From one of our three go-to Marxists. Two are economists* and then there's Fabio.
As noted in the introduction to June 2024's "The Enemy and the Libidinal Economy of the Apocalypse":
Professor
Fabio Vighi (Critical Theory and Italian at Cardiff Uni.) can get
heavy/borderline tedious but I think he's on to something. Plus, where
else are you going to find sentences like:
"At
the heart of this process is the reliance on the toxic fetish of the
speculative bubble: trillions (quadrillions if we count derivatives) of
insubstantial money orbiting above our heads at the speed of light."
There is a good chance that I will purloin "...the toxic fetish of the speculative bubble"
From Professor Vighi's substack, July 28:
A week of living dangerously
Moonshot AI's Kimi K3 Becomes World's First Open-Source Model in 3-Trillion-Parameter Class
The system always looks most stable just before it starts to crack—a
mixture of vanity and method. That is why the present moment seems
significant: the launch of a Chinese open-weight AI model, a global bond
sell-off, and a round of central bank meetings are not separate stories
but connected symptoms of the same exhausted order. Grinding in the
background is the debt machine, which is now accelerating into its own
limits.
This is a showdown. On one side stands Moonshot AI’s Kimi K3,
released yesterday (July 27th), as the largest open-weight model yet—free to use, modify, and run privately, provided you have the computer power to handle it—with
company claims of strong coding performance at a lower list price than
leading US rivals. On the other side stand the Federal Reserve, the Bank
of England, and the Bank of Japan, meeting this Wednesday, Thursday and
Friday respectively in a market environment already strained by rising
yields and a global bond sell-off. The coincidence is not accidental. It
is a concentration of pressures that capitalism can no longer keep
politely separated.
The Illusion of the Moat
The
AI industry likes to speak the language of moats, frontier advantages,
and scale. But what is a moat in a sector whose core asset is not a
patentable machine but a rapidly replicable architecture? The fantasy of
permanent technical superiority is already dissipating. If open-weight
Chinese models can deliver comparable performance at lower cost, then
the rent structure supporting the US AI bubble becomes much less secure.
Yesterday’s
release confirms the pattern. In developer tests, K3 scored strongly at
a cost that undercuts its US rivals on many important workloads. K3
does not need to win every comparison: it only needs to be good enough
to make the price difference impossible to ignore. Chinese models have
now moved from being dismissed as imitators to serious price-setters,
and that alone is enough to force a repricing—while
the economics may improve further as external developers optimise
inference, quantise the model, and create specialised versions.
This
is where the surface meets the deeper turbulence. Capital wants to
convert technological advance into private monopoly, yet the very spread
of AI undermines exclusivity and erodes control over access. The more
essential the technology becomes to coding, research, administration,
and decision-making, the more obvious it is that the real struggle is
not over “intelligence” as such, but over control of the conditions
under which the artificial intelligence is commodified.
And
here lies the constitutive, inescapable contradiction. AI is celebrated
as a productivity revolution; in truth, it intensifies a formidable
crisis of valorisation. Capital seeks to replace living labour with
machine intelligence, but commodity-producing living labour remains the
only source of economic value. The more capital automates, the more it
corrodes the basis on which profit is supposed to rest.
The
capital-technology contradiction is now being dramatised at a scale
that demands more than conventional economic cheerleading; it demands
self-deception, mythology, and increasingly baroque financial
engineering.
The Financial Trap
The
monetary side of the story is just as unstable. The AI boom has been
financed through pandemic-era cheap money, speculative expectation, and
the capitalisation of future earnings that will never arrive as
investors imagine. That is fictitious capital in its purest form: claims
on the future priced as if they were already secure.
Now
the conditions that sustained this arrangement are changing very
rapidly. Higher policy rates devalue future earnings, while they also
raise refinancing costs and expose overleveraged firms to a harsher
arithmetic. You can think of it this way: if the government guarantees
you 5% on a bond, why would you pay a sky-high price for a tech stock
that might only deliver that return years from now—if it delivers at
all? The same companies that were rewarded for growth at any price are
now being asked to explain how that growth will be funded when money
stays expensive. The answer, more often than not, is that they won’t.
The
current bond sell-off makes the situation worse. When even sovereign
debt is under pressure, the old assumption that capital can flee risk
into safety becomes less convincing. Investors are dumping bonds because
they realise that inflation is here to stay, inducing central banks to
keep rates high for longer than markets had hoped. The immediate result
is likely to be a broad repricing of assets built on the promise of
distant returns. AI stocks are especially vulnerable because so much of
their valuation depends on future margins that are increasingly
uncertain.
The arithmetic, therefore, is brutal: higher rates plus lower projected earnings equals violent repricing—and that repricing is less a temporary glitch than the logical consequence of a grotesquely delusional structure.
The Energy Reality Check....
....MUCH MORE
We don't always agree with his conclusions but the arguments he makes along the way can be insightful/enlightening/borderline brilliant.
Our other go-to Marxists are Michael Roberts, formerly an economist in the City (Londres, not Nieuw Amsterdam) and Professor Michael Hudson about whom we once wrote:
Happy May Day!
From one of our two favorite Marxist economists. But first the introduction to 2022's "America’s real adversaries are its European and other allies":
The author of this essay, Michael Hudson, is a Marxist economist.
But not just any Marxist economist. Leon Trotsky was his godfather.
And in addition to his professorship at the University of Missouri - Kansas City he teaches at Beijing's School of Marxist Studies, Peking University.
Yves Smith at naked capitalism seems to like him.
And
he almost has me convinced that the only way to clear the sclerotic
arteries of American capitalism is to declare Jubilee on all debts. He
may have gotten attracted to this ancient idea during his time on Harvard's archaeology faculty at the Peabody Museum as a research fellow in Babylonian economics. (Wiki) Not to be confused with The Babylon Bee's 2019 piece "Modernized Year Of Jubilee Will Forgive Everyone For Their Old Tweets". [rather ironic in light of the Bee's being kicked off Twitter, inciting Elon Musk and setting that whole train in motion]
Anyhoo, from Professor Hudson's website, February 8, 2022 i.e. sixteen days before Russia invaded:
The U.S. aim is to keep them from trading with China and Russia
And the headline essay, from Professor Hudson's personal website, March 29, 2024:
As published in Berliner Zeitung....
