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northern-git

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About northern-git

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  1. So far as my limited understanding of Marxism extends, according to Marx capitalism contains the seeds of its own destruction. What I think he was essentially getting at is that, as Wonderpup has already explained, the endless competition between industrialist bosses would inevitably lead to a collapse of their customer base. This, in turn, would lead to civil unrest and, eventually, revolution. The reason for the above is the need for profit. In its most essential form, profit may be defined as a situation whereby you exit an economic transaction with more resources than when you went in. In order for anyone to extract a profit, a loss must be incurred by someone, or some thing, somewhere else. Either the supplier of the raw materials makes a loss, or the manufacturer makes a loss, or the retailer makes a loss, or the customer makes a loss, or the workers all the way up the production chain makes a loss. Someone or something has to make a loss. The above leads to the paradox of a situation where the ideal for any capitalist would be to do away with all workers and automate all production since this would prove to be the most profitable arrangement. However, those workers are also their customers. Thus, in doing away with them, they have destroyed their customer base's capacity to spend money on buying their products. Growth is the only thing that has allowed capitalism to paper over this fundamental flaw in its heart and so allow it to last for as long as it has. Which, in historical terms, is not very long at all. This is not to say that any system of human organisation would not have run up against the same resource buffers. It's just that capitalism has proved to be very efficient at getting us here. In this sense, whilst resources are available to enable growth to occur, the "loss" is incurred by the Earth itself. Now that growth is no longer physically possible due to resource constraints in the context of a world where every man and his dog (understandably) now wants a Western lifestyle, the days of win/win capitalism are over. In a static or contracting economy all profits must be balanced with losses. Or, to put all of the above more succinctly: Capitalism does not work in a static or contracting economy unless one is prepared to accept considerable levels of bankruptcies/social unrest etc. Fractional reserve banking (FRB) stimulates and amplifies economic growth by borrowing from the future and so avoids, for a time, the inherent flaw in capitalism. The earth has finite amounts of easily accessible industrial resources eventually resulting in a situation where growth has stopped. Capitalism's inherent flaw is exposed. I should expand, here, on a subsidiary but very important factor. That of fractional reserve banking. FRB, as I am sure many of you on here understand, is a financial process whereby if I go to a bank and borrow money from them I must pay it back with the monetary fruits of my own future productive activities. The money that the domestic bank lent to me, they also borrowed from a commercial bank. The commercial bank lent that money into existence. Or, rather, multiplied it into existence on the back of an initial injection into the system of a small amount of base money by a CB. Thus, ultimately, central banks/commercial lenders decide how much is lent into existence to you and me based on an assumption of how much productive activity will be happening in the future such that the lending can be repaid. Of course, the reality of how the credit trickles down through the system is far more tortuous and indirect than the schematic, above. But, in principle, this is how our FRB "money" supply grows. FRB, in the above conceptualisation, may be seen as borrowing from the future. Or, if you prefer, FRB is a form of the lending of the future to today. The semantics of the description matter less than the actuality of the process. FRB has been yet another weapon in the armoury of capitalism whereby the losses incurred today can be papered over. In FRB's case, by drawing down profits from the future. Thus, economic growth is accelerated under an FRB system of money creation. However, there is a fundamental truth we all know in our guts and which science has merely formalised. Namely, that there is no such thing as free lunch. As long as there are a large amount of resources, we can pretend, for a while, that there is. Once we hit the limits of those resources, though, FRB stops working as a consequence of the future failing to honour the FRB promises of today. At that point, we get economic collapse (the current crisis is the beginning of that collapse). From now on in, in order for profits to be maintained, someone has to lose for someone else to gain. Perpetual economic growth is over. A money supply that is increased over time via FRB credit is over. Capitalism is over. The future will be either some form of socialism or a return to serfdom for the majority
  2. They have actually risen in some places (London) fallen slightly in most places and only fallen significantly (about 20% or so) in a very few places. In those places where they have risen, this is because there is big foreign money buying them. In those places where they have fallen significantly, this is because half the workforce worked for the local councils and are now on short hour contracts or are out of work. In other words, for ordinary people, house prices are further than ever out of reach due to them not falling, or falling but with salaries/employment prospects falling even faster.
  3. They have actually risen in some places (London) fallen slightly in most places and only fallen significantly (about 20% or so) in a very few places. In those places where they have risen, this is because there is big foreign money buying them. In those places where they have fallen significantly, this is because half the workforce worked for the local councils and are now on short hour contracts or are out of work. In other words, for ordinary people, house prices are further than ever out of reach due to them not falling, or falling but with salaries/employment prospects falling even faster.
  4. The main idea is to simply keep the boat afloat for a while longer by patching it up with more debt. Debt's the only game left in town. It's not a long game, mind you, given the lack of real primary economic growth on the horizon. But, then, the time horizon of our booms and bust are getting shorter with each sucessive cycle and so the "long view" taken by our leaders is getting comensurately shorter also.
  5. House prices, as valued in FIAT, will never be alowed to fall. Haven't the monetary manipulations by our dear leaders over the last 6 years taught you that yet? On the other hand, if you have some non FIAT asset to exchange for a house (usinf FIAT as a temporary intermediate means of exchange), only then may you see a "fall" in the exchange value of a house relative to that asset. If you are hoping for that to be the case with your FIAT, though, you can forget it. Aint gonna happen.
  6. My guess is that is has now reached critical mass in terms of prevelance in the workforce. That is to say, as long as it was only being applied to low income, low socio-economic status workers, your average BBC type wouldn't give a shit. However, such employment practices are now creeping significantly into the white collar sector and so the chattering classes are starting to get a bit twitchy. First they came for the gypsies...and I said nothing
  7. First, they came for the gypsies...and I said nothing. Then they came for me
  8. The first thing that strikes me about the rise of zero hour contracts is that everyone is going to get dragged along to this particular party whether they like it or not. In other words, any company that is able to and choose to implement a zero hours policy vis a vis their workforce, is going to competitively advantaged because they will be able to save on manpower costs during relative slack periods. This, in turn, will leave anyone who does not choose to follow a similar policy, competitively disadvantaged. Thus, all companies will be forced to implement such a policy once a critical mass of companies implement it. In the absence of an enforced set of ground rules (primary legislation) that outlaws such practices where it can be clearly demonstrated that a company needs a more or less full time set of workers to run their business, damn near everyone is going to find themselves on zero hour contracts in the not too distant future.
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