Monday, 16 July 2018

Bourgeois Schizophrenia: the Liberal and the Authoritarian State

The dis-location of the nation-state by the global bourgeoisie arises because of two competing and conflicting needs of capitalist industry: the first need is to reduce class antagonism in each specific area of capitalist production (the workplace, different branches of industry, different nation-states) by dis-placing it through technological “innovation” or exporting this antagonism to other geographical areas, including ultimately other nation-states, where the political strength of workers is reduced (for example, totalitarian regimes such as China at present, or former ones like Japan, South Korea and Taiwan in the recent past). In both cases, this first “need” induces the global bourgeoisie to shift production to ever more authoritarian nation-states. On the other hand, the second “need” of the global bourgeoisie is to place its capital holdings in as “liquid” a form possible (money as currency, gold, jewellery) under the control of nation-states with the governance that allows for impartial arbitration or resolution of inter-capitalist conflict and disputes. As we have seen in our previous entry, this “need” for state justifiability of bourgeois property rights arises because the formal freedom of the labour force requires the existence of many capitals: a capitalist society with only One Capital simply cannot exist - because there would be no “labour market”. (This is yet another reason why the Chinese Dictatorship will never be “capitalist” in China!)

The “free-dom” of capital requires a “liberal” political order - one in which (a) property rights and (b) access to “markets” - above all the “labour market”, that is, access to “formally free labour” - is absolutely sacrosanct and guaranteed constitutionally. Although a “liberal” State is not necessarily a “democratic” one (as imbeciles who insist on the phrase “liberal democracy” imply) - nevertheless, for workers to be “formally free” to sell their labour-power they need a minimal degree of political representation.  Thus, the first “need” induces the global bourgeoisie to support authoritarian regimes, whilst the second “need” makes it lean toward more “democratic” or at least “liberal” ones where at the very least an independent judiciary is present to adjudicate on property rights. The bourgeoisie needs a “rule of law” or even a “State of Right” (Rechtsstaat) for capitalism to exist at all! 

A bourgeois state must therefore be somewhat schizophrenic in character: in foro interno, it must be liberal and to some extent democratic; but in foro externo the bourgeoisie cannot but look with languorous envy at the autocratic states and tyrants that enjoy unbridled dominion over their workers! The liberal social contract celebrated from Hobbes to Locke, from Smith to Hayek, exists only for those States under whose protection the global bourgeoisie places its wealth: everywhere else, the global bourgeoisie seeks only its own brand of tyranny and domination! This abominable reality flies right into the face of those liberal theoreticians (such as Benjamin Constant) who argued that the freedom of capital movement would spread representative government across the planet on the hypothesis that money capital and investments would flow to liberal nation-states. These liberal theoreticians saw only one side of industrial capitalism - the need for “free markets”, above all the “labour market”, that is, the “formal freedom of the labour force”. But they did not see the other “need” of capital: - the need to dominate living labour (workers).

We can see now why and how this “schizophrenia” of the bourgeoisie leads to a dis-location of the bourgeois State from representative government to outright totalitarian dictatorship. Next, we shall see how this intra-cerebral problem is resolved by capital through monetary zones.

Friday, 13 July 2018

Capitalism and the Dis-location of the Nation-State

Friedrich List and Karl Marx - Or, Capitalism and the Dis-Location of the Bourgeois State

The implicit lie in all of bourgeois economics is that the sole aim and purpose of capitalism is to increase - indeed, to maximise - ‘welfare’ in terms of the satisfaction of human needs. This is especially true in trade theory where the creed of “free trade” as delivering welfare maximisation between nations is deemed to be beyond all reasonable doubt as a tenet of “economic science”. But the stark reality, as we have sought to demonstrate in our series on Friedrich List, is that capitalism is founded on social conflict, on the antagonism of the wage relation. It is this antagonism - the struggle of workers against capitalist command and for emancipation from the wage relation - that compels capitalist employers to introduce technological innovations that seek, first, to defuse and circumvent workers’ antagonism and, second, to make workers redundant in a given industry so as to deflect their antagonism to other areas of production - and ultimately to other nation-states! In other words, it is workers, not employers, who drive the push to productivity gains and innovation: destroy the power of workers over production and you destroy productivity. The key to the universal bourgeois deprecation of the recent stagnation in productivity is all here. As workers have been disenfranchised in the capitalist metropole, productivity has stagnated.

