Commentary on Political Economy

Tuesday 2 August 2011

Absolute and Relative Exploitation

The situation gets more alarming each day. Friends who read the contents of this site will know that capitalism has two ways of operating, of "growing", if you like:
the first method is called "absolute exploitation", and the second is called (predictably) "relative exploitation". Let us look at them schematically - the hour is burning and time is of the essence.

"Absolute exploitation" is achieved when capitalist value - which means "political control over living labour" - in other words, the ability of capitalists to be able to offer "dead objectified labour" (wage goods) in return for their ability to work for future production of wage goods - when capitalist value can be ensured by expanding the workforce that can be exploited either nationally or internationally (in "other, foreign markets"). Call this "horizontal absolute exploitation".

The "vertical absolute exploitation" is when the intensity of living labour productivity is achieved by extending the working day or extracting more "effort" from workers.

By contrast, "relative exploitation" is achieved by allowing workers to enjoy better and higher standards of living and working conditions in exchange for higher productivity mainly through technological innovation in the labour process.

Of course, as capitalist production covers more and more areas of social reproduction - from transport to communication to sanity and energy - the entire society comes to resemble a "social factory" for what is "the society of capital", so that which mode of exploitation is chosen will have a huge impact on the general quality of life in society - mainly through "the environment".

What happens unfortunately at a certain stage is that "relative exploitation" makes workers more emancipated and less willing to work - because, remember, it is still "alienated labour" or "wage labour" that we are talking about - so that the "profitability" of capital declines.

At that stage, capital can preserve its profitability in a number of ways: it can continue with "relative exploitation" - which means that society will become even more emancipated and eventually capital will abolish itself. Or else it can try the way of "absolute exploitation" - more workers, more intensive work, worse conditions, more "foreign markets" for investment and exports.

Another way, a solution that is "internal" to capital, is called "speculation" and "concentration". The first means that capital tries lots of stratagems to appropriate more value from other parts of the capitalist economy - both from workers (their "savings" - witness the credit boom in the US and in Europe) and other firms (higher asset prices, lower returns whereby lenders end up owning the assets of borrowers).

You can see that "the Great Moderation" constituted a period of "absolute exploitation" by capital at the expense of mainly Chinese and other "emerging-country" workers. Incidentally, the "emerging-country" mythology is a huge tragic laugh because no-one has "emerged" except a few "robber barons" in China India Russia and Brasil! The rest of the population (the so-called "middle classes") have living standards that - in real human terms of enjoyment, leisure time, the environment - are much worse than they were "before" (!) they "emerged"!! And that is without considering the hundreds of millions of workers expropriated in China and forced into factory-cities!

Another form of absolute exploitation was the speculative wave upon wave that we are still witnessing - the subprime loan in the US and the exploitation by "Finanzkapital" of institutional gaps in the construction of the European Union to raise the interest repayable on bonds on fear (which is quite justified) that with the eurozone as it is - that is, with Germany exploiting its own workers absolutely so as to extract profits through exports that are financed by loans that are never going to be repaid.... you get the picture! - with this situation in the eurozone those bonds are never (!) going to be repaid at any rate!

The upshot is that the period of rapid "absolute exploitation" in China (the Great Moderation) has long come to an end; the period of "speculation" is coming to an end (the Great Financial Crisis), and now we are witnessing two things. First, the collapse of financial markets. Second, the flight of capitalists the world over to the relative safety of US treausries. Third, inter-capitalist rivalries between the "progressives" in the US and in the EU (those who want a closer more equitable "union") and the "conservatives" (the other and opposing parties). And then there is a level of rivalry between countries - mainly the US against Germany and China.

The US will win this one simply by printing more dollars and driving the others into "stagflation", for the simple reason that the other countries are more reliant on "exports". But this will be true only if the US engage in another New Deal - and for that we need new political institutions in the US, like a much stronger Democratic Party and more flexible political representation and dismantling of "corporate lobbies". That will take, initially, a President other than Obama who has turned out to be a complete wimp.

I have decided to include a selection from international press for you to draw your own conclusions (with brief description attached). Now I have to go back to my Nietzschebuch which is nearing completion. Let me tell you, friends, it is the best thing that has been written in a long time and if you care to leave me your email address I will forward an e-copy to you next month (I hope) - because I have to work out copyright matters. I do not care about "money" at all, but I do not want good-for-nothing bourgeois bastards copying my stuff to make a buck by stealing these ideas and turning them into best-sellers! Ciao to all. (Giavazzi telling us Italians to be quick to appease panicky financial markets. But it's too late. Only a fiscal union will save the eurozone now!) (Krugman on Obama’s ‘surrender’. I agree totally with Krugman on this. Time to change, not just President, but the Presidency and the Democratic Party themselves!) (HSBC selling to US bank. How US banks will soon dominate the world as all their competitors in Europe and Asia run out of money! Look at recent results from UBS to BNP to Credit Suisse to Barclays and DB and so on!) (FAZ right-wing propaganda. The FAZ are at it again with a heap of absolutely laughable graphs and statistics that show the opposite of what the utter moron who wrote this was trying to prove! And that is that German workers have lost a bundle by financing the consumption of othe EU countries by tightening their own belts - or by agreeing to have them tightened by their bourgeoisie in "exchange" for higher employment!) (Insolvency of Italy with high ECB rates. Shows why Germany is on a hiding to nowhere unless it agrees to reform European capitalism through fiscal union!) (Michel Rocard - ex prime minister of France shows why "low inflation" has simply meant "more asset price inflation and speculation", leading to government debt and "stagflation" right now.) (Lex on the dollar. This one shows that the more dollars you print the more capitalists buy because it is theor "last refuge"!) (China Treasury holdings - proving that the Chinese dictatorship needs to keep its money in the safest place possible - outside China and in the US! - for fear of revolution at home - which will come as surely as day follows night.))

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