End Games

 

Half a century ago it seemed that humanity might destroy itself and the planet, with nuclear weapons. That threat has not gone away, but it has dwindled in front of more ominous ones. Collapsing finance, climate change and pollution in general, as well as declining resources are potentially as destructive as hydrogen bombs, and there are no Commanders-in-Chief who can hold them back or set them off. There is no declaring war or suing for peace with these irreversible processes.

Once upon a time it was believed that the gods decided what happened on Earth, and that they could be induced, directly or through their saints, to be benign rather than vindictive. It was generally accepted that human actions could influence the weather, health and wealth, by interceding on the other side with sacrifices. Over the ages this practice passed from human immolations to donations in kind and cash, by which time credulity had begun to wane. It was perceived that the clergy were the only beneficiaries of the system, and meanwhile natural phenomena were being studied and understood. By the 19^th century the gods were infinite, ethereal and inactive entities who had set down universal laws for eternity, with gravity, thermodynamics and electro-magnetism. However, because of their complexity, two domains kept the unpredictability that favours magic and hocus-pocus. Weather was still an act of God and money a Mephistophelean pact.

The 20^th century started full of certainties and ended in doubt. There were political convictions about nation, race and historic class struggle, and there were scientific beliefs that nature could be dominated. The political faiths turned out to be deadly all to no avail. And instead of mastering the world, applied science has put it off track. In this widespread disillusion, climate and finance have kept their magical powers of controversy. Do they have their own inexorable rules or are they man-made? Is humanity modifying the first and can it control the second?

An ecosystem built by some very unlikely cosmological coincidences and some three billion years of evolving life forms is being squandered, polluted and destroyed. Animal and vegetable species are disappearing as fast as the polar ice-caps. Land, sea and air are full of human garbage, of fumes and junk, of synthetic and mineral poisons. Plants are being modified to produce pesticides and to resist herbicides. Animals are being tinkered with and humans are increasingly prosthetic. An anthropocene, a man-made world, a garden of delights gone wrong, an impossible paradise designed for private profit and driven by the accumulation of wealth and power in the grasp of a tiny minority.

The rent of privatised land, the commercial profit and the financial usury of money, the surplus value of machines and the very nature of capital that forces it to grow or flounder, to eat or be eaten, have made the world a more violent place than the wildest jungle. A property regime obsessed by the rate of return on investment can see no further than the next quarterly balance-sheet, and is oblivious of the pain and harm the balance causes. The Draconian rule of profit or death allows neither scruples nor compassion. Free market capitalism is a devastating force that destroys social bonds, existing environments, labour and ultimately itself.

Production supplies the demand for investment and consumption. With each technological era (e.g. steam, internal combustion, electronics), a cycle begins with investments playing the dominant role, harvesting new minerals, vegetables, animals, and building new machines to make new machines to makes new machines… But once these investments are in place, their final products and infrastructures need to be consumed. At a certain point, the increasing demand must swing from investment to consumption. Planes need passengers, movies need spectators, bicycle-lanes cyclists, search-engines searchers, etc. However, effective demand cannot exist without the wherewithal.

There is renewed demand, the same as yesterday. There is increased demand, more than yesterday. And there is decreased demand, less than yesterday. However, for demand to grow and shrink, the means of payment circulating on the market must also grow and shrink. Means of payment are basically either central bank cash or credit granted by private banks and just about every commercial enterprise. Cash can be spent or saved, whereas credit can only be spent. The old propensity to store cash has disappeared. It all stays in circulation and, as with credit, it can be spent as an investment or for consumption.

As cash was dematerialised from metal to paper and to digital, it became increasingly difficult to distinguish it from scriptural credit, and their distinctive functions became confused. Cash is the proceeds of a previous transaction. Credit is based on the proceeds of a future transaction. Cash gets its full value in an exchange, whereas credit gets only part of its value as it must also pay interest. Cash exists of itself, it has inherent value. Credit only exists as goods and services, its value is theirs. Cash settles an exchange, which suits consumption. Credit postpones the settlement, which suits investments that return their value with a profit. Except that investing credit means sharing the profit with interest, whereas invested cash keeps all the profit. This is a strong incentive to invest cash and to consume with credit.

