Law & Political Economy

The enduring entanglement of modern property law with this original “feudal calculus” is a thread running throughout Pistor’s book. Most importantly, it informs her skepticism about the alignment that is commonly assumed in liberal grand narratives among progress, property rights, and the rule of law (understood in the sense of the universal applicability of general rules, such that no one class received preferential treatment by the state).

There have been revolutionary moments, Pistor concedes, in which property owners did line up behind the demand for general rights—the American and French Revolutions being cases in point. But once their property was established, owners became, like their feudal predecessors, defenders of privilege. They have advocated not universal binding rules, but what Max Weber called a “modern particularism,” finding ways around the law when it suited their interests.” —Tooze reviews Pistor (2019).

The Usual Suspects: The University of Chicago, Ronald Coase, and Aaron Director established the school of Law and Economics in the 1960s. Its purpose was to diffuse the functionalist liberal grand narrative on capitalist law, in which capitalist law is mythologized as harmonizing interests throughout society by creating rules that maximize efficiency, productivity, and economic growth. This obfuscatory economist-managed myth factory helped distribute resources and power globally, but within the inegalitarian rules of feudal privilege that efface the citizenship and interests of smallholders and life on Earth.

Responding to the 20th-21st century expropriation explosion and democratic dissipation, Pistor is part of a new school, Law & Political Economy, that clarifies that global Anglo law, based in New York and London, actually marries exceptionalist feudal restrictions on [immobile] land property alienability with increasing volumes of extremely-mobile exclusive private property claims [only obliquely upon–but governing the disposition of– tangible assets], so that states enforcing this elite, privately-manufactured law have come to unequally, inequitably, exceptionally enforce the asset claims of large, global capital owners against the interests and welfare of the rest of societies.

Note the gendered leadership of the Law & Econ v. Law & Political-Economy networks. Together patriarchs may imagine their protection racket as benevolent. Women are experientially informed about the central, pervasive, destructive role of expropriation in capitalism.

 

Bibliography

Bhattacharya, Tithi. 2017. Social Reproduction Theory. Pluto.

Choudry, Aziz & Adrian A. Smith, eds. 2016. Unfree Labour? Struggles of Migrant and Immigrant Workers in Canada. PM Press.

Ghodsee, Kristin. 2018. Why Women Have Better Sex Under Socialism.

Graeber, David. 2006. “Turning Modes of Production Inside Out: Or, Why Capitalism is a Transformation of Slavery.” Critique of Anthropology 26 (1): 61-85.

Kapczynski, Amy.

Kalecki, Michal. 1971. Selected Essays on the Dynamics of the Capitalist Economy 1933-1970. Cambridge University Press.

Kato, Daniel. 2015. Liberalizing lynching: Building a new racialized state. Oxford University Press.

Law & Political Economy blog.

Lawrence, Andrew G. 2014. Employer and Worker Collective Action. Cambridge University Press.

Marx, Karl. 1867. Part VIII, “Primitive Accumulation,” Capital V. I.

Moore, Jason. 2015. Capitalism in the Web of Life. Verso.

Orren, Karen. 1991. Belated Feudalism: Labor, the Law, and Liberal Development in the United States. Cambridge University Press.

Pistor, Katharine. 2019. The Code of Capital: How the Law Creates Wealth and Inequality. Princeton University Press.

 

 

Distinguishing social democracy

Distinguishing social democracy:

Under left-liberal (as opposed to soc dem) regimes, organized labor does not participate in mid- to longer-range socio-economic planning. However, left think tanks can contribute mid- to long-range planning analyses.

Conversely, there are a variety of ways in which business leaders contribute to public policy formation, because business (public and private, but not cooperative) is regarded by the lib-left govt as the engine of growth.

This exclusion of cooperatives from the field of perceived contributors to growth indicates that lib-left govts may also be distinguished from social democratic govts by an assumption that growth is a product of “efficient” social-hierarchy-inflating organizational forms.

In lib-left regimes, labor views its role, and the liberal government views labor’s role as (often obstructive) ballast to economic growth initiatives that are seen as the natural concern of business. That’s labor’s negative role. It’s not a leadership role.

