Peter Camejo's Long Wave

[This thread was occasioned by a posting by L. Proyect]

I suppose one can choose to believe or not believe in the rise and fall, the rhythms, so to speak, of the world-economic system. But we should distinguish between people's beliefs about things, on the one hand, and structural, actual, and empirical realities on the other. Long waves and their nested business cycles are constellations of empirical phenomena generated by the structure and actualities of capitalist accumulation. As such, these empirical phenomena are in need of theoretical explanation. Marx, to my mind, provides the best explanatory model for understanding these phenomena. Other people present different models. But the movements themselves are a matter of fact. Therefore, long waves, like business cycles, are not in the same ontological class as astrology, or even a step above astrology, since long waves deal with observable empirical phenomena, whereas astrology does not. The distinction is qualitative.

On the subject of Camejo considering this entirely new element, namely the amount of labor time that qualifies an individual for a position, I hope that this statement was made by either Camejo or his interpreters in a moment of sarcasm, because Camejo is nowhere near the first person who has considered such matters.

One of the things that remains unresolved is whether the present phase is a business-cyclical upturn amid the B-phase of the post-world war two long-wave, or whether the world-economy has embarked upon the A-phase of a new long-wave. This determination is more problematic given that the break after the 1967-73 period appears to be, at some levels, a qualitative transformation, one marked by the emergence of the global economy, where the capitalist world-economy loses its hyphen. This is not only a theoretical matter, but important for thinking about the organization of the left. If it is the former, then the time to organize is short, since the business cycle, hype aside, is sure too give out soon. And certainly the downfall will be dramatic. If it is the latter, then there is considerable time to organize, since capitalism will be in no danger of collapse for at least another 40-50 years; and the structure of the world will be considerably different from what we know today, and so organizing the left, as well.

Andy Austin


The possibility exists that we are in the midst of a composite wave structure that encompasses both phases described by Andy. The basic structure of industrial capitalism, as observed by Marx at the turn of the 19th century, was based on the exploitation of labor by capital. There are clear signs that this phase is coming to an end, perhaps not imminent, but certainly within the next 2 or 3 decades, quite possibly sooner. It is also clear that a new wave is beginning in which production is less dependent on physical labor, but on automation and intelligent machines and information. In this new regime, knowledge become the new capital and it exploits not workers, but the uninformed. Internet companies are built by penniless intellectuals who through their intelligence and education, wield enormous financial power over financial capital.

This is a field where P/E ratios are routinely infinite, where market capitalization of several hundred millions dollars can be created less than three years after inception at IPOs based on negative cash flow. Often, these companies, in their home garage phase, are organized as socialist collectives. Two buddies started with an idea, ten other associates join them for intellectual sweat equity, the list grows to 50 and bang, IPO three years later, with 50 multi-millionaires created. This is a huge window of opportunity for socialism. Americans tend to forget that there is a great tradition of mutual companies, cooperatives and collectives in American economic history.

Many major insurance companies are still mutuals and savings and loans and credit unions have socialist characteristics. The reorganization of Wall Street into a socialist regime require only a few alterations. User-owned cooperatives operate today in the energy sector and likely to expand into the communication sector. The list of American institutions in history that contain the term "people's" in its names is long and only de-emphasized in the post WWII anti-Communist period. True dialectic materialism would call for a strategy to synthesize capitalism and technology into a new socialism in which the contradiction between capital and labor will become passť because both are becoming conceptually obsolete.

Henry C.K. Liu


Louis,

Thanks for this very interesting post and the discussion it provoked. I wanted to write some things in reaction to what you and other have said, and please don't be offended if I (at least formally) address to you some points in response to other posters.

On Nicaragua:

It was not just Peter Camejo who was sent by the SWP to be a full-time reporter in Nicaragua and came to the conclusion, based on what they went through there, that there were serious problems with the SWP.

This was also true of Matilde Zimmermann, Arnie Weissberg, Mike Baumann, Jane Harris, Fred Murphy, Ellen Kratka and me. I've been told -- I'm not ssure how reliably -- that the revolution had a similar impact on Larry Seigle. Cindy Jaquith was, I've heard, immune.

