Unveiling Class Politics and Economic Policy with Nicolas D Villarreal

Discover the forces behind the economic curtain as Nicolas D Villarreal and I tackle the pressing issues of class politics and economic policies in a riveting conversation. From the surprising bipartisan strategies spanning Trump to Biden's administrations to the intricacies of labor market shifts, we dissect how these elements interplay with the tech sector, antitrust actions, and the subtle AI resistance in today's job market. The episode takes you on a journey through the undercurrents of our economic landscape, shining a light on the surprising continuity of policies and their profound impact on entry-level wages and labor dynamics.

Venture with us into the precarious world of the Petit Bourgeoisie, where we draw historical parallels to dissect their modern capitalist role. We scrutinize small businesses' vulnerabilities, the see-saw of shifting interest rates, and the tightrope walk of rentier economies, all under the shadow of recent banking collapse like Silicon Valley Bank. Listen as we challenge state theories, evaluate economic planning, and examine the profitability hiccups of local media against the backdrop of a global audience. As we navigate through the complex maze of economic thought, we uncover how political crises lay bare the limitations of the bourgeois state, questioning both reactionary forces and the left's readiness for a looming crisis of profitability.

Concluding the discussion, we plunge into the intertwining fates of educational institutions and the banking sector, exploring their roles within the capitalist framework and the new challenges they face. We address the ongoing political crises, the constraints of bourgeois state mechanisms, and the struggles inherent in Marxist theory to craft a narrative that transcends seizing power. This episode promises not just an exploration of contemporary economics but a deep reflection on the philosophical underpinnings that shape our society's future. Join us for an episode that not only informs but provokes thought on the complex interdependencies of our economic system.

Transcript

C. Derick Varn: 1:34

Hello and welcome to FarmVlog. Today I'm talking to Nico Via Real about, let's just call it, the haze of buy dynamics. I don't really know what to call. We're going to be dealing with profit rates, current trends and left economics from the likes of MMT and Sawhackerman, the Petit Bouroisi all kinds of stuff are coming up today, so, and I'm going to, of course, link the articles we refer to by Nico and the show notes, obviously. So how are you doing today? I'm doing all right.

Nicolas D Villarreal : 2:17

I've been stressed lately but finally got some chance to relax. I've had a, I guess, a flurry of work that I did when I wrote those last two articles. Economics is one of those things where it really seizes my attention and I have to get whatever idea is out of me before I like to lose it, you know.

C. Derick Varn: 2:49

Yeah Well, and also it's something that I think the information can be difficult to parse in real time, so you kind of have to act very quickly, sure, when you get data, and I find the current data problems kind of interesting.

Nicolas D Villarreal : 3:16

You know I well, it's funny because, like, certainly there's lots of data points that I'm thinking about recently. Like I try to keep up to date with everything that comes out, especially with GDP, national account stuff as that comes out, but a lot of the things that I've been obsessing with recently have kind of been slow, burning that I've been thinking about a long time, and only recently has something happened where it made me realize something. So there was like the you call this stream, like a haze of economics under Biden. There's one like particular thing. I mean, there's lots of particular things with Biden and the economy and how that's being affected.

Nicolas D Villarreal : 4:01

But the thing that I had been thinking about the longest was the relationship of, like antitrust and class politics and how that's being like picked up by the Biden administration, because it like I recognized that it was like back in 2019 or so, that this was a thing that was becoming like that the Trump administration have really brought to the fore.

Nicolas D Villarreal : 4:34

And then the Democrats, who had not really been doing anything on it, kind of started picking up on it too, and this was stronger for, like, the social Democrat wing, like the Bernie crap wing of the Democratic party, but now it was like a mainstream thing because Biden was talking about it it's during his transition, right, and now we're seeing everything that he's doing about it. It made me realize that this is like a very firm bipartisan consensus and what and I had this thought, like when I was thinking about this originally, that the tech companies would really try to do something about this, but they wouldn't just stand by and let it happen and they really haven't done anything out of the ordinary to prevent it, like the they have that there's, I mean, anti-trust suit going against Amazon and that and lots of other things are being considered as well, but the idea that it would get this far and the tech companies just wouldn't do anything about it was like I didn't think that was how it was gonna play out.

C. Derick Varn: 5:47

Yeah, I've been thinking a lot about. I've been thinking a lot about this anti-trust stuff too, because for like literally two decades we've kind of ignored anti-trust law like entirely. Now there is a broad bipartisan consensus on actually doing something about it. I completely agree with you on that. And what makes that more interesting is that it's actually part of a large panoply of things that there's a kind of hidden bipartisan consensus on. And I say hidden because it seems like neither side wants to admit how much continuity there is on economic policy between the two parties right now.

C. Derick Varn: 6:40

You'll get lip service in opposition to either on the Democratic side to something like a more social democratic, whatever this post neoliberalism is, and you'll get lip service on the Republican side to like a freer market or to the, the Liberty Caucus. But they largely actually have come to a consensus on infrastructure. They've come to a consensus on not that they can do it, but they come to a consensus about its need. They've come to a consensus on anti-trust law. They've come to a consensus on resuring. They've come to a consensus on limiting immigration and not using that as a way to lower certain kinds of wage sectors anymore.

Nicolas D Villarreal : 7:27

I mean the craziest thing about all this is that where this came from. Because Trump was the one who was the leader on all these things and like the fact that he was the one who was moving policy on us. And now that these are all things that are bog standard in Washington the Trump like the Trump tax policy, the Trump trade policy, the Trump infrastructure and all the first really big, insane spending package happened during the pandemic under Trump, before Biden got into power.

C. Derick Varn: 7:59

And actually, arguably even though there's tons that we could talk about it's mishandling the PPP loans, et cetera. The first spending bills in some way were more progressive, because they are what enabled the most progressive part of this of the bailouts, which was expanding unemployment. The way it was expanded, when paired with a Biden change of raising the federal minimum wage for federal contractors and employees legislatively for the general public, really did set pace for a low-end wage increase. When I say low-end, I mean entry-level workers have seen pretty significant wage increases in a lot of fields. What's interesting about that, though, is it doesn't go up very far. So you've seen a lot of increase of base pay, but mid-tier pay has actually been somewhat consistent. It's going up, but far less pegged to inflation.

C. Derick Varn: 9:08

Then we had the great AI job apocalypse, which I'm not saying won't happen, but it's not happening as fast as we feared. The technology seems to have been underutilized or not utilized well in its rollout by these tech companies, and in fact, I've been surprised in general about two things. One is the amount of consensus that's hidden, and everyone's like oh, we're super divided and I'm like it seems like the division is actually distracting from what the consensus is in some ways.

Nicolas D Villarreal : 9:42

Yeah, Go ahead. I think the important thing about this, at least the way that I've understood it, is that what really drove these changes is the militancy of the petty bourgeois in response to a resurgent monopoly power and, in general, the trends of globalization, which was simmering a long time but really took shape under Trump. Trump gave all of this coherency and ideology. He was doing the work of creating ideology and putting it into the state apparatus of this group and I actually.

Nicolas D Villarreal : 10:32

For a long time I didn't have too much specifics on the data on how the economy has shifted between small and large firms. I finally got some of that data from the census and looking at how employment by firm size has shifted over the years since 1978 or something which was kind of a tease because it would have been really helpful to know what it looked like just like 10 years before that, to see how the seventies really transformed the economy, but with a big takeaway. I mean, these numbers don't actually shift all that much because you're just looking at employment, not like the income and so on. It's going to these different firms, but the clear trend that you see is that the small and medium-sized businesses are really ascendant up until the early to mid 2000s, and then the biggest firms 1,000 more employees start to take off like return back to their highs at the very start of this process, and I think that this really is what kicked off this whole the political situation that we have now and why this became the bipartisan consensus right now.

C. Derick Varn: 12:15

Well, I find your focus on the Ptibut was interesting, because the left right now, the left, whatever the fuck that is I'm just going to start always using the left and scare quotes, because I don't know what it means anymore, and if I don't know what it means, neither do the most people. But there's been a movement around a certain coterie of not quite post-left third generation post-left actually, to be clear, because that's mean different things in time too. I hate the way these words get recycled but definitely, but not quite post-left, but almost social Democrat adjacent like quasi-workerism that's emerged out of people like Catherine Liu, clash, unity Caucus, et cetera, that I have increasingly seen as like totally stuck on the idea of the PMC, a class that I don't even think is a class, and people attack me because they're like well, the PMC elites run everything, but when you ask them who it is, there's always a game with who they're referring to, whereas it seems to me that there's two things going on, and I do think Kristen Perente, of all people, actually did kind of hit this nail on the head and I used it in your article on the Petit Poutreuse, which, for people listening are watching, will be in the show notes. I started seeing that maybe Michael Lind had a point and this is not me endorsing Lind's politics, which are totally corporatist in the old sense of that word, but it really did seem like there's a strata of former Petit Bouzois who are now professionalized. So they are we could call them labor aristocrats, because they have government employees, highly unionized jobs, they're carteled, they have licensure and then you have a very active Petit Bouzois right and Lind says right now I think he's said this since the new class war that if you wanna understand American politics you have to understand the visions between these two groups.

