At the moment, Marxism seems better prepared to interpret the world than to change it.
That quote is from the closing sentences of an article in the February 2011 London Review of Books. The article itself – “How Much is Too Much?” – ostensibly reviews David Harvey’s effort in his 2010 work The Enigma of Capital: and the Crises of Capitalism [no, I don’t know why there is a colon in that title] to consider the world’s current economic situation through the lens of Marxian crisis theory. However, most of its length is devoted to explaining what “Marxian crisis theory” actually is and to describing the gloss that Harvey put on this theory in his earlier work from the 1980s, The Limits to Capital.
I came across the LRB article about a month ago, read it, was highly intrigued by it, but realized that I didn’t actually understand it. So I printed it out, put it aside, and waited until this weekend to re-read it. I think I have a better handle on it now, but reading the thing does underscore how woefully little I know about Karl Marx’s critique of capitalism. It doesn’t help – judging solely from Kunkel’s review and some of the passages he quotes – that the critique does not seem to be easily penetrable.
In any event, while there is a great deal in the article to pique one’s interest, I cannot claim to really be on any kind of sure footing when I discuss (as I do below) some of the ideas I found particularly interesting. I suspect that what I really need is a very dumbed-down introduction to this stuff, something like Marxian Economic Theory for Dummies. (I looked for it; it doesn’t seem to be in print.)
Anyway . . . here goes.
One of the really thought-provoking ideas I found in reading Kunkel’s article was the explained connection between credit and capitalism’s GOD (“Grow Or Die”) principle.
Essentially, Marx argues that all inputs into the capitalist system fall into only one of two categories: “the means of production,” i.e., tangible goods and assets, like raw materials, factories, tools, etc., which he calls ‘constant capital,’ and wage-labor, which he calls ‘variable capital.’ The capitalist system involves purchasing both ‘constant capital’ (C) and ‘variable capital’ (V), combining the two, and then selling the result at a profit. The profit realized is the finished product’s ‘surplus value’ (S).
This understanding of capitalism can be jotted down as C + V ==> C + V + S, where “==>” represents the transformative process by which surplus value is created. But this points to a fundamental problem for the system: from where comes the money to pay for ‘S’?
To get a clearer understanding of why this is a problem for capitalism, imagine a fully realized global economy that consists of only one firm, which provides all finished goods and services. In order to do so, the firm has to purchase all available commodity inputs (C), and all available labor (V); for these material and labor inputs the firm pays its suppliers C + V. Subsequently, the firm wants to sell its finished goods for C + V + S . . . but the only customers to whom the firm can sell these finished products are the same people from whom the firm purchased its needed commodities and labor inputs, and those people only have C + V to spend. So from where comes the additional money to purchase C + V + S?
From the future. (Cue theramin.)
The idea is that supplier/consumers first provide the original C and V inputs, the system combines those inputs to produce surplus value S, and then sells that surplus value back to the supplier/consumers. The supplier/consumers purchase that additional value S with credit advanced against the increased value of commodity and labor inputs (Cʹ and Vʹ) that the supplier/consumers will provide the system in the future.
Then, in the future, when the supplier/consumers provide the increased value Cʹ and Vʹ inputs, the system combines the two to produce surplus value Sʹ, which it then sells back to the supplier/consumers on credit advanced against the further increased value of commodity and labor inputs (Cʹʹ and Vʹʹ) that those supplier/consumers will provide the system in the more distant future.
Then, in the more distant future, when the supplier/consumers provide the increased value Cʹʹ and Vʹʹ inputs, the system combines the two to produce surplus value Sʹʹ, which it then sells back to the supplier/consumers on credit advanced against the further increased value of commodity and labor inputs (Cʹʹʹ and Vʹʹʹ) that those supplier/consumers will provide the system in the even still more distant future.
Rinse and repeat, world without end, amen.
And so “finance and production, production and finance, can then chase each other’s tail until together they have covered the entire world.”
