Last lap

Capital is accumulated by investing incomes instead of consuming them. On a national scale this means that more labour is employed in building infrastructures and making means of production, while the labour producing consumer goods and services regresses in proportion to the total labour force. More infrastructures and more means of production increase productivity down the chain to consumer goods and services, so that wages go up, or prices go down, to allow the increased supply to find a solvent demand. During the investment phase, capital accumulates by increasing its share of the value produced. When the consumption phase sets in, labour consumes by increasing its share of the value produced. This transfer is necessary for a solvent demand, but capital opposes it and substitutes credit for income. To be valid, investments need to be realised, and their final realisation is consumption. Capital needs consumption but does not want to pay for it. As the supply of consumption grows (some of it may be exchanged for investments abroad), demand is sustained by credit instead of wages.

Capital invests incomes and consumes with credit. But consumer credit, both private and public, piles up and reaches a stage where it is just paying interest and no longer consuming. At this point, capital is no longer increasing infrastructure and means of production. It is just increasing the value of existing infrastructure and means of production. This is when subprime lending and market bubbles become the norm. The problem is that a few get very large incomes and all the rest are deep in debt. Some earn more than they spend, and most spend more than they earn. But it is not about savers profligates, it is due to the way value is shared between capital’s profits and labour’s wages, and the way the property of capital is concentrated in just a few hands. Some can spend lavishly and still save income for investments, whereas many live frugally and still borrow to make ends meet.

Supposing incomes could only be consumed, and that extra investments were financed with credit granted by the community who would thereby own them. This is how infrastructure is (was) publically funded. Revenue would no longer be the result of rent, interest, profit, dividends, patents or copyrights. It would come from goods produced and services rendered. This would not signify equality, because supply cannot always keep up with demand and rareness increases exchange value. Moreover, muscular strength, manual agility and mental ability offer a wide spectrum of possibilities for excellence, above average remuneration and preying on the labour of others. However, the common property of capital would limit such abuse, and might put the value of general esteem above that of monetary wealth. Wanting more than others could be perceived as pathological. There is, of course, not the slightest chance that this daydream could become reality. Ninety years ago Keynes imagined today’s world having such a super abundance of capital that “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.” (1) That super abundance has come about, but it either inflates market bubbles before dissipating in thin air, or is used to make ordnance for perpetual global war, and having more than everyone brings superstar status, not men in white with a strait-jacket. Super abundance just demands more and more again, and this escalation is bringing about the total collapse of the planet’s ecosystem on which all life depends. No number of trillions will stop hurricanes, or rising sea levels, or drought, nor bring back from extinction all the dying species.

Profit capitalism is out on a limb. It is unable to turn back, and the weight of debt is making the wood crack louder and louder. It seems to be competing with the planet in a race to annihilation. Will global finance default before the weather goes wild and food gets scarce, or will climate and pollution bring down the leveraged mountain of credit and expose money’s lack of intrinsic value? That race is running its final lap.

1. Economic Possibilities for our Grandchildren (1930)

Marxists Internet Archive

https://www.marxists.org/reference/subject/economics/keynes/1930/our-grandchildren.htm