C. Derick Varn: 14:48

I think that's broadly speaking true, with the concession that the PMC is a more confused category which contains many Petit Bouzois elements in it itself and because of that there's a mystification on like the identity politics and cultural war stuff around this group as a means of getting ahead in very limited white collar kind of work. At the same time, these same people are often doing what the right wing does and actually valorizing elements of the Petit Bouzois has the work in class without even acknowledging radical differences in the interest of these groups and then also not dealing with, on top of that, a kind of lumpenization of a whole swaths of the US working class in the industrialization. So I don't mean they're true lumpen in the Marxist sense that they're like criminalized. I mean that people are in gig work and have to like work in precarious jobs that are highly alienated and isolated from each other and actually kind of have to be. They're often going in the same person will be a Petit Bouzois part of the day and then be a wage earner part of the day and may even be partaking in the gray economy for part of the day, making like clear class interest in organization much harder to do. And I think you even see that in the kinds of organizational attempts left since they do right now. They're not trying to, even though we have a union militancy.

C. Derick Varn: 16:43

I think today I read there's more strikes going on right now than there has been in American history. Asterisk, not when you adjust for population size, though un-astrisked, but still like there's real labor militancy right now, even if unions somehow aren't growing. And that leads me to a kind of question then if the like let me put it this way the semi-Petit Bouzoification of large parts of the economy are actually really interesting. So I'm just gonna speak about a field I know a lot about.

C. Derick Varn: 17:27

My family has been tied into auto dealerships and the mechanic sector for a long time. They can't get parts, they can't sell cars, and so a lot of the workers in downstream of the UAW right now are turning against the UAW. But part of the problem there is that they are piecemeal commission workers who also have a semi-Petit Bouzoit like the way they have to bill hours but puts them in a semi-Petit Bouzoit position. So even in these cases where these people by any Marxist definition are workers but the structure of their work incentivizes them to act like Petit Bouzoisi and there's tons of them downstream of industrial workers and there's more of them than there are the industrial workers and so it's very hard to see how you generate a clear class politics out of that as a revolutionary subject. So your article thesis on the Petit Bouzri as a revolutionary class and how this generated a consensus in response to it, first under Trump, but the remarkable thing is that a lot of the more democratic party adjacent left has not really addressed is how fucking consistent.

Nicolas D Villarreal : 18:54

And people don't realize that the Petit Bouzois small business owners, these people, while they prefer the Republicans. It's not overwhelming, it's like 60, 40 or something like that. Maybe not even that far. It says a lot of Petit Bouzois people in the democratic party. But I think to hit on something deeper, there is that there's this tendency. I kind of used the revolutionary class there. You could kind of put that in quotation marks.

C. Derick Varn: 19:30

I think you were actually kind of applying. They were counter revolutionary class.

Nicolas D Villarreal : 19:34

Well, here's the thing is that there's a lot of people like the post-left people that you're pointing out. There's also like the patriotic socialist types that has and a lot of other people Caleb Moppen, who basically picked up on this thing, that the Petit Bouzois is the class that is like the biggest problem right now for the state that has yet to be solved, which is how I frame it in the article that there's a real thing that the people aren't imagining when talking about like, oh, like the January 6th or the Trekker protests or the anti lockdown people or whatever like that's like these people actually are. Like anti, like are a problem for the state. They are like that. So I see why people look to them as a revolutionary subject. But the problem with that is like is this the classical problems of the Marxists have always talked about with the Petit Bouzois I've talked about it a lot is that it's like you can go back to like the 18th Brumair and Marx is talking about like the well, he talks about the French peasants.

Nicolas D Villarreal : 21:07

He like at this point, like the Petit Bouzois are still like supporting democratic struggle or whatever they're basically like the like centrist libs in parliament or whatever are the like this, like the less radical Republicans are basically what they're associated with at the time.

Nicolas D Villarreal : 21:23

But the way that Marx describes the peasants is something that I think perfectly describes like the Petit Bouzois in America today and lots of parts in the world, which is that these people are atomized. They have like their little parcel that they own and they do their work kind of on their own. They're not like in common, they're not in cooperation with society or at large, and they are they need strong leaders to because they don't have like their own kind of collective politics. They look towards like Bonaparte in that situation and that's another reason I think that Trump is a very Bonaparteist figure is that he is this like strong leader for an atomized, isolated, like Petit Bouzois class. It has these analogs to the French peasantry at the time the like they can't create a better society. It's like as like trying to because they can't like like one. They can't imagine anything beyond. They're trying to preserve Bourgeois with social relations really, really hard, but they are the weakest link of like Bourgeois society at the same time because of their economic situation.

C. Derick Varn: 22:56

Let's talk about that for a second, because there is also a left response to this. I think came out of Seff Ackerman's reply to Dylan Riley and Robert Brenner. Now I have my critiques of the Brenner and Riley thesis is on Biden, one of which is they point out that most of what Biden has done is a response to Trump, and then they point out that correctly, that Trump can't totally claim what he did because he had to keep neoliberal elements of his coalition in the coalition. But then they somehow read Biden as a new force of politics and as a holder of neo-progressivism, whatever that means, which I think is silly. But one of the things that they do talk about, I don't love their idea of political capitalism because capitalism's always been political. That's confused. But the thing they point out is it seems like we're attempting Keynesian management strategies on a low profit economy and the Marxist. Well, actually I guess Ackerman would consider himself a Marxist even though he doesn't talk like one.

C. Derick Varn: 24:16

But the modern monetary theorist and people, and a lot of the social democrats like self Ackerman, have been arguing that no, the economy's doing really well. I mean, Freddie DeBore came on my show and said he didn't understand why. You know, people felt like the economy was doing poorly under Biden and I kept my mouth shut, but I was like I can tell your sub-stacks doing well. Um, because, yes, GDP is about 3% and that's historically high-ish, but when you look at the finer details of that, it paints a much more stagnant picture, and you picked up on this and we'll I think I wanna tie this back into your thesis is about the petty bourgeoisie, and you know my observations about lumpenization. But you do tie this back into two things One, you've looked at what's holding the banks solvent right now and it's not what people think. And two, even though we haven't gone back to QE, so this is working in a different way, but there is a way in which, you know, the Fed looks like it's just plummeting actually right now.

C. Derick Varn: 25:35

Furthermore, the actual profit rate. I will admit I've become skeptical that we actually completely I've almost taken a problematic junior view of it where, like some of these things, are hard to measure the way we measure them, unless it's very hard to talk about. But we do have proximity measures and it seems to me that, using just net GDP, even though in the long-duray that also indicates that there's a decline in the rates of profits, because net GDP is kind of since the 60s been between what like 1 and 5%, like pretty much perpetually. But it also seems to me that when you look at these other indicators, you start seeing that profits are not what they seem, and particularly when you start dealing in real commodities, and it's not just de-dolarization or whatever that is driving this. So would you like to talk about that a little bit?

Nicolas D Villarreal : 26:50

Yeah. So I think that the I think that the statistics on rate of profits are pretty good, that we like that I mean I've reduced it to like a, to basically a different way of looking at the profit margin. Just don't worry about the capital stock, which Accom was really focused on. But even like I've also done some double checking on this, Like when you use depreciation instead of the capital stock and use just using flow measures, it will mirror the same trajectory of what the capital stock is doing generally, Can you?

C. Derick Varn: 27:30

explain what that means to listeners who might not understand you.

Nicolas D Villarreal : 27:33

Yeah, like the. So when you invest in like fixed capital, you have these things that are now on your balance sheet, that you have, that you don't immediately count the cost of these things that you bought as like an, as a business expense their investments and they slowly get moved as expenses through depreciation, taking them off the balance sheet and onto your income statement as an expense. So the, so the capital stock, is this asset of, like the fixed machinery, the fixed, like the machinery equipment, all the kind of stuff that you need for the business, and depreciation is how that much that's used up. Specifically, marx talks about how the amount that you stop it has its value represented in the price of the or the value of the final commodity, and that's so. When you look at income, you can divide it into, like depreciation wages, the surplus, which is what which is reflected in actual national accounts, but like, there's more Marxist way of looking at it. I haven't even touched like turnover rates and stuff like that, but I'm hoping to look more into that in the future. The thing that like the.

Nicolas D Villarreal : 29:05

So the thing that Ackerman was really like, the technical critique he made of all these people saying that, like the capital stock measures like depreciation rates were incorrect was what he said, and it just meant that capital stocks were different and creating like a rate of profit that doesn't show like a tendency for profit rates to fall.

Nicolas D Villarreal : 29:29

But that's just not like the way he did it. He basically did like the took the wrong data of like. So I actually looked back and I realized that if there was a correct set of data he could have used from the paper he cited. But because basically it's just they took a new depreciation rate and applied it to this capital stock and cause it to change drastically because it was a just because the whole time that capital stock was created it was up working under a different depreciation rate. So by introducing a new one it had to rapidly change to adjust to that new outflow level. Whereas if you had applied that depreciation rate consistently for the whole time period that like you had how we're tracking investment and had this capital stock which the paper also does it like applies this depreciation rate going back to 1901, then you get a totally different capital stock that is like more in line like. You would get a measure that is very similar to other profit rate measures in terms of the shape that it takes, even if it's at a different level.

C. Derick Varn: 30:43

So to explain why this is important, it means that the contention that Seth Ackerman and a lot of modern monetary theorists not all but a lot put out, that by basically increasing liquidity through fiscal policy you can stimulate enough production to offset any tendency of the rate of profit to fall.