Of that collection of people, only Mike (and perhaps his companion, Jane) were able to stay in the party much after returning. Mike had (and I guess has, last I heard he was still in the SWP) an unshakable conviction that the real class struggle would correct the party's mistakes.

In essence, the political role of the SWP's coverage of Nicaragua was to drum up this mindless cheerleading for the unstoppable advances of the revolution. Little was allowed in the Militant that pointed to the real enormous politial challenges the Sandinistas faced in confronting the U.S. sponsored war, as it took its toll on the country. The real dimension of the war wasn't reported, nor was the reality ever recognized that the contras were not just a mercenary force, but that a sector of it was deeply rooted in the countryside.

The reason for this Pollyana approach was that constant hyping of the "three giants" of the Caribbean and especially Nicaragua was used to divert attention from the not entirely stellar success of the SWP's tactics and policies at home. I believe it was a diversion from taking a serious look at where we'd been, where we were, and how we got there. Certainly by the early 1980s there was sufficient evidence to show that the fundamental political premises of the turn to industry were wrong.

I'm sure other people would express differently the basic perception I'm trying to convey, the increasing unreality of life within the SWP as it hardened into a sect/cult, but that wasn't the main point I wanted to make. The point is that Peter's political evolution was similar to that of a whole layer of "cadres" as they became familiar with the reality of the Nicaraguan revolution. And, of course, this went way beyond the privileged handful who got to live in Nicaragua for a few months or more, although it is striking that those of us who did go mostly came back terminally ill, from the SWPs point of view, with the virus of alien class influences.

In retrospect, the SWP's response to Nicaragua was shameful. No other organization on the left was better situated by history and experience to help lead a broad, non-sectarian, action-oriented movement against the U.S.-sponsored contra War.

Equally shameful was the organizational clampdown around "proletarian norms" and especially the expulsions or driving out of older comrades who had spent their life building the organization. Comrades like Frank Lovell, George Breitman, Jimmy Kutcher, anyone who in any way, shape or form seemed out of sync was got rid off. Their years of proven commitment was presented as an aggravating factor for any charge, no matter how flimsy or trumped up. Certainly Jim Cannon, with his infamous "onion skin" school of informally raising ideas with selected comrades all over the country, would not have lasted one week under this regime. Lucky Trotsky wasn't alive: "Of all comrades, certainly lev davidovich should have been most conscious of the need for proletarian discipline as the former leader of the red army, and should have raised his hand to ask for permission to go to the bathroom." I can hear Jack giving the spech now.

I read many of the essays linked to from your home page where you talk about your SWP experiences, and your analysis of the roots of much of this. Also from there I went to the Australian party's site, and read much of the parallel material accessible from there, and found that I agree with much of it, by and large.

Certainly the "catastrophism" of the transitional program got revived time and again during my life in the SWP. I joined being promised that the "new radicalization" would not be decisively reversed until the working class had its shot at power; later this was blended with the idea of big class battles ahead, and eventually liquidated into it. As far as I can tell now, about a quarter century (!) from the original "turn," the SWP thinks the big class battles are still just over the horizon.

I had meant this to be a couple of introductory paragraphs to my main points about the economy, and the long wave issue, but it's getting too long.

I just want to point out that Camejo's experience and general political drift is not at all unique. I think it flowed from some of the positive political features of the pre-1974 or 1975 SWP, as well as, of course, other influences. And that -- based on what you've written -- I think I would largely agree with his analysis of the current evolution of the capitalist economy.

Your "ad hominem" post about Peter and his stock market activities should not lead people to dismiss the idea that capitalism, especially American capitalism, is experiencing a profound boom, with deep-seated causes, and not just a particularly vigorous uptick of the business cycle thanks to a combination of favorable and largely accidental conditions. I know you appreciate this point, as you do not dismiss Peter's ideas with a "consider the source" but address them substantively. I just wanted to emphasize this point here.

