Wednesday, April 16, 2014

1385. Karl Marx or Club of Rome?: Why Naturalizing Causes of the Great Recession Undermines Efforts to Transcend the Capitalist Civilization

By Kamran Nayeri, April 16, 2014

1. The problem of naturalizing the capitalist economy
Because the Great Recession was/is a capitalist crisis understanding it requires a theory of the capitalist mode of production.  Saral’s claims that the Great Recession was caused by a permanent secular rise in production cost of a number of primary commodities or peak oil, while unsubstantiated, also lack an explicit theory of the capitalist mode of production.  This matters also because the “natural” causes he cites must be articulated through the working of the capitalist world market to cause the crisis.  In what follows, I will argue that Saral’s naturalizing of the causes of the Great Recession undermines understanding of the core problems caused by the capitalist mode of production for any emancipatory movement.  Therefore, it undermines efforts to transcend the capitalist economy and society.  

The problem of naturalizing the capitalist economy is not a new one. The environmentalist movement has long focused on the industrial base of modern economies instead of the fossil fuel-powered industrial capitalist world economy (I set aside the problem of the so-called “socialist countries” that in my view were not socialist for a detailed discussion at another opportunity. Also, they never had a sizable environmentalist movement.).  This error has helped fostering illusions in Green Capitalism instead of forging or strengthening emancipatory movements that could go beyond industrial capitalism to ecologically sound communal social formations.

This derailment of the modern environment movement has a number of reasons.  A central reason is the implicit assumption that the capitalist economy and society (often mystified as “market economy”) is the natural end result of the development of markets that allegedly existed in all earlier forms of economic organization and has now become universalized. This view is sanctioned in dominant neoclassical economics that hold consumers and markets as central to economic life. 

Naturalizing unemployment, under-employment, income inequality, and unmet needs
Consider Saral’s summary of how the Great Recession has played out.
“If due to diminishing availability of affordable resources a growing number of workers lose their jobs or are forced to work only part-time, then they are producing no goods and services or less of them than before. Now, since most goods and services are, in the ultimate analysis, paid for by (exchanged with) goods and services, it is unavoidable that these workers can get less goods and services from other people.” (emphasis in the original)
Here problems of unemployment and under-employment, income inequality and unmet needs in the United States are reduced to natural causes.  To naturalize a mode of production is to make it ahistorical. Thus, Saral’s summary can be equally applied to any other social formations that experiences “diminishing availability of affordable resources” due to “natural” causes.  The capitalist relations of production do not appear in this summary (or the entire Saral’s essay) at all and the economy is presented as markets for exchange of goods and services (as in neoclassical theory).  Further, Saral degrades arguments about the class nature of the crisis by calling labor and socialist arguments that place the Great Recession in the context of the forty-year capitalist offensive in the United States as “partially correct” and class analyses of the Great Recession as “superficial.”

Houses as “concrete things with imminent value”
In discussion of the Great Recession and the value lost because of it, Saral argues that contrary to stock of companies, houses are “concrete things with imminent use value.” Further, he casts doubt on economic reality of money by noting that the central bank’s control over the money supply.  A similar attitude is not uncommon among other natural limits to growth proponents.  Dave Kimble in his comment posted in response to my critical discussion of Saral’s essay suggests a similar argument about fiat money and adds: “The correct key factor is Energy - the stuff that obeys the incontrovertible Laws of Thermodynamics.” While there is no doubt that oil and energy are crucial to the industrial capitalist economies and the laws of thermodynamics govern the universe, Dave too tends to strip off the capitalist character of the economy in favor of its natural underpinnings. 

Focus on use-value instead of value
The analytical and theoretical issue at the heart of the tendency to naturalize the capitalist economy is that Saral, Limits to Growth authors, and the environmentalist movement focus on use-value instead of value in their analysis.  Analytical focus on use-value elevates natural/physical properties of things (land, raw materials, machinery, houses, pollution, etc.) as primary in understanding the crisis.   Analytical focus on value on the other hand focuses attention on the social relations formed and perpetuated in the capitalist mode of production.  While a focus on use-value helps in understanding the ecological and environmental boundaries of a social formation, in this case the capitalist United States (or the world for that matter), value relations inform about the social relations of production through which society interacts with its ecological and environmental context.  Thus a value analysis is necessary if we are concerned with how crisis events come about and their consequences for social classes and groups.  Also, a value analysis is necessary if we are to transcend the existing capitalist civilization to ecologically sound communal social formations.   