Nicolas D Villarreal : 31:12

Fundamentally, there's a couple of big problems with that. First of all, you have to keep in mind that the Keynesian policy framework is what created the big profitability crisis of the 70s. Absolutely, that should not be in contention. When you have the point of the economic stimulus is like you're having rising wages. If you have rising wages, rising investment as particularly as a share of the economy, eventually you're going to run into a profitability crisis. That is just what's going to happen, because the more investment that you have, the more capital stock, the more depreciation and the more wages, obviously, the less profit you're going to have. You can stimulate the economy to induce tighter labor markets through full employment, or if just full employment is your goal, you're still going to get tighter labor markets. The whole thing that. I am very open to all the kinds of possibilities here. I am even open to the possibility that what Biden's doing right now lays the foundation for a systemically higher wage growth and higher investment type of economy. The problem with that happening which I think it's a good problem to have, it's a kind of problem that we as Marxists want is that you're going to get to another profitability crisis because of that policy, because of that systemic framework. The problem that Ackerman and people like him have is that they don't recognize that they are fundamentally because they're wedded to basically the capitalism.

Nicolas D Villarreal : 33:08

Seth Ackerman I actually liked him as I was becoming familiar with socialism. He had this article that basically elaborated on a system of market socialism. That I thought was really interesting and I enjoyed it. If you take that as your end goal and you can't accept these, it's different once if you've actually eliminated a capitalist class. The problem of what he's talking about right now is, if you have a capitalist class, once you hit that limit, you're going to have to expropriate them in order to keep the gains that you have in terms of the income of society going to workers and to the means of production and so on.

Nicolas D Villarreal : 34:00

If you don't do that, you're going to get exactly what happened in the 70s and 80s, which was the rise of neoliberalism. You had to do all these things to take down workers' income, decrease investment rates. The thing is because of what we did then. This is all connected back to the Petit-Bourge wall, because one of the strategies of how to deal with this this was very explicit in how capitalism in the 70s and 80s worked was that you took businesses and you cut off the unprofitable parts and had those be their own business so that the big capitalists could preserve their profitability, and this created a whole new class of the Petit-Bourge wall regional capitalists, because really, what we're talking about Petit-Bourge wall, the leading elements of this are not people who have a small operation of two or three employees. That's actually been a decreasing part of the economy.

C. Derick Varn: 35:08

Yeah, that would be. We might even call that the Petit-Petit-Bourge wall at this point, yeah.

Nicolas D Villarreal : 35:13

Honestly, I can respect that. There's something emancipatory in just this very one or two people, or just a small group of people who are trying to just make a living for themselves. There's something dynamic about that, or whatever.

C. Derick Varn: 35:35

Artisan consciousness, artisan consciousness, yeah, artisan materializing in a way, because their profits suck.

Nicolas D Villarreal : 35:47

The thing is really we're talking about as a political and economic phenomenon are people who have 10, 20 up to even 100 employees, maybe even more. On a regional level there's different arrangements of franchises, are really big and stuff. The point is a lot of why these things became a thing is because they were the unprofitable parts of these bigger businesses. What you were talking about earlier, the reason that car dealerships do that kind of thing of treating these people almost as their own businesses, almost as contractors or whatever, having their piecemeal and whatever that's because they don't want to take on the risk of those shifts in demand and whatever. They want to pass on as much of the business risk to other people as they can.

Nicolas D Villarreal : 36:50

When you've done that and when you've atomized production in general, it makes society more vulnerable to profitability crises. It took the whole post-war period to get to the profitability crisis of the 70s. It would not take as long if we were to take that route again. It would happen much quicker Because the Petit Bourgeois is a militant political faction society now that has real power in setting the agenda in Washington. It would be a much bigger problem because now these people are facing an existential economic problem and they have political power to do something about it.

Nicolas D Villarreal : 37:40

We really didn't see what with during the pandemic. We had PPE loans and all that stuff to make sure that didn't happen, to ameliorate over all these things. We still don't know exactly what that would look like in the post-2008 period.

C. Derick Varn: 37:56

I think there's a bunch of black boxes opening up. There's the return of all the capital tied into student loans, which admittedly doesn't affect all of society, but it does affect 40% of it, or something. There is the fact that things like PPP loans and that set of stuff has dried up. Other forms of investment has dried up, full investments, which have been able to hoist stuff up through federal block grants, and stuff that had come through COVID is drying up. All the programs that we were sold by Democrats in 2020, they were going to try to long-term. They achieved almost none of that. A few of those things did get put into the Inflation Reduction Act. The situation has more or less seemingly stabilized for now. I don't know how long that's going to stay.

Nicolas D Villarreal : 39:00

I think it's entirely possible. We shift into deflation sooner rather than later. Anything that happened is that you remember everybody talking about the bullwhip effect right in the supply chain crisis. Now we're at the very, very end of that. The lesson that everybody learned was not really a lesson, but what ended up happening is that everybody, now that the supply chain kinks are gone, has a lot more inventory than they did before, than before the crisis More inventory that has to be absorbed somehow.

C. Derick Varn: 39:48

You have to absorb the cost to maintain the inventory, I think, and there's still areas where that's breaking down see what I was talking about with cars. But the idea that we're going to return back to we might see deflation, we might not. What we might see is radical sectional decoupling. You might see inflation in certain key commodities like food and radical deflation and other things. For example, I don't know how a car industry is going to maintain itself if it's price to stay at it is and it's only building luxury cars. I don't think there is a demand to keep a whole lot of that industry open with that pricing model, An unwillingness to manufacture economy still probably $35,000 to $40,000 cars because of profit margins on those cars are so low. This is what I keep pushing back on. When I look at this piece mail, when I look at actual individual commodities, I'm like most physical commodities have lower and lower returns. We'll get to this because this is going to get complicated.

C. Derick Varn: 41:15

The whole Rintier economy the venture capital was maintaining, where people were leveraging profits off of debts as a way of avoiding taxes. Actually I don't think people realize that's what it does. If you can eke out just enough profit to outpace your debt. You can also hide your earnings by taking on additional debt, which these Rintier companies were clearly doing. That led to the theories everybody was talking about three years ago and somehow some leftists are still pretending that they're neofutilism or whatever, which to me is laughable after 2022, to be maintaining that thesis.

C. Derick Varn: 42:08

When I look at all this right now, I have to put an asterisk on all of it, because this stuff with the petite bourgeois seems to me volatile as fuck and highly unpredictable. Because one thing that we can say about the professional end of the petite bourgeoisie, what we might call the PMC, or I like to call the PMS, the professional managerial strata is that there's a real sense that government largesse is holding those people up through government contracts, through indirect investment, et cetera. There's a real sense that also, despite the fact that the GOP likes to poke at those people, they really don't actually want to damage that infrastructure. You have that political base, but a lot of those institutions, frankly, are becoming less and less relevant. For example, higher education, which I don't think we're going to do away with, but it's going to be a smaller and smaller portion of our economy. I think that's kind of undeniable at this point.

Nicolas D Villarreal : 43:38

Yeah, I mean we've already seen the peak of college graduates and stuff To go back to what you were saying about how volatile it is.

Nicolas D Villarreal : 43:54

One thing to keep in mind. I first saw this paper a few years ago about profit rate distributions. It was looking at for most companies private companies. We have no idea For public companies. We do know there's some databases of public company data that go back to I don't know the 60s or something. If you plot the distribution of profit rates for all the public companies and you look at it over the years, how that distribution has changed, you can see that the like the tail end, the negative, the side that is on the lower half of the profit rate distribution, is for public companies. It's basically a triangle of a logarithmic triangle. It keeps going lower and lower and lower. You have and there was, it came back like this came back it's a relevancy just a few weeks ago when Goldman Sachs put out a graph that showed this like what is the share of negatively profitable public companies? Over time and it's, you see it, since the 60s it's been, particularly since like the 70s it's been going up and up and up and right now it's at like 50%. 50% of all public companies are not profitable. That's a crazy statistic If you think about that in terms of like the like, the here's.

Nicolas D Villarreal : 45:31

The thing with like the rentier is some kind of thing, right Is that it's always like a double-edged sword and it's and it's a delicate thing too, because it was always kind of dependent on profit rates. Not on profit rates, but on interest rates. Yeah, because who can be the rentier is entirely dependent on the interest rates, because if it's low, then it's exactly what you're talking about. The debtor gets to be the rentier. It's all of these companies that with negative profit rates and so on, that are like living off of these new dollars created by credit, who are like living off of, like the irrational excesses of capitalism and speculation and so on. But as soon as profit rates go up and it's like it's right now and we haven't even really seen like the other foot, like the other shoe, fall Because people, because interest rates are so high, are choosing not to get more debt.

Nicolas D Villarreal : 46:45

They're trying to avoid it as much as possible. They're trying to lock in the low interest rates they had before. But eventually that's not going to be feasible anymore and it's why we're seeing like oh, youtube is forcing people to get off their ad blockers and stuff. It's why well, I mean. The thing with Twitter is that, like Musk, made a horrible business decision in buying at such a high price, but it's the same kind of logic. He said he needs to get, like, more operating income in order to make this work with the debt that he has. The rentier shifts from the debtor to the creditor when you have the higher interest rates go up, and that's why it's like such a delicate thing and why it's like these distributional effects are really important for capitalist economies, because it shifts where the excess is and where, like, the resources are going.

