Debt, Money and Marx

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  • #81455

    admin
    Participant

    Following is a discussion on the page titled: Debt, Money and Marx.
    Below is the discussion so far. Feel free to add your own comments!

    #89006

    Reply received from David Graeber:Dear editors:You may be surprised to know I have read Capital, and am familiar with the concept of primitive/original accumulation. I might suggest it is the reviewer, rather, who might wish to expand his reading list, since he is evidently unfamiliar with that strain of the Marxian tradition that has most informed my analysis of such matters: the “autonomist” or “post-workerist” strain that runs through Tronti to Cleaver to the Midnight Notes collective, Federici, Caffentzis, and de Angelis (a very different one from the more familiar Negri strain). In that tradition, “primitive accumulation”  is not treated as a one-time thing that somehow teleologically prepared the way for capitalism, but rather as part of an ongoing process of the enclosure of different sorts of commons (and the creation of various forms of capitalist commons, like, currently, the US military) that has marked capitalism’s history from beginning to – hopefully its rapidly approaching – end. I actually cite my sources here in a footnote the reviewer seems to have missed. In fact he doesn’t seem to notice that my entire analysis of post-war economic cycles is based in this tradition.What I was mainly trying to address in the section on capitalism is a question that to my knowledge no Marxist analysis has really been able to resolve: why, if capitalism is a system based on factories and free wage labor, did most of the financial institutions that we associate with it – stocks, bonds, futures trading, semi-private central banking systems, and so on – actually arise in the 17th century, long before either factories or (any significant amount of) free wage labor made an appearance. The whole idea of “merchant capitalism” which is supposed to characterize the period from roughly 1500 to 1750 (or even 1800 in most of Europe) has always been a puzzle. If capitalism is a system based on wage labor, then it wasn’t capitalism at all. But if so most bourgeois revolutions happened before capitalism had even appeared! If merchant capitalism is capitalism, then capitalism does not have to be based on wage labor, and certainly not free wage labor, at all. Claiming that merchant capitalism was capitalism because European elites were somehow trying to create a system that didn’t exist and there is no evidence they were even capable of imagining, seems absurd. The obvious answer is that capitalism is not in fact necessarily based on free wage labor contracts. Marx was, as I note in the book, effectively saying “well, let’s take a best case scenario, and imagine workers are in no sense constrained; I can show the system would still lead to impoverishment and self-destruction.” He wasn’t saying that the assumptions of the political economists were empirically true. He was just allowing them for the sake of argument. As I note many seem to have forgotten the “as if” quality of his analysis.I find it genuinely odd that I get so many reviews that accuse me of ignorance of even the basic ABCs of Marxism, while at the same time, systematically ignore everything I actually say about Marx! Granted, the book is meant for a wide audience, and therefore avoids scholarly debates of all sorts, Marxist or otherwise. But it’s all there in the footnotes. And I do talk about Marx in the text.As for the reviewer’s final claims that we are primarily wage slaves not debt peons: how does he know this? Because the secret to our 21st century situation lies in the correct interpretation of 19th century texts? That’s silly. Systems change. I mean, it might be true, but it’s a matter to be empirically established. A far larger percentage of Wall Street’s profits is now derived from the financial sector than from industry or commerce – that is, from the exploitation of wage laborers. Where does that profit really come from? It would be very interesting to know what percent of the average (say) American’s income is now directly expropriated by the FIRE [Finance, Insurance, Real Estate] sector, compared to what might be said to be extracted indirectly, through the wage. But the research simply hasn’t been done. Nor will it be if we can’t open up our minds a little and treat Marx’s legacy as a living tradition. It’s possible that the system is already starting to turn into something else. Or maybe it isn’t. Let’s figure it out rather than just shouting doctrine at one another. 

    #89007

    alanjjohnstone
    Participant

    Just for a bit clarification. “A far larger percentage of Wall Street’s profits is now derived from the financial sector than from industry or commerce” Factually untrue. Oil companies are the biggest money makers on this year’s Global 500, including besieged BP. Rounding out the top 10 earners are U.S. giants Microsoft and, of course, Wal-Mart.http://money.cnn.com/magazines/fortune/global500/2010/performers/companies/profits/

    #89008

    ALB
    Participant
    Socialist Party Head Office wrote:
    Reply received from David Graeber:Dear editors:A far larger percentage of Wall Street’s profits is now derived from the financial sector than from industry or commerce – that is, from the exploitation of wage laborers. Where does that profit really come from? It would be very interesting to know what percent of the average (say) American’s income is now directly expropriated by the FIRE [Finance, Insurance, Real Estate] sector, compared to what might be said to be extracted indirectly, through the wage.

