and is rubbing the Aladdin’s lamp of sudden fortune, no little matter of interest rates is effective.” Borrowing continued…. National City offering $25 million to brokers in March preventing a decline at the time. So the market had 7 more months of breathing room…”
"Our [the Fed’s] job is credit. It makes no difference if it’s a deposit or a bank note. If we regulate and keep fairly constant the volume of this credit, - always with due regard to gold imports and exports… - we are doing our whole duty."
- Benjamin Strong, 1923
""Capital must protect itself in every possible manner by combination and legislation. Debts must be collected, bonds and mortgages must be foreclosed as rapidly as possible. When, through a process of law, the common people lose their homes they will become more docile and more easily governed through the influence of the strong arm of government, applied by a central power of wealth under control of leading financiers. This truth is well known among our principal men now engaged in forming an imperialism of Capital to govern the world. By dividing the voters through the political party system, we can get them to expend their energies in fighting over questions of no importance. Thus by discreet action we can secure for ourselves what has been so well planned and so successfully accomplished."
USA Banker's Magazine, August 25 1924
I would guess that the amount of credit in the economy would follow an increase in expectations about permanent or lifetime income and an increase in expectations about the amounts of commodities, consumer products, and investment opportunities.
IOW, credit doesn't build an economy but is built by an economy.
"Trade" might be better.
I think that in addition to the increase in inequality and the increase in people trying to keep up with the ever-receding Joneses in terms of conspicuous consumption, the spread of credit cards was very important. Even in the 1970s, they were rather rare, with one actually having to pass at least some sorts of minimal financial tests before one of the few banks that issued them would let you have one. Needless to say, those days are long past, and substantial chunks of the more recent consumer credit boom has been on credit cards, with more and more not paying them off each month, and thus facing much higher interest payments.
Barkley
"some sorts of minimal financial tests before one of the few banks that issued them would let you have one. Needless to say, those days are long past"
But isn't the important question why the banks have loosened their standards? If the card default rate was high enough to make loans unprofitable or expected to be high
enough...etc
"auto industry facing a stagnating market"
I would explain it with mass production enabling Fort to make more cars than he could sell for cash;Ford having profits that couldn't be spent on increased production without a market;and Ford expecting the loans to be paid back or the interest on loans to finance production.
I would describe it not as a "dependence on credit" but as an increased availability of credit in large part arising from the "great burst of inequality"
Low marginal taxes (increased savings for the savings class), globalization, monetarism (spreads), "the great moderation", financial deregulation...supply created demand.
Two 'pictures', both ex-mortgage:
Total Consumer Credit Outstanding, 1958-2008:
http://www.economagic.com/em-cgi/charter.exe/frbg19/sa01+1958+2008+4+1+1+650+1250++0
Total Revolving Consumer Credit Outstanding, 1968-2008:
http://www.economagic.com/em-cgi/charter.exe/frbg19/sa02+1968+2008+4+1+1+550+1100++0
(notice the recent spike)
Short excerpt from the Minneapolis Federal Reserve Banks 1974 Annual Report:
If the present recession were simply one more cyclical downturn along an essentially stable economic growth path, then it might be appropriate to try another dose of the medicine we've used in the past—an expansion of federal spending and further easing of monetary policy. But our problems today are intractable partly because:
we have tried to raise living standards faster than investments in productive facilities could keep pace;
investments, particularly those financed by equity capital, have lagged as a result of inadequate rates of return on capital; and
we have substituted credit expansion for savings as the means to finance the growth of consumer and business spending. Another dose of the old medicine would only worsen the disease, in the longer run if not immediately.
Instead, if this analysis is correct, we are going to have to accept as fact that we cannot continue to expand consumption (i.e., living standards) as rapidly in the next few years as we have during the past decade. ...
... If long-nourished expectations of “a better life” (i.e., more goods, services, leisure, etc.) are now going to be frustrated, or at least postponed, as seems inevitable, then there is going to have to be an equitable sharing of the burden of this adjustment.
(emphasis added)
"But isn't the important question why the banks have loosened their standards?"
Is answered by the relative decline in avg rate of profit of production capital v. financial capital post 1980-83 and changes which took place as traditional banking was progressively deregulated and as non-bank financial institutions increased in weight and scope. If I recall, it was not until ~1994 that generalization of sweep accounts created a de facto reduction of reserve ratios to near zero within the traditional sector, until by the later 1990s a number of banks were drawing down vault cash in their efforts to expand lending.
Of course, financial dereg has not been a simply national affair.
So now I can quote myself from another board:
[There has been a] general tendency to frame the question in strictly national terms and then (besides ideas of infinite credit creation) also hold tight to notions of federal reserve and/or government abilities to control.
