Fwd: Reply to Critics
Begin forwarded message:
From: Loren Goldner lrgoldner@yahoo.com Date: September 12, 2007 11:39:36 AM EDT To: dhenwood@panix.com Subject: Reply to Critics
Dear Doug,
As you know, quite a debate took place on the libcom.org list about my article “Imperialism, ‘Anti-Imperialism”…”. The link to the list:
http://libcom.org/forums/thought/fictitious-capital-beginners- imperialism-anti-imperialism-continuing-relevance-rosa- luxemburg-27082007
This is my reply. I’d appreciate it if you’d post it on your list.
Thanks
Loren
Reply to Critics: Bringing Social Reproduction Back In
First, thanks to all comrades who have participated in the debate so far.
I must first say, reading and re-reading it, that I was initially somewhat surprised at all the things I said that were (IMHO) controversial that were barely mentioned or not mentioned at all. No one defended Lenin’s theory of imperialism or the labor aristocracy theory; no one questioned the idea that the U.S. is “managing empire through bankruptcy”, or the critique of Chavez or of Third Worldism, or my assertion of a vast population of unproductive consumers in advanced capitalism, or the concrete analysis of contemporary accumulation centered (for now) on the “indebted U.S. consumer”. Of course on this particular libertarian communist list affirmations that might elsewhere be controversial are, I presume, like charging through an open door.
I’m glad we all agree on the preceding.
It is unfortunate that the article was basically finished in May and that its mention of the biggest credit bubble in the history of capitalism was not made front and center, a bubble whose contraction over the summer finally exploded into the biggest liquidity crisis since 1998 and (since it’s not over) perhaps well before that. It’s certainly a strange context for some people to be doubting that there’s an enormous amount of fictitious capital sloshing around.
Boiled down to its simplest, my article says that capital accumulation, in the course of a cycle, necessarily generates titles to wealth (stocks, bonds, property deeds and leases, and more recently securitized mortgages, etc.), capitalized anticipations of income in excess of available surplus value, and that it makes up that gap with “loot”, i.e. goods, labor power, raw materials not paid for at their reproductive value, by running down (not reproducing) C (means of production and infrastructure) or V labor power past their point of depletion. When available surplus value and loot no longer suffice to support those paper claims, capitalism undergoes a deflationary crisis that wipes out claims (and ultimately real capital, and labor power) until those claims and are once again in some equilibrium with available surplus value. That’s exactly what we are seeing today.
In a nutshell, in the era of the proliferation of fictitious capital, capitalist paper expands, while the material reproduction of society goes backwards.
That said, the biggest polemical target I had in mind was the broader left milieu, led by the Trotskyists and the altermondialists. No defenders here, apparently. But, in more advanced circles, make a positive mention of Rosa Luxemburg’s economic theory and you’ve got a debate on your hands.
To get certain questions out of the way (namely about the “heuristic”, “pure model” of capitalism in vol. I and most of vol. II of Capital) I refer comrades to the article on my web site “Production or Reproduction”, which grew out of the 2002 exchange with Aufheben (http://home.earthlink.net/~lrgoldner/prodorreprod.html). It shows clearly, with the requisite quotations from Capital, that Marx intended much of the discussion prior to the introduction of expanded reproduction and the total social capital at the end of vol. II to be what he called “a purely formal mode of presentation”, mainly focused on the single firm. With Engels’ preface to vol. II clearly stating that Marx was very dissatisfied with the last part of vol. II, I don’t see how anyone can think that Luxemburg was seeing problems where there were none, whatever the limits of her solution.
Most of the texts I have written on the critique of political economy have attempted to rehabilitate the (in my opinion) neglected concept of social reproduction. I think that most of the criticisms raised in the discussion of the “Imperialism, ‘Anti-Imperialism”…” demonstrate yet again that most comrades, similar to the people Luxemburg was polemicizing against 95 years ago, are preoccupied with the reproduction of capital only in a formal sense of their reproduction schema, and, when that occurs, see the material reproduction of society to be almost a given, taken for granted. They don’t believe that a capitalist can make a profit from contracted social reproduction. They seem to pay no attention to Marx’s remark in vol. I (pp. 726-727): “Accumulation requires the transformation of a portion of the surplus product into capital. But we cannot, except by a miracle, transform into capital anything but such articles as can be employed in the labour process (i.e. means of production), and such further articles as are suitable for the sustenance of the worker (i.e. means of subsistence)…In a word, surplus-value can be transformed into capital only because the surplus product, whose value it is, already comprises the material components of a new quantity of capital.” No one in the discussion so much as commented on my affirmation that there exists today a huge unproductive consumption by the state, the military and (e.g.) the FIRE population which is precisely not materially transformed back into capital. To acknowledge this means to admit that there is “fictitious profit”, i.e. profit from the sale of commodities (tanks, Ferraris) that “drop out” of the capital circuit. Yet that ficititious profit is pocketed by some capitalist and continues, for a while, to undergo the M-C-M’ circuit just like profit from food and clothing.
