Rai 01-05 The Coming of a New Democratic Revolution (Part 3) Mark Wain March 28, 2016 Part 3 http://www.nytimes.com/2016/04/09/nyregion/bernie-sanders-back-in-the-old-neighborhood-to-make-his-case.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=first-column-region®ion=top-news&WT.nav=top-news: Asked what she thought of him (i.e., Bernie Sanders), Ms. Lazareva laughed with delight. “Oh, I hate him!” she said. Ms. Lazareva, who hails from Moscow, recalled waiting in line for three hours each morning to get a jug of milk as a little girl living under communism. “If you lived under socialists, you’d hate them too,” she said. “They make everyone poor.” Although Mr. Sanders, as a self-described democratic socialist, has a vision for America that is distinct from the economic system in the former Soviet Union, the word “socialist” was enough to provoke anxiety in Ms. Lazareva. She was unmoved. “Everyone will be hungry, everyone will be poor,” she said. “If it will be Sanders, we will have the same here. Everybody who comes from a communist country, Russians, Eastern Europeans, even Latinos from Cuba, feel this way. When you know what will happen, when you see it — you’re Republican.” *** We have so much for Soviet socialism after capitalism being restored starting from the 1950s. The reason why she complained about and hated socialism is that the Cold War arms race between the U.S. and the Soviet Union for gaining an upper hand in world hegemony had evidently hurt the latter more than the former, causing severe shortage of means of subsistence. Socialism per se has nothing to do with making everyone poor, in fact it should have made everyone richer if it did not go astray. Let’s look at some other issues. http://www.nytimes.com/2016/04/08/upshot/how-a-tariff-on-chinese-imports-would-ripple-through-american-life.html?comments#permid=18161999: Trade between China and the United States — which reached $598 billion in 2015 is a problem. Donald Trump’s 45% tariff proposal on Chinese imports has different effects on different workers in the U.S. Some workers will benefit and others may not. The middle class (or white-collar) workers belong to the latter and the working poor whose income cannot afford imports will feel no impact from Chinese imports whereas those afford the imports will have to pay more after imposing tariff. In a wide-open world market, capital moves around the globe freely in a split second while labor power dwindles down and leaves their lives on. Capital always has the upper hand of the labor no matter in what way the economy turns around. Workers’ job will become scarce even with no import, because, to boost profit, capital tends to replace labor with machinery when not importing goods or doing both at the same time. Tariff on imports is a superficial cure of the severe wounds caused by unemployment and underemployment. The only healing art is nationalization of capital. Any surplus labor product that exchanges on the market for profit will have to be owned by the nation-state instead of private individuals. Profit-sharing and working-time-sharing among all workers will eventually lead to full employment. The state will pay interests for a long haul to those individuals whose capital has been appropriated or bought out by state. Universal employment of machinery for production will not only alleviate burdens on human laborers but also allow them to enjoy lives as freely associated laborers and learn new knowledge on new things every day in preparation for social expanded reproduction for the whole society and never again for a few rich and powerful individuals. http://www.nytimes.com/2016/04/09/business/dealbook/getting-a-student-loan-with-collateral-from-a-future-job: The idea of “pledging to pay a percentage of their future incomes in return for funds today” is not much different from the much older reverse-mortgage business model. The difference lies in the loaner to the former does not own the borrower’s property for life, rather only a portion of one’s lifetime earnings. But the trend is such that the “educational industry” is accelerating its enrichment by charging ever more tuition and other fees to workers going into education and training on a yearly basis. It’s odd, however, that business hiring people gratis undertake no obligation so far as the “human capital” is concerned. All benefits come, after all, from a price one has paid. Capital cannot have both ways – not paying anything for workers’ education. Public higher education must be made free of charge and paid for by capital transforming a major portion of the human labor power as surplus labor into profits. If it refuses to pay for taking possessions of “human capital” then it will have to invest all funds in machinery capital without hiring anyone - no living labor power will be available to produce surplus product that pays capital back, after exchange, the profit, interest, tax and rent, it has nowhere to go but demise. Only living labor power creates wealth for capital, if most laborers are squandered, so will be capital