    The whole letter with a reply from the editors will be published in the October Socialist Standard, but this is by far the weakest part of what he has to be say. He seems to be suggesting that the profits of the financial sector might come from interest payments by workers on mortgages and other loans. This sounds a bit like the “secondary exploitation” discussed in another thread here (the one on Untermann), only he seems to think that it is primary. Otherwise why does he say that exploitation through working for wages is “indirect”? No wonder he is so popular in currency crank circles and others who think that the banks are the main villains of the piece.I would have thought that the source of all profit is obvious: the surplus value produced by workers in the productive sector of the economy. This includes the profits of the financial sector. How could it be otherwise when wealth can only be produced by work transforming materials that originally came from nature into something useful and the whole financial sector doesn’t produce a single item of wealth?

    #89009

    robbo203
    Participant

    It is difficult to deny that David Graeber does make a valid point.  I refer to this comment of his “The whole idea of “merchant capitalism” which is supposed to characterize the period from roughly 1500 to 1750 (or even 1800 in most of Europe) has always been a puzzle. If capitalism is a system based on wage labor, then it wasn’t capitalism at all. But if so most bourgeois revolutions happened before capitalism had even appeared! If merchant capitalism is capitalism, then capitalism does not have to be based on wage labor, and certainly not free wage labor, at all. Claiming that merchant capitalism was capitalism because European elites were somehow trying to create a system that didn’t exist and there is no evidence they were even capable of imagining, seems absurd.”It seems to me that the obvious way round this problem is to reject the whole idea of merchant or mercantile capitalism.  There was merchant capital before capitalism just as there was wage labour before capitalism but neither of these things in and of themselves imply the existence of capitalism as a mode of production. Thus wage labour needs to be generalised before we can usefully talk of a capitalist mode of production Where did the idea of “mercantile capitalism” come from, I wonder? Marx himself seems to analytically separate the notion of “merchants capital” from capitalism as a mode of production. I cant seem to find any reference by him to mercantile capitalism.  Incidentally, the Oxford English Dictionary attributes  the first use of the English word “capitalism”, surprisingly enough not to Marx (who preferred to use the expression “capitalist production”),  but  William Makepeace Thackeray in his  novel The Newcomes (1855, vol. 2: p. 45),  However Makepeace seemed to have meant by this the money-making activities of financiers rather than  an economic system as such.  That may or may not be signficantIn Capital Vol. III Part IV, Marx says this:”The less developed the production, the more wealth in money is concentrated in the hands of merchants or appears in the specific form of merchants’ wealth.Within the capitalist mode of production — i.e., as soon as capital has established its sway over production and imparted to it a wholly changed and specific form — merchant’s capital appears merely as a capital with a specific function. In all previous modes of production, and all the more, wherever production ministers to the immediate wants of the producer, merchant’s capital appears to perform the function par excellence of capital.There is, therefore, not the least difficulty in understanding why merchant’s capital appears as the historical form of capital long before capital established its own domination over production. Its existence and development to a certain level are in themselves historical premises for the development of capitalist production 1) as premises for the concentration of money wealth, and 2) because the capitalist mode of production presupposes production for trade, selling on a large scale, and not to the individual customer, hence also a merchant who does not buy to satisfy his personal wants but concentrates the purchases of many buyers in his one purchase. On the other hand, all development of merchant’s capital tends to give production more and more the character of production for exchange-value and to turn products more and more into commodities. Yet its development, as we shall presently see, is incapable by itself of promoting and explaining the transition from one mode of production to another.Within capitalist production merchant’s capital is reduced from its former independent existence to a special phase in the investment of capital, and the levelling of profits reduces its rate of profit to the general average. It functions only as an agent of productive capital. The special social conditions that take shape with the development of merchant’s capital, are here no longer paramount. On the contrary, wherever merchant’s capital still predominates we find backward conditions. This is true even within one and the same country, in which, for instance, the specifically merchant towns present far more striking analogies with past conditions than industrial town”In the same chapter Marx points outThe extent to which products enter trade and go through the merchants’ hands depends on the mode of production, and reaches its maximum in the ultimate development of capitalist production, where the product is produced solely as a commodity, and not as a direct means of subsistence. What this seems be saying is that for the mode of production to be called “capitalist”  presupposes the cessation of direct production for use and the transformatioin of the products into commodities. In other words, the end of  the traditional system of usufract rights and compulsory  in-kind labour services performed by serfs  under a system of feudalism and its replacement by money rents and the employment of wage labour by tenant farmers.  In short what Marx ironically called  free wage labour.  It is when capital is invested in production that the system becomes “capitalist “and this is what to an increasing extent happened with merchant capital.  It was transformed into industrial or “productive”capital and the banking system of  “country banks” in England in the 18th century arose precisely to allow this to happen and to finance yer early proto-capitalists Prior to that you could not usefully talk about there being “capitalism”. There was merchants capital yes but as Marx suggest the extent of merchant capital and its social significance in society was limited by the extent to which direct production for use prevailed .  It required the separation of the producers from the means of production,  to which they had access,  for trade to take off in a big way i.e. with the development of a working class dependent on wage labour.and this in itself calls into question the usefulness iof the term mercantile capitalism.  Almost as a matter of logical deduction,   trade is rendered not particularly or primarily important if  producers still can directly produce for themselves (not to mention for the lord of the manor).   Therefore the very term “mercantile capitalism” can hardly be said  to capture the essence of the prevailing system. It is a contradiction in terms, if you see what I mean The period under discussion might be called a transitional period between feudalism and capitalism in which, for example, the power of monarchy  expanded greatly by comparison with the traditional powers enjoyed by the aristocracy under feudalism and so paved the way to the more centralised burueaucratic structures  that capitalism would come to depend upon as well as the growth of the nation state. You could not exactly say in this period that capitalist relations of production were dominant although they were certainly beginning to become  more pronounced particularly in England and as evinced by the growth of wage labour in both the towns and the countryside. However while merchants capital played an increasing role in this period “mercantile capitalism” is a myth. There never was such a thing for the simple reason that there never could be such a thing….

