Capitalism and Definitions

We have argued that the essential element of capitalism as a system is not, as is often contended, proletarian wage labor or production for the market or factory production. For one thing, all of these phenomena have long historical roots and can be found in many different kinds of systems. In my view, the key element that defines a capitalist system is that it is built on the drive for the endless accumulation of capital. This is not merely a cultural value but a structural requirement, meaning that there exist mechanisms within the system to reward in the middle those who operate according to its logic and to punish (materially) those who insist on operating according to other logics.

We have argued that, in order to maintain such a system, several things are necessary. There has to be an axial division of labor, such that there are continuous exchanges of essential goods that are low-profit and highly competitive (i.e., peripheral) with high-profit and quasi-monopolized (i.e., core-like) products. In order to allow entrepreneurs to operate successfully in such a system, there needs in addition to be an interstate system composed of pseudosovereign states of differing degrees of efficacy (strength). And there also have to be cyclical mechanisms that permit the constant creation of new quasi-monopolistic profit-making enterprises. The consequence of this is that there is a quite slow but constant geographical relocation of the privileged centers of the system. (xiv)

These words are Immanuel Wallerstein's, from his new prologue to the 2011 edition of volume III of The Modern World-System: The Second Era of Great Expansion of the Capitalist World-Economy, 1730s-1840s. I quote them here because definitions matter and we have too many of them for capitalism.

I have, in the last year or so, found myself embroiled in various online discussions here and there about capitalism and our current predicament, etc, in which the conversation can only go so far because we, the participants, are not operating under the same set of assumptions on what capitalism, in fact, is. I tend to avoid lengthy online back-and-forths, for a variety of reasons, not least of which is the inadequacy of my available devices (which means the mechanics of it are unpleasant). But also, where once I was quick to write lengthy responses to people, usually via email, now I shy away from them. In part, I don't want to lose a piece of writing in the bowels of another blog's comments, and I write too slow to effectively respond here. It's also true that I'm simply not read deeply enough in the Marxist or liberal economic literature to respond to certain kinds of pedantry. So if someone cites a particular of a given debate, I'm often at something of a loss. However, though I would like to deepen my reading of such literature, the truth is I'm only going to get to so much of it, and things are happening right now. My gut tells me that most of it is unnecessary.

A few years ago I read Ellen Meiksins Wood's Origins of Capitalism, and I found it very helpful. She is, of course, a Marxist, writing in the aftermath of the Brenner debates of the 1970s. She helped me to see a number of different things much more clearly than I had seen them before (for just one example, the state's role in enforcing propertylessness). I was further helped along by essays from the Midnight Notes Collective, and then David Harvey's book-length study of Marx's Capital, The Limits to Capital, as well as a couple of Harvey's other books. Then came the first volume of Capital itself, along with Harvey's online lectures, and the feminist approaches of Maria Mies (Patriarchy and Accumulation on a World Scale) and Silvia Federici (Caliban and the Witch). The feminist works are crucial; they seem to take the analysis to its logical conclusions that too many Marxists seem unwilling to take it (so they said; but I had no trouble taking their word for it, given my own limited experience with the literature). Readers will notice that I've rehearsed this sequence before. All apologies. In any event, my point here is that something nagged at me. I was still having trouble understanding where it came from, and why, and it seemed really important that I do understand it, in order to wrap my head around the problems facing us today. Then I read Giovanni Arrighi's The Long Twentieth Century, my first exposure to world-system analysis, and many things began to fall into place in my mind. This led me to Wallerstein. First to his slim World-Systems Analysis: An Introduction, then to his now four-volume study, The Modern World-System. (David Graeber's work plays a big role here, too; I'm thinking a few of the essays in Possibilities, as well as the more recent Debt.)

I realized that what had troubled me were questions of focus and certain sets of assumptions. I had difficulty with the idea of a particular capitalist "state" (or "states" competing with each other) (though, indeed, Wood, in her Empire of Capital, had helped clarify for me the necessity of the state apparatus for capitalism), with the very focus on "mode of production", with questions and apparently long-running debates about such topics as whether or not slavery was capitalist, which seemed silly on their face (of course it was capitalist; for just one point, the feminist focus on how unpaid labor underpins the wage system is important here). I desired, and insisted, without knowing it, a longer view (somewhat ironic, considering the subtitle of Wood's book is, in fact, "a longer view"; it's not quite long enough), and a more detailed view. Arrighi's and then especially Wallerstein's books have helped me enormously, providing a framework in which things fit together much better (not like a puzzle, but like life, if you'll pardon the expression). Anyway, I provide the passage at the top of this post as a placeholder and reference point: this is the definition of capitalism I'm working from, the one that makes the most sense to me. Recent claims that we've already moved away from capitalism into a feudalism-like "rentism" seem to me to misunderstand both feudal arrangements and capitalism itself, and especially miss the ease with which the former historically shaded into the latter. There's nothing un-capitalist about monopolies or rent. Misplaced emphasis on wage labor and modes of production are distracting. Here Wallerstein continues:

Capitalism is a system in which the endless accumulation of capital is the raison d'être. To accumulate capital, producers must obtain profits from their operations. However, truly significant profits are possible only if the producer can sell the product for considerably more than the cost of production. In a situation of perfect competition, it is absolutely impossible to make significant profit. Perfect competition is classically defined as a situation with three features—a multitude of sellers, a multitude of buyers, and universally available information about prices. If all three features were to prevail (which rarely occurs), any intelligent buyer will go from seller to seller until he finds one who will sell at a penny above the cost of production, if not indeed below the cost of production.

Obtaining significant profit requires a monopoly, or at least a quasi-monopoly, of world-economic power. If there is a monopoly, the seller can demand any price, as long as he does not go beyond what the elasticity of demand permits. Any time the world-economy is expanding significantly, one will find that there are some "leading" products, which are relatively monopolized. It is from these products that great profits are made and large amounts of capital are accumulated.

I could go on, but will not, not now. But consider this a re-beginning, of sorts, on this topic.

