Seventeen Contradictions and the End of Capitalism (9 page)

Since I have in preceding sections frequently referred to the housing market and the crisis in the property market as an example, let me briefly explain how it all works in this context. Private property rights underpin home ownership and capitalist states have systematically
supported by various means (from active subsidies to advertising and rhetoric of the dreams of home ownership) the extension of home ownership to more and more segments of the population. This has in part been to ensure a continuous growth of the property market as a field of active and lucrative capital accumulation, but it has also performed a crucial ideological function, consolidating popular and populist support for the strategy of providing use values through exchange value mechanisms: in other words, support for the capitalist way. The active governmental support for home ownership in the United States, for political as well as economic reasons, consequently played its part in fostering the sub-prime mortgage crisis that brought down some of the major private investment institutions but also brought the quasi-public institutions of Fannie Mae and Freddie Mac into the ranks of bankruptcy, from which they had to be rescued by temporary nationalisation.

So what, then, must the political strategy in relation to this contradiction between state and private property be? A simple argument to try to restore the balance and enhance individual liberties (as many on both the left and the right of the political spectrum seem to favour these days) cannot suffice, in part because the balance has shifted so dramatically towards arbitrary state power and also because faith in the state as a potentially benevolent agent has largely faded. The return of the state to a pure ‘nightwatchman’ role will only further unleash the powers of what is already a largely unregulated capital to do as it will without any social or long-term constraints.

The only viable alternative political strategy is one that dissolves the existing contradiction between private and individual interests on the one hand and state power and interests on the other and replaces it with something else. It is in this context that much of the current left concern with the re-establishment and reclamation of ‘the commons’ makes so much sense. The absorption of private property rights into a comprehensive project for the collective management of the commons and the dissolution of autocratic and despotic state powers into democratic collective management structures become the only worthy long-term objectives.

These objectives make sense when applied to money and credit. The reclamation of money and credit as a form of the democratically regulated commons is imperative if the trend towards autocracy and monetary despotism is to be reversed. Severing the activities of money creation from the state apparatus becomes imperative in the name of strengthening and democratising collective liberties and freedoms. Since the power of the capitalist state rests in part on the twin pillars of a monopoly over the legitimate use of violence and monopoly power over monetary affairs and the currency, the breaking of the latter monopoly would ultimately entail a dissolution (rather than the ‘smashing’) of capitalist state power. Once deprived of power over its monetary resources, the capacity of the state to resort to militarised violence against its own restive populations would be nullified also. While this might seem far-fetched as an idea, something like it is already partially realised by the fact that the power of the bondholders is being used in countries like Greece, Italy and Spain to dictate state policies towards their own populations. Replace the power of the bondholders by the power of the people and this all too visible trend could just as easily be reversed.

State power is, as already noted, generic rather than particular. Hence this politics would have to dissolve all those international monetary institutions (like the IMF) that have emerged to support the dollar imperialism of the USA and which serve to maintain its financial hegemony within the world system. The disciplinary apparatus that is currently destroying the daily life of the Greek people, as well as the lives of many others who have suffered from the interventions of the IMF (usually in combination with other multilateral state powers, such as, in the Greek case, the European Central Bank and the European Commission), would likewise need to be dissolved to make way for practices and institutions of collective management of the common wealth of populations. Such a solution may appear abstracted and utopian in relation to current practices. But it is vital for alternative politics to have this sort of vision and long-term ambition in mind. Radical agendas, either revolutionary or reformist, must be formulated if civilisation is to be saved from
being drowned in the contradiction between callous and unregulated private property and increasingly autocratic and militarised police state powers dedicated to the support of capital rather than to the well-being of the people.

The common wealth created by social labour comes in an infinite variety of use values, everything from knives and forks to cleared lands, whole cities, the aircraft we fly, the cars we drive, the food we eat, the houses we live in and the clothes we wear. The private appropriation and accumulation of this common wealth and the social labour congealed within it occur in two quite different ways. First, there is a vast array of what we would now consider extra-legal activities, such as robbery, thievery, swindling, corruption, usury, predation, violence and coercion, along with a range of suspicious and shady practices in the market (monopolisation, manipulation, market cornering, price fixing, Ponzi schemes etc.). Second, individuals accumulate wealth by legally sanctioned exchanges under conditions of non-coercive trade in freely functioning markets. Theorists of capital circulation and accumulation typically exclude activities of the first sort as excrescences external to the ‘normal’ and legitimate functioning of the capitalist market. They build their models of capital circulation and accumulation on the presumption that only the second mode of private appropriation and accumulation of social wealth is legitimate and relevant.

I think it is time we overthrew this convenient but profoundly misleading fiction promoted by the economics textbooks and recognise the symbiotic relation between these two forms of appropriation of both social labour and the products of that social labour. I make this argument in part on the simple empirical grounds that it
is stupid to seek to understand the world of capital without engaging with the drug cartels, traffickers in arms and the various mafias and other criminal forms of organisation that play such a significant role in world trade. It is impossible to shunt aside as accidental excrescences the vast array of predatory practices that were so easily identifiable in the recent crash of property markets in the United States (along with recent revelations of systematic banking malfeasance – such as the falsification of asset valuations in bank portfolios – money laundering, Ponzi finance, interest-rate manipulations and the like).

