Tuesday, November 03, 2009

The privilege of capital

Under capitalism labor power and wage labor are treated more or less as "true" commodities: over time the price of labor power tends towards its cost; a person who exchanges her labor will receive not what she spends — the hours she works — but rather the lower cost of producing those hours.

Capital has all the features of a commodity: It has a cost, it has use-value, it is exchanged, yet the price of capital does not tend towards its cost. Rather, the capitalist expects a permanent and continuous rate of return, a price that always far exceeds the actual cost, even when adjusted for risk (and the risk is disproportionally borne not by firmly entrenched capitalists but by those trying to enter the capitalist class).

Human labor always produces a surplus — a tiny surplus under primitive conditions, an enormous surplus under more advanced conditions — but where does this surplus go? If everything is exchanged at its underlying cost (i.e. the cost of producing labor power, the cost of producing the labor that produces the capital) then nobody would get the surplus, which is obviously nonsense.

The short answer to "Who gets the surplus?" is: the man with the gun. The longer answer is that the allocation of surplus is not at all an economic question, it's a political question. The way that human beings actually construct their society by exchanging and promulgating ideas determines how the surplus is allocated.

I'm not saying its necessarily the best way to do things, but under relatively primitive physical conditions (i.e. under human- and animal-powered peasant agriculture), it makes a certain degree of sense to concentrate the surplus into industrialization, under the control of those who can provably create successful industrial enterprises. Social constructions that privilege the owners of capital thus have a powerful "statistical gravity" — at least relative to social constructions that do not tend to concentrate capital into industrialization.

Thus the rise of capitalism goes hand-in-hand with social, political and legal constructions that allocate the surplus generated by human labor to the owners of capital.

The most important of these social, legal and political constructions under capitalism are property rights. Property rights exist as "memes" (actual ideas in peoples minds): Actual human beings believe that Bill Gates deserves his tens of billions of dollars; every day he personally creates more wealth than ten million of the world's poorest people </sarcasm>. Property rights exist as legal constructions (statutes and precedents), and support for property rights are directly and indirectly "baked into" the Constitution and our governmental institutions.

But what specific property rights exist? Or, more pointedly, what specific property rights do not exist? Most notably, a person's own time is not her own property: a person does not own her own labor; she owns and can exchange only her labor power, her ability to produce labor. The capitalist, however, owns his capital, he owns the right to expect a continuous return long after the capital has actually been paid for. Essentially, the capitalist owns the right to rent his capital to workers: he allows them to survive in exchange for the surplus their labor produces.

Of course, the capitalists do not have absolute political power; the sheer numbers of workers relative to capitalists give them some power to obtain some of their surplus. But it's important to understand that the allocation of surplus is indeed political, it depends on the power of people to promulgate social ideas in others minds and translate those social ideas into legal and political principles that are actually enforced by police, prisons and soldiers. The allocation of surplus is not a matter of "objective" physical law. More precisely, the physical laws that govern the allocation of surpluses are psychological and social; they are not independent of people's minds.

The question is not: what sort of a society must we have. The question is: what sort of a society do we want to have?


  1. Hey Larry.

    First off the near obligatory lead in which I say despite the fact you're a cantankerous bastard who despises everything I, as an academic philosopher in training, stand for in one sense, it's damn good to hear your refreshing bile filled vituperations. Seriously, that is actually meant as a compliment.

    To the real meat of my comment, though I'm going to admit while I'm cautiously supportive of Marxism in a general "haven't really read a lot about it sense", I'm a little sceptical about the arguments regarding the inherent wrongs that capital creates.

    Take this post where the major assertion deals with the equality of access to surplus. My reading of Marxism is that this inequality is built into the concept of capital; that it inevitably arises whenever we set up a system involving money. It's that claim that I'm wavering on simply because money seems very useful to me and I'm not sure if it can be changed out that easily. Far more easy would be to concentrate on for example consolidating worker power effectively and in a more philosophical way getting people to realise in a way they don't seem to now that money isn't a thing to be aimed at and that rather it's just standing in for something we have a harder time quantifying, namely our time.

    It strikes me that a useful analogy here is with science and it's relationship with maths. It's easy to forget that maths doesn't literally describe the universe. In order for maths to actually describe the universe we need to set up largely arbitrary standards like the distance of a meter which enable us to quantify say distances in a way that lets us examine it in a rigorous manner. Money is like meters in that sense and the real problem seems to be more people forgetting that and believing the money itself is real rather than a useful arbitrary measurement.

  2. it's damn good to hear your refreshing bile filled vituperations. Seriously, that is actually meant as a compliment.

    Fair enough; I'll take the comment in the spirit you made it. :-)

    My reading of Marxism is that this inequality is built into the concept of capital; that it inevitably arises whenever we set up a system involving money.

    I'm not sure that this is Marx's position; if it is, I don't believe it's correct.

    Much depends, of course, on what precisely we mean by "capital". In the most general descriptive sense, capital consists of any resources consumed prior to and intentionally in the service of additional production. The surplus of one harvest is the capital to generate the next. Of course, in describing capitalism, Marx adds additional conditions, notably that Marxian capital is used to produce commodities specifically for exchange.

    Of course, Marx predates finance capitalism and de facto and de jure fiat money, and he underestimates the power of imperialism. It fell to Lenin to begin discussion of these topics in Imperialism, the Highest Stage of Capitalism.

    While it's definitely the case that a lot of people have delusional beliefs about money (believing, for example, that we can run out of money on a large social scale) I do not believe that these delusions are the underlying cause of our problems; they seem more like symptoms.

    It's sometimes difficult, though, to separate out a delusion itself from the interests of those propagating that delusion as effective causes: after all, the people who intentionally propagate a delusion do so precisely because they expect the delusion will advance their interests, because they expect the delusion itself to have efficacy.

    I have been (more-or-lest justly) accused of eclecticism: I think we must address both the symptoms and the underlying cause. Indeed I think that while communism and socialism are relatively weak, it's best to try everything we can think of, and not worry too much about whether the other guy is addressing what we would like to address, focusing our criticism on the merits of specific ideas.


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