Understanding Capitalism: Don’t Take It On Faith

I am thinking about a note I found on the corner of the internet by journalist Liu Zhiyi: “After using the toilet at 4am, I stuck my ear on the workshop corridor wall, and listened to the machines rumbling steadily from all four directions – this is the factory’s heartbeat. The employees work, walk and eat at this beat, so no wonder I was walking so fast, eating so quickly without anyone hurrying me, even though it didn’t feel good. You’re like a component that’s entered the assembly line, just following the rhythm, belonging to that heartbeat at 4am, no way to escape.” Zhiyi had infiltrated a Foxconn factory in China that manufactured iPhones, iPads and iPads round the clock.

“The hard-working Wang Kezhu moaned that the salary was too low, but when he tried to apply for courses outside he “couldn’t understand a word,” so he gave up . I asked him why push so hard, but he never answered, until one morning I saw him stopping in front of a pillar, and suddenly shouted “help!” He probably didn’t know what he’d just blurted out, either” (From the English translation of Zhiyi’s Chinese text)1

Why had this man who worked in a smooth and orderly factory “with employee treatment reaching standard specifications” shouted for help without realizing he had shouted?

 

I remember a line I read in the subtitles of a black and white French film from the 1970s: “What obliges the producers to participate in the production of the world is also what separates them from it.”2 The free world feels like an uneasy, bloated tummy. There are murky rumbles every now and then, but I am optimistic, I expect it to settle down, to ‘stabilize’ with a good night’s sleep.

I wake up and today’s news is the same as yesterday’s. I feel like an inmate in an asylum. So I fold up the newspaper, put it out of sight. I switch off the tv, I turn off the notifications on my phone, my laptop – so I can get back to the business of my daily life. This is the best of all possible worlds. A ‘progressing’ world. There is no alternative but to keep one’s head down and work harder.

What is Capitalism?

I go back to Zhiyi’s Foxconn exposé. Further down, he has written: “In 2009, Times magazine nominated “The Chinese Worker” as “Person of the Year,” praising its “determined vision shone on the future of mankind,” but this so-called “determination” is needed to resist being mechanized and eroded by capitalism.”

“Determination is needed to resist being mechanized and eroded by capitalism”. What did he mean? This is where we shall turn to Marxist3 historian and Professor of Political science, Ellen Meiksins Wood: “How we understand [capitalism, and its history] has a great effect on how we” misunderstand the basic conditions which are necessary for a free society. If capitalism structures our everyday lives, what can our everyday lives tell us about capitalism? Wood’s work allows us to investigate.

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If capitalism structures our everyday lives, what can our everyday lives tell us about capitalism?

 

Looking around, it feels safe to assume that Zhiyi is talking about the incredible, invisible, nonstop, productive forces we feel around us today. You can’t point to one person or organization and say here is the entity who is forcing me to behave like this, but you know you have to compete. At the market pace. At the market price. If you refuse, your consequences are yours alone to deal with. It is a hyper practical world, we’ve been told. Wood calls these irresistible and invisible forces ‘imperatives’. Let’s log this as mundane fact number (1).

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A production line worker at Foxconn. “We must talk about the consumer,” says photographer Thomas Lee. “Consumption of [popular electronic products] is why Foxconn grew so large and I think it is why it lost its way. We can’t simply point fingers at Foxconn.” Source: Wired.
There are certain things we do less and less these days. Taking a walk. Why wouldn’t you walk to the gym? But who has the time? Walking wastes too much time. Don’t go to the bank, pay online – it’s faster. More efficient. Mundane fact number (2).

You probably have a career plan for the near future – to ‘grow your business’ or earn a certification which can get you more desirable work. College graduates will remark that a bachelor’s degree is the bare minimum these days. There are certain laws of motion at work in this machinery. We know the school syllabus grows denser with the years. Automation is generating more efficiency as well as wiping out certain job profiles on a steady basis. Mundane fact number (3).

“The market implies offering and choice” says Wood. When you are free to work hard and use your profits to purchase everything you need to improve your own situation, it seems like rank idiocy to resist the system that has brought you this freedom. We ourselves conform to the market because we understand that if not, we would be thrown back on to very meagre means of subsistence. Mundane fact number (4).

Getting a job is not enough. Nor is having a small business. Even children are aware they will have to (1) compete on the market, (2) by making efficient and productive use of their time and (3) “keeping up to date” with the newest ‘standards’. (4) We do this without being forced, because its the only way to buy the things we want to buy. The lucky ones carve out a niche for themselves, and find the time to relax a little later in life. (5) Everything is a ‘commodity’ for sale (and you never know what goods and services are going to cost when you retire).

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These are the capitalist ‘laws of motion’ which according to Wood, distinguish a capitalist society from all other forms of social organization…

 

These are the capitalist ‘laws of motion’ which according to Wood, distinguish a capitalist society from all other forms of social organization: “the imperatives of competition and profit-maximisation, a compulsion to reinvest surpluses, and a systematic and relentless need to improve labour-productivity and develop the forces of production”.

Within the Foxconn factory, the factory worker has to work as hard as he is pushed, and harder too, because the only thing that can bring him hope is hard work. Otherwise how would he dare hope? Even hope has to be earned within a purely capitalist system.

Hasn’t the world always been run like this? On the exploitation of slave labour or of peasant serfs by a privileged few? These days, its factory workers and ‘informal labour’  – that’s all. Such generalizations (which are easy to make since they are so readily bandied about) elide several fundamental, antithetical historical facts.

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“In this original and provocative book Ellen Meiksins Wood reminds us that capitalism is not a natural and inevitable consequence of human nature, nor is it simply an extension of age-old practices of trade and commerce.” Source: Verso.

