Seventeen Contradictions and the End of Capitalism (20 page)

It also turns out that the labourers themselves, as inherently passionate and sociable human beings, have something to say not only about their objective situation but also about their own subjective state of mind. The objective conditions of alienation can, even without capital’s help, be turned around by labourers themselves as they grasp opportunities to humanise labour processes and their general conditions of employment through the struggles they engage in. They may demand and in some instances even be accorded respect by their employers at the same time as they are objectively exploited. Subjectively, the forms of social bonding and solidarity necessary for survival down in the mines or around the steel furnaces are translated into pride in a dangerous and difficult job well done. Community solidarities mirror such sentiments and help counter the individualistic isolation that free-market processes tend to emphasise. It is possible even under the iron rule of capital that workers can take pride in their work and their role and assume an identity as a worker of a certain sort. They patently do ask, just as much as anyone else, what the meaning of the kind of life to which they are condemned might be and who it is that is in charge of an evolutionary process that either casts them aside into the ranks of the unemployed as disposable beings or offers them a job title that sounds so weird as to be as
incomprehensible as it is patently meaningless. Workers employed by capital do not have to feel totally alienated. But when meaningful jobs disappear, then the clear sense of being exploited is dangerously supplemented by a growing sense of total alienation as to their meaningless position in a make-work world.

This does not imply that the balance between alienation on the one hand and coping and compromise on the other is fixed. In the advanced capitalist countries, such as the United States, Britain, Germany, Canada, Japan and Singapore, the trends in the division of labour have favoured the production of an educated workforce capable of engaging flexibly in a wide range of different labour processes. This, coupled with a long history of struggle over the rights of labour and a multitude of fights against the alienations visited upon them by capital, has created a situation in which a significant proportion of the workforce in these countries is highly trained in at least elementary skills and if not handsomely at least comfortably remunerated. By way of contrast, the labour conditions in the clothing factories in Bangladesh, the electronics factories of southern China, the
maquila
factories strung along the Mexican border or the chemical complexes in Indonesia are much closer to those with which Marx was so familiar. We could insert contemporary accounts of labour conditions in and around these factories that would not seem out of place in
Capital
.

The transformations in work and social life wrought by the neoliberal counter-revolution that has gathered pace throughout the advanced capitalist world since the late 1970s has had devastating effects on large segments of the population that have been left behind and rendered disposable and dispensable by a combination of technological changes and offshoring. Lost in a world of long-term unemployment and decay of social infrastructures and loss of communal solidarities, large segments of the population are deeply alienated, largely given to passive resentments punctuated by occasional eruptions of sometimes violent and seemingly irrational protest. All it will take is for the volcanic protests from the Swedish suburbs to Istanbul and São Paulo to coalesce to reveal the vast magma of
alienation bubbling underneath. Capital will then be confronted with a political crisis that will be almost impossible to manage without draconian autocratic repressions that will in turn exacerbate rather than assuage the discontent. Uneven geographical developments in the division of labour and the parallel increase in social inequality in life chances are exacerbating that sense of alienation, which, if it becomes active rather than passive, will surely pose a major threat to the reproduction of capital as it is currently constituted. Society will then have to face the stark choice between an impossible reform and an improbable revolution.

Read any economics text or popular defence of capitalism and the word ‘competition’ will almost certainly very soon crop up. In popular defences as well as in more serious theoretical works, one of the great success stories of capitalism is that it supposedly takes the natural proclivity of human beings to compete, unleashes it from social constraints and harnesses it through the market to produce a dynamic and progressive social system that can function for the benefit of all. Monopoly power (of the sort that Google, Microsoft and Amazon wield these days) and its cognates like oligopoly (of the sort that the ‘Seven Sisters’ major global oil companies possess) and monopsony (the power that Walmart and Apple exert over their suppliers) all tend to be presented (if they are mentioned at all) as aberrations, as unfortunate departures from a state of happy equilibrium that should be achieved in a purely competitive market.

