A transnational common weal

Marx had pointed out that the concentration of capital would facilitate its appropriation by a proletarian dictatorship. And Rosa Luxemburg criticised Lenin’s injunction to “Go and take the land for yourselves”, arguing that it “simply led to the sudden, chaotic conversion of large landownership into peasant landownership. What was created is not social property but a new form of private property, namely, the breaking up of large estates into medium and small estates, or relatively advanced large units of production into primitive small units which operate with technical means from the time of the Pharaohs.” (1)

The idea that capitalism is just a prelude to socialism comes from historic materialism. Humanity is on the path from slavery to freedom, and salaried bondage is the intermediary stage. In fact, the only certainty about the future of a species is its final extinction. Imagining that humans can achieve liberty, equality, fraternity and happiness before that fatal outcome is just a hypothesis. Having lost the common freedom of their wild origins, can humans regain it? If the power of master over servant is to be abolished, then its foundation on the private property of the means of production must also disappear. Both Marx and Luxemburg considered that big concentrations of private capital were the most suitable for a passage to communal/social property. Today’s leviathans are transnational corporations, so their social property would have to be global.

The industrial revolution greatly accentuated the division of labour, but capital brought together multitudes for a common production. Labour was divided and ruled, while capital acquired the planet’s continents and oceans. Capital accumulates over generations, and its property concentrates as big fish make alliances and swallow small ones. The actual concentration of wealth – it is still going on – has not been seen for a century, but the quantities of wealth have multiplied faster than the population and the disparity between the top and the bottom of the property pyramid has increased accordingly. Many of the poorest people in America (South of Rio Bravo), Africa and Asia have seen their living conditions worsen over the past fifty years, and not a few have been killed or forced into exile by drug, agro and oil capitalism (2). Last time it all led to total war, widespread destruction and death, forced redistribution and a more level wealth hierarchy. This time total war would mean total nuclear destruction, so that civil war offers the only alternative. Events in Syria (Iraq, Ukraine, etc.) may be just a foretaste of global events to come. The capitalist phoenix must burn to ashes before it can be born again.

Things could be resolved by expropriating and socialising the ownership of the means of production, and by writing off debts. But that is contrary to the interests of the actual owners, and they have the power to decide what is said and what is done. And why go to so much trouble, when it can be settled with barrel bombs, multiple-rocket launchers and armed drones? Pasolini’s film “Salo”, inspired by Sade’s “120 Days”, shows how totalitarianism takes over incrementally, how tormentors and victims come to accept their roles and, as the level of horror rises, how the tormentors in turn become victims. The atrocities perpetrated abroad are distant and seem contextually excusable or of no concern. They may turn out to be the hors-d’oeuvres for a homeland feast. Already academic and theological spokespersons are bewailing the ingrained propensity of the species for violence, while ignoring its psychotic obsession with possessions and the social organisation that encourages this “disgusting morbidity” (3). The illness is not a resurgence of primeval inhumanity. It is the result of crushing the many to enrich the few, of putting everything up for sale, of using death to dissuade dissent. And wiping out a city, or bombing a nation back into the Stone Age, is the ultimate barbarity of extermination. The inhuman beast is not a scruffy bearded gunman in a blood washed town somewhere to the South, it is the tailor-made executive in a high-rise office somewhere to the North.

1. https://www.marxists.org/archive/luxemburg/1918/russian-revolution/ch02.htm 
2. Drug War Capitalism by Dawn Paley, AK Press, 2014

3. In 1930 Keynes had this to say on the subject: “The love of money as a possession – as distinguished from the love of money as a means to the enjoyments and realities of life – will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease.”

