ALB
Forum Replies Created
-
Posts
-
Afraid it is fiktiv but I've just noticed that the term in the English translation is "fictitious capital" rather than "fictional capital". But I have seen "fictional capital" used in the litterature. I still prefer "notional capital" to describe the concept as it avoids any suggestion of fabrication and fraud that so often occur in discussions about banks and banking.
Young Master Smeet wrote:He seems to be suggesting that the paper value of such capital depends on the prevailing rate of interest (which is itself a dependent but arbitrary aspect of the overall rate of profit).He says so explicitly later on in the same chapter:
Quote:The formation of a fictitious capital is called capitalisation. Every periodic income is capitalised by calculating it on the basis of the average rate of interest, as an income which would be realised by a capital loaned at this rate of interest. For example, if the annual income is £100 and the rate of interest 5%, then the £100 would represent the annual interest on £2,000, and the £2,000 is regarded as the capital-value of the legal title of ownership on the £100 annually. For the person who buys this title of ownership, the annual income of £100 represents indeed the interest on his capital invested at 5%This is the conventional definition of "capitalization" (which can be applied to any regular stream of income) but I think that "notional capital" would have been a better term than "fictional capital" (given what Marxists tempted by currency crankism, and even those not, have made of this term).
I know that it's not what they really think but they argue as if they did. Their deeper argument is more subtle and involves the whole banking system including, crucially, the Bank of Exchange which as the state central bank does have the power to "create money out of nothing". They don't really think that a single bank can create money out of nothing, nor that all the banks together could without the involvement of a state central bank.The contradiction in their position comes out in what the supporters of the same idea in Switzerland are arguing: that banks there should still be allowed to lend but only from savings accounts and what they've borrowed from other banks or the central bank. But as a loan would still involve double entry book-keeping it should still, on the PM argument we care discussing here, involve banks creating money from nothing but they don't argue this. In fact, the description of what they think should happen is what happens now except that now banks can also lend money deposited (from outside) in current accounts (which are in effect also loans, from the depositor to the bank).This seems an unecessary restriction on banking lending from a capitalist point of view. In fact, by restricting credit it could slow down business activity and the accumulation of capital which capitalism is all about. Which is one reason why fellow banking reformer Ann Pettifor is opposed to it:https://www.opendemocracy.net/ourkingdom/ann-pettifor/why-i-disagree-with-positive-money-and-martin-wolfShe wants banks to continue to be able to, as she would put it, create money out of thin air (in fact, to continue more or less as they do now subject to more regulation). She also makes the relevant point that the PM theory is derived from Monetarism.
dms wrote:Under the PM model of banking the bank only has to ensure their assets (the loan agreements) match their liabilities (deposits in accounts).That's easy. It's just double entry book-keeping when the bank makes a loan. It's irrelevant as far as the question of where the money loaned comes from.Incidentally, not all "deposits" are liabilities as there are the two different kinds of "deposit".The original, more normal definition is where someone from outside the bank deposits a sum of money. In this case, the money in the deposit is the bank's asset and the bank's IOU to repay the money its liability.Then there are "deposits" the PM model above is talking about where the bank agrees to lend someone money and opens a deposit in their name with a credit of the amount of the loan. In this case, it is the deposit that is the liability and the lender's IOU to repay it that is the asset. In other words, the opposite to the more normal sense.So some "deposits" are assets and some are liabilities. No wonder there's confusion but I'd have thought it was obvious that the money a bank lends comes its real, non-paper assets, the money deposited with it and what it itself has borrowsed.If Positive Money really think that a bank could operate without outside funding why don't they practise what they preach and start their own bank (suggested name: The Bank of Thin Air). In fact, why has nobody ever done this, not even Ponzi?
For a different, more plausible explanation of why some banks got into trouble see the article in this month's Socialist Standard:http://www.worldsocialism.org/spgb/socialist-standard/2010s/2016/no-1337-january-2016/hbos-horse-boltedIt wasn't just bad loans but also how some even of the good loans were funded.I'm not sure about your last paragraph. A bank might be able to make a loan and then find the funding fairly quickly afterwards. The article in the Bank of England Quarterly Bulletin quoted here describes what happens when a bank wants to expand its lending:http://www.worldsocialism.org/spgb/socialist-standard/2010s/2014/no-1317-may-2014/cooking-books-harry-graeber-and-magic-wand
Quote:whether through deposits or other liabilities, the bank would need to make sure it was attracting and retaining some kind of funds in order to keep expanding lending.alanjjohnstone wrote:And i was just thinking, when was the last time anti-fracking protesters in the United States turned up with AK-47s and an assortment of other assault rifles…i can't properly recall…I thought the best advice when you are in a hole is to stop digging
Vin wrote:So should we support the 'IN' voteOnly if someone holds a gun to our head and says you've got to choose either IN or OUT !But of course we're not in that position and don't have to choose either of the two options on offer. That said, I don't think we lose anything by accepting that the relative free movement of labour that the common labour market has brought about was a small advantage for workers, even if not enough to vote IN. On the other hand, I can't see a single advantage of OUT and the big disadvantage of it stoking up British nationalism.
