Tag: economics

Divide Between Town and Country.  Large Landowners and Unions. 11 28 2025 

~ nicholasjayboyes

Divide Between Town and Country.  Large Landowners and Unions. 11 28 2025 

Much like eastern Europe, America is in a period of reaction.  The bourgeoisie has leveraged the rural people, some of whom are workers in large scale agriculture, to people who believe they are small businessmen growing on farms as capitalists.

The latter group,  not exactly small farmers but also not large scale agriculture, are sort of becoming a petty bourgeoisie, who sell their products as commodities to the merchants.  They may have a few hands, but often are still labouring.  

These people supported Trump.  In so doing, they also supported the large scale production of food,  even though they have seen many of their counterparts lose their farms, only to have their lands subsumed by large landowners.  

They feel it is not simply the large scale agriculture bourgeois who have spared them, probably due to their political bent, that has given them prosperity, and allowed them to keep farming.  Although they are clearly the chosen ones, they feel it has been their good business sense that  has kept the farm.  This is why they support Trump, even though economically they are on shaky ground; a few bad harvests and that’s it, bankruptcy follows.

Harnessing this form of ignorance is common throughout capitalist society.  It is rare for one to acknowledge his posh lifestyle simply came through a process of vetting, undertaken by the upper class into their ranks.  Rather ignorance most often restricts the knowledge of this from the petty bourgeoisie.

The view of Trump having made himself rich as a businessman; a sort of man who became rich with his own money and business sense, is fiction.  Trump was born into money, his dad was a real estate tycoon from New York, who helped his son get into casinos at a young age, like Trump Taj Mahal in Atlantic City. He built a small empire after his dad died in luxury properties, he did not trade commodities, rather traded the profit from capitalist industry, the money kept as surplus value by capitalists for their own personal enjoyment, rather than a product like an auto part, sold as a commodity.  Trump has been chosen to represent his class, as he has always been,from his start as a casino owner to his presidency. It is doubtful he would be intelligent enough to be pulling some sort of scam, supporting the proletariat from his position as president. 

He has no experience as a commodity producing capitalist, yet the farmers liked him, and although he was not elected in 2016, appointed rather in 2017 after losing the popular vote; then, following his loss in suffrage in 2020, questioned the validity of American elections by having a group of ruffians , ex military and police, storm the capital on January 6th 2020.

It seemed like he was gone then,  but by leveraging the ignorant by the bourgeoisie, just like in Russia and Eastern Europe, where employee ownership ended due to ignorance of what capitalism really represented, Trump came back.  American antisocialist laws are present here, with political prisons for Jews, communists, etc. which echo the rise of Hitler.  Trump regularly calls his opponents lunatics, sick individuals, etc. like Hitler and his SS in the thirties.  

The large landowners are represented in government by the constitution, that keeps them at the table  so to speak with large capitalist industry.  There was a time agriculture was all the land was used for under the British, when America was a colony.  The planters who rebelled  understood that industry would follow revolution, that the north in particular would  build heavy industry, eventually challenging the South where the slave plantations were.  

This was rectified by having the upper house of Congress have 2 seats for each state.  It keeps large scale agriculture in power; the areas with less population, or a rural population of a sort of reserve army of workers., like the city is present.  It’s like the poor whites during the Civil war supporting the landowners; they were no help to them,  but they supported the slaveowners who used them for an army to fight the north, where slavery was not present, as in Wisconsin, or minimally present, like Lincoln’s state of Illinois.

The phenomenon of support for landowners, not the family farm, rather the more industrial form of agriculture, heavily mechanised petroleum dependent large scale agriculture, is what Trump harnessed.  Without unions, large agriculture’s labour is low paid, often m Mexican immigrants many  of whom are in the country illegally.  There is little or no movement to nationalise the land, rather a distant belief in a capitalist who will buck the system, and support the little guy.

You don’t get rich supporting the little guy.  Trump is a billionaire, he represents capital, he is the living embodiment  of capital, it is his hand that creates the surplus value. 

Perhaps it is the idea a person can go to the casino, and walk out a millionaire.  You have a better chance of getting struck by lightning than winning at Trump’s casino.  It is the roughest place in town, where if you don;t spend enough you get kicked out.  If you went there hungry you would get bounced  for asking for food.  It’s a dog eat dog reality.

In the cities it is a little harder for capitalists.  Libraries, museums, theaters,  etc. are part of urban society,  and the proletariat is thus a little harder to fool.  There is less ignorance in the city, rural society has none of these advantages.  Collectively large scale industry comprises much of the activity in the city, with buzzing ports, retail capital workers, large commodity producing recycling operations.  It is a stark difference to rural America, reflecting a massive divide between town and county. 

Rectifying this divide will take time.  Nationalising the land will follow, as large landowners have to increasingly reckon with a union of farmers at the site of harvest and in the fields.  The cooperative markets will be where the money comes from, and outreach for the small and large cooperatives that will replace the capitalist landowner will come from here.

The state will not be buying the land for the cooperative. The workers may have to use the money created in production to buy additional land, or nationalizing the land if the landowners refuse to cooperate with their workers. 

This will not be easy, but will start to rectify the huge gap between town and country.  Getting used to being in a union at work on the farm, much like his proletarian cousin in the city, will follow.  

The system is geared against them.   There will be losses, but also victories.  As recognition of membership in the class of labourers comes,  that they do not own the stocks in the means of production,  collectively the poor rural man will support more radical leadership.  He is up against the constitution, this may take time.  But don’t give up on the countryman, instead remove the ignorance.  

Nicholas Jay Boyes

Milwaukee Wisconsin

American Democratic Republic

11 28 2025

Money Capital.  Interest.  Role of the Central Bank.