C. Derick Varn: 47:41

This is actually really crucial because I think that's going to change a lot of politics If these rentier companies are also thus drying up, and I think we've seen, like for me, when Acre Men and Co try to convince me that there's no declining rates of profits and I'm like, well, okay, why is mass media failing? Why are we reaching all these profitability things in areas of excess? Why is it not just? Why is it happening in places outside of the United States? If it's just a currency policy problem, why do we see similar trends happening In China and Russia? I mean, the ruble fell through the floor this year like, and most people didn't notice it. It's actually quite interesting reading Economic analysis right now, on both the right and the left, because it's usually like a year and a half out of date. What they're saying is going on right now and I admit, yes, there is something very frustrating to the constant predictions of the final crisis the next day and, like you and I both are hesitant to do that for one.

C. Derick Varn: 49:02

Countervailing tendencies emerge all over the place in ways we don't see. That's how neoliberalism happened in the first place. That's how, actually, that's also how Keynesianism became viable, and there's always a prediction to declare in the midst of that that, that all these trends are done, that, like you know, monopoly capital exists. We don't have to worry about the crime rate for profit anymore, 1950s, 1960s Neoliberalism exists. We know, like we, we can emissary an austerity our way out of the client race profit. Somehow that prevents revolutionary subjectivity. I don't know how, but, but that was the argument. Now I don't, you know, neo feudalism, our political capitalism, or whatever is forestalling it, or the idea that just monetary flows can handle the problem. And then you'll hear, you know, predictions of like, well, de dollarization is happening tomorrow. You know, I think Mackle Hudson has literally said this every month for two years now, and While there has been significant de dollarization just because of the value of the dollar going up, it hasn't really led to like the weakness of the US trade capacity at all.

Nicolas D Villarreal : 50:24

Yeah, this is good. This has been what my Instincts have been for this like ever since I kind of started thinking about economics and socials, politics and stuff. Well, I was like a bushy tailed undergrad I was. I came up with this idea that wrote this really terrible paper, based off of it for a class, about how there are these trade-offs in capitalist regulation of economies that like this like you, you keep coming up with these new solutions, but they create, but you and they create new problems, but you can't ever escape these fundamental trade-offs and how you deal with the capitalist economy.

Nicolas D Villarreal : 51:09

And I still think that's true. I think that, like I mentioned this when we had our discussion on, like the right after the bank started failing and the Silicon Valley Bank and stuff, like you're like your serious problems, but the overall, like I didn't think it was going to cause the cascading failure necessarily. And Like, even today, the, the economic outlook is still very mixed. I don't see like, oh, great depression, two happening right around the corner, although certainly there are such like things that could trip things up somehow, like Auto loans are a big example.

C. Derick Varn: 51:48

Our loans. Commercial real estate there's a lot of people.

Nicolas D Villarreal : 51:51

Yeah, this big problems in the economy. I don't know if there's like, if they'll cause things to explode or not necessarily. What I do know for a fact is that there are like, even if, like the next recession, is it like a final crisis of capitalism? I do believe final crisis of capitalism exist. We saw one in the 70s and what they are is the crisis of profitability, that that, eventually. This is what it. This is what pushing up against the limits of these trade-offs actually looks like.

Nicolas D Villarreal : 52:24

If you're interested in, like the welfare of society, because event, because once you hit that point and this is what makes the Keynesians so irresponsible, in my opinion Is it that? Is it by thinking that you can always just Regulate out of like the these problems To just always have more prosperity and so on? No, at some point you run into the. This comes into Conflict with the reproduction of the capitalist class, and that's what we saw. And nobody, like none of the Keynesians and Ackerman, aren't talking about this. They never, they never admit it. When I confront them about it, they don't even address it Because it's not like that. This is not even like in the realm of things to talk about in economics, you know.

C. Derick Varn: 53:15

Yeah, well, this is something I brought up to MMT years where I'm like, okay, what? What if you're correct? What if everything you're saying is true and yet there is no way in which the power relationships Of the policy you want would be maintainable. If we had full employment, for example, yes, all Marxist should advocate for, for employment, because we know damn well I mean Marx to be careful about that, be careful about promising it, because we know damn well that under capital that would be disaster for, for, for the capitalist it would be like it would. Yeah, having no elasticity in the labor market would effectively, you know, tip the bargaining power to labor to a point that it could totally different to the profitability. There's no way around that.

Nicolas D Villarreal : 54:00

And it's and it's not got off effects that. So I mean one of the reasons the national workshops were so important in like the second French Republic for the socialists, is because they were like stimulated work or organizing extraordinarily, and so does having full employment. Like you actually have all these people working Co-operations and they have tight labor market, you can't but Well, that's why we are seeing so many strikes right now.

C. Derick Varn: 54:26

Let's be honest, because because they can't like there's there's less scabs to scab on you right now.

Nicolas D Villarreal : 54:32

Yeah, exactly but I saw this, this paper that was. I Don't think it was very Intellectually deep, but it was one of those papers. It's like trying to summarize and combine a bunch of different ideas and so on, basically trying to combine D-growth and mmT to get like just climate transition or whatever right you mean so someone like Jason Hinkle?

C. Derick Varn: 55:03

Maybe that sounds like his go ahead, that just sounds like his deal.

Nicolas D Villarreal : 55:09

I can't remember who the author was. That might have been it, but the it was just so pie in the sky, like just wishful thinking, because they're like oh well, if we Institute price controls and when we do the those stimulative spending, we can control the like. Inflation is like whether is a that could result from this, and it's just. Do you not understand?

C. Derick Varn: 55:40

the amount of control over the economy they're actually positing would would require more than what Marxist would require for a communist revolution, and they're just not being honest about it.

Nicolas D Villarreal : 55:48

Exactly like there's no way this will ever work if you don't have direct control over production. Like as soon as you do something like this, you're going to open up black markets. People are just going to find ways around this. It's not. It's not a serious policy solution To it's. It's just wishful thinking that you can combine all these different ideas to get exactly what you want.

C. Derick Varn: 56:10

So, yeah, you have to target investment, you have to tax a shit out of people, you have to, and hope that that doesn't lead to To Political backlash, which it will. You have to like. There's a reason, for example, that almost all Keynesians have effectively given up the primary Inflation control that Keynes thought existed, which is taxation.

Nicolas D Villarreal : 56:38

Mm-hmm.

C. Derick Varn: 56:39

There's a reason why they've given it up and there's a re, yeah, and there's a reason why, for example, ackerman and up not, this has nothing to do with what you are arguing with them about, but in the past he's like well, inflation is good for the working class. That was, you know, two years ago. That was like every article he was writing, and as long as it doesn't get above, like what is it like 12% or something? And I'm like only if you think the working class are debtors, which I don't like. There's a confusion of categories there, my friend.

Nicolas D Villarreal : 57:13

I mean the middle class has way more debt than like the. I mean middle class is nebulous but like Middle-income earners like these are much more likely to benefit than like people who are really just scraping by With like wages and so on, because you need assets to have liabilities Like large liabilities right.

C. Derick Varn: 57:36

Exactly, you have to have assets, you have to have you, you have to be there's. There's a way in which people are playing around with I mean, middle class is nebulous, but like playing around with moving the image of the middle-class worker and the working poor. Yeah, so that you, so that you're not like always shuffling around who's being held where, and I think this is a. This is a pretty big problem because, like I said, I don't necessarily disagree with what MMT years have to say about money and currency, mm-hmm, I Disagree with them on what that means about production and power relationships and a lot of what they're actually advocating. For, if you think about it, requires a Vast managerial class, beyond even what the Soviet Union or China, when it was trying full communism, ever had Targeted, targeted, technocratic, fiscal and monetary policy.

Nicolas D Villarreal : 58:51

And you even you need like new techniques for like a coordinating production too. That they don't talk about what those would be, because, like if you, if you're doing price controls and stuff and also trying to stimulate investment through like extra government spending, the primary way that like the industry's shift, like they're in like Reallocate sectorally, is through price changes. If you take that away, like there's gonna be all kinds of messiness if you're not the people that you're not even anticipating right now and aren't dealing with conceptually.

C. Derick Varn: 59:23

Absolutely so.

C. Derick Varn: 59:29

This means that right now, it seems like the most connected Part of the class to tie this back into your stuff and we'll get to talking about the Fed and your current thesis about how that works but that the people most activated by this is the petite bourgeoisie, particularly the petite buzz was E, and then what let's call the middle tier petite bourgeoisie, yeah, who also tend to be tied into Sunbelt production, that are downwardly mobile, as both individuals in a class who tax rates really are an existential threat to their profit rates and thus their ability to socially reproduce Mm-hmm, and a way that they are not for everybody else.

C. Derick Varn: 1:00:19

I mean, let's be honest, while there's a ton of taxes that hit the poor, actual income tax doesn't that much and the poor tax rate is not that much, and the poor, by definition, don't tend to have a whole lot of other profits to go after, and so they get hit by other things hidden fees, service taxes like Medicare and Medicaid, social security but even those are, those are limited, you know, because of bracket cap, whereas the petite bourgeois who make it, like you know, a hundred to two hundred thousand dollars a year in there, who are theoretically comfortable and yes, I, you're right that these people are about 60% GOP. They are still probably a large part of the more conservative end of the of the Democratic base, depending on if they're urban or not.