Deflationary Critique

Recently at Rough Theory:

I have tried to make an extended argument that Capital needs to be read as a deflationary text – meaning that, where other forms of theory tend to presuppose certain “givens”, on the basis of which they then conduct their analysis, Capital tries not to do this. It tries, instead, to show how the major tools in its analytical toolkit – including foundational categories like “society”, “history”, or “material life” – are actively produced by specific forms of human interactions, and therefore reflect the distinctive sensibilities that are primed by particular forms of collective practice.

[...]

The core of Marx’s deflationary critique of political economy is that, as soon as a theory starts presupposing or treating as given the constitutive moments of its subject matter, it has failed to examine how that subject matter itself came into being. When it loses the ability to examine how the subject matter came into being, it naturalises its subject matter – it becomes blind to the contingency of the subject matter itself, and therefore cannot conceptualise how the subject matter itself could be abolished or transformed.

Normally Marx keeps this squarely in view. Sometimes... not so much.

As David Harvey stresses, though many mischaracterize Marx as arguing such givens, his method is much more fluid. He is describing a process, the various aspects of which are themselves not fixed in place, so his method must remain in motion, and generally does. I admit that I am increasingly interested in what Marx may have missed, for example in the context of the all-important feminist critique of Marx's analysis (I hesitate to say "Marxism", though the critique is of that too); I tend to believe that Marx himself would have encouraged this. It is this very open-ness, this fluidity, which keeps me coming back to Marx himself and which means that a serious engagement with Capital especially is still very much in the works.

Bloggery and linkage

At A Tiny Revolution, Jonathan Schwarz yesterday took note of "Another Triumph for American Journalism". And last week he noted the similarities between Goldman Sachs's responses to certain interview questions from Matt Taibbi and Saddam Hussein's responses to questions from the FBI, after they forced him to watch a documentary, and quipped, all too accurately: "The funniest part is, you could legitimately argue that Goldman Sachs has killed more people than Saddam."

ladypoverty on jackassery; also on the puzzling perspective on current events offered by Elie Wiesel's account, in Dawn, of the use of terrorism by Jews against the British in Palestine after WWII. I'd like to quote numerous other pithy ladypoverty utterances, but the relevant posts are way too short to justify my quotation of them here. You should check in there regularly yourself.

For those few of you who are not planning on reading David Harvey's The Limits to Capital this summer ("Capital Summer"?), at Lenin's Tomb lenin summarizes a talk given by Harvey, which also happens to serve as an excellent précis of many of the arguments in that book. (See also my own somewhat rambly post from April touching on the same book.)

And, finally, here is a video of an excellent talk given by Chris Knight, discussing Marxism and science, religion and communism, sex strikes and the evolutionary emergence of language and origins of culture, and more. The video is about 75 minutes long, but well worth your time. Unsurprisingly, the link comes to me via Stuart at From Despair to Where?, where in the comments an interesting discussion occurred about the reception of Knight's theory, in particular as outlined in his great book Blood Relations (which, again, I discussed at length here). In the talk, incidentally, Knight refers to an article titled "Painted Ladies" in New Scientist that summarizes some of the argument. That article appeared in October 2001, and a pdf can be viewed here. If you're interested, but wary about jumping right into Blood Relations, the talk plus the "Painted Ladies" article are a good way, I think, to gain some familiarity with these important ideas.

I imagined I would provide more links here today, but then I lost the will, so this will have to do. Enjoy!

Giovanni Arrighi

Lost in the shuffle of recent events has been the death on June 18th of Giovanni Arrighi, described as "one of the foremost scholars of the history and future of capitalism" at Verso's blog.
I actually haven't yet read anything by Arrighi myself, though his monumental books The Long Twentieth Century: Money, Power and the Origins of Our Times and the more recent Adam Smith in Beijing are on my ever-lengthening list of books I feel that I need to read in order to understand our time (while I'm here, allow me to again point you to jane dark's excellent recent post on world system hegemons, which draws on Arrighi's arguments in both of these books). In March 2008, not long after Adam Smith in Beijing appeared, I happened to catch a panel discussion with Arrighi, David Harvey, and Joel Andreas at 2640 in Baltimore (Arrighi taught at Johns Hopkins University, Andreas still does, and of course Harvey taught there for the better part of two decades). It was a fascinating and occasionally heated discussion. I took copious notes intended for use on this blog, but I was never able to get my act together to organize them. (However, it turns out you can view a film of the event here; it's worth looking at if you have the time.) I was especially interested in this discussion, precisely because of its focus on China. As I've mentioned here previously, I'm greatly interested in China, but I've been unsure how to proceed. I'd like to read a history of the communist revolution and the cultural revolution that takes it seriously, without being fawningly Maoist or something. Perhaps Arrighi's later book covers some of the history; no doubt the book is equipped with a substantial bibliography (I'm also aware that, as one would expect, Monthly Review Press has some titles that look just right for this investigation, such as perhaps this one or this one or, especially, this one.)

One thing I remember from the panel discussion was Arrighi's contention that China's emergence as an economic power has been in large part dependent on the advances of the revolution, which resulted in a generally healthy and educated populace. Harvey and Andreas didn't dispute this point, but they were far less sanguine about the prospects of China becoming a major power, given its, in their view, particularly virulent form of capitalism. (This contention of Arrighi's reminds me, incidentally, of this talk given by Dmitry Orlov, in which he argues that the USSR, because of its socialism, however deeply flawed, was much better prepared to handle its collapse than the USA will be to handle its inevitable collapse, when it comes.)

Anyway, this great, great interview (link via Verso) of Arrighi by Harvey, which appeared in the New Left Review this Spring, has me dying to dive into his work sooner rather than later. The interview covers a lot of ground, from his work in Africa, where he cut his teeth in the 1960s ("the mathematically modelled neo-classical tradition I’d been trained in had nothing to say about the processes I was observing in Rhodesia, or the realities of African life"), up through to China and the current financial crisis. Here is a short excerpt:

One of Marx’s conclusions in Capital, particularly Volume One, is that adoption of a Smithian free-market system will lead to increases in class inequality. To what degree does the introduction of a Smithian regime in Beijing carry the risk of even greater class inequalities in China?