In ‘The Origin of Capitalism: A Longer View’, Ellen Meiksins Woods tells us that capitalism is a unique beast, different from all earlier forms of commerce and social organization. If one is clear is in one’s definition of capitalism (which we have been careful to establish at the very beginning) it becomes easy to locate that time and place in history where these strange, new, self-reproducing forces were set in motion. Locating them, following them as they developed, she hopes, will allow us to understand the true potential of capitalism.

The Origin of Capitalism

Liberté, égalité, fraternité. Words which take us back to France in the seventeenth and eighteenth centuries. Back to “Absolutist … France, regarded by many as the prototype of the emerging ‘modern’ nation state”; birthplace of the historic Declaration of the Rights of Man and of the Citizen – this point in space and time remains the signal beacon of the modern world’s progressive liberal values.

Of our cry for a world where everyone can “be” who they want to be and “do” what they want to do in life.

As the doctrine of divine right of kings was overthrown, French “peasants [consolidated] their hold on property … enough to resist … increasing pressures from landlords [and] rents were often fixed at a nominal rate.” Looking back, one would be forgiven for assuming (1) that the security and stability which the new regime offered the basic producers would generate a growing population of entrepreneurial peasants; (2) that the time was ripe for a growing competition in production, which would lead to innovations in the means of production, increased productivity and so on. But this story isn’t going the way you would think.

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… something was causing the English farmers to work harder than ever …

 

Across the channel, something was causing the English farmers to work harder than ever. They were producing almost as much total food output as the French, but with a much smaller population that was engaged in agricultural production. This increased “output per unit of work” was producing enough food not just to sustain a growing urban population, English foodgrain was even being exported in large quantities.

In 16th century England, as governance slowly become centralized under the Tudors, the aristocrats lost their privileges to maintain their own military instruments of force. They began to look for alternatives to their recently relinquished feudal powers of physical coercion. New forms of power were being devised: especially in South and South East England where land was concentrated in “unnaturally large” landholdings, the aristocrats began to look for creative new ways to put their property to use.

These lands “were leased out in manageably small segments for cultivation to tenants. The aristocrats “in this arrangement had a strong incentive to encourage … their tenants to find ways of reducing costs by increasing labour-productivity… “ What this did was to create a market in land leases. The more and more agricultural land was put to work under this logic, the more these imperatives came to be a fact of life for everyone: (1) for the landlords, (2) for the tenant farmers and (3) for landless wage labour.

The insecure English farmers, who were just trying to survive in their local market on leases, stepped up their own productivity enough to collectively outproduce their secure French counterparts.

As ‘improvement’ of the land using better agricultural techniques became absolutely necessary for survival, “a whole new body of literature emerged, spelling out in unprecedented detail [its] techniques and benefits.” New legal rights had to be established so that productivity could continue to rise without hiccups in spite of the rising rates of competition. The aristocrats got busy devising new rationale to extinguish ancient “common and customary use rights” to land, such as “the right to collect the leavings of the harvest during specified periods of the year”.

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Thus the first historical instance of capitalism neither came about in an egalitarian society, nor did it create the conditions for one … It exacerbated existing social and class differences.

 

“Traditional conceptions of property [were] replaced by new, capitalist conceptions of property – not only as ‘private’ but as exclusive.” Age old practices were reclassified as incidents of trespass, so that the landlords could put even common lands to productive use. The combined effect of all this was a “growing plague of vagabonds, those dispossessed ‘masterless men’ who wandered the countryside and threatened social order”. Thus the first historical instance of capitalism was neither found in an egalitarian society, nor did it create the conditions for one. It exacerbated existing social and class differences, by allowing unfair advantages to be carried over – the rich were de facto better competitors in this progressive new system.

What happened to the losers? Many of these dispossessed producers poured into the nearest large urban center – London. Between 1530 and 1700, London’s population grew tenfold (from 60,000 to 575, 000)! These new urban poor formed a ‘standing reserve army’ of labour, starved of work and in competition with each other to work longer hours, for cheaper wages. The development of capitalist imperatives in rural England, set things up nicely for urban English capitalists in the coming Industrial Revolution!

Even as the English urban population mushroomed reflecting the increased productivity of the growing rural agrarian capitalism, the French rural-urban population balance barely moved in the same period, showing what capitalism can do to social composition.

While it is clear that the landed classes in Britain were shaping the state to their own changing requirements, French writings of the time do not reflect a similar concern with capitalist ‘values’. John Locke, “the Father of Liberalism” was pre-eminent among the English intelligentsia:

“’tis labour indeed that puts the difference of value on everything” wrote Locke. And instead of from here deriving that labour must therefore be protected and nurtured in a just society, since we all enjoy the fruits of our poorest paid labour, the ‘liberal’ Locke derives the fundamental ‘objective declaration’ of capitalism: he derives that transactional intent is ‘pure’ intent.

From God ‘hath given the world to men in common’ he leaps to: “individual property is a God-given natural right”. And from there to: “any man who takes [unimproved land] out of common ownership and appropriates it to himself in order to improve it has given something to humanity.” Locke turns the act of taking land away from someone and making it more productive, into a sign of industry, of contributing to an abstract ‘greater good’. 4

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Holding and multiplying one’s wealth in perpetuity thus appears as the most decent reasonable human right, for the first time in modern history.

 

Holding and multiplying one’s wealth in perpetuity thus appears as the most decent reasonable human right (this was no military might backed appeal to divine right). For the first time in modern history we have the systematization of the notion that if you reproduce capital, you do something good for the future of society. This ‘pure’ intent would set the standards by which legal disputes over access rights were resolved: the improver was favoured in the eyes of the law.

Using crude ‘calculations’ he declared that the unimproved common lands roamed and put to various seasonal uses by American Indians as not being worth “1/1000 of the English acre”. His “point,… not coincidentally drip[ped] with colonialist contempt” and also not coincidentally supported the interests of the landed classes – prominent among whom was his mentor, the First Earl of Shaftesbury.