~ nicholasjayboyes

Money Capital.  Interest.  Role of the Central Bank. 4 21 2025

“Shortly after markets opened, Trump referred to Powell as a “major loser” on Truth Social and said the U.S. economy could slow without an immediate reduction in the cost of money amid the fallout from his trade war.”

Washington Post 4 21 2025

Note the “cost of money” This refers to money capital that is paid interest for its part in the production of commodities.  The money is first loaned to, for example, an industrial capitalist, who uses the money to produce a commodity,  then sells it, and repays the loan, with interest.

The interest is comes from the part of the surplus value created by the industrial capitalist, he calculates ahead of time that he is going to have to pay the money capitalist interest.  The cost of the money capital is referred to as the price of money.  It is the amount of surplus value that money as a commodity produces when loaned out.

Trump is making the price of money to be lower; Federal Reserve Chair Jerome H. Powell is in charge of this.  Apparently there is a separation of powers agreement that Trump cannot just order interest rates to go down, instead we have Powell sort of independent to make these conclusions.

It may make the price of money lower, but it also must interfere with the average rate of profit.  The interest rate is a tangible condition, and it is speculated on by money capitalists.  Where the money capitalist keeps his money that he expects interest to accumulate on, would seem to have to sort of compete with industrial capital.  If there was more than the average rate of profit to be made on money  capital as opposed to industrial capital, people would invest their money in money capital instead of industrial capital. 

But without industrial capital, there can be no money capital.  There is no goose that lays golden eggs.  The Alchemists of the Middle Ages thought all they had to do was figure out how to make gold and they could have anything they wanted.  They failed to see the process by which productive labour created commodities.  The money capitalists can get so caught up in speculation they forget industrial capital is where money capital comes from. The result is a bubble, where speculation runs rampant, often  on high risk investments, backed by nothing more than paper.

It would seem the bubble is starting to break now, and Trump’s capitalists  want the price of money to be cheaper.  If it is cheaper to get a loan, you can invest the money and bring in more profit by speculating on money capital.  

The irrational form of money as a commodity, which can be bought or sold for a price, would explain why in the previous article I noted the stock market feels they are trading commodities.  The commodity money is bought and sold at the exchange, thus they trade commodities.

The exchange of commodities is not where this surplus value is created.  All wealth is the product of human labor, whether or not it is paid for,.  All this exchanging is a cost of production, money capital is originally a product of productive labour, the surplus value this labour has created is where money capital is derived.   

Thus the foolishness of suggesting exchange of a commodity produces wealth.  The merchant may make trading commodities run more smoothly for the  industrial capitalist, but his wealth is from production. Exchange, even if he does make out like a bandit sometimes, the money he makes is a cost of production for the capitalist, the money comes out of industrial capital’s profit.

The accumulation of money capital has reached absurd amounts, the state’s debt alone is 32 trillion dollars.  In this case it is not even speculation on a material commodity, there is no commodity or production of a commodity speculated on several years down the road.  This practice, paid for by bonds, is also connected to the interest rate.  The federal reserve uses its money it gets paid  the interest rate for, the price of money, to loan out to money capitalists, who loan it to industrial capitalists, to produce commodities.   

Calculation of interest on his profit is where money capital is formed. It has a sort of legal agreement, the money loaned has to be paid back with interest, regardless of if the capitalist made a profit producing commodities.  There is a legal relationship between the leader and burrower,  to pay a certain interest rate on the loan  regardless of if it was used productively.

The price of money is real, and Trump knows what it means. He may not have had experience running a factory, but as a luxury real estate person, he knows what lowering the interest rate will do.  It makes it easier to loan out money capital. Speculation on in the process by those in between the industrial capital and the money capital runs rampant. 

Nicholas Jay Boyes

Milwaukee Wisconsin

American Democratic Republic

edit 9 17 2025

Financial Capital.  A Speculative Bubble. 

~ nicholasjayboyes

At the start of what is looking like what could be a crisis,  the question is if the financial bubble will burst.   The speculation on financial capital is reaching a fevered pitch, with investment in money capital feeding a market that is now further and further away from industrial capital, and is producing a mountain of financial services, hedge funds, money markets, etc.

The bourgeois are in bonds heavily too, speculating on the ability of the state to be able to pay off its debts, with the interest paid for by taxes.

The purpose of circulation capital, merchants capital, is to make the turnover of capital occur more smoothly.  Credit and the large banks are also connected with this, they use the stored money to do banking operations that include loaning out money to capitalists to smooth the exchange of commodities.

But beyond this lies the world of joint stock companies, which are simply companies with several owners.  The stock is a title to ownership of the company, and the companies control capital.

But is all this buying and selling of stocks really a movement of industrial capital?  

To some degree yes.  But it is invested in by money market funds, and other financial services that draw interest from industrial capital.  They are a cost of production, and we should always remember the value of a commodity is the amount of labour contained in it, whether or not it is paid for.  David Ricardo showed us this in his Principles of Political Economy and Taxation.  Clearly circulating capital does not miraculously create value; the exchange of commodities does not create surplus value, what Ricardo called profit (surplus value).  The surplus value is the unpaid section of the workday, based on the amount of labour required to produce a commodity. Profit is calculated on the whole capital expenditure, including the means of production and raw materials.

All this speculation and corresponding financial capital has formed a bubble, and in the end, if it breaks, industrial capital will be all that remains.  And if you are a country that has leveraged other countries resources, with money from the home country, importing much more than exporting, financial capital becomes increasingly more important.

The question becomes how much financial capital has accumulated, and what happens when there is overproduction, and crisis occurs.  At this point large amounts of capital are destroyed, we saw this as the markets were crashing of late. The money is just wiped off, the financial capital rendered useless paper. 

Perhaps this is due to the fact the bank does not produce commodities, rather it is connected with merchant capital, circulating capital.  It also makes the process of production turn over more quickly by means of credit, making turnover more smoothly than if the industrial capitalist had to be the one who had to sell his own commodity.

