June 1, 2012
A Review of Kliman’s “The Failure of Capitalist Production” (unedited!)

“The Failure of Capitalist Production” is essential reading for the left— from liberal to Stalinist. Responding to the recent resurgence of advocates for Keynesian style “fixes” to capitalism, Kliman presents the case that papering over problems with state intervention delays, but actually intensifies the inevitable crisis. Kliman empirically deconstructs the arguments which blame the 2007-2008 crisis of capitalism on “greed” rather than inevitable structural flaws in capitalist production— in his words “Blaming the crisis on greed is like blaming a plane crash on gravity”. His scholarly rigor is impeccable, processing slowly and deeply how statistics are manipulated by the left and right to affirm reformist solutions to stabilizing capitalism. Analytically reviewing the economic trouble of the 70’s, he comes to the conclusion (against his own intuition as he explains) that Keynesian policies, coupled with the tendency of the rate of profit (LTRPF) to fall, began a period of stagnation that we have never recovered from. In fact, nearly all of the problems we try to pin to the unique policies of neo-liberalism (unemployment, wealth inequality, low investment in infrastructure, borrowing out of proportion to GDP growth) began in the Keynsian 70’s The main thrust of the book is to explain how the LTRPF can hold water against generally excepted framework from the Okishio theorem, and the claims of dogmaticism by other Marxists, with the implication that turning toward neo-liberalism or the welfare state are equally untenable.

The tendency in Marxist advocated by Kliman and others is called “TSSI”, the “Temporal Single-System Interpretation” that points to the LTRPF as a latent, but persistent cause of crisis, rather than some holy grail that can provide ready-made analysis when things go wrong. The “temporal” in TSSI measures the rate of profit arguably in the way Marx himself did, by looking at the aggregate of total investment in the initial purchase of the means of production, and then measuring this number (historically adjusted for inflation and the like) against produced surplus. This is counter to the tendency of Marxists and some bourgeois economists to measure the rate of profit merely as a relationship between surplus and the portion of constant capital that one is replacing. “Single-System” refers to the correlation between value (socially necessary labor time for production) and price(market variance of value): the relationship is single but irreducible. These points may seem semantic or obscure, but the implications are crucial for a strong analysis, and also for politics. Kliman uses the TSSI as an interpretive tool to combat modern left economic trends, as well as defend Marx from charges of inconsistency that have become orthodox.

The fashionable jargon around “financialization”, the move to a primarily consumer based economy, and the concept of “deindustrialization” are all put through the ringer; Kliman asserts in fact that between 1981 and 2001 corporations invested more in production than in 1947 to 1980. It is perhaps most boldly stated when he explains “The data therefore fail to support the notion that “finance” has become uncoupled from the “real” economy. No neo-liberal shift away from productive investment in favor of portfolio investment took place. The entire fall in the rate of accumulation is therefore attributable to the fall in the rate of profit.” Coupled with the statistic that the global proletariat has actually doubled since the 1970’s, the alleged paradigm shift argued for by post-Marxist/communization theory celebrities like Hardt and Marazzi become rather weak. Marazzi’s contention that “The extraction of value[…] enters directly into the sphere of the circulation of capital” through debt is countered effectively by Kliman, who argues that “ Sales activities, labor performed in financial, real-estate, and insurance industries, and legal activities transfer ownership of already-existing value; the labor of security personnel and some managerial activity protects already-existing value; and the labor of accountants and bookkeepers and some other managerial labor keeps track of already-existing value.” (my emphasis)

Now this may seem counter-intuitive to some, as debt makes up an increasing portion of the GDP, and most of us work in the service sector, or know someone who does. This doesn’t alter the fact that industrial production is at an all time high, and that the debt and securities “explosion” does nothing to fundamentally alter the way value (not to be confused with wealth) is created. Kliman elucidates to the contrary: “Production Investment spending has increased 5 times faster since 1933 than consumption spending. Capitalism doesn’t produce for human need, it is production for productions sake.” Segmenting financialization as the new paradigm over classic production, regardless of the degree to which the two are intertwined, masks capitalisms “dirty little secret” of surplus-value, and has the political ramifications of shifting our analysis away from the working class as the fulcrum for mobilizing and defeating the capitalism. It is pure commodity fetishism to believe that the mere circulation of wealth can stimulate its own surplus-value: the reality of this comes to light when the bubbles burst, and serious liquidity issues arise in regard to these immaterial assets. Debt and financialization are responses to cope with the underlying contradictions of capitalism itself.

