Contrary to what Lenin is said to
have quipped, politics is not a concentrate of economics. It is the other way
round: economics is a concentrate of politics. In other words, it is not
politics that "boils down" to economics; it is economics that can be
reduced to a bundle of politics. The important thing is to focus on the meaning
of the phrase "a concentrate of" and the phrase "boils down
to". What is it that we mean when we say that "in the final
analysis" politics is economics or the opposite, that economics really is
politics? What kind of "reality" do we refer to when we speak of the
ultimate foundations of economics or politics? As we all know, necessity is not
just "the mother of invention" - meaning that there are some needs
that are so fundamental that they stir up human imagination and inventiveness.
Necessity can also be camouflaged and disguised or simply be rationalised away
as "virtue": this is what we do when "we make virtue out of
necessity". Differently put, we recognize that there are situations in
social relations when we are coerced into doing things that either we would
rather not do or else "concentrate the mind" to the point of inducing
virtue - the acquiescence to necessity as virtue - or inventiveness, the desperate
search for alternative solutions.
But in all these cases, in all
these instances, what we call ‘necessity’ is a function of social relations,
not of physical or physiological necessity. If we accept that our environment
offers sufficient resources for human societies to reproduce themselves, then
it is evident that economics - which as "the dismal science" is often
confused with "the sphere of necessity" - has little to do with
physical or physiological necessity but must instead have everything to do with
"coercion". The necessity of economics intended as a
"science" is therefore in reality the necessity of
political coercion. So this is why it is correct to insist that
"economics is a concentrate of politics", in the sense that what we
describe or circumscribe as a separate field of human activity - "the
Economic" - is a specific form of coercion imposed by some people on other
people in the sphere of the production of human needs or for their satisfaction.
And it is utterly false to claim, with Lenin, that "politics is a
concentrate of economics" because accepting this proposition would mean
that we accept that economic activity is dictated by a "necessity"
that is independent of "coercion", that is physical or even
physio-bio-logical in nature – and therefore independent of "the
Political".
In the case of capitalism, the
form of political coercion specific to it – its differentia specifica
from other modes of production – is that the capitalists are allowed to command
the present living labour of workers by means of an “exchange” with their past
or dead or objectified labour. It follows that the profitability of capitalists
is dependent entirely on their ability to command future living labour. Profit
is surplus value that represents a mortgage – the dead hand of the past
over the future – on future living labour. (Keynes had an inkling of this
insight when he declared in of The General Theory that “money [as a
store of value] is a bridge between the present and the future”.) But there is
one rider to this definition – one that distinguishes capitalism from the slave
mode of production. After all, slavery can also be seen as an “exchange” for
the living labour of slaves with their past dead labour. The difference between
capitalism and slavery is that the capitalist does not legally own
the worker: what defines capitalism is that the living labour of workers “exchanged”
for their dead labour is legally free to work or not to work for
the capitalist – yes, on condition of starving, perhaps, but if workers starve
the capitalist does not make a profit, which means that a political compromise
must be reached between workers and capitalists.
The political compromise consists
of this: that in exchange for their living labour being paid with their own
past labour – that is, in accepting that this “exchange” is really a political
coercion forced on them by the fact that capitalists own the means of
production and their ownership is enforced by the monopoly owner of the means
of violence, the capitalist State – the workers compel the capitalist to
improve their living standards materially by increasing the productivity of
living labour. Of course, increasing the productivity of living labour serves
merely to reduce the real cost per worker of living labour because the
capitalist now needs to employ fewer workers to be able to exchange their dead
labour for their living labour. This would certainly create excess living
labour, and therefore unemployment – except that the capitalist can deploy the
excess dead labour derived from the higher productivity of workers to employ
more workers from the reserve army of the unemployed or else from new supplies
of living labour from other countries and their populations.
This entire process is called “relative
exploitation” or “relative surplus value”, whereas where capitalists are not
forced by workers to increase productivity through innovation, the only way for
them to accumulate more profits or surplus value is simply to employ more
workers with the existing means of production or to force existing workers to
work longer hours. This is called “absolute exploitation” or “absolute surplus value
extraction”. There obviously comes a time when the entire present and potential
(reserve army plus new populations) army of workers is nearly exhausted and the
capitalists cannot find new outlets for profitable investment of their excess
capital. It is at this stage that the overall rate of profit of capital begins
to decline, interest rates begin to sink and approach “the zero bound” and
unemployment begins to rise without any improvement in the living conditions of
the employed labour force.
At this stage, capitalists have
two choices: one is to accept that a large part of their accumulated capital or
“assets” is worthless because it is incapable of producing being profitably
invested – this is called a deflation. The other “solution” is to keep
employing workers by means of collective capitalist creation of fiat money,
that is to say, by means of the extension of credit through the artificial
printing of money that essentially involves, depending on “the transmission
mechanism” of money creation, either the transfer of social resources to
workers, or else the inflation of the “assets” or excess capital that
capitalists already own – which implies the growing income and property
inequality of a capitalist society between the owners of “assets” and the
working population and the reserve army of unemployed.
Essentially, what is happening
right now is that “the collective capitalist” – the capitalist State – through
its financial (Treasury) and monetary (central-bank) authorities is extending
monetary claims (fiscal and monetary debt through the issuance of bonds and the
purchase of securities) to capitalists and thereby (a) is exchanging the
private debt of capitalists for government debt, with the consequence (b) that
the volume of debt is both being “nationalized” and is expanding exponentially
to avoid what would otherwise be a catastrophic collapse in the value of
existing “assets” or surplus accumulated capital – with the unimaginably
catastrophic consequences that this collapse in the financial credit pyramid that
this obviously implies!
Now you can draw your own
conclusions as to the colossal stupidity of a Paul Krugman (not to mention – do
we have to? – those idiotic “modern monetary theorists” – theorists! Was
there ever a bigger misnomer?). According to our dear Paul – who knows a thing
or two about “the Economic”, but understands little or nothing about “the
Political” – what is happening now is that “investors are quite willing to lend
to governments at zero interest rates so that it does not matter how much fiat
money the government prints in the shape of treasury bonds”! But that is simply
false as false can be! In reality – in the Political – governments are buying
bonds through their central banks! In other words, were it not for central
banks creating excess money claims on existing resources through the purchase
of government debt, the entire fake money pyramid of debt would come crashing
down with a kinetic energy equivalent to that of a thermonuclear war and sufficient
to obliterate life on earth! ...You don’t believe me? You believe Paul? Very
well, then. Go and buy some Tesla and Amazon shares! He laughs well who laughs
last…
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