The upshot of this analytical perspective of capitalist production is that the real effective aim of capitalism is command over living labour through the production of ‘goods’ for sale: improvements in living conditions for workers are only a consequence of this exquisitely Political conflict and antagonism induced by capitalist command; they are not its direct aim and effect! The true essence of capitalism is political command over living labour: welfare has never been and can never be the real aim of capitalist industry. All those bourgeois economists and commentators - from Paul Krugman to Martin Wolf - who sing the praises and celebrate the achievements of “free-trade liberalism” as conducive to “economic growth and welfare” for the greatest number of humans - all these imbeciles fail to perceive what List saw quite clearly and exposed with brutal lucidity: - that the aim of the bourgeoisie is political power over workers by means of production - not welfare and emancipation! And that invariably this quest for political power by the bourgeoisie must gravitate and coalesce around the purveyors and holders of the means of violence over a given territory - that is to say, the nation-state. The unquestionable truth that the sole purpose of capitalist production is political domination through production - the exchange of living labour for dead labour - is something that the saraband of morons who call themselves economists fail to perceive and foolishly overlook in their analyses of the ever-widening trade battle between the US Republic and the Chinese Dictatorship.

When Karl Marx derided “parliamentary cretinism”, he did so because in his view the violence of the wage relation under capitalism made any form of political representation of the working class in the bourgeois state entirely impotent and ineffectual, and all faith in it nothing more than either bourgeois ideological mystification or working-class delusion. Although Marx always held firm to the “political” nature of all economic relations as manifestations of an inherent “class struggle”, the violence intrinsic in economic relations left little or no space between the factory and state institutions. In other words, for Marx there was no “autonomy of the political”: in a capitalist society, the State is nothing more than “a committee of the bourgeoisie” perpetrating and perpetuating the naked violence of capitalist command in the workplace. Lenin’s reduction of all politics to “a concentrate of economics” was made possible precisely by Marx’s insistence that the State cannot be the heavenly resolution of the antagonism of the wage relation such as the bourgeoisie wishes it to be, but must instead reproduce in all and for all the violence of capitalist command over living labour. Because of this, it was not possible for Marx to explain how we have come to have, at least in Western capitalist nations, a permissive society founded on an authoritarian workplace.

Things stand in direct contrast to Marx in Friedrich List’s conception of economics. For List, economics remains a science of welfare that can reconcile human interests: but it can do so only when all nations reach a comparable level of economic development. Without economic equality there can be no “free trade” and no “equal exchange” between nation-states. List shares with Marx this “political” vision of economics - but only because for him economics is, as it were, “constrained” by different levels of national development which in turn cause and justify open conflict between those states. Thus, whereas Marx scrutinised political conflict at the microeconomic locus of production - the factory or workplace -, List focused instead on the macroeconomic factors involving national political idiosyncrasies. [Emanationism] The problem with List’s critique of Anglo-Saxon ‘cosmopolitical’ economy is that nowhere does he explain (a) why different nations are at different levels of economic development and, (b), how nations with different levels of economic development can ever reach a convergence of this development such that equal exchange and free trade become geopolitically possible!

The contrasting but related problems with both visions of economics and politics - that of Marx and that of List - is evident: whereas Marx shatters the empyrean of the bourgeois “liberal-democratic” parliamentary state against the hell of class antagonism over the capitalist wage relation, without leaving any space, first, for the legitimacy of the bourgeois state and therefore, second, for national politics, - List on the other hand leaves plenty of room for nationalist economic policies without ever entering the realm of the factory! 

As a result, Marx is unable to explain, first, how the bourgeoisie as a global entity whose interests presumably converge in the class struggle against workers can obtain political legitimacy in a capitalist economy - how it can present the State as a “neutral” representative political body mediating the interests of all social classes -; and, second, how there can come to be separate national bourgeoisies in conflict with one another! It is not pure accident that The Communist Manifesto is the most internationalist document in social theory! In that short visionary pamphlet, Marx avows his personal faith in the cosmic ecumenical mission of the bourgeoisie to homogenise political systems across the globe and, thus, eventually to bypass the nation-state through the establishment of a world market (what is known nowadays as “globalisation”). Marx is thereby unable to explain the persistence of nation-states and inter-national conflict. For his part, List, whilst starting from the existence of separate national bourgeoisies with conflicting economic interests, is unable to explain how and why these national interests arise in the first place from the differential economic development of each nation; and even less is he able to explain how these conflicts can ever be reconciled under the “scientific” guidance of economics leading to convergent national economic developments!