Essays in persuasion, V, 2, Economic possibilities for our grandchildren, Classic House Books, 2009, p. 199

A debt quagmire

Adam Smith was one of the first to point out that the Earth’s natural bounty had to be transformed by human activity to acquire use value, that nature as such was mostly useless. As for exchange value, it was the result of rareness and desirability, of supply and demand. These logical observations opposed the Physiocrats (Quesnay, Turgot, etc.) who equated all wealth with agricultural produce. They marked the moment when the power of industry replaced the power of landowners, with bankers having to hover in between. Later, Smith’s reasoning led Marx to study the due paid by labour to property. Setting aside its morality and its flagrant abuses, Marx realised that this very ancient practice was becoming increasingly problematic. In the past property was land (and slaves). Excluding conquests, its ownership was fairly stable and, as the investment opportunities were few and risky, mostly in trade and overseas enterprises, the incomes it generated were consumed by the owner and his retinue. Machines had changed that equilibrium by multiplying productivity and investment possibilities. Property owners were able to invest their incomes and increase their property. Capital that previously could only be increased by foreign conquest began to grow in the form of factories, railways, canals, ports and all their machines. But this unlimited expansion would stop periodically, regress and then start again as vigorously as before. Capitalist accumulation had a fundamental fault, but Marx was unable to fathom its intricacies and, distracted by the politics of the First International, held to his idea of a falling rate of profit.

The owners of capital take a share of the value produced by labour. Surplus value, which includes rent, interest and dividends, starts off as a part of production. To be invested and accumulated, surplus value must first be exchanged for money on the market. But, as Rosa Luxemburg explained after a critical study of previous writings on the subject (1), it is the unpaid produce of labour and there is no equivalent solvent demand for it. How can the surplus value of all production – whether for consumption or investment – be transformed into investments? Those producing investments could exchange their surplus produce among themselves, but what of the surplus consumption? Rosa Luxemburg concluded that imperialist exploitation was the explanation and that surplus consumption from the metropolis went out to the colonies to supply the colonial administration, while its value came back as investments, as raw materials or as ownership of expropriated land. And with independence, governments changed without changing those asymmetrical exchanges. Surplus consumption can be transformed into investments by foreign trade but, as all countries want to do it, the possibilities are limited (2). On the home market, surplus value in general is exchanged for credit, which must grow alongside surplus value to maintain demand.

As surplus value is the unpaid part of production, it depends on credit for demand. And, because a part of surplus value is destined to be an investment and the other part is destined to be consumed, the credit that fuels demand does not have the same progression in both cases. Invested credit grows at about the same rate as investments and at a lesser rate if there is inflation. Consumed credit increases much faster than consumption, though its rate of growth is also reduced by inflation. But the accumulation of credit cannot continue indefinitely in either case can. Many economic statisticians have studied business cycles and several have given their names to a certain periodicity. In round numbers these cycles are: Kitchin (1861-1932) for three years; Juglar (1818-1905) for ten years; Kuznets (1901-1985) for twenty years; Kondratieff (1892-1930) for sixty years. Schumpeter (1883-1950) attempted to synthesise previous studies, but his conclusions did not explain the regularity of the various cyclical periods. He and the others overlooked the possibility that the perfect time scales of credit could cause business cycles, preferring the obviously haphazard evolution of technological innovation, or (Kitchin) a glut in production. Borrowing is obviously cyclical, as it always comprises a fixed term. As borrowing increases so do the paying back and the lending out again. Consumer credit in particular, whether for governments or households, has to grow very fast at each term to maintain a regular increase in consumption. In practice the acceleration in borrowing is rarely sufficient, and each term puts a brake on consumer demand. This also holds for investments, but neither the progression at term nor the downturn in demand is as strong, except when investment terms and consumer terms coincide. And the wide variety of durations for debts, days to decades, means the increasing debt of one term will compensate a reduction elsewhere. However, occasionally several cycles will cumulate their growth or their stagnation/recession.

