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From Capitalistic to Humanistic Business
Ulrich Steinvorth, Carlos Largacha-Martinez, Claus Dierksmeier, M. Pirson, Kenneth A. Loparo, M. Pirson, J R Mulryne
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eBook - ePub
From Capitalistic to Humanistic Business
Ulrich Steinvorth, Carlos Largacha-Martinez, Claus Dierksmeier, M. Pirson, Kenneth A. Loparo, M. Pirson, J R Mulryne
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Transforming Capitalism addresses the challenges to shareholder capitalism. It explores: fair play in the market place;challenges on systemic, organizational and individual levels; the need to refocus our economic system around community and cooperation; the current challenges and transform capitalism.
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Part IV
Change by Specific Reforms: Basic Income, Property Rights, Money, and Education
8
Marx’s Critique of Capitalism and the Concept of Basic Income
Ulrich Steinvorth
Marx’s critique of capitalism
The discussion of capitalism and its virtues and vices, its development and alternatives, its possible continuation and end, was stimulated by, and suffered from, Marx’s claim that capitalism is doomed. Even the concept of capitalism is under the spell of Marx’s critique, because both the defenders of capitalism and its critics explicitly or implicitly refer to Marx as a critical analyst of capitalism. Yet a reconstruction of Marx’s theory of capitalism that aims at being as true to Marx’s various assertions as possible is of historical value only.1 What is badly needed to orient theoretical and practical attitudes toward the present economies are judgments on Marx’s critique that unambiguously distinguish between what has withstood the critique of time and what has not. I contribute to this task by sketching what I think is the ingenious core of Marx’s theory of capitalism, contrast it with what I argue are his fallacious and politically fatal conclusions from this core, and propose a practical consequence.
Marx’s crucial step in approaching the economy of his time was to conceive it as the conjunction, starting with the industrial revolution, of two spheres of activities with different goals: the sphere of trade and the sphere of production. Trade is the job of merchants and aims at the increase of the value invested in a trade venture; to use the term common at Marx’s time, it aims at the increase of the exchange value, represented by money. Production is the job of farmers, artisans, engineers, doctors, teachers, artists, judges, and the many other people who offer something useful or good and aim at producing wealth, well-being or, again to use the term common at Marx’s time, use-value.2 Capitalism before the industrial revolution was only a system of trade, even if it influenced production and was an important cause of the industrial revolution. Capitalism after the industrial revolution is the conjunction of trade and production dominated by the goal of trade, the increase of exchange value.
The distinction between merchants and producers is of course not Marx’s invention; it is also found in Plato and Aristotle,3 who as aristocrats looked down upon the merchants as money-makers and lauded the people who produce the things that money can, or cannot, buy. It is a distinction between people who accumulate means and people who produce what the means can help provide but what the interest in moneymaking threatens to pervert into an activity subordinate to moneymaking.
The distinction allowed Marx to understand capitalism historically as the organization of production by merchants and systematically as the conjunction of goals difficult to combine. It enabled him to give his critique of capitalism a dramatic form that presents the relation between the goals as a Hegelian contradiction that determines world history. The primary goal of increasing the exchange value first boosts wealth and then fetters it. But it fetters it only when the productive forces have grown strong enough to enable the creation of an economy with the goal of production only.
Marx’s approach to modern capitalism as the conjunction of trade and production is obscured by two facts. First, Marx starts his book Capital by analyzing simple, but not yet industrial, commodity production; second, he measures the exchange value of a commodity by the amount of labor necessary to produce it. By starting with an analysis of simple commodity production, followed by an analysis of the roles of money, he gives the impression of wanting to analyze early historical forms of capitalism and their development into modern capitalism, though in fact he analyzes elements of modern industrial capitalism. With his so-called labor theory of value, he obscures why the two goals of capitalism (recovering the invested exchange value with a profit and producing a use value) can be understood as a contradiction that conditions the development of capitalism.
The exchange value of a good or service is the equivalent got for it in exchange. It is different from its use-value; for instance, the utility of a good, such as fresh water, may be high, but its exchange value may be low if it is in water-rich areas.4 So how are equivalents measured, if not by utility? Aristotle had already asked this question and answered it with the “demand (chreia)” for the good,5 or as most contemporary economists say, by its scarcity. Marx and some other economists say it is by the average labor time necessary to produce it, which is often interpreted to contradict the “bourgeois” economists. But his view is not opposed to the prevailing view because labor is the most important factor that determines scarcity. The more labor we need to produce a good, the scarcer it is.6 Marx and his critics do not clash over what the exchange value is but over whether the two goals of capitalism, the increase in exchange value and use-value, are compatible in the long run.