In Limits of Limits to Growth Perspective  I discussed the Club of Rome’s Limits to Growth studies. In particular while noting the dominance of pro-growth views among socialists and other radical movements I wrote:
“However, the socialist critique included a valid point. Limits to Growth model incorporates many assumptions based on mainstream socio-economic theories. That is, Limits to Growth proponents sidelined, if not entirely denied, economic, social and ideological criticism of the capitalist system in favor of  arguing for natural limits to growth. It was argued that if these natural limits are not respected the population and the economy will go into a sudden and precipitous decline.”
Sliding back to pre-Classical Political Economy doctrines
From the perspective of the history of economic thought, this sliding backward is reminiscent of physicalism and ahistorical approach to the economy found in pre-Classical Political Economy theorizing.  For example, early mercantilist writers “frequently discussed ‘intrinsic value’ or use value as the most important factor determining demand, and hence as an important causal factor determinant of market price.”( E. K. Hunt, History of Economic Thought: A Critical Perspective, 1979, p. 20).  Classical Political Economy while revolutionizing economic thinking by arguing for labor theories of value still naturalized the capitalist economy.  It was Marx who corrected this error. 
“Political Economy has indeed analysed value and its magnitude, however incompletely, and has uncovered the content concealed within these forms. But it has never once asked the question why this content has assumed that particular form, that is to say, why labour is expressed in value, and why the measurement of labour by its duration is expressed in the magnitude of the value of the product.  These formulas, which bear the unmistakable stamp of belonging to a social formation in which the process of production has mastery over man, instead of the opposite, appear to the political economists’ bourgeois consciousness to be as much a self-evident and nature-imposed necessity as productive labour itself. Hence the pre-bourgeois forms of the social organization of production are treated by political economy in much the same way as the Fathers of the Church treated pre-Christian religions.” (Marx, Capital volume one, New York: Vintage Books, 1867/1977, pp. 173-75). (my emphasis)
In the rest of this discussion, I will focus on Marx’s contribution that must be integral to any emancipatory movement that hopes to transcend the capitalist civilization, especially the ecological socialist movement.  I invite Saral and the reader to follow me closely.

2. The value dimension and alienation
To understand the capitalist law of motion and core problems that arise from them, including capitalist crises, it is absolutely necessary to understand the value dimension. 

For Marx, this begins with analysis of commodity because “[t]he wealth of societies in which the capitalist mode of production prevails appears as ‘an immense collection of commodities’…” (Marx, Capital volume 1, New York: Vintage Books, 1867/1977, p. 125). 

However, commodity is not limited to things that have physicality or supposed “intrinsic value.”   As Marx notes: 
“The commodity is, first of all, an external object, a thing which through its qualities satisfies human needs of various kinds.  The nature of these needs, whether they arise, for example, from the stomach, or the imagination, makes no difference.” (ibid.)
Thus, Marx proceeds to analyze “two factors of commodity:” use-value and value.  To understand the capitalist mode of production, Marx focuses attention on value analysis, the social dimension of commodity as opposed to the personal dimension, use-value. This analysis lead to the two-fold character of labor—concrete and abstract labor—embodied in commodities.  The money form presents itself as the universal commodity. Marx discusses money as measure of value, medium of circulation, store of value, and means of payment.  He concludes with a discussion of universal money.

As we already know from Marx’s criticism of Classical Political Economy under the capitalist mode of production that the economy controls society and not the reverse.  Contrary to the popular belief that Marx’s theory is about exploitation of labor hence income distribution, at the heart of Marx’s theory is a search for understanding human condition in class societies, in particular in capitalist civilization, through the development of a labor theory of alienation.  Thus Marx’s concept of socialism centers on non-alienated labor based on free association of direct producers not state socialism or market socialism. 

Commodity fetishism
To understand alienated labor in capitalist mode of production, Marx begins with value analysis. Marx argues “[t]he mystical character of commodity does not…arise from its use-value.  Just as little does it proceed from the nature of determinants of value [that is concrete forms of labor, duration of labor, and social nature of labor. KN].” (ibid. p. 164)  The mysterious character of the commodity-form consists 
“…in the fact that commodity reflects the social characteristics of man’s own labour as objective characteristics of the products of labour themselves, as the socio-natural properties of these things.  Hence it also reflects the social relations of the producers to the sum total of labour as a social relation between objects, a relation which exists apart from and outside of the producers.  Through this substitution, the products of labour become commodities, sensuous things which are at the same time supera-sensible or social.”   (ibid. pp. 164-65) 
Marx contrasts value relation with natural experiences such as how human vision functions as a physical relation between physical things. In human vision, the impression made by an object on the retina excites the optic nerve. Yet it is not perceived a subjective excitement of the nerve but as the objective form of the thing outside the eye.  Light is transmitted from the object and received by the eye.  Not so in value relations.
“As against this [the vision example above, KN], the commodity-form and the value-relation of the products of  labour within which it appears, have absolutely no connection with the physical nature of the commodity and the material relations arising from this.  It is nothing but the definite social relation between men themselves which assumes here, for them, the fantastic form of a relation between things.” (ibid.)  
Marx uses religion as an analogy.  
“There the products of human brain appear as autonomous figures endowed with a life of their own, which enter into relations both with each other and with the human race.  So, it is in the world of commodities with the products of man’s hands.  I call this the fetishism which attaches itself to the products of labour as soon as they are produced as commodities, and is therefore inseparable from the production of commodities.” (ibid., p. 165)

He concludes: “As the foregoing analysis has already demonstrated, this fetishism of the world of commodities arises from the peculiar social character of the labour which produces it.” (ibid.)  