High capital gains and low inflation are the ideal combination for a borrowing bubble. It occurs when increasing productivity benefits capital and excludes labour. Profits rise while wages stagnate and keep inflation low. So borrowing grows rapidly, the more so if several borrowing cycles are in an expanding phase. The borrowing balloon that should have burst in 2008 was merely deflated by bailouts and quantitative easing. It is still there and still adds up to several years of future incomes and, even at very low interest, it still takes a significant fraction of yearly income. Having borrowed to pay for surplus value, households and governments must borrow more to pay interest on their previous borrowing, thereby increasing the surplus value that goes to banks. In this context it is difficult to imagine a surge in demand, and the actual upturn is the probable consequence of the price war being fought by off and online retailers. Cutting prices without gains in productivity means a reduction of surplus value. Selling more at a reduced price can compensate the reduction, but in such a competition only a few can win and the losers go out of business. The world’s leaders are grasping at straws as 99% of humanity sinks into a quagmire of debt. And, following their demagogic instinct, they are using foreign wars and homeland paranoia to distract public opinion from the growing chaos of last stand capitalist exploitation. How far will they go as the situation worsens? Will the 99% realise that they are held only by written words and numbers that can be written differently, and that united they have the power to decide? Historic precedents answer negatively, but the speed and quantity of circulating information have increased so fast these past decades that previous experiences may be obsolescent. Fooling all the people some of the time is becoming more and more difficult.

1. The Accumulation of Capital, sections I and III:

http://www.marxists.org/archive/luxemburg/1913/accumulation-capital/

2. All industrial countries have done it, and China is just the latest example of capital accumulation by importing investments and exporting consumption.

Europe's model

The nation-state originated in Europe, where it progressed alongside the absolutism of kings and was then idealised by the republics that succeeded them. However, the kingdoms of Europe were the resulting conglomerates of wars and marriages, and their populations were disparate in customs and dictions, and in their laws, privileges and religious practices. The centralisation of power around the monarch during the Renaissance set about unifying language, religion, law and taxes within the realm. As a consequence most of the period was ravaged by civil and foreign wars.

The monarchs of the Enlightenment increased their power to absolute tyranny and were overthrown by the tax-paying middle classes. But monarchs could rule over a diversity of subjects, whereas republics demanded uniformity. (This was probably linked to printing and increasing literacy, and McLuhan has pointed to similarities with the spread of reading and writing in ancient Athens.) Citizens were equals and, as far as possible, interchangeable, dynastic quarrels were transformed into national confrontations and the king’s mercenary battalions were replaced by a people’s army. The nation-kingdom with its patchwork of subjections was melted into the standard alloy of the nation-state. The same primary school indoctrination for all and general conscription destroyed cultural diversity and replaced it by a uniform monoculture. To impose itself, the monoculture claimed to be universal and superior to all other cultures, which was a national necessity but brought conflict with neighbouring nations. To be the best monoculture within the borders, it had to be the best everywhere. This plunged Europe into new wars that became ever more ferocious and destructive, with advancing technology and with the intent of monocultural supremacy.

The nation-states of Europe seem appeased, but the monocultural mind-sets imposed on past generations are still active and their influence seems to be undergoing a revival. This could be the nostalgic last stand of a moribund notion, but it could as well be the beginning of a new surge in monocultural conflicts. After all, nations remain the only recognised geographical delimitations of the Earth’s surface and its inhabitants. The nation-state model was imposed on people everywhere, and the arbitrary colonial frontiers divided sameness and assembled irreconcilable differences. And ever since the end of colonial rule, the new nations have been struggling to construct their own particular monocultures. From the start, nation building was about illuminating differences, generally by violent means. And yet, forgetting even their very recent past – the partition of Yugoslavia two decades ago – Europeans stand aghast as Africa, the Middle East and South Asia are engulfed by religious and secular pandemonium, by the programmed barbarity of constructing a national monoculture. But as austerity bites deeper, Europe is being confronted with its own nationalist demons that had been smouldering under the ash of past total wars. As the birth place and the propagator of the nation-state, Europe has been unable to change this fatal model into something less conflictive. An incapacity that is on the verge of breaking up the Union, as national populism pushes governments towards more quarrelsome confrontations.

The nation-state, separate from its neighbours, unique and superior, and wishing to impose its monoculture everywhere, is a model based on absolutism, perpetual war and the control of wealth. Can this really be an ideal for the 21^st century?