I am not a stockbroker, and --frankly-- consider most conventional stock brokering, investment analysis, stock picking and so on to BE a form of astrology. (For many reasons why, see the book, A random Walk down Wall Street.) As for "social" or "progressive" investment, what little hard data I've seen suggests you do better with a monkey throwing darts at the stock pages of the Wall Street Journal. Then again, that is true of virtually all managed stock funds, investment advisers, newsletters and stock-picking strategies. But the "progressive" ones do a little worse than the rest.

But I DO believe Peter Camejo's theses --as you describe it-- is largely right, giving him a little "discount," not just for his social origins or his current job, but also for his trademark hyperbolic exhuberance.

The extraordinary rise of the stock market reflected in Standard and Poors P/E ratios in the mid-to-high 20s is largely justified, based on an acceleration in the growth of profits of the average large U.S. company. For several years this growth had been double-digit, last year it slipped a bit to just under 10%. (Here and throughout, many stats being offered are mostly from memory, as my case is largely "qualitative" not "quantitative.")

I say largely because it's evident to me that financial and similar markets usually overshoot, and are not infrequent victims of speculative bubbles (there is, I suspect, a direct lineage from the Tullip craze of the 1600s to the dot com craze of today). The market may be a touch high right now, but with interest rates about where they've been for several years, and no real sign of inflation or recession on the horizon, and strong growth, I would not worry about long term investments.

Short-term stock market speculation around individual issues or index options isn't something I'd recommend to anyone. You're likely to make some money in markets like this one, which have been going up steadily years after year. But a poor bet could cost you plenty even in this market, and just about any bet can wipe you out in a downdraft.

Many of the points you make about the uncertainties of future earnings and P/E ratios and so on are very good ones, when applied to individual stocks or sectors in a short time frame. I don't believe they're applicable to the market as a whole, on average, over time. In the last analysis, what you buy when you buy stock is a share of the future profits of the company, and the discounted value, i.e., the value today of that future flow of income is simply a function of the prevailing interest rates. It may be that the current stock market valuations turn out to be a financial bubble, like the Nikkei at 40,000 a decade ago, but I do not think that is what is happening. I believe the DOW 10,000 is grounded in an extraordinary expansion of economic activity and profits.

So the question is really, how likely is it that the economy will keep growing briskly enough (with whatever temporary ups and downs, since I'm sure the business cycle has not gone away) to allow companies to generate that kind of growth in profits. And, basically, that question comes down to another one: how much is the productivity of labor growing?

On the face of it, looking at official statistics, things don't look good. Labor productivity is supposedly growing at 1.7%/year (1994-1998), a nice pickup from the 1.2% rate of the previous twenty years, but still abysmal by historical standards. But that isn't the whole story.

Official statistics say manufacturing productivity has grown at a 4.3% rate over the past four years, the highest figure in (at least) half a century. That's more than double the 2% rate of the 50s, substantially more than the 3% rate of the 60s. Moreover, clearly, this rate is NOT primarily a product of closing down inefficient production plants, but of opening new, more efficient facilities and upgrading existing ones. I say clearly because despite the vigrous growth, capacity utilization has drifted down to 80% from close to 85% a few years ago. New capacity is being installed at a slightly higher rate than that of growth. I also think it incorporates the beginning of an "internet dividend" that manufacturing companies will get, both from just-on-time ordering of inputs, direct sales of products, and elimination of intermediaries at both ends.

Manufacturing productivity statistics are the most reliable because they are the most straightforward to measure. You see how much was produced, adjust the dollar amount for inflation. Substract the inflation-adjusted cost of inputs, divide by the number of hours and compare the output in dollars this year to last year to come up with the variation.

And I say again: 4.3% is an EXTRAORDINARY figure for a 4-year average. Much higher and you start getting close to Asian Tiger and Chilean Miracle territory. It also correlates fairly nicely with GDP growth.

