Profit rate is still dominating and driving the regulation of developed capitalist countries and of multinational enterprises (MNEs) all around the world. But it encounters profound new conditions in the context of the objective radical transformation in the technology that we analyze as a genuine technological revolution defined as an informational revolution.
Capitalism seizes that technological revolution inside its own logic, but the contradictions tend to be more radical and systemic, because sharing is intrinsic part of the essence of information, contrary to the essential logic of capitalism, with its appropriation and monopolies, historically developed from industrial revolution.
The crisis of 2008-2009 was a burst out of over-accumulation, in line with Marx’s analysis showing that profit rate is at the core of capitalist « regulation » by crisis and by unemployment. Profit rate is at the core of capitalism itself, as a specific kind of total work productivity growth, by prioritizing growth of capital (material and financial).
There are growing contradictions between (i) profit rate (Profit/Capital) and capital efficiency (Value Added/Capital); and a second set of contradictions (ii) between the mass of profit and, what we call, ‘disposable value added’ (dVA) for a population and a territory.
The crisis takes place inside a long term depressive trend opened by the 1967-73 turning down. Indeed, the French Marxist (neo-marxist) analysis (P. Boccara) distinguishes middle term (Juglar cycles) and long term (Kondratiev) over-accumulation, which had been solved, until now, by several transformations of the system — systemic devalorization of capital (devalorization means: valorization at lower rate, even zero) together with new institutions created and imposed by social struggles (for examples after world war II: Public Utilities in the USA, and in Europe: Public enterprises and Social security) in interaction with new objective conditions in technology and in demography. But in the same time, in parallel with limitation of profit in public enterprises or with elements of another logic in several sectors of economic life (health, education), the dominancy of profit rate was maintained as the central regulator of the private enterprises and of banks activity, and yet reinforced on the whole economy during the financial globalization phase.
After the 2008-2009 deep collapse, the present moment is interpreted as a recovery by dominant forces, in France and in most developed capitalist countries. But it seems both:
more a “rest” in the crisis, especially for intermediate capitalist countries as France,
and a moment of huge efforts by dominant capitals, especially of the USA and of the USA-MNEs, to recover their own profit rate and to reinforce their technological advance and make a new step ahead in it.
Some statistics on Brazil, China, France and USA show a clear movement in this sense. That is to say: higher value added exits from other countries toward USA under the form of exit of profits through MNEs (see graphs), since 2009-2010, and a weaker one toward an intermediate capitalist country as France. It could be also the case not only for MNEs in emerging economies, but also in less developed countries as Tunisia (see graph), with the twofold role of MNEs and of Debt.
Comments of the graphs
On the graph for Brazil, we see exits of profits to Foreign capital (essentially MNEs) through incomes of foreign direct investments (FDI) and technological and finance payments. It is as much, in GDP percentage, as in the past was the exits to reimburse external debt.
On the graph for China, we can see the recent growth of value added exits, through MNES, under the form of profits for foreign direct investment (FDI) and technological and finance payments in terms of GDP percentage.
The Chinese trade surplus of some 300 billions of dollars is largely eroded by profit exits of almost 200 billions of dollars to foreign capital (it is not visible in the net current balance, because of the profit taken from the dollar circuit by income from the Chinese purchase of US treasury bonds).
For Tunisia, we see that exits of profits to Foreign capital (essentially MNEs) through incomes of foreign direct investments (FDI) and technological (measured only from 2005) and finance payments are higher, today, in GDP percentage, than the exits to reimburse external debt. The debts payments are still important. And the total (debt+MNEs take away) has recently reached the same level than in 1986-87, the years of a previous important crisis.
In counterpart, for USA, we can see a growth of the entrance of exterior profits. It has been doubled, in terms of GDP percentage, since the 2008 crisis. Moreover, technological payments to MNEs seems to count for at least one third.
For France, we can see a growth of the entrance of exterior profits, with almso an increase since the 2008 crisis. But it seems to be more recent and lower than for USA. It is a net result of entrance, from dominated countries, and exits of profits to foreign capital toward dominating countries (as USA or Germany) or toward fiscal heavens. Moreover, in addition there are higher debts bonds remuneration exits, especially toward USA and Germany (not taken into account in this graph).