Kliman also argues against Harvey and Luxembourg that surplus can increase indefinitely, and that attempting to explain imperialism by claiming capitalism needs to expand outward to find markets for realizing overproduced commodities is misguided. The faulty framework is the assumption that all production is slated for consumption by persons, whereas the majority of value is realized immanently among capitalists. “Let us consider businesses’ productive consumption demand— in other words, their investment demand. It consists of spending by businesses to build structures (factories, malls, offices, and so on), as well as purchases of machinery, other equipment, and software. If investment demand rises, and the rise is large enough to offset the fall in personal consumption demand, a decline in wages or workers’ share of income does not lead to a decline in total demand. It therefore does not lead to an economic crisis or recession. ” The fallacy of assuming that production need be geared toward human consumption stems from the idea that capitalism is a system designed to meet human needs in some way, whereas in reality capitalists would be (and mostly are) wholly content with selling amongst each-other. Kliman goes into great detail on the way the surplus is internally realized, ending with some equations that are a bit above my head, but from following the logical argument, I can see the consistency with Marx’s analysis in Capital volume 2. The evidence to back this claim is partly in relation to the 2008 crisis: “In the 65 years from 1943 to 2007, real personal consumption spending in the U.S. declined only twice, in 1974 and 1980, while there were 23 years in which real gross private domestic investment spending declined. Moreover, the percentage decline in consumption spending in 1974 and 1980 was on average just 7 percent of the percentage decline in investment spending. ” Further evidence emerges when a direct comparison is made: “In the case of the U.S., there is also very good evidence that the share of income devoted to investment rose, and the share devoted to consumption fell, during the three-quarters of a century following 1933, the trough of the Great Depression. ” (investment here referring to investment in the Means of Production)

The most controversial thesis of the book, especially for those of us on the left, is that equal wealth redistribution does not promote a healthy economy. This is of course the political conclusion of underconsumption theory: that people are unable to buy the products they make because of the increasing exploitation and wage depression. The unfortunate reality is that taking a portion of profit from capitalists, who primarily are trading amongst themselves, is actually a detriment to the profit rate, which is at the end of the day the fundamental underpinning of a healthy economy. This isn’t a call to abandon the fight for living wages, or universal health-care, or any of that good stuff; it is a warning that there is no solution within the capitalist economic relationship. To escape perpetual crisis and poverty for the vast majority of people, a revolution must eliminate these perpetuating institutions. The revolution is essential not merely as a measure of vengeance, justice, and morality— the revolution is a necessity to unburden our world from its massive debt by the direct destruction of capital value, and to assure that our new world is unfettered from value creation entirely. No reform or limitation to capitalism can succeed, as capital cannot abide a barrier, and will do it has done since day one: find a way through any fences we build to restrain it. Communism is not a utopian concept, it is the only realistic solution. Kliman elaborates: “Such risk exists only because lenders and borrowers are separate and opposed entities; it would not exist in a communal society. Indeed, the very notion of credit would be meaningless in such a society. Just as an individual or household cannot obtain credit from itself, repay itself, or default on its obligation to repay itself— it simply decides whether to use its resources or hold on to them— neither could a communal society. ”


The excitement around now cliché concepts like “prefigurative politics”, “building a new world within the old”, and other reformist garbage like Hakim Bey’s “Temporary autonomous zone” are also regarded contemptuously by Kliman: “This brings me to the notion of developing socialism within capitalism, enlarging the space of the commons or whatever. Unfortunately, it cannot be done. It has been tried (for instance, in the Israeli kibbutzim) and it does not succeed. The economic laws of the larger system will not allow it. If you buy from the capitalist world “outside,” you also have to sell to it in order to get the money you need to buy from it, and you will not sell anything if your prices are high because your costs of production are high. And if you have debts, you have to repay them.” (my emphasis) The seeds of Stalin’s “socialism in one country” are sown in the conception of creating a community or society that functions in capitalism, yet against it. This is important to firmly lay into anyone and everyone that believes we can overcome this system without a revolution, or that this revolution cannot succeed without an internationalist basis. By “revolution” I don’t mean inter-personally, or temporarily, in art, or the latest Apple product— I mean the working and oppressed peoples, collectively assuming power, smashing the capitalist social relation, and implementing global systematic oppression of the ruling class and their cohorts. As Kliman says “It seems utopian, but we have no alternative”; We have a lot of work to do.

(P.S.) I will forgive the unwarranted criticism of Lenin at the end… this time!