Our aim here has been to identify the complex dynamics whereby capitalist bourgeoisies seek to gain hegemony over their working classes by mediating complex inter-national economic relations that relate to exchange rates and trade policies in a manner that seeks to minimise the level of domestic national class antagonism by “exporting” it to other bourgeoisies and workers in other nations. It is true that such “export” is made easier by the so-called “globalisation” of international financial movements - as theoreticians from Marx to List and even Benjamin Constant asseverated. But far from leading to the homogenisation and convergence of bourgeois capitalist interests against the global working class, this globalisation sets in motion fresh antagonisms that the mobility of capital simply cannot resolve. In its monetary form, capital falls into the illusion that it can move seamlessly from nation to nation. Yet in reality, however “global” it may pretend to be, capital must always confront workers in flesh and blood in specific territories that correspond with national states. 

On one side, capitalist industry induces the homogenisation of capitalist command over workers both in the sphere of production (the workplace) and in that of consumption (the market). But the need to exploit rivalries and induce competition between different sets of workers is the unique responsibility of finance capital - of capital in its most “liquid” or fungible form, capable of flowing seamlessly from nation to nation, as Constant argued. In core capitalist societies (metropole), the formal freedom of workers guarantees the existence of multiple poles of capitalist command - the existence of many capitals in competition with one another - because otherwise the labour force would be under the direct responsibility of one capitalist, wit the inevitable political complications. There would be no “market” for living labour. The bourgeoisie can never take up the reins of society entirely - because then it would cease to treat living labour as a commodity - there would be no “market”. The existence of many capitals entails the existence of multiple poles of command over living labour. The “exchange” or homogenisation of this command between different poles is achieved through exchange rates between different monetary systems, where each monetary system is known as a “currency area”.

Monday, 2 July 2018

Reply to a Reader: Capitalism, Overpopulation and “the Clash of Civilisations”.

Hi Dan. You are quite right: it can never be said that “capital causes overpopulation”. What can be said, however, is that capital requires overpopulation because, without an expansion of those “simultaneous working days” (Marx), surplus value and profit would have no social efficacy whatsoever! Think of a capitalist who invested profits in acquiring more “things” (land, properties, jewels): these objects would require unproductive labour (“unproductive” for capital, in the sense that Smith, Ricardo, Marx all used the word) - in other words, they would require “servants” to maintain them. But these “servants” would not be able to sustain....more workers (!) - which is why such “investment” would be “unproductive” if not indeed counter-productive!
Furthermore, though capital does not cause yet requires overpopulation, there is no doubt that the living labour of workers, their antagonism to wage labour, forces capitalists to adopt more “productive” technology which facilitates the sustenance of an expanding working population. (Indeed, in the Grundrisse quotations in the previous post, Marx argues that the very expansion of the working population makes capitalist investment more “productive”, through the division of social labour - a point emphasised by Smith and even by List). Thus it can be said that the antagonism of the wage relation...facilitates or enables or even perhaps en-genders overpopulation.
Obviously, if capital does not strictly “cause” overpopulation, it certainly benefits from it - in whatever way it can, say through the spread of religious beliefs encouraging procreation (Christianity, Islam) or through reduced child mortality.
The more emancipated workers become, however, women especially, the harder is the task of capital to find new “markets” - that is, living labour to exploit.
I know from your previous comments that you are entirely aware of the dire environmental consequences of this “dynamic” of capital, so I will not go into those.
The aspect of capitalist dynamics (“development”, “growth”) that will be the subject of my next posts is perhaps the most pressing, urgent one at the moment: - the interaction between access to exploitable working populations under the political control of regimes not entirely open to the “formal freedom of labour” which is essential to the most legitimate form of capitalism - “market” capitalism (China, most notably) and the relation of “democratic” and “liberal” capitalist parliamentary regimes to these other autocratic, despotic regimes (“emerging markets”) that, whilst supplying the “markets” necessary to capital, yet quite openly threaten its survival as a globally dominant mode of social production and reproduction.
This aspect of capitalist dynamics is currently misinterpreted (almost universally) as “the clash of civilisations”.
This aspect of capitalist dynamics relates quite obviously to trade and exchange rate regimes, monetary and financial policies and, of course, “labour mobility” or immigration which was central to the theory of Optimal Currency Areas in the 1980s and 1990s.
My thesis is that “democratic parliamentary regimes” where the “formal freedom of labour” is guaranteed constitutionally (“market capitalism” where the “market” is guaranteed fundamentally by the formal freedom of workers) are absolutely essential to the survival of capitalism - which is why we should always fight with a Roosevelt against a Hitler, and with US democracy against the Chinese and Russian dictatorships, to be perfectly blunt.

So, there you have it: these are the political and economic knots that I will attempt to untie summarily over the next few days and weeks. Thanks again for your much-appreciated sharp and perceptive comments.

