The Wolf Report:Nonconfidential analysis for the anti-investor

Hair[cuts] of the Dog[s]

2012-01-08T22:00:00.002-05:00

Part 2

4. Two weeks before the summit, the European Union announced that it was setting a deadline for the development of, and agreement upon, a comprehensive program for saving its currency and itself from the insolvency of the sovereign and banking debts of its member nations.

Publicizing the deadline date did not exactly instill confidence in the financial markets. Actually, the deadline announcement elicited nothing more than a shrug of the shoulders and an uncomfortable feeling of déjà-vu among the bondholders, and those traders who had become holders against their will since the markets had frozen in the chill wind blowing from the south.

“Haven’t we already done that? Didn’t we say we had already done that? And twice? Didn’t we do that last year, in the summer of 2010? Didn’t we that this summer, in July?”

What might be déjà-vu for the rest of us is, and is always a repetition compulsion for the bourgeoisie and their agents. Yes, they had said that in June 2010. Yes, they had said that again in July 2011. Yes, they were saying it again in October. And yes, they would be saying it again in December.

Déjà-vu and short-term memory loss are the two poles measuring the full range of the bourgeoisie’s neural processes, just as fear and greed measure the full range of their emotional processes. This year’s model of déjà-vu and short-term memory loss was the vision of a more “robust” [robust meaning unrealistic] European Financial Stability Facility [EFSF].

The members of the EU had guaranteed this bailout fund to the tune of e440 billion, which was, of course, inadequate to the task. The 440 had been reduced to 250 after the commitments to Greece in 2010, and then Ireland and then Portugal. The summiteers had to come up with a program to expand the protection afforded by the EFSF umbrella and they were ready to consider anything—anything that is except actually purchasing a bigger umbrella. Germany, Finland, the Netherlands were convinced rain, even if it is acid, even black, is good for the spirit, especially the spirit of those watching others getting soaked. France wanted a bigger umbrella but certainly couldn’t afford one. Britain… well as Sarkozy said to Cameron “You’ve missed a fine opportunity to shut up.”

The EU summiteers proposed two methods for expanding the EFSF. One proposed method was to turn the EFSF into an insurance fund—insuring the first 25% of losses on purchasers of sovereign debt, thus turning the EFSF into a “mono-line” insurer of the Ambac variety [Ambac filed for bankruptcy protection in November, 2010].

The second mechanism was that old favorite, the “public-private partnership” whereby EFSF funds would be used to guarantee the “value”— actually, the purchase price private institutions paid for sovereign debt.

What do the bourgeoisie do when they are a bit short of their common currency, OPM, other peoples’ money? They borrow. They leverage. They structure. They take the debt-service payments of a debt instrument [mortgages, auto loans, credit card debts] and package those debt-service payments as an equity, a specialized, structured investment vehicle The “as if” equity then becomes the basis, the collateral, for the sale of more and expanded debt instruments—of leverage. These collateralized debt obligations then can be combined again into super or synthetic CDOs ad infinitum and ad nauseum.

All the compounded debt service payments depend upon the revenue stream attached to the original debt instruments. When the reproduction of that revenue stream falters, we get….Bear Stearns, Northern Rock, Lehman Brothers, AIG, RBS, Wachovia, Dexia; we get 2008.

Essentially, the EU proposed leveraging the EFSF, the fund that was supposed to manage an orderly deleveraging of non-performing EU sovereign debt.

The US Treasury, Federal Reserve, and FDIC attempted a PPIP in 2009 for the “legacy assets” [i.e. non-performing loans] that has so encumbered US banks. In the US scheme, the bank had to offer the debt instruments for bid, accepting the highest bid. The private bidder, of course, was certainly not going to bid the notional [face] value of the securities. The entire basis for the PPIP was the fact that there was no market for these legacy assets. There was no effective process of valuation. The FDIC would guarantee 85 percent of the bid amount, by guaranteeing the bonds the bidder would issue for that amount. Of the remaining 15 percent, considered the “equity portion,” half would be funded by the US Treasury. A private purchaser was responsible for the other half. .

What recourse did the FDIC have if the private purchaser failed to dispose of the legacy assets and make the payments on the FDIC guaranteed bonds? None. The legacy assets were the collateral for the loan issued to buy the legacy assets. So if the partnership failed, the FDIC would seize the unmarketable, non-performing legacy assets. Now that’s what I call leverage. And what the bourgeoisie call a public-private investment partnership.

The US Treasury was optimistic about the prospects for its PPIP program, anticipating the movement of hundreds of billions of dollars of non-performing loans into these partnerships for resale and liquidation. However, when the program was closed, only $30 billion is such assets had moved into the program.

The US PPIP failed for essentially the reason it was deemed necessary—there was no market for the unmarketable securities. The sellers, the banks, did not want to sell into the discounts, and thus realize the loss. The buyers could not establish a price floor based, at the very least, on the anticipated revenue, the interim payments, the debt service, until sale.

The US PPIP had the advantage, at least, of recognizing the need to discount the legacy loans, of the banks absorbing losses. The US PPIP also had the advantage of having sufficient funding [at least in theory] from the getgo to actually sustain the program, and “cover” the private “partners.”

The EU “plan” lacked both those elements, as the PPIP’s origin was in the fact that the EFSF was insufficiently funded. At the same time, the EU summiteers were swearing that Greece was an exception, a “one-off,” a unique situation, and that all other EU sovereign debt would be redeemed by its issuer or an EU body at face value. Hence no purchasing the debt at a deep discount and no basis for arbitrage.

Jens Weidmann of the Bundesbank took up the song:

“[The proposal] embraces the same kind of financial instruments to boost effectiveness that many blame for causing the financial crisis in 2008.”

And

“The envisaged leverage instruments are similar to those which were among the sources of the crisis because they temporarily masked the risk.”

When the sovereign debt markets opened the next day, they were speaking German.

“Risk” which not so long ago had been the badge of courage for our brave bondholders was now scorned. “No risk, no reward” had been transformed into “risk, no reward.” The “workout” mantra, a meaningless phrase mumbled repeatedly, numbing the mumbler to reality, of “no pain, no gain,” was replaced by the European Commission’s workout mantra, “no gain, all pain.”

The entrepreneurs’ ode to joy had become fear and trembling, a sickness unto death.

5. The bond markets regarded the summit statement as boilerplate, that standard language applying the usual conditions to the ordinary transactions, when the markets themselves were hardly in the usual condition, incapable of conducting ordinary transactions. What the text on the boilerplate really said was, “days late, and dollars short.”

The European Central Bank held fast to its position, unsurprisingly the same position as its biggest shareholder, the Bundesbank, adamantly declaring that its resources could not and would not be utilized to bail out any EU government. The ECB held fast to another position, also shared by its biggest shareholder, the Bundesbank, adamantly declaring that all of its resources would be mobilized to bail out the European Union banks holding the sovereign debt of the governments it would not bail out.

The private banks were permitted to post the sovereign debt as collateral for essentially unlimited loans. The private banks then re-deposited the funds in overnight accounts with the ECB. It was a public-private investment partnership that the EU governments could only dream of joining.

6. Prior to the 2009 election that restored Papandreou’s socialists [PASOK] to power, the Amherst College, London School of Economics, Harvard University educated soon-to-be-Prime Minister, dismissed concerns over the country’s sovereign debt. ”The money’s there,“ said he. “The markets can wait.”

Two years later the money that wasn’t there wasn’t waiting any longer.

During his period as prime minister, Papandreou had dedicated his energies to enforcing the austerity programs that the “troika” had mandated as restitution for the money that had never been there. He had governed behind the ranks of helmeted police protecting the buildings, the offices, and the very parliament of his government from the resistance and fury of the governed.

He had exercised his dismal wizardry, which by the way, had reduced the average income of a family in Greece by the equivalent of some seven thousand dollars, safely obscured by the curtain of tear gas that hung over Athens for days on end.

Yet on October 31, 2011, a bizarre hallucinatory fusion of the memories of his Halloween days spent in the US around Cambridge with the recognition that he was in fact Greek and it was, after all, Greece that he was governing, produced a sort of epiphany in Papandreou.

All dressed up, goody-bag in hand, he rang the Eurozone’s doorbell and announced, “Trick-or-Treat, motherfuckers. We’re going to have a referendum.”

Actually he said, “The people are wise and capable of making the right decision for the benefit of our country.” He received the following immediate responses:

“While Greece is threatening a vote, nobody will ever give Europe the resources for the enhanced [bailout fund],” Jan Poser [sic!], chief economist Bank Sarasin.

“[The vote] is a very unfortunate development…we have to do everything to prevent it,” Mark Rutte, prime minister the Netherlands.”

“Be in Cannes no later than 1100 hours.” Or else,” Angela and Nick.

At the same time, the EU suspended release of the next tranche in the loans scheduled for distribution to Greece.

“No democracy for the birthplace of democracy.”

“The bondholders, united, will never be defeated. The bondholders, united, will never be defeated.”

“We own 99%. We own 99%. We own 99%.

These were the chants coming from Brussels, The Hague, Cannes, Frankfurt.

On November 2, Papandreou, knowing to whom he owed allegiance, left Greece, preferring Cannes and its La Croisette to Athens and its parliament where his government was facing a debate on its “program” and a no-confidence vote.

Nick and Angela, having refined their good-cop, bad-cop routine picked a conference room with an unobstructed view of Ile Sainte-Marguerite, prison home of The Man in the Iron Mask, for their meeting with George.

While Angela toyed idly with the set of handcuffs she always carried, Nick put it to George, straight simple and no chaser.

“In or Out, George? Before you answer, look out there,” said Sarkozy gesturing to the pink, gray, and green island resting comfortably in the Mediterranean. “Beautiful isn’t it? Never guess from here that there is a completely restored and functioning prison, avec dungeon there, would you George? Used it for Carlos the Jackal. Plan to have him spend the rest of his life there as soon as the trial is completed. He might like some company. What do think George? In or out?”

That was the good-cop. The bad-cop just played with her handcuffs.

On November 4, Papandreou announced his withdrawal of the proposal for a referendum.

It was too little and too late. EFSF cancelled its planned issue of euro 3 billion in 10 year debt instruments due to lack of interest, which means of course that the EFSF would have been required to pay too much interest, as the markets were discounting the face or notional value of the debt, thereby increasing the total return, and the yield to maturity of the EFSF bonds.

“If the vehicle that is supposed to borrow on behalf of the countries that can’t borrow can’t borrow, then that may push the crisis into an even more dangerous phase,” Alan Wilde, Barings Asset Management.

See, it’s like this: if a woodchuck won’t chuck wood, who would chuck the wood the woodchuck wouldn’t chuck?

Papandreou returned to Athens, where upon being informed that he had triumphed against the no-confidence vote in Parliament, promptly resigned as prime minister. George made way for Lucas Papademos, the former governor of the Bank of Greece, recent vice-president of the European Central Bank, and, most importantly, the man with the Frankfurt connection. He was a “Senior Fellow” at the Center for Financial Studies at the University of Frankfurt. Maybe Germany wasn’t about to put its tanks in the streets of Athens, but it sure would send its bankers.

7. The outgoing ECB president, Trichet, had been steadfast in his refusal to “rescue” any country by committing the resources of the bank to securing the trading, and refinancing, of sovereign debt instruments. He had been that steadfast even as he utilized the bank’s resources to purchase sovereign debt in the secondary markets, even as he accepted sovereign debt as collateral for loans to private banks. There was no country he was more steadfastly committed to not rescuing as he was steadfastly committed to not rescuing Italy…. as long as Berlusconi was premier.

Was Trichet lodging a monetary protest over Berlusconi’s dalliance with 17 year olds? Was Trichet enforcing an embargo on governments where the prime minister installs girlfriends and former girlfriends in official positions? Of course not, Trichet is French. He knows why men enter politics.

Berlusconi had wavered in his commitment to the ECB to take Italy down the path already taken by Ireland, Portugal, and Greece. He could not be trusted to attack wages, and even more importantly, to attack past wages, deferred wages, pensions. There is no future for capital without wasting, and wrecking, the past.

Italy, with its euro 1.9 trillion in sovereign debt wasn’t too big to fail, it was too big to save. No bailout fund could absorb the burden of supporting that amount of non-performing debt if Italy were frozen out of the bond markets, so it had to adopt the measures the “troika” had imposed on Greece, willingly, autonomously, without recourse to loans from the EFSF.

No meetings in Cannes, Berlusconi simply had to go. It had to appear that the bond markets were the forces behind Berlusconi’s defenestration. After all, neither France nor Germany was willing to put its tanks on the streets of Rome. Besides, if Merkel and Sarkozy had summoned Berlusconi to Cannes, he just would have shown up topless…and with a date.

So when the bond traders started another round of crack the whip, driving up interest rates on Italy’s ten year notes in the secondary markets, Trichet decided to intervene by not doing what he had done so often before; utilizing ECB funds to enter the markets, purchasing the debt, and blunting the rise in interest rates. Nero had fiddled while Rome burned. Trichet wouldn’t fiddle, thus allowing the Roman to burn.

Journalists, economist, financial advisors, traders all did their jobs when the interest rates broke through the 7 percent level. “Interest rates that high are simply unsupportable,” said one, said all. The EU bourgeoisie had found their marker, their indicator, their summum bonum and maximum malum, for all things economic. Below 7%, good, 7% bad, above 7%, unsustainably bad.

Of course, the 7% rate in the secondary markets didn’t cost Italy an extra penny, as it applied to debt that had been issued previously, underwritten previously, and sold previously. It did cost the banks which held the 10 year instruments a bit, as the value of their holdings declined. It could mean that more collateral would have to be posted to get the low interest loans from the ECB. It would mean that the EU banks, already pressed to increase capital levels to offset accrued risk, that is to say the accumulated devaluation [another marvel of capitalism’s oxymoronic being], would require more capital.

It would cost Italy a bundle in the future, on its future debt issues, provided such issues escaped the fate that had recently befallen the EFSF and there was even a market for future issues. Finance, to repeat what all traders know, is nothing. Refinancing is everything

“Lay waste to the past. Destroy their pensions. Preserve our future. Protect the rollovers,” demand the bondholders, traders, bankers, central bankers. “If not, we’ve seen the future and you can’t afford the vig.”

Seven was the lucky number, with luckiness being next to godliness in the bourgeoisie’s order of battle. Seven percent however was the unluckiest number of them all.

Emerging from World War 2, the bourgeoisie of Europe thought that they had found a fix to the competition that periodically led to destruction of the continent. That solution was supposed to be in a customs, trading, currency and capital union. The markets however were telling the bourgeoisie that the currency and capital unions were the problem, and they, the markets were ready to drown the EU in their own fix… which was the 7 percent dissolution

Berlusconi had survived more than 50 no-confidence votes during his tenure as Italy’s Il Primo Ministro. It was, however, the approval of his austerity budget that signaled his downfall as the budget was passed due to, and only due to, the abstention of members of the opposition parties, allied parties, and even his own party.