So if manufacturing productivity is growing so quickly, as is the economy, how can overall productivity be so dismal? The obvious answer is: it can't. The productivity figure of the business sector of the economy as a whole (government and non-profits are excluded from the calculation) might well be double or triple the official figure. Or more. One thing is for sure. The government knows its figure is so wildly off base, it can't even begin to guess what the REAL figure is. As a matter of fact, it doesn't even know how to DEFINE the real figure.

What the h.....?

You heard me right. Double or triple. Or more.

For the productivity of the entire business sector of the economy to be growing so slowly, when manufacturing productivity is growing so rapidly, productivity in the service sector MUST be zero or even negative, i.e., it is falling. Moreover, as three articles in the February isssue of the Monthly Labor Review examine in great detail, service sector productivity must have been stagnant or declining for the PAST QUARTER CENTURY, when the gap between business sector and manufacturing productivity first opened up.

Now, the Bureau of Labor Statistics has never published the actual non-manufacturing productivity statistic. They do not consider it sufficiently reliable. You have to guesstimate from the manufacturing and the overall figures what the nonmanufacturing component must be. But why they include it AT ALL in the overall figure if it is so unreliable is a mystery to me.

At any rate, the BLS articles are indicative of the problems with non-manufacturing numbers. We know what the output of a factory is. So many widgets and such and such a price for a total value of so much. But what is the output of a bank? The economists aren't sure, they can't agree, so for practical purposes, a government bureau gets some estimated figure for the number of hours worked in the past year, multiplies by a dollar fudge factor and ... that's the "output."

And indeed, the BLS researchers' analysis of the unpublished numbers on which the overall productivity statistics is based reveal that banks, insurance, construction, health services and utilities all have had very strong NEGATIVE productivity numbers for a quarter century or so.

This is simply risible. The efficiency of banks hasn't been dropping for a quarter century. It's been going up. The problem, the government experts suggest, lie with the way "output" is calculated. In banking, "output" is projected by hours worked. A similar procedure is used for construction. In health insurance, "output" is premiums paid to the company minus benefits. In sector after sector, you get the same problem. What is the "output" of a retailer? Or a wholesaler? Or a movie theater? Or a web site? In very many cases you come up with, total sales minus costs of inputs. And the bottom line on that is that as your store or whatever gets more efficient, this is never captured as a "productivity" saving, but rather as a drop in output. Yet for society as a whole, it certainly does represent an efficiency that we no longer have individuals staffing little stalls in markets to facilitate the circulation of a few dollars' worth of commodities each day. It means, among other things, that we have people to build web sites, for example, which would not be the case otherwise. [This whole statistical mess, BTW, provides rather striking confirmation of the Marxist position that ONLY commodity production creates value, that activities like retailing add no value.]

Call it silicon silliness or the digital revolution, the transformation of workplaces has been profound, and unless I miss my guess, we're far from the end of it.

Is manufacturing the sector where application of new technology is likely to have had the greatest impact? I submit not. A worker from a 1972 car plant transported to today's assembly line by a time machine would probably fit right in, even though some things have been automated and many others streamlined (then again if the worker lands at a chip fab she's just as likely to think she's arrived, not in her future, but on another planet).

But a bank teller, or a secretary, or an accountant, or a bookekeeper, or a bookmaker, or a journalist, or a TV producer, or a film maker, or a nurse would be totally at sea if time shifted 25 years to today.

I could give a ton of annecdotes to this effect but my point is the following: if you actually stop to think about how the economy has evolved at the micro level, and try to reconcile that with a quarter-century-long stagnation in efficiency everywhere except in manufacturing, this simply does not compute.

Part of it is that the government statistics suffer from the same problem as the cynic of the well known aphorism, who knows the price of everything and the value of nothing. So for example, in analyzing Plain Old Telephone Service (POTS), the government statistician may note with satisfaction that not much has changed since ma bell got broken up back in 1984. A dollar or two more or less, perhaps. All this talk to telecommunications revolution, he'll say, is rubbish.

