The Problem Isn't That People Are Greedy—It's That They're Capitalist ~~ Hadas Thier

https://inthesetimes.com/article/capitalism-marx-engels-economic-theory-greed-grow-or-die-accumulation

Capitalism’s ethos of “grow or die” comes at our expense.

HADAS THIER SEPTEMBER 9, 2020

The fol­low­ing is an excerpt from A People’s Guide to Cap­i­tal­ism: An Intro­duc­tion to Marx­ist Eco­nom­ics (Hay­mar­ket Books, August 2020).

Com­pe­ti­tion is the beat­ing heart of cap­i­tal­ism. Mar­ket com­pe­ti­tion acts as a dis­ci­pling force, which com­pels cap­i­tal­ists to con­stant­ly ​“accu­mu­late”: to trans­form prof­its into fur­ther investments.

It isn’t the case that each cap­i­tal­ist wants to make a greater prof­it than his neigh­bor so that he’ll feel him­self a big­ger man (though it’s true that most cap­i­tal­ists are men). Nor is the dri­ve for prof­it dri­ven by his insa­tiable thirst for more lux­u­ries. Rather, he des­per­ate­ly needs to accu­mu­late more cap­i­tal in order to get hold of the lat­est, most effi­cient, labor­sav­ing automa­tion. The big­ger the prof­it of an indi­vid­ual cap­i­tal­ist, the more quick­ly he’ll be able to invest in these tech­nolo­gies, ahead of his com­peti­tors. In the words of Dell Com­put­ers founder and CEO, Michael Dell, cor­po­ra­tions must ​“grow or die.”

As Friedrich Engels explained:

We have seen that the per­fectibil­i­ty of mod­ern machin­ery, devel­oped to the high­est degree, becomes trans­formed by means of the anar­chy of pro­duc­tion in soci­ety into a com­pul­so­ry law for the indi­vid­ual indus­tri­al cap­i­tal­ist con­stant­ly to improve his machin­ery, con­stant­ly to increase its pro­duc­tive pow­er. The bare fac­tu­al pos­si­bil­i­ty of extend­ing his sphere of pro­duc­tion, becomes trans­formed, for him, into a sim­i­lar com­pul­so­ry law. The enor­mous expan­sive force of mod­ern indus­try, in com­par­i­son with which that of gas­es is ver­i­ta­ble child’s play, appears now before our eyes as a qual­i­ta­tive and quan­ti­ta­tive need to expand which laughs at all resistance.

In the auto indus­try, for instance, the aver­age time between redesigns of new mod­els is five years. Auto­mo­bile tech­nol­o­gy for elec­tric motors, mul­ti­speed auto­mat­ic trans­mis­sions, bat­tery pow­er, and engine pow­er is con­tin­u­al­ly updat­ed to pro­vide ​“more car for your mon­ey.” If a car com­pa­ny comes out with a new vehi­cle that does not sig­nif­i­cant­ly improve upon old­er mod­els, it will spend those years between redesigns los­ing mar­ket share until it can pro­duce a new model.

Marx, there­fore, made the point that it is not enough to gen­er­ate prof­it; it must be rein­vest­ed. The part of prof­it that is con­sumed by cap­i­tal­ists them­selves is rev­enue, while the part that is employed as cap­i­tal is accu­mu­lat­ed. If boss­es mere­ly spent their prof­its on lux­u­ries, pro­duc­tion would not expand, and cap­i­tal­ists would not have the means to inno­vate. “[W]hat does this sur­plus prod­uct [prof­it] con­sist of?” asked Marx: ​“Only of things des­tined to sat­is­fy the needs and desires of the cap­i­tal­ist class, things which con­se­quent­ly enter into the con­sump­tion fund of the cap­i­tal­ists? If that were all, the cup of sur­plus val­ue would be drained to the very dregs, and noth­ing but sim­ple repro­duc­tion would ever take place.”