My argument in the theoretical chapter on Smith, in Adam Smith in Beijing, is that there is no notion in his work of self-regulating markets as in the neoliberal creed. The invisible hand is that of the state, which should rule in a decentralized way, with minimal bureaucratic interference. Substantively, the action of the government in Smith is pro-labour, not pro-capital. He is quite explicit that he is not in favour of making workers compete to reduce wages, but of making capitalists compete, to reduce profits to a minimum acceptable reward for their risks. Current conceptions turn him completely upside-down. But it’s unclear where China is headed today. In the Jiang Zemin era, in the 1990s, it was certainly headed in the direction of making workers compete for the benefit of capital and profit; there is no question about that. Now there is a reversal, one which as I’ve said takes into account not only the tradition of the Revolution and the Mao period, but also of the welfare aspects of late-imperial China under the Qing in the eighteenth and early nineteenth centuries. I’m not putting bets on any particular outcome in China, but we must have an open mind in terms of seeing where it’s going.

In Adam Smith in Beijing, you also draw on Sugihara Kaoru’s work in contrasting an ‘industrious revolution’, based on intensive labour and husbanding of nature, in early modern East Asia, and an ‘industrial revolution’, based on mechanization and predation of natural resources, and speak of the hope that there could be a convergence of the two for humanity in the future. How would you estimate the balance between them in East Asia today?

Very precarious. I am not as optimistic as Sugihara in thinking that the East Asian tradition of ‘industrious revolution’ is so well entrenched that it may, if not become dominant again, at least play an important role in whatever hybrid formation is going to emerge. These concepts are more important for monitoring what’s happening than saying, East Asia is going this way, or the United States is going the other way. We need to see what they actually do. There is evidence that the Chinese authorities are worried about the environment, as well as about social unrest—but then they do things that are plain stupid. Maybe there is a plan in the works, but I don’t see much awareness of the ecological disasters of car civilizations. The idea of copying the United States from this point of view was already crazy in Europe—it’s even crazier in China. And I’ve always told the Chinese that in the 1990s and 2000s, they went to look at the wrong city. If they want to see how to be wealthy without being ecologically destructive, they should go to Amsterdam rather than Los Angeles. In Amsterdam, everybody goes around on bicycles; there are thousands of bikes parked at the station overnight, because people come in by train, pick up their bicycles in the morning and leave them there again in the evening. Whereas in China, while there were no cars at all the first time I was there in 1970—only a few buses in a sea of bicycles—now, more and more, the bicycles have been crowded out. From that point of view it’s a very mixed picture, very worrying and contradictory. The ideology of modernization is discredited elsewhere but so far is living on, rather naively, in China.

Containing Autarky

As I was working on completing my second post on Nicholson Baker's Human Smoke, I came across this highly relevant passage in David Harvey's The Limits to Capital:

The insatiable thirst of capitalism for fresh supplies of labour accounts for the vigour with which it has pursued primitive accumulation, destroying, transforming and absorbing pre-capitalist populations wherever it finds them. [...] The real troubles begin when capitalists, facing shortages of labour supply and as ever urged on by competition, induce unemployment through technological innovations which disturb the equilibrium between production and realization, between the productive forces and their accompanying social relations. The closing of the frontiers to primitive accumulation, through sheer exhaustion of possibilities, increasing resistance on the part of pre-capitalist populations, or monopolization by some dominant power, has, therefore, a tremendous significance for the long-run stability of capitalism. This was the sea-change that began to be felt increasingly as capitalism moved into the twentieth century. It was the sea-change that, far more than the rise of monopoly or finance forms of capitalism, played the crucial role in pushing capitalism deeper into the mire of global crises and led, inexorably, to the kinds of primitive accumulation and devaluation jointly wrought through inter-capitalist wars.

[...] Any regional alliance, if it is to continue the process of accumulation, must maintain access to reserves of labour as well as to those 'forces of nature' (such as key mineral resources) that are otherwise capable of monopolization. Few problems arise if reserves of both exist in the region wherein most local capital circulates. When internal frontiers close, capital has to look elsewhere or risk devaluation. The regional alliance feels the stress between capital embedded in place and capital that moves to create new and permanent centres of accumulation elsewhere. Conflict between different regional and national capitals over access to labour reserves and natural resources begin to be felt. The themes of internationalism and multinationalism run hard up against the desire for autarky as the means to preserve the position of some particular region in the face of internal contradictions and external pressures—autarky of the sort that prevailed in the 1930s, as Britain sealed in its Commonwealth trade and Japan expanded into Manchuria and mainland Asia, Germany into eastern Europe and Italy into Africa, pitting different regions against each other, each pursuing its own 'spatial fix'. Only the United States found it appropriate to pursue an 'open door' policy founded on internationalism and multilateral trading. In the end the war was fought to contain autarky and to open up the whole world to the potentialities of geographical expansion and unlimited uneven development. That solution, pursued single-mindedly under United State's hegemony after 1945, had the advantage of being super-imposed upon one of the most savage bouts of devaluation and destruction ever recorded in capitalism's violent history. And signal benefits accrued not simply from the immense destruction of capital, but also from the uneven geographical distribution of that destruction. The world was saved from the terrors of the great depression not by some glorious 'new deal' or the magic touch of Keynesian economics in the treasuries of the world, but by the destruction and death of global war.

And later, in examining the ongoing, ever-increasing military budgets, he concludes that the cycle of capital accumulation and devaluation suggests a

terrifying interpretation of military expenditures: not only must weapons be bought and paid for out of surpluses of capital and labour, but they must also be put to use. For this is the only means that capitalism has at its disposal to achieve the levels of devaluation now required.