This biased view – for such I maintain it is – is supported by the existence of anti-trust and anti-monopoly legislation and commissions which proclaim how bad monopolies are and from time to time set out to break them up in order to protect the public from their negative effects. At the beginning of the twentieth century, for example, a wave of ‘trust-busting’ led by the indomitable figure of Teddy Roosevelt occurred in the USA. In the 1980s the break-up of AT&T’s monopoly in telecommunications was mandated in the USA and now in both Europe and North America questions are being asked concerning the excessive market power of Google, Microsoft
and Amazon. In the case of so-called ‘natural monopolies’ (mainly public utilities and transport links like canals and railways, which cannot be organised competitively) Adam Smith advised government regulation to prevent price gouging. The stated aim of public policy is to prevent monopoly pricing and to ensure the benefits of innovation, rising productivity and low prices that supposedly derive from inter-capitalist competition. The maintenance of a competitive environment through state action is generally touted as an essential policy stance for any healthy capitalist economy. In particular, achieving a competitive position in international trade is frequently cited as a major goal of public policies. If only a pure and perfect competitive market could be created, free of the distortions of monopoly power, then all, it is said, would be well.

This amazingly influential story has held sway for more than two centuries, ever since Adam Smith articulated it so persuasively and brilliantly in
The Wealth of Nations
. It constitutes
the
founding myth of liberal economic theory. The liberal political economists mounted a crusade against state interventions in price-fixing markets and against monopoly power from the late eighteenth century onwards. Keynes did not depart too much from it. Even more surprisingly, it is accepted as gospel in Marx’s
Capital
, though in Marx’s case the reasoning runs that if Adam Smith’s utopian tale was correct, then things would not turn out to be for the benefit of all: the result would be to deepen the class divide of wealth and power and ensure that capital would become ever more crisis-prone as well as powerful.

In the wake of the crisis of 2007–9 it became very difficult for economists to stick with their customary storyline. The bankers in pursuit of their individual interests plainly did not contribute to the general welfare and in the USA the Federal Reserve bailed out the banks but not the people. This has now led to an admission that monopoly power is more than an aberration but a systemic problem that arises out of what economists refer to as ‘rent seeking’. ‘To put it baldly,’ says the economist Joseph Stiglitz, ‘there are two ways to become wealthy: to create wealth or to take wealth away from others.
The former adds to society. The latter typically subtracts from it, for in the process of taking it away, wealth gets destroyed.’
¹
Rent seeking is nothing more than a polite and rather neutral-sounding way of referring to what I call ‘accumulation by dispossession’.

The virtue of Stiglitz’s somewhat truncated account of rent seeking or accumulation by dispossession is that it recognises the seamless way in which monopoly power in economic transactions is paralleled by monopoly power in the political process. Take the case of the United States. Regressive taxes and write-offs; regulatory capture (in which the foxes are put in charge of the henhouse); acquiring or leasing state or private assets at discount prices; inflated cost-plus contracts with state agencies; writing legislation to protect or subsidise particular interests (energy and agribusiness); buying political influence through campaign contributions – these are all political practices that give a free hand to big moneyed and monopolistic interests while permitting them to plunder the public treasury at the expense of the taxpayer. These political practices supplement conventional rent seeking in land and property markets; rents on resources and on patents, licences and intellectual property rights; plus excess returns due to monopoly pricing. Then there are all the quasi-legal ways of gaining excess profits. The creation of financial markets that lack any transparency or in which adequate information is lacking creates a fog of misunderstanding in which sharp practices are impossible to curb. Real money has been made out of fictitious accounting (as Enron showed so dramatically). When we add in the proliferation of abusive practices such as predatory lending in housing markets that transferred billions in asset values from the public to the financiers, abusive credit card practices, hidden charges (on phone and medical bills), as well as practices that skirt if not infringe the law, we end up with a vast array of practices where big corporations and big moneyed interests add to their wealth hand over fist even as the economy as a whole collapses and then stagnates. As Stiglitz remarks, ‘Some of the most important innovations in business in the last three decades have centered not on making the economy more efficient but on how better to ensure monopoly
power or how better to circumvent government regulations intended to align social returns and private rewards.’
²