Around the same time as Locke, William Petty an English Surveyor General who had been posted to Ireland “computed the comparative value of human beings in improved as against unimproved societies.” (italics added for emphasis) This provided economic proof that people of less ‘developed’ societies were worth less.

“Starting from a value comparable to the price of African slaves – at £25 for an adult male – Petty estimated that the improvement of Ireland (another British colony) … could raise the value of an Irishman, to that of an Englishman, worth £70.”5 And so it is unsurprising that once the Native Americans (who were worth less) had been cleared off the land, “the first major [English] colonies in [America, Virginia and Maryland, were] organized explicitly on the principles of ‘improvement’.”6 They were making way for progress. Or in the language of the history books of the new ideology, primitive ways were dying.

Through the cunning use of such ideological ‘innovations’, by the 18th century, enclosure (the transfer of lands deemed unimproved to the ownership of the landed classes) was able to proceed by Parliamentary means in England. The State backed the logic of ‘improvement’. This marked the end of the “enclosure riots [which had] punctuated the 16th and 17th centuries … Whole villages disappeared in this process [violently making way for the English rural idyll that we are familiar with today:] country houses, parks and landscape gardens”.

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… for a while, the growth of British capitalism fueled a steady growth in the international slave trade!

 

“[T]he development of agrarian capitalism created a mass market for basic consumer goods” which rested doubly on the growing dispossessed urban workforce. They were both wage labour which produced goods as well as dependent consumers of produced goods to fulfill their daily necessities. Britain had become home to the world’s first ever capitalist system. “The specific logic of this novel market depended … on the poverty of its consumers.” As the Britain of Charles Dickens ‘boomed’, the British colonies’ need to ramp up production on their plantations in order to compete with the rising productivity of this market in the motherland, fast outstripped the local availability of labour, and created a steady demand for new ‘slave labour’.

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Slave trade poster. Source: Wikipedia

This means that for a while, the growth of British capitalism fueled a steady growth in the international slave trade! This was what was needed to compete.7 Wood tells us that “this was accompanied by the construction of more rigid racial categories than had ever existed before – in the form of pseudo scientific conceptions of race or patriarchal ideologies in which African slaves were perennial children.” She is not exaggerating, all one needs is a little historical perspective. Let’s take the case of a small Caribbean island in the 18th century.

The French gained full control of Haiti in 1697, after the signing of a treaty with Spain. Shortly thereafter they imported thousands of slaves from Africa to work on the tobacco, cocoa, cotton, indigo and sugarcane plantations and under the rule of the gun and the whip the island came to be known as the Pearl of the Antilles. What was at work in Haiti was clearly not capitalism. It was production for international trade supported by military occupation and the use of involuntary labour. The voluntary stepping up of productivity without end as a strategy that was compulsory for success, remained an unnatural logic within most societies.

In other words, “Feudalism in Europe … produced several different outcomes, only one of which was capitalism.” (italics added for emphasis)

Then something happened in France. A Revolution. The people were rising! Inspired by the French Revolution of 1789, the dark men of Haiti too cried out for their liberté, their égalité, their fraternité!

However, with very few exceptions, the French saw nothing wrong in keeping their liberal ideals exclusively for themselves. Left with no choice, the Haitians led by brave men such as Toussaint L’Ouverture fought fiercely against Napoleon’s imperial reinforcements, driving them out by 1803. Haiti became the first ‘dark nation’ in modern times to rid itself of its colonial overlords.

Predictably, following the Haitian declaration of Independence in 1804, the French retaliated with a trade embargo, severely crippling the island nation’s efforts to take its place as an independent economy. When the embargo was eventually lifted in 1825, it was only because the Haitians had finally agreed to pay the French for the loss of their slaves!8

We have seen that as England ‘progressed’ towards Parliamentary enclosures, the establishment of capitalism went hand in hand with the cultivation of the notion of economic exploitation as a ‘right’ – the right to improve the productivity of a means of production. Even today, the demand for ‘economic rights’ continues to be presented as an ultimately ‘decent’ request: that the only decent thing to do is to open up the markets to allow everyone to compete.

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Even today, the demand for ‘economic rights’ continues to be presented as an ultimately ‘decent’ request: that the only decent thing to do is to open up the markets to ‘allow’ everyone to compete.

 

Today ideologues such as Ayn Rand perform an ideological function similar to the one of John Locke during the enclosures. This philosophy takes as its starting point the assumption that the highest virtue is self-interest. This assumption is itself problematically founded on Adam Smith’s once mentioned, unproved, 18th century notion of an ‘invisible hand’ – a benevolent unknowable ‘force’ that tirelessly works towards the overall stability of a market society. However, even Smith had warned at the end of his opus – ‘An Inquiry into the Nature and Causes of the Wealth of Nations’ – against “an overgrown standing army of special interest” (which Randians conveniently ignore).

Wood and other scholars have shown that actuality did not conform to Smith’s classic commercialization model, where commercial accumulation and frugality ” [would] eventually [reach] a point at which it was sufficient to permit substantial reinvestment and the natural development of a relentless competitive impulse”. Not one of the strongest commercial empires in history – the Dutch, the Florentines, the Arab Muslims, the French –  became capitalist following this model.9 They can even be said to have stagnated after reaching a certain level of growth (relative to what we have seen in agrarian capitalist England). When capitalism did spread, it was either through the vehicle of English colonialism or as other powers began putting in place capitalist ‘laws of motion’ in their own countries to compete with England.

So those who claim that ‘society’ was bound to develop from barter to trade to commercialization, industrialization and then on to mature capitalism miss the chance to systematically understand the historic and political conditions of capitalism. How can we judge whether moving towards a better world is just a matter of giving the same system more time, without this fundamental understanding?