What's missing here?
A failure to take account of the worldwide shifting from regulation to deregulation that's been a primary aspect of 25 years of neoliberal development policies. Doug has touched upon this a few times but IMO understated the degree and extent of change that's taken place. Traditional banking became combined with non-bank banks on a global scale; new technologies facilitated the destruction of the old system and rise of a fully globalized hybrid which has created layers upon layers of claims to claims to claims... massive quantities of fictitious capital. Over just the last ten years, outstanding OTC derivatives have increased roughly 10x (to $516 trillion at the end of June 2007). Average daily foreign exchange market turnover ($3.2 trillion) in April of last year had risen 71 percent vs only 3 years before. Total world equities market capitalization had reached in excess of $51 trillion by early last year, up from $23.5 trillion in 1997 itself much higher than the $9.4 trillion in 1990.
'independent' monetary policies?:
"Legally central banks have monopolies on the issuance of money in a territory. However, as international capital flows are freed, as assets are becoming easier to use as collateral for creating new money and as money is inherently intangible, monetary transactions with important implications for the real economy in a territory can increasingly take place beyond the control of the central bank. This implies that central banks are losing control over monetary conditions in a broad sense. ...
"The new thing...is that we are increasingly starting to see the loss of monetary control in economies with stable non-inflationary monetary policies. This is especially the case in small open advanced ? or semi-advanced ? economies. And it is happening in fixed exchange rate regimes and floating regimes alike."
(International Conference of Commercial Bank Economists, Madrid, July 2007, The Global Financial Accelerator...)
Not only a loss of control but a true financial explosion which, by mass and rate, has far exceeded IMF exchange rate adjusted World GDP growth since at least 1986.
Contradiction between slow growth global real economy and financial sphere hypertrophy which, whatever banks and governments do, should not be expected to resolve via still further 'permanent' inflation.
Limits exist, have - as crises - been appearing for years.
If the card default rate was high enough to make loans unprofitable or expected to be high
enough...etc
The Value at Risk models used for such calculations have proven to be very flawed.
The capital system became credit dependent and financialized, to the extent that the fate of its current form hangs today on decisions by a rating agency duopoly.
Consumer credit was widespread in the South, generally secured by future wages or future crops. For classic, well-known examples, think about "furnishing merchants" for sharecroppers, and the company store for miners.
SamChevre
I picked up on one line in Juan's post: the inadequate return on capital.
What happened? Why did the rate of return on capital fall?
There's an argument that says that capitalism is prone to recurrent crises of overproduction. I assume that return on investment in capital would drop in the context of overproduction. You're not going to get much return on a new factory if there are already enough or too many factories.
There's also a Marxist argument based on the labor theory of value, which says as production industrializes and human labor decreases, profit must drop, because profit comes from unpaid human labor. I think I have that right; and I don't know what I think of it.
Credit increases, because of the need to continue selling stuff which is being overproduced relative to people's ability to buy.
At the same time, you have money moving into various kinds of financial instruments, because the return on investment in production is not adequate.
So, you are set up for a financial/credit bubble.
Depending on the size of the bubble and the underlying crisis of overproduction, you may be set up for a depression when the bubble breaks.
I'm putting the above together out a bits and pieces of economic reading. It's not a manifesto. It's thinking out loud, about an issue that puzzles me.
Hi Eleanor,
I've been wondering the same thing myself and have been meaning to do further reading on the topic.
A few things I've noted.
- The marginal productivity of labour declines as production/technologies become more efficient. The wages would have some tendency to reflect this and thus decline as worker-productivity increases.
- The industrial economy has relied on cheap and readily available sources of energy and raw materials. Depletion is now reflected in higher costs. (Oil and coal both running out).
- In terms of the general environment.
- Forestry. The multinational forest corporations have been making a fortune clearfelling virgin rainforests. They have not planted these forests. It's a one-off windfall now virtually exhausted.
- Agriculture. The green revolution has relied on cheap oil and cheap fertiliser. Also soils that weren't exhausted. Again, this windfall is near exhausted.
- Fisheries. Greater and greater costs with the world's fisheries on the point of collapse, like the forests.
I am incredulous at the dearth of economists who mention the state of the planet in their economic analysis of our contemporary problems. After all, it's such an extraordinary and alarming time.
Eleanor,
There's also a Marxist argument based on the labor theory of value, which says as production industrializes and human labor decreases, profit must drop, because profit comes from unpaid human labor. I think I have that right; and I don't know what I think of it.
