saving capitalism

I finally got around to watching Robert Reich's Saving Capitalism tonight, and it wasn't as bad as I thought it'd be. For starters, I have respect for Reich as a person. I think he's smart, genuine, and I truly believe that his heart is in the right place. He truly seems to want everyone to benefit from the system. And in this film, based upon his book by the same name, he sets out to make the case that, yes, capitalism is broken, but it can be fixed—that all we have to do is change the rules and clean up leadership in Washington DC through our collective activism. But as admirable as his motivations may be, I think both his perspective and his solution falls short of what's needed to curb capital accumulation and structural inequality.

For starters, the current statistics concerning wealth inequality in the US are pretty shocking to many. As it stands, the top 1% alone controls about 40% of the total wealth of the US, while the bottom 80% only has 7% of that wealth shared between them, statistics that are a lot worse than people think they are. But the statistics themselves aren't the full story, and I think it's worth digging deeper to find out what that story is. I'm sure some will disagree with my particular answers, but the two main questions that I think need to be asked are: 'Why is there so much disparity when it comes to wealth distribution?' and 'Where does all that wealth come from in the first place?'

In answer to the latter, I think we need to begin by taking a broader look at history and the evolution of capitalism, which to its credit has succeeded in greatly increasing both wealth and the efficiency of commodity production. For starters, I think it's worth noting that much of the wealth we're talking about has its roots in theft and violence, i.e., the primitive accumulation of capital in the form of colonialism and imperialism. The initial 'start up' capital for many early capitalists and industrializing nations came from the expropriation and consumption of the labour and resources of other places, particularly large parts of Africa, the Americas, and Asia by the West. And here I'm talking about everything from land grabs to slave labour, with literal black bodies acting as collateral in the first bond markets. (Capitalism also historically arose in conjunction with patriarchy, so more men tend to own and control land and shares of capital, fueling gender inequality as well as economic inequality, racial inequality, etc.)

Today, we do similar things via more civilized methods such as sweatshops and the IMF, which forces countries experiencing economic instability to adopt certain favourable policies (to the US and Europe, at least) in exchange for financial loans, etc.

Wealth is also created via the capitalist mode of commodity production, which is why capitalism was a revolutionary mode of production that eventually supplanted feudalism. The logic of capitalism spurs both the production of surplus value (which is where profits come from) and constant evolutions in technology, and this has both positive and negative consequences. One positive is that capitalism has revolutionized production methods, and the drive for the accumulation of profit constantly pushes the development of new and labour-saving technologies and increases in wealth creation. A negative is that the internal contradictions in the capitalist mode of production create crises that cause economic instability, and capitalist social relations are a major source of inequality, disproportionately accumulating the lion's share of that increased wealth into the hands of capitalists rather than average workers.

I'd concede that some of the wealth inequality we're currently experiencing (at least in the West) is due to policies and laws that have weakened unions, eroded the minimum wage to the lowest level (in real terms) since the 1950s, put Wall Street’s toxic innovations ahead of workers, etc. Nevertheless, I'd strongly argue that a great deal of this inequality is a direct result of the way capitalism functions and the social forms (including the state) that that functioning engenders, with capitalism conditioning many of those policies and laws. I think our politics have always been 'sick' in the sense that they've always been dominated by the interests of a privileged class of wealthy, ruling class elites — whether it's been the white, male landowners of the late 1700s or the 1% of today — and their ownership of the means of production and finance give them the means to appropriate the lion's share of wealth, whether created or simply expropriated from elsewhere (i.e., accumulation by dispossession), and keep its control out of the hands of the vast majority of working people.

This seed of inequality, however, is easily obscured, as are capitalist social relations and the origin of profit, which from the Marxist perspective arises out of the division of the workday into necessary labour and surplus labour. But since all labour appears as paid labour, it's easy for the capitalist apologist to argue that capital is the source of value (essentially separating capital as an independent and autonomous factor of production) despite the actual complexity of capitalist production and distribution, completely obscuring labour's contribution in the creation and realization of profit and the lopsidedness of the actual relations between capital and labour.

But as David Harvey illustrates in Limits to Capital, part of Marx's critique in Capital details precisely how the contradictions inherent within the capitalist mode of production produces a fundamental contradiction between the equality presupposed by exchange and the inequality via the exploitation of labour required to gain profit. So from the very onset, the kernel of inequality is already present within our political-economic system. And that inequality is the basis for much of the struggle between capital and labour and how surplus value is distributed.

