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View Diary: Owners of the world, unite (271 comments)

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  •  By opening China as a manufacturing hub for the (0+ / 0-)

    ...west, Deng punched a hole in the tub. He destroyed the value of labor, convinced corporate management that they could separate their customer base from their worker base, and broke the back of western manufacturing.

    The value of items was not completely tied to the value of labor, but the value of labor was still a big enough component in the cost of goods that workers in America and elsewhere could afford to buy the things they made. Labor cost and goods costs were still tightly coupled.

    Deng offered corporations a chance to break that connection. By moving the source of production to China, they could sharply reduce the cost of labor. - emphasis added

    So much for Capitalism equals Democracy, the politically sanctimonious  purity meme that has been the very foundation of the Gop.

    Excellent analysis M.S.

    The value of human life never really matters to a corporation when  profit is on the line.

    •  a temporary solution, however. (1+ / 0-)
      Recommended by:
      Eric Nelson
      convinced corporate management that they could separate their customer base from their worker base

      I've alreeady noted above that capitalism has a fatal internal conflict that it can't resolve---it needs low wages for high profits, but needs high wages for high sales.

      You are precisely correct--what the corporados are doing now is to try to have both at the same time, by separating the producers from the consumers. They want low wage manufacturing in China and elsewhere, while simultaneously having high-wage consumption markets in the US and Europe.

      Alas, as they are learning now, that is simply not a stable situation.  Inevitably the wages equalize, and the corporados are back where they started.

      •  We haven't heard enough of this side of the (0+ / 0-)

        equation. The consumer
        By reducing labor costs as the default/primary cost cutting mechanism, the other side of the market is overlooked - the consumer.
         Who are they marketing to? What consumer base - where is the market, not with the financially strapped workers.

        We need more on this imo.

        •  we see its effects all around. (0+ / 0-)

          The current "jobless recovery" is a classic overproduction crisis, aka a demand crunch. It's not that we don't have the capacity to produce enough economic output for everyone--it's that we've cut wages so low for so long that people don't have the means anymore to BUY it.

          In the past, demand crunches were solved by Keynesian government spending, which increased demand without increasing capacity.  Now, however, we are in thrall of ideologue nutters who think all government is communistic--which prevents us from carrying out the solution that has always worked in the past.

          Wages simply must go up.  There simply is no other way to relieve the demand crunch. The economy is simply not fueled by a handful of billionaires buying second and third yachts---it is fueled by the millions of plain old ordinary working folks buying all the everyday things they need for their lives.

          That is the reality. It won't go away. And reality always wins in the end.

          We simply will have massive Keynesian government spending. From both parties.  Whether the libertarian ideologues like it or not. (shrug)

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