The banks also invest financial capital in industry, in the 20th century they were quickly becoming ever more powerful.  The ability to gain seats in joint stock companies led to the monopoly conditions, led by JP Morgan, who controlled US Steel, most of the eastern railways, General Motors, etc.  Financial capital was connected with this, he used credit to buy companies, which he obtained through the bank. 

But the question remains how much is financial capital used to simply turnover commodities?  The stock market is still called the ‘“Stock Exchange”, implying something tangible is being exchanged. 

“What does a mercantile exchange do?

“The Merc trades several types of financial instruments: interest rates, equities, currencies, and commodities.

Google search mercantile exchange

“Equities, also known as stocks, represent an ownership stake in a company, giving investors a claim on the company’s assets and earnings. Investors purchase equities to gain potential returns through capital appreciation (an increase in share price) and dividends. The value of equities fluctuates based on market demand, company performance, and economic conditions, making them a popular but inherently risky investment.”

Google search equities

Equities seem to now equal stocks., as the jargon in capitalism changes sometimes; Milton Keynes would have been proud of this one. People buy stocks “to gain potential returns through capital appreciation (an increase in share price) and dividends.”

“Capital appreciation is the increase in an investment’s market value over time, leading to a higher price than its original purchase price. This growth occurs due to factors like increased demand, better asset performance, or favorable market conditions. Investors seek capital appreciation for passive growth, while the actual profit realized from selling an asset is known as a capital gain.”

Google search capital appreciation

So now we know profit results from selling an asset, which is an active relationship of the owner of stocks to his glorified hoard.

“Passive growth” refers to growth achieved without continuous, active effort, appearing in several contexts including investment strategies where wealth accumulates over time with minimal management)….

Google search passive growth

And naturally investors in stocks want to think or do as little as possible, and still be able to wring the surplus value out of the workers, whose labour represent the profit..

” increased demand, better asset performance, or favorable market conditions” as reasons for the exploitation of the proletariat is not clear. There are conditions which make it easier or harder for the bourgeois to reap the profits from is ownership of means of production, referred here to as assets. Sort of a more technical term for the accumulation of capital in stock, obtained upon selling, “capital gain”.

google’s explanations are always witty. I don’t know who writes them. It would not seem to be a task to just let a computer so to say wax philosophically ab.out

The bubble occurs when financial capital is divorced from reality, when circulating capital starts to cease to function,

But it is definitely better to be a producer of commodities than a financial capitalist speculating on  the price of commodities when the crisis comes.  I think that  should be obvious, the bubble may break, and the speculation on financial capital becomes more risky.  The next stage will be in production, when the companies who all rely on China for cheap raw materials and machinery have to pay double for them (Trump’s now on now off again tariffs in 2025).  .   The financial capital may cushion the blow, but when the merchant cannot pay the bill at the port, his creditors will be the first to react.  The spectacle of yards in port, parked, waiting for a consumer, and conversely a working class suffering layoffs and loss of employment, the result of the speculative bubble breaking.  

And there are the exports to China, now tariffed 138% by them to enter, now not tariffed, etc. .   America produces commodities China uses, they may have a huge deficit in overall trade, but they still rely on products from America.  Overproduction will likely occur here too, unless new markets are found for finished commodities. As far as commodities produced in both countries jointly, the tariff would be a real impediment to production.

The speculation on financial capital has created  a bubble.  Overproduction is looking likely, we will probably again see the state in its role to bail out the failing companies and agriculture. We see this taking effect in regard to the threat by Trump to lower the price of money to banks to near nothing. A large subsidy to capitalist industry.  It is also a clever way to use the states money, the segment of surplus value separated off and called taxes, by alternately pulling the taxes out of the surplus value, then returning them to capitalists who are having trouble making a profit. The only question is, is it using the state money to make a profit? The bourgeois has a fetish about state assets capable of making a profit, they are sold off, often at bargain basement prices, to any capitalist who wants to take the risk of running them. I fit is the state making money here, it is quite clever. But it is also not capitalism.

Generally it is agriculture that is subsidized and bailed out; the milk wasted and dumped as it cannot be sold at $2.19 a gallon.  The government paying farmers to dump the milk. At the same time the soup kitchens with long lines, often outdoors in winter.

This is a recurring feature of capitalism.  It may be here again, crisis.  If it is, it was sparked by Donald Trump’s protectionism.  The taxes on imports could cause overproduction, social overproduction, at home and abroad.  He backed off this time, but it could be enough to cause confidence investors had in dealing with Americans to be depleted; how can they be trusted? It is a crisis at least partially of their own making.  

Nicholas Jay Boyes 

Milwaukee Wisconsin

American Democratic Republic

edit 9 13 2025

Speculation on State Debts.  Bonds.  Joint Stock Companies.

~ nicholasjayboyes

So now that the Republicans finally, after 20 years, gained the sanction of universal suffrage, they have been active.  One of their main projects has been to shake up the federal bureaucracy.  They have Elon Musk in charge of a semi official post to make government more efficient.

They have sent most all federal employees notice they can quit and receive 6 months pay, without having to work the 6 months.  

It seems to have resulted in tens of thousands of federal employees deciding to quit their posts. It is not clear if they plan on replacing them, and how this would make the government more efficient if they do.  It may be cheaper for a little while, as a younger person, a Trump supporter, gets a job.  But in the long term, it is difficult to see how this could result in a large savings of money, as in time they would receive a similar paycheck.

To save money they are removing the “soft power”, the aid that small countries receive to make them support Washington.  This type of thing would seem to be something they would not be so apt to do, as these small countries receiving aid sometimes prove strategically important.