itself. http://www.nytimes.com/2016/04/10/us/politics/primary-process-is-seen-as-in-conflict-with-democracy: “Both parties have used a convoluted process for picking their nominees,” to vote on behalf of capital, rather than the voters. The undemocratic election process has been practiced for very long time and the citizens could not do anything to rectify the wrong-doings of the two party and their bosses. This fact proves liberal democracy of this country is a sham. It explains, in part, why so few voters want to vote in the first place. Another equally crucial factor smashing the electoral so-called democracy of the old state machinery is the process designed to prevent from nomination anyone who is not party-approved, i.e., capital-friendly, including Donald Trump and Bernie Sanders. Voters manipulated by both parties have waited until this date to wake up to fight the absolute power of capital for a participatory democracy. Its fight will be escalated from demonstrations to uprisings when capital insists on not to give in. A new democratic revolution is poised for take-off and will become the inevitable trend of the whole era. The goals include, but by no means off-limits to others, the repeal of all undemocratic electoral regulations and rules and all-party leadership and operatives must be elected periodically to serve as well as removable. *** One may want to ask oneself the question why socialism refuses to maintain its hold over the most developed capitalist societies. The answer must do with the fact that their growth of forces of production seems unlimited until very recently when they should face up to the ecological, especially the climate change, calamity and over-production-caused unemployment and underemployment. These quagmires cannot be avoided or escaped from. Capitalism finally reaches its own destiny of greater stumbling at the early part of 21st century. Appearance of Bernie Sanders’ political revolution is never accidental; it arises from a deeply rooted crisis that the world capitalism cannot extricate itself from. No matter how pusillanimous, ineffective or superficial his revolution is, people take it to hearts and go on trying! From Democracy Spring movement and a 36,000-workers’ labor strike by the Communications Workers of America (CWA) against Verizon in this country to Nuit Debout (“Standing Up at Night”) pro-labor movement in France, working people reignite revolutionary torches in response to Sanders’ political revolution as heirs of the long tradition following student-led protests of May 1968 in France, the anti-Iraq-war movement all over the world in February 2003, Occupy Wall Street movement in the U.S. and Spain’s anti-austerity Indignados movement of 2011. Shall Marxists repudiate it and even resist its development? A few will, but the majority will not. They will participate in it and propel it forward aiming at the goal of continued revolution. The critical bottlenecks facing capitalism have nothing to do with external forces; they are purely self-inflicted. Consequently, the system itself is responsible for removals of the stumbling blocks, or better, for removals of their root causes. The internal contradictions dictate the fate of capitalism. The immediate one is the climate change calamity that has been in the making at least for the past several decades (the U.S. energy industry from 1957 onward knew about rising CO2 in the atmosphere causing global warming and beginning to organize against regulation of air pollution; Exxon Mobil understood the risks but funded groups into the mid-2000s that denied serious climate risks; see http://www.nytimes.com/2016/04/14/science/pressure-on-exxon-over-climate-change-intensifies-with-new-documents ), possibly close to two hundred years since the Industrial Revolution between 1820 and 1840 began in England. The idea of carbon tax for solving the greenhouse gas emission problems is not going to work. The reasons are that, firstly, it is contrary to the very condition for the system to exist and survive, namely the profit-maximization principle, and secondly, it presupposes the realization of a family of renewable energy sources which can overwhelmingly defeat with higher efficiency and totally substitute the carbon-based operations. None of the two conditions exists let alone prevails. Carbon-based energy sources are the most profitable ones hence no any other source can take their places when within the bound of the system. Profits come from the labor power mining coal, oil and gas, which are plenty and cheap; while solar, wind and hydraulic operations, once built, can last a long time with very little, if any, labor forces employed, hence much less profitable than the coal-oil-gas (C.O.G) operations. Because of the differences of profitability between these two types of operations, the global C.O.G operations account for 90% of the energy production and the renewable operations for only 10% of which 8.4% comes from the hydroelectric power and solar and wind account for the rest 1.6%. To rectify such an intolerable situation, public investments in energy production must be called forth, but