Finally, on the second graph for USA, we can see the crucial role of Foreign profit entrance to redress the US overall profit rate (approximated by Gross operating surplus + repatriated earnings / fixed capital).
It needs further studies and analysis that we, as communists and Marxists, would have to elaborate on, in common, as elements of a work program.
These new efforts of financial capital are striking peoples’ aspirations to development all around the world. They include also huge efforts to integrate emerging countries into the financial capital logic, or even to make some sectors of them “collaborate”, to it.
The financial capital is at the core of this logic, interconnected with the US-Dollar and its circuit. Financial capital, as the highest stage of capital form, and its twofold logic of “money for money” and of distant power on production simultaneously in different places and countries, appears as the common “enemy” (or “adversary”) all around the world. It is the common adversary against employment (especially in the North), against social security in all the countries, against public services, against security of life, and against common goods, even if the underlying production needs all those expenditures.
Our task is not to limit it or to compensate the consequences. We need another logic.
With no change of the logic itself, we will be affected by a new over-accumulation crisis, with its terrible social consequences for peoples, over-accumulation maybe even from inside emerging countries as Brazil or China.
What is “another logic”? It is the logic of human capacities development and of a new kind of economic efficiency.
Public services, social protection and employment, interconnected with other efficiency criteria for firm management than profitability, are at the core of an alternative logic, both for demand relay, and for the improvement of supply, in another kind of total productivity growth.
a. Needs of systemic change and the new conditions opened by the “informational revolution”
Two points have to be stressed.
First, nowadays limiting profit rate or its playing, as in Keynes recommendations, or « controlling » the financial market it is not a way out from the systemic crisis. It will not be sufficient to avoid a new over-accumulation collapse. We need a « positive » alternative logic to profit rate, not only “less profit rate”. We must act at the three complementary points of the systemic triangle (social objectives, financial means, power) and promoting other criteria of efficiency than profit rate (criteria organize the links between the three points of the systemic triangle).
It meets also the cultural development of the society, of the people, their claim all around the world for a real and efficient democracy, and their capacity to intervene, with their knowledge about their work or about the society itself.
Second, what we call “informational revolution” changes profoundly the conditions themselves. The new role of information in the production process is the crucial point of the present technological transformation. It brings a new articulation between human beings and machines, notably in the production process.
Hence, in opposition to the industrial revolution, it is not the human hand using the tools which is replaced by machine-tools, but certain functions of information treatment and of information transformation by the human brain that are replaced by informational machines, as the computers. Information is, for example, the chemical formula of a medicine, it is also the program to implement in machine-tools the fabrication of the medicine.
And information is potentially sharable and transferable all around the world, at quasi zero cost — especially inside a multinational enterprise (MNE) — contrary to a machine-tool, which can only be in one place (and which request to double the spending if we want to put it in two places).
b. MNEs and financial globalization challenges
It brings radical new challenges, and it is at the basis of the new development of a new kind of multinational enterprises (MNEs). It has been also a driven force for privatization at world level and for financial globalization (including the reshaping of international organizations and rules). But it challenges the logic of capital, of appropriation and monopolies.
It brings hence new challenges for peoples and, hence, for leftist thought to master them. We can only mention three other main “objective” revolutions (monetary, demographic, ecological).
All this, objectively, claims for a genuine social and political revolution, ie a profound overturn of objectives, of basic rules and of institutions, and of the powers on financial means. And, it is also at the basis of a new potential of development for the development of all humanity.
Financial globalization supports the profit rate logic and also allows value transfers between countries, but transfers essentially take place inside MNEs and for their own benefit, more and more in contradiction with territories and with global human development. And capital control — at the basis of MNEs perimeter — is the mean to “privatizing the sharing” of informational resources.