-M

2:59pm  |   URL: http://tmblr.co/Z57pbxMYrwlF
Filed under: Capitalism Crisis Currency David Graeber David Harvey Economics Economy Hakim Bey Keynes Kliman Liberal Marxism Money Neo-Liberalism Occupy Political Economy Revolution The Failure of Capitalist Production Temporary Autonomous Zone. 
September 6, 2011
Capital Kills Labour

A year ago, a fire in a Bangladesh factory killed 30 workers. The factory made clothes for American companies JC Penny, Abercrombie, and Gap (1). Most of the workers died jumping from the 10th floor, or trying to climb down the fire escapes. An electrical short circuit probably caused the fire. This is a common occurrence in Bangladeshi factories, which use sub-standard wiring, and often have inadequate fire escapes. 500 workers have died in factory fires in Bangladesh in the last five years. Some workers who survived the recent fire complained to the AFP news agency that their fire exits were locked (2).

The fire, and many others, could have been prevented—lives could have been saved—if the factory had seriously implemented the required safety measures. No doubt they considered it too expensive to keep the building up to code, and would rather risk the workers’ lives than eat into their profits. No doubt they were also under pressure from the American firms buying their products to keep the prices low. After all workers, like machines, can be replaced, but lost profits are lost forever. At some point, the decision was consciously made to ignore safety regulations, just one of the innumerable decisions made all over the world every day which place profits over people, lives over loss. In capitalist cost-benefit analysis, individual labourers are expendable, as long as there are more to take their place. And under the coercive conditions capitalism imposes on every aspect of our lives, there are always more people willing to work for however little money: if not here, then somewhere else around the world.

2011 was the 100th anniversary of the Triangle Shirtwaist Factory Fire in Manhattan which killed 146 women, many of them young Italian and Jewish immigrants. The workers died jumping from the top stories of the building, or falling when a flimsy fire escape collapsed. Those trying to escape down the stairs found the door locked. In New York this year the tragedy was solemnly commemorated by a coalition of labour organizers, historic preservation societies, and local artists who held a procession through Greenwich village carrying shirtwaists, and banners with the names of the women who died (3).

But who will commemorate this recent tragedy? It will be up to the families of the workers. The Bangladeshi factory fire was largely ignored by American mainstream media, as are countless other instances of death, illness and severe exploitation in Third World factories which supply American companies. This month, 284 people fainted in a Cambodian H&M factory, due to noxious fumes emitting from the clothes they were constructing. Another 300 workers at an H&M factory 100 miles away fell ill in July (4). This phenomenon has been reported by NGOs who estimate 1,000 fainting have occurred this year among garment workers . A local police chief blames the recent faintings on the “weak health” of the workers, most likely caused by malnutrition, and long shifts handling toxic chemicals in poorly ventilated rooms (5). For Third World labourers, danger and illness are all in a day’s work.

Today, in the centers of consumption, we think these tragedies are things of the past. We have labour laws now, and safety regulations, fire codes, sprinklers and disaster training. Deaths are the result of individual carelessness, not systematic neglect. Regrettable accidents, not corporate policies, are to blame for any lives lost on the job. We assume that in this enlightened era of free-market competition, companies willingly follow the laws and take necessary precautions to ensure workers’ safety: the market acts as a force of reason, regulating itself with the help of state legislation. Factories have to keep up to code in order to be competitive employers: who would want to work for a firm that didn’t care about its workers? The assumption that labour is on an equal footing with capital, that workers have the agency to decide who they sell their labour to, is a myth perpetuated by the capitalist class: neo-liberal economic policy and political propaganda use liberal notions of individual freedom and social equality to obscure the very real race, gender and class differences dividing people. We may have equal rights according to the constitution, but as Marx reminds us, “between equal rights, force decides” (6) Neo-liberalism champions micro-credit programs as a solution to poverty, corporate bailouts to stimulate economic recovery, and privatization to improve health-care and social services. We have seen the effects of these policies over the last thirty years, since their introduction by Reagan and Thatcher in the 1980s: the rural poor burdened by mounting debt (7), massive profits for banks and unemployment for the masses, and drastic reductions of medical coverage and welfare benefits (8).

Despite agreeing to negotiate compensation for the injured workers and the families of the deceased, and to implement rigorous fire safety standards, JC Penny, one of the seven companies supplied by the factory, has dropped out of the negotiations. Whether or not the people affected by this tragedy will be compensated remains to be seen, though certainly no amount of money can make up for a permanent injury, or the loss of a loved one. Yet money is the best thing they can hope for from these negotiations: capital regards with human life in no other terms.