Thursday, 21 June 2018

The Chinese Dictatorship’s Belt and Road to Nowhere

Perhaps the greatest ominous sign of the tremendous crisis that is about to hit global capitalism - in line with what we argued in our previous post - is the desperate convulsive attempt by the Chinese Dictatorship to keep its command economy afloat through imperialist (and racist) expansion abroad. This attempt is already failing. Here is an extract from a recent post in the Wall Street Journal that summarises the unfailing signs of the coming catastrophe:

While the sell-off in currencies of emerging markets with insufficient foreign exchange (forex) reserves and wide current account deficits — such as the Argentine peso and the Turkish lira — is still picking up steam, there is relative calm in China. The yuan is trading well off its recent multi-year lows.
On the surface, the yuan has plenty of forex reserves (over $3 trillion) and its current account has been in surplus for over 20 years. But under the surface, it very well may have some serious issues.
The natural question is: If there is no need for external financing, why did China lose $1 trillion in forex reserves between mid-2014 and mid-2016 before briefly arresting that decline? The decline has now resumed (see chart).
Danger for China
There is a bonfire burning in the Chinese financial system because the bulk of rampant dollar borrowing in emerging markets in the past 10 years has come from China, because of the sheer size of the Chinese economy, which was $11.94 trillion in 2017 — second largest in the world. Furthermore, unlike in India where GDP growth is driven by self-sustainable internal domestic demand, in China GDP growth is driven by accelerating dollar borrowing (see chart) and aggressive mercantilist tactics.
Chinese over-leverage
Furthermore, unlike in India where GDP growth is driven by self-sustainable internal domestic demand, in China GDP growth is driven also by accelerating yuan borrowing. As Chinese GDP has grown 12-fold over 20 years, its total financial leverage has grown over 40-fold. That means the GDP-to-total-debt ratio in China has grown by a factor of nearly 4 times. Such estimates include shadow banking leverage, which is excluded from all official figures, but by estimates from credible sources including the Brookings Institution is as large as the official Chinese economy (see report).
If a trade war were to escalate, the fragile balance in the Chinese economy could be tipped and we may very well experience a second Asian crisis, which ironically, was also driven by rampant dollar borrowing. The important difference here would be that China’s GDP is many times larger than the total GDP of all countries involved in the first Asian crisis in 1997-1998 (when China’s GDP was barely above $1 trillion).
While the sell-off in the Turkish lira and Argentine peso is generating headlines at the moment, it is hard for the Chinese yuan to get the same attention as there are still plenty of forex reserves to stop the yuan from depreciating further. One could say that because of the bigger war chest of the People’s Bank of China, the yuan is not necessarily a similar market indicator to other emerging markets currencies whose central banks are in considerably less fortunate positions.
The key here remains forex reserve outflows, in which a pickup similar to what we saw in 2015 after the crash of the Shanghai Composite (and faster than the present pace) would be the major red flag.
Other market-driven indicators
The Shanghai Composite Index SHCOMP, +0.27%  has fallen this week already to as low as 2,907 points. It sure looks to have experienced a bad “crack” in 2018. I have previously referred to the rally off the January 2016 lows of 2,650 as “the mother of all dead cat bounces,” or MOADCB, a bear market rally that could not recover in two years what it lost in a single month (January 2016). The index is now unwinding that MOADCB rather expeditiously (see chart).

I am aware that the Shanghai Composite is not as good a reflection of the Chinese economy as India’s Sensex is for the economy of India, as China’s economic growth does not necessarily translate into profit growth due to the much bigger government intervention in the economy in the best interest of “social stability,” as the Chinese like to say. Still, the troubling developments in the Shanghai Composite cannot be ignored when forex reserve flows have resumed and there is a rather unconventional man at the wheel of a kerosene truck headed for the blazing bonfire of the Chinese financial system.

Tuesday, 19 June 2018


The winds of war are upon us. They blow with greater intensity as the days, if not the hours, go past. The causes of this will be familiar to all the friends who have followed this blog attentively. In our few last instalments especially, we have sought to demonstrate how the antagonism of the wage relation which is central to the mode of production we call capitalism leads to two inseparable developments. On one side, workers seek to make all their work “necessary” so that the “surplus” part of the working day available to the capitalist is diminished whilst, on the other, capitalists seek the opposite either “absolutely” by extending the working day or by employing more workers side by side (Marx’s “simultaneous working days”) - or else again, the capitalist will seek to shift the antagonism of the wage relation to other capitalists and workers through technological innovation, or else again “to export” the antagonism either within his own nation or else to other nations with weaker working populations relative to the governance of those nations (of course, dictatorial and authoritarian regimes are preferred! As a result, technological innovation is highest in those nations where workers’ autonomy is highest - because innovation always reflects the need of the capitalist to avoid working-class antagonism over the wage relation. 

