Dear Doug,
The debate on imperialism continues to percolate on our list. If you think the following intervention of mine is worth circulating on yours, I'd appreciate feedback.
Thanks
Loren
Thanks to Mike, Rakesh and Paul for re-igniting our imperialism debate to kick off 2007, which promises to be quite a year.
Before I get started, I would just like to say that if primitive accumulation" is too specifically linked to the initial separation of producers from the means of production in the 15th-17th century, then let's develop another term to describe the forms of capitalist loot to which I referred in my December posts. In addition to Luxemburg, I was influenced by the left opposition theorist Preobrazhensky's (in The New Economics) argument for "socialist primitive accumulation" in the 1920's: organizing a managed decline of the Russian peasantry through selling industrial goods dear and buying agricultural goods cheap. (Let's not get distracted by the unhappy outcome of that strategy.) I said and I'll say again that when capital interacts with nature and petty producers outside the wage-labor relationship, and when it pushes wages and capital expenditure below reproductive costs inside that relationship, it is violating the "exchange of equivalents" which Marx saw as the "heuristic" framework for separating capitalist profits and accumulation from swindle, monopoly, selling goods above their value, and other wrong-headed explanations of profit. And if we don't want to call that NON- REPRODUCTION primitive accumulation, fine, but let's first admit that such phenomena exist, and (since the 1970's) are increasingly important, and moreover indispensable to the system.
I have invoked the good name of Rosa Luxemburg as the theoretical framework closest to my interpretation of Marx primarily because of her focus on these aspects, inside and outside the pure capitalist system, of non-reproduction, which I don't find in Grossmann or Mattick. But in fact my framework differs somewhat from hers, and this debate is a good place to air it.
Mike says I don't explain WHY capitalism needs permanent primitive accumulation (or some similar term). OK, here goes.
Let's review what I consider some basics, which are not always self- evident in some of the interventions in this debate.
First, vol. I and most of vol. II of Capital are a phenomenology of a closed capitalist system in which there are only capitalists and wage laborers, and most of the focus is on the single firm.
When, in the last section of vol. II, Marx shifts to the "total social capital" and expanded reproduction, he is moving beyond that heuristic model. That demarcation of the interraction of the "pure system" (capitalists and wage laborers) with, on one hand, the vast modern population of unproductive consumers who consume surplus value and do not produce it, i.e. the FIRE (finance- insurance- real estate) sector, state civil servants, managerial strata, the military sector, the law enforcement/ prison sector and, on the other hand, with nature and with petty producers (today found primarily in the Third World) is fundamental for clarity. None of the latter populations are present in vols. I and II, except for some interesting asides and the important chapters in the middle of vol. II dealing with insurance, bookkeeping and other "faux frais" of production. Capital is a circuit (in vols. I and II, with simple reproduction) and is a spiral in expanded reproduction, and a commodity, whether from Dept. I or II (and in what department do we put a tank or a guided missile?) which does not complete the circuit, i.e. is not productively consumed in Dept. I (new means of production) or Dept. II (new labor power) ceases to be capital.
Rosa Luxemburg also had the great merit of emphasizing capitalism as a transitional mode of production between European feudalism and socialism. This may seem a truism, but it is much more than that. In her survey of the rise and fall of political economy from the Physiocrats to the Ricardian school, she points out that only a socialist (i.e. Marx) could solve the problem of the source of profit and of expanded reproduction. To wit: capitalism must be seen as a necessarily incomplete, transient mode of production, which lives in part off the pre-capitalist modes it looted and continues to loot, and whose full crisis is only visible to someone seeing "beyond" it. Capitalism is therefore a system in which no practical viewpoint, either of an individual capitalist or of the total social capital, or finally of labor power as a commodity (the class-in-itself) can be concretely universal. All viewpoints on capital "within" the system are "negation of the negation" viewpoints, and only the perspective that looks prior to and beyond capitalism can be a "self-subsisting positive" with a universal practical (class for itself) program. From the Italian pirates of the 11th century to the slave labor in the Dominican Republic or Brazil today, capitalism has never stopped its "looting" of labor power and resources "outside" the closed (vols. I and II) system of exchange of equivalents.
