Wednesday, February 26, 2014

CREDO REDUX CONCLUSION

What is capitalism?  It is not free markets.  Indeed, capitalism as it has developed first in England and Western Europe and then worldwide depends on a variety of state-imposed restraints on absolutely free market interactions, not the least of which of course is the legal enforcement of contracts.  Superficial apologists for capitalism tend to overlook this fact, until someone violates a patent or copyright or tries to weasel out of a bargain to deliver some grain [or until workers unite to form a union.]  As always, when I want to understand capitalism, I look to Karl Marx, who was one of the great theoretical economists of all time, as well as the first, and arguably the best, economic historian.

As Marx had the wit to recognize, capitalism, at its core, is defined and constituted by three interconnected structural characteristics:  First, private ownership of the means of production; Second, wage labor; and third, the production of commodities for the purpose of making a profit rather than the production of goods and services for the purpose of satisfying human needs and desires.  [As I write this, I realize that fully to explain what I have in mind would take several books.  But, as it happens, I have written those books.  They are called Understanding Marx and Moneybags Must Be So Lucky.  So I am going to have to skim the surface here and invite you to read the books if you want a fuller exposition and explanation.  You can also read From Each According To His Ability, Volume Two of my collected published and unpublished papers, available as an e-book on Amazon.com.  Well, so much for what Tom and Ray Magliozzi would call the Shameless Commerce Division of The Philosopher's Stone.]

The key to the development of capitalism, and the secret of its extraordinary profitability, is the historical process by which yeoman farmers and independent craftspeople were separated from and deprived of access to the means of production -- land, mines, forests, lakes and oceans, and also the technology of production -- and were compelled in order to live to become, in the evocative usage of the early capitalist period, servants of those with control over those means of production, to become, as we would say today, wage laborers.  It is this historically determined expropriation of the laboring many that makes it possible for the owners of the means of production to exploit them, which is to say, to make a profit.

"Free" markets play a central role in this process of expropriation and exploitation.  The lifting of all restraints on who can take a job creates the possibility of a permanent surplus of workers looking for jobs -- a reserve army of the unemployed, as Marx called them in a brilliant phrase.  The lifting of restraints on who may produce goods and on where and to whom and for what price they may be sold clears the way for cutthroat competition among capitalists [as those who own and control the means of production are called].  The result is a constant reinvestment of the profits in the expansion of the scope of production, resulting in an explosion of output and ever greater profits.

In the early stages of capitalism, there was a great deal of thoughtful planning, if one can call it that, by individual entrepreneurs [or undertakers, to translate the French term literally and with delicious irony].  But the desperation of the competition placed great obstacles in the way of any sort of wider planning within an industry or between industries.  There was of course widespread collusion or collaboration in restraint of trade, but extensive rational planning was impossible -- not because it violated the ideology of free trade, but because the organizational, informational, and structural arrangements needed for such planning had not yet developed.

It is at this point that Marx's true brilliance shows forth.  Marx understood that socialism -- which is to say, collective ownership of the means of production and production for the satisfaction of human needs rather than for profit -- could not be mandated by the state, or indeed by any other institutional force, in the absence of those required arrangements.  As he put it in his Introduction to the Critique of Political Economy, a new economic order must "grow in the womb of the old."  He had in mind the slow, centuries-long development of the pre-conditions for capitalism within the feudal economic order of late medieval Europe, but his insight has wider application.  Until the conditions for the transition to socialism have developed within capitalism, any attempt to impose socialism politically or by force is doomed to failure, as the fates of Russia and China demonstrate.

What are those pre-conditions, and are they in fact now developing within capitalism?  That is the subject of my essay, "The Future of Socialism," archived on box.net, and I urge anyone who really wants an answer to those questions to read that essay.  The brief answer is that the conditions are indeed developing within capitalism, prompted not by the brainwashing of corporate executives by left-wing professors at effete Eastern universities but by the internal imperatives of the management of capitalist enterprises.

