The exchange of
commodities goes far back into prehistory. At the beginning, when
hunters lived in autonomous family groups that only gathered together
occasionally, exchanges concerned very few articles. Then the
Neolithic division of labour between ploughman and herdsman promoted
exchanges, and their multiplication produced the concept of money. It
took on various forms, cacao beans, seashells, animal hides, axe
heads, et cetera, but it finally adopted the identity of metal coins.
Without money, exchanges are complicated. The producer of article A,
who wants article B, must find the producer of article B, who wants
article A. And there is the problem of value and its divisions. Half
a shoe or one shoe have neither use nor exchange value. So that
metal, so easily divided, was the perfect intermediary for all
exchanges large and small.
Money is the universal
measure of value, which exalts it to the position of value as such.
So the intermediary becomes the beginning and the sought after end.
In the endless chains of money circulating from hand to hand as
payment for goods and labour, money can be between two commodities in
selling to buy, and commodities can be between two amounts of money
in buying to sell (1). In the first case, money is the go-between of
commodities and measures their equal values. Commodity A is exchanged
for B, C and/or D that have the same exchange value as A but
different usages. These necessary exchanges result from the division
of labour and its multiple specialisations. In the second case,
commodities are the go-between for sums of money with the same usage
but different values.
Buying to sell instead
of selling to buy was a new division of labour that resulted from
trade routes opening on land and sea. As commodities moved over
increasing distances, merchants controlled their motion and the
corresponding flows of money. Commercial profit was the second form
of return on investment, after the primordial land rent. They
competed for shares of surplus value, and this competition opposed
towns and country. Most of the population was rural, so the land
owners could levy poorly equipped troops in large numbers. The towns
had fortified walls and arms for a citizen’s army. The struggle was
never decisive and some great ports formed city-states. Elsewhere
trade was hampered by taxes, to the advantage of land rent. But,
wherever trade flourished, merchants became bankers.
Historically, trade
enriched the merchant bankers at the expense of the landed
aristocracy, who were forced to share surplus value. The shopkeeper’s
balance joined the hereditary sword as a symbol of power. Foreign
trade has always bordered on piracy. Taking by force can be direct
plunder or indirect extortion, and the nature of exchanges can have
far reaching consequences. Flooding foreign markets with excess
production could be a cause for war, so that trade was soon oriented
towards regions that did not have a war making capacity. To lessen
the pressure on each other’s markets, the cities of ancient Greece
(and later the European states) started to trade overseas. They
shipped their surplus production and their warmongers round all the
Mediterranean (the Europeans did it all round the globe).
Trade brought new
commodities to the market, which increased the value exchanged and
the surplus value that could be extracted as rent and commercial
profit/interest. If the sword finally accepted to share wealth and
power with the balance, it was because the prize they were sharing
was multiplying. The merchant princes of the Renaissance had
precedents in Athens and Rome. It was the next step into the machine
age that had never been taken before. However, might and money
continued to struggle over the booty, and it was more than two
centuries after Columbus’ discovery and Lorenzo Medici’s birth
that a third contender challenged their rule.
Planet Earth with its
exceptional particularities is the primeval source of wealth.
Dominion over land and sea is the property of might – they can be
taken and held by force – whereas exchange is a nomadic and
fleeting event controlled by money (basically credit). But both
depend on the productive and transformative powers of human activity,
on skills and motive forces. Before the Middle Ages, animal and
mainly human muscle was the only motion-producing energy on hand.
Boats had sails as well as rowers, and the waterwheel was a late
invention of the Roman period. Then, as the Middle Ages drew to a
close, ships were built that could beat to windward and sails were
adapted to turn millstones. And that seemed to be it, while wealth
creating labour remained essentially the straining of muscles by man
and beast. However, the explosive force of gunpowder and the
mechanical reproductivity of the printing-press set off some
imaginative thinking. It took time, but four centuries after Crecy
and three centuries after Gutenberg, James Watt was putting the final
touches to the steam engine. Since then machines driven by fossil
fuels and electricity have replaced productive muscle power just
about everywhere. Hence the obsession with sport.