Next, and this is fundamental, capital does not appear to capitalists as value-valorizing-itself or a social relationship of production; it appears to them as titles to wealth, namely to profit, interest and ground rent, whose value is determined over the course of a business cycle not by the fine points of the opening chapters of vol. III but as a capitalization of anticipated future cash flow. Marx of course only introduces such titles to wealth--stocks, bonds, leases--after first presenting the heuristic pure system, setting it in motion in the final chapters of vol. II (expanded reproduction), and then discussing the determination of price and the rate of profit in the opening sections of vol. III. Capital as capitalists know it, up to and including all the new "financial products" of the past 25 years, are "liens" on the total cash flow representing, ultimately, the total surplus value produced in the "pure system" AND supplemented by LOOT (non-reproductive exchange) outside and eventually inside the system. We know very well that over long periods of a capitalist cycle these "liens" can depart widely from the price/value determinations that ultimately regulate the cash flow on which they draw, until they are deflated in the periodic crash.
But the source of that total profit/ total surplus value is an empirical question, not to be settled by abstract resort to different takes on the transformation problem or possible flaws in the reproduction schema of vol. II. Are capital plant (means of production, infrastructure) and labor power being reproduced or not? Such a question immediately takes us from the realm of pure theory (however fundamental) to the real concrete historical operation of the system.
The relationship between the value of the myriad capitalist titles to wealth and the surplus value and loot on which they draw is, of course, not an arbitrary one.
Let's go back to the pure system, only capitalists and workers, no banks, no other distorting "titles to wealth". Let us further imagine that the entire world is capitalist and that everything exchanges at its value. In such a world, over time, one would expect to see the rising C/V ratio express itself "algebraically" in a falling rate of profit. Capital ultimately destroys itself, becomes a barrier to itself, by pushing the productive forces to a point where the socially necessary time of reproduction, based on the reproductive value of labor power, can no longer serve as the "numeraire" for exchange among capitals. Capital, as we know, requires living labor to exist, and for labor power's value to be the numeraire, and it simultaneously, through innovation, expels living labor from the production process and undermines the numeraire. That is the pure model's fundamental contradiction.
That is the pure model. It strikes me that the interventions on this list which dwell on Luxemburg vs. Grossmann and Mattick are tilting at windmills to the extent that they focus on the theoretical operation of the pure system and ignore the above considerations.
Because, of course, the pure model of capitalism has never existed and never will exist. As we know, titles to wealth (profit, interest, ground rent), central banks regulating the markets of such titles, and a state enforcing such titles all pre-existed the full-blown triumph of capitalism, i.e. the transformation of means of production and labor power into commodities as the dominant source of wealth.
Once we add titles to wealth to the pure model, as Marx does in the middle and concluding sections of vol. III, we see a different picture. It is precisely because of these titles and because of capitalism's ability to loot non-capitalist populations and nature that we do NOT see any algebraic relationship, over long cycles, between the C/V ratio and the capitalist rate of profit. Such titles tend to correspond to the underlying value mainly at the end of one cycle (through deflation) and the beginning of the next one. The deflationary crisis acts as a form of "retroactive planning" that re- equilibrates the capitalists' titles to wealth with the underlying rate of profit generated within the pure system. (What we have been living through, particularly since the early 1970's, has been a huge operation of credit pyramiding, managed by the world's central banks, aimed at PRESERVING the paper value of existing titles to wealth, and a significant transfer of C and V to S to help prop up those titles. That latter phenomenon is what I call the "self-cannibilization" of the system when the "primitive accumulation"mechanism turns inward, i.e. non-reproduction.)