Sort of. Nobody can spend what they don't have, whether their own or borrowed. Businesses including banks can't either. But of course there are differences between you and a bank. A bank aims to make a profit and practises double entry book-keeping.A bank's profit comes from the interest it charges (not all of it but what's left after it has paid its expenses including staff wages and interest on any money it has itself borrowed).Double entry book-keeping means that when a bank (or any business) acquires an asset or a liability this must be balanced, in the accounts, by a corresponding liability or asset. Thus, when a bank makes a loan this liability has to balanced by a corresponding entry in the asset column (the borrower's IOU to repay the loan). But nothing new has been created. This is just an accounting convention. That's all that the famous "stroke of a pen", or these days keyboard stroke, does.A better example would be if you were a moneylender, i.e if like a bank you lend money but your own money. You could even practise double entry book-keeping. But you would not be able to lend more money than you had. You could try but you would soon come unstuck and find yourself unable to honour a promise to pay someone money. The difference between a bank and moneylender is only that a bank is lending other people's money.Banks are essentially financial intermediaries, borrowing money at one rate of interest and relending it at a higher rate. Their economic role under capitalism is the useful one for capitalism of making available for investment and other spending purchasing power that would otherwise remain dormant.
Looks more like the sort of direct action that anti-frackers, etc take in this country only, being America, guns come into it. As we know, America has a traditional of guns being used, on both sides, even in trade union struggles.
I might have guessed. The Monument is a good read. The trouble is that not all the anectdotes are true. For instance, Glasgow branch have been annoyed about the story (p. 111) of the member expelled for wearing a gas mask. It was a nice story but it just wasn't true. See:http://www.worldsocialism.org/spgb/socialist-standard/1990s/1995/no-1087-march-1995/letter-nail-coffinGlasgow anarchists tell a similar story about one of theirs; which is probably the source of the story. Go here and search for Lennox.Baltrop drafted the book when he was out of the party and hostile to it (as the title suggests). Even though it was published after he had rejoined not all of the previous hostility was edited out. The passage you quoted will be one example.It will not without significance, in the context of the Party's attitude to WW2, that Baltrop himself chose to take part in the war, joining the RAF while most (but not all) other members were conscientious objectors. See his obituary here.
What is the source of that claim? The 1939 Anti-War manifesto, published in the October 1939 issue of the Socialist Standard, ends:
Quote:The Socialist Party of Great Britain therefore pledges itself to continue its work for Socialism, and reiterates the call it issued on the outbreak of war in 1914:“Having no quarrel with the working class of any country, we extend to our fellow workers of all lands the expression of our goodwill and socialist fraternity, and pledge ourselves to work for the overthrow of capitalism and the triumph of Socialism.”THE EXECUTIVE COMMITTEE, S.P.G.B.September 24th 1939Actually the introduction of machinery (mechanization, automation, robotization) under capitalism is not just about technology: it depends on whether installing and using the new machine is cheaper than employing workers to do the work by hand. Because of this capitalism in fact holds back,or rather slows down, the use of machines.A minor example of this was reported in the Times a couple of weeks ago (14 December):
Quote:Garage owners said that the number of car-washing machines has more than halved in the past 15 years because they are struggling to compete with migrants doing the job by hand…. [T]he number of automated “rollover” car washes in Britain has more than halved, from about 9,000 to less than 4,200 in 2015. It is estimated that the number of dedicated handwashing sites has ballooned from 4,000 to at least 20,000 over the same 15-year period.So, ironically (or is it perversely?), if robotisation were to lead to increasing mass unemployment the downward pressure this would exert on wages would make it more profitable is some cases to revert to employing workers.So Hawking is not quite right when he says:
Quote:If machines produce everything we need, the outcome will depend on how things are distributed.It will depend rather on who owns the machines. If the machines stay owned by a capitalist minority, it will be the economic laws of capitalist that will continue to decide. If society owns them, as socialists advocate, then society can decide democratically and apply the old socialist principle of 'from each according to their ability, to each according to their needs'.
Actually, although he doesn't actually use the word capitalism, he does say so in so many words:
Stephen Hawking wrote:If machines produce everything we need, the outcome will depend on how things are distributed. Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality.This is not going to happen of course unless society as a whole becomes the machine owners. Only then can we decide how what is produced can be distributed.Quite apart, that is, from cheaper labour power being an obstacle to complete automation coming about under capitalism, So the wages system would have to go too. But then common ownership and the abolition of the wages system are two sides of the same
Good find. Actually, Hawking's reply probably deserves a thread of its own;
Quote:I'm rather late to the question-asking party, but I'll ask anyway and hope. Have you thought about the possibility of technological unemployment, where we develop automated processes that ultimately cause large unemployment by performing jobs faster and/or cheaper than people can perform them? Some compare this thought to the thoughts of the Luddites, whose revolt was caused in part by perceived technological unemployment over 100 years ago. In particular, do you foresee a world where people work less because so much work is automated? Do you think people will always either find work or manufacture more work to be done? Thank you for your time and your contributions. I’ve found research to be a largely social endeavor, and you've been an inspiration to so many.Answer:If machines produce everything we need, the outcome will depend on how things are distributed. Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality.This is not going to happen of course unless society as a whole becomes the machine owners. Quite apart, that is, from cheaper labour power being an obstacle to complete automation coming about under capitalism, So the wages system would have to go too. But then common ownership and the abolition of the wages system are two sides of the same coin.
Couldn't read it because you have to subscribe but why do all these articles assume that if the government gives everybody, working or not, a regular income this is going to have no effect on wage levels? They seem to be assuming that this would be in addition to income from work whereas what is likely to happen is that it would exert a huge downward pressure on wages and that over time real wages would on average fall by the amount of the "basic" income.In other words, that it would be essentially a subsidy to employers. It would be "basic" in the sense of being a mimumum income that employers would top up to the level people needed to be able to reproduce and maintain their particular working skill. Don't they understand how their much-vaunted law of supply and demand works?Reformists do come up with some crackpot ideas.