Capitalism in the Twentieth Century

To follow the development of the ideological field that supported the shifting of capitalism’s material field (the investment area where sustained reinvestment yields the highest returns would shift from agriculture to industry to global finance with the historical development of capitalism) through the 20th century, we turn to the book ‘The Darker Nations: A People’s History of the Third World’ by historian and Professor of International Studies, Vijay Prashad10.

As the twentieth century dawned, the German sociologist Max Weber contended in his influential work, ‘The Protestant Ethic’, “that the darker world did not have the culture of frugality and thus willed itself into poverty”. It was based on this ‘insight’ that in the 1950s, the sociologist Talcott Parsons circulated his “modernization theory” which insisted that “the problem of the colonized world was not so much its poverty but its traditionalism”; its primitive values.

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Albert Sarraut: “France must not turn over the colonies to the nationalists in the name of “an alleged right to possess the land one occupies”

 

As late as the 1920s, “Albert Sarraut, the French minister of colonies [found it fit to write] that France must not turn over the colonies to the nationalists in the name of “an alleged right to possess the land one occupies, and some sort of right to remain in fierce isolation, which would leave unutilized resources to lie forever idle in the hands of incompetents.” Echoes of Locke?11

Who were these primitive nationalists Sarraut was so concerned with? A vastly underdiscussed part of 20th Century history, is the great wave of liberation from colonial rule that took place following the end of the Second World War: “India (and Pakistan) in 1947 … Indonesia and Vietnam in 1945, the Philippines in 1946, Burma, Ceylon, Korea, and Malaysia in 1948, and China in 1949. In 1951, Ghana gained substantial independence (formally declared in 1957), the same year that Libya gained freedom from Italy to join Liberia, Ethiopia, and Egypt as Africa’s independent states, while in 1956 the Sudan broke from its Anglo-Egyptian bondage (just as Ethiopia absorbed Eritrea)”

These new nations were led by homegrown nationalists, who were eager to lead their fellows to a better way of life now that the shackles of colonialism had been cast off. It is with the hope of finding strength in solidarity against the “bargaining power” of the former colonial powers – the First World – that they came together at the Afro-Asian Conference in 1955 in Bandung, Indonesia.12 The acrimony of the First World that had driven these nations together is reflected in the bitter words of Philippine journalist Carlos Romulo:

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Carlos Romulo: “There is a Marshall plan for Europe, but only “chicken feed” for Asia”.

 

“There is a Marshall plan for Europe, he told his audience in Chapel Hill, but only “chicken feed” for Asia. “What is worse,” he stated in the Times,” it comes with the accompaniment of senatorial lectures on how we must be grateful and how imperative it is for us to realize the advantages of the American way of life. And so on. Must Asia and Africa be content with crumbs and must we be told what a great favor is being conferred on us?” Not only does the U.S . government provide meager aid, and not only does it favor its global corporations to ride rampant on the Third world, but it disfigures the global agricultural markets with its “dumping of American surplus products in Asia, such as rice.” This has “done irreparable harm to surplus-rice producing countries like Thailand .””13

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The Marshall Plan. Source: the Saleroom

Looking for fresh ideas to justify the maintenance of the international economic status quo against the indignance of the Third World, Sarraut and other First World leaders turned to the work of British political economist, David Ricardo. In 1817, Ricardo had put forth “the idea of “comparative advantage” … that a country should specialize in the production of that which it can [already] do best.” This was polite advice that it would be unnatural for a country to try and develop new production capabilities for competition on the world market. When used along with “modernization theory” it provided a powerful ideological counter for belittling the leaders of the dark nations; for telling them they were too primitive to understand what was good for the world economy. But the Third World had canny economic scholars too:

“In 1949, [Argentine economist] Raul Prebisch wrote and circulated a paper titled “The Economic Development of Latin America and Its Principal Problems…” “After centuries of imperialism, [he argued], the new nations had been left with economies that relied on the sale of raw material and the import of finished goods.“

“This fundamental imbalance meant that countries like Argentina [and India had been forced into a pattern of exporting] vast amounts of raw materials [like cotton for the mills of Manchester] at relatively low prices, whereas their import bills [were] inflated with the high prices commanded by industrially manufactured goods” from elsewhere. A clear logical argument.14

As this paper with its wealth of common sense and appreciation for the post colonial condition spread like wildfire among Third World economists and leaders, “the establishment economists in the United States and Europe as well as their leading politicians [denounced them] as “irresponsible wild men, radical utopians”.

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Keynes’ monkey-house: (L to R) Nasser, Sukarno, Nehru, Nkrumah, unidentified. Third World leaders at the Afro-Asian Conference in Bandung, 1955. Source: NYPL

If they submitted to the demands these hooligans were making, they claimed, the ‘stability of the system’ would be compromised. The indignities flew thick and fast: “John Maynard Keynes, … complained to the English government about invitations being sent out to the darker nations for the Bretton Woods Conference” (where conditions favourable to America and its allies would be negotiated for running the world economy, following their victory in the Second World War). He called it “the most monstrous monkey-house assembled for years”. The status quo was flexing its muscles.

First World media was flooded with images of the inability of the great unwashed nations to manage their economies for themselves. “Images of natural calamities, famines, and droughts joined those of hordes of unkempt bodies flooding” their television screens and inevitably altering their populations’ attitude towards the great unwashed.