Of course, the rul­ing class does spend an exor­bi­tant amount of mon­ey on them­selves. Mil­lions of dol­lars are poured into man­sions, yachts, par­ties, watch­es, art, and all man­ner of sundry lux­u­ries. Ven­ture cap­i­tal­ist Marc Bell recent­ly put his Boca Raton man­sion up for sale for near­ly $25 mil­lion, so he could move into larg­er digs in Mia­mi. Along with a ​“nat­ur­al” swim­ming pool that fea­tures water­falls over sculpt­ed stone, a spa and a bas­ket­ball court on the property’s 1.6 acres, his man­sion also includes a ​“Star Trek” home the­atre, which repli­cates the main bridge of the Star­ship Enter­prise, com­plete with prop­er ​“swoosh­ing” sounds every time the doors open or close.

As a 2018 Oxfam report revealed, the rich­est forty-two peo­ple own the same com­bined wealth as the world’s poor­est 3.7 bil­lion. In the US, the wealth of the three rich­est peo­ple equals that of the bot­tom half of the pop­u­la­tion. This gap grows by the day. In the eco­nom­ic cri­sis emerg­ing along­side the COVID-19 pan­dem­ic, the rich are mak­ing a killing. Accord­ing to the Insti­tute for Pol­i­cy Stud­ies:

Between March 18 and April 10, 2020, over 22 mil­lion peo­ple lost their jobs as the unem­ploy­ment rate surged toward 15 per­cent. Over the same three weeks, U.S. bil­lion­aire wealth increased by $282 bil­lion, an almost 10 per­cent gain.

Yet despite their pre­pos­ter­ous lifestyles, and the bar­bar­i­ty of the grow­ing inequal­i­ty between rich and poor, cap­i­tal­ists, too, are like gold-stud­ded cogs in the wheels of the sys­tem. As Marx explained: “[C]ompetition sub­or­di­nates every indi­vid­ual cap­i­tal­ist to the imma­nent laws of cap­i­tal­ist pro­duc­tion, as exter­nal and coer­cive laws. It com­pels him to keep extend­ing his cap­i­tal, so as to pre­serve it, and he can only extend it by means of pro­gres­sive accumulation.”

If Hen­ry Ford had con­tent­ed him­self with blow­ing the prof­its from the first series of Mod­el Ts on a fan­cy vaca­tion, rather than invest­ing in new tech­nolo­gies, anoth­er com­pa­ny would have been first to inno­vate car pro­duc­tion. Ford would have become a foot­note in the his­to­ry of U.S. capitalism.

His­to­ry is rid­dled with such foot­notes of com­pa­nies that fail to inno­vate and then go under. Con­sid­er Block­buster, once a multi­bil­lion-dol­lar enter­tain­ment com­pa­ny, with over 9,000 stores and 60,000 employ­ees. the com­pa­ny took a rather abrupt turn to use­less­ness and bank­rupt­cy when it failed to stay ahead of stream­ing tech­nolo­gies. Block­buster passed up an oppor­tu­ni­ty to buy a then-small com­pa­ny named Net­flix for $50 mil­lion in 2000, unaware that most peo­ple would be watch­ing their shows and movies through the inter­net before long. Net­flix soon drove Block­buster out of business.

This is why both Marc Bell and his Star Trek-styled man­sion, and Ben Cohen and Jer­ry Green­field, founders of Ben and Jerry’s ​“car­ing cap­i­tal­ism” ice-cream, are all dis­ci­plined by the same forces of the mar­ket, and are all com­pelled to accu­mu­late, or face bank­rupt­cy. Marc and Ben and Jer­ry, what­ev­er their per­son­al feel­ings about cap­i­tal­ism or Star Trek, must make enough prof­it to plow back into fur­ther inno­va­tion and pro­duc­tion. As Marx famous­ly described:

Accu­mu­late, accu­mu­late! That is Moses and the prophets! ​‘Indus­try fur­nish­es the mate­r­i­al which sav­ing accu­mu­lates.’ There­fore, save, save, i.e., recon­vert the great­est pos­si­ble por­tion of sur­plus val­ue or sur­plus-prod­uct into cap­i­tal! Accu­mu­la­tion for the sake of accu­mu­la­tion, pro­duc­tion for the sake of pro­duc­tion: this was the for­mu­la in which clas­si­cal eco­nom­ics expressed the his­tor­i­cal mis­sion of the bour­geoisie in the peri­od of its dom­i­na­tion. Not for one instant did it deceive itself over the nature of wealth’s birth-pangs.