But if you look at it from my end of my phone line, things are very different. I've got a fax attached to the phone line, and a computer. Ten years ago, I used the phone perhaps a few minutes a day. Today, I use it an hour or more, between reading the New York Times, answering e-mail, logging on to computers at work, reading Bureau of Labor Statistic reports that caught my fancy, buying stuff and sundry other things. AOL reports that its nearly 20 million subscribers stay online an average of 55 minutes/day. Ten years from now, I suspect "POTS" will be dead or dying, replaced by "virtual" point-to-point voice communication circuits implemented as data traffic on tcp/ip networks. This is already being rolled out to big companies.

Viewed, not as a cost/line, but as cost/minute of use, the actual price of phone USAGE has crashed, even if you add to the phone companmy's $25 the $20 AOL gets (although not from me -- I'm relying more and more on Netzero, the free ISP).

Now, the question is -- where are we in the digital revolution? Have we just about reaped all the potential efficiencies that it is going to bring (including "hidden" --from statistics-- benefits, like the phone use). I think not. In many areas, the revolution is just beginning. Things like television, movies, books, are JUST NOW beginning to go digital. How much fuel does your furnace waste because your thermostat is too stupid to know whether you're up, asleep, out, or in the kitchen? How long before refrigerators learn the usage patterns of their owners, so as to chill things just a little more before breakfast and dinner time? A few years ago a mobile TV reporting team was 4 or 5 people with 8 or 10 cases of heavy equipment costing somewhere around $100,000 or more.

Now you can put all that in a briefcase, including a $3,000 three-chip camera that can give you pictures as good as the $30,000 professional cameras. Sure, one guy told me, you feel a little silly setting up at a press conference, people think some tourist snuck in.

EVERYTHING that can be digital WILL BE digital, and at least for the next 10-15 years, Moore's law -- that the number of components you can put on a given area of silicon doubles every 18 months -- will continue to function.

My best guess is that over the next decade or so we're going to continue reaping extraordinary benefits from digital conversions, and, with whatever ups and downs, will continue with an extraordinary economic growth rate.

Jose G. Perez


I found Jose's post very interesting. I think what he says is a useful antidote to the tendency of many on the left, including some on this list, to see capitalist crisis around every corner and imagine that every glitch is the opening act of imminent collapse. The world capitalist economy has weathered the Asian crisis and does not seem about to succumb to any major disasters in the next couple of years.

I think, however, Jose's view might be at the other extreme, where he imagines that new technological developments are somehow going to buoy up capitalism for a rather long time. (Immanuel Wallerstein was in NZ last year, and predicted the meltdown of the entire world capitalist system. . . . in 2050. If I thought that was the best we could hope for, I'd retire to Samoa.)

I tend to think the system is quite fragile, but that the greatest thing it has going for it is not new technological breakthroughs, but the disintegration and discrediting of any opposition. There simply is no credible alternative, in the eyes of masses of people.

Stalinism and social democracy have deeply discredited notions of collective solutions, although fragments of the far left continue to attempt to prettify these twin monstrosities and thereby delay the possibility of building new forms of collectivism, ie real working class collectivism. The working class has taken a huge battering and although it is has not been defeated in the way it was in the 1930s and 1940s, it is largely confused, demoralised and shell-shocked. A degree of disaggregation and atomisation, in terms of workers' consciousness, has also set in.

A few militant strikes here and there do not change this. For instance, we have some people on the far left in New Zealand, mainly the NZ wing of the IS current, who boldly declare on the front page of their paper that there is 'a mass uprising' going on in this country against the government. Back in the real world, the days lost through industrial action in the past year are about a meagre 5 percent of the figure in the late 1980s and early 1990s.

One of the things that often sparks radicalisation is when the system cannot meet people's rising expectations. Unfortunately, workers today often have almost no expectations from the system anyway. This is one reason why Blair has had such an easy run of it in Britain. The 'cling-on' left (the space cadets who are still attached to the British Labour Party) argued that putting Labour in power would raise workers' expectations which would then not be met, and a new round of struggle would break out. Duh! All that has happened under Blair is that workers' expectations have been lowered even further.