Yes, that's generally right but Marx argued not that total profit must drop but that there is a tendency for the rate of profit to fall. He considered this to be tendential since there were countervailing factors such as increased intensity of labor, changes in form of organization, increasing 'reserve army of labor', expansion into foreign markets, reduction of wages, etc, which were able to - at least for periods - offset what becomes a relative insufficiency of surplus value v. total capital.
IIRC, he also considered that credit played a part in extending expansions beyond what otherwise would have been their limits but that in doing so it gave rise to an army of speculators who were destroyed in the subsequent and more severe crisis.
If interested in the diverging-converging-diverging pattern exhibited by financial and non-financial rates of profit in the U.S., 1948-2000, you may want to take a look at the Figures in:
THE REAL AND FINANCIAL COMPONENTS OF PROFITABILITY...
http://www.jourdan.ens.fr/levy/dle2004g.htm
Marx' theories of profit and value appear to be very limited.
How does Marx deal with the unmeasurable and unquantifiable?
There are values and there are values. Many are not recognised by a capitalist society.
Juan -- Thanks for your comment. Eleanor
Brenda,
I was not attempting to explain his theory of profit, which is not so easily reduced to 'sound bites' given that it is within and dialectically part of the larger theory of social relations called capital or as a mode, capitalism.
To ask "How does Marx deal with the unmeasurable and unquantifiable?" is to pose a dualism rather than, e.g., the reality of quantity/quality contradictions in which quantitative changes drive and are qualitative changes are quantitative...faster and slower rise and resolution of discontinuities. It is to imagine Marx from a neoclassical perspective in which there are 'externalities' even though his theory is not one of excuse providing 'exogenous shocks' but of internal relations.
Nature cannot be external to production, cannot be external to the particular social relations of production that transform it and in so doing transform the active agents of the process. There is no duality here but a socio-ecological metabolism.
Capitalism is also a system of alienation and one aspect of this is an alienation from nature, a rifting of the metabolic process that leads to and perpetuates such dualistic perspectives.
Anyway, Marx's theory explicitly takes account of raw materials (circulating constant capital) and means of production (fixed constant capital), how these products of labor interact and how changes in production and use of each and both, as change in organic composition of capital, modify rate of profit.
Evidently constant capital does not fall from the sky but is produced, is nature transformed into its opposition.
There are values and there are values. Many are not recognised by a capitalist society.
Value, for Marx, was not a subjective category.
Brenda,
Thanks for always reminding us of these things. It really is astounding when you think about it.
Juan, I'm trying to interpret your comments above. Any corrections would be appreciated.
Juan said:
"I was not attempting to explain his theory of profit, which is not so easily reduced to 'sound bites' given that it is within and dialectically part of the larger theory of social relations called capital or as a mode, capitalism."
BR (a comment): Okay. I can see that Marx's theory is much wider than this. I still believe that he has made an error in his 'labour theory of value' nevertheless. Though he clearly recognises 'nature' as being the source of all wealth this particular theory does not acknowledge all of the immeasurable and unquantifiable in this, his specific subtheory. Including those qualities of 'nature' itself.
Juan said: "To ask "How does Marx deal with the unmeasurable and unquantifiable?" is to pose a dualism rather than, e.g., the reality of quantity/quality contradictions in which quantitative changes drive and are qualitative changes are quantitative...faster and slower rise and resolution of discontinuities. It is to imagine Marx from a neoclassical perspective in which there are 'externalities' even though his theory is not one of excuse providing 'exogenous shocks' but of internal relations."
BR: I think you mean that Marx acknowledged the lousy relations in capitalism of man-to-man, man-to-nature, man-to-the-spiritual? That Marx also saw that changes in quantity led to changes in quality and that the negative consequences of economic activity under capitalism were not exceptions to the rule but actually built into the system itself??
Juan said: "Nature cannot be external to production, cannot be external to the particular social relations of production that transform it and in so doing transform the active agents of the process. There is no duality here but a socio-ecological metabolism.
BR: Nature is transformed by man and man is transformed by nature.
Juan: "Capitalism is also a system of alienation and one aspect of this is an alienation from nature, a rifting of the metabolic process that leads to and perpetuates such dualistic perspectives.
BR: Capitalism has, inbuilt into it, a system of thought and action that ensures man will be (and continue to be) estranged from other men, nature and spirituality??
Juan: "Anyway, Marx's theory explicitly takes account of raw materials (circulating constant capital) and means of production (fixed constant capital), how these products of labor interact and how changes in production and use of each and both, as change in organic composition of capital, modify rate of profit. Evidently constant capital does not fall from the sky but is produced, is nature transformed into its opposition."
BR: Marx studies the way the monetary rate of profit diminishes over time by way of examining the the physical production processes in a capitalist economy. He does this by analysing how the composition of each input into that process changes as time goes on?