Labor’s positive role in capitalist democracy thus largely devolves to delivering votes to the left-liberal govt, because although the lib-left does not regard labor as a central social or economic policy resource, as opposed to conservative govts the lib-left govt will not actively try to break organized labor and it may implement those modest proposals of labor that do not impede the business-driven growth planning.

Hence, with a range of ruling (capitalist) political perspectives that always preemptively block information from labor (except what little leaks obliquely through the market), we repeatedly sink into crisis cycles–crisis of profit begets > capital deregulation and overmobilization, working class overregulation, demobilization, and dispossession beget > speculative bubbles/primitive accumulation beget > underconsumption crisis begets > further primitive accumulation, repeat. We fixate on the speculative bubbles moment in the midst of all this autistic failure, hoard wealth, and laud ourselves endlessly for being such top-notch managers and philanthropistes.

This is why for Rawlsianism to work, socialist politics and the communist horizon must be more highly valued, and even defended– by liberals.
As far as I know, this seeming impossibility has only been (temporarily) accomplished in Scandinavia and Minnesota. (While Latin America leftists tried to forge a left-lib coalition from scratch, the US destroyed this effort and enforced conservative rule in Latin America, see Greg Grandin.)

In “Right-wing Rawlsianism: A Critique” (forthcoming in Journal of Political Philosophy) Samuel Arnold argues that if liberals agree that agency is the essence of justice, then liberals have to pick which side they are on–because economic democracy fosters more agency than Trickledown provides.

Arnold’s is a clever detonation of a bridge from liberalism to conservatism, using some of the bridge-builders’ own ideal theory tools. (Particularly with respect to Rawls’ difference principle: A liberal justice-maximizing directive to choose the political-economic system that maximizes the least-advantaged group’s expectations for an index of primary goods that include income and wealth, but also status (qua capacity for agency in the workplace and self-respect in society).)

Upon deriving the optimal realization of liberal justice (agency) in workplace democracy, Arnold concludes (p. 32),

Milquetoast liberal egalitarianism is unstable: liberal egalitarianism must move far to the left in order to avoid being jerked far to the right.”

We need to keep heaping on the demonstrations that economic democracy fosters more agency than GDP/GNP tumescence.

For one example, insofar as political-economic systems can be said to have intentions, how plausible is it that capitalism does not intend to support social pathologies (Arnold, p.29)? Studies of primitive accumulation, the WEB DuBois tradition, socialist feminists, Harvey et al have a lot to say about how capitalism “intends to” (is built and maintained to) and does depend upon and support social pathologies. This approach apprehends the connection between economic (eg. workplace) tyranny and racism, sexism, colonialism, etc., for a powerpunch assertion that inequality is both fundamental to capitalism (even if it is shifted around across some social groups, over time and space) and fatally (from the perspective of justice) undermines agency (power to).

…& on the matter of historical-materialism’s putative incapacity to deal with difference (from a postmodern POV), from Arnold (p. 29):

Patriarchy, discrimination against the weak or the different, pressure to conform, and countless other social practices that prevent people from realizing their full agential potential: how long can these pathologies withstand the countervailing winds of a social democracy, with its democratic workplaces, its flattened division of labor, its robustly egalitarian public institutions?”

Primitive Accumulation, Negative Externalities and Growth

Over the years, Stefano Bartolini has modeled economic growth, showing that whereas most models of economic growth feature accumulation and technical progress as engines of growth, a third engine is needed to ensure self-perpetuating economic growth. History, the theory of Polanyi & Hirsch, and Bartolini’s models suggest that third engine is 2 negative externalities that combine to drive growth: 1) positional externalities, and 2) externalities that reduce social and natural capital.

Pagano 1999 defined a positional good: consumption by an individual of a positive amount of a positional good involves the consumption of an equal negative amount by someone else. Power and status are fundamental positional goods; others include education and housing.  The positional goods/services/externalities theoretical tradition extends from Veblen 1899/1934 and Hirsh 1976. In addition to Bartolini, Robert H. Frank (“Falling Behind”) has continued to explore this tradition as well as Bowles and Park 2002, Schor 1998, and Corneo and Jeanne 2001.