“Paul Ehrlich’s 1968 ‘The Population Bomb‘ received such tremendous acclaim in the First World because its … ideas had already become commonplace: that the reason for hunger in the world had more to do with overpopulation than with imperialism; that the survivors of colonialism had only themselves to blame for their starvation.”15

Scholar Jean Franco tells us that, “At the very moment that [perceptive French philosopher Michel Foucalt was speaking about the disposability of certain lives under the capitalist logic], Henry Kissinger in the United States was publishing the results of a commission on sterilization. The idea was that sterilization should be encouraged in third world countries in order to regulate the population.” 16

The sterilization commission’s report worried … “that the “political consequences” of population growth could produce internal instability in nations “in whose advancement the United States is interested.” “Curbs on Third World population would ensure that local consumption would not increase, and possibly affect availability of Third World resources.17 That last sentence says it all.

When Haiti finally paid off its debt to the American Banks (who financed the repayment of their ridiculous slave-debt to the French) in 1947, it emerged into the same world order as the other dark nations. Against the protests of the Third World leaders, the “modernization” theorists of the First World had decided that the only way for such nations to ‘develop’ was through the mechanism of foreign aid given under strict conditions.

Vijay Prashad tells us: “When “aid” came from the First World, it would not come without conditions. As the president of the World Bank, Eugene Black, wrote in 1960, “Economic aid should be the principle means by which the West maintains its political and economic dynamic in the underdeveloped world. ” He said economic dynamic, but he may as well have said economic dominance.

“the IMF … forced Haiti to cut its rice tariff [on imported rice] from 35 % to 3 %, [flooding the market with cheap foreign rice] resulting in the destruction of local rice farming. The policy was highly favourable to US agri-business, as US rice was feeding 1 out of every 3 Haitians by 1995. This destruction of local agriculture forced peasants to seek work in the sweetshops of the local cities, where many would have to work over 12 hours a day in abysmal conditions for a few cents.” 18

This is a useful reminder of the place the First World has marked out for the poorest people of the darker nations within the world capitalist system.

As late as 1991, the Chief Economist at the World Bank (Larry Summers) found it perfectly okay to spout white imperialist logic: “I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that. I’ve always thought that underpopulated countries in Africa are vastly underpolluted; their air quality is vastly inefficiently low compared to Los Angeles or Mexico City.” (italics added for emphasis)19

This reeks of the same logic as William Petty’s from the 17th century: you remember Petty had valued Irish land as worth less than imperial home land because it was less ‘improved’. He also felt that the value of an Irishman would increase, if the English improved his land. In true ‘capitalist tradition’, Summers went on to serve as Chief Economic Adviser and Director of the National Economic Council under President Obama.

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Vijay Prashad: “The invisible hand is white. And the First World has wanted it to remain white.”

 

Talking like this, thinking like this is a way of belonging to a very particular community. As Slovenian media theorist, philosopher and psycho-analyst Slavoj Žižek interprets ideology, this is his spontaneous relation to the social world and how he understands it. Summers is not an “evil” person (we should give him the benefit of the doubt) – he is only carrying a “tradition” into the future while reaping the benefits of belonging (this was the subtle point Hannah Arendt had made about Adolf Eichmann).

Ha-Joon Chang (Reader in The Political Economy of Development at the University of Cambridge) rather guilelessly accuses the rich countries of following a consistent policy of “Do as I say, not as I did.” He even wrote a whole book describing this phenomenon, called Kicking Away the Ladder. Chang tells us that in America in the 1880s, the “average industrial tariff rate [was] 40-55 per cent [and State policy discriminated] heavily against foreign investors.”20 70 years later, the IMF and the World Bank announced with perfectly straight faces that as long as Haiti or any of the other ‘developing’ nations would try to follow a similar trade policy, they would not qualify for international aid loans. The “scoop” is not that these countries did what they did, but that this is how capitalism works. You’ve heard that its a dog eat dog world? Well with unbridled capitalism comes the concentration of unbridled power – some dogs remain simply “more equal than others” – and as Vijay Prashad will tell you, it was in opposition to this lamentable fact that the Third World was conceived as a project by the nationalists of the darker nations. Today we have lost the very ability to recognize that an active, collective political will is needed to stand in solidarity against the well organized forces of capital – Adam Smith’s “standing army of special interest”.

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Haiti: Only 700 miles from Miami, but several centuries away. Source: Duke.edu

In the years following the Second World War, the ‘developed’ countries wielded their economic (pre) dominance as a ‘right’, which is to say they backed up their ‘polite’ advice to the young dark nations with military and economic force: “Any time one of the darker nations tried to exert its independence from the “political and economic dynamic” of the First World, military invasions and embargoes tried to strangle its capacity, and the media went along.”21

The freedom to compete. On whose terms? Vijay Prashad is not overreacting one bit when he continues: “It is clear that the invisible hand is white. And the First World has wanted it to remain white.” What he means is that the privileged have remained exhilarated by the success of their contempt, along with the success of their success. As we have seen, there is nothing inherently egalitarian about capitalism.

“When growth slowed down in the rich capitalist economies from the mid 1970s, however, the free marketeers in the First World nations dusted off their 19th century rhetoric22 and managed to convince others that the reduction in the share of the income going to the investing class was the reason for the slowdown …” That those who held the most wealth be allowed to retain more of it so that they could reinvest and increase the multiplication of wealth in the country.

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Poster designed by Saatchi and Saatchi supporting the British Conservatives in the late 70s. Following this campaign, Margaret Thatcher was elected the Prime Minister and ruled over a neo-liberal Britain for 11 years! Source: Conservative Party Archive Trust

As the ‘developing’ nations began to suffer debt crises in the 1980s (from balance of payment difficulties related to paying off their ‘development’ loans), they were offered the chance to ‘grow’ their economies by ‘opening up their markets’ according to something that is called a neo-liberal policy package.

Government policy under the reforms package “emphasize[d] lower inflation, greater capital mobility and greater job insecurity (euphemistically called greater labour market flexibility), essentially because it [was] mainly geared towards the interests of the holders of financial assets.”23 Since then capitalism has progressed from ‘industrial capitalism’ to ‘global financial capitalism’. Capital has been able to multiply itself at runaway rates within the realm of highly sophisticated global financial speculation. This is a period where credit fueled consumer booms and ballooning stockmarket speculation have sustained economic growth in the free market.