Nevertheless the national debt is now 36.2 trillion dollars, Musk has suggested he can make government save trillions of dollars by making it smaller.  Thus the logic behind allowing a billionaire to run roughshod over Washington’s bureaucracy.

I don’t think anyone would not agree Washington”s is bloated; we remember the 100 dollar toilet seats, the two hundred dollar screws of the Pentagon budgets we periodically hear about.  Or workers in the bureaucracy receiving 6 digits a year, and not doing any lifting, or producing a commodity.

Many of the people Musk has removed may not be essential, and the government getting smaller to pay off the debt may work.  But we have overlooked something, a thing about the national debt Musk is not attempting to tame.

That national debt is sunk into the bond market, and someone is drawing interest from it.  The money, the state’s debts, are being speculated on. There are investors who have bought ten year bonds, and are speculating on  tax money being collected and spent ten years from now.

Figure 5 percent on a trillion dollars of bonds, that’s 50 billion dollars every 6 months.  The bond’s interest rates are currently at 4,45%,  paid every 6 months, known as a “coupon payment”.  It is easier for me to use 5%, so  bear with me. 

So figure half (which is absurd I know, the total is probably much larger) of the national debt was in these 10 year bonds, that’s about 16 trillion dollars.  Every 6 months our money creates 5%, that’s 16 50 billion dollars.  That’s 800 billion dollars, and in ten years, at every 6 months, a total of $16 trillion has been paid as interest on our bonds that have matured, over a period of 10 years.  

So if you figure the whole 36.2 trillion dollars the debt really is, is in 5% bonds, that’s 32 trillion dollars in interest that has to be paid on the debt in ten years with “coupon payments”. 

According to  Google , in 2024, the interest payments on the national debt totaled  $882 billion.  Our calculation is more than double this, but even if it were half, and in this case half the national debt was not in bonds, rather it was simply paid for by taxes, $882 billion every year for ten years is 8 trillion 82 billion dollars.

Which when you think about it is probably for more money than Musk can save by gutting the bureaucracy.

But if it was twice this, which we calculated first, on a 6 month interest payment (coupon payment), we get a total of about 17.64 trillion dollars in ten years.  

The point of this is to suggest you are going to pay off the debt just by making government smaller, without attending to the source of funding for the government, which is often in bonds, you may not get too far.   Clearly the national debt is speculation on tax dollars being paid to the Treasury, paying interest to investors.

If they want to lower or remove the national debt, the first thing that would have to be done would be to stop issuing bonds.  Straight taxes carry no interest rate.  If you just did that you would save trillions of dollars, and in ten years you would have paid off a large amount of debt, even if you consider Google’s number for the interest on the debt.

Just what they are speculating on is a real question.  The state does not produce commodities that can be sold and make profit, they are not speculating on GM auto production, or Union Pacific railways, which as a joint stock company would pay dividends. 

Rather this is speculation on the debts of the state, paid for by taxes. The surplus value flows in every 6 months as interest on the 10 year note, keeping our bourgeoisie in power.

It would be a remarkable turn of events if Elon Musk reduced the size of the bond issues.  This would result in less surplus value accruing to the bourgeois who buy these bonds, something which would seem the opposite of Musk’s set of prerogatives.  It is just too attractive to speculate on tax money being paid; I mean, they very rarely default.  They could not pay in 2009, and their credit rating fell.  But other than that, it just never happens.  They paid it back eventually, but the bourgeoisie does not like their credit rating being downgraded.  They basically always pay the interest, bonds are pretty much a safe speculation.

Without looking at the source of funding for the state, bonds, reducing the expenditure of the state looks more like a doctrinaire experiment than reality.  These billionaires like Musk are just too sunk into speculating, on the tax money, to give up their cash cow, even to satisfy Elon’s desire for thrift.  

Nicholas Jay Boyes

Milwaukee Wisconsin

American Democratic Republic

2 19 2022

edit 9 19 2025

Concentration and Consolidation of Ownership. Joint Stock Companies.

~ nicholasjayboyes

Try as they may, regardless of the size or sophistication of their latest technology, there is no changing material conditions.  Even with all the new weapons, the fact remains the companies are owned by a monopoly, a duopoly, or cartels.

Every crisis consolidates ownership further, as the companies concentrate ownership.  Often bought in crisis conditions, for ridiculously low prices, or merged by companies with larger wallets to absorb functioning capital, more and more joint stock companies dominate industry.  

It is rare now to have a large company not listed on the stock exchange, the center for trading of joint stock companies.  The days of an industry being private property of an individual have basically come to an end.  

With this change competition begins to fall behind making surplus value by setting prices due to monopoly.  When there are only a few large companies owning, say, electricity and gas, and distributing this gas to consumers on their own lines, it is not hard to see competition come to an end.

Wisconsin Gas and Electric produce all the electricity from power plants here Milwaukee Wisconsin, and also own the lines for transmission of high voltage to Milwaukee.  They also own the gas lines, and distribution facilities, including pipelines.  There is no alternative source in any sense, and short of cutting your own wood, the houses are all gas burning forced air heating.  Solar is still prohibitively expensive, and Wisconsin Gas and Electric do not pay for excess production from solar generation in homes.   

This has been building for some time.  It is a common feature of industry to become concentrated in a few hands, often in the form of monopolies.  They set prices as they control the production facilities, the distribution,the lines etc., and do not practice competition.  

The days of competition regulating the price of major commodities is rapidly fading.  The grocery stores are now all consolidated into huge markets, dominated by WalMart, Kroger, Albertsons, and Costco.  Smaller family owned stores are becoming rare, only for an item or two needed between visits to the big stores.  Kroger and Albertsons attempted a merger, which looks like a failure, but would have meant about half of grocery stores would have been controlled by WalMart and Kroger Albertsons combined as one company.