We can see then that in real­i­ty the move­ment of cap­i­tal can­not be a lin­ear process with a begin­ning and end, but a con­tin­u­ous one, which must spi­ral in growth. When the sys­tem is run­ning smooth­ly, cap­i­tal­ists don’t sit on the cash they’ve made; prof­its are shov­eled back into new rounds of pro­duc­tion. Cash from this quarter’s auto, health ser­vices, or iPhone sales is used to finance next year’s mod­els. Each round of pro­duc­tion thus pro­ceeds from a more advanced posi­tion than the last, built on the larg­er amount of mon­ey gen­er­at­ed by the pre­vi­ous cycle.

Assum­ing a rate of prof­it (a con­cept I take up else­where in my book) of 50%, if a busi­ness begins by invest­ing $20,000 and pro­duc­ing an end val­ue of $30,000, by the sec­ond round of pro­duc­tion, instead of a $20,000 invest­ment pro­duc­ing val­ue of $30,000, we can now start with $30,000 and end up with $45,000. As Marx wrote: ​“Looked at con­crete­ly, accu­mu­la­tion can be resolved into the pro­duc­tion of cap­i­tal on a pro­gres­sive­ly increas­ing scale. The cycle of sim­ple repro­duc­tion alters its form and, to use Sismondi’s expres­sion, changes into a spiral.”

This spi­ral­ing buildup of wealth brings us to the def­i­n­i­tion of cap­i­tal as the self-expan­sion of val­ue. On an indi­vid­ual basis, each cap­i­tal­ist has no choice but to expand prof­its and invest­ments or face insol­ven­cy. On a sys­tem-wide basis, this trans­lates to an econ­o­my that must grow with­out bounds. As David Har­vey explained: ​“Just read the press reports on the state of the econ­o­my every day, and what are peo­ple talk­ing about all the time? Growth! Where’s the growth? How are we going to grow? Slow growth defines a reces­sion, and neg­a­tive growth a depres­sion. One or 2 per­cent growth (com­pound­ed) is not enough, we need at least 3, and only when we reach 4 per­cent is the econ­o­my deemed to be ​‘healthy.’”

Con­trast capitalism’s des­per­ate dri­ve to accu­mu­late and grow — at any human or eco­log­i­cal cost — with a social­ist, planned econ­o­my. Marx and Engels have been wide­ly mis­in­ter­pret­ed on the ques­tion of growth. They did cel­e­brate the pro­duc­tive capac­i­ty of cap­i­tal­ism and saw it as lay­ing the basis for a world of abun­dance that could make social­ism pos­si­ble. One famous pas­sage from the Com­mu­nist Man­i­festo reads:

The bour­geoisie, dur­ing its rule of scarce one hun­dred years, has cre­at­ed more mas­sive and more colos­sal pro­duc­tive forces than have all pre­ced­ing gen­er­a­tions togeth­er Sub­ju­ga­tion of nature’s forces to man, machin­ery, appli­ca­tion of chem­istry to indus­try and agri­cul­ture, steam nav­i­ga­tion, rail­ways, elec­tric telegraphs, clear­ing of whole con­ti­nents for cul­ti­va­tion, canal­iza­tion of rivers, whole pop­u­la­tions con­jured out of the ground — what ear­li­er cen­tu­ry had even a pre­sen­ti­ment that such pro­duc­tive forces slum­bered in the lap of social labor?