Nicolas D Villarreal : 1:01:23

I mean here's the thing is that they're especially important for party politics Because they're the people who can participate. They have like some kind of independent wealth. They have like the. They're the ones who are pulling things in regional and state parties, basically, absolutely.

C. Derick Varn: 1:01:40

Right, basically, yeah, if they are parties, they are people participating in municipal politics, which is the basis of politics, whether we like it or not, and no one else really has the time, the inclination or the ability, particularly now Because of profitability rates. Things like local media and whatnot are completely non viable. I mean, I Like to, when people talk to me about this, always remind them about my podcast. My podcast is profitable, I Mean I do have headway. I don't have a ton, but like it's profitable because my audience is all over the world. It is diffuse, so I. But if I tried to survive off of my local audience and be a local oriented Marxist entertainment podcast or whatever, the up VHS tapes.

C. Derick Varn: 1:02:30

Yeah, or even even just like I'm just focusing on my local polity here on the internet and that's all I want. I would not be viable. There's no way. Right Diffusion is how this kind of you know, ren T A quasi capitalism works. Now people should think about that across the board, because it makes it look like we're able to build more than we can. Because you used to be able to support media apparatuses with staffs All right off of local advertising. Yeah, that is not possible now, which also means that you need more Overhead to even have the knowledge base about local politics to participate in it meaningfully.

C. Derick Varn: 1:03:24

Yep, I don't just mean running or giving to can like even knowing who the candidates are is harder than it used to be, because people like me aren't covering them, because there's no profit base for us to do so. And so when I hear that like there's no profitability problem, I'm like then explain to me why the economy works the way it does right now. And you can't, or you'll say, well, we're not doing the investment you know correctly, this is actually I get from MTAs. You know, if we, if we focus, and I'm like, well, how do you focus that that cleanly? With what mechanism do you actually do planning only by monetary and fiscal policy? That directly you can't control that like that.

C. Derick Varn: 1:04:12

At what point is using this intermediary of money as a power lever actually not that efficient? You know, it's not to say that you can't, but there seems to be a bait and switch. On the general, we print more money, we can stimulate stuff. In the specific, on how we coordinate, how we plan, how we'd stop, you know how we'd manage economy to deal with when it gets overheated and thus inflationary or whatever, like, all these things are questions that are theoretically addressed in the abstract kind of, and then dropped out. And that seems to be a left-wing move and have always, it's always seemed to me to be a progressive move. But I've seen quote social democratic Marxist increasingly do it. Why do I say it's a progressive move? Because the progressive attitude has always been very similar to the Bernsteinian attitude, but even more vulgar in a lot of ways that we could just regulate our way there, right, yeah, and for one I don't mean to give conservatives much, much heed, but that level of regulation is absurd. Well, yeah.

Nicolas D Villarreal : 1:05:28

I mean it's one of the like I don't know there's lots of. I think it's one reason that like why you see that there is like this gap between, like this you hear, the decline of the small businesses they're like one to five people and then all the other kind of businesses, like small, medium businesses are increasing over. Most of like the history that we have is that I mean regulation is like a real thing, like people.

Nicolas D Villarreal : 1:06:01

I mean I obviously have like an affection for bureaucracy, but I obviously filling out forms and trying and red tape is annoying in general and the simplest way to like the simplest way to accomplish lots, and some people talk about it like, oh, we could start like a public company that does certain things, model it off after like post service or different public corporations, and that would be great.

Nicolas D Villarreal : 1:06:35

I think that. But I think that the thing that a lot of people just don't well, actually, let me rewind a bit because this actually relates to like the deeper thing here, which is and this is a problem that Marxists have as well in a much more sophisticated and twisted kind of form is that we don't really have very sophisticated theories of the state, that this is anywhere in like across the political spectrum, I think. Because if you do, if you do have a good theory of the state, of how, like, social institutions function and how they form and reproduce themselves, then you can start to answer some of these questions. And well, how do you do X? And some of these things are like trans-historical, you know like you create social institutions to do these things. But the problem for everyone is that nobody really understands how those things are connected to economics, to not just capital surplus but surplus in general, how these things relate to historical tendencies of like the state to form and what its internal logics are.

C. Derick Varn: 1:08:03

And unfortunately I think Marxists have largely actually left that primary to anarchist anthropologists, frankly, who are the only people who seem to talk about surplus in this way, and I guess. But Ty, like you know, but I actually agree, we have to look at like trans-historical tendencies, we have to look at game theoretical outcomes, like, as much as I and you disagree on Althusser. Althusser attempts a theory of the state. I think his theory is nascent at best, but at least he kind of has one. Marx avoids the question. I mean he does. It is something that originally he planned on doing. He never got there. It has not worked out Like, and I think it does show up in so much that Marx has a theory of the state.

C. Derick Varn: 1:09:00

It usually is implicated in his debates with either Blanqueist on one side or anarchist, usually Bacutin anarchist or Perdon anarchist on the other, where you get a nascent idea of what he means by dictatorship of the proletariat, a state to stateless society, you know, and Lenin does what he can to work that out. But again, at this point I think we can all agree that those understandings, while there might not be anything wrong with them, they're not sufficient. They may be necessary but they're not sufficient in explaining what we see in the modern state. And then we have to start dealing with counter institutions and you'll get things like dual power. Well, fine, but how does dual power handle the scale difference today? Or you know what? You know who is able to do power better than the working class right now? The Petty Bourgeoisie, because they are more willing to be class collaborationists, to maintain whatever vision of the status quo they have in their head.

Nicolas D Villarreal : 1:10:07

I mean, this is exactly like what I wrote, that article in the Petty Bourgeoisie that they, like I was revisiting my priors of like of Marx, because I realized, like, for the longest time, I was still committed to the idea that we could reverse these tendencies of like, atomization and somehow that, like, the recreation of monopoly capital will reestablish the tendencies that Marx identified of the socialization of labor, centralization, the expropriation of capitalists by a smaller number of capitalists, and so on. But is that not happening again, this time because of Petty Bourgeoisie power? I was thinking, well, what does? Let's go back to the drawing board here for a second. What is this problem here? Why is like? This was like something that has always been a thorn in my side that I've been trying to address. It's like, how do we think about the Petty Bourgeoisie? Let's not just let's go back to the like, the basics and try to figure this out and, unlike just what Marx was doing in capital, trying to work this theory, theory of the state. And what I realized is that, if you like this thing that Althusser identifies that I always come back to the relative maximization of violence, or potential violence, depending on how you wanna think about it is like this is trans-historical tendency of the state, of how states, not just like a particular state but as states throughout history, because you can have states that actually fail to in the sentencing they get destroyed usually. And the reason that's important is because it's the same thing that, like Marx, like everybody identifies this in like the moments of defeat. You know that Marx saw this after the failure of the Second French Revolution and then Adorno and the Frankfurt School. People are talking about the same kind of thing after World War II and like after post-Stalin secret speech stuff.

Nicolas D Villarreal : 1:12:35

Is that when you see that like the history of like increasing, like he talks about, like from like throwing, like the I forget what the first thing was like a stone or something to the atom bomb, the slingshot to the atom bomb, I think it was like this tendency to create more refined and powerful apparatuses of violence. How do and Marx was Marx was actually kind of talking about the opposite, but he was talking about increasing perfection of the state through the centralization of the French state and through the first revolution, the first Napoleon, and then the Second Revolution, the Second Napoleon, and these things are all connected. Is what Alphazère is saying? Is that in his final critique of Marx in trying to create the theory of the state. He's saying that the you have, on the one hand, these increasingly refined methods of social control and political power in the state in creating ideology and so on, and then also the more refined and powerful methods of actual violence, and this is connected to decrease the violence of all of their actors on the one hand, and increase the violence of the state. And when you realize that and you think about this in an evolutionary framework of the state, the problem, the Petit Bourgeois, makes a lot more sense.

Nicolas D Villarreal : 1:14:10

Because in order to get to like each of these things that happen, when you had the failure of the 1848 revolutions and you had what appeared to be the failures of Stalinist communism and then also the hopes of the Second International and so on, like these things were attached to like. Well, first was the failure of the bourgeoisie to create the liberatory politics, right, and then it was like the failure of the proletariat, or the first, the failure of the bourgeoisie and the failure of the proletariat to create liberation, and so on. But these things and I had this phrase in the article that, like, everybody gets the freedom they deserve, in the sense that, like everybody's political actions to get their kind of, to get their freedom as a class, is creates a particular kind of state that is capable of suppressing them as like violent actors and so on. And this is like what. This is what the revolutionary potential of the bourgeoisie is.

Nicolas D Villarreal : 1:15:24

Is it at some point in this process of like, once we see what the crisis of the bourgeoisie is? It's like it's gonna exist economically, but it'll have a political dimension that is equally important, and when that happens, there is a crisis for the state as well, that it has to adapt and overcome this somehow, whether it's through like and this is talking about the state, it's like a species of social organization, so individual states may fail like the including like the bourgeois state is a general category. What you have to, I think that you can't, if you can't, escape these kind of tendencies in history so long as like the state exists, you have to do like a meta-analysis of how you respond to a crisis to get the outcomes that you want. And if you can't get like, if you know that the state is going to find a way to deal with this problem, you have to try to find the solution out of all, out of like the sample set of solutions that is most aligned with what you're interested in, what makes sense?