“Industrial revolutions are the paradigmatic example of this (Growth as Substitution) mechanism: they are the most striking processes of labor supply and accumulation increase because they are the most striking processes of social and environmental devastation recorded by economic history” (Stefano Bartolini, “Beyond Accumulation and Technical Progress: Negative Externalities as an Engine of Economic Growth.” 2003: 9).

Williamson 1995, Krugman 1995, and Bartolini et al have shown that the transition to an industrial economy has always been associated with explosive growth in the labor force participation rate.

Such growth-propelling negative externalities are discussed within the Marxist tradition as primitive accumulation. To further explore: The relationship between primitive accumulation and other capitalist strategies of promoting profit-restoring growth to the point of increasing contradiction / social and environmental irrationality.

Bartolini’s growth-model can better explain the failure of conservative economics’ predicted relationship between growth and happiness (Bartolini 2003). Inter alia, political scientist Lane 2000 shows that American growth is not associated with increased happiness.

Taxes are the Thunder of World History

Taxes, according to Joseph Schumpeter, are “the thunder of world history.”

“The spirit of a people, its social structure, the deeds its policy may prepare, all this and more is written in its fiscal history, stripped of all phrases. He who knows how to listen to its message here discerns the thunder of world history” 

(Schumpeter, J. 1918. “Crisis of the Tax State,” p. 101, quoted in Corey Robin’s blog. Robin is writing a book on two foundational modern conservative schools: the Austrian white emigres and Nietzsche. I think. We’ll see).

Dean Baker’s Critique of Capital Rents

I think “The Rent is Too Damn High” is one of Dean Baker’s best arguments.

But still, Desai’s critical examination of the limitations of the conservative Anglo interpretive and political tendency applies. She recalls the limited sociological imagination that emerged in Britain in response to the Great Depression:

“(During the Great Depression) the ‘responsible and judicious’ British intellect saw the new political task and sought to harness all its native (liberal and individualist) resources to its fulfilment…Thus in Britain, as Elizabeth Durbin has shown, the newly founded microeconomics was used to justify state intervention so as to increase social welfare and the Fabians, who constituted a distinct segment of the new intellectual stratum and who had already examined and rejected Marxism, used it in their theory of ‘rents’ and ‘unearned incomes’ to justify socialist goals” (Desai 1994: 47).

Crisis is based in Maldistribution

In “Celebrating Consumption,” Sasha Lilley (“Against the Grain”) interviews (and clarifies) economic historian and “residual marxist” James Livingston’s study of the structural problems of capitalism.

Lilley’s clarifications are integral to this discussion, because Livingston’s project seems to be taking Marxism and rebranding it and making it palatable to Cold War-scarred, pro-capitalist and Judeo-Christian Americans. While this ambition I think creates problems in his diagnosis, on the other hand, it must be said that Dr. Livingston nonetheless seems to be a remarkably gracious gentleman and a scholar. For now, I think it would be unsporting to begrudge him his reframing experiments.

Private investment is not key to productivity or growth in capitalism

Livingston:

Empirically,
Private investment is not historically key to increasing productivity, to growth in the US.
Private investment has been atrophying since 1910.
What has increasingly promoted growth is consumer spending, government spending (officially classified as investment), residential investment.

Against Brenner, the problem with the decline of manufacturing in the US is not the loss of productivity, but the loss of wages and unions, leading to the maldistribution of income and wealth.

In view of the historical evidence (private investment atrophy), what happens when we drop the assumption that private investment is key to growth? What kinds of policies can we work on that move us out of crisis mode?

Livingston’s use value-exchange value discussion (TBD)

To get to innovative policy formation, we need to address a cultural block. Livingston: to advance structural development, we have to address the moral question. We need to move from attaching income to waged work to attaching it to need. The cultural revolution Livingston advocates: Making things should not be so important. “People deserve an income that allows for a decent, humane life, that allows for freedom, mobility, dignity.”

Lilley points out that that’s communist (From each according to her abilities to each according her needs). Livingston would prefer to identify this value as historical religious culture.