On the one hand, workers are, in principle, "free to sell their labour under whatever conditions of contract (for whatever length of working day) they please" (30), which highlights the equality, freedom, and individuality characterizing exchange relations, recalling both Aristotle's argument that "exchange cannot take place without equality" and Marx's argument that "the circulation of commodities requires the exchange of equivalents" (19). However, workers must also compete against one another in the labour market, where capitalists who are forced to internalize the profit-seeking motive due to the coercive laws of competition purchase workers' labour-time with the sole purpose being the accumulation of profit (accumulation for accumulation's sake), and who more often than not dictate the duration and conditions of labour workers must accept or else risk privation while seeking something better, putting workers at a disadvantage on an individual level. (28-30) (One of the main reasons I favour some kind of universal basic income is that it has the potential to empower workers, decommodify labour-power by helping free workers from absolute dependence on wage labour for subsistence, and enlarge the nonmarket social economy.)

The expansion of value in this process occurs via the production of surplus value by capitalists who employ wage labour, a social relation in which the worker — who gives up their rights to control over the production process, the product of their labour, and the added value incorporated into and created by the production process — receives the value of their labour power and nothing else (42-3). And this is important because this is the point where the surplus value created in the labour process is appropriated by capitalists who are conditioned to employ wage labour with the primary objective being the accumulation of that additional value/profit, i.e., how they transform money (M) into commodities (C) and then back into money plus a surplus (M + ∆M), the added value being the result of the additional amount of labour-time capitalists can extract/contract out of the worker in excess of what it takes for them to produce the value of the wages they receive.

More broadly speaking, however, workers generally seek (and one could rightly even say are compelled) to purchase commodities with the money they earn through their role in the production of commodities (C-M-C); and through the maintenance and reproduction of the working class (primarily through their role as consumers of commodities), the reproduction of capital is created. Surplus value, then, is produced via the production process and realized via market exchange, where workers as producers and consumers give of themselves twice to capital—first as what's conventionally viewed as unpaid labour and second as wages for commodities (as well as things like rent, etc.) (56).

And that inequality in the economic sphere is further carried into the political sphere since the accumulation of profit on the part of capital in the form of money, which itself is a form of social power, gives capital (particularly as a class) a disproportionate political advantage, putting workers at a disadvantage on a broader political level. Capital does this through various means, from acting as the primary financial benefactor of politicians and their campaigns and having the time and power to directly communicate with and advise legislators to using their jobs and capital as leverage and providing employment for compliant policymakers in top administrative positions once they're done with public service. In addition, the more workers collectively resist the depredations of capital, the "more the capitalists are forced to constitute themselves as a class to ensure collectively that the conditions for progressive accumulation are preserved" (30), meaning putting aside competition between each other whenever they need to in order to reinforce their political and economic dominance. (And the state is primarily the political representation of capital, the social relation, that subsumes the capitalist class and working class alike, and which seeks to help resolve the reoccurring crises of overaccumulation that result from the intrinsic contradictions within the capitalist mode of production itself.)

Of course, one can always look at the numbers and argue that the massive wealth in the hands of the uber-rich is simply due to the amount of the proverbial pie being a lot bigger than in the past, and that the ends of increased wealth (assuming it's not just inflationary numbers we're talking about here) and evolutions in technology justify the means (which include a lot of ugly truths), especially from the relative comfort of the US, which has appropriated and expropriated a vast quantity of global wealth that's trickled down to its working class while exporting some of the harshest and most exploitative industries to poorer countries across the border and overseas. But I think it's misleading to look at the size of the pie without also looking at how the slices are distributed and where the ingredients come from. Last year, for example, capitalism created ten pieces of pie, and a small handful of capitalists took eight pieces, leaving the entire rest of the world, composed of billions of people, to split two.

So why isn't redistributionalism a viable long-term solution? The basis of our economic system is relatively simple. On the one hand, money is invested as capital (to purchase equipment, raw materials, labour, etc.) to produce commodities (goods and services) that are then sold for a profit. On the other, the majority of those commodities are purchased by the people employed to produce them, the working class. Jobs, then, are created in the flux of this symbiotic relationship between supply and demand. If investors don't have the money to invest as capital, then supply is reduced, the economy slows, and jobs can't be created. If consumers can't afford to purchase goods, then consumption is reduced, the economy slows, and jobs can't be created. Ideally, supply and demand should be in equilibrium.

Within this process of transforming money into commodities and then back into money plus a surplus (profit), however, there are a number of contradictions that give rise to imbalances and crises of overaccumulation. And when due to these, both the mass of superfluous (i.e., unproductive) capital and labour increase in conjunction with technological advances and efficiencies in production, they cause the rate of profit to fall and a shrinkage in the absolute mass of profit produced, creating an unsustainable situation that eventually needs to be resolved. Moreover, if the rate of profit in that process falls to a certain level, preventing money from being able to be transformed into money plus a surplus, then both supply and demand are reduced, and as a consequence, employment, which feeds back into the downturn, again creating an unsustainable situation that eventually needs to be resolved.

