Historic materialism: from Grundrisse to Gutenberg’s galaxy.

Marx’s materialistic reading of history was based on class struggle. He perceived the function of technology in the production process and realised that industry needed free labour to hire and fire, and he understood that gold was not money but it had allowed the concept to take form. However, he did not see society as the mirror of its material environment. The conflict opposing the propertied class and the property-less was to be the end-game opening to a classless future. Technology was just a player in the larger game of a terminal confrontation between labour and capital. However unnecessary and unjust the extreme inequality that is a feature of the present distribution of wealth may seem, it will not be reduced by a proletarian overthrow of the bourgeoisie. There will be no final showdown to save humankind, though there may be a slow realisation that a particular gift or proficiency can earn its possessor a large income, whereas capital gains are the earnings of money. It may become apparent that money does not produce any value, and that its remuneration is the consequence of the private monopoly of an imminently social instrument. Some skills are better paid than others, usually because they are difficult to acquire, and ultimate mastery can result in extravagant life styles, which is the effect of rarity, or of topping the sales charts. The rarity of money is a completely contrived situation, and so is its capacity to appropriate income in the form of usury (rent, interest and profit). 

War, misery and injustice form an endless tale of horrors throughout history. Their intensity and atrocity vary, but these variations are more the result of evolving technologies than of a changing moral outlook. Many great cities have been razed, but Joshua, Titus, Hulagu and Cortez would have found the use of an atomic bomb barbaric. They and their armies were intent on looting, taking slaves and just plain blood spilling. In Nagasaki, the 9^th of August 1945, there was not much to loot, slaves were of no use and guns had replaced knives. Famines and epidemics have often ravaged societies in the past, some to extinction. This no longer happens, or very rarely, because world opinion is informed and because air freight is commonplace. The images provoke empathy and the money collected pays the cargo and the planes. Might has always been right. Nevertheless, law backed by might (and/or consensus) has occasionally had the upper hand. The oral transmission of rules and regulations existed, but a practical judicial process could not be without writing. Written laws are the best protection against arbitrary acts of power because they are there for everyone to see. 

Human evolution is neither psychological nor ethical, it is material and technological. Social relations and ideas are changed by tools, processes, machines, by media as McLuhan defined them, as extensions of the body, the senses and the mind, as intermediaries with the surrounding universe. From the digging-stick of our simian ancestors to the smart-phone, media have determined human transformation. For the past million years or so, random inventions have replaced random genetic mutations, and the rate of change has been able to accelerate at a dizzying speed. Some media increase the power of muscles, some regulate body temperature, some enhance the range of the senses and some store and circulate images and sounds. Along with weaponry and the art of war, this last category was McLuhan’s main interest. He considered writing to be the first major step after drawing, and alphabetical writing in particular as it is far easier to master than are ideograms and hieroglyphics. Before writing, information could only be transmitted orally and was stored in human minds. Legends, incantations, genealogies, everything had to be memorised before it could be passed on. Apprenticeship was long and difficult, and death destroyed it all, whereas written information outlives the writer and need not be committed to memory. With writing the quantity of information began to expand like a rolling snowball. Its availability freed minds from the constraints of rote, and its diversity encouraged minds to search farther. And the more there was, the more it was sought after. 

McLuhan did not only describe the functional effects of media, he was also convinced that they contained a subliminal element, that their very nature and usage had far reaching consequences, hence his phrase “the medium is the message”. Writing converts sounds into signs. Reading converts the signs back into sound. Reading handwritten texts was (is) difficult and needed training. It was usually done out loud for and audience. Printing changed everything. It made reading matter much more available, and easier to decipher with standard letters and spelling, which lead to reading in private and in silence. The ear no longer heard the words, they became an inner voice. It also developed the notion of serial production. Coins came from the same mould, as did some figurines, but everything else was produced one by one. Identical books and handbills in their hundreds and thousands were circulated, constructing a community of thought, a shared internal narrative. This had never happened before and it set off an unprecedented chain of events from the reformation to the industrial revolution and the rise of liberal capitalism. 

Another aspect of writing analysed by McLuhan was its visual impact. He imagined how different letters joining to form words, and words to make a sentence that had meaning and intent, could have produced the Greek phalanx of literate hoplites. And he wondered if the printed page with its idiomatic text and its precisely defined borders may have generated the image of a nation. More importantly, he studied what happened when a new means of transmitting ideas was introduced. He saw a stunning effect and wrote of societies sleep-walking. He also categorised media into hot and cold, according to the degree of participation needed to get the message. Radio was much warmer than the press and TV was cooler than the movies (the heat of a rock festival and the chill of a web page). And the successive appearances of different mass media give a coherent explanation of social evolution since the steam press and the first newspaper magnates. The silent scream of headlines and the rant and rave of editorials can go to the extremes because print is cold. When the hot media of radio and sound systems began defusing the same language and ideas, everything got quickly out of hand. Later, the Cold War was kept at a low temperature by television. 