Once Berlusconi agreed to vacate the premiership for Mr. Monti, the ECB intervened in the sovereign debt markets in the attempt to push the interest rate on Italian government debt below the 7 percent dissolution mark, thus bailing out the government it had sworn never to bail out. This leads us to an important question: When is a bailout not a bailout?

“Wenn wir sagen es ist nicht,” replied the Frenchman Trichet.

“Dies ist kein Rettunspaket,” answered the Italian Draghi.

8. Berlusconi or no Berlusconi, Papandreou or no Papandreou, the October Summit did nothing to calm the November markets. On November 16, panic swept the European bond markets. Germany was unable to find buyers for 40 percent of a euro six billion bond issue. Individuals and corporations moved deposits out of EU banks, and out of EU currencies, including the euro.

Finance is nothing. Refinancing is everything. European Union banks had been frozen out of the short-term commercial paper money markets, utilized for day-to-day operating costs. For months, US mutual funds have refused to rollover the short term debt as it came due.

European Union banks have also been frozen out of the long-term capital funding markets, unable and unwilling to risk the response to senior bond issuance. Market refinancing to the banks had been pretty much restricted to “coco” instruments-- “contingent convertible” obligations, which are debt obligations that would convert to equity stakes if the amounts the banks held in their capital tiers [tier 1, 2,etc.] dropped below specified levels.

The problem is that for the “cocos” to be approved by the European Banking Authority as instruments for replenishing capital, the conversion triggers are so “fragile” that the convertibility is practically automatic providing almost no security for the bondholder as the bond is converted into equity, ownership shares with no claims on assets. This in turn requires the issuing banks to increase their coupon payments to levels well above the “unsustainable” 7% dissolution mark.

The “coco” is in essence, the flip side of the asset-backed-security, of the collateralized debt obligation, as the bond liquidates itself into an equity pool upon the failure of bank assets to produce sufficient earnings. The bourgeoisie not only peddle their hair-of-the dog-that-bit-you cure for what ails their machinations, they also flog their hair-of-the-inside-out-dog-that-will-bite- you-soon alternative.

Cocos to the contrary notwithstanding, the ECB has become the lender of only resort to European Union banks, providing overnight, one week, three month, one year, and three year loans to the European banking network And what do the banks do with the “unlimited liquidity” provided by central bank? They deposit the loans in overnight, one week, three month, one year, three year accounts with the European Central Bank, of course. The more liquidity the ECB supplies to the banking network, the more cash the banks deposit in the ECB.

As a result of its generosity, the balance sheet of the ECB, the assets held on its books for loans extended, now measures some euro 2 trillion, with the capital ratio of the ECB, the paid in cash from its shareholder EU governments that it refuses to “bail out,” relative to those loans, is far below the levels the European Banking Authority requires for private banks. What has not resulted from the “unlimited liquidity” offerings of the ECB is the refinancing of the assets the private banking network holds on its balance sheet.

The banks will require approximately euro 700 billion of refinancing in 2012. Eurozone governments are estimated to require a total of euro 800 billion in additional and rollover financing in 2012.

These amounts are trivial, however, in comparison to the corporate debt, in bank loans and bond issues that EU corporations must refund in the next four years. That amount is a cool euro 4 trillion. The EU banks hold three-quarters of that outstanding corporate debt.

9. The central executive committee of the European Union called the European Commission demonstrated to the satisfaction or dissatisfaction of all that it had no economic program to remedy the sovereign debt crisis of its member countries. The ECB established emphatically through the inability of its “unlimited liquidity” programs to restore liquidity to the financial markets, that the predicament of the European Union banks was not a “liquidity crisis,” or a “credit crunch,” but rather a matter of solvency. But failure can be its own reward, just ask any CEO picking up his or her paycheck on the way out of the door of a company in liquidation.

The reward for our merchants of failure isn’t in the resolution of the solvency crisis, but rather in the use of the solvency crisis to suborn the budgetary processes of the member countries of the EU to the social policy and program of central bank. Where the European Central Bank pretends to an “independence” from government policy, it makes no such allowances for government independence from its policy.

And so the October summit statement introduced inside the shell of “haircuts,” the leveraging of the EFSF, under the guise of greater coordination, couched in its own boiler plate language, the subjugation of it member countries to a single fiscal policy. The summit statement proposes that each eurozone nation adopt constitutional requirements for the government to maintain a “balanced” budget; that each member state submits fiscal and/or economic policy reform plans to the European Commission for pre-view; that each member adhere to the recommendations of the Commission.

Those are the proposals for governing the governments of the states without “excessive deficits,” i.e. requiring any special economic assistance.

For member states already encumbered in the “excessive deficit procedure,” the summit statement proposed that national budgets be submitted to the European Commission before submission to the “relevant national parliaments,” and that the Commission will maintain a monitor, review, and amendment capability over the course of the budget.

Where before the universal warning had been “Beware of Greeks bearing gifts,” now the warning was “Beware of those bearing gifts to the Greeks.”

Finally, however, the European Union had its policy, its program, and its new intra-continental, inter-national anthem: Bundesbank über Alles!

As the bond market turmoil continued through November, the European Commission pushed forward proposals to expand its authority over national budgets, including the ability to request revisions of draft budgets.

The structure of the EU, which would not and could not be changed to allow the Union to issue a single common Eurobond, supposedly would and could be changed to allow the European Commission to, in essence, put a member state into receivership.

To be sure, there was some concern among the member states. Even Sarkozy felt a bit of discomfort being so close to Merkel. Sarkozy proposed that the individual member states exercise their sovereign powers in electing to submit to the super-sovereignty of the European Commission, while Merkel preferred the power to be concentrated in the Commission and the obligation in the members. Obviously it was time for another summit to once and for all resolve the sovereign debt crisis and propel the Union forward to its future of unencumbered prosperity.

For the proposals to be adopted by the European Union, as a union; to fund the bureaucracy inherent in authority, review, and enforcement, the member states would have to agree unanimously to the changes [and dispense, it was fervently hoped, with messy parliamentary votes, not to mention the nightmare of referenda].

The summit was set for December 9, 2011, and on December 9, 2011, the world was privileged to see the prime minister of Britain’s government of the posh and the twits, by the posh and the twits, for the posh and the twists, that runner from the floor of the London Stock Exchange, that messenger boy from the financial institutions located in “The City,” David Cameron, hold an entire continent for ransom. Cameron, whose own policies of retrenchment, austerity, and deficit reduction, were expected to increase his government’s borrowing, declared that no economic reorganization would be allowed unless it guaranteed the right of his friends, his schoolmates, his rippers, his swindlers to rip, swindle and conduct business in their accustomed manner.

“God Save The Queen,” he concluded.

Sarkozy, not missing a beat, channeling the Sex Pistols, responded:

“She’s made you a moron,

A potential H-Bomb”

Merkel, who had received her higher education in the then East Germany, and had satisfactorily completed her required coursework in Marxism-Leninism, simply stared at Cameron and muttered in German:

“Trotzkistischen Zerstörer!”

So...so this is the way the summits end, not with bangs or whimpers, but with old songs.

New music, meanwhile, is out there, waiting to be composed, orchestrated, conducted. There’s a new music army tuning up in the streets.

S. Artesian

January 8, 2012.

Hair[cuts] of the Dog[s]

2011-12-02T16:41:00.008-05:00

Hair[cuts] of the Dog[s]

Part 1

1. All that was lacking was the puff of white smoke….. and a hall of mirrors. All that was lacking to the labor and delivery of the latest infant heir to crumbling euro-throne; all that was lacking to the latest bailout, financial stabilization facility, firewall, vaccine, blood-brain barrier; all that was lacking to the birth of the latest in still-born messiahs riding into town in the back of a limousine and on the backs of seventeen asses was that smoke and that hall of mirrors reflecting into infinity the image of latest in the line of hairless, toothless, witless offspring of smoke and mirrors capitalism.

Staring at their latest product, Herr Sarkozy and Madame Merkel, held hands and spoke to each other as one:

"Mein Liebling er sieht genau wie wir. Ma Cherie, il regarde juste comme nous."

It was October 27, 2011.

2. Marx, prior to plunging into the study of political economy, has to settle accounts with Hegel. It is Hegel's mastery of critical philosophy that has revealed itself incapable of apprehending the true conditions of history, of human beings creating the conditions of their own existence. Critical philosophy at its zenith cannot apprehend the material basis for its own existence, which is that conditions of sustaining the society are antagonistic, contradictory, opposed to the social labor process.

At a point, the point being the intersection of the concrete organization and functioning of the society with human need, critical philosophy exhausts itself. Abstract criticism capitulates to things as they are, unable to expose relations as they become manifest.

At this point, Marx undertakes his Critique of Hegel's Philosophy of Right. There is a material, "passive," basis for Marx's own work and that is the intersection of Germany's backward political relations combined with the modern economic conditions that have already taken root there. The Critique of Hegel's Philosophy of Right stands as a record of Marx's encounter with this uneven and combined development. Marx's "A Contribution to the Critique of Hegel's Philosophy of Right—Introduction" is the overture to what would become the enduring theme, the symphonic collection he would produce as his opus—historical materialism.

This "Introduction" is just that and in it Marx actually reestablishes critique but not as or in the abstract, as speculative inquiry. Rather, critique is demonstrated, not described, as the quality, the condition, the product of human activity itself, the product of the labor process.

Critique is reshaped, or rather re-produced as an expression, manifestation of the conflict, the antagonism, the contradiction that produces and reproduces human beings as social beings, as they create their own social existence in the mediation of their natural existence through their facility, capability, potential, necessity for social labor.

Critique, reshaped, reproduced, is also restored as the immanent critique, the critique inherent in the conditions, relations of existence, erupting, and disrupting, the state of existence, of being.

It is in his "Introduction" that Marx gives immanent critique it's "sweetest" most poetic expression, stating, almost throwing away the statement that "…these petrified conditions must be made to dance by singing to them their own melody." The musicality of the immanent critique is not just that it sings in the voice recognizing the contradictions, but that the song is those contradictions achieving a voice. It's not just that the "music" is in the right key, but that the music is the key itself.

Now voice assumes its power in exposition, in relating the origins and prospects, the history of the petrified, obsolete, but still respiring conditions. With capitalism, as it accumulates its contradictions, the "singing" is performed by its very defenders, its agents, its governors, administrators, advocates in the very act of defending, governing, administering to, and advocating the conditions of capital.

It happens, sometimes, that the song begins with a sigh of relief:

"I believe the debt crisis affecting Spain and the Eurozone in general has passed." So said Spain's Prime Minister, Jose Luis Rodriguez-Zapatero in September of 2010. Six months later, the passing was of Rodriquez-Zapatero himself as he announced he would not stand for reelection… as if it were his choice, his decision. Rodriquez-Zapatero was compelled to move up the date for national elections in accordance with the wishes of holders of the Spanish sovereign, and corporate, debt. Ever the singer, always with the song, Rodriquez-Zapatero, in announcing the early elections, crooned "I believe that the basis for economic recovery and the foundations of a new stage of growth in Spain have been laid."

Other verses of the song might include frank admissions as to the dysfunctional function of capital accumulation:

"Our industry has destroyed billions of dollars in value, and we have been at that task year after year. The financial crisis did not cause the problems we face, it unmasked them, laid them bare, and deprived us of any pretence of denial," sang Sergio Marchionne, CEO Fiat SpA, in late September 2011.

Sometimes, the song has a verse of simultaneously expressing recognition and disbelief:

"We have experienced the most sustained fall in living standards since the Great Depression," hummed Mervyn King, governor of the Bank of England.

Other verses appear without being credited to any particular author, as if they were part of the public domain, the common knowledge of all:

"The large banks [in opposing the conditions agreed upon in the Basel III round of banking requirements] are seeking to undo the moderate progress that has been made, using the very crisis they helped trigger as an excuse."

Sometimes verses appear speculating about what might have, could have, and should have happened:

"What could, and in the original design of the eurozone, should have happened was no financing, huge depression, falling nominal wages, massive defaults, and, after years of devastation, a recovery. This would have been adjustment without financing. What did happen was financing with quite limited true adjustment through ECB funding of dubiously solvent banks, and via lending from other governments and the International Monetary Fund, for Greece, and Portugal."—Martin Wolf, October 12, 2011 Financial Times.

On occasion, the singer gives voice to thoughts, and words so ignorant of history, that the very denial of the past appears as foreshadowing the future:

"Nor is a common fiscal policy sufficient for a successful monetary union. Neither the European Commission nor the German government can put tanks on the streets of Athens." John Kay, October 25, 2011 Financial Times.

Mr. Kay apparently has no knowledge of that minor event in the history of capitalism known as the Second World War when the German government did exactly put tanks on the streets of Athens. And if Mr. Kay has no knowledge of WW II, how can we expect him to have recognized the melody of the Horst Wessel Lied to which his words were synchronized?

Sometimes a verse is sung by a bozo bagman in charge of the bourgeoisie's government, who having filled his pockets with loot, his cabinet with girlfriends, and his bed with minors, gives voice to the stirring principles of popular sovereignty:

"No one in the Union can appoint themselves as administrator and speak in the name of governments elected by and made of the people of Europe. No one can give lessons to a partner."—Silvio Berlusconi, October 24, 2011. Note: Does not apply when giving lessons to Greece, Ireland, Portugal, or Hungary. No longer applies to Italy.

And sometimes the bozo bagman has to hog the spotlight, and sing more than one verse:

"Italy does not feel the crisis. The restaurants are full, the planes are fully booked, and the hotels are fully booked as well." –Silvio Berlusconi, November 4, 2011.

Followed by this:

"Reports of my resignation are without foundation."—Silvio Berlusconi, November 8, 2011.

Followed by this:

"Once this finance law is approved along with the amendment on everything which Europe has asked of us and which the Eurogroup has asked for, I will resign so that the head of state can open consultations." –Silvio Berlusconi.

And after all that, all that and more, the music is truly just beginning.

3. That the October 26 "plan"--in actuality nothing more than another discourse on wings, prayers, not so good intentions and who's paving and who's paying on the toll road to hell-- announced at the close of the EU's Brussels "summit" could be regarded seriously as a "breakthrough" revealed just how closely related are magical thinking and political economy in the defense of capitalist property.

The statement "welcomed" the progress evinced by Ireland, "the important steps taken by Spain," Italy's commitment to a "structural reforms," a "balanced budget," and another round of "important" steps taken by Portugal.

All these steps and reforms and commitments are precisely the opposite of what is claimed. These "commitments" are in fact the abrogation of previous commitments. All this progress amounts to is regression. None of these steps will balance any budgets. Progress here means increasing the level of poverty. Reform means preserving the republic of debt. Commitment means commitment to the rights, the liberty, the sovereignty of the bondholders. And this too is an expression of the immanent critique. Nothing is what the bourgeoisie say it is. Everything will be the opposite of what the bourgeoisie say it will be.

