ECONOMIC-PHILOSOPHIC MANUSCRIPT OF 1978 AS IT WERE CONCLUSION

An example, for purposes of clarification.  Several years ago, I found that I had accumulated a savings account large enough so as to raise questions about how best to deal with it.  After rejecting the stock market [to risky, and at that time quite stagnant] and long-term savings accounts [too great a sacrifice of liquidity for a very small increase in return] I decided to look seriously into local rental real estate.  At first, when I was shown available properties by local realtors, my attention was focused on the properties as homes, places to live.  I found myself trying to decide whether I would like to move into one of the apartments I was being shown.  My senses, my self as a living person, were engaged.  At the same time, I gave a great deal of thought to the role of landlord.  Would I be comfortable evicting tenants for non-payment of rent?  Could I handle the necessary repairs [or find someone to do them for me?]  Did I like the thought of renting rooms?

Slowly, it was brought home to me that all such considerations were strictly irrelevant, indeed badly misleading.  I began to evaluate an investment property purely as a flow of income against which were charged operating expenses.  Not merely the familiar costs [heat, taxes, utilities] but also the probable vacancy factor and the interest from security deposits were factored into the calculations.  The asking price for a property was, I realized, simply irrelevant.  What mattered was a rule-of-thumb multiple of total rentals.  As I learned to calculate the probable return on my investment, it became fully clear to me, for the first time, that everything turned on how heavily leveraged the purchase could be made – how little of my own money had to be invested, in short.  Taking into account tax deductions, capital gains, depreciation [which, by the bye, explained why it was unprofitable to own a property for seven years], I was able, at last, to perceive a property not as a converted fourteen room Victorian-style frame house, or as a five-year old fourteen-apartment  two-story flat-roofed building on a rather seedy street, but simply as a relatively safe a6% return on a $10,000 investment, or as a risky 20% return on an $8,000 investment.

            Let me repeat: I came, eventually, to perceive these dwelling-places in this abstract manner.  I saw them as investments.   The figures on my scratch pad became more real to me than the physical buildings themselves or the people living in them.

            Now – I am quite aware that in this personal anecdote, I have not even touched upon the distinctive characteristic of capitalism, namely wage-labor and commodity production.  But the implications of the story are clear enough, and can be extended and generalized without great difficulty.  Let us list some of those implications:

(1) A necessary precondition for the transformation of my savings into investment capital was an alteration in my apprehension of the physical and social world, an alteration that involved perceptions as well as concepts.  To say merely that I performed a different calculation would be to miss the point of the story entirely.

(2)  A second necessary precondition for my adoption of the role of real estate investor was that I come to focus my attention single-mindedly on the percentage return on invested capital.  Fractions of a percentage took on, for me, a reality that had previously been reserved for such aspects of real estate as usability of living space, friendliness of neighbourhood, or attractiveness of the grounds.  I had to learn that it was not I would live in these dwelling-places, but my money.  And capital, with admirable Spartan hardihood, disdains sensory distractions from its role as self-expanding value.         

(3)  Equally necessary, of course, though I have, by my subjective and anecdotal style, tended to ignore it, was the existence of a market in real estate, a regular and predictable demand for rental apartments, a tax structure, a banking system with funds seeking gainful employment, and so on and on.

            All of that, and much, much more, is required before I can even contemplate “investing” my savings – required, that is, in order for my unspent income [the reward for my abstinence, needless to say] to become capital.  [Oh yes, in the end, I opted for the relatively less lucrative safety of tax free municipal bonds.  I am, in matters of real world finance, a timid entrepreneur].

            Let these few remarks be suitably extended and generalized.  Marx is clearly correct in the Grundrisse, and oddly, perversely, the obscurantist philosophical jargon in which he expresses his musings captures well the combination of subjective and objective transformations – psychological and institutional – through which goods become commodities.  Exchange value as such emerges, and finally capital per se, self-expanding value, comes to dominate the senses, the consciousness, the administrative decisions, the very a priori principles of rational choice themselves, of bourgeois capitalist society.  It is as mad to suppose that one could have capitalism without those transformations, as it is to suppose – that a feudal manor could be run on the principles of a modern agribusiness, with no ill effects to the local religion or the idyllic communal bonds between lord and peasant.

            The physical quantities model of a capitalist economy is thus an inadequate model.  Its critique of Marx’s value theory is wrong.  The movement from physical quantities to values, and from values to profits, is not a detour, a meaningless mathematical excursion, because in the real world of capitalism, market prices, interest rates, and wages, are not mere accounting devices derivable from the technical coefficients of production.  Deep and far-reaching

[at this point the manuscript breaks off.]