Even when progressive people acknowledge the horrors of sweat shop labour—our cheap goods come at a human cost!—the issue is taken to be a Third World problem, caused by corrupt local governments and sleazy factory owners cutting corners. Working conditions in sweat shops are likened to those prevailing a hundred years ago during the dark ages of Europe and America’s Industrial Revolution, further reinforcing the colonial construct of the West as the center of Progress, which the rest of the world is still catching up to. Well meaning organizations may decry the deplorable conditions in Third World factories, and urge consumers to consider the ethical implications of the things they buy. But rarely do they extend their analysis to an anti-capitalist conclusion. We might be called upon to boycott Nike, but not to recognize the coercive force of US economic imperialism, or to challenge the inherently immoral system of capitalists extorting surplus value from exploited labour. Better regulations or consumer boycotts will not improve workers’ conditions in a global economy operating on free-market competition, aimed at generating enormous wealth for a tiny number of individuals, at the expense of every one else. As David Harvey says, “capital circles the globe looking for the most profitable locations. ” Countries like China, India, Cambodia, and Taiwan attract foreign investment by offering large reserves of cheap labour with minimal state regulation to police profits. Companies that used to manufacture in the US and Europe have moved their operations to developing countries where they can turn a higher profit by exporting cheap goods to Western markets.

Hazardous workplaces and meager wages are not anomalous throw backs to the Industrial Revolution: they are standard conditions for the global proletariat. And these conditions are no accident: they are purposefully perpetuated by international capitalism to ensure cheap production and high profits. Capitalists need to increase their profits by 3% every year just to keep up with the competition and remain in business, and they achieve this by cutting the costs of production to the bare minimum, paying workers low wages for long hours, and skimping on safety measures. Death and illness on the job are endemic to capitalism’s systematic lack of ethics. As long as there are more workers to fill the fields and factories, capitalists do not care how many are crushed in the path of their relentless pursuit of profit.

What we need are not more laws for capitalists to ignore, standards for them to squirm around, or regulatory agencies for them to bribe. State governments have been falling in step with capital since the before the Industrial Revolution, facilitating massive accumulation and profit through land seizures, the privatization of natural resources, police and military control of the population, bureaucracy, corporate-sponsored politicians, bank bail-outs, slashed social services, and laws which punish poor people, immigrants, women, workers, and people of colour (9). No boycotts or NGOs or online-petitions are going to stop the insatiable lust for profit, the vampire of capital which drains the blood of labour to keep on living (10).

We need a mass movement of working people to forcefully seize the means of production, an organized revolutionary force to wage war against the ruling class. We need violent action, not peaceful reform; international solidarity, not competitive nationalism. From the Industrial Revolution to Globalization, from the New York in 1911 to Bangladesh in 2011, capitalism is the culprit in these crimes. We must destroy the drive-for-profit, private property, the free-market, and the state apparatuses upholding them if we’re to have any hope of an equitable, cooperative society, of production free from exploitation, for the benefit of all people. And we must have this hope if we’re to have any hope at all for the future of humanity, animals and the earth.

  1. http://www.change.org/petitions/jc-penney-dont-break-your-promise-to-families-of-workers-who-died-making-your-clothes?utm_source=action_alert&utm_medium=email&alert_id=rQanerDeCt_DNjZQwZmbx

  2. http://www.bbc.co.uk/news/world-south-asia-11991807

     3.  http://en.wikipedia.org/wiki/Triangle_Shirtwaist_Factory_fire

     4.   http://www.styleite.com/media/hm-factory-fainting/

     5.   http://www.reuters.com/article/2011/08/25/us-cambodia-faintings-idUSTRE77O2TC20110825

     6. Marx, Karl. Capital. Page 235. International Publishers, New York: 1977

     7.   http://www.mainstreamweekly.net/article1492.html

     8. The number of Americans without health insurance has risen from 46.3 million (15.4%) to 50 million (16.7 %) in a year. http://www.usatoday.com/news/nation/2010-09-17-uninsured17_ST_N.htm

     9. For some recent examples of these laws see Arizona’s anti-immigrant law SB 1070 passed in collaboration with prison corporations (http://www.npr.org/templates/story/story.php?storyId=130833741), the numerous laws restricting access to abortion which primarily affect low-income women (http://www.alternet.org/reproductivejustice/151504/900_anti-woman_laws_to_appease_conservative_extremists_—_is_abortion_becoming_legal_in_name_only/ ), and laws which require welfare recipients to pass drug tests which purposefully ignore the explicit causal connection between drug use and poverty http://inciteblog.wordpress.com/2011/07/19/stereotypes-myths-criminalizing-policies-regulating-the-lives-of-poor-women/

    10. “Capital is dead labour, that, vampire-like, only lives by sucking living labour, and lives the more, the more labour it sucks.” Karl Marx, Capital page 233.


-H

10:12pm  |   URL: http://tmblr.co/Z57pbx9EGsgo
(Notes: 150)
  
Filed under: Factories Capitalism Capital Marx David Harvey Neo-Liberalism Consumerism free market Marxism Triangle Shirtwaist Factory H&M JC Penny Cambodia Bangladesh 
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