    #89010

    DJP
    Member
    robbo203 wrote:
    It is difficult to deny that David Graeber does make a valid point.  I refer to this comment of his”The whole idea of “merchant capitalism” which is supposed to characterize the period from roughly 1500 to 1750 (or even 1800 in most of Europe) has always been a puzzle.

    Graeber and anyone else interested would do well to read Ellen Meiskins Wood “The Origins of Capitalism”The genesis of capitalism is not in merchants capital but in property relations in the English countryside.Seems to me Graeber is just another sloppy reader of ‘Capital’….

    #89011

    gnome
    Participant
    DJP wrote:
    Graeber and anyone else interested would do well to read Ellen Meiskins Wood “The Origins of Capitalism”

     Ellen Meiksins WoodWish folk would check their typography before posting :)http://monthlyreview.org/1998/07/01/the-agrarian-origins-of-capitalism

    #89012

    robbo203
    Participant
    DJP wrote:
    robbo203 wrote:
    It is difficult to deny that David Graeber does make a valid point.  I refer to this comment of his”The whole idea of “merchant capitalism” which is supposed to characterize the period from roughly 1500 to 1750 (or even 1800 in most of Europe) has always been a puzzle.

    Graeber and anyone else interested would do well to read Ellen Meiskins Wood “The Origins of Capitalism”The genesis of capitalism is not in merchants capital but in property relations in the English countryside.Seems to me Graeber is just another sloppy reader of ‘Capital’….

     This might be a little too black-or-white.  Merchant capital certainly did play a role in the genesis of capitalism.  Marx made the point that primitive accumulation,  the slave trade and so on provided much the funds  which large landowners ploughed into their estates.  A good deal of the infrastructure upon which the industrial revolution  depended such as the canals  and railroads came from this source.  And the early small time proto-capitalists as I said were often funded by “country banks” into which wealthy individuals who had made their money abroad through the trade deposited some of their ill gotten gains in the expectation of a reyrnThe issue is not whether merchant capital played a role in the genesis of capitalism but rather whether there was such a thing as mercantile capitalism. I think Graeber is right to question this…

    #89013

    anonymous
    Member

      Actually there have been longstanding arguments, at least since the Dobb-Sweezy debate, going on through the Brenner debate and the Wood book you mention, about the relative importance of rural British class relations, and international merchant capital, in the origins of what has come to be known as “capitalism” (remember Marx himself never used this term, but referred instead to the “capitalist mode of production” – which meant he didn’t have to deal with the question of whether merchant capitalism is capitalism, as merchant capital was simply capital, but just not engaged in a capitalist mode of production per se.) But saying that capitalism is wage labor and wage labor emerged from British rural society and therefore capitalism emerged from British rural society is just a circular argument that doesn’t resolve the questions I raised. It just comes up with a rhetorical way to sidestep it.   The question is: the financial apparatus which we now identify with “capitalism” – that is, the actual form that capital takes in relations between capitalists – did not arise from handling the profits from wage labor, but, mainly rather, from handling the profits of military and colonial ventures, and the production of commodities through slavery, forced labor, and debt peonage. For much of the history of what we now call capitalism, whatever the organization of English landed estates might have been, this is what was mainly happening. What’s more this system did not simply go away when factories and wage labor did appear on a mass scale. For instance: as in the previous period, so today, the money that capitalists actually use in trading with one another is actually monetized forms of government war debt. If the establishment of that kind of central banking system was merely the product of some transitional phase, why has it stayed with us so doggedly. Why has the amount of debt peonage, forced labor, and other forms of unfree labor short of actual legal chattel slavery not seriously declined but if anything increased during the last two hundred years?     What I am suggesting is that the role of sheer violence in creating and maintaining the system might be vastly understated.  

