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Capitalism is not a Useful Concept

I stumbled across this fantastic book chapter by D. T. Cochrane.

academics experience similar difficulties when speaking of ‘capital.’ Economists, political scientists, even literary theorists, freely employ the concept, yet few can say what the word ‘capital’ truly signifies. Either unaware of or unconcerned by the serious problems with both the Marxist labor theory of value (LToV) and the neoclassical utility theory of value, they continue to discuss ‘capital’ as if it were conceptually unproblematic…academics may have an intuitive grasp of capital that they are unable to articulate adequately: they know it when they ‘see’ it. However, while we may live perfectly well with fuzzy conceptions of our emotions and the emotions of others, theoretical concepts cannot rest upon intuition; they must be clear and distinct. Otherwise, they risk becoming a catch-all, ascribed to almost anything, explaining almost nothing. If capital is one of the most important institutions of our current political economic system, then it demands as precise a meaning as we can give it. If concepts are meant to help us understand the institutions that order our lives, then we must constantly work to make our theoretical significations resemble, as closely as possible, the real world counterparts to which they refer.

Capitalism means absolutely nothing. It’s like listening to old fogeys grow lyrical about cyberspace(aka the internet), and you’ve grown up with it, you’re just trying to make the best of a world in which the internet is a ubiquitous fact. At least the internet has an agreed definition, unlike this thing the paranoids call capitalism. As if, we could get to the root of all evil, once and for all, excise it, then, POW…utopia Adventure Time world The book chapter continues:

“The prevailing, and largely unacknowledged, uncertainty around capital puts a question mark behind many proclamations regarding the ideology, theory, and praxis of the capitalist system. The ‘I know it when I see it’-approach results in a confusing hodgepodge of material and social entities being described as ‘capital’: money is capital, investment is capital, machinery is capital, workers are capital, political largesse is capital … Eventually, capital is everything and everywhere, and the concept is rendered meaningless. A clearer understanding of ‘what we talk about when we talk about capital’ is a priority if we wish to distinguish useful theoretical positions from misguided pretenders. Such an understanding aims at a working definition that encapsulates the actual political-economic conditions of business and the on-going efforts of accumulation.Currently, Jonathan Nitzan and Shimshon Bichler are among the few contemporary theorists calling attention to the hollowness of the dominant theories of capital and the only theorists offering a radically new realist perspective”

Kant’s Anthropology from a Pragmatic Point of View argument on the limit of us understanding ourselves, humans, as rational beings is a similar argument to why I think capitalism is not a useful explanatory concept. I am told that Bruno Bosteels raises a similar question albeit about communism in his The Actuality of Communism. Just as Kant invokes the improbable but not impossible existence of rational aliens, which would be a necessary comparative referent for defining what a species endowed with reason is, we lack a referent for a global, fair and sustainable alternative economic system, beyond minor historical experiments, which don’t scale up and never had to deal with the global problems or technology of the present. Capitalism thus is everything and nothing, and is as problematic as any generalised statements on human nature. Power, exploitation, violence, environmental destruction, wage slavery, oligarchy: these are things to denounce, but capitalism is NOT a good explanatory concept for these nasty human tendencies. What is non-capitalism then? Do we even know? Does dispensing with capitalism as a concept make the struggle for a better world any less worthwhile a fight? Not at all, it just highlights the open-ended contingency of the future as the only ontological necessity, and resists any theological sense of historical finality. We don’t know what a fair world would look like, and we don’t know if in a fair world we would still need to fight against the undesirable tendencies of unchecked power, as we don’t know how collective human behaviour would change in this possible future. Humans minus ‘capitalism’ ≠ paradise. The question of capitalism is tied to the problem of an adequate theory of value, the power theory of value is certainly a useful way of understanding political economy, but it’s not sufficient on on its own.

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Yet More Differential Accumulation (by Breadth) in the Tech Sector

From an article on Forbes about Amazon.

The reported Dell-EMC deal, one that neither company has confirmed, epitomizes the sort of financial engineering that has inflamed older tech companies of late. Companies like EMC,IBM, and Hewlett-Packard garner headlines more for their M&A activity (or litigation) than for their new products and services.

This kind of financial engineering is not new in large industry, it is only relatively new in the information technology technology sector because the sector itself a relatively new one. Bichler and Nitzan would call this differential accumulation by breath. The purpose of mergers and acquisitions is hardly ever driven by the supposed efficiencies of economies of scale that is usually the official reason for such operations. Like the Oracle’s acquisition of Sun, both these companies have so many duplicate product lines that the only benefit from such operations is for the owners. For customers, usually the experience is a bad one, as working product lines are dropped, and prices never decrease thanks to the supposed economies of scale efficiencies. Apart from perhaps Google and Facebook, usually an IPO or an acquisition signals the end of the innovation that grew the start-up in the first place.

Also, it is mainly in the information technology sector that M&A events are heralded as portents of great new products and never before seen innovation. Other industries don’t bother to maintain this fiction, as stock price is determined by expected future earnings, and by the relative power of a corporation to manage demand and competitors in its sector.

It’s also not surprising that software-centric tech companies have huge market capitalisations, despite owning few tangible capital assets and having pitiful (or nil) revenue (Amazon). Again, this is due to the market’s perception of future earning potential, which has little, if any, relationship to a corporation’s fixed assets, revenue or past earnings. The primacy of finance-capital, certainly not a recent development.

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