by whom? There is no hope to wait for the existing system to change in such a way that somehow all by itself the contradiction between the societal common good and the private profitability be resolved. In a capitalist society, climate change is considered as secondary in importance to profitability if abundant labor power is healthy enough to be hired as waged slaves, markets function well, crises come and go and no greater calamity is close at hand. Capital will be aware of its need to stop burning fossil fuels when the above conditions become too difficult to maintain. By that time, it will be too late for the planet and its inhabitants to survive. Compulsory nationalization, on behalf of the society, of fossil mines, fuels and the carbon-based power plants and vehicle manufacturing must be done to save the earth from total ruin. Financial incentives will not work. Giving advices and preaches do not go very far toward solving the survival problems. Under national ownership of means of production, economic growth will continue and survival is no longer a problem. Economic inequality will be replaced with full development of all individuals. “We’re going to put a lot of coal miners and coal companies out of business,” Hillary Clinton said, in explaining her plan to create clean energy jobs. My own thought about her comments is that the plan to bring clean energy jobs back to coal country neglects the fact that clean energy jobs are mostly assembly jobs, very few maintenance jobs are needed and are much fewer than coal jobs. An unemployed miner has very little chance to be retrained for the clean energy work. Her plan is an unfounded hope at the best and wishful thinking at the worst. A solid plan to solve massive miner unemployment problem must invoke changes of system-related foundation, i.e., the nation-state must own all power plants and all coal mines, or simply put, nationalization of means of production through either buy-outs or otherwise confiscations. Those who want to work within the existing system will fail to rescue the unemployed, because capital will never allow investments in and profits from coal or elsewhere to be interrupted or stopped. Why do the Koch brothers oppose renewable energy? The simple answer is that they would not make a profit on renewable energy. Main-stream economists think differently. For an example, Paul Krugman asserted: it has already become a fact that falling cost of electricity generation using wind power and solar power put the cost of renewable energy into range where it’s competitive with fossil fuels… storage technology…and the issue paying consumers to cut energy use during peak periods seem to be of diminishing significance. Financial incentives will do the trick to shift from fossil fuels to renewables, a shift to sun and wind instead of fire. If so, then why global coal-oil-gas or C.O.G operations account for 90% of the energy production and the renewables for only 10% of which 8.4% comes from the hydroelectric power and solar and wind account for the rest 1.6%? The fact is financial incentives, short of direct state subsidies, are no match for the basic tenet of maximization of profits. The renewables are energy-conversion machineries using natural sources as “fuels” to convert natural forms of energy into electricity and employing almost no living human labor power from which ordinary capital appropriates surplus value (including profit, interest, rent and tax). What this means is that these are not ordinary machineries, or rather they behave somewhat like perpetuum mobile as Marx describes those that last forever. In the 19th Century, after the Industrial Revolution, say between 1820 and 1840, “Machinery inserts itself to replace labor only where there is an overflow of labor power… Machinery enters only where labor capacity is on hand in masses.” (Marx: “Grundrisse” translated by Martin Nicholaus, 1973, p.702) Nowadays climate change has rendered energy-conversion machinery necessary without considering replacement of labor power as the purpose. “It is easy to form the notion that machinery as such posits value, because it acts as a productive power of labor. But if machinery requires no labor, then it would be able to increase the use value; but the exchange value which it would create would never be greater than its own costs of production, its own value, the labor objectified in it. It creates value not because it replaces labor; rather, only in so far as it is a means to increase surplus labor, and only the latter itself is both the measure and the substance of the surplus value posited with the aid of the machine; hence of labor generally.” (Footnote, pp.767-768) Now it’s clear that its circulation capital or electricity as a commodity realized after being consumed by customers (mainly the working masses as direct producers) cannot exceed the objectified labor value in machinery. The diminished exchange value due to depreciation, wear and tear of the machinery that employs no human labor power is a major drawback to the appreciation of capital. In addition, were the renewables