* * *
Of course, what this presentation makes obvious is that the entire system can only be sustained by the ever increasing provision of more labor and/or commodity inputs.
Our ability to meet the constant need for more labor (or, at least, the same amount of labor at a lower cost, which is functionally the same thing) is easy to understand and is well known. Global population growth – we just hit 7 billion! – is the ultimate source of our increasing labor supply. More provisionally, increased labor can be also be provided in locally geographically defined areas simply by immigration, and less locally by expanding business operations into new and cheaper labor markets (e.g., Apple and Wal-Mart’s Chinese workers, consumer credit and tech support companies’ Indian phone banks, etc.).
What I found more interesting was how the need to provide increasing commodity inputs can be met. The simplest illustration of increased commodity inputs is simply the acquisition of more raw material, and I don’t believe one can find a more historically significant example of such an acquisition than the discovery of the New World by the then technologically advanced European nations. Here was the mother lode of raw goods – two continents’ worth! – that had never been subject to systemic deforestation, mass agriculture, mining, any kind of universal resource exploitation. And it was discovered relatively shortly before the advent of the Industrial Revolution, which – when it kicked in – would only help to make the exploitation of those natural resources even more complete.
(These facts are always at the back of my mind when I hear our more jingoistic citizens babble about how “exceptional” America is and how the United States was “blessed by God” and then, when attempting to justify these claims, point to how rich the country is. Dude! I always think to myself, that’s like being given the keys to Ft. Knox and then boasting a year later that you’re special because you’ve got all this gold.)
But the provision of ever increasing commodity inputs is not limited simply to the continual expansion into new geographic areas and the greater exploitation of raw physical material. It also encompasses the exploitation of new sources of energy. For a long time humans’ chief source of fuel was simply fire: burning wood and vegetable or animal oils. Then we discovered how much more efficiently fuel is packed into coal, and coal powered plants helped push the Industrial Revolution. And then came the real discovery: how much more efficiently fuel is packed into oil.
We have been the beneficiaries of succeeding discoveries of cheap and plentiful energy, and – for a little while at least – this seemingly unlimited energy made it possible to envision not only an infinitely growing global economy but a rapidly growing one as well. And that could very well end up being a problem as we head toward Peak Oil. The need for ever increasing commodity inputs means that it will not be sufficient simply to “level off.” According to Marx’s critique, because capitalism itself is inexorably tied up with the extension of credit, capitalism must consume more inputs every year. If a large source of what had been counted on to provide this necessary input increase is eliminated (in this case, ever increasing energy inputs no longer become available), on what will capitalism feed itself?
* * *
And this leads to an idea that I find sickly fascinating: that the need to feed capitalism might have to be met by monetizing literally everything. Humankind has encircled the globe, the availability of unexploited natural resources is dwindling and – besides – most of us are beginning to get a clearer picture of what complete exploitation of those resources would mean: Death. Overfishing the seas, clear-cutting the forests, pumping greenhouse gases into the air, pumping petro-fertilizers into the soil in order to force-grow sufficient food to feed us all . . . we are coming to realize that the cost of sustaining our economic system may in fact be our own continued existence. What profits a man if he gains an economy but loses his world?
Beginning in around the 15th century, Eurasians – and especially the European nations – began their first serious attempts at a truly global trade. There was literally an entire world waiting to be plucked, and they started doing some serious plucking. In fact, they often plucked things right out of the hands of other people who already owned that stuff. Hell, a lot of the time they plucked other people! With an entire world just waiting to be plundered, the sheer wealth of the raw material to be fed into capitalism’s maw must have seemed inexhaustible. I like to think of this as the matter-based expansion of capitalism.
Less than a handful of centuries thereafter, the Industrial Revolution and the discovery of oil’s properties amplified the returns humans could receive on the raw materials they had been ripping from the earth. The discovery of cheap and plentiful energy, coupled with heavy machinery and automation, allowed us to leverage the exploitation of resources to levels never before imaginable. I like to think of this as the energy-based expansion of capitalism.