Twenty-first Century Capitalism

David Harvey recently argued that the 2008 global financial crisis revealed a ‘state-finance nexus‘. After Lehman brothers crashed, suddenly George Bush “was nowhere to be seen … Who was it who came on the television set and said this is what we’re going to do and this is how we’re going to do it? The Secretary of the Treasury and the Chair of the Federal Reserve! The Secretary of the Treasury since 1990 has come from Goldman Sachs.”

In 21st century America as in 18th Century Britain, competing within capitalism, the aristocracy continues to influence both policymaking and legal logic to its favour. Therefore calling the present manifestation of this phenomenon a nexus is a bit misleading. We can see that historically speaking, this is nothing new for the capitalist system. Having observed what we have observed , perhaps it is more appropriate to say that the ‘state-finance symbiosis‘ -integral to the development of capitalism- has simply made itself visible once again.

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David Harvey: “This world is being rebuilt, reconstructed, not around anybody’s needs wants and desires or anybody’s thoughtful arguments about exactly what kind of world we want to live in, it is being reconstructed by the power of the system.”

 

The competitive efficiency that is achieved through the state and the economic sphere acting in concert has been demonstrated by China in recent years. In the most massive construction push known in human history, China consumed more cement between 2011 and 2013 than the US did over the entire 20th century! Similar statements can be made about the consumption of steel and several other metals over the same period. This spectacular rise in industrial production capacity took place on the back of an equally impressive growth in domestic capital through internal real estate speculation, which created capital gains through asset price inflation.

It was something like the logic of Gurgaon on a scale that dwarfs anything we have ever seen before. The Chinese promised and built entire cities over 2 and a half years. Following this they announced a project to build a highway to Turkey (the One Belt, One Road Initiative), which not only promises to keep China’s excess production capacity occupied, it is also expected to yield significant investment opportunities for Chinese firms all along this route. All the while, the Chinese government has been carefully playing with the dials on Yuan outflow to ensure the world competitivity of the Yuan.

There is now significant demand for cement (and metals) waiting at their overseas sites of investment. As China’s expanded industrial capacity continues to run at full capacity, Chinese capital is literally reshaping the surface of the globe at an unprecedented pace and an unprecedented scale.

David Harvey calls this “the madness of economic reason.” “This world is being rebuilt, reconstructed, not around anybody’s needs wants and desires or anybody’s thoughtful arguments about exactly what kind of world we want to live in, it is being reconstructed by the power of the system.” 24

twombly-NGM-chinesecement
China’s monumental cement consumption in recent years. Source: Matthew Twombly for National Geographic

This level of coordination for the reproduction of surplus capital is historic. Žižek has called this capitalism with ‘Asian values’ – authoritarian State and concentrated capital acting in perfect coordination – and remarked that it is proving more effective than ‘Western liberal capitalism’ (where one is shocked to find a state-finance nexus!).

As capitalism is a system that amplifies profits, productivity and competitive reinvestment by making these the sole basis for its rationality, it should come as no surprise that at one time capitalism justified slavery using ‘economic reason’; or that thoughtful arguments about needs, wants and desires are dismissed by the same ‘purely’ economic reasoning as frivolous and utopian.

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Capitalism should not be sentimentally confused with egalitarianism.

 

Capitalism should not be sentimentally confused with egalitarianism. That is to say, critiques of capitalism should not be sentimentally interpreted as attacks on liberal democracy. “resistance against monopolization and domineering market tyranny cannot be simply equaled with the struggle ‘against’ the market because such social resistance itself includes the efforts … for fair competition … and for economic democracy.” (italics added for emphasis)25

When in 18th century England the State backed the logic of ‘improvement’ with legal apparatus, it meant that peasants were by law no longer allowed to protest against their conditions of dispossession. Industrial capitalism followed suit – the Labor Management Relations Act of 1947 in the United States made it illegal for factory workers to go on unnotified strike!

Throughout the forty odd years of the Cold War, so-called wildcat strikes became an impropriety that could not be tolerated in an orderly capitalist society – they were demonized as communist politics. Today the right of workers to go on strike to demand fair treatment from their employers -regarding stipulated hours of labour, protection against accidents, holidays, adequate pay and so on- has been severely eroded in almost every nation that claims to compete on the ‘global market’.

It is clear that a purely ‘transactional’ ideology creates an environment that is hostile to the full practice (I do not mean “official recognition”) of ‘human rights’.

We (who live in a society where capitalism is the ‘correct’ universal truth) feel it is appropriate to say: “lets not get overexcited by the fact that citizens no longer have a ‘right’ to higher education or housing, lets celebrate the opportunity they have to take out loans and do things for themselves”. Capitalism establishes this opportunity x as the most important objective claim, against which all other subjective ‘claims’ (for rights etc) will be weighed and often found wanting.

We don’t need capitalism for democracy, we need democracy to make capitalists behave. We need critiques of capitalism to understand the capitalist form of social organization (and its limitations) as it has moved through history.

Feminist theorist-practitioners like Kamla Bhasin (founder Sanghat South Asia) have explained how the climate of capitalism works to naturalize particularly aggressive, oppressive, competitive traits from the masculine tradition of gender. It mobilizes pure instrumental reason, an obsession with clinical calculations and world bending above all else. Compassion (in its true altruistic form) and dependence (of the disadvantaged on benevolence, rather than ‘standing on their own feet’) are ridiculed.

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Slavoj Žižek: “Capitalism has a strange religious structure.”