wide-spread in use, the number of affordable direct producers (A.K. electricity consumers) would decrease because the renewables would not hire workers. As a result, the price of electricity together with its value would decrease. Capitals of the renewables could not expect capitalist expanded reproductions and they would find they had nowhere to go except bankrupt. To sum up, in the capitalist world, only a tiny portion of the total electricity production will be of renewable nature. The Koch brothers would rather die than face up to penalty and regulations that oblige them to change their monopoly capital investment in coal to the renewables. On the other hand, in a socialist world, people would enjoy whole-heartily renewable energy because the principle of common good will supersede the principle of maximization of private profits, namely in a few words borrowed from Paul Krugman, “climate change can’t be fought without overthrowing capitalism” or in a few state-capitalist countries, climate change can’t be fought without state-subsidized investments. The U.S. wastes no time to block and fight against effort to combat global warming. See (0) http://www.nytimes.com/2016/02/01/opinion/wind-sun-and-fire. (1) http://www.rollingstone.com/politics/news/the-koch-brothers-dirty-war-on-solar-power-20160211 (2) http://www.rollingstone.com/politics/news/inside-the-koch-brothers-toxic-empire-20140924 (3) http://www.nytimes.com/2016/02/10/us/politics/supreme-court-blocks-obama-epa-coal-emissions-regulations. (4) http://www.nytimes.com/2016/02/11/us/politics/carbon-emissions-paris-climate-accord. (5) http://www.nytimes.com/2016/02/11/business/energy-environment/rooftop-solar-providers-face-a-cloudier-future. (6) http://www.greentechmedia.com/articles/read/after-paris-the-state-of-americas-electricity-sector-emissions. (7) http://www.nytimes.com/2016/01/26/business/energy-environment/climate-deals-first-big-hurdle-the-draw-of-cheap-oil. The sole purpose of capitalist system is to maintain profit maximization against all odds. If renewable clean energy sources do not offer better investment return than the fossil fuel sources, there is no way for capital to change its investment from the C.O.G. (Coal-Oil-Gas) sources to the renewables. The secret lies in the fact that value created in any commodity comes from living labor power. C.O.G. capital hires miners, truck and train drivers, and operators. A lot of manpower is spent during the production process which creates precious value of exchange between electricity, the commodity, and its users. Of the value, capital pays a small part (depending on the going rate of the job market) as wages to manpower and grabs hold of a major part for itself as, you guessed it, surplus value from which capital accumulates more capital as profit, pays tax, if any, and interest on debt. The most significant difference between the two systems is that the renewable system provides no living labor power hence any surplus value or profit for the buyer. The old surplus values acquired in machines had been extracted as profit by the seller of the machines and left no profit for the buyer to appropriate. And this is the only factor causing capital to reject investment in the renewable system regardless of how many financial incentives it may receive. In the editorial http://www.nytimes.com/2016/04/04/opinion/a-renewable-energy-boom, NY Times states: “One formidable obstacle to the cleaner energy future is technological; second one is financial; a third one is political.” The main obstacle is none of the above; it is the economic system! Let’s be frank about it – capitalist system is profit-maximization-based. If renewable clean energy sources do not offer better investment return than the fossil fuel sources, there is no way for capital to change its investment from the C.O.G. (Coal-Oil-Gas) industry to the renewables. Coal has been around since the Industrial Revolution and as energy source it is dirty-cheap compared to the renewables no matter how inexpensive, handy or energy-efficient the latter may have been. Why not? The secret lies in the fact that value created in any commodity comes from living labor power. Fossil fuels are never produced, for general discussion purposes, as perpetual ones provided by nature as wind and solar “fuels” (or feedstock). Wind and solar “fuels” are free of charge for any labor power. Where then in the world their value comes from? Can nature create value for humans all by itself? The answer is of course a resounding no. It comes from what Marx calls dead or objectified (or materialized) labor power embedded in the machine of wind or solar power generation, i.e., those labor power spent as dead labor in R&D, design, manufacturing, assembly, testing, transport, construction, monitoring and maintenance, etc. As “Global Trends in Renewable Energy Investment 2016”, http://www.fs-unep-centre.org Frankfurt am Main) described, “Renewable sources such as wind and solar (but also geothermal and small hydro) have lifetime costs that are heavily concentrated at the development and construction stage and, by