And now this system, which has grown huge consuming both matter and energy, needs to keep “Growing Or Die” . . . but we no longer have a planet’s worth of raw material to plunder and the best we seem to be able to hope for with respect to energy production is to maintain it at its current level. The spice no longer flows, it trickles. Without cheap and available raw material or energy, what can we now throw into capitalism’s maw to keep the system fed?
Well, one possible solution to this dilemma is to start privatizing the public goods and services we’ve created for ourselves – hey! we haven’t used them up yet, let’s feed them to our economy! Harvey refers to this as “accumulation by dispossession,” and I would suggest that there is a good deal of evidence to indicate it may already be underway.
For example, in the past few decades we have seen pushes to do away with public institutions like schools and prisons in favor of making them both for-profit industries. Only a few months ago conservative lawmakers were pushing to get rid of the postal service and consign all of our mail to the hands of for-profit couriers. Before that, Rick Santorum was arguing that the National Weather Service should be prohibited from making its weather information – the information the general public’s tax dollars pay for – available to the general public because doing so constituted unfair competition against private enterprises like AccuWeather and The Weather Channel (which, of course, obtain this information for free from the National Weather Service in the first place).
The financial terms now being dictated to countries like Greece, Italy and Ireland include the privatization of state assets, and Matt Taibbi has been chronicling similar efforts by the financial industry to convince US state and municipal governments to sell their toll roads, parking meters and other public assets to private entities as well. Eleven years ago – under pressure from the World Bank – Bolivia attempted to privatize the provision of water to its citizens, granting a monopoly over water to a private consortium and guaranteeing those private investors no less than a 15% return on their investment.
(Something similar was done in South Africa with a Dutch company. I watched a documentary about this some years ago that pointed out that – by law – the private water company had to provide at least the minimal amount of water necessary for a human to survive regardless of ability to pay for that minimal amount of water. The company complied with this law by installing devices on water spigots that allowed water to drip, drip, drip from the faucet at the rate of only a couple of liters per day. Watching footage of poor people needing a drink and staring at the water drip, drip, dripping out of their faucets was chilling.)
In the past I’ve looked at such efforts and merely shaken my head, wondering at the sheer greed that can lead people to take such positions. But Harvey’s gloss on Marxian crisis theory now has me wondering if perhaps something more fundamental might be afoot.
Perhaps the strong push we are seeing to privatize aspects of our lives that until now had always been run by public, not-for-profit institutions does not result from mere cupidity, but represents the inevitable attempt of capitalism to continue the expansion it needs simply in order to survive. Perhaps, with all our exploitable natural resources drying up and our global energy output stagnating, privatizing our public functions – privatizing our government – is the last thing capitalism can do to stave off its collapse. Perhaps the corporatization of democracy is baked in to the idea of capitalism itself.
To be sure, I have no idea. But I do appreciate discovering a new framework with which to examine the things I see happening in the world, and to compare what is observed with what that new framework predicts.
* * *
As mentioned, I know very little about Marxian economic theory and certainly I am not prepared to swallow it whole. For example, my understanding is that Marx believed the ultimate source of any surplus value “created” by capitalism could be nothing more than the exploitation of workers, who obviously could not have been being fully compensated for their labor if surplus value was being captured by non-laboring factory owners simply because they happened to own the factory.
But such a blanket statement seems suspicious to me. Just as a f’rinstance, I have always thought it very possible that surplus value might be created merely as a result of aggregation. As economies of scale and the division of labor kicks in, surplus value might simply arise as an epiphenomenon of size and organization, much in the same way some AI proponents believe consciousness itself will simply “arise” when computing systems reach a tipping point in complexity and computing power. It seems to me that the whole of a commercial organization may very well be greater than the sum of its parts and – if that is the case – then the reductionist approach to locating “value” that I understand Karl Marx to have espoused would not be particularly useful.
But that’s just me spitballing, so, y’know . . . if anyone can tell me where I can pick up a copy of Marxian Economic Theory for Dummies, I’d take it as a kindness.