Machines had not begun
with Watt, nor with Savery or Papin. Their most rudimentary forms are
as old as humanity. But the construction of a mechanical driving
force was revolutionary. By multiplying horse-power, motors
multiplied production and its surplus value, and set off a new
struggle over the partition of the extra wealth, in a triangular
contest that completely changed the rules. The power of land was (is)
territorial, whereas the power of money was (is) extra-territorial,
which meant that territorial government was controlled by
land-owners. The power of machines was (is) also territorial,
themselves and their infrastructures. And it was at this stage that
government became bipolar, land and machines on opposite sides and
money in the centre dithering back and forth. And, as power swung
between left and right, the state took on an autonomous identity. It
became a sort of arbiter, benign or authoritarian, taking a share of
wealth, commanding the armed forces and trying to steer the nation, a
materialisation of the prevailing ideology.
Government may favour
land-owners, or it may favour machine owners, while the bankers do
business with all three. Ruling power alternates according to the
strength of the opposing forces in their ideological battles. One
side groups real property both large and small. The other owns
brands, patents and copyrights. There are a lot of crossovers, but
the two compete for political dominion and for portions of surplus
value. The economic tensions between rent and dividend are played out
on the political arena as a continual spectacle, with the regular
highlights of electoral circuses. This permanent activity at the
front of the stage distracts attention from another more fundamental
conflict, where capital acts in unison against labour. Politicians
are the front-men for lobbies, by conviction or material interest.
The wealthiest and most “convincing” lobbies are those of
property, which means they monopolise the representation. Requested
to vote, the people are given the choice of property or property. The
only systemic difference is that agriculture tends to employ an
unskilled work force of underpaid immigrant day-labourers, while
industry tends to employ a skilled work force of salaried qualified
collaborators, hence their respective reactionary and liberal
discourses.
The proprietors of
land, money and machines demand surplus value, that part of the value
added by labour over and above the cost of labour’s upkeep and
renewal. Like the machines they serve, workers have running costs and
the aged must be replaced by new generations. The feudal lord and his
retinue consumed his surplus value. His only investment was war,
which seldom brought a return. Trade and credit were profitable, but
subprime debts have always been catastrophic. So that capital
accumulation only began to expand freely with the mechanisation of
industry. Trade can participate in the exploitation of labour, but it
cannot modify the value produced. Though it can change demand, as in
16th century England where land was closed for rearing
sheep for the wool trade instead of growing corn for bread (2).
Machines modify production. They are multipliers of strength and
speed. They offer the unlimited means for the unlimited growth of
surplus value. Or so it seemed, and still does to many. The system
did stall occasionally – quite regularly in fact – and competing
nations went to war. There were large scale destructions of wealth,
police states, imperialism, global pollutions and weapons of mass
destruction. But all this was obviously the fault of evil people and
of Evil per se, because the private property of the means of
production and the toll it takes have no alternatives. Evil of course
is just a perception that has no master-plan and, on closer
inspection, surplus value has a very problematic existence (3).
The price obtained on
the market for goods and services is made up of numerous different
parts. Some go to refunding investment and renewing machines,
buildings and the supply of energy and raw materials. Some go to
maintaining the working nation’s generations with the necessities
of life and happiness, some go to the state for security and
legislation, and some to property as surplus value. Exchanges on the
market always have money on one side of the deal. If the goods and
services supplied contain all the above mentioned values, the
wherewithal of demand must also contain them. So the value obtained
on the market is distributed to create a new demand. This extremely
varied demand has a major dividing line between investment and
consumption. On one side, demand concerns goods and services that
will either transmit their value or acquire more value during a
production process. On the other, demand concerns goods and services
whose value will be consumed. A portion of demand gets its value back
enhanced by rent, interest or dividend, while the rest of demand is
consumed and its value needs to be created all over again.