comparison, very modest during the operating stage – because the feedstock is essentially free and the ongoing labor requirement is limited to monitoring and maintenance. Fossil fuel generation, however, has a cost profile that is much more spread-out during project life, with the upfront capital cost a much lower fraction of the total and the feedstock itself, and the transport and handling of that feedstock, a much higher fraction of the total.” A wind turbine lifetime is at least 20 years - refurbishment or repowering can extend the wind project lifetime. Since it uses negligibly small amount of living labor power, no new value will be created. The only value lies in the machine itself, which can be extracted over a period of about 20 years. At the end of that period, all the dead value imbedded will be siphoned off to nothing. This is in distinct contrast to fossil fuel power plants – with a lifetime of about 40 years at a building cost much lower than the renewables. Its maintenance cost is also low. Furthermore, it never ceases from hiring living labor power to add new value from which generous profits are generated and kept growing by not paying the labor power for this surplus value created. Thus, The World Coal Association estimates that some 900GW of coal generation were operating in 1992, and that this had increased to around 1.9TW by 2015. [1 GW = 1 Giga Watt = 10^9 Watts; 1 TW = 1 Tera Watt = 10^12 Watts = 10^3 GW.] There is an insurmountable barrier for capital to switch its investment from fossil fuel power plants to renewables no matter how inexpensive or well-suited for generation of electricity the latter may be. The barrier to progress is capital itself. Only nationalization of all energy production can overcome the barrier of capital; the nation-state should take over from private capital all means of production or capital goods, to engage in socially oriented production that will make renewables feasible. Any effort to develop renewables as the new means of power production replacing the fossil fuel power production within the scope of capitalist system will fail. Climate change is but one of the many problems that require radical changes of a dying system if it is to be saved for a time. Others include economic structural crises; gold worker’s productivity-based depreciations, in price and value, of commodity, means of subsistence, and means of production as labor power rather devotes its major portion of working hours to produce surplus value than create new value for the society ; decline of socio-average rate of profit; automation-driven over-production, excess production capacity, over accumulation of capital which necessarily and deliberately creates a surplus population and a long-term reserve army of unemployed labor as well as transforms economic crises into financial crises; temporal decline of capital value in commodity, real estate, debt, stock and other financial assets such as currency etc. Since mainstream economists as an apologist opinion-leader class have been at a loss to save the system from the danger of demise, now it’s the people’s duty as well as their privilege to take the solution of these problems into their own hands. In these days opportunity is being driven by the digital economy and a production-based economy is superseded by numbers, just like manual labor has been superseded by using machinery which never asks for a raise. There are many reasons why it happens, but one of them is the fact that automation has not only reduced the manual labor usage but also reduced labor power value or money wage and the average rate of profit. To regain the latter, capital tends to take advantage of the social nature of the internet where it can acquire surplus labor power value without paying any wage hence boost the rate of profit extraordinarily high, if it can realize fully the unpaid surplus value. In the infotainment or the digital economy, web visitors or computer users contribute their (working) time either online or offline viewing advertisements from which infotainment “industries” exchange viewers’ viewing time as value for cash, when capital pays nothing for wages or the labor power spent during their working time. For an example, Microsoft Corporation has gained 71,283% in stock value from 1986 to 2016 over 30 years, i.e., at an annual rate of increase of 2376%. There are on the average about 0.5 billion people using its Windows Operating System; each contributes, say, 2 hours a day working on their Windows machines to create surplus labor value at about $10 a day as profit for Microsoft and other companies gratis in addition to the cost on users acquiring the operating system and paying internet providers; the total working day contribution is about $1 billion, from which Microsoft and other digital corporations such as Facebook, acquired and shared as profits. In addition to Microsoft Windows machines, there are at least 2 billion smartphone users worldwide in 2016; each of them can access as many social networks as one wants. The theoretical profits that corporations accumulate from