The largest computers cannot stop the consolidation of industry, the growth of joint stock companies and monopoly conditions. It is a built in condition of late capitalism, described by Friedrich Engels in Anti Duhring in the 1890’s; the growth of joint stock companies, and concentration and consolidation of industry. here is a quote

T0″he period of industrial high pressure, with its unbounded inflation of credit, not less than the crash itself, by the collapse of great capitalist establishments, tends to bring about that form of socialization of great masses of means of production which we meet with in the different type of joint stock companies. Many of these means of production are, from the outset, so colossal that , like the railways, they exclude all other forms of capitalistic exploitation. At a further stage of evolution this form also becomes insufficient. The producers on a large scale in a particular branch of industry in a particular country unite in a “Trust”, a union for the purpose of regulating production. They determine the total amount to be produced, parcel it out among themselves, and thus enforce the selling price fixed beforehand. But trusts of this kind, as soon as business becomes bad, are generally liable to break up, and on this very account compel a yet greater concentration of association. The whole of the particular industry is turned into a gigantic joint stock company; internal competition gives place to internal monopoly of this one company. This has happened in 1890 with the English alkali production, which is now, after the fusion of 48 large works, in the hands of one company, conducted on a single plan, with a capital of &6,000,0000.”

“In the trusts, freedom of competition changes to its very opposite- into monopoly; and the production without any definite plan of capitalistic society capitulates to the production a definite plan of the invading socialistic society. Certainly this is so far still to the benefit of the capitalists. But in this case the exploitation is so palpable that it must break down, No nation will put up with production conducted by trusts, with so barefaced an exploitation of the community by a small band of dividend mongers.”

Anti Duhring First wellread books edition 2017

Part 3 socialism II Theoretical p. 329

Which is optimistic that a society will not tolerate trusts and monopolies, which is precisely what we have learned to do. The important part is trusts and monopoly were recognized by Engels as being the dominant form of capitalism.

This was published in 1890. Vladimir Lenin published Imperialism, the Highest Form of Capitalism, in 1916. Clearly Lenin agreed with Engels, and developed this idea further.

It is all connected, and the presence of these monopolies looks unlikely to change.  Internet service is also dominated by two large companies, one of which has been the subject of antitrust activity, American Telephone Telegraph, AT&T.  The only choice is Charter, also called Spectrum, and these companies cooperate to keep the price of internet at a set price, by removing, for instance, subsidies by the state to keep the price of internet low for seniors.  There is AT&T again controlling prices; last time it was their long distance telephone service, broken up by congress, resulting in the baby Bells.

Computers are dominated by Apple, who produce most often computers used in homes. International Business Machines, IBM, is no longer a competitor of home computers to Apple, who are close to monopoly.  Google as the search engine, also a monopoly, caps off much of our computing.

This list could continue, but I think I have made my point.  Consolidation and concentration of ownership into joint stock companies, often exerting monopoly power, is a fixture of modern capitalism.  Rarely it is addressed as antitrust by capitalists who want to artificially change what is a dominant feature of capitalism, to control the market by monopoly.

Every capitalist wants to drive his competitor out of business.  When they are successful at this, they control the market, competition ends, and they then set prices for the commodity they control. It seems to be universal; there are no sectors of the economy left untouched by consolidation of ownership. Breaking them up is only a temporary fix, AT&T for instance is now back to its old self again, in a duopoly of internet service with Charter, as they own the fiber optic cables. Antitrust activity towards AT&T, breaking up the long distance telephone to the baby Bells, did not stop AT&T from again attempting to set prices by control of markets,this time in internet transmission .

This system is a form of capitalism referred to as imperialism in the late 19th century and early 20th century by Friedrich Engels, and later by Vladimir Lenin. It was becoming more obvious then that joint stock companies would dominate capitalism, and consolidation of ownership would only continue.  

Names like J Peirpont Morgan, and his domination of 20th century large scale industry, is a case study in the growth of monopolies and trusts. By the early to mid 20th century Morgan’s empire included railroads, Steel production (US Steel), General Electric, AT&T…. Morgan personified the bourgeoisie of the 20th century, with control of markets for just about every large industry.  

When the next crisis comes the trend will no doubt continue. Capitalism is at the  stage where competition is becoming rare, only lasting a few years in a new industry, until monopoly control and joint stock ownership is achieved. Crisis comes and ownership is consolidated further, the likes of which are a recurrent theme in capitalism. It seems unlikely this will end without leaving capitalism, antitrust does not deter companies from concentration ownership of the means of production (like AT&T) from continuing to exert monopoly power over the industries they own, it just sets them back a decade or so.  It is just way too tempting to remove competition by these capitalists , and set prices.  

Nicholas Jay Boyes

Milwaukee Wisconsin

American Democratic Republic

1 4 2025

revised 9 16 2025

Fictitious Capital and Speculation

~ nicholasjayboyes

Fictitious Capital and Speculation  

The amount of money the national debt comprises is more than 30 trillion dollars according to the National Debt Clock website.  This money carries interest, and it is this process which is what is referred to below. 

“… fictitious capital,  the object of gambling on the stock exchange, which is actually nothing but the selling and buying of entitlement of a certain part of the annual tax revenue.”

Karl Marx Theories of Surplus Value volume 3 p. 111

“ By fictitious capital Marx here means the capital of the National Debt which is brought into being by loans (of the bourgeois or bourgeois landowner state) and never intended to be invested as capital and on which the creditors are paid interest on the taxes, imposed on the people. “

Footnote in Prometheus books edition #40

“U.S. Budget Deficit & The National Debt. The National Debt is the total amount of money owed to all external parties by the US government. Most of that debt is in the form of outstanding government securities such as treasury bills, notes, and bonds that the government has issued.