The invested cash returns with a profit, while the consumed credit means future cash is already spent. Consumption does not return value the way an investment does. So that an increase in consumer demand based on credit (instead of wage rises) quickly spirals out of control, and debts pile up beyond possible repayment (1). It also results in private capital taking an ever larger share of incomes (added value). A growth in production needs more investments (or more productive ones) and then more consumption. The growing investments of a new technological cycle are paid with credit (how else?). When profits (cash) start rolling in, which takes time and leaves many failed enterprises along the way, they are invested and progressively replace the credit. This cash drain means that growing consumption must have recourse to credit, resulting in a fast rising mountain of debts.

When investments are in place, the value they produce needs to be consumed. The credit of growing investments turns into cash when their produce is exchanged on the market. Does this cash replace the credit as an investment, or does it increase consumer demand? Is it the wage of capital or labour? The answer of course is invested cash and rent/interest/profit. And so the system builds the conditions of its downfall. Credit collapse ruins consumer demand, provokes recession, destroys jobs, causes misery, revolt and repression, and ends in some kind of war. The rule of private capital is a scourge that is laying waste the planet. Its financial structures lead to debt “cliffs”, vast disproportions of wealth and their resultant violence and mayhem. It is about time to reconsider this plutocratic power and stop it rising again from the ashes of its coming devastation.

1.  For more on this see   http://lelezard.blogspot.fr/2010/08/binary-production-of-wealth.html

Too big to grow

When the means of production, starting with land, become the property of a minority, there arises the question of controlling the propertyless majority. This “social control” (Allen) is basically brute force, justified by legislation that favours and protects private property. But, being so few, the owning class needs an intermediary mercenary group to apply the forceful control and enact the rules. It must employ soldiers and clerks. This necessity produces a three tiers society, a labouring majority, the armed forces and the ideologues, and the propertied rulers. The ruling class relies on the middle class for its dominion and ideas. This dangerous dependency is resolved by division. Clerk and soldier are kept in conflictive tension, where it is uncertain whether the pen commands the sword or the other way round.

Property subjects labour with guns and gods, with might and mystification (Engels adds misogyny), and it masters these instruments by constantly shifting dominion from one to the other. A pendulous movement that follows the ups and downs of the power struggle with labour. When labour is strong, property has recourse to unheld promises and revocable concessions. Its speakers offer the sky. When labour is weak, force suffices. But propertyless labour’s only possible strength is unity, and property’s major task is to disrupt all unifying endeavours. Ruling is dividing. The original split between have and have-not perpetuates itself by provoking chaos, by pitting all against all in perpetual conflict.

Private property, with its unavoidable accumulation, makes social cohesion impossible and acerbates conflicts to maintain its empire. A constant goading that regularly leads to bloodshed. Either the military fights labour or labour is pressed into fighting itself, in the name of national property, for a mother/father land it will never inherit. The pressure exerted by private property (rent, usury and dividend) and its divisive tactics provoke turmoil of varying intensity, which is probably linked to the trickle-down flows of wages and credit. When technology increases productivity and the value produced, property and labour receive their usual disproportions, and both of them are growing. Once the new technology is in place, the extra gains in productivity become marginal and the value produced stabilises. But property and labour are eager for more, whipped on by futuristic dreams and emulation. So property takes more by reducing wages and social benefits and, to avoid a social breakdown, it grants huge amounts of credit to labour and government.

Supposing that property is not completely mindless, the accumulation of debt to allow the continued accumulation of capital could only be a temporary solution. It offered a way to tide over until the next technological jump and a new growth cycle. The trouble is that speed and size, the two motors of productivity, have material and economic limits. Information is transmitted at the absolute speed of light, and though trains, trucks, ships and planes could still get bigger and faster, they all seem to have reached or passed their maximum cost effectiveness, as have big factories and high-rise buildings. If productivity is in its ultimate stage, the future growth that is supposed to resolve the debt crisis will not materialise. Unfortunately, the savagery of capitalist accumulation is only attenuated by a general increase in the value produced. In the past, property has shown its rapacious ferocity with every global recession, but each time technology was able to set off a new growth cycle with bigger and faster production. But, beyond the extremes of size and speed, this form of salvaging is no longer possible.