them are indeed phenomenal. In 2015, Facebook has 1.59 billion active users of which 1.44 billion are smartphone users. Its potential daily income obtained as profits from those smartphone users at say 0.25 hour a day per user at $0.25/hour adds up to about $0.1 billion a day. (Facebook announces that the average visiting time on Facebook is 50 minutes per user which is exceedingly high. It is possible that its user-time measure is exaggerated by counting time from user’s logon through logoff. Most users would not stay on Facebook all the time before logoff.) To realize it, Facebook would have to sell 100% of its surplus value of the “guest” workers to advertisers to realize the daily $0.1 billion or annually $36.5 billion profits. Obviously, that would be a tall order. Facebook these days can realize only about a small portion, say 1% (called the realization coefficient g of the surplus value) of the surplus value created by the “guest” workers every day as profit, i.e., $0.001 billion or its annual surplus value created by these “guest” worker is only $0.365 billion, which is insignificant compared with the total annual profit (or net income) of $3.69 billion for 2015. Other than the “guest” workers, its own internal host employees will create additional surplus value. The reason why g is small is that “guest” workers cannot be disciplined in the same way as internal host full time workers can so that for the former gg « 1 and for the latter gh ≈ 1. In the service sector of which the infotainment industry is only a part, users of social networks, viewers of TV, listeners of radios, readers of online newspapers/webs and customers of different sorts participate in productive labor as well. They serve a dual role in the economy as both producers and buyers of products they produce. They contribute surplus labor powers as “guest” workers and purchase the infotainment products as consumers by spending money on accessing fees to the internet and subscription fees, if any. In general, in the production sector, workers and buyers of products are distinct from one another. Other types of capital to make money the soft way include the unproductive and fictitious capital of banks, hedge funds and other financial services firms such as Charles Schwab, TIAA and Fidelity Investments. It is questionable how this type of “virtual-reality” capital can help the economy for and of the working class that loses political power and social standing for the past several decades. The sunny side of the American economy, as always, is for and of the rich, powerful and influential brought into being by workers faithfully toiling for race-to-the-bottom wages. The remedy for the problems remains the same - nationalization of these industries by breaking away with old forms, rules, laws and politico-economic scope of capitalist system through a new democratic revolution process. The new revolution can neither be considered as another huge revolving door where fortunes of a few change hands among themselves nor be so awkwardly situated that “the pragmatic pursuit of incremental liberal policy change” as Hillary Clinton has done carries the day. Democratic revolution means seizing major portion of the political power from, and sharing the economic power with, capital, the king, by the people. Without the political power, people’s new democratic revolution is empty; with it, people can subjugate capital to serve the whole society and never again only the 1%. The are many problems that require radical changes of a dying system if it is to be saved for a time, including automation-driven over-production, excess production capacity, over accumulation of capital which necessarily and deliberately creates a surplus population and a long-term reserve army of unemployed labor. To solve the long-term unemployment problem, the state should take over the private enterprises either by transformation of capitalist industry and commerce through the policy of redemption or expropriation, or both. Any other policies are merely futile fidgets. Labor productivity of service sector should be similarly defined to that of the production sector. If service sector workers spend their working time on producing service products of use value for the society, the output per hour per worker or labor productivity is calculable. A more meaningful measurement for labor productivity is not based on the output produced but on the surplus value that labor creates per hour for capital, called labor valuability (new value owned only by capital but not by the whole society). The surplus value is an unpaid and unearned labor power measured in terms of working hour by capital which reaps that as its only income. Its income supplies capital as profit plus interest plus rent plus tax payment, if any. Capital’s main interest is not of production per se but profit maximization hence valuability is more useful than productivity, unless one is interested in only the total output created by labor power. It might be added that labor power creates not only surplus value for capital but also paid wage or advanced money