Seventeen Contradictions and the End of Capitalism (12 page)

Consider a simple flow model of how a well-behaved and honest capitalist might work while respecting all the legalities that a properly regulated capitalist state might impose on market behaviours. The capitalist starts the day with a certain amount of money (whether the money is borrowed or owned outright does not matter here). That money is used to purchase means of production (use of land and all the resources that lie therein, as well as partially finished inputs, energy, machinery and the like). The capitalist also finds a labour market at hand and hires workers under contract for a given period of work (say, eight hours a day for five days for a weekly wage). The acquisition of these means of production and of labour power precedes the moment of production. The labour power is, however, usually remunerated after production has occurred, whereas the means of production are usually paid for prior to production (unless purchased on credit). Plainly, the productivity of workers depends on the technology (for example, machines), the organisational form (for example, the division of labour within the labour process and forms of cooperation) and the intensity/efficiency of the labour process as designed by the capitalist. The outcome of this production process is a new commodity (mostly things but sometimes processes, like transportation as well as services) which is taken into the marketplace and sold to consumers at a price that should yield the capitalist an equivalent sum of money to that which was initially laid out plus an additional sum that constitutes a profit.

The profit at the end of the day is the motivation for going to all the trouble to engage with this process. The following day the capitalist repeats the process all over again in order to continue to make a living.
But the next day she typically takes a part of the profit earned yesterday and uses it to expand production. She does this for a variety of reasons, including lust and greed for more money power, but also out of fear that upstart capitalist competitors may drive her out of business if she does not reinvest a part of yesterday’s profits in expansion.

There are illegal versions of this process. The initial money may have been assembled through robbery and violence. Access to land and resources may be coerced and inputs may be stolen rather than purchased fairly on the open market. The conditions of contract imposed on labour may violate legally established norms, while violations of all sorts – non-payment of wages, forced extension of working hours, fines for supposed misconduct – can be widespread. Labour process conditions can become intolerable or even hazardous (exposure to toxic substances, forced increase in the intensity of work beyond reasonable human capacities). Chicanery in the marketplace through false representation, monopoly pricing and the sale of defective and even dangerous commodities can all be widespread. Competitors can be shot and monopoly prices charged. The recognition that all these things can happen has led to state policing and interventions such as regulatory laws on occupational safety and health, consumer product safety protections and the like (such protective measures have been severely weakened under the neoliberal regimes personified by Ronald Reagan and Margaret Thatcher that have prevailed these last thirty years or so).

Almost everywhere we look in the capitalist world, the evidence of widespread illegality is palpable. The definition of what is the norm for legal capital circulation is, it seems, heavily influenced, if not defined, by the field of illegal behaviours. This legal–illegal duality therefore also plays a role in how capital works. Plainly, the involvement of state power as a constraint on individual behaviours is needed. A stateless capitalism is unthinkable (see
Contradiction 3
). But how the state intervenes depends on class controls and influence over the state apparatus. The illegalities practised by Wall Street in recent times could not have occurred without some mix of neglect or complicity on the part of the state apparatus.

But the main point here is the definition of capital as a process, as a continuous flow of value through the various moments and across the various transitions from one material form to another. At one moment capital takes the form of money, at another it is a stock of means of production (including land and resources) or a mass of labourers walking through the factory gates. Within the factory, capital is involved in concrete labouring and the making of a commodity in which latent and as yet unrealised value (social labour) and surplus value are congealed. When the commodity is sold, then capital returns once again to its money form. In this continuous flow, both the process and the things are contingent upon each other.

The process–thing duality is not unique to capital. It is a universal condition of existence in nature, I would argue, and, since human beings are a part of nature, it is a universal condition of social activity and social life under all modes of production. I live my life as a process even as I have thing-like qualities through which the state defines who I am (name and number!). But capital confronts and mobilises this duality in a particular way and it is this that requires our close attention. Capital exists as a continuous flow of value through the different physical states we have identified (along with others yet to be considered). The continuity of the flow is a primary condition of capital’s existence. Capital must circulate continuously or die. The speed of its circulation is also important. If I can circulate my capital faster than you, then I have a certain competitive advantage. There is considerable competitive pressure, therefore, to accelerate the turnover time of capital. The tendency towards speed-up is easily identifiable in capital’s history. The list of technological and organisational innovations designed to speed things up and to reduce the barriers posed by physical distance is very long.

But all this presumes that the transitions from one moment to another are unproblematic. This is not, however, the case. I have money and I want to make steel, so I need to have to hand immediately all of the ingredients (labour power and means of production) to make that steel. But the iron ore and coal are still buried in the ground and it takes a lot of time to dig them out. There are not
enough workers close by who are willing to sell their labour power. I need to build a blast furnace and that takes time too. Meanwhile my money capital designated for steel production sits dormant and no value is produced. The transition from money into the commodities required for production is plagued with all sorts of potential barriers of this sort and time lost is capital devalued or even capital lost. It is only when all these barriers are transcended that capital can finally flow into actual production.

Within production there are also all manner of potential problems and barriers. It takes time to produce the steel and the intensity of the work process affects how long it takes for the steel to be produced. While different organisational and technological innovations can be sought out to shorten the working time, there are physical barriers to reducing this time to zero. Workers, furthermore, are not automatons. They may lay down their tools or go slow in the labour process. Establishing control over and collaboration with the workforce is needed for continuity.