Mar 22, 2022

Google search “is the national debt paid for with bonds or stocks?” 8 10 2022

The state’s money comes from profit, taxes are a subdivision of this profit. You have to first have a profit before the capitalist state can pay taxes, and the state’s money is not investment, at least it makes no profit. Rather it is revenue, and revenue refers to money spent that does not create surplus value, the object of capitalist production.  

All production is carried out to create surplus value, if there is state production it is something needed by capitalists they cannot produce and make a profit doing so, but is essential, like city buses, the passenger train, the highway system, etc. so the worker can, for instance, get to work in the factory on time.

The bond market is speculation on the state’s taxation in the future.  It is an investment on something that has not yet been created; there is no commodity 10 years from now when the bond matures that will be sold.  It is pure speculation on the income of taxes, gambling in the stock exchange on the states debts. 

Marx calls this “fictitious capital”, as it creates no real surplus value, rather is speculation on the annual tax money.  If it was capital it would make a profit. The company is not run firstly to pay taxes, then to make profit, rather the opposite, to make a profit then to subdivide this into taxes.  Industrial capital and agricultural capital create the surplus value, it is the unpaid section of the workday.  The state does not create surplus value, it is an expenditure of capitalists, and claimed by them as revenue. 

We are somehow supposed to feel that we have some say over taxes, as if the amount of taxes displayed on the paycheck would be the property of the worker if it did not have to be paid by the bourgeois.

Being privy to his tax expenditures is sort of interesting, perhaps we should have the whole profit printed on the paycheck?  If you want to hear the capitalists cry bloody murder, try bringing a vote on that. If the taxes did not have to be paid, there is no reason to assume the capitalist would not simply pay the worker the same, and keep the money.  It’s not like the worker is buying into something, an investment of sorts.  This money is directly from the profit, the worker does not choose how much he wants to give, and when liberal progressive bourgeoisie soften a little, and use the taxes for ecology or more worker friendly things, there is usually a corresponding retrogression.

This type of speculation indicates fictitious capital is still alive and real, just as it was in 1863 when Marx wrote Theories of Surplus Value.  The bond market is still large, and if it carries interest, the amounts of which are a sizable sum of money.  Have we ever seen taxes go down, under either party? In the real world, not the Ivory towers, life is a different experience.  

Taxes do come from the  worker, it is part of the unpaid section of the workday, the surplus value. When it is paid directly by the worker it is calculated for beforehand by the employer as a part of his wages..  

We thus see a society that is still functioning the same 167 years after being described by Marx in Theories of Surplus Value Volume 3. 

Nicholas Jay Boyes   

Milwaukee Wisconsin

American Democratic Republic

Profit and Taxes.  Wages and Profit. 

~ nicholasjayboyes

Profit and Taxes.  Wages and Profit. 

Wages are the lowest that can be paid, remaining socially acceptable.  The unpaid section of the workday, the surplus value, essentially what profit, is where taxes are divided off from. Escaping from this reality seems to be what is desired now, by cutting taxes for the wealthy.

If you cut taxes from profit and shift it directly on the workers back,. the taxes still have to be paid for. Workers work longer hours, what Marx referred to as increasing the absolute surplus value.  But this too runs into resistance, as there are laws about how many hours workers are supposed to be able to work, 8 hours is the current one.

You have to work them overtime to make up for the loss of wages due to the tax   

Longer hours, a wage cut…  It makes one wonder where the support for this is coming from.

Privations by the proletariat would seem to be coming.  You cannot simply raise the amount of profit.  If you lower the amount of the taxes from profit the taxes have to come from somewhere.  

And as the only thing that creates profit is labour,: lowering taxes on the wealthy is the same thing as increasing the profit kept by the capitalist at the workers expense.  

Either the taxes are coming from the form of profit, or from making the worker privy to part of what was taken as surplus value directly by his employer by charging him yearly, like property taxes, or printing it on the paycheck as a deduction, it still comes from the worker. In either case, divided off of profit, or shifted on to the worker, the surplus value flows into the state.

The bourgeoisie claims the tax money as their own. Obviously for them it is part of their profit. State industry does not make a profit.  It is privatized when it can make a profit, we saw this with recycling.  Waste Management now runs the sorter. Money for the state can only come from taxes.

The wealthy can only cut taxes by increasing privations from its workers.  Surplus value from the worker is needed to maintain the capitalist state.  It is a bourgeois fantasy to massively defund the state. Perhaps some of the savings will come from the prisons, police, etc. whose social function becomes clear during unrest. Like that is going to happen. The whole purpose of the state from its inception is to keep the classes divided.

Perhaps it is more palatable to the bourgeoisie to consider taxing workers directly rather than making a profit and dividing it off to pay for the state.  But in the end, it is all the labor of the workers that has to pay this, out of the surplus value they have created thorough exploitation of their labour.

Nicholas Jay Boyes   

Milwaukee Wisconsin

American Democratic Republic

Notes on Ha Joon Chang Economics 4 2 2024

~ nicholasjayboyes

Notes on Ha Joon Chang Economics

Ha Joon Chang’s book Economics presents many economics principles in a way that is easier to  understand than Keynes, in other words, without essentially redefining the whole language of political economy to overshadow and conceal concepts like profit and surplus value.  These concepts, although not much mentioned by Chang when discussing the production process, are part of his description of financial capital, which he is talented at.

“Money is what others in your society owe you,  or your claim on particular amounts of the society’s resources.  

P.18 Ha- Joon Chang Economics 2014 Bloomsbury Press

Which places money as a commodity, a special one capable of representing other commodities.  The commodity represents social labour, done by the worker not for himself or his own enjoyment, rather for society, although mediated by the capitalist, who owns the means of production.  It is this disconnection that forms the basis of capitalism, the worker does not own the means of production he is labouring on, and the product he is producing  is a commodity, it is labour for society, not his personal enjoyment as a particular object he has created,

Here we see money as commanding commodities,  a claim on societies resources, social labour as “ societies resources”, rather than individual desires.

