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Re: [ox-en] Robinsonades (was: Re: Role of markets)


list-en writes:
Paul said that prices have demonstrated an up to 95% correlation with
time value.

Any sources for such studies?

Thanks Paul, Franz for the replies and links [1].

When I asked the question, I was trying to square the above with what happened in the US financial sector in the 1990s. Below, I have pasted a chapter from a paper named "US Boom: Triumph of the Paper Economy" written about that time [2] ...

 The Irresistible Growth of the Financial Sphere

 "How, therefore, to reconcile these figures with those relating to GDP
  which has grown 19 per cent over the last few years, against 13.5 for
  the EU and 6 per cent for Japan?

  First of all a clarification is necessary. GDP includes all sectors;
  so, for example, a decline in industrial production could be
  compensated and annulled by a growth in agriculture, or a decline in
  both these sectors could be compensated or annulled by the growth of
  the service sector and so on. Thus it is not so risky to assume that
  each positive variation in GDP means that an economy is sailing along.
  Moreover, numerous parameters are left out of the equation — such as,
  for example, expenditure on public health which, if it were included
  (even many bourgeois economists admit this), would give a more exact
  indication of the real value of wealth creation than GDP claims to
  measure. The same argument is also valid when it comes to calculating
  the increase in labour productivity. Here the official statistics for
  the United States give an annual growth rate of 1.5 per cent for 1996.
  Taken as it stands, like the media and a good part of the specialist
  press do, such a figure can give a positive impression, but in fact it
  can also conceal a simple reduction in real wages that doesn’t
  necessarily mean a more efficient economy.

  However, there isn’t any room for doubt when it comes to US financial
  data and the speculation associated with it over the last decade. Here
  the figures show an exponential growth which, if carefully
  interpreted, throw more than a few shadows over the present phase of
  the American and world economy.

  Since 1996 the Dow Jones industrial share index has increased by more
  than 70 per cent.

  It may be observed that this figure taken by itself does not
  necessarily indicate a dangerous speculative tendency. Using this
  reasoning, the typical bourgeois economic theorist asks why shouldn’t
  the shares of a healthy company that is making a profit increase in
  value? And, from their point of view, they could be right if it were
  not that the shares of loss-making firms have also risen fantastically
  or that their activity has nothing to do with industrial production.
  For example, the virtual bookstore Amazon, though in deficit,

    "is worth more than all the big American bookstore chains put
     together, and, a cheap air ticket sales service, was
     worth $11.7 billion the day after its quotation on the stock
     market, i.e. more than any other flight company."

  The rise is thus indiscriminate and unrelated to the reality of either
  a firm’s economic history or the state of its accounts: shares are
  bought because their price is increasing and not because the firm
  itself is healthy. And it is for this reason that Greenspan, president
  of the Fed, is perpetually raising the alarm against "the irrational
  exuberance of the markets" -- something confirmed, amongst other
  things, by the unbelievable performances registered by the general
  Wall Street index in recent years. The Dow Jones, which in 1996 had
  reached 6,000, was quoted at 9,000 in March 1998. In March 1999 it had
  climbed to 10,000 and was already at 11,000 in May of the same year.
  This progression has no comparison in the real economy, seeing that
  the current capitalisation of the stock market is equivalent to more
  than the 150% of GDP while in 1988, for example, it had hardly reached
  50 per cent.

  Oddly however, despite the fact that this phenomenon has taken on such
  gigantic proportions, when the tendencies at play in the American
  economy come to be appraised, it is either omitted altogether or
  considered as marginal. Even so, it is only in the light of this that
  a coherent explanation of the incongruities in the argument of the
  vast majority of bourgeois economists — that the American boom is
  rooted in the excellent course of the real economy — can be found. In
  fact a sharpening of the tendency towards centralisation of capital is
  intrinsic to the development of financial activity. Thus, as is
  typical of expansion in speculative and parasitic activity, service
  sector and generally menial jobs are growing markedly in the USA

On the material flip side, Annie Leonard in the *Distribution* section of this presentation ...


... argues that companies *externalize the costs* of producing commodities, and are no longer in the business of trying to recoup production costs, let alone produce a profit.

-- adam


[2] US Boom: Triumph of the Paper Economy : Giorgio Paolucci
Contact: projekt

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