Livingston observes that crisis arises in capitalism as we socialize risk but let the 1% decide everything. Where bankers won’t invest, we need to socialize our ability to use the tremendous store of wealth.

Toward market socialism: We collectively decide, will this investment create the kind of jobs that afford everyone a decent, humane and dignified life? Use value re-enters politics.

Talk About Repression: Weber! Nietzsche! Freud! Anybody but M__x!

Crises are problems internal to the economic structure. According to Livingston, the problem is the distribution of income. There is too much surplus capital. Crisis is not a problem of money, monopoly, the Fed’s choices, or morality.

Why do Americans lean so heavily on the morality explanation? Livingston follows Weber, blaming this dependence, this urge to personify the cause of crisis, on the Protestant ethic. But the Weberian approach plays a larger role in Livingston’s explanatory scheme. Repressive protestant culture is the cause of, or primary impediment to Americans’ inability to switch out of crisis-prone economic relations to a more rational, constructive grasp of work and wealth distribution.
What can replace Protestant repression?, he asks. What can transform our characters? His overdetermined answer is a more libidinal culture. Livingston wants to start by valorizing the libidinal culture that currently exists–as is promulgated by advertising and consumer culture.
However, empirically, it’s very hard to say that such libidinal culture hasn’t been emphatically encouraged and harvested–and we have the austerity agenda. If Livingston is attempting a reframing experiment, I fail to understand the strategy in that I fail to understand how a political historian’s weight can modify the trajectory of the great mass of marketeers’ raison d’etre. Consumer spending and advertising have been dominant cultural institutions (See Michael Dawson’s The Consumer Trap.), and they have not freed us from Protestant repression–and I doubt they can be hitched to anti-austerity. I would argue that is because repression and libidinal excess are two sides of the same coin, capitalist culture in dialectic. They do not exclude one another. They constitute each other as two ends of a cultural teeter totter. But it’s possible there’s a strategic grappling hook in there.

Here is Ehrenreich’s alternative theory on what needs changing in US culture (elite belief in and reification of a “culture of poverty”)…that I think could get us to a rational approach to work and distributive justice. (It also contains of story of how neoliberalization happens to good socialists who just want to be heard…but at what a price.)

2nd part of Livingston’s book: It kind of goes off the rails

It is Livingston’s market-aficionado thesis that commercial culture is liberatory and solidaristic. Commercial culture is disfigured utopia, but tells us that after work is when we become unalienated, and advertising reminds us of that. Livingston feels that this is culturally important because work should not define us. Basically, commercial culture, he feels, can lead to libidinal liberation.

Lilley reminds us that advertising touching on and co-opting desires isn’t the same thing as unleashing desires. We can contrast Livingston’s capitalist dichotomy, ascetic Protestantism / libidinal carnival, to Marxist Epicureanism. Elaine Scarry’s The Body in Pain is much, much better than Livingston on the psycho-social / cultural theory of work and making. Perhaps because she’s not afraid of M__x.

Purchasing commodities is social, Livingston insists.

Citing consumer movements, Livingston argues that consumption does not negatively impact the environment. If consumers have requisite income, then they reduce their footprint (modified Bruntland argument). That is not a strong argument, see Jevon’s Paradox, ecological footprint/slaves analyses. I don’t know why anti-austerity should entail abandoning the headway the Left has gotten from Red-Green coalition-building.  That seems unstrategic.

Another Anglo Fabian in want of a Marxist backbone?

Livingston’s arguments can at times seem to be overblown sophistry or excessively solicitous of current hegemons. But he’s trying to do interesting things, seeing ways of looking at capitalism’s problem institutions (the capitalist Protestant Ethic abstemiousness/libidinal commodity consumption–which he doesn’t recognize as intertwined) as potential sites of market socialist development. I think though that James Livingston would be more effective if he re-read Scarry, picked up Dawson, checked out Epicurean ethics, and if he engaged Sasha Lilley as his co-author.

…Or maybe I just need to write an article on the Marxist approach to making / unmaking, production and consumption, as an alternative to the austerity dogma. Eureka.