Once the steel is finished it has to be sold and again the commodity can sit on the market for some time before a buyer shows up. If everyone out there has enough steel to last a couple of years, then there can be no buyers at all for a while and the commodity capital becomes dead capital because it has ceased to circulate. The producer has a vested interest in securing and accelerating the turnover time of consumption. One of the ways to do that is to produce steel that rusts so fast that it needs rapid replacement. Diminishing the turnover time of consumption is much easier, however, in the case of cellphones and electronic devices. Planned obsolescence, innovation, shifting fashion and the like become deeply rooted in capitalist culture.

All sorts of strategies and short cuts emerge as capital desperately seeks to transcend or bypass the barriers to circulation and to smooth out and speed up its turnover time. Producers, for example, may not want to wait to sell their commodities. For them it is easier to pass the commodity on to merchants at a discount on the full value (which furnishes the merchants with an opportunity to earn
their cut of the surplus). The merchants (wholesalers and retailers) take on both the costs and the risks of selling the product to final consumers. By pursuing efficiencies and economies of scale (while exploiting the labour they employ) they can connect producers with final consumers at a lower cost than would be the case if the direct producers undertook the marketing themselves. This smooths out the flow and provides producers with a more secure market. But, on the negative side, the merchants may end up exercising considerable power over the direct producers and force the latter to take lower rates of return (this is the Walmart strategy). Alternatively, producers can seek credit on unsold goods. But here too the autonomous power of the bankers, financiers and discounters may then come into play as an active factor in the circulation and accumulation of capital. Social strategies to maintain the continuity of capital flow constitute a double-edged sword. While they may succeed in their immediate aim of smoothing out and facilitating the circulation process, they simultaneously create active power blocs among the merchants (for example, Walmart) and the financiers (for example, Goldman Sachs) who may pursue their own specific interests rather than serve the interests of capital in general.

There are other more purely physical problems that exacerbate the tension between fixity and motion within the circulation of capital. These problems centre on the category of long-term investments in fixed capital. In order for capital to circulate freely in space and time, physical infrastructures and built environments must be created that are fixed in space (anchored on the land in the form of roads, railways, communication towers and fibre-optic cables, airports and harbours, factory buildings, offices, houses, schools, hospitals and the like). Other more mobile forms of fixed capital (the ships, trucks, planes and railway engines, as well as the machinery and office equipment, right the way down to the knives and forks, the plates and cooking utensils, we use on a daily basis) have a long life. The mass of all this – as we look at an urban landscape like São Paulo, Shanghai or Manhattan – is simply huge and much of it is immovable, and that part which is movable cannot be replaced during the item’s lifetime
without loss of value. It is one of the paradoxes of capital accumulation that as time goes on the sheer mass of this long-lived and often physically immobile capital for both production and consumption increases relative to the capital that is continuously flowing. Capital is forever in danger of becoming more sclerotic over time because of the increasing amount of fixed capital required.

Fixed and circulating capital are in contradiction with each other but neither can exist without the other. The flow of that part of capital that facilitates circulation has to be slowed down if the movement of the circulating capital is to speed up. But the value of immobile fixed capital (like a container port terminal) can be realised only through its use. A container facility to which no ships come is useless and the capital invested in it is lost. On the other hand, commodities could not find their way to market without the ships and the container terminals. Fixed capital constitutes a world of things to support the process of capital circulation, while the process of circulation furnishes the means whereby the value invested in the fixed capital is recovered.

Another layer of difficulty then arises out of this underlying contradiction between fixity and motion. When the social manoeuvres designed to smooth out capital flow (for example, the activities of merchant capitalists and even more powerfully those of the financiers) are combined with the physical problems of fixity in the land, then a space is opened up for landed property to capture a share of the surplus. This distinct faction of capital extracts rents and shapes investments on the land even as it speculates mercilessly on land, natural resource and property asset values.

Back in the 1930s Keynes happily looked forward to what he called ‘the euthanasia of the rentier’.
¹
That political ambition, which Keynes applied to all owners of capital, has not of course been realised. Land, for example, has become even more prominent as a form of fictitious capital to which titles of ownership (or shares of future rental income) can be traded internationally. The concept of ‘land’ now includes, of course, all the infrastructures and human modifications accumulated from past times (for example, the subway tunnels of London and New York built more than a century ago), as well as
recent investments not yet amortised. The potential stranglehold of the rentier and the landed interest on economic activity is now an even greater threat, particularly as it is backed today by the power of financial institutions that revel in the returns to be had from escalating rents and land and property prices. The housing-price booms and crashes on which we have already commented have been typical examples. What is interesting is that these practices have not gone away. They have now morphed into the astonishing ‘land grabs’ going on around the world (from the resource-rich regions of north-east India to Africa and throughout much of Latin America) as institutions and individuals seek to secure their financial future by ownership of land and all the resources (both ‘natural’ and humanly created) embedded therein. This suggests the arrival of a coming regime of land and resource scarcity (in a largely self-fulfilling condition based on monopoly and speculative power of the sort that the oil companies have long exercised).

The rentier class rests its power on the control of fixity even as it uses the financial powers of motion to peddle its wares internationally. How this happened in housing markets in recent times is the paradigmatic case. Ownership rights to houses in Nevada were traded all over the world to unsuspecting investors who were eventually bilked of millions as Wall Street and other financial predators enjoyed their bonuses and their ill-gotten gains.