In essence, when accumulation is too high and the market is flooded with devalued capital that prevents its reinvestment from producing sufficient returns and/or goods and services that can't be sold, the economy stalls. If profit can't be realized, then capital can't function as capital and it sits unutilized. To get things started back up, both employers and the state look for ways to overcome this problem, whether through encouraging debt spending by consumers, the opening of new markets for export, the 'creative destruction' of superfluous capital (mostly through state consumption), or creating ways to increase the mass of profit via evolutions (i.e., innovations) in the means of production and finance that, in turn, set up the conditions for further overaccumulation and crises.

The post-WWII boom is a case in point. People (especially on the left) often like to point towards this snapshot in history as an ideal time, an economic golden age, noting the fact that taxes on the wealthy were high and so was employment, wages, and economic growth. What those same people may not realize, however, is that the massive destruction of superfluous capital (as well as the industrial centres of Europe and Asia) caused by the war paved the way for the US's growing prosperity following the Great Depression, which was arguably caused by a crisis of overaccumulation and the subsequent over-indebtedness and financial speculation utilized to bolster consumption and profits. In other words, it wasn't simply an issue of taxes and wages being just right, but Washington's consumption of unproductive capital and labour through the war economy and the increase in exports that resulted from the actual destruction of Europe and Asia's means of productions allowing for a relatively long period of stability and growth until Europe and Asia rebuilt their economies and global capital began to compete with one another on a more equal footing, leading to the decline of both profits and wages in the US (but of course the losses fell predominately on the working class in the form of decades of stagnant wages).

The inconvenient truth of capitalism is that crises arise naturally and are needed to help destroy unproductive capital, whether through businesses failing, the depreciation of existing value/wealth, wars, or whatever, clearing the way for the creation of future value/wealth. This, in turn, creates a decrease in the labour force (i.e., unemployment of productive labour) that helps drive down wages, allowing capital to temporarily increase nominal profits even if the tendency of the rate of profit falls in the long term. And since it appears on the surface that either a lack of supply or a lack of demand is the problem, the role that crises play in acting as what Marx calls a 'counteracting factor' is obscured.

The way I see it, this obscuration is one of the things that make capitalism appear like a perpetual growth/profit-making machine, as well as more stable than it truly is. This is somewhat similar to Chris Harman's take on the tendency of the rate of profit to fall, i.e., that crises are the prime counteracting factors mentioned by Marx, with recoveries being limited in effectiveness over time due to a combination of things like units of capital become larger and more interlinked (the bigger they are, the harder they fall) and increases in the level of unproductive labour in both the private and public sector (the former due to capital attempting to defend and expand markets in unproductive ways, waves of speculative investments, top-heavy corporate hierarchies, what David Graeber calls bullshit jobs, etc.; the latter due to government spending via the military, stimulus measures, etc.).

The true limit to crises as a counteracting factor, however, may be labour itself, specifically labour-time, which capital tries to increase in order to extract more profit from the labourer in order to compensate for a falling rate of profit and the fact that much of this labour is itself superfluous, i.e., labor-time that, in the words of blogger Jehu, "consists in the production of values that do not reenter the capitalist reproduction process" [8]. But a person can only work so much, and if the labour itself is 'unproductive,' increasing it only serves to lower the rate of profit in the long term. This, as a consequence, creates the conditions for future (and potentially more severe) crises. One possible solution on the road to a post-capitalist society, then, may actually be an overall reduction in hours of labour.

The real question is how this society of minimal hours of labour and maximum hours of leisure can be achieved, which, under the logic of capitalism, it can't, since this is the point where surplus value is created and realized by capital, i.e., a reduction in labour hours under capitalism will ultimately serve to reduce the mass of surplus value (and with it profit), which, according to the labour theory of value, is itself intimately tied into the amount of labour-time required for the production of commodities. Simply socializing aspects of capitalist production (such as finance) or instituting more aggressive forms of wealth redistribution while ignoring the process of production itself won't get rid of the "coercive pressure of competition and accumulation" inherent within capitalism, and hence can't fully transcend it or its limitations.

We're at the tail end of the worst economic slump since the Great Depression, which in my opinion was almost certainly caused by a crisis of overaccumulation and the subsequent over-indebtedness and financial speculation utilized to bolster consumption and profits, and experiencing historic levels of wealth inequality. But solutions Reich puts forward, like less corporate subsidies, would slow growth and stall the economy. And a more progressive tax structure may help to consume some of this unproductive capital, which in turn can be used to subsidize social safety nets for struggling workers and help to reduce inequality (assuming it could get passed), but it's not enough to fix the underlying problem. Employment may rise, and the economy may continue to grow post-recovery; but the cycle of capitalistic crises in some shape and form and the pain they cause will continue either way, and those will be further exacerbated by the negative environmental impact capitalism has wrought on the world in its logical need to continuously grow and the consumerism needed to feed that growth.

Tl; dr: I think the guy at the beginning of the film is a lot closer to the truth when he says that capitalism is "an economy that has been immoral from its inception. It was not designed to include everyone in a fair way." And if we truly want a healthier, more egalitarian, and more democratic society, we must find an alternative socioeconomic system to capitalism.