“Such discrete, theoretically-unintegrated critical impulses attacked the irrationality and inhumanity of capitalism. The common aim was to reform it piecemeal into a more rational and human social order in which inequalitites of wealth and incomes would be drastically reduced and democratic rights extended and substantiated, and in which the still-marginalised and -alienated working class would be integrated into the political system. In a(n Anglo) cultural landscape dominated by laissez-faire Liberalism, these concerns made a shift from individualist to collectivist thought a ‘necessary intellectual adjustment’ on the part of the more socially conscious liberal intellectuals. This was the common temper of the New Liberals as well as the Fabians” (Desai 1994: 47, describing the conservative Anglo inteligensia’s tepid and temporary “radicalization” to Fabianism in response to working class disruption).

What it Means to Close Economic Models

In this Pilkington interview, Varoufakis elaborates his comparison of the classical political-economic perspective on social value with the marginalists’ view of asocial utility. He explains why neoclassical (and Austrian?) economists have to close their models to create a methodological individualist analysis, and why that construction cannot represent economic activity, or predict economic system decline.

the Fall in the Rate of Profit & Surplus Recycling Mechanisms

This post is a work in progress.

I first heard Andrew Kliman give a talk on his new study The Failure of Capitaist Production (as opposed to the failure of financialization). Tonight I’ve read his argument against the MR falling rate of profit-underconsumption theory. The MR theory finds that financial-military imperial capitalism is a distinctive phase of world capitalism. I will be discussing Kliman’s use of data and rhetoric critically.

To defend financial capital (It’s simply an implied coincidence, in Kliman’s account, that financial capital had grown to an unchecked leviathan before the Great Depression, and before the 2007.), Kliman goes all conservative neoclassical economist, including denying that economic inequality a) is in anything but equilibrium, and b) has any effect on economic systems. He tries to imply that this view on the trivialness of inequality is Marx’s view; I will refute that as I construct this blog entry over time. Although to deny inequality Kliman attacks MR and economists as illustrious as Saez and Piketty, sociologists also need to take note of his manoeuvers, which he will claim he does to ward off fascism. In his bustle to deny, deny, deny the economic impact of inequality, Kliman is disingenuous about both how he treats data and his own “prophetic” identity as well.

Tonight, I’m not going to get to a blow-by-blow analysis of Kliman’s shenanigans in his chapter 8; but suffice it to say, his much-proclaimed loyalty to the actual words of Marx falls hollow in this chapter, where he pretends that Marxists are saying only that underconsumption happens because workers consume more than rich people do. No. That is not at all only what Marx or Marxists say on this topic.

Triumphantly, and really pulling out the conservative econ dogma, Kliman declares that capitalism can proceed without workers’ consumption. This is not a revelation that Kliman is making; this is a dogma that conservative economists and politicians were steadily insisting throughout the last bubble. [See  Citigroup “Plutonomy” corporate report on how all consumption will exclude the working class now: Part 1. Part 2.]

…Only before 2007, the conservative economists also held that economic equilibrium proved that inequality is non-existent or trivial. This article shows that all recent US income growth has gone to the top 1%. It is probably no accident Kliman’s book emerges now, when capitalists can say that they have the system under perfect control, and by implication what is happening to the conditions of accumulation–what is happening to the working class economically (austerity, primitive accumulation) and the state (debt overload, via making real and public the private money debt the financial sector “innovented”) (not to mention the natural conditions of accumulation) is immaterial or restorative to the smooth functioning of capitalism.

Marx has something emphatic to say about this: No. Capital cannot proceed by exploiting other capital. The rate of profit falls because it is dependent upon the creation of value, and in capitalism, value derives solely from exploiting labor, although that derivation depends on using nature and human reproductive services as if they were an “inexhaustible” Plains bison herd. (Anglos always have difficulty with this. Recall why England had to implement reforms in the Progressive Era–because the Boers were kicking the asses of the underfed, undergrown, ricketts-plagued English cannon fodder.)

