MIKI TASSENI:
REVIEWERS and seasoned analysts have for a few weeks been occupied with
rendering account of a new book on the US market with a title that always
sends a shiver down the spine of every bourgeois interest group when it is
mentioned: Capital. A French economist whom a few know as a philosopher,
Thomas Piketty, has done the world a service by trying to look at the issue
of what Karl Marx’s Capital would be like if written during and for the
21st century, with the result being the book. It dimly resembles ‘Das
Kapital’ in its grim outward features, etc.
This outward resemblance aside, there are disturbing differences between
the theme of Capital (usually restricted to the first volume, published in
1867 in the first German edition) and the latest book. It is also unclear
how far the author has been following on earlier projections of Marx’s
classic work, perhaps the most well known non-fiction book after Charles
Darwin’s The Origin of Species and Adam Smith’s The Wealth of Nations. The
two books are uncontested in their spheres of learning, the former as the
script of evolution, which some clerics or apologists are still trying to
combat, and the latter, a foundation of capitalist economy worldwide.
Capital, on the other hand, remained a controversial contribution, and one
that by and large failed, and even this new projection of the thesis is
apparently an effort to return to some of the themes by giving them a
plausible touch resonating with current conditions. What is apparent is
that the 2008 stock exchange meltdown raised ‘hopes’ if one can say so, of
some of the theses of Karl Marx starting to be realised, but soon it
appeared it was all a mirage. The crisis was little more than another
business cycle, a necessary correction as global surpluses were flowing to
the United States excessively, so investors literally begged anyone to take
loans….
Examining reviews in various media both print and online, it seems that the
main theme of the new book by the French economist and philosopher is why
income inequality is endemic to capitalism. Despite that this theme is
captivating for leagues of scholars, those who insist that capitalism is
fair and those who refuse that thesis, it appears strange from the
viewpoint of Das Kapital. It isn’t the issue.
Whoever wishes to improve the thesis of Dr Karl Marx for current conditions
should tell us where capitalism is going, if it is still in crisis, if it
can crumble owing to crisis, if the principal hypothesis in Das Kapital,
the law of the tendency of the rate of profit to fall, still applies. The
theme has had lows and highs in major economic studies in the past, with
the UK University of Manchester perhaps the best known in its studies of
capital, the relationships of profit and wage levels, etc but not the
theory of crisis per se. This sphere of research more or less fizzled out
after Europe outlived the crisis of the 1920s going into the `1930s and
known as the Great Depression, whose conclusive ending point was 1944, with
the creation of the International Monetary Fund and the World Bank, and the
Federal Reserve.
An online reviewer of the thematic movement around the publication of
‘Capital in the Twenty-First Century,’ a book by French economist Thomas
Piketty, says it focuses on wealth and income inequality in Europe and the
US since the 18th century. It was initially published in French last year,
with an English translation released just last month. “The central thesis
is that wealth will accumulate if the rate of return on capital is greater
than the rate of economic growth. Over the long term, Piketty argues, this
will lead to the concentration of wealth and economic instability,” to
which he then proposes a global system of progressive tax and transfer to
help create greater equality and avoid the vast majority of wealth coming
under the control of a tiny minority.” That looks like socialism to Marx,
and admittedly not many among young leftists know the depth of distaste,
not to say contempt, that Karl Marx had on socialism, raising moral issues,
not science.
That the book is enjoying huge popularity is without doubt, as is
everything that is skimpy and wooly leftist – on the global stage. “The
French version of the book has sold over 50,000 copies while the English
version as of 24 April 2014 has sold approximately 80,000 printed copies
and over 13,000 digital copies; Harvard University Press expects to sell an
additional 200,000 copies. The book reached number one on The New York
Times bestselling hardcover nonfiction list in the list dated May 18,
2014.” Excellent, but is that not another round of sheer illusions?
Predictably, as an online reviewer asserts, “the central thesis of the
book is that inequality is not an accident, but rather a feature of
capitalism, and can only be reversed through state intervention. The book
thus argues that unless capitalism is reformed, the very democratic order
will be threatened.” This ‘central thesis’ is quite far from Marx’s own
efforts, and seeks to invoke Marx’s authority by simply alluding to crisis,
implying the threat of collapse of capitalism and of revolution, but the
key thesis thereof is close to socialism and rhymes with anarchy, the idea
that productive activity can be collectively owned or popularly controlled,
etc.
There are some innovations in how the author makes his argument, which
could be somewhat close to propositions or hypotheses in the decades-long
debate in the Manchester School of Capital, a phenonemon of the 1950s. The
reviewer says the author “bases his argument on a formula that relates the
rate of return on capital (r) to the rate of economic growth (g) , where r
includes profits, dividends, interest, rents and other income from capital;
and g is measured in income or output. He argues that when the rate of
growth is low then wealth tends to accumulate more quickly from r than from
labor, and tends to accumulate more among the top decile and centile,
increasing inequality.” There is already a conceptual problem here, if the
issue is the Marxian legacy and not ‘economics as usual,’ namely that there
is little point served by contrasting wealth accumulating more quickly from
interest than from labour, as that is to beg the question. Who produces
interest but labour?
