Dear Psycho-History Organization Members,

Pasted-in below is Part 3. of the multi-part synthesis of Psycho-Historical Crisis Theory whose overall title is --

MALADY AND REMEDY: WHAT'S WRONG, AND WHAT TO DO ABOUT IT

-- encompassing the following sub-titled sub-parts --

Hypothesis II: The Core Plutocracy's Solution to the Crisis of 'Techno-Depreciation'

Narration of U. S. Inflation-History Chart

Hypothesis III: The Conversion of 'Techno-Depreciation' into General Inflation

Illustrative Counterfactual Conditional

Hypothesis IV: Timing of the Core Plutocracy's Conversion to
'Capitalist Anti-Capitalism'

Hypothesis V: The Law of the Tendency of the Rate of Capital
Profitability to Fall

-- and available, in full, via the following URL --

www.equitism.org . . .

Regards,

Psi_Sci



Hypothesis II: The Core Plutocracy's Solution to the Crisis of 'Techno-Depreciation'

These impositions were, in fact, the plutocracy's "solution" to the 'techno-depreciation' crisis of industrial capital profitability, which was also a viability-crisis for the global, capital-based social system as a whole.

These solutions begat, in their wake, the plutocracy's power to create World War I, to engineer the currency inflation "bubble" of the 1920s, the Great Depression of the 1930s,
the Second World War of the 1940s [though this was partly the result of their failure: of the 'Franken-Dictator' turn of their erstwhile servant-dictator, Hitler, against them], the post-World War II continual inflation since [see the chart above], and the Global Crisis of Humanity that is now fast upon us.

This productivity-growth / capital-value annihilation process will generate secular net losses, instead of net profitability, to the plutocracy's industrial production capital assets, until that plutocracy imposes, upon the rest of society, mechanisms to convert such continuing, ongoing, and even accelerating private losses to the plutocracy's businesses, into ongoing, continual, even accelerating
social losses to the rest of society — losses to wages and salaries, and to the life-conditions, of the rest of society as a whole.

The plutocracy accomplishes this conversion of its losses, otherwise private and confined to itself — capital 'techno-losses' — into losses for the majority of the rest of the human population, via the establishment of central bank mechanisms enforcing "permanent inflation", such as the mechanisms of the U. S. Federal Reserve System.

For more on this, see the film, "Zeitgeist: Addendum". [e6]

"Permanent inflation" is, precisely, a permanent tendency to reduce real wages and salaries, if nominal wages and salaries remain constant, or even if wages and salaries increase, but at a rate of increase (s)lower than the rate of general consumer price inflation.

Geert Reuten more fully describes this process of conversion of 'techno-deflation', and of 'techno-depreciation losses' to private capital, via continual inflation, into social losses. [e7]


Narration of U. S. Inflation-History Chart

Consider again the chart [e2] of the history of U. S. price levels from 1665 to 2005.

What stories does it tell, about what previous generations have been through, and about what is now upon us?

Note the "Great Inflation" that began circa 1915, and also note the decided lack of any such continual inflationary trend throughout the 250 years prior to that, from 1665 to 1915.

Before ~1915: One sees, in this chart, a series of somewhat shallow undulations — somewhat shallow relative to what arises after 1915 — a series of alternating, aperiodic 'acycles', acyclical waves of inflation and deflation, shadowing "business cycles", with peaks of inflation around times of war.

After ~1915: One sees an unprecedented, towering, essentially unbroken upward "exponential" trend line [with a nearly "symmetric perturbation" around that trend-line, of inflation in the 1920s 'engineered bubble', turning into nearly "equal and opposite" deflation in the 1930s Great Depression] — albeit with a further acceleration after ~1965 — of ever-escalating price levels, continual inflation.


Hypothesis III: The Conversion of 'Techno-Depreciation' into General Inflation

The post-1915 continual inflation overall — apart from
temporally-local, shorter-duration, 'bubble-engineering', and war-related transients — is, precisely, general 'techno-depreciation' converted into general inflation.

It is private 'techno-losses' to the plutocracy converted into social livelihood losses for the social majority, via the mechanisms of the Federal Reserve Banks system, imposed upon that majority by the plutocracy from 1913 on, through to the present.

Reuten describes succinctly how this conversion process works:

"To the extent that technical change accelerates, price
competition precludes the full amortization of capital investments.

In contrast with the common opinion that both technical change and competition are key characteristics of the capitalist system, they are incompatible, at least when technical change accelerates.

Such acceleration then gives rise to forms of concurrence —
abstinence from price competition, price leaderships, cartels. The particular form depends on the structure of production of enterprises (i.e. the make-up of the stratification of capital).

Concurrence is a major determinant of the inflationary form of the accumulation of capital.

Because it is in their interest, banks tend to accommodate the concurrent price settings of enterprises and so to accommodate a socialisation of private losses that would be due to the devaluation of capital in the case of price competition.

Price inflation also puts enterprises in a relatively advantageous position vis-á-vis labour."

— Geert Reuten, "The Incompatibility of Prolonged Technical Change and Competition: Concurrence and the Socialization of Entrepreneurial Losses through Inflation" [e7]

See also Joseph M. Gillman's book, The Falling Rate of Profit, published by Dennis Dobson (London: 1957), especially pages 47-57 [e8], and the forthcoming Equitism article, "Exposing the Existential, Ontological, Historical Self-Contradiction That Capital Is — The Solution to the Riddle of the [Psycho-]History of Capitalism".