In the European Union, everyone's a partner, but some are senior partners and some are junior partners. The Brussels statement proclaimed:

The mechanisms for monitoring of implementation of the Greek programme must be strengthened, as requested by the Greek government. The ownership of the programme is Greek and its implementation is the responsibility of the Greek authorities.

Short version: do as we tell you to do, and we will be telling you what to do.

The statement continued:

…the [European] Commission, in cooperation with the other Troika [IMF, ECB] partners, will establish…a monitoring capacity… to work in close and continuous cooperation with the Greek government…and offer assistance in order to ensure the timely and full implementation of the reforms.

Short version: we told you we'd be telling you what to do.

Everyone's a partner, everyone cooperates, life is a party, and everyone gets an invitation and a prize.

Further:

The Private Sector Involvement [PSI] has a vital role in establishing the sustainability of the Greek debt. [The careful reader will note that according to the EU it is the debt that must be sustained, not the Greek economy, not the living standards or the welfare of the Greek people.] …To this end we invite Greece, private investors and all parties concerned to develop a voluntary bond exchange with a nominal discount of 50% on notional Greek debt held by private investors. The Euro zone Member States would contribute to the PSI package up to 30 bn euro. On that basis, the official sector stands ready to provide additional program financing of up to 100 bn euro until 2014, including the required recapitalization of Greek banks. The new programme should be agreed by the end of 2011 and the exchange of bonds should be implemented at the beginning of 2012.

Who knew that the summiteers of the European Union had such an acute sense of humor? Who would have guessed that Merkel and Sarkozy were the Nichols and May of debt restructuring?

The Brussels statement makes no mention of any restructuring of debt service amounts, neither the annual amounts nor the cumulative amount of debt service to be assessed to Greece as its cost for being invited to this party. The Brussels statement makes no mention of the duration of the new bonds to be issued in this exchange, the annual interest to be paid.

Just as financing is nothing [and in this case, literally], and refinancing is everything, the notional amount of the outstanding debt is nothing. Debt service is everything. The annual amounts of debt service are part of everything. The duration of the debt service is another part of everything. The cumulative debt service makes up the yield to maturity, and yield to maturity really is everything.

The Brussels statement explicitly identifies the willingness of the EU to absorb e30 billion in losses, and provide another e100 billion to recapitalize Greek banks as the banks would suffer severe losses and depletion of its core capital through this consensual bankruptcy. Moreover, the sovereign debt of Greece purchased by the ECB, or pledged to the ECB as collateral by private banks as part of the ECB's "unlimited liquidity" program would be sequestered from the exchange program.

But on the critical issues of yield, and duration, "mum" was the word. The silence speaks volumes.

"Here," says our angel Merkel non-Lovett, "take a seat and help yourself to 30 billion in meat pies. The barber will be right with you."

Cue the barber. From stage right enters Nick Sarkozy non-Todd, humming the Contours smash hit from the 60s "First I Look at the Purse."

"Who's next?" inquires Nick. "Have no fear. The razor is rubber, the scissors are plastic, and the clippers buzz but can't clip. I pretend to give you a haircut, and you pretend it hurts."

S. Artesian, 2 December 2011

address all comments to:

sartesian@earthlink.net

Volume 1

2011-10-22T17:22:00.002-04:00

note: this analysis was originally intended to appear in Insurgent Notes 5. However it is unlikely that IN will appear before the end of December, 2011, and I do not believe that IN can be a significant weapon of analysis and agitation with this infrequency of appearance. I don't think TWR can become that weapon either, but at least there's less waiting. So I have "resigned my position," actually discontinued my presence on the editorial board of IN. I'm sure there will be further opportunities for collaboration and disagreement with the comrades of IN, and I certainly hope to remain personal friends with them.

Volume 1

Chapters, 7, 9, 11, 13

1. Radio Nowhere

By the time you re-read this, it will be obsolete. Greece will have declared bankruptcy, and the European Union will have to decide whether to issue EuroBrady bonds or implode, realizing too little and too late, that it, the European Union was an idea conspicuous only in its absence.

Housing markets will continue to contract with prices, and new starts marking successive monthly declines. Commercial real estate ventures will find themselves unable to refinance portions of the $1.4 trillion in debt, direct debt and asset backed securities, coming due in the next 6 months. “Re-defaults” will become the label attached to, and identified with this new wave of seizures and foreclosures.

Copper prices will continue to decline, followed by steep declines in oil, coal, steel prices, and both container and dry-bulk shipping rates.

World trade expansion will slow and stop at a level between its 2007 peak and 2009 low.

Paralysis in the markets will be matched and over-matched by actions in the streets as strike-waves course through the UK, Ireland, Spain, France, Italy, Greece, Portugal, Russia, Venezuela, Bolivia, Argentina, and Chile.

China’s real estate market, the focus of so much investment, so much construction, and so much debt will wobble, and then tumble with bond failures and debt delinquency reaching 40% of notional values. At the same time, and as a consequence, China will be gripped by the protests of the rural population fighting their dispossession from, and despoilment of, common lands.

In the United States, the Bank of America [with a perfect name and balance sheet to match] will have followed in the path of its European cousins, and will find itself locked out of the commercial paper money markets. Bank of America will then find its creditor of last resort, the Federal Reserve unable to, if willing, to accept the $100 billion or so in delinquent or foreclosed mortgages as collateral, as the Fed maneuvers to keep Europe afloat with open-ended currency swap lines. The collapse of BofA will make that of Lehman Bros. look, and feel, like a picnic, a walk in the park, fun. The bourgeoisie will think back and recall 2008 fondly, nostalgia being the one market strategy providing positive returns.

So with this guaranteed obsolescence in mind, let’s try to catching up.

2. Chain of Fools

The bourgeoisie stumbled through 2009 like a drunk staggering away from the car he just wrapped around a tree, thanking his god not so much for his life but for the bottle that remained unbroken in his pocket, because it was in times like these that a man really needed a drink.

That’s how the bourgeoisie spent 2009: bloody, torn, hooked up to a drip feed of morphine, vodka, and cash.

2010, however, was a different story, or at least it was supposed to be a different story. Supposedly, the wreckage had been cleared away. Supposedly all that intensive care had done the job. “Good as new,” said he as he tried out his new government issued legs, patted lovingly the bulge, his wallet, which meant he was happy to see everyone and there was a gun in his pocket.

He couldn’t wait to get back behind the wheel of his structured investment vehicle. Grabbing the keys and his bottle, he OJ Simpsoned his way behind the steering wheel, turned the ignition, took a long pull on the bottle, slammed the car into reverse and took off like a bat going into hell, backwards, only too eager to do what he did best—hit and run.

And that’s how capitalism careened its way into 2011, backwards, drunk, at a high rate of speed, smack into the concrete pillar that marked the spot where that tree used to be.

3. Pre-history

The recession of 1969-1970 signaled the end of the post-WW2 golden era for US capitalism. When the rate of profitability turned down under the over-accumulated weight of the means of production, the bourgeoisie adjusted the program of “guns and butter.” The guns would remain of course, since all the guns that mattered were theirs. And the butter? All the butter that wasn’t theirs was to become the target for all the guns that were.

The bourgeoisie in general, led or driven by the US bourgeoisie in particular, girded their loins and loans, screwed what courage they could find in others to the sticking point, and plunged into their great offensive; and offensive that is defined today as it was in 1973 by two events, dual assaults on the living standards, and the lives, of workers and poor. One assault was Pinochet’s upon the working class of Chile, accumulation by the bayonet. The other pincer in this maneuver was the OPEC-led price increase of oil, accumulation through the drill-bit.

Since then, the bourgeoisie have organized profitability, more or less, and more consistently than less, around reducing the living standards of the working class and the poor. Moving wealth up the social ladder and everybody else down, that has been the bourgeoisie’s ticket to business class.

For almost 40 years the bourgeoisie of the advanced countries have made their living in this practice of distressed accumulation, anointing themselves with West-Texas-Intermediate, as the great liquidators.

In the past, the bourgeoisie had revised their old algorithm of accumulation— “to get rich by appropriating the unpaid labor of others”—and more than once. In their attenuated rule, they had deployed and employed version 2 of the algorithm—“to get rich not by appropriating unpaid labor of others, but by pocketing the wealth accumulated by those appropriating the unpaid labor of others”—pretty much on a daily basis.

The version deployed in the late 1970s, expanded and refined in the 1980s, deregulated in the 1990s, and practiced in the new century with religious, and scientific, quantified fervor almost obscured its own genesis in the original algorithm, v.3 read—“to get rich by liquidating that wealth pocketed from those who had accumulated it by appropriating the unpaid labor of others.”

Capital is nothing if not increasingly derivative, and the truths of these derivatives of accumulation is the same as the truths of the derivative investment products in the financial markets: there is no value intrinsic to, produced in, provided by the derivative product while, at the same time, the derivative in its value-less-ness is the fully developed expression of the mode of production that transforms products into values, and surplus product into surplus value.

4. Ask the Angels

If the bourgeoisie have been at this for almost 40 years, if successive assaults on wage rates, benefits, employment, health, education, any and every apparent manifestation of social equality, if all that has been the order of the day for the last 14,000 days, is there anything really that different about the current conditions, the current configuration, the current predicament of capital? Is this, the period beginning in December 2007, a crisis?

Certainly, the historical data confirms the assault of capital on labor—the decline in the number of industrial workers, the disproportion between improved labor productivity and labor’s declining share of the national income; the increasing numbers of temporarily employed, marginally employed during periods of “expansion,” the increases in numbers of unemployed and the duration of unemployment during contractions; the numbers eligible for and dependent upon on food stamps; the rise in children born into poverty. Statistics like these earn economics its label as the dismal science, which label, like everything else about political economy is half-right and all wrong. Dismal? Without question. Science? Not exactly.

Marx in volume 3 of Capital puts it this way:

Crises are never more than momentary violent solution for the existing contradictions, violent eruptions that re-establish the disturbed balance for the time being. [Marx, Capital, volume 3, Chapter 15, “Development of the Law’s Internal Contradictions,” p. 357, Penguin, 1981.]

A crisis can persist for several years. But if an economic condition, pattern, predicament has lasted for 40 years, it’s not a crisis, it’s a business plan.

Certainly, the condition of capitalist accumulation during the last four years can accurately be characterized as critical—desperate, urgent, and… necessary.

However, the last four years qualify as something more, much more than a crisis. They count as a period when the crisis mechanism has been proven inadequate to re-establishing “the disturbed balance for the time being,” because, in part, there is no “balance” disturbed or otherwise to be restored, and because there is no longer time “for the time being.”

5. Just a Word…

Too much is never enough when it comes to summer, Beethoven, October baseball, and the Rhythm Revue dance party [www.classicsoul.com]. Too much, however, is made of the notions of “balance” “equilibrium” “proportion” as the normal, and normative conditions for capitalist accumulation… as if capitalism requires balance, aims towards equilibrium, produces proportion as necessary conditions of its reproduction…as if capitalism periodically disturbs the scales that have balanced, upsets the equilibrium that exists “naturally” in the economy, overturns the proportions between and among the sectors of its economy, and those are the reasons for capitalism’s short-term crises and structural decrepitude. Even Marx refers to “restoring the balance” in his discussion of crisis.

Balance, equilibrium, proportion are moments in capitalist reproduction and not determinants of that reproduction. Balance is something that exists mostly, and most conspicuously, in its absence. Equilibrium, as is the case with its political sibling equality, is a purely formal and superficial designation in political economy, an advertising program.

Imbalance, disproportion, disequilibrium are likewise moments in capitalist reproduction. However, unlike balance and equilibrium and proportion, which are random occurrences in the reproduction of capital, disproportion, imbalance, disequilibrium are essential to that reproduction. These form the intra-mediations of capital—the mechanisms by which capital concentrates itself, centralizes itself, aggrandizes parts of itself on behalf of its whole.

In the Marx’s critique of political economy, his explication of the critique immanent to capital at all moments and in all facets of its existence, dynamic disequilibrium, punctuated imbalance, chronic disproportion are revealed as the truth of that whole.

Imbalance and disproportion are everyday expressions of the laws of accumulation and stand in relation to those laws as price stands to value, that is to say the agent of the laws.

6. Taking the K.A.S.H.

Capitalism’s recovery from the 2001-2003 recession was not organized around expanding consumer credit, reduced interest rates, or “exuberance”—rational or irrational. That recovery had two sources. One was the rigorous control of capital spending. The sustained increases in capital spending during the 1994-2000 period had driven profit rates down from their 1997 highs. Expansion continued after the profit rate turned, as it usually does. What’s the point of all that investment if it isn’t used to increase the mass of commodities forced into the markets?

Expansion in the information, communication, and transportation sectors of the US economy were particularly acute, as logistics were better controlled, and logistic costs [warehousing, transportation] declined throughout the economy. Transportation, communication, logistics—for capital to complete any of its metamorphoses, it has to move, or rather be moved, even if the movement is but a representation, an image, a cascade of zeros and zeros + ones that define the virtual content of the current reality.

By the end of this communications and control “revolution,” it was estimated that 97 percent of all fiber optic cable installed in the United States was dark, carrying no signal, no data; without function. Function, under capitalism, is a bit different and a bit more than simple use. Function is a capital relation, a social quality, where and when the commodities enter into the reproduction, the expansion of the mode of production; where and when in fact, the commodities “live” by giving up their “lives”—the value accumulated, embedded in them—to more production, that is to say to the aggrandizement of more labor. A fiber optic cable exists to transmit data point to point, but capital survives only by engendering more capital.

The bourgeoisie, after 2003, were determined to enforce that survival by consuming their fixed assets without replacement for as long as possible.

This certainly wasn’t the first time the bourgeoisie had attacked the accumulation of fixed assets. For years, the bourgeoisie had been engaged in asset-stripping, asset-liquidation schemes involving industrial, manufacturing, and transportation companies.

Somebody somewhere had figured out that the parts were worth more than the whole, as long as the whole could be made smaller. So, a private equity company using a leveraged-buyout shell corporation would launch a tender bid for outstanding shares of a target company, particularly a manufacturing company.

The target would be acquired, and the asset-strippers would take the company private. With the company now private, with the asset-strippers in control of the target’s cash and cash flow, the asset strippers would award themselves a special dividend, with the target company assuming high levels of debt to make the payment. Then, with the target burdened with debt, the strippers would begin selling off the businesses of the company, using these revenues to retire portions of the debt, while rewarding themselves with further cash payments.

At the end of this process, what remained of the target was just that—remains.

This technique was honed to its imperfection during the reign of that idiot-hero of capitalism, Ronald Reagan.

In the Reagan version of liquidationist capitalism, industrial production was subordinated to finance. The huge cash pools generated in asset liquidation flowed through and to the banks, and leveraged the banks’ control.