compensation by capital as exchange value for the whole society. Users of social networks, viewers of TV, listeners of radios, readers of online newspapers, news webs and others participate in productive labor as well. They serve a dual role in the economy as both producers and buyers of products they produce. They contribute surplus labor powers as “guest” workers and purchase the infotainment products as viewing consumers by spending money on accessing fees to the internet and subscription fees, if any. In general, in the production sector, workers and buyers of products are distinct from one another. Other than those “guest” workers, internal employees of the service sector will create additional surplus value. It is useful to introduce the realization coefficient g of the surplus value, which is a measure of actual surplus value realized for a given kind of workers. If, for argument purposes, we assume that the “guest” workers are not as easily disciplined as the internal host employees, the extraction efficiency of the surplus value from the “guest” workers is much less than that of the internal host employees, we would have gg « 1 and gh ≈ 1. [Wherein, the second letter denotes the subscript; g refers to the guest workers and h the host employees.] In the following discussion, we will neglect the contribution of the “guest” workers’ surplus value and consider only the contribution of the internal host employees, i.e., we will assume gg = 0 and gh = 1, until the assumption is found invalid and the “guest”- worker contribution to the surplus value can no longer be neglected. In general, the surplus value S = Sg + Sh = S· (gg + gh) Let’s take Facebook as an example. In 2009, Facebook’s revenue was $777 million, its net income was $229 million and its employee number was 1,218. In 2013, its revenue was $7.87 billion; hired 6,337 full time employees and wrung a net income of $1.49 billion. In 2015 Facebook's revenue grew to $17.93 billion, squeezed a net income of $3.67 billion, and hired 12,691 full time employees. Assume every year each worker spends 40 hours/week for 52 weeks or 2,080 working hours. The labor valuability (= net income/employee number/working hour) in 2009, 2013 and 2015 are, respectively, $90/hr., $114/hr. and $140/hr., neglecting inflation. From 2009 to 2015, the linear increase rate of labor valuability is 8.3% per year. In the two years from 2013 to 2015 it is 13% per year. The run-of-mill labor productivity (= labor valuability times the revenue-to-income ratio) in 2009, 2013 and 2015 are, respectively, $305/hr., $598/hr. and $680/hr. Either of the two measures regarding host workers’ output is unbelievably high. According to http://www.marketwatch.com/investing/stock/fb/financials Facebook Annual Income Statement: (1): 2011, (2): 2012, (3): 2013, (4): 2014, (5): 2015. Gross Income: 2.85B (1) 3.73B (2) 6.11B (3) 10.28B (4) 15.06B (5). Surplus value S = Net Income 668M (1) 32M (2) 1.49B (3) 2.93B (4) 3.67B (5). Other SG&A (Other Selling, General and Administrative) Expense: 707M (1) 1.79B (2) 1.78B (3) 2.65B (4) 4.02B (5) of which about 60% is the wage bill including bonus. V = Variable Capital: 60% of another SG&A or 424M (1) 1.07B (2) 1.068B (3) 1.59B (4) 2.41B (5). C = Constant Capital: Depreciation & Amortization Expense 323M (1) 649M (2) 1.01B (3) 1.24B (4) 1.95B (5). The rate of profit R, or Marx’ formula, the exploitation rate E.R. and the organic composition of capital O.C.C. are calculated as follows: R ≡ S/ (C + V) = 0.894 (1), 0.019 (2), 0.716 (3), 1.04(4), 0.84 (5), E.R. ≡ S/V = 1.575 (1), 0.03(2), 1.40(3), 1.84(4), 1.52(5), and O.C.C.≡ C/V = 0.762(1), 0.607(2), 0.946(3), 0.78(4), 0.81(5). The rate of profit R of Facebook is more than three times (except that in 2012 – an extraordinary year) of the U.S. social average rate of profit (projected to be about 23% during 2013-2015. See below.) The true surplus value appropriated from the labor power of the internal host employees is therefore only 23% of total invested capital or C + V (See below). In 2013, the average hourly salary including bonus at Facebook was 1.068B/（6,337 *2080）= $81 or $169K/year. In 2015 the average hourly salary including bonus was $91 or $190K/year. The variable capital V is only approximate as Facebook does not publish the wages and salary expenses to the public. The reason R is very high is that the unpaid “guest” workers contribution Sg= S·gg to the surplus value S has not been accounted for. The true surplus value appropriated from the labor power of the internal host employees is reduced from S to Sh = S· (1 - gg) = (C + V) ·23% since Sh / (C + V) = 23%. Hence, the realization coefficient gg = 1 – 0.23/R as a share of the surplus value to which the “guest” workers contribute. Thus, in 2013, gg is 68% and in 2015 it increases to 73%, both are significant amounts, indeed! “Guest” workers contribute much more labor power to Facebook than its internal host workers since gh = 1 - gg = 0.23/R it is only 32% and 27%, respectively, and the tendency of falling host contribution to the surplus value seems increasingly more significant in