Rosa Luxemburg, in The Accumulation of Capital, used the examples of the looting of the 19th century American farmer through bank loans, the Anglo-French seizure of the Egyptian cotton crop as collateral against loans, and the locust-like depradations of Africa, India and China as examples of ongoing primitive accumulation. For her, although she stresses the importance of the international system of loans in most of these cases, it was a question of the sale of real goods to the non-capitalist producers that was foremost, in exchange for the increment of loot that came back in the wealth produced in far less productive regions of the world.
Luxemburg did not live to see either the post-1933 American or German creations of quasi-permanent military production, supported by the taxation of the working class, and still less the post-1944 Bretton Woods system, in which the U.S. financial markets and the U.S. state acquired the ability to tap wealth from every part of the capitalist world (until recently, minus Russia and China) through dollar seigneurage.
Thus I would "correct" Luxemburg to the extent that the external relations of the "pure system" are not so much about the sale of a surplus product on the model of the sale of industrial goods to independent farmers or peasants (though that of course also takes place) as the more important circulation of an ever-increasing fictitious totem (fictitious capital) through international loans in exchange for whatever loot can be acquired from petty producers' labor power or from nature. I argue that this fictitious totem is initially lawfully generated WITHIN the pure system, analogous to Luxemburg's unsaleable surplus product, and is discussed in Marx's middle chapters of vol. III. This is the NECESSARY, internally generated reason that the system requires permanent primitive accumulation: the answer to Mike's question.
As Luxemburg says (I paraphrase from memory) capitalism's problem is its drive to universality (universal exchange of equivalents) and its inability, because of the heteronomy of the system, to become universal.
Back to the closed system, to which we have added capitalist titles to wealth, capitalizations of an anticipated cash flow. These titles of course go together with a capital market, a central bank and a state enforcing them, and ultimately a state debt (again, all vol. III phenomena)
Because capitalism is an anarchic system, (a "heteronomic" system in Kant's sense) a practical perspective on the total social capital which could keep these capitalizations (most immediately, stocks) rigorously in line with the underlying (current reproductive cost) value of the assets on whose cash flow they depend is a chimera. Increases in labor productivity, particularly those which ripple quickly through the whole system, such as canal and railroad construction in the 19th century, or the air, shipping and communications innovations of recent decades, are not necessarily immediately registered in the capitalized value of all assets. Over time, such innovations create rather a fictitious increment "f" of overvalued capitalizations which must be periodically purged in a deflationary collapse. The actions of the central bank in regulating credit markets aim at preserving at least some of the capitalized titles to wealth from the devalorization (deflation) demanded by increased labor productivity.
Capital, as we know, is the fundamental movement M-C-M': money capital (M) converted into the commodity form in production (C) with the aim of its return as expanded money (M'). But, as we have said, individual capitalists know this process only as titles to wealth, "liens" on the cash flow generated from such investment. The total profit on which such titles depend is supplemented, through primitive accumulation, outside or ultimately inside the pure system. The credit markets, the central bank and the state debt are all designed to "manage" the increasingly disparity between total titles to wealth— the fictitious totem—and their pure system value as long as possible.
I would argue, therefore, that this internally-generated, "pure system" ball of hot air, FICTITIOUS CAPITAL (fictitious relative to the real current reproductive value of assets) is, more than real goods, what is "exported" in exchange for loot. As long as sufficient loot compensates for the fictitous gap, accumulation can continue. This is my minor disagreement with Luxemburg.
The fictitious totem in the contemporary world is first of all the huge ($3-4 trillion, at current, conservative) estimates) dollar "overhang", the net U.S. external debt ($11-12 trillion held abroad, minus $8 trillion in US assets overseas), held mainly in central banks. Everything, from a capitalist viewpoint, must be done to prevent its deflation. The U.S. government is busy depreciating it, yet its foreign holders fret at the erosion of their holdings. They relend the money to the U.S. government and U.S. financial markets, making possible more domestic U.S. credit, more consumption, and more imports from America's creditors.
To be continued. (!)
Loren Goldner lrgoldner at yahoo.com