So let’s cut to the quick. Mikus is right that I lump too many things under the category of primitive accumulation and I say in a footnote that if that is so then a better term is necessary. But in all the specific instances I cite and he criticizes, he’s wrong.
What was historically progressive about capitalism was that it expanded the material reproduction of society, both in means of production and labor power. It laid the material foundation for the supersession of socially necessary labor time of reproduction (the law of value) as the numeraire of economic activity. Having reached that point, it began a massive retrogression, attempting (like all previous crises) to re-equilibrate an adequate rate of profit, even if billions of people have to go onto the scrapheap and entire continents have to be depleted to achieve it. The capitalist spiral (the expanded reproduction extension of Marx’s circuit, the latter used in reference to simple reproduction in vols. I and II) goes backward just as it previously went forward.
Capitalism is not merely about production (“the sphere of immediate production” of vol. I) but about reproduction: in Marx’s model and in its progressive phase, it reproduced C (means of production and infrastructure) and it reproduced V (the labor power of wage workers). Thus it is wrong-headed to say that “all exchange” violates the law of value because market price fluctuates around value; “inside” the heuristic model of vols. I and II commodities are presumed to interact, in general, at their value precisely to eliminate vulgar economic explanations of profit, etc. from “rip-off”.
I was also inexact in quoting Luxemburg to the effect that only a socialist could identify the source of profit. What she actually said is that
“only a socialist can really solve the problem of the reproduction of capital. Between the Tableau Economique and the diagram of reproduction in the second volume of Capital there lies the prosperity and decline of bourgeois economics, both in time and in substance” (Accumulation of Capital, p. 106).
But the substance of what I meant is still there: only someone seeing capitalism as a transitory phase between feudalism and socialism/communism can grasp and act on a true practical universal at work in the system: the working class as a “class for itself”, posing a higher mode of production. But the implication of that transition is that the violence of the early emergence from feudalism is still with us, and will be until that transition is complete.
Luxemburg didn’t say that primitive accumulation was a permanent feature of capitalism? If she didn’t say it in so many words, she did say that
“Although (capitalism) strives to become universal…it is immanently incapable of becoming a universal form of production.” (Accumulation of Capital, p. 467).
Since she sees capitalism as handling that impossibility by its “war on natural economy”, i.e. the absorption of labor power, goods and raw materials from non-capitalist economies, that is tantamount to saying that primitive accumulation (or a more general violation of the law of value, pending a new name) is permanent.
Mikus says that the historical sections on the looting of non-capitalist economies make up only 50 pages of a 400-page book. Without wanting to quibble, in my (1923 German) edition, they are 90 pages of 380, and further constitute the illustration of the dynamic she has identified in the preceding middle section, a review of various bourgeois and non-Marxist socialist attempts to solve the problem. Unlike people who think everything can be resolved (and has been) in abstract models, Luxemburg insists on concrete history.
Several people questioned whether the contemporary pulling of labor power out of parts of the Third World can be considered primitive accumulation. I don’t think Indian doctors working in the UK is an adequate example. Once again, if the term “primitive accumulation” is limited to the initial separation of petty producers from their means of production (e.g. England in the 16th and 17th centuries) let’s think of a better term. What that initial phase has in common with today, as I said, is a “violation of the capitalist law of value”, the exchange of equivalents. The reproduction costs of petty producers recently expelled from the dissolution of the Chinese rural communes, from the Mexican ejido (especially since NAFTA) or tiny plots in the Indian countryside are not paid for by capital until they are directly enlisted in the wage labor system, any more than were the American farmers wiped out by debt described in Luxemburg’s book. Petty producers sell to capital, but can’t reproduce themselves in the exchange, just as Preobrazhenzy imagined (wrongly) the possibility of a ”planned” gradual elimination of Russian rural petty producers in the 1920’s.
