Top ten posts in 2018: value and robots, populism, stock markets and debt

Here is my usual resume of the top ten most read posts on my blog in 2018.  Leading the list by some way was my post on a debate that I had over Marx’s value theory with Professor David Harvey. As most of my readers will know, David Harvey is the most well-known Marxist theorist globally, so the argument that I had with him obviously interested blog readers.

In a recent paper, entitled Marx’s refusal of the labour theory of value, Harvey argued that Marx did not have a ‘labour theory of value’ at all. As he put it: “if there is no market, there is no value”.  I understood this to mean it is in the realization of value as expressed in money that value emerges, not in the production process as such.  Harvey then goes on to argue that if wages are forced down to the minimum or even to nothing, then there will be no market for commodities and thus no value – and this is the “real root of capitalist crises”. And thus it follows that a policy for capital to avoid crises would be by “raising wages to ensure “rational consumption” from the standpoint of capital and colonizing everyday life as a field for consumerism”.

In the post, I responded that, in Marx’s view, the value of a commodity is still the labour contained in it and expended during the production process before it gets to market.  Value is not a creature of money – on the contrary.  Money is the representation or exchange value of labour expended, not vice versa. With Harvey’s interpretation, Marx’s theory of crisis (based on insufficient surplus value) is replaced with insufficient use values for workers as consumers.  Overaccumulation is replaced by underconsumption.  The class struggle becomes not workers versus capitalists; but consumers versus capitalists or taxpayers versus governments.  Naturally, Harvey firmly disagreed with my interpretation and found the empirical support I offered for my view  (eg the graph below shows that it is investment not consumption that leads slumps in the US) nonsensical. But read the post and make up your own minds.

The second most viewed post was on robots and what they mean for jobs and incomes.  I’ve covered the issue of robots and AI in earlier posts, but in a way, this post summed up the arguments for and against robots in delivering more or less jobs and incomes and offered some policy responses, preferring Universal Basic Services, (ie what are called public goods and services, free at the point of use) as a better policy option than Universal Basic Income.

This month has seen a very sharp fall in global stock markets as world economic growth slows, the trade war between the US and China continues and the global debt mountain accumulates. The S&P 500 index is down 10.6 per cent so far this month, its largest December drop since 1931 at the depths of the Great Depression. The benchmark’s 7.8 per cent drop so far in 2018 is its biggest since 2008.

Back last February, I argued, as I have done in earlier posts, that the economic landscape looks much like 1937, when an apparent economic recovery from the Great Depression in the US came to a sharp stop when the US Fed hiked interest rates, triggering a new downturn.  And throughout this year, the Fed has been hiking (with the latest rise this week), while the stock market is falling and economic growth is slowing.

Several of the top ten in 2018 covered specific countries, including the economic meltdown in Turkey, a key example of rumbling emerging market debt crisis that I have highlighted before. This is what I said in May after Turkey’s general election. “Rising global interest rates and the growing trade war initiated by US President Trump are going to hit the so-called emerging capitalist economies like Turkey.  The cost of borrowing in foreign currency will rise sharply and foreign investment is likely to reverse…..Turkey is now near the top of the pile for a debt crisis, along with Argentina (already there), Ukraine and South Africa.”

My posts on the elections in Sweden and Italy also caught the attention of blog readers.  In both, there was a dramatic rise in the votes of the so-called ‘populist’ parties.  In Italy, Five-Star (on the left) and the Liga (on the right) won and formed an unstable coalition government that has quickly come into conflict with the EU Commission over its attempt to expand public spending beyond EU fiscal caps.

Sweden has long been the poster child of the ‘mixed economy’, the social democrat state – where capitalism is supposedly ‘moulded’ to provide a welfare state, equality and decent working and living conditions for the majority. The 2018 general election result put that story to bed. The so-called Democrats, an anti-immigrant party with neo-Nazi roots, came third and now hold the balance of power between the traditional parties of the ‘centre-left’ and ‘centre-right’.

