Commentary on Political Economy

Thursday 3 November 2011

Passage to Schumpeter: Capital as Control of Future Growth

In our last intervention we took pains to stress the following point:

[L]iving labour is now “separate” from the means of its reproduction and is therefore wholly “destitute”, in a condition of “absolute misery”, of “poverty”, and forced therefore [by capital] “to exchange” itself for the means of its own sustenance and reproduction – but only to the extent that in its exertion or work it does not thereby acquire (obtain legal claim to) the means of its own reproduction.

In other words, the capitalist must ensure not only that living labour is destitute throughout the process of the production of present goods, but also and above all that it remains so destitute and “separate” from the means of production at all other times in the future! Capital therefore must ensure the “effectiveness” of its command and domination of dead labour over living labour not only for the present cycle of production – but also for the next! And it can do this only by ensuring that “the wage relation” remains a politically-regulated “wage basket” or “poverty line” that forces workers “to sell” or “exchange” their living labour for the dead labour of the “wage basket” at every stage of the reproduction of capital. In other words, capital must “mortgage the future” of living labour by maintaining the wage basket at a level insufficient for living labour to reproduce itself “independently of capital”! (We will see later how inflation – that is, the control of monetary quantities and interest rates by political or technocratic capitalist institutions serves as a “barometer” or “thermometer” of social and class conflict.)

But how can and how does bourgeois “economic science” justify this “mortgaging of the future” – of “our” future – which is particularly and acutely evident in these days after the latest financial crisis of 2007? Here is Bohm-Bawerk again. Read carefully:

The answer is: On the same principles as we estimate the value of goods in general: that is, according to the marginal utility which they will bring us in the circumstances, of Want and Provision for want. But here, naturally, we have not to deal with the relations of want and provision that obtain at the moment, but with the want and provision of that future period when the goods in question will be at our disposal. (PTC, V.I.11)

Notice here how Bohm-Bawerk cleverly extends the “ownership” of the capitalist over his “present endowments” to ownership over “the means of production” and, therefore by extension also, to ownership over the pro-ducts of living labour through the utilization of the means of production “in the future”! All the while, of course, Bohm-Bawerk conveniently forgets that the capitalist is not in the least interested in the “marginal utility” of future pro-ducts (pro-ducts that the means of production [capital] could never pro-duce without living labour or, if it could, would have no capitalist “value” in any case) but rather in how “profitable” future production might be – which depends as much on “marginal utility” of future goods as it does on his ideological “dis-utility of labor”!

The ultimate aim of the capitalist is not nad never has been to exchange goods at their "marginal utility" - because if all goods were exchanged at their "equilibrium price" or "marginal utility", then there would never be any room left for "profit"! If indeed the entire purpose of "time preference", of "deferred consumption" is to be able to accumulate "labour-saving devices" or "capital" - then it becomes absolutely evident that the ultimate goal of the capitalist is not and cannot be the mere accumulation of "marginal utilities" of goods, but rather the accumulation of more and more "labour-saving devices", or capital! But the whole purpose of collecting these "labour-saving devices" is and must be "profit" - in other words, sheer future deferred "command over living labour"!

Here the entire ideological violence of capitalist rationale and ideology is exposed in all its political and exploitative brutality. Capital is "accumulation of political command over living labour by means of political control over the production of dead objectified labour". Capital is "the mortgaging of the future": it is "the accumulation of death". (Mort-gage, from the French "dead security" meaning control by the dead over the living. The whole notion of "security" as a "dead hand over the living future" is particularly resonant after the Great Financial Crisis and the threat of debt-deflation.)

Differently put, Bohm-Bawerk’s “marginal utility of future goods” is really the future “profitability” of capital invested now, which depends solely on the ability of present investment to ensure the “absolute poverty” of living labour in the future!

And here we enter a crucial and paramount new chapter in our analysis of the society of capital: that is the phase of “the capitalist control of growth and the growth of control”; in other words, the need of capital “to mortgage our future”, to ensure that present production does not or cannot emancipate our living labour so much as to undermine the reproduction of the wage relation and of “the society of capital” in the future!!

But let us proceed carefully, because here is the all-important nexus that will lead us to the work of Schumpeter on “capitalist evolution-development-crisis” or Entwicklung and then to its “political control through the institutional filters of the collective capitalist, the State” in Weber – and finally to the formulation of these two bourgeois theoretical frameworks in the concept of “aggregate demand” and “expectations” and “money” as elaborated by Keynes in the ‘General Theory’.

Neoclassical theory from Gossen onwards begins with the notion that human living activity is “toil”, is “effort”; it is “want” (Bedarf) and “pain” (Leid) in search of “provision”. It follows from this perspective that human living activity is conceptually “separated” from its “object”, from its environment which supplies it with “the means of production”. And consequently human living labour is seen from the outset as pure and utter “destitution”, as “poverty”, as “want”. It follows from this that all means of production are not seen as means for the expression of human living labour but rather as “labour-saving devices”!

What this means is that, for one, human living labour is already considered itself as a “tool”, as an instrument whose “productivity” can be measured in terms of “units of output per unit of time”. And for another, it is seen as an activity or a “labour power” that is purely abstract, pure “potentiality”, pure “possibility” not bound to a particular, specific mode of expression or activity. (Heidegger's entire early philosophy in Being and Time [Sein und Zeit] is a virtual epitaph on this Neoclassical version of the nihilism implicit in the negatives Denken that had already been exposed by Nietzsche. Weber's entire notion of "free labour", discussed here earlier, is the sociological equivalent of this decadence of European thought.) In short, this “abstract labour” is sheer, naked, destitute poverty, barren misery – “potential” that can only become “actual” if, and only to the extent and manner that, it is allowed to come into contact with “the means of production” that are the “endowment” of the capitalist!

For the Neoclassics, then, “labour” – workers – are by definition the factor of production that is in “want” or “need”, that is “toil” and “pain” and “dis-utility” – and that “needs” capital (the means of production as “labour-saving tools”) in order to satisfy its “wants” that are made “immediate”, “urgent” – in contrast with the capitalist owner who can “defer” consumption – by the very fact that it does not now have “provisions” for its subsistence and reproduction and survival!!

With the exemplary brutality of a callous master, Bohm-Bawerk  describes the Freudian “Reality Principle” whereby destitute workers (expropriated en masse in England at the beginning of the Industrial Revolution in the “enclosure” movement) are forced by their “higher value on present goods” to sell their living labour to the capitalist “who can afford to wait” (!!!) because he already is “endowed” with the “means of production of future goods” – either physical or financial capital!

We may, then, draw up the balance-sheet which shows the influence of the different circumstances of Want and its Provision in present and future as follows. A great many persons who are not so well provided for in the present as they expect to be in the future, set a considerably higher value on present goods than on future. A great many persons who are better provided for in the present than they expect to be in the future, but who have the chance of preserving present goods for the service of the future, and, moreover, of using them as a reserve fund for anything that may turn up in the meantime, value present goods either at the same figure as future, or a little higher. (V.II.4)

The ferocious brutality of the Law of Value – in its Classical or Socialist or Neoclassical garb -, of “market equilibrium” and “competition” and “individual choice” could not be illustrated in more “civilized” fashion than by this “Marx of the bourgeoisie” – this toothless worm of an idiocy and bastardry as abysmal as it is colossal!!

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