Commentary on Political Economy

Monday 14 November 2016

The True Meaning of "The Natural Rate of Interest:

We saw in the previous post how bourgeois economists are quite aware of the fact that “value” is not a “physical property” of the means of production – of what they mistakenly call “capital” and thus, by so doing, inviting the confusion between the social relation “capital” and the physical, objective means of production. But then, once they have acknowledged that economic value – and therefore profit and therefore interest, which is the average rate of profit – is not a physical property, bourgeois economists find themselves at a serious loss: because if one acknowledges that value is not a physical property, then it must follow that it is a political category based on power relations in a society. “Capital” therefore can no longer refer to the physical means of production but rather to the “legal claim over production” that comes from the capitalist’s “ownership” of the means of production. The insurmountable difficulty for bourgeois economics with this realization is that capitalism loses its “natural” status and becomes merely a political reality – a social institution that is either entered into freely by the members of a society or else is enforced violently by some (the capitalists) over others (the workers). It is at this juncture that bourgeois economists balk – because to acknowledge that capitalism is a political rather than a “natural” reality is immediately to call its existence into question and its rationale into doubt. That is why bourgeois economists must perennially oscillate between the notion of “capital” as physical means of production and “capital” as exchange value!

Now, on the assumption of “universally free competition”, we would have to conclude that capital could simply not exist because universally free exchange would mean that no “rate of interest”, natural or monetary, could ever apply to capital. For capital to attract “interest” (read, “profit”) it must be able to be exchanged with an entity that can increase its “value”: but what can that “entity” be? Clearly, that entity can only be the living labour of workers who use the means of production or “capital” made available by their owners, the “capitalists” or “employers”. But again such an admission is anathema to bourgeois economists because that would be tantamount to admitting that there is no “exchange” possible between “capital” as a “thing” and living labour as the living activity of workers. Therefore, bourgeois economists are thrown back to finding a “property” of capital that makes such an “exchange” politically justifiable.
On the assumption of “universally free competition”, the only ways in which one individual, the capitalist or “employer”, is able “to purchase” or “exchange” existing products or “goods” for the living activity of another individual, the worker or “employee”, are two: - either the capitalist already owns the means of production and is therefore able to force the worker to sell his living activity; or else the capitalist renounces his present consumption and exchanges it for the living labour of workers who wish to consume his goods immediately. Of course, in neither case is the capitalist system of production justified, because in the first case, where capitalists already own the means of production, their prior ownership is not explained or justified, and in the other case, where they purchase the living activity of workers by “delaying” or “sacrificing” their present consumption, that may justify the current “exchange” by workers to capitalists, but it certainly does not justify the enslavement of all future generations of workers to capital!
But in this second instance, the rationale for capitalism is that the capitalist is the stronger person, the ascetic who is willing to wait, to deprive himself, to sacrifice present consumption in exchange for the living labour of those who cannot wait – and who therefore become “employees” or workers. (No less a thinker than Joseph Schumpeter espoused this patently flawed rationale.) This capitalist claim to “property” is called “time preference” in bourgeois economics. Thus, bourgeois economists are able to mix the subjective (time preference) with the objective (the contribution of the means of production to the product): there is almost a Freudian “transference” of capability from the clearly political ownership of the means of production to the “metaphysical” or “physiological” contribution of the means of production to the creation of the product itself!
Here is Marx on this precise point and this precious equivocation on the part of bourgeois economists to justify the violence of the wage relation well before the Marginal Revolution came to pass in economic theory:

Altri, anch’essi economisti, come per esempio Ricardo44, Sismondi45 ecc., dicono che soltanto il lavoro e non il capitale, è produttivo. Ma in tal modo costoro lasciano sussistere il capitale non nella sua specifica determinatezza formale, ossia come rapporto di produzione riflesso in sé, ma pensano soltanto alla sua sostanza materiale, alla materia prima ecc. Ma non sono questi elementi materiali che fanno del capitale il capitale. D’altra parte poi essi si accorgono che il capitale per un suo verso è valore, quindi qualcosa di immateriale, di indifferente alla sua sostanza materiale46. E allora Say afferma: «il capitale è sempre di natura immateriale, giacché non è la materia che costituisce il capitale, ma il valore di questa materia, valore che non ha nulla di corporeo» (Say, 21)47. Oppure Sismondi: «Il capitale è un’idea commerciale» (Sismondi, LX)48. Ma a questo punto si accorgono che il capitale è anche una determinazione economica diversa da quella di valore, perché altrimenti non sarebbe nemmeno possibile parlare di capitale a differenza del valore, dato che, se tutti i capitali sono valori, non tutti i valori in quanto tali sono capitale. E allora si rifugiano di nuovo nella forma materiale che esso assume entro il processo di produzione, come fa per esempio Ricardo quando definisce il capitale come «lavoro accumulato impiegato per la produzione di nuovo lavoro»49 ossia come mero strumento o materiale di lavoro. In questo senso Say50 parla addirittura di «servizio produttivo del capitale» su cui si baserebbe la sua remunerazione: come se lo strumento di lavoro in quanto tale pretendesse il ringraziamento dell’operaio, e come se non fosse invece proprio in virtù di quest’ultimo che esso è posto come strumento di lavoro produttivo. In tal modo l’autonomia dello strumento di lavoro — che è una sua determinazione sociale, vale a dire la sua determinazione di capitale — viene presupposta per dedurne i diritti del capitale. (Grundrisse, 3.2.12)

The point here is that bourgeois economists must present capital as the most “natural” of values. And to do so they have to try and fuse two aspects of capital – that of being a social relation whereby the capitalist is able “to purchase” human living activity as “labour power”, and that of being “embodied” in physical commodities or “goods” – means of production and products that can be “exchanged” with human living labour as it the latter itself were a “good” or commodity exchangeable like an object. Thus, capital becomes “objectified or dead labour”. Wicksell’s notion of “the natural rate of interest” widely adopted in bourgeois economics is nothing other than the most nefarious, wicked and brutal apology for the bestiality of capitalist oppression.

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