The same is true in places like New Zealand, where we face the likelihood of a Labour-led government (probably in coalition with the more leftish Alliance). The election campaign hasn't even started and Labour is already making clear that it has no goodies on offer, even as an electoral bribe for workers. When the Alliance suggested new legislation to give workers four weeks a year paid holidays, both the Labour Party and the leader of the main trade union federation came out opposing this, saying the 'country' couldn't afford it!

Anyway, to return to Jose's email. There was one further thing, I wanted to pick up on which is his figures on productivity growth. The problem with the figures he cites is that they don't necessarily indicate a dramatic economic surge. For instance, there are two ways of increasing productivity. One is that you reduce the size of the productive workforce and make the remainder work harder. This may make productivity figures look good, but actually doesn't give the economy much of a kick at all, because you aren't necessarily producing any more commodities or any more value than you were before.

In New Zealand, there was a marked increase in productivity through the slash and burn 'new right' reforms carried out by Labour in the mid-late 1980s and National in the early-mid 1990s. But total output was stagnant. In fact total output in about 1995 had only just returned to the output figures of 1984!

So pure productivity figures can be quite misleading.

The other way of increasing productivity is that you massively increase constant capital (especially fixed constant capital - machines, technology) and expand both productivity and total production. So here you are not only more productive, but you have expanded the total output and total value. This is what the postwar boom did. (Of course, since this brings about a rise in the organic composition of capital, so it also results in falling profit rates, thus real booms always contain the elements which lead to recession and slump.) But I cannot see that the much-vaunted 'technological revolution' of the 1990s, nor the productivity figures Jose mentions, are commensurate with the postwar boom, a genuine boom in which not only productivity but total output rose massively.

Mere growth in individual productivity, if not accompanied by a growth of output, creates an atmosphere of stagnation within society. On the one hand, things seem to be getting better in terms of official figures and there may be little resistance, but, on the other hand, because total output is not growing, there is no real dynamism across the economy as a whole. Much of the rest of the economy is left sluggish, and very little is on offer in terms of social reform, crumbs for the masses and so on. This is certainly the ways things 'feel' in New Zealand at present, and there is empirical proof in the figures for productive output. I wonder if it is similar in the USA.

Philip Ferguson


I am no economist, but I have been a professional computer programmer since 1968. One of the things that provides me is an "insider's" view of the ups and downs of the computer industry, which most pundits, from Toffler to Camejo, regard as driving our prosperity. I am skeptical. On Oct. 12, 1985 IBM reported 3rd quarter earnings of $2.40 per share. The closing price of the stock that day was $125.62. The third quarter earnings per share in 1998 were reported as $1.56, but the stock was selling for $137.87. I can tell you this much. Based on figures like these, IBM's future is very cloudy.

Columbia just replaced an older IBM RS6000 machine with a new one. It is 18% more expensive, but 2,500% more powerful. This means that the replacement curve will flatten, just as it did for mainframes and as it did for PC's. The silicon revolution cuts both ways. On one hand it makes production more efficient. On the other hand, it tends to dampen the profit outlook for manufacturers.

The same problem exists for software manufacturers. A number of companies have gone bust since the early 90s, because the cost of adapting object-type modules into the production line has become more feasible. Software production has become more and more of a Fordist enterprise, at least in terms of shrink-wrapped products.

While this has inspired folks like Toffler and Camejo to throw their hats in the air, the other side of the dialectical coin is that less profit is being generated. The stock market bubble is based on the expectation that high technology companies can create ever-increasing earnings per share, whereas in fact the opposite expectation is more reasonable.

Louis Proyect


Louis,

I think you (and Doug of the LBO) are perhaps falling into the trap of believing everything bad bourgeois commentators say about their own system.

In the original posts, I went over some of the issues, as they say in the software biz, with productivity figures for the service sector of the economy. This make service sector productivity figures unreliable, from a bourgeois point of view, or nonsensical, from a marxist one (non sensical because NOTHING of value is "produced" at a bank or a brokerage house or a travel agency).