In the Bush version, that is to say the idiot’s version of the idiot’s version, the restraints on fixed asset accumulation and the attack on wage rates effectively detached the major industrial and manufacturing corporations from dependency on bank financing. In the European Union banks provide 80% of the financing for non-financial corporate sector, while in the US only 30% of the financing is provided by banks. It’s not that “cash is king” for US industries. It is that “cash generation is king.”

And the banks? With the distinction between commercial and investment banks abolished, and with their access to a portion of the profits generated in production severely restricted, the banks turned with renewed zeal to the next best thing, securitized consumer lending. The difference between securitized consumer lending and corporate is that lending to corporations involves a claim against future earnings, future extractions of surplus value. The securitized consumer debt was established as a trading position where there were no earnings to be claimed, except from the counter-party to the established position.

The “asset” itself was dead, having become an object of consumption. Restoring such an “asset” to the assumed imagined life of capital, of the commodity, required the collateralization of the security representing the asset. Since there were no future earnings to be generated by the asset, since the asset did not and could not reengage with wage labor, the collateralization of the security encumbered the assets with levels of debt that required the devaluation of any collateral so encumbered. Sooner or later, the value supposed to exist in, actually superimposed upon the collateral, had to prove itself as a cash value. “Dead” assets can only prove their value through their liquidation. The asset-stripping liquidationist bourgeoisie had proved that in the 1980s by killing “live” assets through the assumption of debt, hadn’t they?

The bankers, hedge-fund traders, structured investment used-car salesmen, our no-memory, history is bunk, short-attention-span buccaneers forgot that. In taking their trading positions, in creating their structured investment vehicles, in committing their collateral to the securitized debt, the banks were, in effect, sheep thinking they were leading lambs to slaughter only to find that mutton was the menu of the day on the killing floors.

When the new home construction market peaked in 2006, and then began its decline in 2007; when HSBC reported in 2006 that increasing numbers of its mortgage borrowers were falling into delinquency; when the rate of return peaked for non-financial corporations in 2006; when oil prices exploded in 2007, channeling profit to the energy companies, sooner and later both came together in the collateralized debt, asset-backed securities market. Devaluation raced through the network of parties and counter-parties like the Spanish influenza. The markets froze. The securities could not be valued by the markets as the underlying assets themselves were value-less.

7. Stuck in My Car

The Great Recession officially began, according to the US National Bureau of Economic Research, in the 4^th quarter of 2007. The depth of the contraction was the sharpest since the Great Depression of the 1930s. Comparing 2009 to 2008, the manufacturing sector eliminated 15% of its work force, cut 15% of its wage bill for production workers, reduced production hours by 16%, shipped products amounting to 19% less value, and allotted 22% less for capital expenditures [figures from the US Census Bureau Annual Survey of Manufacturers: http://fastfacts.census.gov/servlet/IBQTable?_bm=y&-ds_name=AM0931GS10].

The reward for these efforts materialized in improving rates of return on net property, plant and equipment. After-tax profit as a percentage of the net PPE which had measured 2.6% in the 1^st Q2009 improved to 7.5% in the fourth quarter. By the 4^th Q2010 the rate had reached 9.5%, and in the 2Q 2011, the ratio reached 12.5%, praise the lord [figures derived from the US Census Bureau Quarterly Financial Report http://www.census.gov/econ/qfr/]

Here’s where things start to get sticky. And to slow down. The boost to profits has been provided exclusively to the rate of profitability and not to the mass of profits. Manufacturing profits after taxes remain 30% below their 2006 peak, and 20% below their 2007 level. The recovery from the 2009 low has been provided almost entirely through the decline in the wage-bill. Fixed production assets in manufacturing, transportation, circulation have not been reduced, consumed, liquidated. In 2007, US fixed assets in the agriculture, mining, utilities, construction, manufacturing, transportation, and information sectors totaled $8.148 trillion. In 2010, that total had grown to $8612.6 trillion.

As production increased through 2010 and the first half of 2011, growth in profits was driven by increased productivity of labor—more and more fixed assets were brought online and more and more output was extracted from the [reduced] units of labor. Such growth is circumscribed by the labor so employed. So as expansion increases, more labor will be demanded, and consumed for each [declining] increment of increased production. “Speed up” increases in productivity must inevitably slow down. Further increases in output require a disproportionate increase in working hours, increasing workers’ compensation and unit labor costs as fixed assets themselves can no longer amplify the productivity of labor. Despite the continued low utilization rates, bringing greater fixed assets back into production will undermine the very basis for the recovery as the wage-bill climbs.

On October 13, 2011 the US Bureau of Labor Statistics reported that, compared to the 1^st Q 2011, productivity in the 2^ndQ 2011 for the non-farming sector decreased 0.7% as output increased 1.2% while working hours increased 2.0%, leading to a 3.3% rise in unit labor costs. Unit labor costs in manufacturing increased 4.6% on a quarter to quarter basis, but only .4% on the year to year basis.

This is not a “wage-push” eroding profitability. It is a capital constraint upon profitability, and will result in first, a flattening of the profit curve, and then a real decline in earnings. It is precisely that [fore]shadow of the decline in earnings that has brought our capitalists full circle from greed to fear to panic.

Without improving earnings, the remaining overhang of non-performing debt—perhaps some $2 trillion in mortgage based debt in the US alone cannot be mitigated. The banks cannot be rescued, again. The sovereign debt of the EU “periphery,” and the debt-holders, cannot be protected from the gathering tidal wave of devaluation. This is what drives the bourgeoisie into both expanding belligerence and increased paralysis.

Now certainly, there is no established, fixed decline the rate of profit below which capitalism cannot function, cannot recover. But there is also no decline in the rate of profit that capitalism, and its personified agents, the bourgeoisie, can afford to ignore, dismiss. The bourgeoisie understand this, even in their panic, especially through their panic.

The next “round” in the capitalist cycle of devaluation has already begun. The thing about accumulation is… well, that it accumulates; that the problems to the reproduction of capital, and the impairment of the reproduction of capital are indeed, cumulative The response of the bourgeoisie will be, and necessarily, even more of the same, “more” in such quantity that it becomes qualitatively different—with levels of privation, brutality, and immiseration imposed upon the working class different in degree and kind, with destruction of the accumulated assets of capitalism weighing like a concrete overcoat on the backs of the living. The response of that and those living must begin with “de-funding” the source of devaluation, the debts, and then removing the source of the debts, the capitalist mode of production.

S. Artesian

October 19, 2011

OWS #4

2011-10-13T22:29:00.003-04:00

OWS: The Fourth Time's the (Maybe Lucky) Charm

We are not seeking to gain recruits for anything, nor trying to building an organization. Rather, we only want to share a perspective thus far not articulated here, though implicit in the collective, practical organization.

The mayor, a true member of the ruling capitalist class, who literally bought his three elections, has decided that enough is enough, so, after conferring with his long-time girlfriend, who sits on the board of directors of Brookfield Office Properties, which supposedly owns the occupied park, has decreed that the park be cleaned.

Apparently, the bankers and landlords are worried that the presence of food and drink will attract rats. Bankers, landlords, politicians complaining about rats? You can't make this up. Is there no species loyalty among these brothers of the fur?

New York is what it is, it has become what it is only because it's been home to the rats, vermin, plague vectors of capitalism for two hundred years.

And now the mayor says he wants to clean up a park.

This movement must move explicitly against the private ownership of public space by resisting any attempts at eviction and allowing the so-called owners to use the cops to impose their made-up rules. All open space should be commons, as this space is in reality now, not private nor even municipal, but of and for the common people, which is, first and foremost, the working class, coming together.

The mayor has repeatedly declared New York a "luxury brand," thus openly stating that the working class should not appear in it. Yes, they have to be in the kitchens, run the subways, and clear the ridiculous amount of trash this society produces, but they—we—should be as invisible as possible.

Two points here: (1) All capitalism produces in its center these days is its trash (junk food, junk bonds, useless packaging, etc.), and this has to end; we need to create situations that momentarily create more unemployment, both high-end and low-end, by obliterating brokerage houses and banks and fast-food joints, as well as so much more, so that we can start creative, collective action that begins to transform this fucked-up world; and (2) we need to extend the commons as far as is possible, taking the collective, practical activity of this occupation back into our daily lives, else the leftists and the union bureaucrats they support (and often are) shall turn this all on itself—and Bloomberg's class will win again.

Many here are too young to remember that in Paris, in May 1968, while eleven million workers occupied their factories and other workplaces, the bourse (the Paris stock exchange) was torched. As we have previously said, Wall Street needs to be abolished for human freedom and dignity to advance.

And the mayor must be physically driven from office, but not allowed to leave this city. We cannot shift our burdens onto the backs of the workers in Bermuda, London, etc.—wherever this martinet has a home, an apartment, or access to a hotel. Only through the public defrocking of this minister to finance can the ignominy of his being able to buy his moralistic dictatorship be removed.

Practically, if the cops move to evict, seniors/retirees and so called 'tweens—symbolic grandparents and grandchildren—must move to the periphery, so that all can see the assaults on them, thus causing students and teachers and workers of all sorts to join . . . and push these fucks into the river.

R. Ryder

Oct 13, 2011

WHEN PUSH COMES TO SHOVE

2011-10-10T23:20:00.002-04:00

Third in a series, meant to be freely copied, printed, distributed. No credit required. Plagiarism greatly appreciated.

Push always comes to shove when the issues are power, property and the continued flow of the mean green that produces the bulge in a banker's pants that says both that he's happy to see you and he has a gun in his pocket.

So first the whining, sniveling billionaire mayor of New York [an imposter, imported from Boston as if the disaster of the 2004 American League Championship Series wasn't enough punishment for the errors of our ways in tolerating the Steinbrenners for 30 years] announces that the OWS protests are not "productive" as they threaten two of the three pillars of NYC's pre-apocalyptic economy-- banking and tourism. The other pillar, as yet unthreatened by those camped out in lower Manhattan, is real estate.

In a bit of psychotic doublespeak worthy of the idiot-hero of capitalists everywhere, Ronald Reagan, the mayor states: "The protestors that are trying to destroy the jobs of working people in the city aren't productive."

What a man of the common people, what a fighter for the working stiff our mayor is, as long as the stiff is taking down a seven figure income, utilizes limousines, and subscribes to the Bloomberg news feeds.

When in 2008, the men and women working at the Stella D'oro bakery in the Bronx went on strike against that company's attempt to cut wages and benefits, the mayor wasn't making pronouncements about the "unproductive" attitude of the owners, Brynwood Partners. The mayor wasn't complaining about the fact that between 1991 and 2008, the various owners-- Nabisco, Kraft, Brynwood had reduced employment 80 percent, destroying some 400 jobs of working people in New York.

When the NLRB found that the company had improperly refused to bargain with the workers' union, our mayor didn't send in the police to restrain the Brynwood Partners, to teach them a lesson at the end of a cop's baton. He didn't express his outrage that these owners, these outside agitators based in Greenwich, Ct. could so trample on the image of this wonderful city.

When Brynwood Partners announced, directly after the workers had won the strike, that it would be closing the Bronx factory, destroying 134 jobs, did the mayor take a time out to denounce that unproductive action of the owners? Why even ask?

In the "recession" that "ended" [!] in June 2009, over 8 million jobs were lost. Since the start of the recession more than 2 million homes have been foreclosed upon or are in the foreclosure process. Housing construction and related services which accounted for 1/6 of the US GDP prior to the contraction is now at 13% of GDP. Poverty rates are increasing and one-fifth, 20% of the children in the United States are born into poverty.

So...who's destroying whom? Who's zoomin' who around here, and around the world?

We know that every time Bloomberg opens his mouth he's speaking as the representative of that billionaires boy's club. And we know that behind, or now as push comes to shove, in front of that boy's club stand the ranks of the cops with their billy clubs.

While the bankers go home to their gated communities, their spokesman turns NYC into a "penned-in" community.

The police will be ordered to move against the OWS demonstrators, and we must move to counter the police.

Our response requires students across the city, in high schools, colleges, universities to walk out of their classes.

That their teachers walk out.

That transit workers refuse to handle vehicles commandeered for and by the police.

That teamsters hot cargo deliveries to all city agencies except hospitals, fire departments, libraries, and the various welfare agencies.

Our response requires that the working people organize themselves against this government of, by, and for financiers.

October 10, 2011

2011-10-06T12:19:00.003-04:00

OWS AGAIN

AS LONG AS THE WORKING CLASS DOES NOT IMPOSE ITS OWN SOLUTIONS, THE CAPITALIST CLASS WILL CONTINUE TO IMPOSE ITS OWN - CONTINUING TO KILL US ALL AND AT A SWIFTER RATE.

The are but three classes under afterhours capitalism: (1) a tiny, venal capitalist class intent on extracting profit whenever and wherever it may the world around; (2) an ever-recreated "middle class," made out of small business owners of all sorts, gangsters and racketeers everywhere, of course cops and private security combines, professionals of all sorts, and bureaucrats of the State, capitalist enterprises, and the so-called opposition; and then there is (3) the atomized working class, those with no power over their own lives whether fully conscious of it or not, but alone possessing the potential power to bring it all down.

We have let these recent confrontations be termed fights to save the so-called middle class. The working class, true object of the attacks, has been allowed to be "disappeared," a la South America thirty years ago. And the trade union bureaucrats - dwindling brokers of labor power - are complicit in this; just look at the leaflets or listen, if you can bear, to the speeches of their truly middle-class officers and staff.

Rest assured, this is not a final crisis for the capitalists unless we collectively make it so. The class origins of those out here demonstrating against the banks and corporations matter little unless and until they align themselves with a working-class program that calls for the immediate end of capitalist relations here and worldwide albeit in a transitional way - we shall need growing elements of the middle class such the growing numbers of small farmers growing healthy food for the foreseeable future, likewise healthcare professionals not in the thrall of Big Pharma, willing to fight global obesity and myriad other diseases caused by capitalism. And we will need educational professionals dedicated to keeping literacy alive. Such a transition must guard against measures which might allow for retrogressive slippage and must support all movements anywhere likewise demanding richer lives beyond value.

And if we begin to win, even in small sectors - hardly a safe assumption-- we need to start living life better collectively, and not in the "future," but right now. There will be sacrifices, even deaths ... but we must not sanctify them. We must get through to lives beyond capital as soon as possible.

The struggle will be more violent than many of us might hope - as it has been each time the working class has contested capital's advances over the past two-hundred-plus years. The capitalist class will not relinquish its power short of what amounts to genocide, region by region, reducing wage-labor to slave-labor. once again. The unstable middle class will split asunder; most shall become stormtroopers for their capitalist rulers as the cops and Tea Party cretins already are, and a minority will think they alone can lead the working class to victory, given what they assume to be their superior knowledges(s) or organizational skills. Stuff and nonsense....nothing other than a choice between pathologies.

It is these middle-class idiots who staff the ever-dwindling and continually compromising unions who are only capable of a "trade union consciousness." This is their ace in the capitalist whole,The working class alone can end capitalism and thus all class society.