C. Derick Varn: 1:16:35

Yeah, it makes sense to me. I mean, this is why I'm so interested in studying state formation, surplus formation, social institutions that arise out of surplus. And by surplus here I don't mean, like surplus capital, you know, ally capital, volume one through three, I mean physical, surplus, general, without even dealing with value categories, like it's something that you have to look at and you have to start gaming out what's going to happen, what are the incentive structures, what kinds of social, geographical, you know, interpersonal, intersocial factors lead to X. And if you can't do that, if you don't have models for that beyond, you know, beyond very basic ones, you're going to be kind of at Schitt's Creek. And it is actually to me the problem of Bonapartism, which I admit, for Marx was a post-talk adjustment to his theory.

Nicolas D Villarreal : 1:17:43

It's very funny reading what he was hoping was going to happen at the start of the Second French Revolution and then what actually happens, and he's responding to it in real time.

C. Derick Varn: 1:17:53

Right, yeah, and I don't. When I say it's post-talk, I'm not even here saying that it's necessarily bad. He's trying to reconceptualize what is going on in real time as he's observing it from England, you know, in journalism, in his polemics in the first international, et cetera.

Nicolas D Villarreal : 1:18:13

He was in France for the first part of it and then, well yeah, by the time Bonapart came to power, I think he was out.

C. Derick Varn: 1:18:22

But yeah, it's so. I find this very, very interesting though, because this is where you start seeing something like a state theory. You start seeing the dealing with problem classes. So we have the two driving classes, but there's all these. It's John Elster, not a guy particularly like, but who did actually count the different class categories that show up in Marx. He counts 16 of them. And then, if you take what Clive Burrow says is the two distinctions between true lump-in and semi-lump-in, are you know lump-in, so-called? You know which are categories? He derives from the letters.

Nicolas D Villarreal : 1:19:07

It reminds me of that reporter. Like asking Biden how many genders are there, and he replies at least three, right, right.

C. Derick Varn: 1:19:14

Oh, you get a ton coming out of this and you have to a lot of people have to, like, fix the categories in some way. I mean, clive Burrow, for example, says lump-in proletariat was never meant to be a class. Well, marx doesn't say that, although that is consistent with what Marx wrote, because the tradition. There's two theories of what causes people to be lump-in. The first one is just the decayed social classes of prior social orders which, okay, you can't explain all lump-in this now with it were 150 years in capital that way are 400 years, independent of how you count. Or it's like people who are thrown into unclear positions from all classes and thus have to parasite on this.

C. Derick Varn: 1:20:22

Marx isn't consistent on it, but he is working something out about state dependency, because one thing that I think Marx's today miss, but is something that Marx was very big on, is like, yes, there has to be a seizure of the state, but socialist and workers being dependent on the state before that seizure is actually a bad thing. It's not something Marx wants, and his electoral strategy, both in the first international and in his advice to the S-Pay Day and Letters, is pretty clear you don't get in their way if they're helping workers, but you don't even take ownership of that, because eventually it's going to be used for control and it's going to put you in a bad position.

Nicolas D Villarreal : 1:21:08

It's funny because I've been thinking about. We were talking about the Particular of the Gotha program the other week.

C. Derick Varn: 1:21:19

We were talking about it privately. We still have to do that episode.

Nicolas D Villarreal : 1:21:24

Yeah, but this is a very tangential thing about it is that he mentions and I think it's one of the footnotes or something or what are the after-peak parts of it where he says that they shouldn't support the abolition of child labor. So obviously against the excesses of it and so on. But it's good for kids to have, as like, have experience working in things, because it gives them agency. And he actually has ideas of actualization and independence of people, of working people, and I think that's consistent with what you were talking about.

Nicolas D Villarreal : 1:22:22

People talk today about how people are so unprepared for the real world now that the way the education works, the way that people going through college and so on. I've talked about how universities and stuff operate as a state ideological apparatus in line with Alster's. There. I think that in a lot of ways our society is like we've been dealing like the way that capitalist states have adapted to modern, like because they're always creating these new hot fixers. It's like this too many. It keeps accumulating and coming up with new. Like every time you add something on, it's not sure if it will break something else, like if you're trying to debug spaghetti code or something and a lot of the evolutionary adaptations it has. It came up with something that's something to solve this particular crisis, and then it came up with this new thing to solve the next crisis, and so on. The colleges and stuff came for like very important in the 20th century to solve the problems of the revolutionary proletariat, I think.

C. Derick Varn: 1:23:58

Well, it gets rid of a whole lot of people from the labor market. It also enables, it divides the proletariat up and cartelizes things that you normally couldn't cartelize. It also is a way for the capitalist class to outsource and rent, seek on training and outsource that to the proletariat and a skilled, protected, cartelized labor, aristocratic part of the proletariat itself. I mean like there's a ton of things it does and I have been reading more and more of these sections of theories of surplus value in Capital Volume 3, when Marx talks about, like, how pre-capitalist formations actually survive all the time in Capital but they change their social orientation, changes what they do, and I've been thinking a lot about that in regards to universities. In regards to banking. He talks about this in regards to like usury. Actually he was talking about one of the change in functions of like a banking between late medieval and capitalist production, even though he's saying he's well aware that it was banking's crucial for capitalism, but it definitely existed for different reasons.

Nicolas D Villarreal : 1:25:26

I mean, I was going to get the banking too here, because it's one of the places where we most clearly see like adaptations by the state to these kind of crises.

C. Derick Varn: 1:25:37

Well, let's talk about that, because I think we've seen since 1981. You've seen several radical but stealthy reorganizations of banking. So let's talk about that, because this is another article you were writing, but I think it's really important.

Nicolas D Villarreal : 1:25:54

Yeah, now in the 80s, like one of the big things that happens is you have the savings and loan crisis. You have lots of centralization. This paves the way for a lot of globalization that comes later. Because now you have, like these really big banks that are the sponsors, the creators of these new, very liquid international markets of different assets, of, like state bonds and equities, and all these international companies and so on, derivatives markets, sporak, so on All of that. The big international supply chains needed this to exist. Then you have, like the 08 crisis, radically reorganized banking, you had QE and so on.

Nicolas D Villarreal : 1:26:43

Like a lot of interesting, like little hangovers, like it's very interesting, like the current situation where I'm right now. The reason, like the thing I wrote that article to highlight what was going on, was because nobody who caused it to happen in like 08, seemed to think about this as a consequence, because it, like the whole framework that they were operating in never would have this, never would have even happened and it didn't happen for a long time because they were everybody was so worried about liquidity and like the super low interest rates after the Great Recession that lasted for so long that, like nobody thought to think about. Well, like, because what happened in an 08 is that you had a transition away from controlling banks like the lending of banks and their interest rates controlling, like the safest interest rate that they had, by basically buying and selling treasuries and altering their reserves through that. It was kind of a funky like way of doing it, but that's what they did. So you weren't the Fed, really wasn't.

Nicolas D Villarreal : 1:28:07

There was a certain small situations where they were doing like repo repos and stuff and they were paying banks directly, but overall that wasn't the case. So in 2008 they started, they changed it so that the lowest, the safest interest rate that banks had was the interest rate they paid on. They got paid on their reserves that they put at the Federal Reserve. So the Federal Reserve basically has bank accounts for all of the major banks and the interest rate that they give those banks is basically the interest rate for like the just the Fed funds rate for the overall economy. And this is how they manipulate interest rates now and because of that, when you have rising interest rates, you can have a situation where the Fed is actually paying a lot of money directly to these banks.

C. Derick Varn: 1:29:04

Right. Well, what I found interesting about your argument there is it sounds like it's similar to what Warren Mosler would argue that the payouts on the interest rates are holding up the entire economy. That's not what you're arguing and I want to make that clear. Mosler is basically arguing that's why we don't have an unemployment crisis is the back door payouts on these interest rates. But I'm like that only goes to the banks. That doesn't necessarily go to places to give out payroll. So I don't know if that's actually true, but there is a sense in which the banks are being supported by the payouts on these interest rates.

Nicolas D Villarreal : 1:29:48

I did the math that if you take away those interest rates right now they would be making, most of the big banks would be in negative profitability territory and the ones that aren't would be pretty close. This is a particular consequence of this particular monetary policy framework. It didn't have to be this way. I don't know what the exact, what a different path would look like. It's certainly the case that these interest payouts to banks probably did help a lot in preventing the spread of the Silicon Valley bank collapse.

C. Derick Varn: 1:30:43

We didn't have a crypto and do savings and loans crisis. Basically, yeah, exactly.

Nicolas D Villarreal : 1:30:48

There's still really big problems for banks right now because interest rates are so high. A lot of the assets that they're holding are worth way less than what they paid for them, and if they tried to sell them, they would have big losses on their statements. They're not selling them, but they are, and if it came to that, the Fed would probably just buy them for them at higher prices to make sure that everything held together. But that would be a whole other kind of thing. Like the Fed is fixing these prices or, in this hypothetical situation, would be fixing prices to ensure the stability of the financial market, the whole thing calls into question why do we need these guys? Why do we need these big banks? Why does public monetary policy have to make private investors really wealthy like the owners of these banks? It's just really absurd that that's how it continues to work.