“So what is the capitalist economy, or capitalism? It is an economy in which production is organized in pursuit of profit, rather than your own consumption (as in subsistence farming) or for political authorities (here comes his dig against socialism, in parentheses here)- as in feudal or socialist economies where political authorities, respectively aristocrats and the central planning authorities tell you what to produce.” 

Ha – Joon Chang Economics p. 27

Well we must remember Chang is a Cambridge professor, so this should not surprise us (at least the misrepresented account of what socialism represents).  The part about production being organized to create profit is right. But to compare feudalism, whose labourers were often slaves or serfs, basically chained to the land, without earning money, which would have been contrary to their status as slaves, to socialism neglects that if nothing else slavery no longer exists, rather it was removed in cooperation with socialists, in 1863 when Karl Marx was involved in the Civil War, which emancipated the slaves, and with it the last vestiges of feudal society whose economic system was still  prevalent.  Incidentally at this point in 1867 the right to participate in universal suffrage was extended to freed black male slaves, a direct result of socialist cooperation with Abraham Lincoln.

Ha Joon Chang seems to think central planning is a repressive process, but look at agriculture under capitalism, with its more than 10 billion dollars worth of yearly farm subsidies, controlled by massive bureaucracies in the capitalist state with billion dollar budgets,, and you see central planning is a real part of collectivized agriculture, and is not feudalism.  The land is not rented, the landlord is not part of late capitalism, at some point he became redundant in the late 18th and early 19th centuries, and was replaced by large scale capitalist farmers, whose only goal was profit.   

The ethical argument for collectivized agriculture, that it ends rural backwardness by allowing for the once farmers to move to the city, where they will be more culturally advanced, as there are museums, theaters, libraries, etc. in the city that are not present in the country is a strong one.  Given the pull of rural society, backwards Republican bourgeois strongholds, compared to the urban proletariat, literate and industrialized more heavily, especially as of late with computers and the internet, it is hard to see any alternative to large scale collectivized agriculture.

To make it worse, to even be able to compete with a large farm vs a small one, requires money for tractors, harvesters, trucks, etc.  Unless you are a small organic farm, with a following in the cooperatives or Whole Foods organic food stores, competition with capitalists is difficult.

But what differentiates feudal from socialist agriculture is not central planning, it is the farmer owns his own land under socialism, individually or collectively.  Either he outright owns a farm,  with no landlord, rent or profit, or he labours in a collective farm with employee ownership of some sort, which differs from slavery obviously, that should be clear to our economist, who disparages the worker who has had the audacity to question the capitalist control the means of production. 

Chang seems to dis socialism anytime the world profit or profits comes up.  He never spells out exactly what profit is, instead goes right into financial capital  and an average rate of profit.  He also does not square off with what a community represents, no less a concept like surplus value.  It’s just more and more defense of profit, and financial capital.

About the only thing valuable about his “beginners guide to economics” is he does point out there is more financial capital today than previously.  But he does not see interest is  a subdivision of surplus value, like taxes.  Consumed by the fetish of interest bearing capital,  profit removed from the factory, he displays the many ways financial capital in form of bonds, stocks, derivatives, etc. make a profit for their owners.  

If it seems too complicated don’t worry, he even says himself of the myriad financial transactions he discusses they are all too difficult to understand, even to him.  It is abstraction basically, and Chang is caught up in it.  

He takes the vulgar view here:

“Capitalists own the means of production either directly or,  more commonly these days,  indirectly by owning shares(or stocks) in a company- that is , proportional claims on the total value of the company- that owns those means of production.  Capitalists hire other people on a commercial basis to operate these means of production. These people are known as wage labourers, or simply workers. Capitalists make profits by producing things and selling them to other people through the market, which is where goods and services are bought and sold.

Ha Joon Chang Economics p. 27

His view of profits being made by people selling things in markets shows the vulgar view of profit, namely it does not occur in production, rather when the commodity is exchanged for money.  First and foremost,  the value of a commodity is the amount of labour time contained in it, regardless of whether or not it is paid for.  David Ricardo showed us this on the first page of his book Principles of Political Economy and Taxation in 1817. Surplus value is the amount of unpaid labour contained in the commodity, its value (the commodity) is the amount of labour time required to produce it.  Its exchange value is how much money it is worth, which does not determine how much labour time is required for its production, it is a measure of it.  The unpaid labour, essentially profit, is not created by exchange, it is already present in the commodities value, realized by being sold at its price of production in the market. 

Indeed goods and services are bought and sold in the market, but this is not the cause of profit. It is the relationship with the wage labourers he identified who “operated on a commercial basis to operate these means of production” with the capitalist that is the source of the unpaid labour, the profit. Just what the “commercial basis” that makes one man owners of these means of production, that are “more commonly these days”  owned by more than one capitalist, and wage labour, remains a mystery not solved by Chang. This influences his views later of financial capital  and interest.

He then proceeds to show that much has changed since Adam Smith wrote Wealth of Nations.  Banking, stock exchanges, corporate bonds, are all touched on.  Things have changed, and Chang grudgingly accepts that the goal of production is the same, the quest for surplus value.  Adam Smith, however limited he was, is still further along than this fellow as he recognized the value of a commodity  is the amount of labour required to produce it, whether or not it is paid for.  He saw surplus value as part of the cost of production, not as coming from exchange, which our vulgarian just suggested.

He does acknowledge the quest for profit is the same as in Adam Smith’s time on page 33, when he says

“…competition among profit- seeking firms may still be a key driving force of capitalism, as in Smith’s scheme.”

Chang p. 33

Which is as close as he gets to looking at how Adam Smith viewed profit, and how surplus value is created  in production.  

“But it is not between small, anonymous firms which, accepting consumer tastes, fight it out by increasing the efficiency in the use of given technology. “

Chang p.33 ibid.