    #89014

    DJP
    Member

     

    robbo203 wrote:
    The issue is not whether merchant capital played a role in the genesis of capitalism but rather whether there was such a thing as mercantile capitalism. I think Graeber is right to question this…

    I’m still a little confused as to who it is that is supposed to have said there was such a thing anyhow. Though I guess some ideas on the origins of capitalism (the ones Brenner, Meiksins Wood etc criticized) could be interpreted this way.

    davidgraeber wrote:
    But saying that capitalism is wage labor and wage labor emerged from British rural society and therefore capitalism emerged from British rural society is just a circular argument that doesn’t resolve the questions I raised. It just comes up with a rhetorical way to sidestep it.

    By the 17th century trade, mercantilism & money lending had grown and developed in Europe but these by themselves did not undermine the foundations of feudal society. The mere existence of commodity production, wage labour, merchants capital and money lenders capital are necessary but not sufficient conditions for the full development of capitalism. ‘Or else ancient Rome, Byzantium etc. would have ended their history with free labour and capital’ (Marx, Grundrisse p 506 )So it becomes a question of looking at what specific historical factors come together to create a rupture with the old social relations.Capitalism is a system where human activity is dominated by the law of value (abstract labour) and the last time I checked it still is. The structure and composition of classes may change over time but the basic relation has not been altered, as far as I’m aware.I have not read Mr Graeber’s book; it’s on my wish list though!

    #89015

    A reader has drawn our attention to an article “Marx at 193” that appeared in the London Review of Books by John Lancester on 5 April and asked for our comments. Among other things Lanchester claims that Marx never used the word “capitalism”:

    Quote:
    Marx doesn’t use the word ‘capitalism’. The term never occurs in the finished first part of Das Kapital. (I checked this by doing a word search and found it three times, every time an apparent mistranslation or loose use of the German plural Kapitals – in German he never talks of Kapitalismus.)
    #89016

    DJP
    Member
    Socialist Party Head Office wrote:
    A reader has drawn our attention to an article “Marx at 193” that appeared in the London Review of Books by John Lancester on 5 April and asked for our comments. Among other things Lanchester claims that Marx never used the word “capitalism”:

    Quote:
    Marx doesn’t use the word ‘capitalism’. The term never occurs in the finished first part of Das Kapital. (I checked this by doing a word search and found it three times, every time an apparent mistranslation or loose use of the German plural Kapitals – in German he never talks of Kapitalismus.)

    Indeed.The same seems to hold for the phrase “labour theory of value” Doing a search on Marxists.org I can only find it referenced to in notes by editors etc. Or have I missed it somewhere?

    #89017

    ALB
    Participant
    Socialist Party Head Office wrote:
    Among other things Lanchester claims that Marx never used the word “capitalism”:

    I’m not sure how significant this is. After all, language like everything else changes, but I suppose it could tell us what Marx would have meant by the word had he used it rather than the term he did use, i.e. the capitalist mode of production. In other words, capitalism is a way of producing things, based, as he explained, on the production of commodities by wage-labour.

    #89018

    DJP
    Member
    ALB wrote:
    Socialist Party Head Office wrote:
    Among other things Lanchester claims that Marx never used the word “capitalism”:

    I’m not sure how significant this is. After all, language like everything else changes, but I suppose it could tell us what Marx would have meant by the word had he used it rather than the term he did use, i.e. the capitalist mode of production. In other words, capitalism is a way of producing things, based, as he explained, on the production of commodities by wage-labour.

    I don’t think it’s that significant, the word wasn’t in common use at the time he was writing. The only difference I can think of is that the word capitalism could refer to an ideology as well as a mode of production.With regards to Marx and ‘the labour theory of value’. I’m beginning to suspect that this was first used by the neo-classical economists so that they could lump Marx, Ricardo and Smith together then attempt to trash Marx by critiquing Ricardo.Just to be clear I’m not saying that Marx did not have a theory of value, but when it is (mis)understood as a theory of the prices of individual commodities (i.e price=value) it doesn’t add up properly.

    #89019

    anonymous
    Member

     Yes, agreed, DJP – and Marx doesn’t even use “law of value” more than once or twice. I’ve argued extensively that the LTV is true as a broad philosophical point – value is always the way our creative and/or productive activity becomes meaningful to us by being socially recognized through some concrete material form – but will never work as a theory of prices because it’s not meant to be. So the “transformation problem” is kind of missing the point, Massimo de Angelis talks about this very lucidly in his book The Beginning of History where he notes among other things that thinking there even _could_ be a theory of prices based exclusively on the LTV means you’re ignoring the role of political struggle at every point in the process.

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