When might is right

 

Capital opposes labour just as investments oppose consumption. Capital wishes to accumulate investments as fast as possible. And labour aspires to more leisure and consumption. They compete for a share of the wealth produced, and the competition can become abusive when one side has the upper hand. The accumulation of capital may occur at such speed that it forces labour into poverty and debt. And, mostly in pre-industrial societies, consumption may leave no part for the accumulation of capital. Then there are the investments and consumption of making war, which are detrimental to investments and consumption for civilian usage. The military get their ordnance and the people make do with junk food. In this case, accumulation is paid with taxes and public debts.

Capital accumulates as the private property of the means of production (including land), or as the private ownership of loans. These separate forms of investments are complementary, because the unpaid added value of production finds a solvent demand thanks to borrowing (1). The profits of production are paid with debts, and so is interest. Profit allows the accumulation of productive investments, and interest does the same for financial investments. This means that an increasing part of borrowing goes to paying interest, and that debts grow faster than demand, faster than GDP. At some point, because of its size, the percentage increase in borrowing can no longer be maintained, so consumer demand stalls, debt defaults increase their frequency and the structure starts to fall apart.

To accumulate as capital, profit and interest must impose an ever increasing debt load on society. And when it gets unbearably heavy, there are few available solutions. Basically, they are cancelation, inflation or reimbursement. Debts can be cancelled in an authoritarian manner. This was an occasional practice in ancient Babylonia and a septennial one in Judea, and Solon decreed it in 6^th century BCE Athens, but then the ramifications of debt ownership became so complicated that this was no longer a realistic option. Inflation reduces the value of past debts, but it must be in double digits to be effective, as it was in the 1970s, and that severely disturbs commercial exchanges because of constantly changing prices. Debts can be paid back, but that supposes a serious reduction in spending with a slump in production and employment, and a fall in profits, interest and accumulation. There is no convenient resolution for debts.

The division of production into capital and labour divides society into employers and employees, amasses debts and leads to disruptive chaos. This division is artificial. It is the consequence of property rights that were instituted by violent conquest, when land became private property and labour was put in bondage. Prior to that, a territory (the means of production) was commonly owned by those who lived in it. For thousands of years, armies have plundered foreign lands and subjected the natives, but this is the result of superior force, it is not a fatality. After all, labour is future capital and capital is past labour. Their distinctiveness comes from their ownership, not from their inherent qualities. And if capital and labour are one and the same, then investments and consumption are also united as two parts of a whole. Investments sustain and increase the means of production, and consumption does the same for the work force. Their oppositions are not functional, because production, exchange and consumption are inseparable, they are due to the rights property gives to rent, interest and profit. And these in turn bring the disruption of debt accumulation. It is the private ownership of capital that is driving the world to financial collapse and destruction. But it would be foolish to pretend that changing it at short notice is possible. When the rubble settles and the dust clears, however, a future generation may give it some thought.

1. For more on the relationship between debt and profit see:

http://lelezard.blogspot.fr/2016/10/the-unbalance-of-debt-and-demand.html