“Thus the fundamental force for divergence and greater wealth inequality
can be summed up in the inequality r > g. He analyzes inheritance from the
perspective of the same formula. The book argues that there was a trend
towards higher inequality which was reversed between 1930 and 1975 due to
some rather unique circumstances: the two World Wars, the Great Depression
and a debt-fueled recession destroyed much wealth, particularly that owned
by the elite. These events prompted governments to undertake steps towards
redistributing income and the fast economic growth meant that inherited
wealth had its importance reduced.” On a conceptual basis, the reasoning is
not adequate if it merely traces what occurred, unles the premises are
clear: what productive or structural drawbacks were being resolved, and in
what manner were the classes being realigned, to protect liberty, that is,
laissez faire, eliminating the structural weaknesses of the pre-war years?
The problem with the presentation from a Marxian point of view is that it
is trying to build the case for the global management of wealth at present,
but constructing an image of how this was done earlier, whereas what was
being done is something else. Marx resolves the issue about ‘distribution
of wealth’ in one sentence (in his Critique of the Gotha Program, on the
manifesto of the German Social Democratic Workers Party in 1875, saying
‘all distribution is nothing but the distribution of the means of
production.’ It is pointless to set out how governments distribute wealth…
Therefore wealth is distributed on the basis of how it is produced, that
is, who owns the means of production thereof, in the sense that such a
person has his civil liberties which cannot be taken away by Parliament,
and then ‘wealth’ that he creates is directed according to ‘popular
assemblies’ wishes, etc. The moment that this hydra surfaces, wealth
creation ceases as capital shall flow to better climes, in which case what
looks like redistribution is explained in Marxian terms differently, namely
the state taking ‘a portion of the surplus value, for the (managing) of the
common affairs of the whole bourgeoisie,’ what one individual capitalist
can’t do, like building roads or maintaining law and order, the state will
tax and do the job.
The book is actually set on a contrary plane of logic to the movement of
history, and part of the reason is that the author is trying to stick to
what is ostensibly a Marxian sentiment, namely the ‘scandal’ of capitalist
production, which Italian political philosopher Giovanni Sartori settled
the question in his 1957 classic work, ‘Democratic Theory.” The point was
that if capitalism is a market-based economy where each producer or
contracted employee or skills holder takes risks in joining that market
beehive, precisely where is the scandal in the differential incomes, etc?
In a sense this objection is close to the Marxian sentiment, and that is
why Marx railed constantly against the socialists and anarchists for their
predilection to the ‘distribution of wealth’ instead of a scientific view –
ownership, and thus motion of capital as such, arising from dictates of
individual adaptation to profit cycles, etc.
The online reviewer says “the book argues that the world is returning
towards “patrimonial capitalism”, in which much of the economy is dominated
by inherited wealth and that their power is increasing, creating an
oligarchy.” There is clearly an unscientific outlook in this formulation,
as world economy cannot ‘return towards,’ a formulation the author adopts
due to French obsessions with neo-patrimonialism, a sort of feudal echo, of
a class of rulers, nobles, rentiers (holding shares in banks, etc) lording
it over society. From a Leninist point of view, who created the notion of
‘international monopoly finance capital’ after others had created the
notion of finance capital as merging of bank and industrial capital, the
issue is far less the domination but the mode of rate of profit as this is
where capitalism stands or falls. And again, there is the dimension of what
called socially owned capital, namely joint stock capital where ordinary
people take stock (shares) and become part of the market, that it ended the
older strict private ownership model of capitalism. In view of this feature
for instance, most sections of society are part of the capitalist framework
in its wider context, thus the income levels represent little but figures.
In addition, to pick off from Sartori and even Marx if he were to recompose
the thesis of the gradual immiserisation of the working class (a point
Picketty converts into something else, inequality rather than
improverishment leading to revolution), where is the agency of change under
current conditions? It is evident that what has been overtaken entirely in
Marx’s analysis is this projection of impoverishment, and Marx erred in
that direction – not because of a dialectical method that was too sure of
what he was saying – but rather on the very elements of his own analysis.
If constant capital (machinery, fuel) need less labour with each business
cycle, this is the same manner in which commodities are cheapened and thus
workers’ lives improve, instead of immersion into poverty. Hence the crises
of this period are those of low avenues of investment of capital and making
a profit, where among rich countries in the past decade only the US had
five to six per cent growth rate, the rest hardly passing two to three pre
cent. With Barack Obama’s health care plan and earlier doubling of minimum
wages by Congress, capital is flowing out and local manufacturing take up
is poor, services etc owing to higher taxation. Growth may pick up again in
the US if the Republicans take the presidency in the next polls, removing
hurdles to higher rates of profit and higher growth levels. The world
competes on better conditions for investment and profit expectations, so
‘neo-patrimonial’ attitudes in Europe and Asia and quite so in Africa about
land or other assets remaining public property also help to relatively
impoverish these countries compared to the others. They think they do
themselves a favour, though.
(ends)