Smith  understood technological changes driving profits as,  for example, the power loom was making its introduction felt around his time.  His example of the needle making factory also fits in with a basic knowledge of commodity production and what Marx referred to as an increase in relative surplus value when a company invests in better machinery to remove a competitor, or create a profit windfall.  The needle example shows although Smith did not spell this out exactly like Marx,  he still understood what changes in the means of production represented.

These are just a few takes from his Economics book, which claims to explain for the beginner economics,  which he also suggests is simply a political concept.  In other words,  political economy is not a science. Fitting words to a man who cannot use the word “profits “without disparaging workers.

Nicholas Jay Boyes

MIlwaukee Wisconsin

American Democratic Republic

4 2 2024

Value. Profit. Surplus Value. Contradiction Between Rate of Profit and Surplus Value 12 27 2023

~ nicholasjayboyes

Value. Profit. Surplus Value. Contradiction Between Rate of Profit and Surplus Value 12 27 2023

It is essential to understand what the concept value represents, if you want to begin to understand political economy. What seems rather straightforward becomes tied up and difficult to understand the deeper one goes in it.

Adam Smith in his Wealth of Nations in 1775 showed he understood the importance of value, and its connection to the labour process. Value is the entire amount of labour time required to produce a product, whether or not it is paid for. David Ricardo noted this in Principles of Political Economy and Taxation 1817, in chapter one. He owes much to Adam Smith though, which formed the basis for his work.

Adam Smith understood the law of value, but could not directly put forward its inner essence, the presence of surplus value, the unpaid section of the product’s production. The fact it is not paid changes nothing in its value, but by connecting profit with surplus value, as Adam Smith did, confuses what surplus value is.

Because profit is the unpaid labour of the worker, the unpaid section offer workday, it was easy to overlook the contradiction, and lump all of capital that produced this unpaid labour into profit. Surplus value , onto other hand, is the relationship of the worker, wage labour, to the owner of capital. It is calculated by the amount of labour present in the product, paid and unpaid. Profit is the unpaid labour calculated in the entire expenditure including the machinery and raw materials.

This shows that the rate of surplus value can be very different when machinery becomes very advanced, compared to more mundane labour, with many workers but less machinery. The profit rate is higher where more manual labour is used than the sector of production where the labour uses more machinery. This is due to the profit rate being calculated onto total capital expenditure, the ratio of surplus value to the amount of product produced.

Machinery does not create surplus value, only labour can do this. Harnessing natural processes is not what creates the unpaid section of the workday, the value of a commodity is the amount of labour time required to produce it. Less labour is required to produce the product under conditions of modern industry. It requires more souls to produce the product without machinery, with a lower rate of surplus value, but at a higher rate of profit, as the machinery that is calculated with the variable capital, the cost of labour, lower for the owner of large means of production. Even a higher rate of surplus value is obscured when the total value of all the machinery and raw materials are calculated with cost of machinery, the constant capital. The profit rate falls.

Our other producer, whose rate of profit is the average rate, now has a larger section of his expenditure on raw labour. The product was worth more, its value falls with the constant march forward of modern industry. which reduces the amount of labour required to produce the commodity. The person with the machinery can now undersell his competitor, lowering the cost of the product, and the amount of unpaid labour accruing to the individual commodity.

It may seem the more primitive production is making more surplus value, but the cost of this is translated in the product, which falls with machinery becoming more advanced. The sector the machinery is unleashed on shows less profit, as the cost of the machinery is attached to the expenditure, but the surplus value rate can rise, Even if the worker receives higher wages, it is still cheaper to employ him with the help of machinery than without. The profit rate may have been higher prior to the introduction of the machinery, but productivity was lower. With the introduction of machinery, the worker creates more with less labour, resulting in more surplus value. But profit does not show this. This is the contradiction Adam Smith left us, which couldn’t be solved until the surplus value was directly examined. It wasn’t until about 1863 until profit and surplus value would be directly differentiated by Karl Marx, who would eventually cause revolution in the 20th century with his work. It is still causing revolution, and the theory of value still stands.

The study of political economy has to start with the theory of value. The value of the product is the amount of labour time required to produce it, and even if it were all paid labour (which it is not) its value would still be the amount of labour required to produce it. It changes nothing if it is not paid for. It just means part of the commodity is not owned by the worker, rather its production creates the compulsion for him to continue laboring, and the harder the labour the more surplus value, and the less and less chance of the worker to ever be able to buy the machinery he is harnessed to. The harder he works the less control his environment he gets. But if anything this reaffirms the law of value; his labour is still creating the value of the commodity, it is just that more is shared with the capitalist when machinery is more advanced.

The interesting thing is Smith and Ricardo grasped surplus value, yet Ricardo calls it profit. Both see the surplus value; they grasp it is present and can even see the theory of value, yet still do not directly differentiate between profit and surplus value. Ricardo should lave grasped this, but did not. Apparently a half a century more of industrial capitalism was required to unravel what was left to us from Adam Smith and Ricardo. Both were brilliant, a definite study, but inadequate to understanding the difference between surplus value and profit. You have to study Karl Marx to understand this latter difference.

The question what value is has yet to be common knowledge, which should tell us something. Someone doesn’t like the conclusions this brings forward. In many regions of Europe, the study of Marxism is illegal. And this in societies that lived under revolution for decades. They seem to be trying to put the genie back in the bottle, often violently. A universal suffrage minus the workers party, is practiced. There are whole institutions dedicated to removing Marx from political economy, some even purporting to be places of higher learning.

But for all their efforts, the theory of value remains. And the contradiction between the rate of profit and the rate of surplus value remains, becoming more important than ever as of late.

Nicholas Jay Boyes
Milwaukee Wisconsin
American Democratic Republic
12 27 2023