With the conjunction of the Informational revolution and of Financial globalization means and logic, we face a new kind of MNEs, as our Marxist theory of the new MNE analyzes it (see F. Boccara, 2013 and 2005). Using free international transfers of value (money), of information, and of other resources, they play on the opposition between global factors — as information with its global costs — and local factors — as labor and local wages with their local costs.
Hence, the questions of intellectual property rules, of the contents of international investment agreements, the question of transfer prices, and of human capabilities (or even capacities) and of territory development tend to come on the top of the agenda in all the countries. There are, in part, common needs that cross the international relations, especially North-South relations.
c. Money creation, Central banks and Rising struggles on it
The social mastering of money creation (banks, central banks) is a decisive alternative to financial capital: if we promote it with other criteria for the use of the money and with democratic new powers.
Peoples implicitly struggle for it in Europe, by rejecting ECB (European central bank) action and the “troïka” anti-social conditionalities imposed together with their loans. We formulate radical but immediate proposals, not only at the French communist party level, but also through the voice of the European Left Party presided by our French communist comrade Pierre Laurent.
The agenda is that of rapprochements of claims and of their convergence on employment, social protection and public services, in all the countries. Rapprochements also with other left wing people, parties, and Unions, rejecting austerity, as we do in several “Fronts” or “left Fronts” in several capitalist countries.
But in parallel — and partly in contradiction — we have to make growing the necessity of really radical and coherent changes. That is to say: not only to limit the logic, or to come back to a so called “Keynesianism”. For example, if we would follow Joseph Stiglitz, claiming more inflation and more credit, without other precisions and changes on the utilization of the credit, it would lead to “more” .. but more for capital. So a worst situation for people. As we say, “Unifying is a permanent battle”.
We must claim for other contents, especially other criteria of money uses, and claim for democracy. It is similar for public property: the recent developments show higher State intervention (and inter-State intervention, e.g. by ECB or by IMF), but intervention to support the market and the financial capital…!
And even it can lead to an acceleration of the madness of the logic, as we can show it on the case of France (higher disrupting between firms debt and firm value added than before the crisis, especially under the financial paper form, see graph below).
We need to combine ideas struggle and practical experiments on another utilization of money; in a radical and gradual conception of the revolution.
New convergences must be pushed at the international level as well as at the national level, convergences in the denunciation and in the claims (or proposals). But, with the aim of speaking to the whole left wing and even broadly, not only to the “left of the left”, and with the aim to unify all the classes and sectors exploited and dominated by financial capital.
A major common stake is « another internationalization ». Fighting in common in this direction would also help us to unlock the mentalities even at national levels. We need new cooperations against the coming back of the crisis within several years and against the MNEs efforts to take away value from territories and from peoples, and to dominate them.
Yet, there are efforts to push each people fighting economically against the other, in a competition for social lowering (China, for example, is viewed this way in the occidental opinion). But, against it, we have to find ways to affirm and express in common our claims for social co-development.
I quote three points that we could share and on which we could act together.
Alternative to dollar as world common currency by a profound IMF reform and by the development of Special drawing rights (SDR), as began to propose also the governor of the Chinese central Bank. But, as we plea for it in France, we need to propose it with the aim of a new utilization of SDR: for co-development of peoples. That could by done by two means:
The mastering of financial transfers and of technology transfers by MNEs in two directions, with the objective of international cooperative policies with other rules:
We need to begin overcoming in practice the “4 markets” with new institutions and new principles: products market (new criteria of firm management), money market (new criteria of money use), labor market (security of training and employment), and world market.
In particular, we need new public institutions of mastering of international trade: for co-development (social, employment, ecology). That is to say a better social and ecological content of the products and not the market rule of the least price at any cost (means: combination of taxation and of new financing of social conditions elevation). This could begin by regional agreements between several countries. It would build new international alliances and cooperations facing to the financial capital domination in the world and its USA-heart, with the “dollar circuit” (Europe-emerging, emerging-emerging, emerging-South, Europe-South, with pivot political zones, as Latin America, as Europe, or as China).
A decisive agenda for theoretical works and for political initiatives is the alliances and the common claims to face financial capital domination in the world, and affirming the need of freeing from it if one wants to answer to human social needs as a priority.