NONE OF THIS HAS ANYTHING AT ALL TO DO WITH THE ELIMINATION OF MARKETS.  If you need a metaphor to grasp this truth, think of a socialist economy as a vast rainforest with huge trees soaring above the landscape [the state owned major concentrations of the means of production] and a rich flora of flowers, shrubs, bushes, and weeds below the canopy [the sector of small privately owned and run businesses that form, flourish, or fail just as they do now].

Once it becomes structurally possible to engage in rational planning about the allocation of the major capital accumulations of the society -- a point that we are fast approaching -- and also becomes necessary for some sort of planned allocation to take place, guided by decisions that are structurally political even if they are now taken by private persons for private gain -- a situation that is already upon us [this is the central point of my essay, referenced above] -- then and only then can we talk about socialism as more than a dream.  The argument against the institution of socialism is not the virtues and joys of free markets, but the impossibility of socialism before "the new order has grown in the womb of the old."

But, the "masters of the universe" protest, sitting astride the great accumulations of capital that generate an endless stream of profits, have the rich of this world not earned their wealth by their entrepreneurial skill and daring?  This blog post is too short to deal with that bit of self-congratulatory nonsense as it deserves.  Robert Nozick, in what may well be the stupidest argument ever advanced by a brilliant and thoroughly likeable chap, spends three pages in his engaging folie de jeunesse, Anarchy, State, and Utopia, conjuring a Wilt Chamberlain fantasy that supposedly justifies the inequality in the distribution of income in a capitalist economy [see pages 161-163].

So, in answer to Scott [that is where this all started, you will recall], No, I am not advocating market abolitionism.  I am yearning for socialism, which has nothing to do with the abolition of markets and everything to do with collective control of the means of production.

6 comments:

  1. http://www.youtube.com/watch?v=Lad5bc6Gpb4

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  2. I told you Marx was a brilliant theoretician!

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  3. Re your Credo: I recently noticed for the first time Socrates reporting, in the Republic (338b):

    “When you say I learn from others,” I said, “you speak the truth, Thrasymachus; but when you say I do not make full payment in thanks, you lie. For I pay as much as I can. I am only able to praise.” [Bloom translation]

    The identification is clear: paying as much as one can, i.e., payment in accordance with one’s ability, is payment in full.

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  4. I agree that Nozick's Wilt Chamberlain argument does not succeed but would be interested to hear from on precisely why you think it is so bad.

    many thanks
    chris

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  5. Briefly, Nozick's example implies [though he does not actually say it] that capitalism has something to do with individual people being very rich, which is nonsense. The rich are always with us, to paraphrase the Good Book. Capitalism does not develop because individuals one way or another amass large piles of personal wealth, anymore than it emerges from the cheese paring of sober individuals capable of deferral of gratification. It emerges from what Marx calls "primitive accumulation of capital." What is more, none of the great capitalist fortunes, and I do mean none, including those of Bill Gates and Steve Jobs, are the result of lots and lots of people being willing to pay them for some talent or gift they have. If you think otherwise, ask yourself exactly who it is who actually makes the IPhones that I and everyone else buy.

    I've got nothing against Wilt Chamberlain [or LeBron James] getting rich off his athletic skills, and neither did Marx, so far as I can tell. None of that has anything to do with private ownership of the means of production. Bob Nozick's arguments, by and large, are what the English used to call silly clever. See my article on him, archived, for a fuller discussion of his book.

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  6. dear professor wolff

    the fact of primitive accumulation seems a particularly telling criticism of Nozick style justifications of capitalism because it hoists them on their own petard - what is primitive accumulation but a particularly egregious form of coercive property rights violation i.e. theft. I sometimes wonder whether capitalism could be justified if there had been no primitive accumulation and everyone started out with equal shares of resources. Perhaps the appropriate response is that capitalism could never have come into being in such circumstances. What do you think?

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