Commentary on Political Economy

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.