It could be fostered by a common, or convergent, campaign against capital cost — and not labor costs — and against capital domination in the world, for co-development of people of each country, by securing lives for each person, with another kind of democracy and another use of money, toward world common goods development as another internationalization.
* Communication of Frédéric Boccara, pronounced in Beijing , October 2013, at the Academy of social Science of Beijing
Paris 13, University (Associate professor)
PCF (French Communist Party), Member of the National Council
Economie & Politique, journal
Boccara Frédéric (2013), Firmes multinationales et balance des paiements dans la globalisation financière et la révolution technologique informationnelle - une analyse théorique et appliquée, Thèse de doctorat de l’Université de Paris 13, tomes 1 et 2, 608 p.
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FOUR CHANGES’ MANIFESTO
Points that Targeting Holistic Changes in Socio-Economics and Political’ General Systems
Preface: These points are a simple contribution to the last 60 years worldwide discussions on basic subjects of internationally well known both socio-economics and political systems: the Working class ideology and programs of planned development in one hand, and in other hand the social and technical efficiency of Free-Markets system.
The origin of these types of theorizing and discussions over goals and ways that are necessary for humanity to achieve goodness on Earth are start and taking different shapes from old times of Nubian civilization till recent times, but modern times motto/s of Freedom, Fraternity, and Equality between all citizens/human’ public rights was fundamentally stroked by national Right of Independence, the class’ issues of Right for Ownership, and Technological advance determent.
Many and wide range of many evolutionary reforms or revolutionary changes are one after another end in calamities and somehow these calamities are being a main issue of the late 60 years discussions about efficiency of socio-economic and political systems. These wide ranges of discussions are based on a key question about the best way to manage living resources within lines of 1-Types of Democracy, 2-Class issues, 3- National and/or Regional Right for Development, and 4- 'Positive Discrimination.
The next paragraphs start points can be useful contribution in both intellectual or practical' process that aims to liberate energy, clean water, housing, education, health care, cultural services, communication, transportation, banks, industry, and agriculture resources and tools of living from all type nondemocratic minority control over majority living resources and from commonly or capital control miss management.
The Four Points:
1- Democratically, all societies’ resources of living need to be totally free from commercial type of minority control, to end Free market’ dictatorship were few capitalist controlling majority of world resources and shapes of living. This renewable style of socialist and communist ideas/approaches aims to establish a type of socio-economic micro institutions and macro system that use democratic basics to sustain main resources of society and environment.
2- Economic production and services units should be directed by elected persons, from primary mangers up to top sections leaders and ministerial position, in a total democratic process that reorganized all the State units.
3- To harmonize both ''Work -Income'' and ''State-Society" types of Development, all production and service units should turned to co-operative style system based on three equal sections shares for : 1- Workers (sub-divided to main types of jobs), 2- Unit’ needs, 3- State/Society. It is a %33.33 each’ share system that collecting mains of Co-operative, Socialist, Democratic systems.
This type of working units’ organizing is based on equal interests' representation of all internal direct benefiters' units in all four processes of production: planning, management, working, and exchange. This fundamentally and structurally main change can re-link work-living costs of human and material resources and the main three production powers (Workers, Unit, and the State).
4- Ending multi-crises money exchange’s calamities by new process of revaluing main socio-economic resources based on a positive discrimination type of equality. The centre of distributing basic values and organizing main exchange prices will shift from traditionally foreign debt control' central banks to equal representation’ collective body of main socio-economic units ''National Monetary Fund’s Authority''.
State’s National and International monetary body will manage and sustains by a dual banking system; one for internal production and services, and the other is for foreign exchanges and International trade affairs.
Finally: Achieving these four wide co-ops changes needs wide ranges of synchronization and co-ordination between motions of main types of working class struggle and other social justice, sustainable development, and green movement’s … etc towards multi-shapes struggle against injustice and corrupted casino' capitalism' and its (Free) market.
المنصور جعفر .
Par المنصور جعفر, le 19 June 2014 à 18:22.