Marx is Icky

As I've mentioned previously in discussing my recent forays into Marx and Marxian economics, I've found the work so helpful and to be of such great explanatory power that it seems to me that capitalists, simply in order to understand their own system better, would do well to be up on their Marx. But of course classical or neo-liberal economists are not capitalists, but apologists for capitalism, technicians who differ on only particulars, for all their claims to be scientific and empirical. For them as for so many of us, it seems clear, capitalism is simply the natural order of things. Though, as Harvey makes abundantly evident in his The Limits to Capital, there have been numerous bourgeois critiques of Marx and Marxian theory over the years, I get the sense that real liberal engagement with the work has long since dried up, as if merely touching Capital, let alone taking the ideas seriously enough to work through them, is tantamount to signing the forms for a re-education camp or personally approving of the evils of Stalin or Pol Pot.

Now via jane dark I learn of the news that Emmanuel Saez has been awarded the Clark medal, which apparently is of some importance in the world of economics. We are told by Economic Principals that "his most striking finding has been to confirm the widespread intuition that income inequality has been increasing". This is astonishing. That this is news, that is, worthy of an award in economics. As jane says, the rising inequality over the last 30+ years has been common knowledge for quite a long time. But of course, that it's common knowledge is not so damning on its own; after all, science is always somehow or finally validating what has been or ought to be (or once was) common knowledge, so nothing new there. However, as jane also points out, there have been numerous studies on this very topic over the last decade or so; it has been explored in incredible detail by researchers and economists on the left. But of course Marx is icky. What you have then is a purported science, which because of ideological blinders refuses to take notice of important work. Again, to close, jane puts it best:

The whole news event of this prize, then, is on par with granting the latest Fields medal for long division. What to make of this? Is the fact that the guild of professional economics doesn't know the extant scholarship relevant to their own field more shocking than the fact they are just reaching these easily reachable and socially fundamental conclusions out now? Or is the oddest element the hubris whereby knowledge can't be true — despite empirical evidence — until a guild member says it? In any case, welcome to reality, economists: you are making any attempt to take seriously your institutional field rather challenging.

Terminal Crisis?

Last week I wrote: "It appears that the capitalist system, which necessarily undergoes periodic crises, may have entered its terminal crisis." What could I mean by that? What would it mean for capitalism to be in terminal crisis? (And how equivocal can I be? Appears! May!) It sure sounds like the end of capitalism doesn't it? Does it seem like that's likely? In a comment to that post, Aaron Bady expressed his discomfort with this very rhetoric of "terminal crisis": "Capitalism is such a protean term", he reminds us, "that something capitalist will survive, even if it isn't anything recognizably similar to what we're blessed with now." True. Probably. For all my offline joking about collapse ("we're not even going to have cars in 16 years" being my stock response to the question of Mirah one day learning to drive. . .), I hardly think capitalism is simply going to end. And if it did, it's not as if we're ready for it.

So it's likely that we're going to be embroiled in some version of the capitalist system for the foreseeable future. What about it, then? The point is not to attempt to accurately forecast the demise of one system (as if such a thing were possible), an imaginary in which we end up scraping by in the rabble. The point is how to force a change in a time of possibility, or how to carve out viable, perhaps expandable, alternatives. This is just one reason why events such as the City from Below conference, which I belatedly advertized below, are so important. People coming together, developing ties, trying to figure out ways to, at least, force the hand of capital to resolve the current crisis in a way that doesn't utterly fuck those who are not super-rich.

We had hoped to learn a lot at the conference, meet new people, and so on; unfortunately, we were unable to attend much of it, for a variety of reasons (most of them having something to do with a certain little girl's sleep problems). I did, however, manage to catch the opening panel discussion on Friday night. Gratifyingly, the room (at 2640, of course; where else?) was diverse and packed (and there seemed to be plenty of people in attendance the one other time we made it down to check things out). To give you a little bit of a flavor, the participants in this opening panel were Max Rameau, from Take Back the Land in Miami; Shiri Pasternak, from Toronto; Esther Wang, from CAAAV: Organizing Asian Communities in New York; and David Harvey. The first three were unfamiliar to me and all had interesting and inspiring things to say about work they've been doing. You may, for example, have heard about Take Back the Land's work in Florida, placing homeless people in abandoned houses or returning families to their foreclosed homes. Pasternak talked about continuing enclosure among Canada's indigenous communities, as well as abandoned properties more generally, and a proposed "use or lose it" bylaw. Wang reminded us that communities like that of Chinatown in New York--a poor island surrounded on all sides by wealth, Soho, Tribeca, etc--have been facing crisis for some time, which has only been intensified by the particular crisis of the last year. These were just some of the things touched upon; if I can get my act together, perhaps I'll assemble and post some more detailed notes I took during the discussion.

For now, I want to mention a couple of things Harvey said. His opening remarks were in essence a review of the thesis of his valuable book A Brief History of Neoliberalism. He reminded us that the nature of each successive crisis in capitalism depends on how the previous crisis was resolved. The solution to the crisis of the 1970s was the current neoliberal regime.

It so happens that in recent weeks I've been slowly making my way through Harvey's monumental book, The Limits to Capital. I've found it rough going in parts, primarily because, not unlike getting lost in all the Russian names in a Tolstoy novel, I tend to have difficulty keeping straight ideas that go by similar-sounding names (the obvious basic ones being "value", "use value", and "exchange value"), which is only exacerbated by not having time to sit and take detailed notes while reading. In short, Harvey's book is a sort of critical explication of Marx's Capital and his related economic writings, such as the Grundisse, along with critical surveys of the subsequent Marxian and bourgeois analyses of both Marx and various economic concepts in general. Let's face it: this stuff is enormously complicated. Marx defines capital as a process, and keeping track of all of the elements of the process--socially necessary labour time, class struggle, surplus value, accumulation, technological and organizational change, money, credit, finance, circulation, rent, mobility, etc.--and their inherent contradictions isn't easy. For all that, the book has been very helpful; though many of the technical details remain, for now, confusing, the argument as a whole is helping to illuminate much. It was especially interesting reading the chapters on money, credit, and finance in light of current events (and how, with each successive crisis, the financial system necessarily gets more and more rarefied, removed from the production economy, which only makes subsequent crises potentially more dangerous).