R. Ryder
October 2-3, 2011

R. Ryder is a friend and collaborator

Address all comments to: sartesian@earthlink.net

AWS

2011-10-05T23:25:00.002-04:00

O AWS

There's nothing like a banker to bring out the best in somebody, and there's nothing like an enclave of bankers, a virtual village of bankers to bring out the best in everybody. That best, of course, is the gut-hatred of the pin-headed, bb hearted, pin-striped class of bankers, who in both head and heart encapsulate all that makes capitalism what it is today, what it was yesterday, and what it will be tomorrow—vicious, venal, and obsolete.

These purveyors of virtual value, of nothing and 1 + nothing are the ultimate personification of an economic system, a mode of production, an exploitation of labor where everything and everyone is reduced to its value, and value reduces itself back to nothing.

Our bankers and bondholders want cuts everywhere and of all kinds, but no haircuts.

Our bankers and their selected representatives of the Mad Hatter's Tea Party government demand an end to "public subsidies," "entitlement programs," "protective regulation," except of course when the public is subsidizing them, when the programs entitle them, when the regulation protects them.

Never has hypocrisy been given a more truthful, consistent expression.

While fraud, theft, extortion, bribery, graft, and corruption are endemic, inherent, and essential to this system, these are but tactics and methods, not the determining strategy or program of a ruling class determined to find joy in suffering, but not their suffering; and wealth in poverty, as long as it isn't their poverty.

That program is to preserve their property, their ownership of those things, those means of living extracted from the labor of others.

We are those others. Our struggle moves beyond occupying Wall Street and toward abolishing Wall Street. The only way to bust that move is to organize to take over the streets, the hospitals, the schools, the public transportation systems, all those things that must be preserved and expanded in opposition to the accumulations of private wealth. The only way to do that is to organize an economy across cities and countrysides and borders that focuses on the satisfaction of human needs, not their market-values; that fulfills rather than exploits labor.

The Wolf Report http://thewolfatthedoor.blogspot.com

October 5, 2011

July Days Again in Britain-- This Time in August

2011-08-09T19:47:00.002-04:00

Back in the day, blast from the past, a golden oldie, with respect and appreciation to the youth of Britain back in that day and here in this day. Here's what was said 30 years ago.

Here's what's said today: Cameron wants to play Thatcher in drag? He wants to cross-dress his way into the bourgeoisie's pantheon of idiot-heroes? He'll get his own Toxteth, his own Southall, his own Manchester.

The Wolf Report

Number 5
October 1981

All hail, then, to the mob, the incarnation of progress!
—James Connolly, 1910

Lights out!
—Sex Pistols, 19?6
July Days in Britain:
Johnny Strikes Up the Band

I. Dry your eyes my little friend
Let me take you by the hand
Freddy get ready
Rock steady
When Johnny strikes up the band*

After the Brixton revolts in April 1981, the Thatcher government introduced its anti-immigration legislation into parliament. The bill denied the rights of residency and citizenship in Britain to immigrants from the former Asian, West Indian, and African colonies-- to immigrants of color. In July the House of Commons approved the bill. Also in July, Charles Windsor sought the counsel of his vicar on the matter of sex in marriage. Windsor is a mere 33 years old. Reported the vicar, "I told him that sex is good." And with that Windsor established himself as the legitimate heir to the British throne. His sexual poverty gives the flacidness of British capitalism its most ludicrous and accurate expression.

But if the vicar was telling Windsor that sex is good, the working class youths of Britain, sparked by the youths of the former Asian, African, and West Indian colonies, sparked by the youth of color, were telling Windsor that sex by firelight is even better.

II. God save the queen
She ain't no human being
There is no future
In England's dreaming**

The sun never sets on the poverty of British capitalism. In its wretchedness Britain represents the pinnacle of bourgeois society. In its decline Britain is a monument to the market, to private property, to progress.

Unemployment is officially reported at 12 percent, but just as more and more of capitalism's exchanges become unofficial, "go underground," to avoid the taxman, the auditor, the lawyer, so too the real level of unemployment is unofficial. In Toxteth, unemployment is estimated at 50 percent. Meanwhile inflation reached a 21 percent rate in 1980 and industrial production declined 12.1 percent.

The severity of Britain's recession has even worried Milton Friedman. Long fond of describing depression as the "selfcleansing" of capitalism, Friedman has been busy trying to wash his hands of Britain. Said he:

"The recession is much more severe than I anticipated and I believe it is more severe than would have been necessary had you been able to get government spending down and to stay on a steady monetary course."

Now reduced spending and a steady monetary course are possible only when the economy is expanding or when the economy has completely collapsed and the working class has been shattered. So in the world according to Friedman, Britain's recession is more severe than anticipated just because it isn't severe enough. No wonder he won a Nobel Prize.

Friedman's mentor, Friedrich von Hayek, has argued that British capital's recovery depends on breaking the resistance of the working class to poverty— to total economic collapse.
The Labor government of 1974-1979 depended on breaking the working class through the cooperation of the unions in a "social contract." During this escapade in recovery, unemployment increased to 6 percent and inflation averaged 12 percent a year. The Conservative government depends on breaking the working class with or without the cooperation of the unions. According to the Confederation of British Industry, wage increases in Britain have fallen to an 8 percent rate. Wildcat strikes have declined from 2,703 in 1977 to 1,262 in 1980. British Steel has won union approval to sever one-third of its work force. British Ford settled the Halewood strike with an "historic agreement" that entails the disemployment of 40 percent of its workers by 1985. Despite all this recovering, the CBI believes that the recession has not yet touched bottom. No wonder von Hayek won a Nobel Prize.

The West Indian, African, and Asian workers drawn into the British proletariat since World War II settled into the the manufacturing centers of Britain. They stayed but the jobs haven't. Between 1969 and 1981 manufacturing employment in Manchester dropped 58 percent, from 160,000 to 68,000. With access to large—scale production blocked by the long—term decline of British capital, workers entering the market, young workers, immigrants, workers of color, entered light industry, service enterprises, small—scale manufacturing. It is just these small companies that have been folding in record numbers. The British bourgeoisie's antiimmigration bill stands as just one more facet of the attack on the living standards, and the living composition, of the British proletariat.

III. They'll be rocking in the projects
Walking down along the strand
Freddy get ready
Rock steady
When Johnny strikes up the band

The predicament of British capitalism is so acute not because it is the product of the short-term policies of Thatcher, Friedman, or finance capital, but because the short-term policies are the long-term product of British capitalism itself. The predicament of British capitalism is so acute not because it is in decline, but because the decline represents its fullest flowering. The predicament of British capitalism is so acute not simply because it has no future, but because the predicament itself is its future. The predicament is the compression of history into the here and now. The predicament is the transformation of time into the living substance of society, the class struggle. The predicament of British capitalism makes the access to time possible through the attack on private property. It makes the mastery of time the mastery of society through the overthrow of the market.

Just as the attack on race in the antiimmigration bill was the vehicle for the attack on the British working class, the response of the Asian, West Indian, and African population to the skinhead invasion of Southall became the vehicle for the response of the working class. Despite police protection the skinheads barely managed to escape alive. But the shortest distance between any two points is television, and the upsurge was transmitted to Liverpool, Manchester, Birmingham and city after city. From an attack on the skinheads the upsurge became a battle with police. On July 5 the police in Toxteth were driven back by integrated groups of youths. Not just driven back, the police were routed. Not just routed, the Liverpool police were outmaneuvered, outflanked, outmanned, and outfought. In desperation the police used CS gas, marking its first use in Britain outside of Northern Ireland. The Liverpool police thus proved that the real basis for the union of Northern Ireland and England exists in the subjugation of the working class of each.

From a battle with the police, the upsurge became an assault on property. The Racquet Club was burned. On July 8 Thatcher appeared on television to plead for calm. "Violence will destroy everything we value," said she. Right. Spoken like a real shopkeeper. That night, youths in Manchester stormed a police station. Said the Chief Constable:

"We believe a kind of military strategy was used with lookouts and the use of citizen band radios to pass messages. In the height of the troubles vehicles were being used, including vans, to carry petrol bombs and to manufacture them as they travelled the streets."

The British bourgeoisie in particular, like the bourgeoisie in general, comforts itself in good and bad times with the notion that the workers in general, and workers of color in particular, are incapable of the organization, discipline, alertness, intelligence,and flexibility essential to power. Poverty is supposed to exist as an index to the proletariat's stupidity. Just these comforts the British working class youths put to the torch in July. Just these comforts went up in smoke over Toxteth, Moss Side, Southall. Through the use of radios, lookouts, vans, the British working class youths proved their capacity for organization, discipline, alertness. By outflanking the police, they proved their intelligence and flexibility. In their July days, the British working class youths proved their capacity for power. The British bourgeoisie had its feet held to the fire in July. It didn't like the smell.

Margaret Thatcher declared that the youths were motivated by simple,naked greed. Right. Spoken like a real Tory. Who would know more about greed, simple and complex, naked and well dressed, than the representative of the British bourgeoisie? Thatcher stated, "Most of us did not think that these things could happen in our country." Right. Spoken like a real bourgeois. Who would know less about real conditions in Britain than the representative of British capital? Thatcher asserted, "There are many poor societies which are scrupulously honorable in everything they do and would not sink to some of the things we have seen in Merseyside in recent days." Right. Spoken like a real imperialist. Here once and for all is the legacy of the British empire and the future of Britain— a scrupulously poor and scrupulously passive society. Thatcher claimed, "The veneer of civilization is very thin." Right. Spoken like a real Rhodesian. Who would know more about the veneer of civilization than the representative of a capitalism that has spent two centuries destroying those civilizations, poor and rich, honorable and not, encountered in the pursuit of sterling? That has papered over that destruction with the veneer of democracy, free markets, Christianity, parliament? All in all, Thatcher speaks like a real Romanoff.

IV. Look around my little friend
Jubilation in the land
Freddy get ready
Rock steady
When Johnny strikes up the band

The British bourgeoisie points with pride to its parliament. "It's our substitute for civil war" tourists are told. But sooner or later history accepts no substitutes. So while inside parliament a Labor member denounced Thatcher with"You stupid woman! You stupid woman!", outside a youth carrying a twelve-inch knife scaled the wall around Commons. Opportunity knocks on doors, but civil war climbs fences. The youth evaded one guard and seized another before being overpowered. As he was led away the youth shouted, "Let me at her. I want Maggie Thatcher!" The July days were just that type of intrusion of class revolt upon the spectacular paltriness of British capitalism. The transition from intrusion to revolution begins with a program that includes:

1. Full unrestricted immigration, residency, and citizenship in Britain.

2. Formation of committees of expropriation, to be known as "Hundred Percenters," to seize and administer any operation reducing employment, production, or services.

3. Creation of workers guards to repulse all official and unofficial attacks upon people of color.

4. Immediate dissolution of the House of Lords. Confiscation of all peer property for the amusement and welfare of the general population.

5. Abolition of the monarchy. Confiscation of its property. Arrest and trial of its members in accordance with the fundamental law of bourgeois justice: "First we give them a fair trial, then we hang them."

Statistics have described the miserableness of British capitalism but they only describe it. The task that confronts the working class youth is its overthrow.

S. Artesian
October 19,1981

*"Johnny Strikes Up the Band" by Warren Zevon, 19?8.
**"God Save the Queen" by Cook, Jones, Matlock and Rotten, 1977 Ah yes... these are those days....... ____

Monday, Monday

2011-08-06T15:36:00.003-04:00

Can't trust that day, sang some group whose name escapes me-- the advantage of growing older I guess.

Anyway, now that Standard and Poor's has pointed out that the standard for credit-worthiness is making almost everybody poorer, Monday should be a very interesting day.

Don't worry. Confusion and inertia will offset the impulse to panic. Just in case, however, emergency scaffolding should be erected around all investment bank buildings, insurance company offices, hedge fund locations to protect the innocent tourists, and back office workers, from the falling bodies should traders, analysts, advisers, entrepreneurs, arbitragers, specialists, market-makers, mutual fund managers mistake the windows for the stairs or the elevators.

Too big to fail? Guess not, motherfuckers. Now what? Now what are you going to do as the global purchasing managers' index hovers between "no growth and correction," and the Fed can't keep international trade afloat through open-ended currency swap lines with Brazil, Japan, Switzerland, Britain, the EU, like it did last time around?

Now what, when turning the national treasury into the "bad bank" in order to protect the private banking system has done its job, that is to say bankrupting the national treasury, which of course, is just another iteration of "privatization," of the invisible hand at work?\

Now what, when the non-performing residential and commercial real estate loans haven't been, and can't be, flushed from the system as that would mean that the private banking system would have to acknowledge its effective bankruptcy?

Well we know what. The attacks on labor, and on immigrant labor in particular will intensify. The vindictive restrictions on female reproductive health care will continue. Tomorrow will be just like yesterday, only worse. Your tomorrow, which is part of the capital's yesterday, will be worse.

But the government? The US government, with its bicameral legislature of spoiled frat boys, and ignorant cheerleaders; with its executive who no matter how smart he thinks he is, is historically, has to be, historically, an idiot... That's on the way down, too, along with its credit-worthiness.

Yeah, yeah, some king offered his kingdom for a horse. But here we have the bourgeoisie trying to find a cowboy, a man on horseback, the man to turn back, to suppress, class struggle, class revolution before it even starts.

S. Artesian

August 6, 2011

OF FORESTS AND TREES, 2

2011-08-02T07:19:00.006-04:00

OF FOREST AND TREES

Let's review:

1. Marx's contribution to the critique of capital, of capitalism, of industrial capitalism is its historicism, its material historicity. The critique begins, ends, and is at all points in between configured by the realization that the substance of human history is the social organization of labor. Capitalism begins, ends, and is at all points configured around the opposition of the material conditions of labor—those instruments of production—to labor itself; the opposition of the labor process to the specific capitalist expression of that process. Labor opposes its organization of wage-labor as it reproduces it. Wage-labor exists as the loss, the devaluation of labor through its exchange as, and for, the commodity.

Each, capital and wage-labor, exists only in the organization of the other. Each can reproduce itself only in the reproduction of both. Yet, capital in order to accumulate must also and always expel labor-power from the production process.

2. In contra-distinction to Marx's critique of the expanding reproduction of this identity in opposition of the labor process and its doppelganger—accumulation—Marx's theory of ground- rent, in its first presentations, is formed in and around the notion of "demand" and demand's body double, scarcity.

Ground-rent is what it is not only because capital is what it is; not only because private property is what it is; not only because labor-power is what it is. Ground-rent is what it is because, in the first, last and all points between analysis, nature is what it is, finite and determined.

While Marx argues that ground-rent is the result of capital's encounter with feudal property in land, the feudal organization of property becomes, and sustains itself, as an obstacle in the path of accumulation because land is limited; the output from the "instrument of production"—agricultural commodities from cultivated land—cannot be multiplied "at will" as it can be, according to Marx, in industry.

