Finance Capitalism

[Young Master Smeet]

the Illusions Created by Competition

In my opinion, this chapter comes close to encompassing the whole of Marx’s account of the critique of capitalist economics.

In brass tacks terms: capitalists exploit workers through the wages system, extracting surplus value from them: but these goods go out into circulation to raise a price that does not equal their full value.

Competition ensues among capitalists to get their hands on the surplus value: using legal and economic means: taxes, rents, interest. That is, capitalists are competing to get access to the levers of extracting surplus value that has already been extracted from workers by industrial capitalists.

e.g.
“When an independent labourer — let us take a small farmer, since all three forms of revenue may here be applied — works for himself and sells his own product, he is first considered as his own employer (capitalist), who makes use of himself as a labourer, and second as his own landlord, who makes use of himself as his own tenant. To himself as wage-worker he pays wages, to himself as capitalist he gives the profit, and to himself as landlord he pays rent. Assuming the capitalist mode of production and the relations corresponding to it to be the general basis of society, this subsumption is correct, in so far as it is not thanks to his labour, but to his ownership of means of production — which have assumed here the general form of capital — that he is in a position to appropriate his own surplus-labour. And furthermore, to the extent that he produces his product as commodities, and thus depends upon its price (and even if not, this price is calculable), the quantity of surplus-labour which he can realise depends not on its own magnitude, but on the general rate of profit; and likewise any eventual excess above the amount of surplus-value determined by the general rate of profit is, in turn, not determined by the quantity of labour performed by him, but can be appropriated by him only because he is owner of the land. Since such a form of production not corresponding to the capitalist mode of production may thus be subsumed under its forms of revenue — and to a certain extent not incorrectly — the illusion is all the more strengthened that capitalist relations are the natural relations of every mode of production.”

That each of those revenue streams can be quantified, themselves, and compare to the general rate of profit, they can be given a notional price: e.g. if the general rate of profit in the economy is 10% then £10 represents a notional capital of £100, so the rent and interest streams of the above farmer can be sold off (indeed, even the wage stream can be subject to a ‘personal loan’ these days which must be repayable and within the means of the wage-earner, so, in essence, the small holder here can sell their labour as an income stream).

Such notional capitals are creatures of contract, and can be shaped by law, so the competition becomes one of defining the law that defines the notional assets. Increasingly complex schemes can be dreamed up, since the notional capital can be infinitely divided not just within itself, but within time (e.g. futures markets) and it can be subject to financial services (e.g. insurance).

So, for example, when the UK’s pension scheme tottered because of Kwartang’s budget, all these things were in play: the pension scheme are regulated, and must be run in accordance with the financial rules, the notional value of their gilts collapsed because of the devaluation of the pound, meaning they had to sell assets to pay they owners of the insurance they take out against significant changes in their asset base.

This world, though, is incredibly complex, shrouded in secrecy and a complex mis of legality, logic and wishful thinking.

So, we come back to propaganda basics: all this wealth comes in the first instance from the labour of workers, and our interest is to push up wages as far as we can and avoid being taken in by their scams.

[Author]

Posts