Nothing is more striking about this form of alienation when it manifest itself during the time of crisis. The problem is not that houses have intrinsic value. The problem is that houses are the product of labor of the American working class who are in turn evicted when they cannot pay the banks who legally own them. Such crisis can only end when the working people become the subject of the economy not its object.

On money
Marx’s discussion of money is not agnostic. He seems money as universal commodity that plays a key role in his labor theory of alienation.  Here is the young Marx’s critique of money in his Economic and Philosophic Manuscripts of 1844 (Paris Manuscripts).
“By possessing the property of buying everything, by possessing the property of appropriating all objects, money is thus the object of eminent possession. The universality of its property is the omnipotence of its being. It is therefore regarded as an omnipotent being. Money is the procurer between man’s need and the object, between his life and his means of life. But that which mediates my life for me, also mediates the existence of other people for me. For me it is the other person 
“If money is the bond binding me to human life, binding society to me, connecting me with nature and man, is not money the bond of all bonds? Can it not dissolve and bind all ties? Is it not, therefore, also the universal agent of separation? It is the coin that really separates as well as the real binding agent – the [...] [One word in the manuscript cannot be deciphered. – Ed.] chemical power of society…” (Marx, Economic and Philosophical Manuscripts of 1844, Collected Works, Volume 3, Moscow: International Publishers, 1975, pp. 322-324). (emphases are in the original). 

3. Marx on growth
Saral who was attracted to socialism in the 1950s has written how the discovery of the Limits to Growth perspective caused him a paradigm shift.  Without wanting to degrade the lessons we can learn from the Limits to Growth studies, I like to point out that while limits to growth was not an imminent issue in the nineteenth century, Karl Marx was still is far ahead of Club of Rome in criticizing growth while explaining it causes.  To be brief, I just cite portion of the young Marx’s views in a section of the Economic and Philosophical Manuscript of 1848 entitled  “Human Requirements and Division of Labour Under the Rule of Private Property,” he write:
“We have seen what significance, given socialism, the wealth of human needs acquires, and what significance, therefore, both a new mode of production and a new object of production obtain: a new manifestation of the forces of human nature and a new enrichment of human nature. Under private property their significance is reversed: every person speculates on creating a new need in another, so as to drive him to fresh sacrifice, to place him in a new dependence and to seduce him into a new mode of enjoyment and therefore economic ruin. Each tries to establish over the other an alien power, so as thereby to find satisfaction of his own selfish need. The increase in the quantity of objects is therefore accompanied by an extension of the realm of the alien powers to which man is subjected, and every new product represents a new potentiality of mutual swindling and mutual plundering. Man becomes ever poorer as man, his need for money becomes ever greater if he wants to master the hostile power. The power of his money declines in inverse proportion to the increase in the volume of production: that is, his neediness grows as the power of money increases.
“The need for money is therefore the true need produced by the economic system, and it is the only need which the latter produces. The quantity of money becomes to an ever greater degree its sole effective quality. Just as it reduces everything to its abstract form, so it reduces itself in the course of its own movement to quantitative being. Excess and intemperance come to be its true norm.
“Subjectively, this appears partly in the fact that the extension of products and needs becomes a contriving and ever-calculating subservience to inhuman, sophisticated, unnatural and imaginary appetites. Private property does not know how to change crude need into human need. Its idealism is fantasy, caprice and whim” (Marx, in Collected Works, volume 3, Moscow: International Publishers, pp. 306-07) (emphases in original)
In Capital Marx develop these ideas further when discussing capital accumulation. For example, when he criticized Malthus' abstinence theory of profit he wrote:
"Accumulate, accumulate! That is Moses and the prophets! 'Industry furnishes the material which saving accumulates.'  Therefore, save, save, i.e., reconvert the greatest possible portion of surplus-value, or surplus-product into capital! Accumulation for accumulation’s sake, production for production’s sake: by this formula classical economy expressed the historical mission of the bourgeoisie, and did not for a single instant deceive itself over the birth-throes of wealth. But what avails lamentation in the face of historical necessity? If to classical economy, the proletarian is but a machine for the production of surplus-value; on the other hand, the capitalist is in its eyes only a machine for the conversion of this surplus-value into additional capital." (Marx, Capital volume one, New York: Vintage Books, 1867/1977, p. 742)
The fact that the bulk of Marx’s self-proclaimed followers (who call themselves "Marxist" regardless of how many factions they have become) have adopted the growth paradigm from the bourgeois discourse tells us more about what went wrong with the socialist movement after Marx than about Marx’s own real views.  As long as we are confronting the capitalist world economy, Marx will remain an irreplaceable teacher.

I will take up the question of whether paradigms, theories and methods are value-neutral in the next part of discussing Saral’s essay and letter.  

To be continued. 

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