3. Still, the news from Marx's economic manuscripts that become Theories of Surplus Value, part 2 isn't all bad: in grappling with absolute and differential rent, Marx is wrestling with that "wave/particle," that certain quantum of absolute uncertainty that every capitalist grasps at-- excess profit, profit above the average. This becomes a thread within volume 3 of Capital.

The determination of value by labor time, the materialization of surplus-value as profit is manifested in this iteration as the distribution, allocation of the total available profit among the capitalists who personify in all its miserable glory and glorious misery of the reproduction of capital.

4. For Marx, the question that starts him down this road is: how can lands of unequal fertility yield agricultural commodities of equal prices when the law of value determines prices and governs the exchange of commodities?

We could answer: "The market does that through competition, through the prices of production." Actually, the market does that through adjustment to the prices of production. The market does that through the divergence of price from value, where the equal prices represent a transfer of value among producers. The market in all its divergences, its manipulations, its "spreads," its arbitrage; in all its scams, swindles, manipulations, panics, manias, booms, busts, fear, greed, swings, shortages and overproductions, does just that—transfers value from the least efficient to the most efficient, most necessary capitals.

5. But Marx isn't buying any of that; not for agricultural commodities. There he is convinced that because of increasing demand, because of the scarcity of land of sufficient fertility, prices of production and market adjustment to the prices of production do not govern.

And Marx is not buying it for the commodities of the "extractive" capitals [mining], and not even for processing capitals [grain mills] which can utilize "natural" advantages such as access to the power of falling water to drive the mill. Ground-rent here begins where there is ownership of a valueless force of nature, where that natural condition has been captured and presented as private property, packaged in the as if condition; as if it were a capital.

Rent becomes a mechanism of "regressive redistribution." It is tribute, penalty, fine, and/or fee, embodied in price but deducted from the profit of the most productive, efficient producers both within a specific sector and among all sectors. Rent accrues without purchase, without valorisation, without amplifying production, without the accumulation of the means of production as capital requiring living labor to sustain its fragile, expropriated heartbeat.

Rent lives, if it can be said to live at all, as the incubus and succubus of history, that weight of all dead generations, of all dying modes of production, on the brains of the living. I know it sure has been weighing on my brain like a nightmare for the last two years.

6. But the news isn't all bad. Within ground-rent, money-mediated ground rent, there is the essential ambiguity of capitalism, that ambiguity between private property in the means of production without which capital can never come into being, can never exist as a condition of labor to which labor must present itself as labor-power, as wage-labor; without which capital can never aggrandize increasing portions of social time; without which capital can never overwhelm the limits of the artisan and handicraft production and the opposition the socialization of labor, of accumulated social labor that threatens capital immanently and imminently with the now reduction, now collapse, of profits.

7. The ambiguity of rent is manifested in the ambiguity of capitalist agriculture. Capital pretends there are no limits; capital requires limits. The landlord personifies a social limit but only because the landlord capitalizes—presents as value engendering value—on the "natural" limits of agricultural production. The landlord capitalizes the limits to fertility; the limits to enhanced fertility; the limits to the very existence of land.

These limits can be pushed, extended, even battered by capital but never completely overcome.

The ambiguity exists in that the very actions required for modifying the limits are the differential applications, degrees, and expenditures of capital, thus re-establishing the limits to agriculture [and extraction] and re-posing the original question: how is it that lands of different, unequal fertilities yield agricultural commodities of the same price? How is it that lodes, veins, ores, reservoirs of different "richness," intensity, ease of access yield commodities of the same price? Or to put it in more familiar terms, what sets the market, other than fear and greed that is? More correctly, what makes fear and greed the manifestation and mediation of value?

Let's Continue

1.1 This question, "how do lands, areas, territories of different fertility, productivity yield commodities of a single [or average] price," parallels the general question that Marx engages throughout volume 3 of Capital: "how do the particular, singular, private, individual expropriations of surplus-value, become, more or less, a general [or average] profit, the average rate of profit?"

How do the individual values, generated, extracted through capitals of different compositions, where greater labor time means greater value, become transformed into an average, a social average where the accrual of value conforms to the socially necessary time of reproduction of… not just any particular commodity, but to the totality of capitalist production relations?

And the answer is…. in the deviations of prices from values.

In this regard, Marx's analysis of ground-rent undergoes a transformation, or more correctly, undergoes development and enhancement, that in the very midst of its own historical inaccuracy [as I described it in Part 1], provides us with a mechanism, which by means of its immanent critique gives us more than a clue to that process, that totality of reproduction.

We move with Marx from ground-rent, to rent; from ground-rent being the mechanism by which agricultural commodities are sold at their values above their prices-of-production, to rent as the description for any and all accumulations of "excess profit."

1.2 In his opening remarks on rent in volume 3, Marx warns against "three major errors that obscure the analysis of ground-rent."

[1] The confusion between the various forms of rent that correspond to different levels of development of the social production process…

[2]All ground-rent is surplus-value, the product of surplus labour. In its more undeveloped form, rent in kind, it is still a direct surplus product. Hence the error that the rent corresponding to the capitalist mode of production, which is always an excess over and above profit, i.e. over and above a portion of commodity value that itself consists of surplus-value (surplus labour)—that this particular and specific component of surplus-value can be explained simply by explaining the general conditions of existence for surplus-value and profit. [Penguin, p.772-773]

OK, so far? So far, OK, but then Marx follows up with this:

[3] A particular peculiarity that arises with the economic valorization of landed property, that is the development of ground-rent, is that its amount is in no way determined by the action of its recipient, but rather by a development of social labor that is independent of him… This is why something that is common to all branches of production and their products on the basis of commodity production, and to capitalist production in its entirety, is easily conceived as a peculiar property of rent (and of the production of agriculture in general).

The level of ground-rent (and with it the value of land) rises in the course of social development, as a result of overall social labour. Not only do the market and the demand for agricultural products grow, but the demand for land itself also grows directly, since it is a condition of production [emphasis added] competed for by all possible branches of business, including non-agricultural ones…

In actual fact, what we have here is not a phenomenon peculiar to agriculture and its products. The same applies rather to all other branches of production and products, on the basis of commodity production and its absolute form, capitalist production. [p. 775-776]

Major error #3 seems to run head-on into major error #2.

Marx has in mind here the relationship of agricultural products to other commodities as values. The mere fact that agricultural commodities are produced as, and for, accumulated, and the accumulation of, values; that agricultural production requires production not for subsistence of direct producers but for exchange with other "mediated" products is the condition of production for all possible branches of production.

Well then, if that—private ownership of a source, means, etc—is the condition of production common to all, then the idiosyncratic nature of ground-rent can't be quite that idiosyncratic at all. If that is the common condition of production for capitalism which is, as Marx describes it in his economic manuscripts, a self-mediating relation of production, reproducing itself at and in every moment of its circuit of realization, then ground-rent is part of the reproduction and the distribution of the total social surplus and not some vestigial appendage, clinging to the sacrum corpus of capital [see above remark about immanent critique].

1.3 Before proceeding, or better yet, in order to proceed in the analysis of rent, we need to consider Marx's explanation of the formation of the general, average, rate of profit. And here again we meet up with a more than just a bit of ambiguity. Marx initially builds a case for particular rates of profit, specific to the individual sectors, if not units, of production. He states:

(2)We have shown that, even assuming the same degree of the exploitation of labour, and ignoring all modifications introduced by the credit system, all mutual swindling and cheating among the capitalists themselves and all favourable selections of the market, rates of profit can be very different according to whether raw materials are purchased cheaply or less cheaply, with more or less specialist knowledge; according to whether the overall arrangement of the production process in its various stages is more or less satisfactory, with wastage of material avoided, management and supervision simple and effective, etc. In short, given the surplus-value that accrues to a certain variable capital, it still depends very much on the business acumen of the individual… [Penguin, p. 235].

That's part of the case, but not a particularly strong part. Or it's a strong part expressed weakly. The strong part is that rates of profit differ based on the internal ratio of the components of production, living and accumulated, in each sector…provided all surplus labor time is absorbed efficiently into the production process and converted into the maximum surplus value, and that surplus value is realized fully by the exchange of commodities at their values.

Just a few pages later, Marx moves from the particular to the general rate of profit:

We have shown, therefore, that in different branches of industry unequal profit rates prevail, corresponding to the different organic compositions of capitals, and, within the indicated limits, corresponding also to their different turnover times; so that at a given rate of surplus-value it is only capitals of the same organic composition—assuming equal turnover times—that the law holds good, as a general tendency that profits stand in direct proportion to the amount of capital, and that capitals of equal size yield equal profits in the same period of time. The above argument is true on the same basis as our whole investigation so far: that commodities are sold at their values. There is no doubt, however, that in actual fact…no such variation in the average rate of profit exists between different branches of industry, and it could not exist without abolishing the entire system of capitalist production. The theory of value thus appears incompatible with the actual phenomena of production, and it might seem that we must abandon all hope of understanding these phenomena. [Penguin, p.252]

Marx does not demonstrate this using the actual data from actual industries and sectors of capitalist production. Again, as is the case with rent, this is not a conclusion drawn from history; it is a conclusion based on the necessity of the logical exclusion of the conflicting possibilities.

And again again, what is the core to that logic?

It has emerged from Part One of this volume that cost prices are the same for the products of different spheres of production if equal portions of capital are advanced in their production, no matter how different the organic composition of these capitals might be [bold added] . In the cost price, the distinction between variable and constant capital is abolished, as far as the capitalist is concerned. [Penguin, p. 253]

This is an iteration of the principle of commodity exchange that suffuses all of volume 3 of Capital, and Theories of Surplus Value, including the analysis of rent, the critique of Rodbertus and Ricardo, where Marx introduces the concepts of cost-price [although his definition of "cost-price" in TSV is very different from that in volume 3], average prices, and average profit.

A few pages on in volume 3, Marx gives us another iteration of this principle:

…to transform profits into mere portions of surplus-value that are distributed not in proportion to the surplus value that is created in each particular sphere of production, but rather in proportion to the amount of capital applied in each of the spheres, so that equal amounts of capital, no matter how they are composed, receive equal shares [aliquot parts] of the totality of surplus-value produced by the total social capital. [Penguin, p. 274]

Capitals of equal size must yield equal profits regardless of the relation between the living and dead components of the capital.

The whole difficulty arises from the fact that commodities are not exchanged simply as commodities, but as the products of capitals, which claim shares in the total mass of surplus-value according to their size, equal shares for equal size. [Penguin, p. 275].

We have moved with Marx from the production and exchange of commodities, to the reproduction of capitals, to the distribution of the total social capital through the arenas of commodity production.

The law of value governs the exchange of commodities at their prices of production—cost of capital plus the average rate of profit. The law of value regulates the exchange of commodities at the prices of production. The law of value is expressed, manifested socially as the law governing reproduction of capitals through the variance of the prices of production from individual values.

The "objective" basis for Marx's affirmation of the general rate of profit is that all value is the transmogrification of labor. Therefore, the components, living or accumulated, fixed or circulating of the value of a commodity are, in the moments of exchange of all commodities, transparent, obscured, invisible.

The "subjective" basis for the general rate of profit is that just as the make-up of value is "invisible" to itself, the components of value are immaterial to the bourgeoisie--when it comes to selling the product of labor, as opposed to buying the ability to labor--because of what the bourgeoisie cannot see. The capitalist produces, or rather employs others to produce, because he or she needs to accumulate surplus-value, but the capitalist cannot comprehend, much less admit that wage-labor is the source of surplus-value, the source of the profit realized in the process of exchange. To do that would be to acknowledge that surplus labor-time is hidden in the even dispersal of the working day, that unpaid labor is hidden in the uniform distribution of the wage—that commodities are exchanged in proportion to the labor-time embedded in them save for the exchange of capital with wage-labor.

The capitalist cannot see the surplus-value extracted in production. The capitalist cannot measure the surplus-value embedded in the commodities. He, or she, can't see what he or she doesn't pay for. But the capitalist does know cost. Beauty is in the eye of the beholder, but under the gaze of the accountant, all the components of production, living and dead, are equally ugly. They all cost. In the eyes of the capitalist, what's purchased below cost is good-looking, but what's sold above cost is simply stunning.

Given the congenital deficiency in depth-perception of the capitalist, he, or she, makes do, compensates, adjusts, and calculates a "cost-plus" number for his or her commodities. The capitalist adds an "average rate of profit," a percentage of the cost-price, to the cost-price of the commodities he or she brings to market.

It is, in the "normal" course of capitalist events, through the exchange of commodities at their production prices, that value is distributed among the capitals, and that capital as a whole is reproduced.

For Marx, the establishment of the general rate of profit is not the calculation of an arithmetic mean, a simple, a worthless calculation that exists always in the abstract and never in the concrete. Despite all Marx writes about particular rates of profit, about the lower rate of profit common to railroads, the general rate of profit is, if not the governing principle, at least the proxy of the governing principle, at least a compelling principle of accumulation. Competition not only creates the general rate of profit, but it is the competition to achieve the general rate of profit that drives capitalism up against the inside of the cage of its own making.

Each/all capitalists must reduce the "ordinary" cost-prices, the costs of production, of his/her/their commodities in order to market those commodities at prices of production that appear to be an extraordinary gain. All capitalists will expel labor-power disproportionately from the production process in order to substitute machinery which reduces, and only to the extent it reduces, the costs of production. Each/all capitalists think they can outrun, outpace, outmaneuver, every/all capitalists when in fact every/all capitalists exist as shadows to each other, and have about the same chance of outracing the general rate of profit as they do of outracing their own, and each other's, shadows.

So we get to that space between the rock and the hard place of capital—between the need to reduce cost-price in an attempt to garner an extra shred of value from the total available social value and the result of that very reduction, which is of course, the decline in the general rate of profit. Capital, to reduce the cost-price, will introduce greater quantities of fixed assets to the degree that this displacement of labor reduces the cost-price. This is manifested in the labor process by the expulsion of labor power. All of the fixed capital must be engaged to expel the labor power to the level that actually reduces the cost-price. But only a fraction, a portion, of the fixed capital transfers, recuperates its own cost in the valorization process. So capital is involved in a continuous process where accumulation creates devaluation; where achieving a general rate of profit requires acting to aggrandize an excess profit; and where price is, if not the only mechanism, certainly the most important and developed one.

Any and all capitals, to achieve the general rate of profit must furiously struggle for increments of profit above the general rate. Any and all capitals in so endeavoring to reduce its cost price will reduce its price of production. The arbitrage, the lag, the differential between the individual producer's price of production and the general price of production constitutes an aggrandizement of excess or surplus profit.

The individual aggrandizement, the arbitrage, draws all of capital into the struggle to reduce cost prices as capital always and everywhere migrates in the very existence and action of the arbitrage itself. Thus the struggle for excess profit, necessary to achieve the general rate of profit reduces the general, average, social rate of profit.