The inevitable result is that once the pressure valves of the export of antagonism, of expansion of the working population and of technological innovation are exhausted, nations will come into conflict. The irrefragable aim of the capitalist to continue to exist as a capitalist is to maximise surplus value - and then to find more working populations that can be put to work for this surplus to be absorbed. But in all these cases the capitalist will need to increase the working population absolutely! The reason for this is that without such a reserve army of the unemployed the capitalist’s accumulated profits and capital will not be put to use and such failure to reinvest will amount therefore to a colossal destruction of capital!

Already with the collapse of Bretton Woods in 1971, the long arch of capitalist accumulation that had begun after World War Two had come very close to catastrophe because of the exhaustion of profitable avenues of investment. The most visible expressions of this exhaustion included not just the fall of the Gold Exchange Standard erected at Bretton Woods, but above all the frightening inflationary parabola that took place in the 1970s and the intensification of antagonistic political movements throughout the world. What came to the rescue of global capital was the propitious opening of China to Western investment occasioned by the visit of President Nixon to Chairman Mao early in the 1970s. That visit opened access for Western capital not just to a working population of well over one billion people - but above all to a working population that had been politically annihilated by the Maoist Cultural Revolution and now in the complete subjugation of the most brutal bloodiest and truculent dictatorship ever known to humanity! 

What followed was the dictatorial “mobilisation of resources” (human, physical and environmental) with the consequent destruction of human communities that this wretched planet has ever known in all its nightmarish history! What Ben Bernanke called “the Great Moderation” - that is to say, the unprecedented expansion of capitalist accumulation from 1980 onwards - coincided with this equally unprecedented, socially and environmentally catastrophic expansion of the wage relation to over one billion Chinese. The consequence was a global glut of “savings” - the profits derived from investment in China - and also the empowering of the Chinese Dictatorship, which sooner or later was going to emerge as a powerful challenger to Western capitalists. The initial hope was that the Chinese dictators could be persuaded eventually to normalise relations with the West and relent on exploiting their workers through the expansion of democratic guarantees. But we know now most certainly since the accession of the most rotten dictator of all in 2012 - Xi Jinping - that this was only a pious wish!

What Western capital failed to see was that once the Chinese Maoist dictatorship ran out of options with its colossal “mobilisation of resources”, it would then (like all dictatorships, it it wished to preserve its totalitarian power) urn to the export of the growing domestic antagonism - and that it would do so in two wholly predictable ways: (a) imperialist expansion through military coercion, and (b) imperialist expansion through heavy capital investment and financial loans aimed at politically subjugating weaker nations with sympathetic dictators and huge excess working populations, especially in Africa! It is this last lunge by the Chinese Dictatorship to save its skin in the face of growing domestic and international working-class antagonism that we are witnessing even as we write: the Chinese stock market and the renminbi are in free fall; US dollar and yen are rising putting intolerable stress on “emerging market” currencies. Soon, we shall see the collapse of the Chinese financial and banking system, already overburdened with unsustainable debt levels and “imperialist” expenses ($65 billion dumped in Venezuela alone!); the lot made worse by the Trump Administration’s unquenchable will to power through the imposition of punishing tariffs that will destroy Chinese export industries and decimate employment. Soon we shall also see a new exodus of Chinese capital as the rats in China try desperately to rescue their ill-gotten criminal gains, and as more Chinese rats seek to jump off the sinking ship that is the Chinese economy! Sauve qui peut! (More to follow, folks!)

Saturday, 16 June 2018

The Dynamic of Capitalist Accumulation: Uneven Development and Global Conflict

We open Karl Marx’s Grundrisse at the part dealing with surplus value. Marx is trying to elucidate to himself in these notes the ultimate meaning of profit - and therefore of capitalism. The essence of capitalism, at least superficially and tangibly and visibly and measurably is the production of use values for profit. Use values, explains Marx, are not necessarily exchange values; they are not necessarily “goods” or “commodities”. The production of use values becomes one exclusively of exchange values (goods, commodities) only in a capitalist system of production whereby use values are produced not for use but for exchange. And this exchange must take place in such a manner that the capitalist can derive a “profit” from the production and sale of the goods: in other words, the revenue derived from the final sale of the goods must be superior to the value invested in the means of production (tools, raw materials, and labour-power) for their production. But where does this “surplus value” (the difference between the end value of the goods and the original value of the means of production) come from? Marx says, quite correctly as ought to be obvious, that value cannot arise from the objects used in the process of production. Instead, value can only be created by a use value that has a political element to it: - labour-power, the commodified form of human living labour. 