Hypothesis IV: Timing of the Core Plutocracy's Conversion to
'Capitalist Anti-Capitalism'

This prolonged ~35 year period (from 1865 through 1900) of steep, deep, sustained 'techno-deflation' was the real '''turning point crisis''' for the ruling, capital-based plutocracy.

In this period, the falling prices, plus the falling profit margins, and the falling profit rates, that accompanied it — not just for a restricted class of goods, like computers, or other "consumer electronics" in general today, but for the broad classes of industrially-produced commodities.

This was, for the plutocracy, the "Gotterdammerung" of their
industrial capital "Gott". This was, for them, the "turning point" from the ascendance phase to the decadence phase of the system of industrial, technological, competitive capital.

It was this protracted experience that turned the plutocracy against industrial, technological, competitive capitalism; that turned this ruling plutocracy into "capitalist anti-capitalists".

Not the Panic of 1907, not the Panic of 1920, nor the prolonged 'hyper-deflation' of the "Great Depression" 1930s, but rather this prolonged fall in their rate of profit, was the "turning point" as far as this ruling plutocracy was concerned.

Indeed, the Panic of 1907 — which this plutocracy used in their argument for the creation of the Federal Reserve System, to help them impose it on a suspicious public — and the Panic of 1920, and the "Great Depression" itself, were, in fact, contrived by the plutocracy.

This plutocracy contrived these socio-economic catastrophes as the beginnings of their response to, and of their retaliations against, the mortal threat that they felt being posed to their rule by 'techno-depreciation', by the general growth of technology-based and of technologically-facilitated productivity, by the growth of the '''productive force''' of human labor in general, by scientific progress applied as technological progress, and by the prosperity that all of this '''potentiated''' for the majority of humanity.

For more on this, see "Zeitgeist: The Movie" [e9], moving the slider so as to start the movie at time-frame ~1:14:28 [Part III, DON'T MIND THE MEN BEHIND THE CURTAIN].


Illustrative Counterfactual Conditional

Had this ruling plutocracy not acted to resuscitate its profitability — at the expense of the rest of society, as we shall see — the rate of profit after ~1900 would have continued to fall, soon reaching a point whereafter capital-based and profit-motivated production would have
ground to a halt.

The majority population would have been forced to discover and to invent a new system of social relations, one which would resuscitate, mediate, and sustainedly motivate a re-starting, and a re-continuation, of the social re-production of their social livelihood(s), a system of social relations that transcended the capital-/wage-labor-relation.


Hypothesis V: The Law of the Tendency of the Rate of Capital
Profitability to Fall

Both of the kinds of consequences of the technological advance of productivity that we have noted above — of
productivity-increase-caused 'de-value-ation' of the "plant and equipment" capital-value-asset, and of its commodity-output — can reduce the rate, or ratio, of "Return" on the "historical" or "original" capital-cost/capital-value of the plutocracy's past, "sunk"
capital-monetary "Investment(s)":

1. 'Techno-deflation' of the prices of the plutocracy's commodity outputs produced via this "plant and equipment", reduces per-commodity-unit sales revenues, hence also reducing the per-commodity-unit monetary "Return" on the capital-money "Invested"in these "plant and equipment" capital-assets, "squeezing" per-commodity-unit profit margins, thus reducing the "Returns" numerator of the net-revenue "Returns" divided by fixed-capital-Investment value-ratio;

2. Episodic "write-downs" of the "historical", "original"
book-value of these "plant and equipment" capital-assets — often "writing them down" to a zero capital-monetary-value, after their 'techno-depreciation' has been recognized — also subtracts out of the "Returns" numerator of the net-revenue "Returns" divided by fixed-capital-Investment value-ratio.

However, in the case of this second consequence, the amount of the "Returns" numerator write-down also, simultaneously, subtracts out the fixed-capital-Investment denominator of the net-revenue "Returns" divided by fixed-capital-Investment value-ratio.

This raises the question as to the overall effect, upon the magnitude of the net-revenue "Returns" divided by fixed-capital-Investment value-ratio as a whole, of this concurrent reduction of both the numerator-component and the denominator-component of this ratio as a whole, by a decrement of the same magnitude for each.

For example, both of these consequences of 'techno-depreciation' can reduce the ratio of net revenue over capital-value invested; can reduce the profit-ratio, or profit-rate, on capital, in that sense, as a secularly-visible, empirically-measurable trend over time.

This is so because both consequences reduce the numerator of that profit-ratio, relative to the fixed-capital Investment-value denominator of that profit-ratio.

Both (consequence 1) reduced commodity unit-revenues from sales, resulting from reduced commodity unit-prices, and (consequence 2) sales revenues episodically reduced by write-offs of part or all of the historical cost of 'techno-depreciated' "plant and equipment", i.e., of "fixed capital", can reduce the R numerator of the
profitability-measuring "Return on Investment",
net-Revenue-over-fixed-capital-Investment, or (Returns / Investment), ratio, relative to its "plant and equipment" Investment-cost, or I, denominator.

Note that effect (2) also reduces the I denominator, by an equal amount of techno-depreciation write-off, d, to that which reduces the R numerator, but the numerator-reduction-effect predominates with respect to the magnitude of the "Return on Investment" ratio as a
whole, for, if I > R > d > 0, then

((R - d)/(I - d)) < (R/I).

For a proof of this proposition, see the end-notes to this article. [e10]