While there are many ways to eff up your capacity to exploit labor, Marx says specifically that forcing down workers wages (which should be measured relative to the basket of real costs–which include housing, education, health care, corporate tax expenditures, privatized costs–such as transportion– that could be delivered more efficiently publicly) is a major way to eff up exploitation capacity. Kliman wants to conservative-econ away capitalist contradiction.

Q. Why do a number of Marxist-identified economists cling to neoclassical econ’s dogma that economic inequality is trivial?

A. The answer is given here: Inequality and Power: The Economics of Class by Eric A. Schutz (London: Routledge, 2011), and summarized in Yates’ “The Great Inequality“.

As well, In his study “Does Income Distribution Matter for Effective Demand? Evidence from the United States,” Christopher Brown (2004) recalls that it was the conservative economists Friedman (1957) and Modigliani (1966) who established modern consumption theory, attributing no (0) importance to income distribution, and ensuring that economics textbooks maintain a nearly-complete blackout on the topic.

Other economists see inequality’s economic impact:

  • Robert H. Frank: How economic inequality inflates the prices of status goods (education, housing, etc.)
  • Dean Baker, Mark Wiesbrot & John Schmitt at CEPR: the percentage of junk jobs in your economy creates high inequality, social immobility. (Agrees with the Scandianavian power resources tradition.)
  • Monthly Review (Michael Yates)
  • Saez & Picketty
  •  Christopher Brown (2004) and S. Presssman (1997) cite the Cambridge school, including especially Kalecki (1943, 1954) as well as Robinson (1954), and Kaldor (1960), as the source for theory about the relationship between income distribution and consumption.
  • Brown (2004) shows mathematically that “income distribution can have very significant implications for effective demand (298). Then, citing Keynes, he argues that people who accumulate wealth can and do defer economic decision-making, including deferring spending. Using the Thiel index to measure economic inequality, Brown shows that increases in the Theil index correlate with slowing household spending (about 12% between 1967 and 1986) (302), and [finish with discussion of debt].

I think Kliman doth protest too much at the start of chapter 8 in The Failure of Capitalist Production, and I don’t believe he’s going to be straight up (in the conclusion) about what political result he’s hysterically trying to circumvent.  TBD… Kliman’s chapter 8 doesn’t give me much confidence about his falling rate of profit argument; but since I’m inclined to find Dumenil & Levy, et al’s argument against it also distorts the Marxist theory and misinterprets the data, I will see if that earlier portion of the study is more reliable.


I was listening to a talk by the unprepossessing Andrew Kliman yesterday. While I was intrigued and impressed by his argument that all the Marxists would measure the fall in the rate of profit incorrectly (But why would they? Ideological and conceptual infection by conservative econ, at least partly, I think.), I have objections to Kliman’s accompanying refutation of underconsumption crisis–his measurement of the distribution of production proceeds between capital and labor. His story is that since 1960 in the US, although the ratio of capitalists’ aggregate profit to aggregate income (both workers’ & capitalists’ wages) has been constant in the US (indicating in his view a capacity to consume in equilibrium), capital’s rate of profit (s/c+v) declined.

By this Kliman concludes that the falling rate of profit theory is correct, but underconsumption crisis is incorrect. Crisis is strictly an effect of falling profit. Capitalist profit suffers, though workers continue to have the same capacity to consume. (I am as yet unclear how the Wall Street crash of 2007/2008 and the ongoing austerity and European Union crises resulted from mere falling profit, in Kliman’s account. Why would workers default on loans en masse if their consumption capacity remains robust?)

I think a major implication of his analysis is that neoliberalism has done a terrible job managing capital’s interest, if the profit motive is declining though the working class share of the social wealth is a constant. The problem with capitalism in Kliman’s view is simply too much built-up fixed capital, due to excess state intervention. Like Pyne’s bourgeois story of the state suppressing fire and creating tinder, in Kliman’s account, built-up fixed capital is what’s impinging on profit, and it needs to be destroyed; hence, the “crisis” is just voluntary capitals destruction.

On this basis, Kliman argues that there is nothing distinctive about global monopoly capitalism, or financialization. In Kliman’s account, trade is in equilibrium, financial capital is not overgrown and does not reduce productive investment, and introducing more able Surplus Recycling Mechanisms–ameliorating excessively-skewed distribution–cannot defer crisis.