It is a law of capital, as we saw, to create surplus labour, disposable time; it can do this only by setting necessary labour in motion—i.e. entering into exchange with the worker. It is its tendency, therefore, to create as much labour as possible; just as it is equally its tendency to reduce necessary labour to a minimum. It is therefore equally a tendency of capital to increase the labouring population, as well as constantly to posit a part of it as surplus population—population which is useless until such time as capital can utilize it. (Hence the correctness of the theory of surplus population and surplus capital.) It is equally a tendency of capital to make human labour (relatively) superfluous, so as to drive it, as human labour, towards infinity.

One important consequence arises from this: for if indeed surplus value - all value - can arise only from living labour, then it is equally obvious that value - and therefore profit - can only have any meaning at all if and only if it is applied to the command of human living labour. Of course, the monetary equivalent of surplus value, profit, can be applied to the purchase of goods other than labour-power (the commodified form of living labour). But such a purchase can b applied capitalistically (for the purpose of making a further profit, that is, for the purpose of capitalist accumulation) if and only if it goes toward the production of goods that, in turn, yield more profit - and therefore ultimately only if they yield more command over living labour.

Value is nothing but objectified labour, and surplus value (realization of capital) is only the excess above that part of objectified labour which is necessary for the reproduction of labouring capacity. But labour as such is and remains the presupposition, and surplus labour exists only in relation with the necessary, hence only in so far as the latter exists. Capital must therefore constantly posit necessary labour in order to posit surplus labour; it has to multiply it (namely the simultaneous working days) in order to multiply the surplus; but at the same time it must suspend them as necessary, in order to posit them as surplus labour. As regards the single working day, the process is of course simple: (1) to lengthen it up to the limits of natural possibility; (2) to shorten the necessary part of it more and more (i.e. to increase the productive forces without limit). But the working day, regarded spatially—time itself regarded as space—is many working days alongside one another. The more working days capital can enter into exchange with at once, during which it exchanges objectified for living labour, the greater its realization at once. It can leap over the natural limit formed by one individual's living, working day, at a given stage in the development of the forces of production (and it does not in itself change anything that this stage is changing) only by positing another working day alongside the first at the same time - by the spatial addition of more simultaneous working days.

The result is that whilst capitalist accumulation - profitability - depends on the reduction of the proportion of production that goes to workers in wages (necessary labour), for the capitalist to be able to reinvest the profit or surplus value there needs to be a corresponding increase in the population of workers! But because human beings work for the capitalist - that is, sell their living labour as labour-power to him - if and only if they are forced to do so - in other words, if they are still subject to necessary labour -, then it is obvious that an increase in the population is also an increase in necessary labour. On one hand, workers seek to increase their wages and reduce their working hours, and so lower the surplus value available to the capitalist by making more of their labour “necessary”; on the other hand, the capitalist seeks to reduce the wages of his own workers, and so the necessary labour, and increase the surplus value or profit available to him. Thus, the greater surplus value or profit can be reinvested by the capitalist only by employing more workers with less of the goods they produce - with lower wages. 

This is why capital solicits the increase of population; and the very process by means of which necessary labour is reduced makes it possible to put new necessary labour (and hence surplus labour) to work. (I.e. the production of workers becomes cheaper, more workers can be produced in the same time, in proportion as necessary labour time becomes smaller or the time required for the production of living labour capacity becomes relatively smaller. These are identical statements.) (This still without regard to the fact that the increase in population increases the productive force of labour, since it makes possible a greater division and combination of labour etc. The increase of population is a natural force of labour, for which nothing is paid. From this standpoint, we use the term natural force to refer to the social force. All natural forces of social labour are themselves historical products.) It is, on the other side, a tendency of capital—just as in the case of the single working day—to reduce the many simultaneous necessary working days (which, as regards their value, can be taken as one working day) to the minimum, i.e. to posit as many as possible of them as not necessary. Just as in the previous case of the single working day it was a tendency of capital to reduce the necessary working hours, so now the necessary working days are reduced in relation to the total amount of objectified labour time.