C. Derick Varn: 1:31:52

It does seem interesting to me that right like QE seems to have been a way to get rid of toxic assets, just removing risks from the market and pumping asset values. I agree with the M&Ters it wasn't by, like, directly throwing money at the economy, it was by basically moving balance sheets around and creating asset protection for things that would otherwise have blown up. Think of them as little asset bomb shelters. But they quit doing that because of inflation. And that makes sense because eventually you can't pump assets forever. And it not eventually, for some kind of ex-dogenous shock flow out into the market, like eventually it's going to have to Something I don't know, covid, whatever can cause that to happen. Oil crisis, there's a number, a war, all kinds of things that are happening right now could cause that to happen.

Nicolas D Villarreal : 1:32:53

I mean. It's a really interesting dichotomy here though, because, going back to the profit rates for a second, is that there's a funny dynamic when you have rising asset prices. Right, because, if you are like, it's not boosting the income to the capitalist class as a whole, except to the extent to which there are non-capitalist asset holders who are like losing money. Relative to them, it's like this is basically a thing that helps, like older capitalists in the market, the ones who already have assets. If you're a capitalist going into the market as a newcomer and you're having to pay relatively a lot to get access into this, now your assets will be worth more than online. Probably.

Nicolas D Villarreal : 1:33:51

That's actually like this. Obviously there's no guarantee, right, but the actual returns that you're getting on these things is like the income that you're getting out of it. I mean, it's just a funny game that you play when it's with asset inflation. Right, because in order for there to be like someone who gains off of it, there has to be a seller and a buyer. Somebody has to be losing money off of this in order for it to work. Like, obviously, like the, if you try to get off this treadmill of like increasing assets and try to actually consume a lot of that wealth? It would a lot of it. You're not fictitious.

C. Derick Varn: 1:34:44

The moment you try to actually valorize it. See what like and I admit you know there's a lot of pushback from MMTers about the idea of fictitious capital. The way I just say is look, if your balance sheet says one thing and when you go to try to sell it, most of that doesn't exist because your valuation was inaccurate to when you were valorizing the capital, then that was fictitious, it never existed, right? You can only know it, though, when you sell shit.

Nicolas D Villarreal : 1:35:11

So but the thing is with like profit rates is that, even though there's lots of money being made in these financial markets, the actual like, so it counts like the asset inflation in terms of rates return, but the actual money that you can take out of the market is actually going down as a rate of like the, which is like reflected in interest rates on bonds, on dividends, on stocks and so on, like the.

Nicolas D Villarreal : 1:35:41

If you think about a rate of like the income return on an investment, excluding the asset price, because if you just roll it out, imagine you're like rolling it over indefinitely, right, the actual income that you're getting out of it is going to be decreasing over time with this kind of asset inflation, because the income is still determined by like what these companies are making. So you can have weird scenarios where, like this, like these huge speculative energies going on in stock markets and so on and this is a lot of people are throwing their money away at it. The actual money in the economy is still in all these really big firms that do all the productive things but they don't actually like if you're a capitalist that's buying the stocks in that company, you have to pay a really high price for those you know You're, in order to get like whatever, like the, that makes it so that the dividends are a it's like socially adjusted return of of like like 5% or whatever you know Whatever beats inflation?

Nicolas D Villarreal : 1:36:55

Yeah, yeah, and it's a, it's a socially determined thing. It's why like it's. It's actually a reason why for a long time people thought like that the equalization of profit where age was absolute. Because it is absolute, absolutely equal on the financial level, because it's totally liquid, like that and so on. But on actual returns of companies and so on, it's not yeah.

C. Derick Varn: 1:37:23

I think this, however, makes it very clear one, why the stakes around the state seem so high for both the petty bourgeoisie, for the PMS, for all these groups that are these like quasi categories right now, why there's such an incentive to turn even things that traditionally are workers into pseudo contractors peace, peace, workers in a way that that offsets losses, and why we see label struggles. I mean, one of the things about current temporary labor structures, with the exception of the UAW, is a lot of what you're seeing right now is battles over small businesses. Their franchises are their small corporates, I mean, but their small businesses effectively, and it's hard to deal with that. That's why they don't often get good contracts or whatever, because they can't really shut production down except at one site. And when you add all that together, it we're in a very interesting time period because it seems like one, you're right, the petty bourgeoisie seem to dominate politics right now because they can participate. Two, you have a radicalized, broadly speaking, semi skilled working class that has a lot of labor power right now. I mean not a lot of market power, excuse me, not labor power on the labor market, I mean, it always has labor power, that's what defines it, but it has a lot of market power in the labor market because of a decline in the workforce like in very simple terms and while adjustments in the economy have made that decline less of a problem. They're also trying to up worker productivity rates, which were super high on the odds but have been down now for like 15 years. They hit a peak, I think, around 2005 and pushing people towards that right now is about pushing people beyond, because the technical capacity with the exception of help with AI, which does has done some work reduction really is still not there for a whole lot of the labor market and you're just breaking the workers. So you're going to get more and more militancy that way, but they don't, interestingly, have properly speaking political representation.

C. Derick Varn: 1:40:06

When we see what the Democrats actually do, yes, they're kinder to labor in a lot of ways and in the ways binding was like reform, the National Labor Relations Board, et cetera, but that's mostly through executive fiat. That hasn't been through legislative action and it's limited to a fairly small set of workers. When you actually look who's covered by the Labor Relations Board, it's a subset of a subset of workers. When you figure out that most workers aren't in unions but most union workers actually are exempted from the NCLB in some way. I mean, all state employees, for example, are. It becomes very clear that there's a real big limit to what's going on there and what's still driving things is trying to keep the petite bourgeoisie at bay, and it doesn't seem to. And I'm going to be frank here. Both parties seem to be having massive political crises right now on how to handle it and increasingly investing into Bonaparte figures because they're like their entire political machine in the legislative branches, at the state level, et cetera, seems to be breaking down.

Nicolas D Villarreal : 1:41:21

Yeah, I mean that's. I mean that's the thing about the like, why I brought up the atomization of this class, that they like, they all of the social techno like this. There is some overlap in the social technologies that were created to deal with both the workers and the high boards, wazie and whatever, but there's not, but there's not a particular social technology built to deal with this of how to like the bourgeois state was supposed to have moved beyond Bonaparte. You know it's supposed to hold.

C. Derick Varn: 1:41:57

Yeah, that was a whole post post World War Two, post war state is supposed to be to get us beyond this problem.

Nicolas D Villarreal : 1:42:03

Yeah, exactly, but you. But because of the way that the petty bourgeois works is because of their atomization, because they can't like you can't use these institutions to control them if they don't participate in them. You know, like they participate in the like the state and the parties and stuff, but they're not like in terms of like the universities, the media, the like they're creating all of these counter like media networks and stuff. Because they don't, because they're not being directly connected into these existing networks and institutions, they haven't developed a set of like policy tools and and structures to deal with them.

C. Derick Varn: 1:42:50

Basically, all they can do is disrupt, but they can disrupt, and that's the thing that, I think, which makes them a political actor, because it can gum up the machine. But what is the Petit Bougeois political vision Other than trying to maintain something about the status quo? It's not even consistent amongst the class, because it can't be. Different parts of the Petit Bougeois are going to need different things. That leads to a kind of incoherence that can only be papered over by administrative fiat, but that's only viable for so long.

Nicolas D Villarreal : 1:43:27

Here's the thing. Here's the ultimate solution that you have come to. It's related to the disagreement that I have with Brenner himself and also Ackerman that a lot of the discussions recently have been about the connection between growth rates and profit rates. On a cyclical level we know that there is a very close connection Because if you have more sales you generally have more profits and there's a bunch of other reasons for this as well. He also found the classical price mechanism and so on, that higher profit rates are going to generally to higher real output because people see that there's money to be made creating commodities and so on.

Nicolas D Villarreal : 1:44:19

But on a secular level there's no reason to expect that there is a particular connection between a one profit rate for society and one average growth rate Because it goes back to the Kalecki profit equations.

Nicolas D Villarreal : 1:44:41

In other words, it goes back to basic accounting.

Nicolas D Villarreal : 1:44:45

The profits of society are always going to be equal in the aggregate to the amount of investing and the amount of consumption of the capitalist class. You can have that technically with any growth rate we can imagine. But obviously there are social institutional reasons why it's correlated with certain profit rates If we have a society where we are firmly taking a big share of the pie and just giving it to capitalists just because they're capitalists, because it is now just an enshrined property relationship in the state that these people get this share of income or whatever. That's not necessarily going to be good for growth, but it is a way to preserve bourgeois social relations through renterism. This is what I've been saying since, from the very beginning, since I've been talking about the petty bourgeois that the one way out of this is to create a society where the profit rates are no longer a thing which is like an economic mechanism of exchange and coordination of investment and so on. They have to neuter it in order for them to maintain their social relations and their status in society.

C. Derick Varn: 1:46:19

Well, that does seem to leave us in quite a bind. Honestly, I think it leaves Marxist in a particularly precarious place because, on one hand, we actually have the beginnings of a theory to understand the economic apparatus of which this works, but we have not been or are afraid to develop a theory of the state that does not just use the state as something we can seize and use as a method for uncontroll, which I think is like yeah, sure, that's a goal, but that doesn't explain anything about what's going on right now or your own role in it. That's my challenge to people like Ackerman and Brennan Riley. I was also dissatisfied with the Brennan Riley thesis, as I've responded to it elsewhere. I thought there was insight in it. I stick by the phrase.