Indeed, if Kliman is right, and the only problem is excess fixed capital, shouldn’t austerity be a lot more effective in restoring profitability than anything else (eg. the Iceland solution), or than it’s looking, when we compare the impact of austerity in the UK and Ireland to the capital accountability approach in Iceland?

I’m dubious about what Kliman’s measuring.

Verify:

  • To support this argument, Kliman does not disaggregate wages going to capitalists from wages going to people dependent on wages. 
  • I do not think he measures consumption v. profits, but rather wages (+ benefit costs) v. national income.
  • He counts increasing health care costs as income going to wages and consumption. He treats all increasing commodity costs uniformly as increased working class share of national income and consumption. Servicing debt does not detract from working class consumption in his account. He counts housing price inflation as increased worker income/consumption, rather than an anti-Surplus Recycling Mechanism stripping working class income and sending it directly to the black hole of Wall Street unproductive speculation. 
  • Kliman’s finding of a constant working class share of national income is not a per capita measurement, but an aggregate ratio, that does not take into account population increase. It is not immaterial (as feedback) to the rate of profit that the economy is not growing fast enough or distribution is not occurring broadly enough (these are interchangeable, although they switch the system qualitatively from capitalism to socialism) for workers to consume at a constant or increasing individual or family rate without borrowing money from financial capital.
  • To be continued…

Questions for reading Kliman:

Is a commitment to rejecting underconsumptionist / distributive crisis helpful or necessary? Why is Kliman intent to try to argue that the only economic squeeze in the US is on capitalists, and that squeeze has not been deferred to working class Americans in such a way as to impact the economy?

A distributive crisis does not mean you have to have a Keynesian analysis. The fall in the rate of profit is all about the excessive ratio of dead labor (constant capital) to exploited live labor. In capitalism, which is what we’re talking about, that implies a history of market-rational, productivity-increasing, social wealth maldistribution.  For a capitalist, increasing productivity by replacing humans with machines or oil is awesome for profits, up to a point, and so long as no one else replaces humans with machines or oil, which is not a possibility. Meanwhile, in capitalism, for workers, the only thing worse than being exploited is not being exploited. That history results in a falling rate of profit, and meets up with the pre-programmed accumulator’s response to a declining rate of profit: 1)  ratcheting up the rate of exploitation by any means necessary, and 2) primitive accumulation.

 I don’t see why we want to strive so hard to divorce the tendency to the falling rate of profit from underconsumption crisis. Marx didn’t. Productivity-maximizing behaviour is a competitive, collective phenomenon. It’s not as if the tendency to falling profit is important as a threat to the individual capitalist’s profit (There’s a reason we measure it aggregately.) whereas only underconsumption crisis is an irrational effect of aggregated individually-rational capitalist behaviour.

Refusing to acknowledge worsening social wealth maldistribution does not really support the falling rate of profit hypothesis; and it unnecessarily implies that global monopoly capitalism and predatory financial capital are not distinctive, logical, systemic late-capitalist developments. Rather, financialization and accompanying imperialism are surely the non-trivial, corrupt and corrupting products of aging capitalist cores.


Because it allows us to dance around the fantasy that dead labor is exploitable in capitalism (As if you can get increased value-controlling profit without human exploitation.), and thereby creates mystified fictitious capital, financial capital is very important in that it allows capitalist elites to use speculation with fictitious capital to pursue primitive accumulation. You need to primitive accumulate if capitalists have lost confidence in the whole capitalist investment thing, and yet won’t quit their capitalist order, as they will not. Capitalists are typically ideologically convinced  that workers are superfluous to an economy; so capitals destruction is a byproduct of this, not, to capitalist minds, a sufficient condition of profitable investment. (Verify with Hilferding and Sweezy/Baran on this. See note on Varoufakis and Freeman on the role of global war–a form of both primitive accumulation and an SRM–in resuscitating capitalism, below.)