But beyond these obvious empirical reasons, there are strong theoretical grounds for believing that an economy based on dispossession lies at the heart of what capital is foundationally about. The direct dispossession of the value that social labour produces at the point of production is but one (albeit major) strain of dispossession that feeds and sustains the appropriation and accumulation by private ‘persons’ (that is, legal entities including corporations) of large portions of the common wealth.

Bankers do not care in principle, for example, whether their profits and excessive bonuses come from lending money to landlords who extract exorbitant rents from oppressed tenants, from merchants who price-gouge their customers, from credit card and telephone companies that bilk their users, from mortgage companies that illegally foreclose on homeowners or from manufacturers who savagely exploit their workers. While theorists on the political left, inspired by their understanding of Marx’s political economy, have typically privileged the last of these forms of appropriation as in some sense more foundational than all the others, the historical evolution of capital has exhibited immense flexibility in its capacity to appropriate the common wealth in all these other myriad ways. The higher wages workers may get through class struggle in the workplace can all too easily be snatched back by the landlord, the credit card companies, the merchants, to say nothing of the taxman. The bankers even construct their own shell games, from which they profit immensely, and even when they get caught it is, for the most part, the bank (that is, the shareholders) who take the hit and not the
bankers themselves (only in Iceland did the bankers actually end up in jail).

At the heart of this process of private appropriation of the common wealth lies the contradictory way in which, as we have seen, money represents and symbolises social labour (value). The fact that money, as opposed to the social value it represents, is inherently appropriable by private persons means that money (provided it functions well as both a store and measure of value) can be accumulated without limit by private persons. And to the degree that money is a repository of social power, so its accumulation and centralisation by a set of individuals become critical to both the social construction of personal greed and the formation of a more or less coherent capitalist class power.

Recognising the dangers to the social world, pre-capitalist societies endeavoured to erect barriers to the reckless private appropriation and use of common wealth while resisting the commodification and monetisation of everything. They realised very well that monetisation dissolved other ways of forming community with the result, as Marx put it, that ‘money became the community’.
¹
We are still living with the consequences of that transition. That these older societies ultimately lost that battle should not deter us from considering ways in which this private appropriation of the common wealth might be curbed, for it is still the case that it poses immense dangers in terms of reckless appropriations and investments regardless of the environmental or social consequences, even threatening the conditions for the reproduction of capital itself.

While this may all be self-evident, there is something even more sinister at work within the monetary calculus that really puts the seal upon the politics and practices of accumulation by dispossession as the hallmark of what capital is about. In the examination of how money works, we saw how the distinction between value and price opened a gap between the realities of social labour on the one hand and the ability to hang a fictional price label on anything, no matter whether it was a product of social labour or not. Both uncultivated land and conscience can be sold for money! The gap between values and prices was therefore not only quantitative (such that prices could
move instantaneously up or down in response to any disequilibrium in demand and supply) but also qualitative (such that a price could be put on even such immaterial traits as honour, allegiances and loyalties). This gap has become a yawning chasm as capital has expanded its range and depth with the passing of time.

Of all writers it was, perhaps, Karl Polanyi, an émigré Hungarian socialist economic historian and anthropologist who ended up working and writing in the United States at the height of the McCarthyite scourge, who most clearly saw the nature of this phenomenon and ‘the perils to society’ which it posed. His influential work on
The Great Transformation
was first published in 1944 and remains a landmark text to this day. The markets for labour, land and money are, he pointed out, essential for the functioning of capital and the production of value.

But labor, land, and money are obviously
not
commodities … Labor is only another name for a human activity which goes with life itself, which in its turn is not produced for sale but for entirely different reasons, nor can that activity be detached from the rest of life, be stored or mobilized; land is only another name for nature, which is not produced by man; actual money, finally, is merely a token of purchasing power which, as a rule, is not produced at all, but comes into being through the mechanism of banking or state finance. None of them is produced for sale. The commodity description of labor, land, and money is entirely fictitious.
²

To allow the fictions that land, labour and money are commodities to flourish without restraint would, in Polanyi’s view, ‘result in the demolition of society’. In ‘disposing of a man’s labor power the system would, incidentally, dispose of the physical, psychological, and moral entity “man” attached to that tag. Robbed of the protective covering of cultural institutions, human beings would perish from the effects of social exposure; they would die as the victims of acute social dislocation through vice, perversion, crime and starvation. Nature would be reduced to its elements, neighborhoods and
landscapes defiled, rivers polluted, military safety jeopardized, the power to produce food and raw materials destroyed’; and, finally, ‘shortages and surfeits of money would prove as disastrous to business as floods and droughts in primitive society’.

No society, Polanyi concluded, ‘could stand the effects of such a system of crude fictions even for the shortest stretch of time unless its human and natural substance as well as its business organization was protected against the ravages of this satanic mill’.
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To the degree that neoliberal politics and policies these last few decades have dismantled many of the protections that had been so painstakingly created through earlier decades of struggle, so we now find ourselves increasingly exposed to some of the worst traits of that ‘satanic mill’ which capital, left to itself, inevitably creates. Not only do we see around us abundant evidence of so many of the collapses that Polanyi feared, but a heightened sense of universal alienation looms ever more threatening, as more and more of humanity turns away in disgust from the barbarism the underpins the civilisation it has itself constructed. This constitutes, as I shall argue by way of conclusion, one of the three most dangerous, perhaps even fatal, contradictions for the perpetuation of both capital and capitalism.