Tag Archives: socialism

Social Capitalism

I’ve been thinking a lot about the opposition between ‘capitalism’ and ‘socialism’ which groups like the Tea Party reinforce. However, I am beginning to think this opposition is artificial in some serious way. By taking the current economic climate as a ‘capitalism in practise’ and following it to its logical conclusion, I want to argue that the end result will largely be no different from ‘socialism’. This is primarily a speculative fiction through which an argument by analogy can be made. My argument hinges on two primary concepts: (1) owners within capitalism will pay as little as possible for everything — labour, goods, etc — and the least they can pay is nothing, and (2) governments take the responsibility for public welfare precisely in the places where ‘normal’ people are unable to afford the ‘luxuries’ of a healthy, productive life.

The current state of affairs is that there is rampant unemployment. One of the dominant ways corporations exploit this is through unpaid (or horribly underpaid) internships whereby a person who needs an income to live ‘normally’ undertakes massive debt to work at below-market rates in order to get a job which pays at market rates. In some places (e.g. Georgia’s Georgia Works program and the new federal ‘Bridge to Work’ variation, UK’s workfare program), the government supports this initiative by pushing unemployed workers currently receiving unemployment funds to work at corporations which do not need to pay for that labour in return. In other words, corporations are receiving unpaid labour while governments compensate the workers involved at rates well below the minimum wage — hence my two central concepts above.

With the continued push for privatisation of every imaginable public service (education, construction, military, prisons, medicine, etc), we are seeing the rise of corporate ownership and control rather than any kind of ‘free market’ idealised utopia which libertarians so desperately want. Combining all of these elements, the logical conclusion is the collapse of a capital-based economy because the majority of people within the system will continue to be institutionally marginalised, de-valued, and discarded as anything but property. People will continue to work, but their subsistence will not come in the form of wages from their employer-owners but in the form of corporate-sponsored social programs which dictate the lives of their worker-slaves from what workers can ‘purchase’ with their work credits to how workers can spend their ‘free time’. A central government will disappear because its primary source of revenue — taxes from the working class — will have dried up; if it continues to exist, it will do so only through loans and bailouts from private corporations which shall use that power to control the social order.

Workers will be evaluated and valued according to their production; those who produce more will be valued more. Teachers will be evaluated according to how many of their students can understand basic instructions to become workers. Universities will be valued according to the direct ‘usefulness’ of their research (which shall be reduced to disciplines in science, technology, engineering, and mathematics) because they will have become departments of industrial research for their corporate owners. Police and courts will be evaluated according to how many people are disciplined (through tickets and fines which require more work from the workers, or imprisonment for those which reject the corporation’s right to labour). Politicians will become corporate representatives and the political process will become one of agreeing on ways to exploit workers for corporate accumulation of capital. All media (internet, television, films, radio, etc) will be much the same — that is, artificially produced — with the added effect of being 100% propaganda for corporations.

Perhaps my handful of readers are wondering how would this be ‘socialism’. The answer is simple: workers have access to all basics of life — food, shelter, medical care, etc — without a mediating system of exchange (i.e. currency). Everything is reduced to a distorted version of Marx’s labour theory of value. This distortion arose through a capitalist supply-and-demand moment of inspiration: massive unemployment through the replacement of paid human labour by unpaid machine labour has produced an excess supply of labour which has driven down its value to nearly nothing. Every worker in the corporate system is reduced to a status equal to that of machines and nothing they produce has any value (because their labour value is also nothing). Instead, the value which corporations desire is the value of flesh — and they begin to exchange workers and potential workers while simultaneously trying to takeover each other. In the end, only one corporation remains and owns everything. In other words, those owners (which also eventually are reduced to one) have accumulated everything of value because they own the entirety of the planet despite the proliferation of brands which have no actual difference because their products are produced in the same factories by the same workers using the same source materials. The branding of products, corporations, and workers is used to control the workers by making them believe that there is a competition amongst brands and that their brand is demonstrably superior to all others.