In addition, it strikes me as somewhat comical that the self-congratulatory so-called empiricism of Anglo-American intellectuals and bourgeois economists should have essentially dismissed Marx out of hand--after all, merely reading Capital is tantamount to being a communist, isn't it? it's the same as The Communist Manifesto, right? and Stalin was pretty bad, wasn't he?--when you'd think it would be important to try to actually understand how capitalism actually works. But ideology can be a bitch (speaking of which, free market libertarians and Friedmanites really need to read this stuff and stop talking blather about freedom and nature and other such ill-understood bullshit). For my part, I consider this only a first pass at really getting my head wrapped around the contradictory workings of capitalism (adding to what I have been able to glean from works by Ellen Meiksins Wood, other books by Harvey, etc). My plan is still to read Capital, while either watching or listening to Harvey's lecture series on it. Anyway, the point is that I find myself heavily immersed in working out the theoretical problems of capitalism, not so I can smugly tell myself, "well, I've tackled that! time to move on to Finnegans Wake. . .", the acquistion of knowledge for its own sake being perhaps of entertainment value, but little else. No, I want to better understand what it is we--I--could do under the circumstances, other than just sit around waiting for things to happen, in part by better understanding what those circumstances really are.

Which brings me in a roundabout way to the other remark made by David Harvey that I'd like to mention here before finishing up. He talked about "the myth of home ownership". This has been a rant-worthy topic of mine for several years ("home ownership is a scam", I'll tell anyone who will listen, which unfortunately for them is usually my wife or my co-workers), so naturally I was pleased to hear him say it. He said that capital started pushing home ownership among the working classes during the Great Depression, which was obviously a time of massive labor unrest. The idea is that "people with mortgages don't go on strike". Truer words have rarely been spoken. It's brilliant, really. More powerful than getting workers to invest in the stock market (how stupid is a 401k? why do I have one? I don't believe in the stock market!). I've been trying to come to some point of action in my own life--selling the house and not buying another is but one potential part of that. But it's not as if renters are secure. This is one reason why an important battle is for rights to the city, rights to the commons, reclaiming the commons, re-establishing the commons, recovering abandoned territory, and so on. In this context, Harvey also mentioned the need for a right to residency (you can't vote if you don't have an address). There is much to do.

Analysing Sentences

In The Limits to Capital, in a footnote addressing a book claiming to subject Marx's analysis of technological change to "the standards and rigor which distinguish twentieth century analytic philosophy", David Harvey says the following:

"Analytical philosophy may be good at analysing sentences but is not so good, apparently, at capturing the total flow of an argument."

Ha!

David Harvey on the Financial Crisis

Reading Capital has an excellent piece from David Harvey on neoliberalism and the financial crisis ("The Crisis and the Consolidation of Class Power"). Here's an excerpt:

One of the major barriers to continuous capital accumulation back in the 1960s and early 70s was the labour question. There were scarcities of labour both in Europe and the US and labour was well organised, with political clout. So one of the big barriers to capital accumulation during that period was; how can capital get access to cheaper and more docile labour supplies? There were a number of answers. One was to encourage more immigration. In the United States there was a major revision of the immigration laws in 1965 that in effect allowed the US access to the global surplus population (before that only Europeans and Caucasians were privileged). In the late 1960s the French government was subsidising the import of Maghrebian labour, the Germans were bringing in the Turks, the Swedes were bringing in the Yugoslavs, the British were drawing upon their empire. So a pro-immigration policy emerged which was one attempt to deal with the labour problem.

The second thing you go for is rapid technological change which throws people out of work and if that failed then there were people like Reagan, Thatcher and Pinochet to crush organized labour. And finally capital goes to where the surplus labour is by off-shoring, and this was facilitated by two things. Firstly technical reorganisation of the transport systems: one of the biggest revolutions that happened during this period is containerisation which allowed you to make auto parts in Brazil and ship them for very low cost to Detroit or wherever. Secondly the new communications systems allowed the tight organization of commodity chain production across the global space.

All of these solved the labour problem for capital, so by 1985 capital has no labour problem any more. It may have specific problems in particular areas but globally it has plenty of labour available to it; the sudden collapse of the Soviet Union and the transformation of much of China added something like 2 billion people to the global proletariat in 20 years. So labour availability is no problem now and the result of that is that labour has been disempowered for the last 30 years. But when labour is disempowered it gets low wages, and if you engage in wage repression this limits markets. So capital was beginning to face problems with its market, and there were two things which happened.

The first was the gap between what labour was earning and what it was spending was covered by the rise of the credit card industry and increasing indebtedness of households. So in the US in 1980 you would find that the average household would owe around $40,000 in debts now it’s about $130,000 for every household, including mortgages. So household debt sky-rockets and that brings you to financialisation, and that was about getting the financial institutions to support the household debts of working class people whose earnings are not increasing. And you start with the respectable working class, but by the time you get to the year 2000 you start to find these sub-prime mortgages circulating. You are looking to create a market. And so finance starts to support the debt-financing of people who have almost no income. But if you hadn’t done that what would have happened to the property developers who are building the houses? So you try and stabilize the market by funding that
indebtedness.

The second thing which happened was that from the 1980s onwards the rich are getting far richer because of that wage repression. The story we are told is that they will invest in new activity but they don’t; most of them start to invest in assets, i.e. they put money in the stock market, the stock market goes up so they think it is a good investment so they put more money in the stock market, so you get these stock market bubbles. It is a ponzi-like system without the Madoff’s organizing it. The rich bid up asset values, including stocks, property, and leisure property as well as the art market. These investments involve financialisation. But as you bid up asset values this carries over to the whole economy, so to live in Manhattan became all but impossible unless you went incredibly into debt, and everyone is caught in this inflation of asset values, including the working classes whose incomes are not rising. And now we’ve got a collapse of asset values; the housing market is down, the stock market is down.

Economic Destruction

In The Shock Doctrine , Naomi Klein spends a fair amount of time outlining the free market blather of Milton Friedman and his demented acolytes, and then proceeds to show how these policies have been implemented throughout the world, by way of one form of shock therapy or another. She compares this economic shock therapy (new economic rules implemented at the moment of crisis) to actual physical torture. I was prepared to find this torture metaphor simplistic; I find that it is not. The book is simply devastating.