Capital, having no existence without valorization, exists only in lock-step with devaluation.

"We Must Go On"—Kane, Alien

3.1 In chapter 38, Part 6, Volume 3 of Capital, Marx applies his theory of rent to capitalist production, contrasting the costs and profits of factories powered by waterfalls with those of factories powered by steam-engines:

To demonstrate the general character of this form of ground-rent, we assume that the factories in a country are powered predominantly by steam-engines, but a certain minority by natural waterfalls instead. We assume the production price in the branches of industry first mentioned to be 115 for a quantity of commodities for which a capital of 100 is consumed. The 15 per cent profit is calculated not just on the consumed capital of 100 but on the total capital that is applied in the production of this commodity value. This production price, as we explained, earlier, is determined not by the individual cost price of any one industrialist producing by himself, but rather by the price that the commodity costs on average under the average conditions for capital in that whole sphere of production. It is in fact the market price of production; the average market price as distinct from its oscillation. It is always in the form of the market price and moreover in the form of the governing market price or the market price of production that the nature of commodity value presents itself, its character being determined not by the labour-time needed by a certain individual producer to produce a certain quantity of a commodity, or a certain number of individual commodities, but by the socially necessary labour-time…

…we shall further assume that the cost price in those factories that are driven by water-power comes to only 90, instead of 100. Since the production price of the great mass of goods that governs the market is 115, with a profit of 15 percent, the factories that drive their machines with water-power will also sell at 115, i.e. at the market price as governed by the average price. Their profit will amount to 25 instead of 15; the governing price of production enables them to make a surplus profit of 10 percent, not because they sell their commodities above the price of production but because they sell them at this price, because their commodities are produced, or their capital functions, under exceptionally favourable conditions, conditions that stand above the average level prevailing in this sphere.

Two things are immediately evident here.

Firstly,…This surplus profit is thus similarly equal to the difference between the individual price of production of these favoured producers and the general social price of production in the sphere of production as a whole, which is what governs the market. This difference is equal to the excess of the general production price of the commodity over its individual production price. The two governing limits of this excess are on the one hand the individual cost price and hence the individual production price, and on the other the general production price. The value of the commodities produced by water-power is lower because a smaller amount of labour is required for their production, i.e. less labour enters in the objectified form, as a portion of constant capital. The labour here is more productive, its individual productivity being greater than that of the labor employed. Its greater productivity is expressed in the way that it needs a smaller quantity of constant capital to produce the same amount of commodities, a smaller quantity of objectified labour than others; and a smaller quantity of living labor as well, since the water wheel does not need to be heated. The greater individual productivity of labor applied reduces the value of the commodity and its cost price and therefore its price of production as well. For the industrialist, this presents itself in the following way, that the cost price of the commodity for him is less. He has less objectified labour to pay for, and similarly less wages for less living labour applied. His cost price is 90 instead of 100. And so his individual production price is only 103 1/2 instead of 115 (100:115=90:103 1/2). The difference between his individual production price and the general one is determined by the difference between his individual cost price and the general one. This is one of the magnitudes that set limits to his surplus profit. The other is the general price of production, in which the general rate of profit is one of the governing factors. If coal becomes cheaper, the difference between his individual cost price and the general one declines, and so therefore does his surplus profit. If he had to sell the commodity at its individual value, or at the production price determined by this individual value, the difference would disappear….

Since one limit to this surplus profit is the level of the general price of production, and the general rate of profit is a factor of this, the surplus profit can arise only from the difference between the general and individual production prices, and hence from the difference between the individual and the general rate of profit….

Secondly, the surplus profit of the manufacturer who uses natural water-power as his motive force instead of steam has not so far been distinguished in any way from all other surplus profit. All normal surplus profit…is determined by the difference between the individual production price of the commodities produced by this particular capital and the general production price which governs the market prices of commodities for capital right across this sphere of production…

But now comes the difference.

To what circumstances does the manufacturer in the present case owe his surplus profit…

In the first instance to a natural force, the motive force of water-power which is provided by nature itself and is not itself the product of labour…It is a natural agent of production, and no labour goes into creating it.

Marx then considers the case where an improvement in the methods of work, the scale of production, productivity, etc. aggrandizes a surplus profit:

Conversely. The simple application of natural forces in industry may affect the level of the general rate of profit, through the amount of labour required to produce the necessary means of subsistence. But it does not in and of itself create any divergence from the general rate of profit, and it is precisely this that we are dealing with now…The reduction in the cost price and the surplus profit which flows from it, arise here from the manner and form in which the capital is invested. They arise either from its concentration in exceptionally large amounts in a single hand—something that is cancelled out as soon as equally large amounts of capital are employed in the average case—or from the circumstance that capital of a particular size function in a particularly productive way—and this ceases to operate as soon as the exceptional manner of production becomes universal, or is overtaken by one still more advanced.

The reason for the surplus profit in this case is thus inherent in the capital itself (including the labor that it sets in motion)…and nothing inherently prevents all capital in the same sphere of production from being invested in the same way. Competition between capitals…tends to cancel out these distinctions more and more…Things take a different form with the surplus profit of the manufacturer who makes use of the waterfall. The increased productivity of the labour he applies arises neither from the capital and labour themselves nor from the simple application of a natural force distinct from capital and labour but incorporated into capital. It arises from the greater natural productivity of a labour linked with the use of a natural force, but a natural force that is not available of all capital in the same sphere of production…What is used is rather a monopolizable natural force which…is available only to those who have at their disposal particular pieces of the earth's surface… The condition is to be found in nature only at certain places, and where it is not found it cannot be produced by a particular capital outlay…Those manufacturers who possess waterfalls exclude those who do not possess them from employing his natural force because land is limited, and still more so land endowed with water-power…Possession of this natural force forms a monopoly in the hands of it owner, a condition of higher productivity for the capital invested, which cannot be produced by capital's own production process; the natural force that can be monopolized in this way is always chained to the earth. A natural force of this kind does not belong to the general conditions of production in question nor to those of its conditions that are generally reproducible. [Marx, volume 3, Penguin 1981 p.779-785]

So Marx tells us the surplus profit is the product of the divergence between the individual price of production and the general social price of production. This leads to a similar divergence between the individual rate of profit and the general, social, average rate of profit. In this facet, there is no distinction between the surplus profits accruing, or more properly-- distributed by the market-- to the water-wheel owner, and surplus profit that is distributed to the capitalist who deploys any technology of greater efficiency in production.

The difference comes in that the advantage accruing to the water wheel owner is not the product of human social labor. No matter how powerfully the water flows, it is not the objectification of labor. It is not labor flowing as a value-magnitude.

The commodities produced under these conditions do not enter the market, exist in the market, at their, as their prices of production, but claim, suck in, portions of the value embedded in other commodities by exchanging at those other commodities prices of production. Unlike the [mythological] competition of all commodities with all other commodities, the natural, restricted, non-reproducible condition of the production of these commodities does not permit the equalization of profit rates.

The water has no value. Rent, in fact, is an effort, an assignment, a "proxy" of value assigned to such resources held as private property, which have yet to engage social labor. Once assigned, such rent appears as a cost, as a deduction from, a transfer of surplus value, through the mediation of the prices of production, from production to ownership.

If private property in the social means of subsistence and production is essential to the "sucking in" [Marx, "Results of the Immediate Process of Production," in Value, Studies by Marx, translated by Albert Dragstedt, New Park Publications, London 1976] of labor as wage-labor, and the capitalist's aggrandizement of surplus value, then private property in land, water, minerals, electromagnetic spectrum etc is the Nosferatu of capital, the shadow on the bourgeoisie's wall, the non-image in the capitalist's mirror.

Marx then takes us back to his earlier discussions of rent in Theories of Surplus Value.

Waterfalls are limited. They cannot be reproduced at will. Natural resources are limited. They are monopolized. They are owned. The owner, the class of owners has no need, no social compulsion to valorize, to make an asset, capital, of his or her ownership.

First, once again Marx has abstracted rent as an economic process, from the concrete history of the conditions surrounding, determining the growth of capitalism. That concrete history shows us that the use of water-mills, water-wheels, natural water power, is indeed restricted. It is restricted by natural occurrence, but as is the case in every natural occurrence, the restriction is embodied and embodies, is preserved and preserves, in the low level of the means of production as a social force. More exactly, the restriction is embodied in, and embodies, the poor development of social labor. This "natural advantage" is nothing other than the reflection of the scattered, fragmented, individualized, atomized level of social production, that is to say the diminished, impoverished, productivity of labor.

Marx's description of the labor consumed at the watermill as "more productive" is curious, puzzling, confusing, right/wrong. We know what productive labor is—it is labor that increases the wealth of the bourgeoisie. It is labor that expands capital. It is labor that valorizes value. It is labor that yields a surplus value. That is the productivity of labor in the valorization process.

We also know that labor has that old "two-fold" character under capitalism. What goes on in the valorization process does not stay in the valorization process. It happens also in the labor process. We know that productive labor is labor that increases the output of product with no increase, or relatively less, consumption of labor power. We know that the increase in output with less consumption of labor power usually requires the expulsion of labor power from production through the substitution of machinery, through applications of technology.

We know that productive labor is labor that reduces the individual cost price, and prices of production, of the commodities. We know that productive labor is labor that animates, absorbs greater capital values in sum, in the labor process, while reducing new values in particular and in ratio to that sum.

We know that the labor process under capitalism is an isomeric process, where the same process exists simultaneously in different states, different conditions, with those conditions bleeding into each other, with the products of the process embodying in their unitary physical existence the collective, social, condition of production.

We know that the fixed assets amplify the productivity of labor, reducing the cost price, increasing the relation of surplus-value to the necessary value of wage replacement. We know that the fixed assets participate fully in the labor process of production, but only marginally in the valorization process.

We know that the reduction in cost-price, in prices of production, entails—not always, not immediately, but always inevitably—more intense exploitation of labor, increased aggrandizement of relative surplus value as the value necessary to replace the wages of wage-labor is reduced in time, in proportion to the time of production.

We know that it is just this increased exploitation that sets the state for the formation of a general rate of profit.

Historically, we should know that water-powered production, of mills, looms, proved incapable of matching steam-power in any of these areas so critical to expanded accumulation. Between 1784 and 1836 in Britain, the application of steam to cotton manufacturing reduced unit processing costs of cotton cloth by eighty percent in comparison to the costs of water-powered production, while vastly expanding output, and increasing profitability. That is the productivity of labor under capitalism.

We should also know that the history of capitalism, in sum, embodies the inadequacy of "natural sources" in meeting both the needs of production and the needs of capital accumulation.

Capitalism is a testament to the diminution of "natural advantage.

It is the inability of the "rental mode" to achieve these three interlocked measures of accumulation-- reduced costs, expanded output, increased profitability-- that makes the "natural advantage," "the different fertilities," rent, so immaterial, so trivial to capitalist accumulation. It is precisely the fact that the rental mode cannot satisfy the increasing demand that undermines, rather than reinforces, its hold on social production.

We should also know that if, as Marx says, the more capitalism develops the more important rent becomes, the more surplus-value is transferred as rent, and as such exists outside the mediation of the prices of production, then a general, average, social rate of profit cannot exist. However, the individual, particular struggles to aggrandize excess profit so essential to the formation of the average social rate of profit continues to drive, and wreck, the accumulation of capital.

A Case of Oil—Of Drills and Bits

3.2 The US Department of Energy through its Energy Information Agency [EIA] collects, analyzes, and publishes the operating and financial performance of the major US energy producing companies. The companies reporting the data participate in the DOE's Financial Reporting System [FRS].

Over the course of 35 years, the individual companies participating in the FRS have come and gone, merged, been acquired, integrated, divested, but the specific weight, the gravity of the FRS companies in relation to all US industrial corporations, and the US economy in general has been constant.

Operating revenues of the FRS companies generally amount to 10% of operating revenues for the Fortune 500 largest corporations. In 2005 and 2006, FRS companies' revenues measured 22% of the revenues for all US manufacturing companies. In 2005, net income of the FRS companies equaled approximately 30% of total manufacturing income in the US. That ratio measured 28% the following year.

Perhaps most importantly, the assets of the FRS companies represent a more than slightly overweight portion of the total assets of US manufacturing companies.

In 2005, gross property, plant, and equipment [PPE] of the FRS companies was equal to 40% of the gross PPE of all manufacturing companies. The ratio measured 44% the next year. Net PPE [Gross PPE minus accumulated depreciation, depletion, and amortization] measured 48% and 58% of the total for years 2005 and 2006.

The EIA produces an annual review of the FRS companies entitled the Performance Profile of Major Energy Producers, usually within the year following the year under review. The data used here is from the Performance Profiles from the years 1992 to 2007. The annual performance profiles, beginning with the 1993 review, are available in .pdf format from the EIA at: http://www.eia.gov/emeu/finance/histlib.html

3.4 Fueled by the consistent high prices for oil in the years from 1974 to 1985, the FRS companies engaged, actually engorged, themselves in a sizeable expansion of assets. Between 1974 and 1981 alone, the asset base of the FRS companies tripled.

The point of capitalist accumulation is the conversion of those production assets into greater masses of the commodity being produced. Accumulation must always become overproduction. The overproduction of oil as a commodity during the period of overall slower growth after 1979 had to bring down the price of oil, eventually, and with a thud. That thud was 1985, 1986 and beyond.

The dramatic price declines of the mid-1980s which brought the FRS companies up short and down low had dramatic repercussions on the US, and the world's, economy. Petro-dollars which, after 1974 and then again after 1979, had recycled through the US commercial and financial networks, had supported U.S. agriculture, housing construction, Houston, Texas, and Mexico among others. For the Soviet Union, the higher prices had meant harder currency, and greater integration with and vulnerability to the world markets.

After the thud came the divestment, massive divestment, a Grand Destockage [you should pardon my French]. Between 1990 and 1992, the FRS companies reduced exploration and development expenditures by some 30% compared to the previous three year period. The petroleum companies spun off maintenance operations, exploration and development divisions, and reduced, of course, that living component of capital accumulation, human labor. By 1992, direct employment by the FRS companies had declined more than fifty percent to 670,000 persons.

The price collapse was the invisible hand of the market slapping the FRS companies upside the head. Tattooed across the knuckles of both invisible hands and one invisible foot was

"O-V-E-R-P R-O-D-U-C T-I-O-N."

Direct production costs [the actual cost of "lifting" a barrel of oil to the surface] had declined steadily during the ten years ending in 1992. Nevertheless, the return on investment sank lower and lower. The FRS companies' ratio of net income to total assets for the years 1990, 1991, 1992 was measured at 4.7%, 3.3%, and 0.6% respectively. At least, the FRS companies didn't suffer alone. The ratios for the S&P industrial companies measured 4.6%, 2.6%, and 0.6% over the same period. Misery loves companies.