The result is that capitalist profitability or accumulation is essentially the increase of “simultaneous working days” by a growing working population - whether that population is located in the nation where the capitalist invests or in a foreign nation. The ultimate purpose of the capitalist is to maximise surplus value (profit); the ultimate aim of the worker is to maximise wages by working less and increasing leisure time. But the aim of the capitalist in maximising surplus value is not and cannot ever be to increase the leisure time of workers! Emphatically no! The aim of the capitalist is to increase the number of individual workers that his accumulated capital can command! The purpose of capitalism is to increase the command of dead labour (goods) over living labour (the population of workers). And the more the capitalist increases profit by reducing the length of the working day through productivity growth - and therefore paying less wages for the same amount of product -, the more the same capitalist will need an ever greater number of workers to exploit for his capital to be reinvested profitably! The net effect, paradoxically, is that while the capitalist seeks to reduce the amount of necessary labour for the reproduction of his own workers, at one and the same time either the single capitalist or the class of capitalists as a whole will need to expand the workers that they employ by a proportionately higher number so as to be able to accumulate more profit.

The devastating conclusion is that capitalists need to perpetuate necessary labour by constantly growing the excess working population - the army of the unemployed - so as to be able to command more workers at lower wage costs. This is the complex process whereby capitalism expands the global population to ecologically unsustainable levels! Capitalists can increase their exploitation of workers either “absolutely” by forcing the same number or a greater number of workers longer with the same machinery (technology). Or else, capitalists can increase the productivity of workers “relatively” through more advanced machinery if the antagonism of workers over wages is especially high. In this second case, the antagonism of workers (a) forces capitalists to replace machinery and, (b), forces capitalists to increase the population of workers to a higher degree proportionate to the bargaining power of workers in raising the “necessary” part of the working day.

Surplus time is the excess of the working day above that part of it which we call necessary labour time; it exists secondly as the multiplication of simultaneous working days, i.e. of the labouring population. (It can also be created - but this is mentioned here only in passing, belongs in the chapter on wage labour - by means of forcible prolongation of the working day beyond its natural limits; by the addition of women and children to the labouring population.) The first relation, that of the surplus time and the necessary time in the day, can be and is modified by the development of the productive forces, so that necessary labour is restricted to a constantly smaller fractional part. The same thing then holds relatively for the population. A labouring population of, say, 6 million can be regarded as one working day of 6×12, i.e. 72 million hours: so that the same laws applicable here.

The repercussions of this dynamic on inter-national relations are obvious: capitalists in a given nation-state seek to unload the antagonism of the wage relation in their state to the working populations in other states. This dynamic works on several levels. For one, capitalists select those countries other than their own (!) where working conditions and governance are worst - either dictatorships or authoritarian countries; and especially nations with large and growing excess populations. The advantage for capitalists is, first, that nominal wage payments in their nations can be kept low; second, at the same time, real wages in their nations can grow through the import of cheap products from the less emancipated nations. By virtue of this process, capitalists buy social peace at home and “export” class antagonism to other more repressive governments and their workers.

Wednesday, 13 June 2018

From List to Weber: Capitalist Uneven Development and Global Conflict

Value Creation and the Coming World War

The world is moving inexorably toward a global conflict, one that will see the capitalist market economies of the West confront and crush the Chinese Dictatorship and its Russian counterpart - the latter already enfeebled by economic crisis, and the former already experiencing insurmountable challenges on the financial and eventually on the industrial and political fronts. The reasons for this seemingly apocalyptic conclusion can be drawn almost with the linearity of logic from the study we have just conducted of Friedrich List’s political economy. To be sure, List’s insightful analysis of the intrinsic conflictuality of capitalist industry still left room for his avowed goal of a community of nations that could finally embody the idealistic premises of what he called the “cosmopolitical economy” of the Anglo-Saxon economists from Adam Smith to J.B. Say. In reality, however, whilst he correctly identified the different “stages of economic development” as being the central reason for existing conflict between nations, List completely failed to enquire into and to enucleate the meaning of “economic development” itself, as distinct from just describing the extrinsic ectypal forms of these progressive “stages”. In the end, List’s political economy amounts to a mere “classification” of stages of development which he mistakenly thought could lead to the convergence of national economies without ever penetrating the essential politico-economic meaning and dynamic of capitalist development that leads - again, inexorably - to the divergence of national economies and eventually to open warfare. Of course, the antagonism implicit in the wage relation - the violent “exchange” of living labour with dead labour - is always tendentially leading to conflict - within nations, first, and then, as nations seek to externalise this internal antagonism, also between nations. The challenge is to identify the circum-stances, the con-ditions, that is to say, the surrounding events, the ingredients that lead to war between capitalist nations. 