When it comes to the Chicago Boys and their ilk, the question must be asked: were they extremely cynical or extremely stupid? Both? In A Brief History of Neoliberalism, Harvey argues that their rhetoric on freedom was exactly that, rhetoric, that they knew full well the damage they were doing, but didn't care, or rather that it was exactly this damage they wanted to do (that is, to echo zunguzungu's use of James Ferguson's The Anti-Politics Machine, the very apparent failure was the desired result, was success itself: "Sometimes there are structural reasons why 'failure' only reproduces the conditions which necessitate yet more failure."). This is certainly possible, even likely. Is it also possible that they believe all their nonsense about the free market? That they truly believe that it is the best way for the most freedom, for the most people? I suspect it's some combination, with varying degrees depending on the ideologue (recalling that, for example, the American planners--men like George Kennan--of the immediate post-WWII period knew the Soviet Union was no real threat, but by the 1980s we had a situation where, to loosely quote Lewis Lapham from memory, we had a president in Ronald Reagan who believed the movie was true).

As narrated by Klein, and in more detail by Michael Schwartz in War Without End: The Iraq War in Context, the Americans in charge of the invasion and occupation of Iraq (and its anticipated magical conversion into a free market paradise) seem to have been genuinely surprised that things didn't go well, while at the same time they very clearly intended for utter destruction and chaos. The stereotype of the quiet American is of a patriot with good intentions, characterized by well-meaning bumbling. But these so-called good intentions amount to a refusal to consider that anyone would want anything other than the American way of life, such as it is, with freedom narrowly understood as commitment to free market fundamentalism (combined with an inability to understand that those genuine freedoms Americans do have, have nothing to do with the free market and have been fought for, not bestowed). In Iraq, this results in the deliberate destruction of a country, to be followed by a shiny new country completely run according to free market ideology, so they can be just like Americans (except, only poor Americans, apparently, since previously well-positioned Iraqis were not given the opportunity to even become owners of privatized firms). It being impossible to run a country according to the free market, extreme violence, as ever, is needed. Such good intentions are of course essentially malevolent.

Adrift on the neoclassical sea

A couple of quotes from jane dark's recent post:

Even economists able in some regard to have seen the crisis with a clear eye are still largely compelled to speak of it in almost purely cyclical terms. . .

And:

It is tempting to assert that this waveform horizon results from being adrift on the neoclassical sea; had they their feet planted in the critique of political economy, they would see the drive of the world capital system toward terminal crisis. But this too may be a mistake, albeit one of scale rather than simplicity. The inability to think the crisis in relation to geopolitics and state power afflicts various Marxian analysts as surely as it does the doyens of the core institutions. That there will not be a recovery in the full sense is explicable only through the coordination of economic and state power, and indeed the horizon of knowability here is not that of an unforeseeable economic unfolding but the difficulty in conceiving of what form the transfer of global power away from the U.S. will take.

In The New Imperialism, David Harvey points out that when capitalism has hit its inevitable crises of overaccumulation, capital has invariably sought to solve its problems overseas, with imperial adventure and investment. In part this is because in general, as a class, the ruling class simply refuses to give up on the class war. Where the problem could perhaps have been fruitfully addressed via extensive investment in the social sphere, ideologically this is simply a non-starter. This is one of the many aspects of capitalism that reveals that the notion that the market involves rational actors, behaving rationally, making rational decisions, is nothing more than a fiction. Nevertheless, crisis is inevitable. The current crisis is one more necessary crisis, pointing towards, as jane puts it, a terminal crisis, not simply an awful downturn in the cyclical (read: natural) order of things.

Checking in

I've been tired. . . busy. . . just a brief reading update.

I finished reading Time Regained the other day, thus coming to the end of In Search of Lost Time. What can I say? I won't get into too much just now, though it's funny: people--friends, co-workers--congratulate me on having finished it. Like it's an accomplishment. To be fair, I tell these people I've finished it. And I had, over the last several months, reported on my progress. Why? Is it simply a pointless boast? I'd like to think not! (Is it substantially different from blogging?) People are curious. They like to talk about what they read, too, and they've heard of Proust, see me with whichever volume I'm reading, want to know something about it. But what can I tell them? I like it? Will anything I say convey anything of interest about the book? Maybe. And, yeah, it's long. But, the thing is, Proust isn't difficult to read, not really, not in the manner of some writers. Blah blah blah. . . Anyway, it feels weird now, not having Proust to read. Granted, I wasn't reading the book exclusively--and there was quite a big gap of time between volumes 4 & 5--but there was always it to return to. I could just read it again, of course, but I'm not going to, not right now. I mentioned earlier that it felt wrong to read any other fiction while in the midst of In Search of Lost Time, and I meant it. Then I was having trouble getting started on The Captive (mostly because I was so often exhausted and having a hard time focusing on Proust's rhythm through the fog). Several passes at the opening got me nowhere, hence the big gap. But I felt the need for some narrative. I pulled books down from our shelves, looking for something worth breaking my self-imposed rule. Finally, Molloy was just the ticket to get me moving again. More on that experience, and the experience of reading Beckett's prose trilogy, in another post.

I made some noise about reading Blanchot's The Space of Literature. Naturally, since then I haven't made it much further into it. However, on recommendations from Mark and Steve, I picked up a copy of Heidegger's Poetry, Language, Thought and am, unexpectedly, finding it much easier going than Blanchot. Which is not to say it's an easy read. Far from it. But there's a lot to chew on, and I know I'll be having something to say about it here. (And, yes, I will be returning to my Blanchot reading and notes.)