What is missing from Stiglitz’s account of rent seeking as a strategy (though not from his account of the social outcomes) is the demolition of a wide range of democratic rights, including economic rights to pensions and health care, and free access to vital services such as education, police and fire protection, and state-funded programmes (like nutritional supplements and food stamps in the case of the USA) that have hitherto helped to support low-income populations at an adequate standard of living. The neoliberal assault on all these rights and services is a form of dispossession that passes the public expenditure savings on to the ‘not needy but greedy’ class of corporate heads and billionaires. And all of this has been accomplished by resort to a consolidated class power that monopolises both the economy and the political process while monopolising most of the media, reducing a supposed ‘free market in ideas’ to a series of factional squabbles about trivia. And yet economic orthodoxy still insists that the free market is the god in whom we must necessarily trust and monopoly an unfortunate aberration that we could, if we put our minds to it, avoid.

The view I shall take here, however, is that
monopoly power is foundational rather than aberrational to the functioning of capital and that it exists in a contradictory unity with competition
. This is a rather unusual stance to take and it goes well beyond Stiglitz’s account, but there is good reason to believe that it is the correct formulation. Not only does it accord with the singular fact that most capitalists if given the choice prefer to be monopolists rather than competitors and that they persistently go out of their way to try to procure as much monopoly power as they possibly can. It also gets to the core of the contradictory unity between competition and monopoly in the history of capital.

So how are we to understand this contradictory unity? The most obvious place to begin is at that point where the two are indistinguishable or, to be more exact, where they are fused and the contradiction is latent rather than antagonistic. This point lies in the nature
of private property, which confers a monopoly over the use of a commodity upon its owner. The monopoly power inherent in private property forms the basis for exchange and by extension for competition. This may seem elemental, trivial even, but it becomes far less so when it is recognised that the class power of capital rests entirely on the assemblage of all of these individual monopolistic property rights into a social order where the capitalist class can be defined vis-à-vis labour by its
collective monopoly over the means of production (or, in its updated version, the means of financing)
. What is lacking in the usual discussion of monopoly is the concept and the reality of
class
monopoly power (the collective power of capital), including class monopoly rents, as applied to both economic and political processes.

The role of the standard story in which competition features so large and monopoly not at all then becomes clearer. It obscures the monopoly basis of class power in private property and conveniently evades questions of class power and class struggle (as is the case in almost all economics textbooks). Capital is ideally construed as a wondrous series of molecular and competitive collisions of individual capitalists moving freely and hunting for profitable opportunities within a chaotic sea of economic activity. The reality of the international competition that is touted as so beneficial to all is that it exerts a downward pressure on wages to the benefit of capital!

Unlike the case of technological change more generally, which can plausibly be depicted as progressive and irreversible, the balance between monopoly and competition oscillates erratically back and forth. It sometimes seems cyclical over time rather than unidirectional and is subject to the political whims and leanings of state management and intervention. Marx thought that the end point of competition was bound to be monopoly power and that there might be distinctive laws governing the centralisation of capital, but he did not elaborate. Lenin famously saw capital moving into a new phase of monopoly power associated with imperialism at the turn of the twentieth century when the big industrial cartels combined with finance capital to dominate the leading national economies (these were the trusts that Teddy Roosevelt strove to break up). This view re-emerged in the 1960s
with Paul Baran and Paul Sweezy’s book
Monopoly Capitalism
in the United States and in the work of various theoreticians of communist parties in Europe.
³
The rising power of monopolies was again associated with strong currents of a centralised imperialism. In the 1960s it was the large corporations (such as the big three car manufacturers in Detroit or state-run enterprises in Europe) that dominated national markets and were thought to exercise excessive monopoly power. It was the large corporations, like United Fruit in Central America or ITT in Chile, that exercised monopoly power internationally and stood behind coups and the military regimes like that in Chile that did the bidding of the imperialist powers.