the future as R keeps increasing and the U.S. social average rate of profit decreasing from 0.23. When R » 0.23, gh ≈ 0. Facebook is not a public owned company serving the well-being of the society. It is a private company for private profit whose raison d'être is to maximize people’s viewing times on it only and nowhere else. To achieve its profit-making purpose, it has to be an infotainment outlet serving the interests of all kinds of people. As interests and ideas of people differ, so must its info-contents to suit their tastes most of the time. Consequently, its news will have to be fickle and increasingly hard-to-impress. Logic, facts, reasons, truths, and justices are the casualties of manipulations under the mantle of its algorithms, just like those under advertisements. The best way to avoid the enormous waste of the public time and resources on the infotainment industry is to enforce the requirement that internet outlets must be government-owned to serve the interests and well-being of the 99% and not the money-making interests of the 1%. The accumulated wealth by Facebook measured with its gross income: $2.85B (2011) 3.73B (2012) 6.11B (2013) 10.28B (2014) and 15.06B (2015) from unpaid viewing times of billions of viewers or “guest” workers must return to, and enrich, the public and, as an example, to fund universal health-care and free public higher-education programs because viewers create as large as 73% (i.e., $11 billion) of its net income, yet they get no compensation for their working times. Excessively unequal distributions of “guest” workers’ surplus value have borne witness to the fact that the infotainment industry has invariably super-exploited users of social networks, viewers of TV, listeners of radios, readers of online newspapers, news webs and others participating in productive labor for the industry. To save the dying system, the internet and the infotainment industry should be nationalized. It’s not difficult to do so as the U.S. capital has heavily concentrated in a small number of corporations for more than one hundred years; for an example, “just six corporations own 90 percent of all media in the United States: most of news and information is produced in an echo chamber.” To alleviate sufferings of the system in the throes, a fresh incremental improvement is to pay the “guest” workers according to the amount of time that they spend each day before they go on strike for compensations in the short run and abolition of the wages system in the long run! The striking “guest” workers should adopt what capital does the best – using machinery in production to reap profits – to bargain for compensations. As the media are inexorably digitized, to tune advertising out is easy not only on social media but also on commercial TV – an industry worthy of $70 billion per annum. (Television advertising revenues in the United States, according to PwC or PricewaterhouseCoopers, a multinational accounting and auditing firm headquartered in London, England, will grow from $71.1 billion in 2015 to $81 billion in 2019.) If we use 73% of Facebook as the gg of the TV industry in 2015, then TV viewers should claim $52 billion as their rightful compensations. If “guest workers” want to get their view-time-worth compensation back, they can use ad-blocking software to block the advertisements they do not want to view or watch. The penalty, however, is that the media outlets will take away viewing or reading rights from you. Capital as a social relation has, as always until now, the upper hand of absolute control power. Have you noticed more and more news websites putting in paywalls and begging readers not to use "adblocking" software? That's because advertising revenue represents a large percent of the budget for most media outlets. If you don't want to pay to subscribe, or don't want to watch a bunch of autoplaying video ads pop up when you just came to read the news, then they don't want you reading their stories. No one has figured out how to make internet journalism profitable. And in 2016, it showed. Digital advertising is robust. In 2017, 33 percent of the world’s projected $547 billion in advertising will go to digital enterprises, according to Group M, a global media investment management group. That’s 77 cents on every dollar. Television, by way of comparison, will get just 17 cents. So, there’s plenty of money going online, just not to media websites. In the first quarter of 2016, Facebook and Google snagged 85 percent of all new online advertising spending. If a pattern can be discerned from the gory remains of this year’s bloodbath of online reorganization, reinvention, acquisition, layoffs, and fiscal “misses,” which claimed the jobs and (often worthless) stock options of so many reporters and editors, it is this: Clicks don’t pay the bills. (See https://newrepublic.com/article/139288/year-everyone-realized-digital-media-doomed) Addendum (05-06-2022): https://www.nytimes.com/2022/05/06/climate/hydro-quebec-maine-clean-energy.html [ See “A Fight Over America’s Energy Future Erupts on the Canadian Border” 01-06 for more]
|