But Marx and Engels’ seem­ing appre­ci­a­tion of the pro­duc­tive forces of cap­i­tal had more to do with the future pos­si­bil­i­ties embed­ded with­in them, and noth­ing to do with the destruc­tive man­ner in which they cur­rent­ly man­i­fest. The sub­ju­ga­tion of nature to man, they not­ed in many of their writ­ings, has dead­ly effects, not just to the nat­ur­al world around us, but to humankind, which is itself a part of nature. As Engels wrote: ​“Thus at every step we are remind­ed that we by no means rule over nature like a con­queror over a for­eign peo­ple, like some­one stand­ing out­side nature — but that we, with flesh, blood and brain, belong to nature, and exist in its midst, and that all our mas­tery of it con­sists in the fact that we have the advan­tage over all oth­er crea­tures of being able to learn its laws and apply them correctly.”

Marx and Engels were very much against the destruc­tion and degra­da­tion wrought by capitalism’s end­less growth of com­modi­ties. At the same time, they under­stood that these same forces have cre­at­ed the con­di­tions for a new soci­ety. ​“The devel­op­ment of the pro­duc­tive forces of social labor is capital’s his­toric mis­sion and jus­ti­fi­ca­tion,” they wrote. ​“for that very rea­son, it unwit­ting­ly cre­ates the mate­r­i­al con­di­tions for a high­er form of pro­duc­tion.” Social­ism would advance the devel­op­ment of society’s pro­duc­tive capac­i­ty. But the pro­duc­tion of goods that do not have price tags attached would lead to a very dif­fer­ent dynamic.

Rather than the com­pul­sion to pro­duce more and more stuff in order to accu­mu­late more and more prof­its, the pur­pose of pro­duc­tion in a social­ist soci­ety would be use, rather than prof­it. Human need would there­fore dri­ve deci­sion-mak­ing, and would pro­pel for­ward advances in tech­nol­o­gy and research for more effi­cient and sus­tain­able pro­duc­tion. Cap­i­tal relies on ​“planned obso­les­cence” of goods made with non­durable and shod­dy mate­ri­als, or ​“upgrades” in designs, which ren­der our expen­sive tech­nol­o­gy use­less with­in a year or two. This is one of the many ways that we are con­tin­u­al­ly induced to buy more. Social­ized pro­duc­tion, on the oth­er hand, would allow us to devel­op meth­ods that pro­duce durable and eco­log­i­cal­ly sus­tain­able goods. Simul­ta­ne­ous­ly, we could cut the amount of labor time for nec­es­sary for pro­duc­tion, and there­by increase our free time and unleash the cre­ative poten­tial of human beings unen­cum­bered by dread­ful­ly long work weeks.

Many things can and should stop being pro­duced imme­di­ate­ly — like mil­i­tary arms, and adver­tise­ments. Oth­ers ought to be dras­ti­cal­ly reduced as quick­ly as pos­si­ble, includ­ing cars and plas­tics. A social­ist soci­ety would there­fore need to tack­le plan­ning a sys­tem of pub­lic trans­porta­tion that ends the need for cars. Beyond that, a future soci­ety will have to take up com­plex ques­tions in facil­i­tat­ing the sat­is­fac­tion of human need with­out destroy­ing the earth that we live on. for instance, how do we want to orga­nize food pro­duc­tion? Research indi­cates that mul­ti-crop, rotat­ing agri­cul­ture, which is sig­nif­i­cant­ly more sus­tain­able for the soil, can also pro­duce more crops than the com­mon meth­ods of cor­po­rate farming.

Cap­i­tal­ism forces us into a spi­ral of accu­mu­la­tion for the sake of accu­mu­la­tion. Planned devel­op­ment to improve the qual­i­ty of life for the vast major­i­ty of human­i­ty on the basis of sus­tain­able pro­duc­tion and plan­ning is its polar oppo­site. That is the vision of a social­ist soci­ety. From there, wrote Marx, ​“the pri­vate prop­er­ty of par­tic­u­lar indi­vid­u­als in the earth will appear just as absurd as the pri­vate prop­er­ty of one man in oth­er men. Even an entire soci­ety, a nation, or all simul­ta­ne­ous­ly exist­ing soci­eties tak­en togeth­er, are not own­ers of the earth. They are sim­ply its pos­ses­sors, its ben­e­fi­cia­ries, and have to bequeath it in an improved state to suc­ceed­ing gen­er­a­tions, as boni patres famil­ias [good heads of the household].”