Months ago, I packed up a lot of my books into storage in anticipation of the arrival of the baby, and more of them will be going into storage soon. I made a small pile of books that I thought were most likely to be read over the next several months. From this pile, I've begun reading Enrique Vila-Matas' Bartleby & Co. How many of us are bloggers of the No? (Not enough of us?) It turns out that this is the perfect time for me to be reading this book. I hope to be able to explore some of my thinking on it here. Time permitting. On the fiction reading horizon: Vila-Matas' Montano's Malady, of course, but then some women. I've noticed that every book I've read this year, fiction or not, was written by a man. Now, in fiction, with Proust and Beckett as my major projects for the year, that's understandable, but still. Anyway: perhaps some Virginia Woolf? I have not read Orlando (acquired years ago, after I read an enthusiastic passage or two on the novel by William H. Gass) or To the Lighthouse, both of which we have on hand, plus a re-read of Mrs. Dalloway may be in order. I expect I'll be reading a fair amount of Marguerite Duras, with six titles awaiting me. And Carole Maso. I've always liked Carole Maso, and it could finally be time for AVA.

But then, maybe I'll just scrap it all and read Capital along with David Harvey. . . if the introductory video is any indication, it's really worth it (link originally via From Despair to Where?, but also via ReadySteadyBlog... ). Which of course reminds me of all the political posts I haven't written (apparently there's some election campaign on), all the food- and oil- and war- and housing- and money-related articles I've meant to link to and write about, but haven't. . . (summary: things are mess)

Disaster Capitalism

Naomi Klein’s new book, The Shock Doctrine: The Rise of Disaster Capitalism, has been getting a lot of attention lately. I’m interested in reading it. I liked what I read of her earlier book, No Logo (I read about 3/4 of it), and have appreciated her work in recent years.

At ads without products, I came across the following short advertising film for the book, directed by Alfonso Cuarón of Children of Men fame:


In the film, and it appears the book, Klein draws comparisons between the use of torture in U.S. interrogation techniques (laid out in the CIA manuals) and the methods of “crisis capitalism”, or what she calls the economic “shock doctrine”: each is intended to soften up the victim so that they are more likely to bend, less likely to resist.

In a respectful review in the Guardian (link via The Reading Experience), John Gray puts Klein's thesis like this:

As Klein sees it, the social breakdowns that have accompanied neo-liberal economic policies are not the result of incompetence or mismanagement. They are integral to the free-market project, which can only advance against a background of disasters.

[. . .]

Klein uses torture as a metaphor, and does not claim any cause-and-effect link between its re-emergence and the rise of neo-liberal shock therapy; but she does point to some disquieting similarities. Individuals and societies have been "de-patterned" with the aim of remaking them on a better, more rational model. In each case, the experiments have failed, while inflicting lasting and often irreparable damage on those who were subjected to them.

In his penultimate paragraph, he writes:

There can be no doubt that fortunes have been reaped from the Iraq war as they have been from other experiments in disaster capitalism. Yet I remain unconvinced that the corporations Klein berates throughout the book understand, let alone control, the anarchic global capitalism that has been allowed to develop over the past couple of decades - any more than the neo-liberal ideologues who helped create it foresaw where it would lead. Rightly, Klein insists that free market ideology must bear responsibility for the crimes committed on its behalf - just as Marxist ideology must be held to account for the crimes of communism. But she says remarkably little about the illusions by which neo-liberal ideologues were themselves blinded. Milton Friedman and his disciples believed a western-style free market would spring up spontaneously in post-communist Russia. They were left gawping when central planning was followed by the criminalised free-for-all of the 90s, and were unprepared for the rise of Putin's resource-based state capitalism. These ideologues were not the sinister, Dr Strangelove-like figures of the anti-capitalist imagination. They were comically deluded bien-pensants, who promoted their utopian schemes with messianic fervour and have been left stranded by history, as the radiant future they confidently predicted has failed to arrive.

I disagree with most of this paragraph, which is packed with a lot of questionable assumptions. I won't attempt a point-by-point response, but let me try to address some of them.

In an earlier post in which I briefly asserted that capitalism needs states, I quoted a passage from a Noam Chomsky essay from 1977 ("American Foreign Policy in the Middle East", collected in Towards a New Cold War). As the titles makes plain, the essay was specifically about American policy in the Middle East and, in part, about the role of the oil companies in the region. Here is how the passage began:

The oil companies face local problems as a result of continued American barriers to a political settlement of the Arab-Israeli crisis in the only possible manner, that is, with a two-state settlement along roughly the 1967 borders. But the basic long-term interests of American capitalism have, so far, been adequately served by this policy. As noted before, this is not the first time that the oil companies, despite their power, have been subordinated to more general interests.

And what are these more general interests? They are the maintenance of the capitalist system as a whole. This is where the idea that capitalism needs states comes in. In his review, Gray says: "There are very few books that really help us understand the present." I agree. Gray suggests that Klein's is just such a book. Here are two more: A Brief History of Neoliberalism, by David Harvey, and Empire of Capital, by Ellen Meiksins Wood.

In his book, Harvey traces the development of, experimentation with, and eventual widespread political accommodation to neoliberal ideas and policies. The bankruptcy of New York City in the 1970s; the assassination of Allende of Chile in 1973, followed by the first imposition of Milton Friedman's neoliberal ideas on a nationwide scale by Pinochet, guided by Chicago-trained economists; Thatcherite England; Carter and Reagan; the capitalization of China: Harvey discusses all of this and more, along the way comparing the rhetoric of neoliberalism with the practice. Where Gray paints Friedman and his followers as deluded "utopians" (not unlike popular conceptions of communist revolutionaries), Harvey shows that "the theoretical utopianism of neoliberal argument has . . . primarily worked as a system of justification and legitimation for whatever needed to be done to achieve" the goal of "restoring, or some instances (as in Russia and China) creating, the power of an economic elite". In short, class war, justified by the attractive but ultimately empty rhetoric of freedom. That is, they knew what they were doing, even if Gray is right (and I think he probably is) that "disaster capitalism is now creating disasters larger than [the system] can handle". (For more on what happened to New York City in the 1970s, see "Neoliberalism and the City" from Studies in Social Justice (the link is to a pdf); for an even briefer history of neoliberalism than offered by Harvey's book, see this excellent interview with Harvey at The Monthly Review's MRZine.)