The analogy to this fictive dystopia is simple: this planet has limited resources. The logical end of capitalism as it is currently practised and as a ‘free market’ ideal which libertarians and others wish it to become is the kind of future I describe. By going to its logical conclusion (albeit only through speculative fiction), there are clear dangers in taking the existing economy and moving towards a ‘free market’ utopia. The first danger is that it will actually produce a sort of corporate-controlled ‘socialism’ that most proponents despise. The second danger is the abuse of a corporate-government alliance to overstep government boundaries and revoke civil liberties. The obvious response is to increase regulations on corporations and break the marriage between corporations and governments rather than to deregulate, privatise, and lax regulations.

Wealth creation

Adrian Rogers, a previously major figure in the Southern Baptist Convention, once said that ‘you cannot multiply wealth by dividing it’ as a way of critiquing socialism. However, such a statement is misguided for two reasons, one which concerns to process of wealth creation within capitalism, and another which concerns the utility of a monetary system within socialism. I’ll start with the second one first (since it is a more direct response to the statement).

The nature of socialism can be defined as the very absence of wealth rather than simply the redistribution of wealth. Since everyone is equal across the board, there is no wealth to be distributed or divided. In fact, the more idealised version of socialism rejects the usage of a monetary system. Everyone is entitled to a basic level of living: health care, education, a job, food, housing, etc. Within a developed practise of socialism, the necessity and commonality of these things would see the usage of money as a central mediating factor (i.e. income from a job and payment of services and goods) disappears. There is no need for money in these basic transactions. Instead, money is reduced to a less meaningful mediator (perhaps used for transactions with parties external to the socialist system and/or for purchasing unnecessary products). To speak of ‘wealth’ within socialism requires an inequality or the capitalist belief that wealth can be possessed. This is exactly how many reactions to the Occupy Wall Street movement fail to recognise their arguments: the respondent often speaks of giving money away to people instead of providing an avenue for the people to become gainfully employed. At its heart, then, Western capitalism misconstrues an integral part of socialism by viewing it as a variation of capitalism rather than as an alternative system. It cannot fathom the possibility of a way of life without a monetary intermediary despite the existence of such communities before the rise of capitalism (e.g. prior to the enclosure of the commons in the sixteenth century).

Since the ascendancy of capitalism and its monetary intermediary, its greatest proponents have a romanticised notion of the creation of wealth. In fact, one could argue that wealth did not exist prior to capitalism because wealth requires an inequality in the cost of production and the product’s selling price*. Prior to industrialisation (and modern capitalism), the person selling the product was often its producer. The sale ‘price’ was equivalent to the cost of production, which means that a person was ‘breaking even’ rather than gaining extra wealth. However, after the advent of industrialisation — which began a process of alienating the workers who produced products and the product itself — the capitalist owner could sell a product for more than what he paid to have the workers produce the product. This can be done either by charging the buyer more than the cost of the product, by paying less to have the product produced, or both. The first is often considered an integral part of the process of supply and demand. However, it does not last often because the second option viciously undercuts that process. As a result, the second is often the primary way of gaining wealth.

The way in which production costs are minimised can be by technological advancements, but competition always catches up. Instead, costs are reduced more permanently by simply paying less. In particular, the workers are paid less than ‘actual market value’ for their labour. In other words, the creation of wealth comes first and foremost by the exploitation of labour. The process of industrialisation increases this effect because a worker is no longer producing a shoe but rather a small part of a shoe. The worker is alienated (again) from her product. (Don’t believe me? Notice the brief mention in this article about Mike Daisey showing a Foxconn worker who helped build the iPad the finished product for the first time.) The result is that the worker no longer knows how to build a complete product and is unable to compete (ignoring intellectual property and copyright laws) with the owner. The only options a worker has is (1) to continue working and be underpaid, (2) quit and find another job which will do the same thing ultimately, or (3) protest.