C. Derick Varn: 1:47:09

The irony of political capitalism is it's basically Keynesianism that doesn't work. Why? Because the whole fucking point of Keynesianism is to restore profitability by acting counter-psychically. This clearly doesn't do that, not, seemingly, in a long-term sustainable way. When we start adding the number of ex-dogenous shocks to use contemporary political economic language, but that I mean wars, climate crisis, etc. We really need a more robust theory for this stuff, because there's a lot of stuff flying at us at once and we're seeing old forms come back again.

C. Derick Varn: 1:48:02

I think in this off it, I've been thinking about the last bits of writing by Mac Davis, the enigmas book, his last book, plus his very last piece of writing, thanatos I'm not familiar Well, he basically argues that you're seeing Bonapartism and the decline of collective rule everywhere I mean, he even says it in China and that it's making the entire political system more fragile. And he basically seemed very worried about the future, as he was dying, about where the left was going to be able to handle this problem of the degrading of institutions, since we're also wedded to these institutions and don't seem to be able to figure out ways to be both counter systemic and productive of a new politics. The Petit Bourgeoisie, as you've said, can be counter systemic, but it doesn't build anything with that counter system. It is not in the position. Even if they wanted to, even if there was a concrete vision, they're not in a position to do that. They're too dependent on the current mechanisms of power, which is the irony of, at least the irony of your thing. They're creating the very state that is crushing them, but they're the people creating it actually, from everything, from the ability of the state to do censorship? Ironically, the ability to outsource so much of for the state to start muddling around, and private corporations, which it's always done, frankly, to achieve in through censorship, to get around censorship blocks that exist in constitutionally in the United States, quasi-constitutionally in Europe, although they're much weaker, that's ironically been created by their own imperatives. That's what did that? Their response to that being used against them is to create new imperatives that will be used against them, but it doesn't create any new politics and it can't.

C. Derick Varn: 1:50:27

But the left right now seems to be totally divided on whether or not we're tailing the seeming counter-systeming this of this Petit Bourgeois vision or the progressive vision of a certain strata of professionals and capitalists who like large capital, basically, who have progressive social norms because it's good for growing markets, frankly, but do not necessarily have any vision beyond that.

C. Derick Varn: 1:50:57

We just seem to be stuck there in a kind of impasse between these two forces, even though at a time where it does look like there's real working-class militancy and yet, despite the left being bigger and having been revitalized as a force during the Autines, not seeming to be able to do anything about that. That seems to be where we're at. I do think a lot of it comes from, frankly, pushing economic gesso stories to get out of the hard part of this problem. Because this is a hard problem, because let's say we do have a final crisis right now. Let's say that actually, yes, we have a true profitability crisis worldwide. That would do it and it actually happens Right now. The reactionary forces would be in a much better advantage to take into some other form of barbarism than anything we want Like-.

Nicolas D Villarreal : 1:51:59

Nobody's really prepared for it again. Nobody was prepared for it the first time and nobody's really talking about the possibility of it happening again. Nobody is prepared to really deal with the petty bourgeois either.

C. Derick Varn: 1:52:17

Yeah, I feel like we get outflanked by people like Michael Lind, like-.

Nicolas D Villarreal : 1:52:25

I had a very pessimistic optimist like, oh, maybe you could tail the high bourgeoisie a bit to try to see if they'll do something about this because it's a threat to their interests. But they didn't seem interested in doing very much at all.

C. Derick Varn: 1:52:41

It's nobody they don't seem interested in even fighting, as you said. To bring it all the way back to the beginning of the show, they don't even seem interested in fighting anti-trust enforcement, like-.

Nicolas D Villarreal : 1:52:52

Which is insane. It's kind of, but I mean they'll lobby against it, but they have no sense of like. This is the other thing.

Nicolas D Villarreal : 1:53:02

I think that the this is something I didn't understand when I was younger, but I think I understand now that it wasn't just like the state figuring out how to deal with the proletariat, it also figured out how to deal with the high bourgeoisie, and that's what the original bourgeois revolutions were. The high bourgeoisie got the unfreedom they deserve, and this is what the result is. They don't have any Like. There is no high bourgeois political vision, and there hasn't been for over a hundred years, because they like, they fixed that it's done, so they have no reason to deal with this except through the most mundane legal means that may go nowhere.

C. Derick Varn: 1:53:53

Yeah, I mean, in some ways this brings me back to a piece by Stefan Bertram Lee a while back where he says look, it looks like the bourgeoisie no longer has the capacity to actually perform its historic roles, and thus it does seem stuck. I mean, you know, I hear the platypoids screaming regression, and maybe they're right. I don't know that framing it that way is necessarily helpful, but there does seem to be a real impasse here.

Nicolas D Villarreal : 1:54:27

And well, this is what I was trying to get at earlier, which is that all these things are ways for society to better reproduce the relations of production.

Nicolas D Villarreal : 1:54:40

But you but at a certain point, if you keep getting better and better at that, you can't also forget just reproducing production, and if you do create an adaptation that interferes with that somehow, then you've got a big problem.

Nicolas D Villarreal : 1:54:56

And that's what the whole thing with the fetters of production are, that it's related to that, that all of these adaptations that capitalism has done has been to in order to preserve the bourgeoisie, have basically prevented, have created a limit on what it can, on its productive capacity, on how it can grow its productive capacity. Essentially and this is the other argument I made in the Petit Bourgeois article that if and this is a big if, of course, but if there was an alternative system that worked anywhere in the world, it would be an existential threat to bourgeois society. Any place that could overcome this problem by just wiping the slate clean and not having to deal with these social classes would be, and have you know, like a set of institutions that actually did reproduce itself effectively, without like the same kind of problems that the Soviet Union did. It would overcome capitalism. It would be like it would be a more. I used the word metastable solution.

C. Derick Varn: 1:56:15

Yeah.

Nicolas D Villarreal : 1:56:16

How do you get there? You know how it's like. Yeah, if there was a like, it's like all the fuel sped, yes, if you could light another fire, it would burn much brighter, whatever. But or I don't know. It's the fundamental problem that you can't get around of. How do you create an alternative?

C. Derick Varn: 1:56:46

Yeah, it's a. It is a depressing problem to think about, but it's something that a socialist is going to mean anything in the 21st century, given the quote poly crisis he's that we are dealing with right now. This is the challenge that we have to ask. Otherwise we're going to be outflanked by, by an incoherent petite bourgeois force that also can't really even get its own means achieved, and right now we are clearly being outflanked and in fact, I would argue a good portion of us have helped them.

Nicolas D Villarreal : 1:57:23

Yeah, yeah, like you know that it's crazy because both both sides, like all sides are basically doing this. Everybody's like the right is telling the petty bourgeoisie the left is a big portion of the left is telling the people which way those that aren't aren't really doing much of anything besides being a part of the existing state apparatus. Right, there is no like I mean, I admire a cosmonaut for what they're trying to do, but it's like there is no like specific anti systemic left force that has like a specific it's connected.

C. Derick Varn: 1:58:05

Right there has a real political economic answer to these questions. Some of them have geopolitical analysis and fine, I mean some of that. You know whether I don't agree with a lot of it. I agree with a lot of it, sometimes it depends. But without a political economic basis that doesn't actually mean that much. And by that I mean understanding Not just currency flows, like having a pretty robust understanding of class, of social reproduction, of the way this is even affecting, like the way people organize themselves, the way people have relationships it goes down the scale and also the way the state is organizing.

C. Derick Varn: 1:58:51

So like, like those two things have to be kind of viewed. And I just think we have a very naive view of the state right now. It tends to be Either simplistically anarchistic about, you know, the state is violence, which OK, true, but also not particularly helpful about how to deal with it, or it sees the state as a lever which we can cleanly pull. I think that's what Ackerman's variety of socialism ultimately is right now, and it doesn't see how these counterfactuals are at better places to use that lever and how decayed all the other major social forces are. And yet we, despite militancy, can't seem to do much about it Like we can't. Like you would think at this moment this would be the moment for the beginnings of the mergers, to get the left in the labor movement back together, and yet right now it feels really far apart.

C. Derick Varn: 1:59:57

Like Well, thank you, nico, for that depressing conversation and I'm going to put the list of your articles. Most of these are available at the prehistory of the encounter, which is your substack. All the articles that we mentioned are fully available for free. So while you should subscribe, you don't have to get this information. You can go read Nico's work here you provide. A lot of your articles are free on that site.

Nicolas D Villarreal : 2:00:23

So yeah, I only I only marked one is paid and then I kind of gave up on marking things as paid because I every time, I think, oh, but I want people to read it, yeah.

C. Derick Varn: 2:00:34

Um, so, uh. So yeah, you can. You can help support Nico learn how to be a better petit bourgeois himself, since he's clearly not good at it.

Nicolas D Villarreal : 2:00:47

Oh, the worst penny bourgeois that ever lived.

C. Derick Varn: 2:00:53

Um, so um, and on that note, thank you so much. People should check out. Have you have anything else you'd like to plug?

Nicolas D Villarreal : 2:01:00

Nah, that's it All right.