In the 1960s McLuhan hung out with some interesting, imaginative and weird people who damaged his academic prestige, and he came to be considered a bit over the top and… psychedelic. But he had many premonitory inspirations that have become a part of basic courses on advertising and opinion making. He died in 1980, before Reagan’s successful bid for the White House, and before internet was weaned from its military-collegial progenitors. That a Hollywood actor should be elected president was the logical conclusion of the political salesmanship he had theorised and warned against. As for the World Wide Web, he had invented the concept of a global village long before its connected existence. Evolution is a material process, and human evolution is essentially technological. Internet is a syncretic medium absorbing press and publishing, radio and TV, politics and religion, work and recreation, etc. It is having a profound effect and will do so even more with time. Will the transformations be good or bad? Global communications with a cool media seems a promising premise but, like global warming, the interactions are so complex that forecasting is an impossible task. Humans have been fighting for so long over the heritage of their common ancestry that it has become a second nature. However, on the brink as never before, there can still be an informed and rational step back.

The property of the means of production.

It all comes down to the way growth is financed. Growth signifies an increase in supply, in demand and in the means of payment. Supply to the market precedes a materialised demand, as opposed to the potential demand that motivates supply. So that extra supply must be financed before the necessary extra demand, and investments that can be lengthy, or in several stages, must be made prior to any actual consumption of the end product. Supposing the extra investments in raw materials and labour are paid with credit. There is monetary creation by the banks who guarantee the payments, which goes into circulation and increases general demand. When the investments take time to reach the consumption stage, the increased general demand will be inflationary. But, if growth is prolonged, the monetary creation of the latest investments fuels demand for the end-production of previous investments. 

By the power they have to create money, banks guarantee the credit that pays for investments and become, in all but name, their owners. To avoid the control of banks, entrepreneurs have always looked for alternative financial backing, in the form of unspent incomes. Instead of circulating additional money, they use money already in circulation and disrupt the balance of supply and demand. The value supplied increases without the equivalent increase in the means of payment that allows an increased demand. However, the insufficient demand can be compensated by consumer credit. Instead of creating money for investments, banks and pseudo-banks create it for consumption. Incomes are invested and credit is consumed, an inversion that is not without consequences. 

The value of an investment is returned when its production is exchanged for money on the market. That means the credit can be paid back and renewed. The value of consumption is… consumed, and has to be produced again. That means the credit cannot be paid back and renewed. The renewal of increased investments needs renewed credit. The renewal of increased consumption needs renewed credit, plus credit to pay back the previous credit. Invested credit grows at the same rate as investments. Consumer credit grows twice as fast as consumption (1). This fatality also applies to the consumption of government debts. 

Derivatives have multiplied the possible forms of financial investments, but an entrepreneur aspiring to expand his business has always had several alternatives. He might ask his banker or supplier to grant him credit. He can sign an IOU (bonds), or sell shares of his company. Or he may be making enough profit to finance himself. In the first case, the virtual money of credit increases the money supply. The following cases concern income destined to consumption (mostly) or to the renewal of existing investments, and result in consumer credit or closed factories. As for reinvesting profits, it is the classic model of capitalism, the thrifty Protestant ethic described by Max Weber. But profit is part of added value and therefore of income. Profit is also the source of dividends, interest and commissions, which are in turn invested or consumed. 

Financing growth with unspent incomes and compensating insufficient demand with consumer credit and public debt, or exports (2), insure that the property of the means of production is private. And profit, in one form or another, is the rent received by this private property. Financial profits attract incomes, and the flow feeds market bubbles whose deflations are a mass destruction of value. A market crash is a potlatch of misappropriated consumer demand. At some point unspent incomes no longer finance extra investments. They merely increase the value of existing investments. Selling investments on the market as shares and bonds (and all their variants) puts them in the commercial sphere of buying and selling at a profit. However, company shares are never put to any use – as are most other objects of commerce – and are for ever. They change hands by the billions every day of every year, in perpetual motion. And the commercial drive tends to push their price up artificially, for as long as the input of incomes is sufficient. When it reaches its limits the bubble collapses more or less suddenly. 

The private property of the means of production and the rent it receives result in exponential borrowing, market speculation and the destruction of wealth. And consumer credit, the corollary of invested incomes, is a growth mechanism that gets quickly out of hand. This means the system is doomed to periodic failures, either in the flow of invested incomes or in the counter-flow of consumer credit. Occasionally both fail together, as they are at present. Unspent incomes are contracting and everyone has borrowed all they can. This could be resolved by considerably increasing incomes (i.e. wages), and letting the subsequent inflation reduce debts. However, for numerous reasons (3), inflation is not on the program. That is, it will not be driven by pay rises. But the monetary creation of quantitative easing will probably bring about the same result, and it will be interesting to see how that unfolds. As for building a new fail-proof system once the dust has cleared, it can only happen if there is a radical transformation of the social contract and the common weal, with fundamental modifications to the rules of property and corporate law. The world will soon be faced with the age old dilemma of war or revolution, of conservative nationalism or structural change. Will nations attack one another or will they transmute their dysfunctional institutions? 

 (1) I have studied this process at greater length in this previous piece, “The binary production of wealth” August 25, 2010 

 http://lelezard.blogspot.fr/2010/08/binary-production-of-wealth.html 

(2) Sorry but here again I refer to this preceding article, “The deceptive promise of growth” May 10, 2012. 

(3) Sorry again, “Then and now” June 16, 2012.