Withdrawal psychosis

Some goods and services are for consumption and some go back into production as investments. The proportion of their value is around 3:1 in developed countries. If surplus value is evenly appropriated, this means three quarters of it must be consumed and depends on public and private consumer borrowing for demand on the market. It also means that surplus value in consumption far outweighs surplus value in investments, but the part of consumption that is dependent on debt is turned into an investment by the accompanying credit. So capital accumulation that once needed the bricks, machinery and infrastructure of production and distribution, can grow unhindered in the virtual world of lending and borrowing, and the result is where things are now.

The systemic shortcoming is not surplus value as such, that has been successfully extracted from labour for millennia. The disruptions are caused by capital accumulation, by surplus value being invested instead of consumed. On the other hand, capital accumulation increases production and trickle down wealth. So the question is: can economic growth and development occur without periodic chaos and destruction, and without imperial dominion? Supposing there was no surplus value and that labour received all the value it added. The necessary demand for consumption would be solvent, but how would more and different investments be made? The popular practice of crowd funding could be a solution, where the community finances the starting up or expansion of production, and once underway the produce benefits the community with jobs and wealth. The communal financing and supervision of education occurs in many countries. The community could just as well finance enterprise, and have a say on what is produced and how.

Taking the produce of someone else’s labour is of doubtful morality, just as private property of the means of production is a theft from the community. Lending the produce back at interest takes that much more. How can that be qualified? And yet it is all enshrined by laws and enforced by armed might. Changing those structures is not worth considering, as they permeate every aspect of society. But, as they totter on the brink, giving them a push will be hard to resist. When debts stop growing, so does demand for surplus value. When borrowing shrinks, so does demand for surplus value. Less borrowing acerbates price competition. Profit margins and costs are cut, businesses fail, and governments search desperately for new sources of liquidity, a few drops of fuel to keep the machine going another month, another year.

The system seizes up, not because capital grows faster than the labour it employs, but because demand for surplus value depends on borrowing, and the necessary expansion of credit fails at term. Borrowers are unable or unwilling to take on more debt, and the existing debt looms massive and threatening, unable to expand or contract. To realise the value of unpaid production, capital accumulation needs the tributes of empire and expanding debts. Presently, debts are blocked by their sheer quantity. Increasing them – the sum of household, city, state and federal debts – by even a small percentage implies numbers too big to be envisaged. And imperial tributes are being encroached by competition from nouveaux riches nations (basically China). This is a very sinister combination because capital is addicted to profit and can go berserk when deprived of it. The hundredth and the seventieth anniversaries, the beginning and the end of capital’s precedent fit of madness have been commemorated on time to announce upheavals of even grander dimensions.

Breaking the spell

After visiting the United States in the early 1830s, Alexis de Tocqueville managed to write his celebrated thesis on American democracy with hardly a mention of slavery. That subject was the task of his travelling companion Gustave de Beaumont. But, all the same, how could his political analysis ignore a significant part of the population that had no rights whatsoever, or did that lack render American slaves invisible? In her book “On Revolution” Hannah Arendt also dodged the question of slavery. Comparing events in America and France at the end of the 18^th century, she noted that revolutionaries in Philadelphia were preoccupied by the institutions of government, whereas those in Paris were obsessed by social justice. The urban poor and the mass of indigent French peasants had to integrate the new republic and become citizens. Equality was the revolution’s slogan. In America, there was no necessary dispossession of the rich, as land could be taken from the natives by force or trickery, and the indigent masses had the status of chattel, whose emancipation was not under consideration at the time and is still incomplete two hundred odd years later. This meant that Franklin, Madison, Jefferson and Co. could concentrate on balancing power between the executive and the legislative, and insuring that the judiciary was independent. And, a few decades later, Tocqueville could laud their success by abstracting the people of native and African parentage. So could Arendt in 1960, just as civil rights and the repeal of segregation were being demanded. (1)

Comparing the American and French revolutions, Arendt misses another crucial point. In the first case a colonial population, whose isolation had imposed local forms of government, broke away from the metropolis. They had vast virgin territories where there was everything to build and nothing to destroy, except nature and natives. The Founding Fathers could construct a revolutionary constitution because they were writing on a blank page. In France secession from the metropolis was not an option. To break away from its power, it had to be destroyed. But the federalist movement that had animated the beginning was quickly swept aside. Paris continued to rule the country and tyrants ruled Paris. The American revolution brought independence from colonial rule, and was to some extent a model for independence in other colonies. It instituted a new form of government by representation but it was not a social revolution, slaves remained slaves. The French revolution broke the remaining feudal bonds and privileges, but did not break the power-lines that all led to the capital. And no subsequent metropolitan revolution has been willing or able to act differently.

The monarchs of Europe had centralised absolute power around their persons, their palaces and their cities. And revolutions did not dismantle those webs of communication and subordination. Power remained in the hands of a few, and wealth followed power. So France is still ruled by a Parisian political elite with a budget of more than half the nation’s income. It is a co-optative organisation that draws new members from the very selective ENA (national school of administration), and its leadership alternates between centre-right and centre-left. Centralised power imposed uniformity on all those under its control. But it stopped at borders and made the nations of Europe vie to distinguish themselves, because “they” are not “us”. Chauvinism and jingoism nurtured xenophobia, which led to outright racism and to the homicidal orgies of the 20^th century.

The thirteen American colonies had a monarch across the ocean and he stayed over there. Having cut their ties with central control, they were keen to avoid a new one. The states of the Union had their own legislative and executive powers. But the Southern states had developed by bringing in bonded labour, from Britain and then from Africa, whereas in the Northern states most of the population had arrived free. Along with geology and climate, this meant the two halves were very different. The South had a plantation economy with large scale intensive culture of cash crops for the export market. The North had family farming and urban industry. Independence had not resolved this divide and civil war merely submitted the Southern states to Northern rule, while the differences linger on.

The French revolution could not expel the centralised construction of power, and its social ambitions came to nothing. The American revolution could not end the use of bonded labour, and its political ambitions came to nothing. Today presidential executive power, preponderant wealth and social/racial discriminations are barely distinguishable from one country to the other. Both revolutions were a failure because freedom and equality cannot prevail one without the other. And bringing them together needs a strong dose of fraternal sentiment and joie de vivre, which cannot be bought nor obtained at gun point. Humans have been mystified by freedom without equality or by equality without freedom for the past two centuries. It might be time to break the spell.

1. “We find evidence for majority freedom and minority oppression in the fact that, even while the early settlers were proclaiming their freedom, they were deliberately and systematically depriving Africans of their freedom. […] The descendants of that small company of original settlers of this land are not among the common people of today, they have become a small ruling class in control of a worldwide economic system. The Constitution set up by their ancestors to serve the people no longer does so, for the people have changed. The people of the eighteenth century have become the ruling class of the twentieth century, and the people of the twentieth century are the descendants of the slaves and dispossessed of the eighteenth century. The Constitution set up to serve the people of the eighteenth century now serves the ruling class of the twentieth century, and the people of today stand waiting for a foundation of their own life, liberty, and pursuit of happiness.”

Huey P. Newton, To the Revolutionary People’s Constitutional Convention, Philadelphia September 5, 1970, in To Die for the People, City Lights Books, 2009, p. 159-160