Juan: "Value, for Marx, was not a subjective category."
Brenda: His opinion, Marx like to think, did not come into a 'scientific' equation?
Anonymous said: "Thanks for always reminding us of these things. It really is astounding when you think about it..."
Thanks Anon. Why would you need a pseudonym to say that? I might actually like you ;-)
1. nature is acknowledged which i had tried to point out. it is included and can only be but he did not recognize nature as the source of all wealth which it cannot be. wealth results from the interaction of labor and nature in a process of production. it doesnot grow on trees nor does it magically pop from the market.
2. that is a process of transforming and a process which depends on/is within the social relations that happen to be dominant. the transforming within a subsistance society is very very different than that within and of one of generalized commodity production for profit and accumulation.
3. and it is in the later that alienation between producer and product so also man and nature reaches absurd levels. people trying to reconstitute what humanity they have via purchase of that which has been alienated from them, simply sad but even saddness can be commodified.
4. look up and think about the organic composition of capital, which is not exactly 'studying the composition of each inbut' but a double set of relation containing other relations. nothing so easy as imagined but relates to change in rate of profit as it takes account of both technical and value relations. the changing comp of capital is itself a consequence of the drive by each to maximize but a drive which, by pressuring avg rate of profit, generates the contrary of that which each demands. there is contradiction between micro and macro not some smithian wonderworld.
5. 'subjective' as in not a value judgement or based on some mythology of needs.
sorry to be abrupt but long posts have been eaten twice now and i've no idea whether even this will post.
Juan said: "[Marx} did not recognize nature as the source of all wealth which it cannot be. wealth results from the interaction of labor and nature in a process of production. it doesnot grow on trees nor does it magically pop from the market...
In Marx's Critique to the Gotha Programme (written by Marx in 1875, contains critical remarks in relation to the draft programme of a United Worker's Party of Germany). and in relation to the words: "Labour is the source of all wealth and all culture.."
Marx said:
Labour is NOT THE SOURCE of all wealth. NATURE is just as much the source of use values (and it is surely of such that material wealth consists!) as labour, which itself is only the manifestation of a force of nature, human labour power. The above phrase is to be found in all children's primers and is correct in so far as it is IMPLIED that labour is performed with the appurtenant subjects and instruments. But a socialist programme cannot allow such bourgeois phrases to pass over in silence the CONDITIONS that alone give them meaning. And so far as man from the beginning behaves towards nature, the primary source of all instruments and subjects of labour, as an owner, treats her as belonging to him, his labour becomes the source of all use values, therefor all wealth. The bourgeois have very good grounds for falsely ascribing SUPERNATURAL CREATIVE POWER TO LABOUR; since precisely from the fact that labour depends on nature it follows that the man who possesses no other property than his labour power must, in all conditions of society and culture, be the slave of other men who have made themselves the owners of the material conditions of labour. He can work only with their permission, hence live only with their permission..."
Juan, thanks for your question-raising 'clarification'.
'Organic composition of capital', 'quantitative -->qualitative/and back again.
Okay, I'll read more Marx. He appears to raise some interesting points. :-)
thank's for reminding me of that Brenda but you know, critique of gotha program was a very political statement as marx was then heavily engaged v. lassalle et al and i think bakunin as well in attempting to bring out a more strictly socialist...communist movement.
context should be taken into account, and that marx often seemed to contradict himself.
by my reading of your quote, marx is simply reiterating that it is not either/or but both nature and labor, and that nature forms the basis, not that it is inherently productive. same time. he's making a statement re. property rights, classes, etc, and that in the overcoming of these, bourgeois categories must also be overcome which, i think, his political opponents were denying.
iow, that such categories as he used in 'capital' would be transcended as the capital system is transformed into socialism and then further.
he was NOT denying his earlier analysis of capital and wealth but speaking to another set of social relations which then and now do not exist.
btw, he was not 'raising points' but explaining the system. 'organic comp of capital' refers to 1. the changing technical relation between mass of means of production and mass of employees. 2. a value relation between constant capital and labor-power. i can't recall which side, if either, he took to be more determinant but you can see this contains and is moved by such relations as productivity, standards of living, unemployment, qualitative change in the technologies of production, competition and, as related to mass of surplus value and rate of exploitation, also rate and mass of profit, et cet.
if you in fact intend to 'read more marx', it might be helpful to read bertell ollman's 'dance of the dialectic' first since imo he does a very good job at bringing out the philosophy of internal relations found in most if not all of marx's 'economic' works.
Juan, thanks for your thoughts. I have taken note of the book reference 'Dance of the Dialectic'. Will follow up later.
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