Good Cap, Bad Cap

The credit crisis has tarnished the image of capitalism but its defenders
may help it live on by pinning all of the blame on financiers.

Investment bankers have gone in the past few months from being the “masters of the universe” to the object of universal scorn. Across the political spectrum in the United States, particularly at the fraying ends of its two main political parties, criticism of Wall Street can be heard. Even McCain and Obama – whose presidential campaigns have been generously funded by Wall Street – have had to make half-hearted statements about how “greed is, um, bad.”

This criticism is richly deserved, of course, but many of the harshest critics of speculators are fond of capitalism itself and take a rather benevolent view towards other types of capitalists. Greedy bankers and stockbrokers are lambasted, but in the next breath the capitalists involved in the actual production and sale of commodities are portrayed as unfortunate victims of the credit crisis. This one-sided criticism suits the capitalist class as a whole just fine.

Now that capitalists themselves are at least exposing some of the high crimes and low comedy connected to their own financial system, and so much popular attention is focused on the role of money capitalists, it seems particularly necessary for us to attack the false notion that there are “good” and “bad” capitalists; and that crisis could be avoided and capitalism perfected if the bad ones could be kept under control or swept away.

Den of thieves

This idea that bankers – particularly investment bankers – are any worse than other types of capitalists is not convincing to anyone aware that the revenue of all capitalists flows from same source: the exploitation of labour. The dirty little secret of capitalism is that the capitalist class as a whole, and all of the individual capitalists, enrich themselves thanks to workers adding more new value to the commodities they produce than the value of the wages received as payment for their labour-power.

Any party to this exploitation of labour – whether the capitalist who advances the investment funds, the capitalist who supervises the commodity production process, or the capitalist who is tasked with selling the commodities – is entitled to a piece of the action and merits an equal share of the blame. It is nonsense to argue that one type of capitalist is more or less culpable than the others.

The relations between capitalists are very much like those between a group of thieves, who cooperate to pull off a heist and then divide the loot among themselves. Conflicts easily arise from such an arrangement: as a bigger share for one means a smaller share for the others. Such squabbles, however, are of little concern to the person who has been robbed. Likewise, for workers, divisions within the capitalist class should be of secondary interest to the more fundamental conflict between the exploiters and the exploited.

Yet we need to do more than simply prove that the idea of “good” and “bad” capitalists is wrong: it is also necessary to explain how this false ideology has a basis in reality that makes it seem plausible to many. That basis, as just touched on, is the antagonism that actually exists between different types of capitalists with regard to how surplus-value is divided between them. This fosters the notion that fundamental differences exist between capitalists and that some are more deserving of their revenue – an impression that is further deepened by the fact that revenue takes different forms that appear to be independent of each other.

This means that we can better understand why money capitalists and industrial capitalists tend to be viewed differently by examining the division of surplus-value between them and the specific forms of their revenue. Marx does this in Volume 3 of Capital, where he examines “interest” and “profit of “enterprise” – the former being the revenue that the money capitalist is entitled for loaning capital to the industrial capitalist, while the latter is the profit the industrial capitalist receives after paying that interest to the money-capitalist.

Marx’s discussion of “interest” and “profit of enterprise” is not directly related to the economic activities of the now-disgraced stockbrokers, as they have made money in more imaginative ways than simply earning interest, yet his observations reveal why it is so easy for bankers to be cast in the role of villains, while those capitalists owning actual means of production appear in a more favourable light.

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