 

The fact that a high incidence of these – traditionally ‘feminine’ – values is observed within natural ecosystems (‘mutual aid’ is just as important as ‘survival-of-the-fittest’)26, is erased from public discussions of the so-called ‘evolutionary’ view because it challenges the fundamental truth claim at the heart of the capitalist doctrine. Just like the ‘satanic verses’ challenge the truth claim of the fundamental statement at the heart of Islam: ‘there is no God but Allah’. Accepting these verses would strike a twofold blow to the ineffability, the uniqueness of the one God: (1) on a direct level it would mean accepting that there are other gods, and (2) by accepting idols, we would be diminishing God’s non-reproducible, un-copyable ‘aura’.

Under capitalism, “there is no God but Desire (the obscene pursuit of ‘out-surviving’ in order to be able to enjoy ‘the fruits’ of the modern world in your very own heaven-on-earth)”.

As long as you accept this, you are a part of the fold. Within the capitalist anti-religion (immediate enjoyment is not denied, it is demanded), those who don’t surrender to its fundamental precepts will suffer justified punishment, the same as within any organized religion. Justified Punishment is an important concept – when you are convinced a punishment is ‘justified’, it becomes difficult to stand up for those who are punished. The latest in ideological vocabulary always deals in tautologies: “we all know that markets are just, therefore you will regulate your own behaviour accordingly. (Or else … the remainder need not be voiced aloud)” 27

One shows allegiance by accepting the justified punishment of ‘the heretics’, ‘the perverts’, the disbelievers. “[Our] duty is on the side of capitalism”, says Žižek midway through the film ‘the Pervert’s Guide to Ideology’. “Capitalism has a strange religious structure.” We can see what he means. There is much that we have swallowed as articles of ‘faith’.

totalconsumption
A screenshot from the Situationist film ‘The Society of the Spectacle’. The subtitles have been distorted for effect.

Poor Haitians huddled over nonstop sweatshop factory lines, small Indian farmers who just cannot afford to compete on the world market, the Ecuadorian tribes who have lived off common lands and their seasonal bounty for centuries, all stand in the way of the enshrinement of capitalism as a universal logic. The capitalist imagination sees them as problematic, ‘primitive’ elements that our able managers (who are also the writers of the how-to-live books) are working hard to bring into ‘the fold’.

Now its easy to see why it is that those who are being chewed up by global capitalism, cannot find a language in which their appeals will make sense. This is the significance of Wang Kezhu: his cry was the cry of a man struggling with his ‘faith’.

For a brief moment, when he paused by a pillar and cried out for help, Wang Kezhu gave us a view into the terrifyingly inhuman substance in which we live. We plan our futures in it. It keeps our desires burning, it gives to us our sustenance. Its logic gives us faith in the future. Most of us will live and die in it.

In the words of Frederic Jameson: “let us be serious: anyone who believes that the profit motive and the logic of capital accumulation are not the fundamental laws of this world, who believes that these do not set absolute barriers and limits to social changes and transformations undertaken in it, such a person is living in an alternative universe.” 28

We have to bring ‘capitalism’ back down to earth, anchor it within a concrete history. If we’re resigned to taking it on faith, how can we say ‘capitalism’ is the problem, without sounding ridiculous at best, fundamentalist at worst?

This post was last updated on 17th July 2017. If you have read thus far, I hope you will also take the time to scan the EndNotes – they will lead you to my wonderful sources: bold, committed scholars all, whose work I cannot recommend enough. I hope you will be curious enough to read them in their own words. Within India, Wood’s and Prashad’s books can be purchased from LeftWord Publications. The Histories of Violence project offers concise, informative video introductions to a range of critical academic takes on systemic oppression and violence. And finally I must apologize for my over-simplification of some exceptionally nuanced theory, but I believe that is the risk which the unqualified but curious layman must take – if any immediate understanding is to be arrived at, of these immense, spectral forces that continue to haunt us. 

 

EndNotes:

  1. Lai, Richard. “The Fate of a Generation of Workers: Foxconn Undercover Fully Translated (update: videos added)” Engadget,19 May 2010, https://www.engadget.com/2010/05/19/the-fate-of-a-generation-of-workers-foxconn-undercover-fully-tr.
  2. “The Society of the Spectacle” directed by Guy Debord, 1973.
  3. WHY ‘MARXIST’ SHOULD NOT BE CONFUSED WITH ‘COMMUNIST’: What can be called ‘Marxist’ logic derisively, is used extensively throughout this article. Didn’t communism fail miserably?You might be left wondering why you should pay any attention to what seems to be ‘left’-ist propaganda. Scholars argue persuasively that there are two Marx’s.
    The first is the Marx of The Communist Manifesto and The German Ideology. This is the revolutionary Marx, young blood if you will. Paraphrasing Ellen Meiksins Wood, the problem is that at this early stage Marx himself presupposed that capitalism had come about naturally, as if it were the destiny of humanity. This was a Marx overflowing with the hope for revolutionary change that we are all filled with (to a limited extent), and his writings from this period are weighed down by several unexplained assumptions.

