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Thanks for this posting about Paul Mattick's book. I went right to
Amazon and bought it. This is an area I have been working on myself. Much
of what you quote is a very readable statement of the labor theory of
value. What he calls profit is what most Marxists call value.

What interests me is that capitalism, as a system and in response to
global crisis (the result of insufficient value production or profit in
Mattick's terminology), seems to be trying to sidestep value production in
some spheres all together. The housing speculative bubble occurred because
the packaging and selling of mortgages actually drove up prices and
created both supply and demand for housing and the corrupt mortgage
lending activities that now are resulting in foreclosures and evictions.

Similarly there has been since 2010 a controversy over what caused the
huge food price increases in the 2008 and 2009 period. Most would agree
that these increases were a contributing factor to the uprising in Egypt.
But in July of 2010 Frederick Kaufman published a piece in Harper's
arguing that the main cause of the food price increases was over
speculation. Since then economists of many stripes have weighed in against
this thesis including some on behalf of the Organization for Economic
Cooperation and Development (OECD)as well as liberals like Paul Krugman.
They contend that the cause was food shortages due to weather conditions,
production costs due to oil spikes and the increase in the demand for meat
in China and India which in turn caused a shift in grain production to
feed cattle.

But their position has been, in my view, refuted by a number of other
people. There is a small booklet of essays and study summaries on this put
together by Steve Suppan at the Institute for Agriculture and Trade Policy
( "Excessive Speculation in Agricultural Commodities." If this
interests anyone the booklet is quite useful. Basically the argument is
that food is now being traded without any consideration of "economic
fundamentals" such as weather, costs of fuel and machinery etc. It is done
through over the counter (OTC) trading by such firms as the beloved
Goldman Sacks who came up with an instrument called Commodity Index Funds
which package commodity derivatives together including futures contracts
in oil, metals and food. The trading of these funds are all bets that the
funds sales value will continue to expand and as they are bought and sold
their price does go up which drives up the prices of the commodities
included. The interaction between the price of the funds and the price of
the food and oil which they contain is very complicated and I am still
trying to understand exactly how this works. (Most of the traders don't
understand either and much of the trading is based on computer models).
But I think the evidence that speculation in commodity index funds was a
major factor in the huge food price run ups causing many people in the
world to starve or go hungry is compelling. And understanding the
mechanism will help us to better understand the current crisis and
uprisings and critique many of the liberal schemes for "solving" what is
in reality a contradiction.

Unfortunately many of the best minds who are researching this are
directing their energies toward legislation to regulate OTC derivatives
trading. But if we can find a way to explain these head bending
machinations of the ruling class to people who are losing their homes,
mired in personal debt and hungry or starving, we have the basis of an
argument for crashing the entire global credit system. This could be
accomplished through some sort of global jubilee (a universal refusal to
pay our debts) which is why I like Noel's proposal and leaflet on this
presented to some of the Occupy movements. To organize for such a thing
though requires a better understanding of the global credit structure
itself and a tactical approach to global organizing based on that

- Dave Ranney

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