Is there something in the notion of “value”, then, in the antagonism between workers and capitalists, that leads all the way to international conflict and war? Let us first examine the more visible notion of “profit”. Profit is the monetary difference between total investment and total revenue. For a capitalist enterprise to be profitable, the products it sells must amount to more than the cost of producing them with the cost of capital added (interest at the prevailing rate over the period of production and sale). This means that in the process of production the inputs have been “valorised” - their value has grown - and this is then reflected in the “realisation” of the value through the sale process. But how can the components of production acquire value? after all, objects (means of production - raw materials and machinery) are only inert objects and they cannot possibly possess or acquire “value”. It is obvious that value, and the value added in the process of production, can only be derived from living labour. Two things follow from this conclusion: the first is that the value of a particular commodity cannot be determined until after it is actually sold on the market - until its potential value is “realised”. And the second is that this value is determined ultimately by the ability of this realised value “to purchase” labour-power on the market as if it were a commodity like any other. 

We have therefore a “double character” (Doppelcharakter) of human living labour: - on one side it is the only possible source of value as living labour - that is its use value; and on the other it can be “purchased” as labour-power through the violence of the wage relation “on the market” like any other commodity through its exchange with produced commodities, that is to say, with “dead labour”. Herein, therefore, lies the “specificity” of the Economic in a capitalist society, that is to say, in the ability of capitalists to dominate living labour - workers - not through explicit coercion but rather through a complex set of institutions that force workers to exchange their living labour for the objects that they themselves have produced, with “dead labour” - again, not through direct coercion from a particular capitalist toward particular workers - the capitalist does not “own” the workers as is the case with slavery or with feudal relations where the “serfs” are tied to the land, the feud or glebe. Nevertheless, it is equally obvious, first, that the wage relation is one of violence in that workers would never accept to sell their living activity in exchange for the product of their labour - that is surely an “exchange” that amounts to fraud (if unwitting) or violence (if workers are aware of it) - Marx. But, second, it is also true that workers could not preserve their “formal freedom” under the law if they rebelled against this oi lent coercive transaction - one based on “th need to work”, “o put food on the table” - and the very fact that workers are willing to work for “a fair wage” means that the capitalist mode of production does have a minimum of legitimacy (Weber). Nevertheless, legitimacy does not mean absence of conflict: capitalist society is founded on social antagonism between capitalist and workers - and specifically on the antagonism of the wage relation. The question then arises of why the antagonism of the wage relation has not exploded into open social conflict - into civil war in many advanced industrial capitalist societies. The answer has to do with capitalist growth and development. Let us see how this works.

Profit and Uneven Development

Profit in capitalist enterprise, and therefore surplus value, makes absolutely no sense at all unless it is seen as value that can be (a) increased through the process of production or “valorisation”, and (b) “realised” through the process of market sale. But for profit or surplus value to be “realised” through sale, this profit realised by capitalists can be absolutely no meaning unless it can be expressed as monetary purchasing power over fresh living labour! This means that the process of realisation of profit can have meaning only through the exertion of capitalist command over fresh living labour, over an ever-expanding population of workers. In turn, this entails the presence of a reserve army of the unemployed that (a) provides competitive tension on employed workers to drive down wages, and (b) provides a repository of further investment for capitalists to expand their command over society so that there may be what is called “capitalist accumulation”. In other words, capitalist accumulation through surplus value and its monetary equivalent, profit, is nothing other than the expansion of excess labour-power through overpopulation.

Thus, if we wish to understand why the global population keeps growing to the point where it is becoming unsustainable for the ecosphere - then we have only the capitalist mode of production to blame. But, the objection will be promptly moved, if that is so, why is it that the most advanced capitalist countries are beginning to experience stable or stagnant or even declining populations? The answer is relatively simple: as capitalist accumulation grows, the process runs against political and environmental limits as capitalist ruling classes attempt, first, to keep their own national populations pacified through rising living standards relative to other nations (!) - but then, second, this first condition requires the presence of other nations (especially if under the control of authoritarian dictatorships) where populations of potential workers are present that can absorb the profits accumulated in the more advanced industrial capitalist countries. This model of international capitalist division of social labour is premised therefore on the “uneven development” of national economies - not just in terms of the level of “industrial” development, but also and above all in terms of the “political-democratic” development of the nations involved! As nations become more advanced from an industrial viewpoint, they also are left with no choice but to emancipate their own working classes. Yet at the same time, these more advanced capitalist nations need to find less advanced nations whose working populations they can exploit and expand through higher rates of fertility! It goes without saying that this process of “uneven development” gives rise to tremendous conflicts between the more advanced and the less advanced capitalist countries - in all sorts of directions from migration pressures, to international tensions as each capitalist nation seeks to unload its domestic wage antagonism on other countries.