Why does Marx believe they are incompatible in the long run? Because by increasing wealth, the capitalist producers make goods abundant and reduce scarcity; hence, they reduce the exchange value of goods. The more successful producers are in their task of production, the less successful they become in their task of exchange, the increase of the exchange value of their investments. The richer a society becomes, the less exchange value can be recovered. On the other hand, the more successful producers are in increasing their exchange value, the scarcer the products must be; hence the less successful they must be in their use-value goal. This is the contradiction Marx finds in capitalism.
To the conceptual contradiction corresponds a specific historical dynamic. The merchants who bought old factories and built new factories could become dominant in production because they made the step crucial for the development of capitalism and mankind: they started using machines. Production by machines made production cheaper than the former production; so the merchant entrepreneurs ousted all producers who did not use machinery. But they also made products abundant, thus reducing scarcity. Hence they reduced the chance of recovering their invested exchange values. Only the most successful producers get back the exchange value of their investment. Yet what they win is lost by the majority of capitalist producers. While the exchange of use-values most often is an advantage for all parties, the exchange of exchange values is a zero-sum game.
To make things worse and the contradiction harder, the abundance the capitalist produces shrinks not only exchange values but also the necessary labor time (which is thus confirmed as the most important factor of scarcity) and hence sets more and more people out of work. Yet unemployed people have little money to buy the commodities that capitalists must sell to recover their investment. Therefore, again, the more use-values produced, the more difficult it is for the capitalists to meet their aim of increasing their exchange value.
By presenting capitalism as the union of two targets that stimulate but in the end obstruct each other, Marx offered a model for the baffling phenomena of the modern economy. The model takes account of the historical fact that capitalism is the result of the takeover of production by merchants and allows predictions. Most spectacular among them are the prediction of economic stagnation and crises caused by problems in the realization of the exchange value, and the prediction of the rise of open or hidden unemployment.7 Yet even without being thus confirmed, the model fascinates by its capacity to explain economic phenomena as the result of two interacting forces and to suggest interventions in the dynamics of the two forces.
However, a distinction should be made between what this ingenious model entitles us to expect of capitalism and of interventions in it and what it does not.
First, we cannot judge the conjunction of the two goals incompatible in the end. Although there are difficulties to keep them conjoined, there is no way to prove that at some time they no longer can be conjoined. What we can predict is that they can be kept together only under conditions incompatible with the hope of a continuing spread of wealth. For to the extent wealth increases scarcity, hence what increases exchange value, decreases. The continued pursuit of exchange value will stop the increase of use-value, but it will not necessarily lead to the suicide of the pursuit of exchange value.8 Investors can go on recovering the exchange value of their investments if they succeed in preventing those who lack the means to invest from insisting on becoming wealthier.
Second, Marx expected the proletariat to stop the investors from recovering their exchange values. The proletariat would take over political power from the bourgeoisie, just as some centuries earlier the bourgeoisie had taken over political power from the feudal aristocracy. As he declared with Engels:
... with the development of industry, the proletariat not only increases in number; it becomes concentrated in greater masses, its strength grows, and it feels its strength more.9
This assumption of their Communist Manifesto was flawed from the beginning. We read in the same text that “steam and machinery revolutionized industrial production,”10 that the “bourgeoisie cannot exist without constantly revolutionizing the instruments of production,”11 and that “the workman ... becomes an appendage of the machine.”12 So we can infer that even this appendage becomes superfluous with the improvement of machines. While the bourgeois could take over power from the aristocrats because they knew how to better organize production, Marx and Engels are far from ascribing a similar superior knowledge to the proletarians. Rather, the superior knowledge necessary for a takeover of power and not just the destruction of the former system comes again from the bourgeoisie:
Just as ... at an earlier period, a section of the nobility went over to the bourgeoisie, so now a portion of the bourgeoisie goes over to the proletariat, and in particular, a portion of the bourgeois ideologists, who have raised themselves to the level of comprehending theoretically the historical movement as a whole.13
Marx and Engels assimilate the expected revolution to the bourgeois revolution by referring to aristocrats who sided with the bourgeoisie, but they cannot conceal the difference: the early bourgeois understood more of the economy than their former masters, while the proletarians do not. To bourgeois intellectuals such as Marx and Engels, organized communist parties were necessary to teach the proletarians the knowledge they lack. In fact, such intellectuals often used the proletarians to seize the political power to subject both bourgeois and proletarians. After the failures of the communist revolutions, many disappointed revolutionaries racked their brains over why they did not succeed. They rather should have wondered why Marx and Engels ascribed to the proletariat a historical role that their economic and historical theory showed clearly enough it could not play.
Third, Marx conceived a future economy as a system of production that has shaken off the fetter of the exchange value goal. Markets are institutions of merchants; exchange value is inherent to commodities, which are the object of markets, and the exchange value is the object that today obstructs the growth of our productive powers. Hence, Marx infers a future economy must not have markets; ideas to improve society without in the end abandoning markets are petty bourgeois.14 Markets, he presumes, commit us to thinking of wealth as the accumulation of ex...