In these posts, I argued that the results in Italy and Sweden – and for that matter the giles jaunes mass protests in France and the Brexit debacle – follow the pattern of so-called populism.  It is the product of the failure of capitalism to deliver after the end of the Golden Age in the mid-1960s, but particularly after the global financial crash, the Great Recession and the ensuing Long Depression.

As for the UK, my post critiquing the opposition Labour Party’s plans for more public ownership also made the top ten.  The aim of the Labour leaders to reverse previous privatisations, end the iniquities of so-called private-public partnership funding; reverse the out-sourcing of public services to private contractors and take the market out of the National Health Service etc is excellent, However, without control of finance and the strategic sectors of the British economy, a Labour government will either be frustrated in its attempts to improve the lot of “the many not the few” (Labour’s slogan), or worse, face the impact of another global recession without any protection from the vicissitudes of the market and the law of value.

As usual every year, my post summing up the latest degree of global inequality of personal wealth in 2018 makes the top ten.  This is based on the annual report of Credit Suisse bank.   Last year, the bank’s economists found that top 1% of personal wealth holders globally had over 50% of the world’s personal wealth – up from 45% ten years ago. In the US, the three richest people in the US – Bill Gates, Jeff Bezos and Warren Buffett – own as much wealth as the bottom half of the US population, or 160 million people.  In contrast, around two-thirds of the world’s adults remain basically without any personal wealth worth speaking of.

Two of the top ten posts that interested blog readers were on the key factor that could trigger a new slump in the world economy: the rising level of global debt and the likely global credit crunch to come.  In one post from May, I highlight the vulnerability of many so-called emerging economies, like Turkey (as above), Argentina, Brazil and South Africa.

The story of the last ten years since the Great Recession is that the world capitalist economy has staggered on at low levels of growth and investment and with virtually no improvement in real incomes for the 90%.  And it has only staggered on because of a huge build-up in debt, particularly in the capitalist sector.  Now, monetary authorities are trying to reverse the credit binge and restore ‘normality’.  As a result, the cost of servicing that debt is on the rise and availability of more credit to finance is shrinking.

With global debt now reaching $237trn by the end of 2017, and with interest rates rising on this debt, servicing it has become more difficult.  According to the IIF, ‘stressed’ firms now account for more than 20% of corporate assets in Brazil, India and Turkey and those companies where profits are greater than interest costs are shrinking fast. The crunch will come when corporate profits in many economies begin to fall as debt servicing costs rise. But this has not happened yet.  I’ll discuss when and how this might happen in my annual post forecasting economic outcomes in 2019 – coming up.

Finally, let me thank all my blog followers for their interest in the blog this year and also to those who have made comments on my posts (sometimes favourably, but often critically).  This blog aims to provide information on the world economy, discuss and develop economic theory and research from a Marxist point of view and comment on economic policy; with the aim of showing how and why it is necessary to replace capitalism with a new stage of human social organisation, socialism.

Also remember, you can follow my Facebook site, where I cover day-to-day items of interest.  I now have a combined following on my blog and on my accompanying Facebook site https://www.facebook.com/Michael-Roberts-blog-925340197491022/ of just under 11,000. During 2018, I had a record 440,000 viewings of posts on the blog and over 195,000 different visits to the blog.

As for my books, you can get my Essays on Inequality in Createspace:
https://www.createspace.com/5078983;
or the Kindle version for the US:
http://www.amazon.com/dp/B00RES373S;
and the UK:
http://www.amazon.co.uk/s/?field-keywords=Essays%20on%20inequality%20%28Essays%20on%20modern%20economies%20Book%201%29&node=341677031.

You can get my first book, The Great Recession – a Marxist view (2009), here.  I think it still has a lot to say.  And if you have not got my best-selling book, The Long Depression (2016), you can get it here; check to see how its forecasts are turning out.

In 2018, I published two books.  To commemorate the 200^th anniversary of Marx’s birth, I published Marx 200, covering Marx’s main economic ideas and their relevance in the 21st century (here).  And just last month, I co-edited with Guglielmo Carchedi, World in Crisis, a global analysis of Marx’s law of profitability (here), which provides empirical backing to Marx’s law from authors spanning the globe.

More projects are planned for 2019!