Either we discount the bourgeois service sector productivity stats, or we are left with the seemingly insoluble contradiction that businesses in all sectors, boards of directors, CEO's COO;s, CFO's, and CIO's are all on this mad race to invest more and more in computers which produce absolutely no payout, on the contrary, they're a waste of money.

Who is right? The government's economists who are so ashamed of the service sector productivity numbers that they refuse to publish them (even though it is these numbers that pull down the published overall productivity figure), or America's corporate managers? My contention is that 10,000 corporate managers aren't wrong. Businesses invest in computer and IT technology because NOT to do so would be --frankly-- economic suicide. The gains in efficiency and profitability are there. They HAVE to be, either that, or corporate America is on an unprecedented, decade-long binge of irrationally unproductive investments that have, somehow, created an impressive prosperity.

Where's the payoff? In the increased growth rate of profits over the past several years, which in turn has been incorporated into the increased valuation of companies as reflected by the historically high P/E ratios, not just for one or another company's stock, but for the market as a whole. And although I believe the "dot com" craze is largely a bubble, there is a core of rationality even there, despite the lack of current year profits. And that is that if the impact of the digital and internetworking revolution can be so great on, say, a Coca Cola, what would it mean for a company that is completely in that sector?

I've been reading about the "non-payoff" of IT technology for quite a few years and eventually came to the conclusion that I had to choose between believing the experts and believing my own lying eyes. I've seen the efficiency gains in a substantial and dynamic company. From my experiences, I can tell you American businesses are inventing and reinventing themselves on the fly. There are tremendous numbers of false steps, things that need to be redone one or two years after being implemented, a great deal of randomness and experimentation. But --bottom line-- three people now do what it used to take 8 or 10 people to do ten years ago.

I do not believe the gains where I work are singular. They're being realized everywhere traditional office tasks are performed, and in everything relating to media and information. The collective result of these myriad efforts, as reflected in the Internet, are breathtaking.

It is this that is behind the extraordinary upswing of the U.S. economy. The percentage of the adult population with jobs is astounding. The percentage of households that own their own homes is at or near the record levels of the 60s -- truly astonishing, when you take into account the number of one-adult households today, and the increase in the average size and amenities of homes today compared to the housing stock of thirty years ago.

Every month brings fresh evidence of the depth, breadth and scope of the digital revolution. This very discussion medium is an indication of the changes. Did you ever have to work putting out "discussion bulletins" in your SWP days? I did, in the YSA, and I'll tell you, an online bulletin board would be a "killer app" for a party with some of the better qualities of the SWAP in the early 70s. Not, mind you, that I should think the current group would have much use for it.

My message to everyone is: open your eyes, talk to your friends about their work environments 5, 10 or 15 years ago and today. If you're engaged in "intellectual" labor, think about what you went through in the 70s writing about current affairs compared with today. I believe these are profound changes that are reshaping people's lives, just as a whole set of interconnected changes, revolutionized life at the end of the last century and beginning of this one.

Jose


Louis has put his finger on a key point. The victim of Schumpeter's creative destruction in the new technological world can well be the creator! IBM bought its second lease on life by shifting over to software and consulting. Soon software will go the route of hardware as a sunset industry. Where is Cray today? The super-super computers have no global market because of export restrictions imposed by political/military security policies.

Soft technology, which extends beyond IT, is the battle field of the future. It is structured finance, virtual market exclusivity, need creation, value adding, etc. that will provide the virtual growth. Amazon.com's valuation is a function of its customer base, not the specific products its intends to sell. The monetarization of the mobilization of humans for value adding activities is an old game, but in the future context, brain power is the determinant. The monetary value of brain power is fast outstripping physical productivity and ownership of hard assets. For internet companies, a $100K cash capital turning into a $500 million IPO capitalization in three years is commonplace. There is no way IBM or ATT can beat that. Marxists have yet to pay serious thought to this new kind of capital accumulation. Who is exploited by whom? Where are the workers?

Henry C.K. Liu