Others questioned my mention of the running down of capital plant and infrastructure under the category of primitive accumulation. Again, I am referring to non-reproduction. It seems to me that many people in this discussion are still laboring under vol. I ideas of production and not end of vol. II ideas of reproduction. If capital continues to make a profit from ancient plant (the most dramatic example today follows in a moment) and does not adequately renew infrastructure, that is non-reproduction of “C”. After Katrina, the New York City (80-year old) pipeline explosion this summer, and the estimate (following the Minnesota bridge collapse this summer) that 7,000 bridges in the U.S. are in as bad shape or worse, who can doubt that U.S. capitalism, showing unusually high paper profits over most of the past three decades, is not materially reproducing society?
Reproduction is also missing from comments on what I said about the looting of nature. It is certainly true that raw materials are not capital investment and that their cost is a combination of the cost of extracting them plus an increment of ground rent. If it is true that capital does not produce nature it must in fact reproduce (i.e. replace) the nature it uses. “Humanity reproduces all of nature” as Marx wrote in 1844. When capital makes a “profit” from strip mining but leaves the total cost to society (depleted countryside, polluted water), capital is expanding but nature is not being reproduced. When capital ruins the earth’s atmosphere with CFCs, nature is not being reproduced. When air and water become unusable from pollution, nature is not being reproduced. Where, as with labor power being paid below the cost of its reproduction, there is profit without paying the cost of reproducing nature, there is a “free input” to the system comparable for the S/C+V ratio to the recruitment of petty producers to the wage-labor proletariat, call it what you will.
Another element missing from most formulations in the discussion is the recognition that capital for capitalists is not what we read about in vols. I and II or the first section of vol. III of Capital but is rather a CAPITALIZATION of the cash flow generated by those underlying realities. However, for long periods of time, understandable only if we ask the concrete question of whether C and V are being materially reproduced, those capitalizations (as today) can be seriously out of whack with reality, if compensated by the material inputs of non-reproduction mentioned previously.
Paper values (and abstract conceptions of reproduction) expand, and society goes backward.
Let’s look at Exhibit A for the prosecution, the self-cannibalization of the system where S/C+V in material terms goes negative while profit, interest and ground rent grow. . The Nazi economy from 1933-1945 is the extreme illustration (to date) of this process at work in an advanced capitalist economy in crisis. Hitler’s finance minister Hjalmar Schacht reflated the Germany economy with a huge credit pyramid, conjured from almost nothing and financing rearmament (unproductive consumption) while suppressing working-class consumption and keeping workers’ wages at about 50% of their pre-1929 levels (non-reproduction of V) , even choking off most investment in Dept. I (non-reproduction of C). As this first experiment in Keynesianism (recognized as such at the time by Keynes) achieved full employment and reached the “overheating” stage ca. 1937-38, inflation took off. Like the U.S. dollar-denominated economy today (which can, however, still tap the world’s wealth, whereas Germany was shorn of all its colonies in 1918), ever-increasing amounts of fictitious capital demanded profit and the completion of the M-C-M’ circuit. The solution was expansionist war, and the outright seizing of assets throughout Nazi-occupied Europe (confiscatory accumulation if you will) to complete that circuit. Within the German war economy itself, millions of people were worked to death in concentration camps and in slave labor in the factories of the big German corporations (non-reproduction of V) both in Germany and in occupied Europe. One of the reasons Germany lost the war was because of the running down of the capital plant from 1929 and especially 1933 onward. This is the concrete illustration of the self-cannibalization immanent in the final stage of the system: capital paper values expand, social reproduction contracts. This was the extreme conclusion of the tendencies already discussed by Rosa Luxemburg in her 1912 portrait of arms production financed by taxing the working class below its reproductive level and other early manifestations of barbarism. Anyone who doubts the permanence of the violence of the earliest primitive accumulation (or whatever improved and expanded term one wants) pointing to this end result can ponder these realities of the Nazi economy.
Those are my basic points. I look forward to rejoinders.
I am currently (in part inspired by this debate) completing a companion piece to my Mute article entitled “Expanded Social Reproduction for Beginners: Bringing the Material World Back In”. Stay tuned.
Loren
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