When individual workers protest, the owner has the ability to terminate the employment and hire a replacement (which is easy to find when there is an army of unemployed workers desperate for any income and willing to sell themselves for even less). This is where unions enter in: by forming unions, workers have greater strength. When a unionised workforce strikes, the owner is unable to get more products to sell because the entire industrialised process is halted. The owner, like the workers, does not know how to produce the product; the owner may have the knowledge and schematics but is often unable to operate the machinery and tools needed to assemble the product. As a result, the owner is faced with two major options: (1) remove the entire union workforce and re-hire and re-train a new workforce (something that would cost a lot of money for training as well as a loss of income while the factory re-build) or (2) deal with the union and appease the workers. In a country or state which protects workers, the first option is often illegal (at least for a period of time which allows negotiation). By forcing owners to attempt to resolve labour disputes, these states and countries provide a basic employment security which allows workers to bargain effectively for their labour. In other words, the power of collective bargaining is a way for workers to demand a more equal distribution of profits to those who actually produce the products. However, many countries and states are moving away from these protections and are implementing at-will employment laws and (as Indiana is preparing to do) ‘right-to-work’ laws. The result is the resurgence of the exploitation of workers for the accumulation of profits which is often coded in terms of creatio ex nihilo whereby the capitalist owner (magically) adds value to a product which allows it to be sold for more than its worth. The reality, however, is less than magical because the wealth does not come from nothing despite the imagination that the whole of the product is worth more than the sum of its parts.

* NB: I am using ‘price’ loosely here for a product may have been exchanged for something other than currency (e.g. other products).

The Bailout is not Happening

Look at any news outlet today and you will find references to the financial bailout of large corporations.  While it is restricted right now to financial and automotive sectors, I won’t be surprised if it expands.  There are a number of arguments in support of and against this bailout; however I want to take a different stance altogether: it isn’t happening at all.

Most people reading this are at least familiar with the factors that led to this: collapse of the financial market due to poor choices from most parties involved as an attempt to get more money.  Some have argued it goes back to subprime lending in the1990s.  I will suggest a specific date: 15 August 1971.  What was important then?  This was the date that the US, under President Nixon, began to move away from the “gold standard” of Bretton Woods.  I am not against this action, but its most important action was the dereferencing of the US dollar.  The dollar became a free-floating object without a fixed reference; it became a simulated identity.  As other monetary values (British Pound, Deutsche Mark, etc) became dereferenced as well, the financial market became both simulated and fragmentary.  The system became self-referential and self-perpetuating.  As the money flowed, monetary value was no longer limited to some externally-imposed “Real.”  Because of this dereferencing, we saw an increase of trade and stocks to the point where the total “value” of the US (measured by the GDP) was traded roughly every 3 weeks in the markets.  The amount traded annually far exceeded not just the GDP of a particular nation, but that of all nations combined, and this was just for one system!

The problem, however, happens to be found in the desire to recreate external references to this simulation.  The product of this recreation of reference is not a return to the original object, but rather a new simulation.  We have gone through so many simulations and simulacra that we are unable to relate to the original object and can only see it as another simulation in a procession of simulacra.  The”bailout as well as the financial crisis is not real.  It is just another game of simulation which results in the production of more simulations and the production of more desire.  The crisis is a non-event.  It cannot be avoided, yet it is not real either.

Some want to use this non-event as a call to socialism (e.g. Badiou and even Bush).  Others want to argue for capitalism and free-market.  I would like to argue that the only true “solution” to the bailout is to take the dereferencing of monies to its ultimate conclusion: the removal recognizing the lack of their value.  Since 1971, money has bean meaningless outside of the financial market.  It was an illusion created to produce more money.  It serves no purpose except to perpetuate itself.  In a money-less society (yes, it is another simulation), there would be no financial crisis.  It is in this society that we today live, but like the death of God in Nietzsche’s The Gay Science, it has not yet been recognized.  There is no bailout because there is no financial crisis.  There is no financial crisis because there is no economy to have a financial crisis.