We have to ask ourselves: Are capitalists really always concerned to re-establish the profit incentive per se, as many Marxist-identified economists assume? Or are capitalists primarily concerned to promote and dominate accumulation, in whatever way the system currently permits? Because the profit incentive is not always the only or most currently-exploitable way accumulation can occur. Think about primitive accumulation. Think political economy, not economistically.

What if Over Time, Distribution Becomes Essential to Functioning Economies, and Capitalism Has Severe Issues with Distribution?:
Surplus Recycling Mechanisms

The Marxist argument is that the capital-flow incentive system tends to break down, on multiple levels, as capitalist accumulation develops. Accumulation creates uneven development on many scales, and that clogs up capital. If capital liquidity is a problem, how does capital normally flow? Ideally, in capitalism, capital flows via profitable productive investment incentives (exploitation potential).

Marx (Capital v. III chapter 14 on countermeasures to the fall in the rate of profit), Harvey, and Varoufakis explain how this endemic capitalist structural problem, capital clotting, can be addressed, partly with variable, political, capitalist collective actions delegated to the state–we can call these GSRMs or SRMs (Global Surplus Recycling Mechanisms, or any Surplus Recycling Mechanisms), distinguished from and a crutch to the built-in (and preferred, because it is based in capitalist autonomy) and dysfunctional-tending profit motive. SRMs will vary with elite ideology. Dependent upon that ideology and their own capacity, state regimes perform a variably vigorous, more or less able role in looking out for the mid-term interest of capital, or defibrillating capitalism. 

As well, from a Marxist viewpoint, you can argue that each defibrillation (SRM reform) defers a growing contradiction between capitalist accumulation and the dispossession and depletion of the growing mass of humanity and the environment, possibly reducing SRM capital-defibrillation effectiveness and options in the future. Perhaps we’re there. Perhaps we are not experiencing elite ideology-based failure; perhaps the twitching, tattered remains of the inadequate SRMs at the bottom of the barrel are all that is left to us at this point in history.

However, I tend to agree with Dumenil & Levy and Varoufakis that one problem with current GSRMs is that they are subordinated to the hegemony and violent coercion of the 20th century capitol of capitalism, the US. I also agree with Varoufakis and Alan Freeman that the only SRM that class-conscious capitalists will reliably submit to is global war. Perhaps because global war is not just a GSRM and a destroyer of excess capitals, but also a primitive accumulation bonanza. Global war is a triple threat. (Quadruple, if you also count that it fosters working class patriotism and acquiescence, and targets, takes out, and disrupts wide swaths of working class and peasant humanity.) Although Varoufakis argues that US capitalists were open-hearted in the Global Plan GSRM, more typically SRMs are highly begrudged by capitalists, and insufficiently supported, or opposed. In that way, capitalists are risk averse; they just want to grab as much surplus as they can right now, and use it to stay on top of the heap, whatever the hell may come.

More and more I get the feeling that the Left’s economic illiteracy is not ameliorated by the fact that Marxist-identified economists today are all overly infected by the conservative neoclassical econ tradition they’ve been immersed in, including both its incompatible methods and its prejudices. These economists’ partial analytics cannot see both falling rate of profit and underconsumption–And primitive accumulation and what it means, politically and economically, is hopelessly off their radar. Increasingly, while I find their partial debates of intellectual interest, economist-kings I suspect are not what the Left needs today.

Fragmented: The contemporary version of Marx.

Given C. Brown, then F. Barager & R. Chernomas: Increased debt servicing = increased rate of exploitation (greater proportion of the working day going to the capitalist class). The capitalist class has greater income, the working class less. What does the consumer do with the income?
Q. i) If the capitalist class, per Kalecki-Sweezy can uniquely “defer” consumption, and the way it did so was to use excess profits to speculate (instead of using their increased consumer demand to create a larger capitalist consumer market to replace the working class consumer market)–then isn’t speculation the capitalist consumer market that neoclassical economists see replacing the working class consumer market?  ii) If “consumption” occurs in speculation when speculators lose, then iii) governments that bail out failed speculation, in effect, are governments preventing consumption to occur, thereby creating a crisis of consumption, preventing investment growth.