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Tag Archives: capital

Karl_MarxInteresting editorial here that echoes some of my sentiments from weeks (months?) ago, that Marxism is showing itself valid and relevant again. I still have doubts about the real possibility of a revolution in the relatively near future, but it is likely that revolution–in the strict sense–is not needed.

Interviewer: “Nowadays we call these ‘crises’ recessions. You predicted that over time, capitalism would become dominated by larger and larger firms.”

Marx: “[T]he concentration of capital and land in a few hands.”

Interviewer: “And how does this concentration bring on socialism?”

Marx: “By paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented.”

Interviewer: “So the bigger firms become, the harder they fall. In the US economy, some firms have become ‘too big too fail,’ and the government has moved in. As this plays out, what will happen to capitalism?”

Marx: “Its fall and the victory of the proletariat are equally inevitable.”

It is true that much of the policy designed to help the US finance and auto companies seems particularly socialist in that government is taking over the control of many larger firms. Not sure that counts as a victory of the proletariat, but I also read today that governement is limiting executive pay. That levels the playing field a bit.

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foreign20debtThe first quarter of this year, China’s foreign reserves went up by only $7.7 billion. Sound like enough? Last year for the same period it was $153.9 billion. Reasons for this are numerous.

  • Chinese investors are becoming wary of the safety of their foreign bond holdings.
  • Exports from China are decreasing compared to imports, so less demand for the Yuan.
  • Capital flight from China may be slowing.
  • Non-Chinese investors are buying more US debt, keeping returns low.
  • US consumers are saving more money, reducing the need for Chinese savings.

One Chinese economist was interviewed, and he was asked about the balance of financial power between China and the US. He replied–

“I think it’s mainly in favor of the United States.” (As John Maynard Keynes said) “If you owe your bank manager a thousand pounds, you are at his mercy. If you owe him a million pounds, he is at your mercy.”

Not sure I believe him, but I like the quote.