Private property was founded by violence and has shown no qualms about its continued use. Property’s last stand will be a messy affaire that might be attenuated if its demise is accepted as an unavoidable outcome. So far there are no signs of such a change of outlook, with crowds of ideologues waffling on about 2050, 2100 and beyond, projecting yesterday’s expansion into the distant future as a fundamental article of faith. Turning that round before everything goes haywire is at best an unlikely probability.

Theodore Allen. The Invention of the White Race (1994)

Friedrich Engels. The Origin of the Family, Private Property and the State (1884)

A republic of private interests

The passage from communal to individual property of land was the consequence of conquest, at least in the more recent and well documented examples, in the Americas, Africa and Asia. The invader wanted to take the land from the native. To do this he could exterminate the conquered people. But, if they were numerous and used to such labour, he could keep the people in bondage to till the soil to his advantage. Killing or chasing off the natives meant bringing in labour, either from the invader’s place of origin or from elsewhere. These were subjected to the new land owners. If the invader kept the people, he had to dispossess them of their common property by more devious means. The habitual method (see Tocqueville, Luxemburg, Allen et al.) was to change the local tribal leader, who was elected and revocable, into the hereditary proprietor of the community’s land. He was then coerced or bribed to give away portions of it, or he might lose all for an act of treason or rebellion, real or supposed.

The private property of land is originally the result of robbery with violence.  And so it must be, as it contradicts the foundations of society, which are the common weal and its governance, and opposes the state and the private person. Governments swing continually between tight control and laissez faire, turning from demagogy to plutocracy and back again. They are in a double bind. Obliged constitutionally to protect and encourage the accumulation of private wealth, as well as insuring the pursuit of happiness for all. And, in the most obvious case of land property, one person’s gain is another person’s loss as the land surface of the planet is only very marginally extensible.

Governments have to synthesise the nebulous concept of common good and the precision of private interests. They are expected to steer nations towards future goals. This needs perspective and foresight, a vision of the wider picture and of the long term. But these expectations are drowned out, by the urgencies of arbitrating the sharing of wealth between labour and capital, and of keeping the workers in their place and the rich in theirs. And there are the infernal rounds of funding recurrent election campaigns, and the campaigns themselves. No wonder politicians are seen as hopeless and helpless, and as being bought and sold. Who needs a naked emperor, and would he be of more use if he were clothed? The difference between autocracy and republic is that the autocrat relies on the threatening throng to subdue the privileged few, whereas the republic unites the few against the throng.

To have or have not was, and is, a question of armed force. Force used to take and force to keep. This violence began with the acquisition of land. Then, whenever trade developed, it spread to the monetisation of exchanges and the control of credit. Finally, with the mechanisation of industry, it concerned the property of all the means of production. The ground, money, tools, patents and copyrights are the capital that demands a share of the value produced by labour. The state also takes a share for its running costs, which complicates its role as arbiter of capital and labour. Capital needs force for protection and labour needs legislation to restrain that force. The state supplies both services, but is unable to resolve the dilemma of private and public, of the individual and the group, of property and community.

The state as a power exterior and superior to the community was also the result of conquest. The passage from elected chiefs, first among peers, to hereditary monarchs accompanied the transmittable private ownership of land. The king owned and ruled his kingdom, and his law was backed by military might. War was his principal occupation, war on his rebellious subjects and war to increase his domains. Royal absolutism was a static aristocratic concept, where status and property were inherently inherited qualities. Guns levelled the battle-field and gave power to rural gentry and urban merchants, who would constitute the capitalist foundation of the industrial revolution. Government returned to its electoral form of primo inter pares, but land property remained private. It even determined the right to vote, which was reserved to proprietors until domiciliation became the criterion and included rent payers. And so was born the republic of private interests.

Private and public, individual and state are in perpetual conflict, but this is the heritage of past divisions into conqueror and conquered, have and have not, winner and loser. Armed force created a duality in society. Primitively ethnic, it became cultural, social and ideological, in a continuing justification of the original theft and of government partiality. Descendant of monarchy the state is proprietor, buying, selling and extorting on a grand scale. The state occasionally takes over all property, but this alienates everyone, except its functionaries, and brings about a police regime, which is very rigid and unproductive. Generally the state is a proprietor among others, and its legislation reinforces its own powers and those of its peers. However, now that the whole global structure is wobbling, humanity (99%) may have the opportunity to reclaim its common earthly heritage. Or at least take a step in that direction.