    The Marx we are interested with throughout this essay, in contrast, is the so-called ‘mature Marx’ of Kapital and The Grundrisse where he undertakes a systematic critique of political economy under capitalism. This was a pragmatic and troubled Marx who had gone back to the basics if you will, in order to undertake a systematic critique of the capitalist system. What he found was that capitalism is a unique form of social organization, different from all others in history, and this insight was essential in allowing him to look past his youthful assumptions and offer a powerful, objective critique of the system.
  4. Wood 2002. See “Locke’s Theory of Property”. Pages 109-115.
  5. Wood 2003. See “The Value of Empire”. Pages 73-77.
  6. Wood 2003. See “The British in America”. Pages 89-96.
  7. Like a magnet draws iron filings toward itself, the productive sphere within capitalism attracts all surplus capital available for reinvestment on the market toward itself. This is how the privileged within capitalism experience ‘market forces’ aka the pull of investment.
    Thus within British agrarian capitalism, most surplus capital was reinvested towards the ‘improvement’ of land, of agriculture. In the case of later industrial capitalism (whether British, Swiss or American) surplus capital found itself drawn toward reinvestment in industry, which had become the most productive sphere. Today, within global finance capitalism, surplus capital available for reinvestment finds itself drawn most toward the F.I.R.E. industry – finance, insurance and real estate – because that is where capital is able to multiply itself the easiest.
  8. Colmáin, Gearóid Ó . “France And the History of Haiti.” Global Research. 22 Jan 2010. http://www.globalresearch.ca/france-and-the-history-of-haiti/17130
  9. Wood 2003. See Chapter 4: Empire of Commerce. Pages 38-63.
  10. See Prashad 2007. Chapter 5: Buenos Aires. Imagining an Economy. Pages 77-89.
  11. See Prashad 2007. Chapter 1: Paris. A Concept Conjured. Pages 19-31.
  12. See Prashad 2007. Chapter 3: Bandung. The 1955 Afro-Asian Conference.Pages 47-65.
  13. See Endnote 11.
  14. See Endnote 9.
  15. See Endnote 10.
  16. “Disposable Life – Jean Franco.” Vimeo, uploaded by Histories of Violence, https://vimeo.com/89305469
  17. Cockburn, Alexander. “Real U.S. Policy in Third World: Sterilization : Disregard the ’empowerment’ shoe polish–the goal is to keep the natives from breeding” L.A. Times, 08 Sep 1994, http://articles.latimes.com/1994-09-08/local/me-35791_1_shoe-polish
  18. See Endnote 7.
  19. Enwegbara, Basil. “Toxic Colonialism: Lawrence Summers and Let Africans Eat Colonialism.” TheTech Online Edition, 6 Apr 2001, http://tech.mit.edu/V121/N16/col16guest.16c.html.
  20. Chang 2010. Thing 7: Free market policies rarely make poor countries rich. Pages 62-73.
  21. See Endnote 10.
  22. According to this rhetoric that even economists such as David Ricardo championed, the poor were poor because they did not have the character to” reinvest their gains fruitfully. Only the capitalist class could be trusted to do so to the overall benefit of a national economy. The poor would fritter it all away meaninglessly. This was the 19th century ‘liberal’ view. This rhetoric was revived in the late 20th century in spite of the fact that it had been comprehensively proved false in the immediately past ‘Golden Age of Capitalism’.
  23. Chang 2010. Thing 6: Greater Macroeconomic Stability Has Not Made The World Economy More Stable. Pages 51-61.
  24. . “David Harvey’s Featured Lecture: Marx, Capital and the Madness of Economic Reason” YouTube, uploaded by American Association of Geographers on 25th May 2017, https://www.youtube.com/watch?v=YDy2rq7SUwg
  25. Žižek 2014. Essay 5: Crisis? What Crisis? Navayana.
  26. “a lecture on the law of mutual aid, which was delivered at a Russian Congress of naturalists … by a well known zoologist, Professor Kessler, the then dean of the St. Petersburg University, [he] struck me as throwing a new light on the whole subject. Kessler’s idea was that besides the law of natural struggle, there is in nature the law of mutual aid which, for the success of a struggle for life, and especially for the progressive evolution of a species is far more important than the law of mutual contest.“
    “Kessler’s suggestion, was in reality, nothing but a further development of the ideas expressed by Darwin himself in the Descent of Man … Kessler’s suggestion seemed to me so correct, and of so great a significance that, since I became acquainted with it (in 1883), I began to collect material for further developing the idea which he had only cursorily sketched in his lecture, but had not lived to develop.” (italics added for emphasis) (Kropotkin 1922).
  27. “The ultimate triumph of capitalism thus occurs when each worker becomes its own capitalist who decides how much to invest in his/her future (education, health…), paying for these investments by getting indebted. The rights (to education, healthcare, housing…) thus become free decisions to invest in, formally at the same level as the banker’s or capitalist’s decision to invest in this or that company, so thath, at this formal level, everyone is a capitalist getting indebted in order to invest.” From Žižek 2014. Essay 5: Crisis? What Crisis?
  28. Jameson, Fredric. “Cognitive mapping.” Marxism and the Interpretation of Culture. Macmillan Education UK, 1988. 347-357.

Bibliography:

  • Bhasin, Kamla. “Understanding Masculinity”. Women Unlimited, (2004).
  • Can Dialectics Break Bricks. Directed by René Viénet, 1973.
  • “David Harvey’s Featured Lecture: Marx, Capital and the Madness of Economic Reason” YouTube, uploaded by American Association of Geographers on 25th May 2017, https://www.youtube.com/watch?v=YDy2rq7SUwg
  • Ha-Joon, Chang. “23 Things They don’t tell You about Capitalism.” Allen Lane (2010).
  • Kropotkin, Peter. “Mutual Aid: A Factor of Evolution”. Knopf, (1922).
  • Prashad, Vijay. “The darker nations: A Biography of the Short-Lived Third World”. Nueva Delhi: Left Word Books (2007).
  • The Pervert’s Guide to Ideology. Directed by Sophie Fiennes, performance by Slavoj Žižek, 2012.
  • The Society of the Spectacle. Directed by Guy DeBord, 1973.
  • Wood, Ellen Meiksins. “The origin of capitalism: a longer view”. Verso (2002).
  • Wood, Ellen Meiksins. “Empire of capital.” Verso (2003).
  • Žižek, Slavoj. “Agitating the Frame: Five Essays on Economy, Ideology, Sexuality and Cinema”. Navayana (2014).
  • “Žižek & Violence: Paul Taylor” Vimeo, uploaded by Histories of Violence on 30th May 2012, https://vimeo.com/43114099
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