Demand for investments
is basically of two different kinds. It is either the renewal of
existing investments and comes from that part of the partition of
value described above, or it is an extension of existing investments
and comes from elsewhere. The shares of demand granted to labour and
state functionaries are for the upkeep of people who are doing
things. The shares of demand granted to property is also for the
upkeep of people doing things, but the individual shares are larger
and may be added to shares from labour or state, and may exceed the
cost of upkeep if it is thrifty. This can result in hoarding or, more
and more commonly over the past couple of centuries, in an investment
that brings in more income, which in turn demands more investment,
etc. The surplus value of property tends to be invested instead of
being consumed, and the supply for consumption is diverted to supply
investments. Rural populations, who produced their own needs plus the
landlord’s rent and the state’s taxes, were herded off the land
into factories to make things they had no use for, while all the
things they did need dwindled considerably. However, the supply of
investments could only grow so far. Steel production had grown with
the railways. Once tracks had been laid on all the continents and
were struggling to make a return, expansion stopped and steel
magnates turned to making warships and big guns for the state, which
made possible the destructive consumption of two world wars. The rail
magnates were just bailed out.
When productive
investments grow, there is a resulting growth in consumption at some
later date. But increasing demand for investments automatically
reduces demand for consumption. This dilemma can be resolved by
exporting consumption and importing investments. In fact this is the
preferred if not the only way to accumulate private capital, but it
is highly disruptive for those nations who must necessarily export
investments and import consumption. It is the imperial trade of
dominion, where raw materials are exchanged for weapons and luxury
goods, and for plastic bags and shoes. It destroys existing
production, inhibits enterprise and favours tyranny. It produces
socio-economic break downs and lawlessness. At which point the
balance between loss and gain goes all red. Meanwhile, at the heart
of empire, there was a widening productivity gap. Automation was
multiplying output, but certain productions still needed agile hands,
notably for assemblages such as clothing and electronics, and for
picking strawberries, apples and pears. Price competition and
imperative profit sent factories abroad and brought in seasonal
immigrants. This massive transfer of labour was presented as a brave
new world, with a white-collar empire directing sweat-shops and
mine-shafts all round the world, which was just a fantasy driven by
post-Cold War hubris.
Factories had been
built abroad before (VW in Brazil since 1957), but they mostly
assembled stuff sent by the company’s home base for the local
market. Instead of shipping fragile cars, ship the components and
have the work intensive assembly done by cheap labour. It was just
one step back from exporting consumption. However, having things made
abroad for home consumption means that value, however small, is being
added elsewhere. At the beginning, the mass of investments hid this
incremental deficit but, with time as more and more factories began
producing, it became a chronic commercial debt that could only be
settled with Treasury bonds. Meanwhile the empire was suffering the
traditional woes of consumption importers. Manufacturing jobs
disappeared, putting pressure on the remaining work force. For the
middle class, the increased work load meant hiring domestic help, and
the wage freeze meant borrowing. There was a brief boom in the
services industry (low investments and low pay) and in the
distribution of social aids, and a massive expansion of personal
debts.
For the past twenty
years, the empire has concentrated private wealth as never before and
has accumulated three growing deficits that have reached gigantic
proportions. The trade deficit is linked to the wage deficit, which
causes the budget deficit, but the first and the last cancel each
other with an exchange of paper at interest. Pushed by the frantic
competition for surplus value, the empire outsourced part of its
production and exchanged investments for consumption, thereby
reversing the order of a nation’s profitable trade. Private
interests, the illusion of a borderless global market and an
ignorance of past experiences have built a colossal structure with
the paper of debts. And now that its foundations in the real economy
are showing signs of weakness, it is easy to predict that the next
serious storm will bring the building down. And, unfortunately,
lynching bankers will solve nothing, though it might calm angry mobs.
All private property of the means of production is involved, and its
unquenchable thirst for higher returns on capital investments has
brought this about. Production has stalled due to insufficient
consumer demand, because property was investing too much surplus
value. This means that all the extra surplus value, plus the
productive investments that are not renewed, only have the choice of
speculative investments that do not increase production, making the
last hay before the big freeze-up.
1. Often represented as
C-M-C and M-C-M.
The three classic
functions of money are, intermediary of exchange, standard measure of
value and reserve of value.
2. Large scale
enclosures began when Henry VIII confiscated church property, and
continued almost to the end of the 19th century.
3. See Rosa Luxemburg’s
study of surplus value in “The Accumulation of Capital”.