"They knew what they were doing." Who is "they" in this case? If Gray's review is any indication, it sounds as if Naomi Klein focuses on the depredations of "disaster capitalism" through the prism of large corporations. If so, this isn't surprising, given the balance of her work in the past, including No Logo. It's not unimportant, of course. We need to know what those corporations are up to. But, as suggested by the Chomsky passage, there are general systemic interests over and above the short-term needs of even the most powerful corporations. Who attends to the system? Whereas many have observed the existence of hugely powerful multinational corporations and organizations such as the WTO and concluded that we are living in a period of the declining importance of states, in Empire of Capital Ellen Meiksins Wood argues that

. . . for all the globalizing tendencies of capitalism, the world has become more, not less, a world of nation states, not only as a result of national liberation struggles, but also under pressure from imperial powers.

These powers have found the nation state the most reliable guarantor of the conditions necessary for accumulation, and the only means by which capital can freely expand beyond the boundaries of direct political domination. As market imperatives have become a means of manipulating local elites, local states have proved to be far more useful transmission belts for capitalist imperatives than were the old colonial agents and settlers who originally carried the capitalist market throughout the world.

Where formerly it was the British who enforced the nascent global system (Mike Davis' Late Victorian Holocausts, which I am currently reading, is proving invaluably instructive on this score), with the end of World War II (and adverserial inter-ally politics during the war) the United States emerged as its guarantor. Wood spends some time discussing the differences between various empires throughout history (Roman, Chinese, Spanish, Arab Muslim, Dutch, Venetian, British) in order to show how the empire presided over by the United States is different: the first truly capitalist empire. If capitalist imperatives are self-replicating and "purely economic", and neoliberalism promises freedom for all, where is the problem? The problem is

this mode of imperialism, like capitalism itself, has contradictions at its very core. On the one hand, it depends on the separation of the ‘economic’ and ‘political’, which makes possible the unbounded expansion of capitalist appropriation by purely economic means and the extension of the capitalist economy far beyond the limits of the nation state. Capitalism has a unique drive for self-expansion. Capital cannot survive without constant accumulation, and its requirements relentlessly drive it to expand its geographic scope beyond national boundaries too. Yet, on the other hand, capital has always needed the support of territorial states; and while the wide-ranging expansion of capitalist appropriation has moved far beyond national borders, the national organization of capitalist economies has remained stubbornly persistent. At the same time, the nation state has remained an indispensable instrument – perhaps the only indispensable ‘extra-economic’ instrument – of global capital.

'Extra-economic' means politics; 'extra-economic' instrument means the political state, usually in the form of a monopoly on violence. Within countries, the process is more straightforward: "capital appropriates, while the 'neutral' state enforces the system of property, and propertylessness." It's a lot more complicated in the global system, but I think the actions taken by the United States since the end of World War II--from containment policy, including the wars in Korea and Vietnam, to "support" for not only Israel and, earlier, South Africa, but countless Third World despots--make a whole lot more sense when viewed within the conceptual framework of the United States as enforcer and guarantor of the capitalist world system (which is not to say that individual personalities don't impact the political situation in their own ways). Now, as American economic hegemony has all but collapsed, American attempts to throw its weight around militarily seem increasingly desperate.

There is a lot more that can be said about Wood's book (I found the idea of the state as the enforcer of not only the system of property but also "propertylessness" extremely important, and now that she's brought it to my attention, obvious), but I'll leave with one more thing before finishing up here. She points out that the idea that states are declining in importance, the premise that "the nation state is giving way to a new form of stateless 'sovereignty' that is everywhere and nowhere" (as argued by Michael Hardt and Antonio Negri in their popular book Empire, which I have not read)--"such views", she says, "not only miss something truly essential in today's global order but also leave us powerless to resist the empire of capital." Recognizing the remaining importance of states means that there can be--and are--centers of power, potential loci of resistance. Many of us feel powerless enough as it is, but without political entities (in this case states) to resist against, without a place to act politically, that sense of powerlessness can only increase.

I like what I've heard about Naomi Klein's The Shock Doctrine, and I look forward to learning a lot from it. For those interested in understanding the present world, I highly recommend also reading A Brief History of Neoliberalism and Empire of Capital.

David Harvey

I had hoped to post at length about David Harvey's excellent book A Brief History of Neoliberalism, but I don't think I'm going to have the time to do it justice any time soon. I will say, however, that I think that this is an essential book. Anyone hoping to make sense of the world today would be well served by reading it. I can't recommend it highly enough.

This is a short interview with Harvey in which he talks about many of the issues discussed in much greater detail in the book. Here's a sample:

Q: Tell me about the ideological dimension of all this, because the ideological thought process is more complicated. You talk about the institutions, the concentration of wealth. But what is neo-liberalism, broadly speaking? And how does that relate not only to the economy but also to ideology and culture?

A: The strength of the neo-liberal ideology, on a popular level, is its emphasis individual liberty, freedom and personal responsibility. Those have all been very important aspects, of what you might call ‘American Ideology’ since the very inception of what the U.S. has been about. What neo-liberalism did was to take the demand for that which was clearly there in the 1950's and the 1960's and say “We can satisfy this demand, but we are gonna do this a certain way, we are gonna do it through the market, and you can only achieve those goals through the market. We are gonna do it in such a way that you have to forget about the issues of social justice.” It seems to me that the movements of the 1960's were about combining individual liberty and social justice. What neo-liberalism did was say “we’ll give you the individual liberty, you forget the social justice.” For that reason it has been very powerful in the United States as an ideology,because it can appeal to this long tradition of individual liberty and freedom.

You can see this in Bush’s rhetoric even before 9/11, although it has escalated since. . How many times did he use the words ‘Liberty’ and ‘Freedom’ in his second inaugural address? It is to that ideological tradition which I think everyone in the US subscribes to some degree, including myself. The only interesting question is, how do we conceptualize individual liberty and freedom in relationship to social obligations? In relationship to social justice? In relationship to real possibilities for everybody to participate in this system? That is a question you cannot ask if you say the only vehicle for which you may realize your dreams of individual liberty and freedom is through the market and through privatization of everything, and through a legal apparatus which is heavily reliant on individual personal rights.