Sunday, February 15, 2009

The current capitalist crisis

The present depression, caused proximately by the crash of 2008, is very different from any previous capitalist crisis, including the Great Depression. There are some things in common, of course. All depressions and recessions under capitalism, including this depression, have as their underlying cause over-production and under-consumption.

All ruling-class systems tend to concentrate most consumption in the ruling class, some consumption in the middle class (those individuals providing services (e.g. medicine or military command) to the ruling class, services that require the providers' enthusiastic cooperation), and the bare minimum of consumption necessary to maintain productivity to the working class. The ruling class tends to appropriate all the surplus production from the working class, and then grants some of that surplus production to the middle class. This distribution of wealth is fairly obvious in pre-capitalist societies.

Capitalism subverts this extremal distribution to some extent, because the capitalist ruling class is composed of those who own the most productive organizations. As Marx noted, capitalism deserves credit for stripping away the bullshit of pre-capitalist societies and focusing directly and unashamedly on material production as the sine qua non of political power.

All well and good in conditions of scarcity, especially when conditions of scarcity directly affect the productivity of the working class. Under pre-capitalist economic conditions, each worker consumes the vast majority of his own productivity, leaving only a tiny surplus. Capitalism instead of consuming that surplus, uses the surplus to mechanize and industrialize production, leading to a larger surplus. Most of this larger surplus is fed back into increasing industrialization, leading to exponential growth of productivity. As industrialization increases, the surplus labor that an individual worker contributes increases: Industrialization makes workers more efficient.

Because a well-fed, well-housed, healthy and more-or-less happy worker is more productive, the working class consumes some the increased surplus. But this increased consumption is grudging and measured out to the gram. Most of the surplus labor is still appropriated by the ruling class: the bourgeoisie, the owners of capital.

But the bourgeoisie has a problem. They simply cannot themselves consume all the surplus value generated by a working class whose efficiency increases exponentially. They require some services that cannot effectively be compelled, services that require the creativity, independence and, most importantly, advanced education of the provider. In order to secure the cooperation of the middle class, the ruling class must allow them to consume some of the surplus labor of the working class. This consumption, however, is still allocated grudgingly and only as needed.

Of course the middle class also wants middle-class services, so there's a something of a trickle-down effect. But someone has to generate surplus labor for the ruling and middle classes to consume, so this trickle-down effect is self-limiting.

The previous depressions — including the Great Depression of the 1930s — were caused by the inability of the ruling and middle classes to consume the surplus labor of the working class. The problem was more-or-less ameliorated by arbitrarily allowing millions of workers into the middle class, and allowing them to consume some surplus labor. To support this expanded middle class, the ruling class had to access the surplus labor of people outside the country, necessitating imperialism.

Now that we have a global economy, though, there is no more "outside" to draw surplus labor from.

The attentive reader will note that I have talked about surplus labor, and not surplus use-value. When the amount of surplus labor is small, a small increase in surplus labor is a larger percentage increase. If a worker works 12 hours a day and produces 0.1 hour of surplus value, the production of 0.11 hours of surplus labor represents a 10% increase in the economy. If, however, a worker works 10 hours per day and produces ~9.09 hours of surplus labor, it is impossible to grow the economy by 10%: it is physically impossible for a worker to consume nothing. Note that increasing the use-value output of a worker by 10% does not grow a capitalist economy by 10%. If it takes one hour of labor time to produce 1,000 hats, then producing 1,100 hats in one hour does not grow the economy by 10%, it just reduces the value of a hat.

Why should this be so? It seems intuitively obvious, does it not, that improving output by 10% should grow the economy by 10%: efficiency is output divided by input. To understand this counter-intuitive proposition, we must go back to the beginning of capitalism.

Capitalism originated under conditions of scarcity of everything, raw materials, energy, technology, surplus labor and raw labor power. It is not enough to simply produce stuff at random; for maximum efficiency, improved production has to be targeted at those items that are most scarce. But actually determining which items are most scarce, especially accounting for complex systems of dependency, is an enormously difficult task. If cars are scarce, you can't simply produce more cars: you have to obtain the right raw materials, you have to make different parts, you have to train workers, you have to improve technology, etc.

It's such an enormously difficult task that it cannot be solved analytically or computationally without enormously powerful computers, computers we are only just now beginning to develop. So, hand-in-hand with capitalism, the "competitive market" was established. The competitive market is (more or less) a genetic algorithm to incrementally improve the efficiency of production of the system as a whole. People go into business "randomly" (i.e. without knowing analytically whether their endeavors will be successful); only those endeavors that actually are successful (more efficient than before at relieving scarcity) survive.

Even though the details of this genetic algorithm are left to individual initiative, the overall structure has to be established by social and political constructions. Most importantly, we establish by social construction how to measure the ability of a business to relieve scarcity.

The crucial scarcity for most of the beginning of capitalism was the scarcity of surplus labor. Every other scarcity (except perhaps the scarcity of raw labor power, which could be relieved only by increasing the population) paled in comparison. The capitalist economy bent all its effort to reducing the amount of socially necessary labor time necessary for the workers' survival, while still keeping the workers working as much as possible. Therefore the vast majority of the political, social and psychological constructions under capitalism measure, promote and reward the increase of surplus labor. No "conspiracy" or special teleology is necessary to explain these constructions. The constructions that produced the most surplus labor survived competition; those that produced less perished.

Social, political and psychological constructions, though, have a life of their own; they persist and exert "pressure" even when the environmental conditions under which they evolved have changed.

In the Great Depression, the environment had changed somewhat, but there was still dramatic growth in surplus labor as yet untapped. The fundamental conditions that applied to capitalism had not changed dramatically; the social, political and psychological constructions just needed a little tweaking to measure new scarcities.

Today, however, fundamentally new conditions obtain. Surplus labor is no longer scarce, and there is very little new surplus labor that can be created. (We are also up against severe externalities, especially pollution.) Capitalism has achieved success, and there's nowhere left to go but down: by the measures and social constructions of capitalism, all we can do now is reduce the middle class and transfer the surplus they consume to the ruling class... and the ruling class will then cannibalize itself until only the most dominant and ruthless remain.

The alternative is, of course, to stop measuring the value of endeavors by the increase in surplus labor they consume: to eliminate the profit motive. There is nothing sacred or essential about the profit motive. It is efficient under conditions of surplus labor scarcity, but it is simply irrelevant when surplus labor is abundant. We must measure not whether we are producing more, but whether we are producing more effectively at meeting the needs of everyone.

We no longer have a choice about whether or not to "save" capitalism. Capitalism is doomed. Our only choice today is whether capitalism will evolve into feudalism or communism.

1 comment:

  1. Excellent analysis, Bum. I would say that one of the most important externalities is the global peak in fossil fuel production that has probably just occurred. Highly concentrated free energy in the form of fossil fuels was an essential input that allowed the exponential growth of capitalist economies. The idea that some sort of "green technology" is going to come anywhere close to the energy density of fossil fuels is a fucking joke.


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