In 1993, the profitability of the FRS companies began to recover as part of the general industrial expansion during the Clinton years. By 1995, net income for the FRS companies had increased for its third straight year. Additions to investments in place [a general measure of capital spending] excluding merger and acquisitions, increased 13.4% over the 1994 level. Direct lifting costs in US onshore and offshore operations declined from $3.68/barrel to $3.47/barrel. Costs in foreign operations declined 6% to $3.40/barrel.

Finding costs, defined as exploration and development costs divided by reserve additions minus net purchase fell 12% in 1994 from the year earlier, and fell another 11% in 1995. Finding coast however are not a reliable index to the efficiency, and success, of exploration and development activity as reserves is an economic, and not a geological, category. Any supply of crude oil only becomes a reserve when it can be produced at an established price, using current technology, at a profit. If ever there was a two sentence summary of the first chapters of Capital, there it is.

Happy days were there again in 1996, with net income from oil and gas production doubling on the year-to-year basis. Return on investment for oil and gas production reached 14.1% in US operations and 12.8% in foreign operations. Lifting costs continued to decline. For the period 1991-1996, lifting costs had declined by more than one-third. Well productivity, the output per active well improved in US offshore and onshore operations by 17%, and in the overseas operations some 41% as the OECD Europe areas, mainly North Sea operations, recorded the highest productivity per active well.

Overall the FRS companies' ratio of net income to total invested capital had improved steadily from 9.7% in 1994 to 11.7% in 1995 to 15.7% in 1996. The ratio for US industrial corporations as a group measured 13.5%, 13.8%, and 14.8% in those same years.

Another record profit was recorded 1997, although a 10% decline in the price of oil did not bode well for the future. Reported the EIA in its Performance Profile of Major Energy Producers, 1997:

On the supply side, crude oil production in 1997 was up 3.5 per cent over 1996 production. The 2.3 million barrel-per-day rise in production was the largest since 1986 and was considerably in excess of the 1.6 million barrel-per-day increment in demand.

Step ups in oil production of 6 percent over 1996 levels by members of OPEC account for most of the added oil supplies. Nearly all OPEC members reported increases with Iraq registering a doubling of production [PP 1997, p.2]

Remember those words, "with Iraq registering a doubling of production."

Still, FRS companies recorded further reduction in lifting and finding costs, and greater success rates in their exploratory drilling. That rate improved from 36% in 1985 to 51% in 1997 despite/because of increased drilling activity. The FRS companies' investments in 3D seismic imaging and horizontal drilling were still paying dividends even as the realization of those investments set the stage for devaluation of the commodity itself.

In 1998, oil prices fell to a 25 year low, with prices breaking below $10 per barrel. Iraq essentially doubled its daily 1997 production [remember those words, too], provoking various expressions of displeasure from the FRS companies. Net income as a percentage of total invested capital for FRS declined to about 6.5%, with the ratio being 12.7% for the US industrial companies.

The year 1998 was the same year that our celebrated "oil-cons" got together to produce their seminal work on the forthcoming American century in the Mideast in general, and the need to get rid of Iraq's Hussein in particular. An uncharitable sort might make a connection between that declining ratio of return on invested capital, Iraq's continued excess production, and the peer-reviewed and sanctioned proposals for regime change.

Anyway, the Saudis responded to the anguished cries of the FRS companies and announced alterations to production quotas and in 1999 oil prices rose from $10 to $24 per barrel. The Saudis, controlling 30-40% of OPEC's production capacity reduced their production, but Iraq actually increased its production.

Another price increase in 2000, driven by prices that averaged $10 per barrel above 1999 levels, brought record high profits for the FRS companies. The companies, in turn, doubled their capital expenditures, except….90% of that expenditure was absorbed in mergers and acquisitions with/of other companies.

Replacement of reserves "through the drill bit"—expanding known reserves from developed fields, again a reflection of the economic, price, determination behind the meaning of reserve, was the second highest in 25 years. The FRS companies replaced 166% of their US onshore production, 136% of US offshore production, and 119% of foreign production.

Most importantly, for only the second time in two decades, 2000 was a year that the profitability of FRS companies exceeded that of US industrial companies. The FRS ratio of net income to total invested capital reached 16.3%, with the S&P industrial recorded a 12.9% rate.

For every year between 2000 and 2007the FRS companies' measure of profitability exceeded that of the S&P Industrial index. Just as importantly, for our consideration of Marx's arguments that capitals of equal size will command equal profits, the ratio of the FRS companies' net earnings to the net earnings of the US industrial corporations began a dramatic climb. This increase in proportion, actually disproportion of total net income approached, but just approached, the disproportion, the overweighting of the FRS companies' accumulated asset base in relation to the total assets of US industry:

FRS net income ratio to S&P Industrial net income, by year

1995, 9%

1996, 14%

1998, 5%

2000, 27%

2002, 18%

2003, 19%

2005, 30%

2007, 28%

3.5 The point of this examination is simply that the recent history of the oil industry, the recent history of oil prices is not a product of the mechanisms of rent, or the actions of renters. There are no increased costs of production by "marginal" "less efficient" operations. On the contrary, costs of production declined steadily.

There is no declining productivity of successive investments in the extractive process. On the contrary, successive applications of capital increased productivity.

There is no inability to satisfy demand. On the contrary, production outpaces consumption.

There is no increase in prices based on the inability to multiply production, or the instruments of production. On the contrary, there is a rapid and dramatic decline in price, the result of improved ability to multiply the assets of production [i.e. improved success rates].

There is no impingement of accumulation by landlords, by national governments, by monopolists. On the contrary there is over-accumulation by the oil producers.

There is, however, a conflict between production and accumulation, between use and value.

There is, however, the conflict between the general rate of profit and the rate of profit specific to the FRS companies at the start of the 1990s.

There is however, the conflict between a general rate of profit and the compulsion of capital to distribute profit according to the size of the capitals engaged in the process of accumulation.

There is, however, the functioning of price as a distributive mechanism to "relieve" that conflict.

There is, however, the divergence between price and value to mitigate overproduction.

There is, in short and in total, the mechanisms, conflicts, dynamics of capital.

4. And It Ends Up… Here

A plague of rent-seekers is seeking quick gains by privatizing the public sector and erecting tollbooths to charge access fees to roads, power plants and other basic infrastructure….

Most wealth in history has been acquired either by armed conquest of the land, or by political insider dealing, such as the great US railroad land giveaways of the mid 19th century. The great American fortunes have been founded by prying land, public enterprises and monopoly rights from the public domain, because that's where the assets are to take. Michael Hudson "Wisconsin Death Trip" http://www.globalresearch.ca/index.php?context=va&aid=23664

Here then, courtesy of Dr. Hudson, is the problem with rent-theorizing. It precludes the recognition, and apprehension, of capitalism as value-producing, as requiring a specific organization of labor for the reproduction of a value. There is no accumulation, no valorization, no reproduction. There is only rent and renters, loot and looters, theft and thieves, rip off artists, swindlers, accruing monopoly rights to "public domain."

There is no Marx, only Proudhon. Property is theft.

Behind Hudson's seemingly deep insight into "rent" is nothing other than the prosaic and pedestrian reality that capitalist production, like all production, has to access and utilize natural resources; that it takes place in a material world where value has no innate existence; that value is not inherent in nature; that in the organization of value-production the "natural" platforms for such value-production must be assigned an "as-if" value; as if the land, the lake, the forest were realized in their inception economically, as social products controlled, owned, by private producers. Without the "as-if" characteristic, the land, the lake, the mine, the forest cannot be circulated in the value of the commodities extracted from the land, the like, the mine, the forest. The private property cannot be exchanged, and without exchange we know property is useless.

Clearly, notions of renter, and rentier, capitalism figure prominently in the work of those theorists of "monopoly capitalism"—where the divergence of prices from values is considered proof that, in its "monopoly" phase, capitalism has overcome, transcended, "abolished" the law of value. Again, missing here is the recognition that capitalism is first and foremost a system of accumulation. Value is, if not nothing today, pretty much nothing tomorrow. The reproduction of value is pretty much everything.

Swindles, looting, theft certainly exist but only phenomenally, as expressions of moments in the organization, and disorganization, of value production. They cannot, as rent cannot, replace valorization. Opposition to renter or rentier capitalism cannot replace opposition to the reproduction of capital.

Accumulation beats the hell out of rent every day of the week, and twice on Sundays.

Now let's move on to something really important, like the struggles in Greece, China, the Philippines, and Egypt.

S.Artesian

Milestones in Due Process

2011-06-21T08:41:00.002-04:00

Supreme Court to Women:

Drop Dead!

Smackdown: Mr. MBS battles Mr. QE2

2011-06-08T21:31:00.005-04:00

Doctor Derivative looked good in the blue and silver spandex leotard he did, this son of New York, this brash, brawling, battling banker. He bowed a bit to the crowd, blew a kiss to a loved one, flexed first one bicep then the other. Jamie Dimon took the measure of his opponent.

The Bearded Bernanke, his green suit with "In God We Trust" stenciled across his chest, his buffed and ripped, botoxed, HGHed pecs struggling against the fabric.

"You," said the Doctor, reaching deep down, below his money belt to bring forth a voice trembling with passion. "You! You......regulator!"

The crowd, ensconced comfortably in the plush chairs if the Atlanta Fed's intensive care unit in its recovery and recuperation wing, came to life.

"Tell him, Jamie! Tell him for all of us!"

"Better yet," came a shout, "Hit him where it hurts!"

The Doctor stared at the Bearded One, wizard of the special purpose vehicle, the Humvee of the Open Ended currency swap.

"And do you have a fear, like I do, that when we look back... these regulations, these capital requirements will be a reason that it took so long that our banks, our credit, our business, and most importantly, job creation started going again?"

The crowd applauded. Men in suits fist bumped.

The Bearded One stammered something about quantitative analysis and regression and....

The crowd knew that The Doctor spoke for all of them, and spoke for more than just all of them in this place, in this time. The Doctor spoke on behalf of all of them not even born yet. The Doctor spoke on behalf of his own yet-to-be-born grandchildren; on behalf of all of their yet-to-be-born grandchildren, who besides having a right to life from the moment that sperm dives head first into that egg, wiggles its ears, and ditches its tail, had the right to grow up to be investment bankers, financial planners, hedge-fund managers; had the right to wear suits without socks; had the right to summer in the Hamptons, live in Greenwich.

"Do you think," continued Doctor Derivative, "and do you fear as I do when I look ahead, that my grandchildren, our grandchildren, the grandchildren of Bears and Stearns, of brothers Lehman"-- the Doctor crossed himself-- "may they rest in peace," will never know the joy of taking home a 25 million dollar bonus for stripping the assets out of an overdeveloped industrial conglomerate? Do you not fear, or do you just not think of the deprivation inflicted on our grandchildren if they can no longer sell junk to our municipal governments and their pension plans? Do you ever wake up in the middle of the night, covered in sweat, as I do, trembling at the prospects of our grandchildren growing up not knowing the meaning of the word....arbitrage?"

The crowd roared its approval. "Break his bearded pin-head," shouted Richard Fuld.

"I ask you, sir. Where is your patriotism, your gratitude to we brave investment bankers who have given new meaning, new currency, to those words inscribed on the Statue of Liberty, by giving this great country, and more than just this country, new and future generations of poor, of huddled masses; turning whole communities, nay, entire cities into wretched refuse; who sent you millions of new homeless, with millions more to come, tempest tossed and underwater, as we turned out the lights and kicked them out the door?"

As the Doctor spoke, tears formed in his eyes. "Have you no gratitude, sir? Have you no decency? Have you no appreciation for those of us who make America a dream coming true for those of us doing what we do best: separating fools from their money like the SS separated people from the gold fillings in their teeth?"

The Doctor nodded in the direction of his tag-team partner, Dangerous Deutsche Bank.

"I ask you, one more time sir. What about the jobs we create in this noble endeavor? Do you expect our grandchildren to actually work.

Suddenly, from the back of the room an usher strode toward the ring, her heels clacking on the parquet floor.

"Hey asshole," she said addressing the Doctor directly and buy his given name, "How many fucking jobs did you destroy between 2008 and 2010 with your leveraged bullshit?"

June 8, 2011

Address all comments to sartesian@earthlink.net

Putting the MF in IMF

2011-05-16T22:33:00.002-04:00

At the same time that the finance ministers of the countries of the European Union were reviewing the proposed IMF-EU e78 billion bailout of Portugal, Judge Melissa Jackson in New York City ruled against releasing Dominique Strauss-Kahn on $1 million bail after he was formally charged charged with attempted rape and sexual assault.

Strauss-Kahn, forgetting that his position at the IMF in no way qualified him for the special treatment afforded to star athletes, film directors, and regular cops, thought he could, with impunity, do to an individual female worker what he had been doing, what he had been hired to do, to entire countries, to millions of people regardless of gender.

The Socialist Party of France, which had looked to Strauss-Kahn as their best hope of returning to the Elysee Palace, reeled in shock and despair at the arrest of Strauss-Kahn. "A banker, and a rapist... he was the most qualified, the most perfect candidate to represent our great country, our great past, our great future," said an official of the party who did not wish to be identified. "Where will we find another man of such stature, embodying everything social democracy stands for now? Alors, dites-moi, monsieur, savez-vous si Kobe Bryant parle français?"

Meanwhile, Roman Polanski has offered to run as a proxy for Strauss-Kahn and proudly carry the banner of social democracy-- bread, roses, and debt bondage-- in the upcoming election.

Strauss-Kahn's attorney intends to conduct a two-pronged defense of the chief MFer. One prong will be to call a number of outstanding personalities as character witnesses for his client. Rumor is that leading off that parade will be OJ Simpson [shackled and accompanied by his state-paid bodyguards] with the ghost of Ted Kennedy to testify next. Mr. Kennedy will communicate by rapping on the defense table.

The second element in the defense strategy is to blame the entire incident on stress, overwork, lack of sleep, and stimulant abuse combining to cause Strauss-Kahn to mistake the female employee for an indebted country. Said the attorney, "In a terrible case of mistaken identity brought on by the long hours Strauss-Kahn has been working to alleviate the world's problems, Dominique confused the female employee with Greece. Or Ireland. Or Portugal. Or maybe Latvia. Or Hungary."

Facets of Value

2011-05-16T17:58:00.002-04:00

I. In his preface to the first edition of Capital, Volume 1, Marx writes that this work is the continuation of his work in A Contribution to the Critique of Political Economy, published 1859. Marx states:

The substance of that earlier work is summarized in the first three chapters of this volume. This is done not merely for the sake of connection and completeness. The presentation of the subject matter is improved. As far as circumstances in any way permit, many points only hinted at in the earlier book are here worked out more fully, whilst, conversely, points worked out fully there are only touched upon in this volume.

Of course, it is these three chapters on commodities, exchange, and money that constitute not the core, but the entry, the vector to the core of Marx's critique which is that capital is a historical relation of production, of property to labor; that value is the expropriation of the powers of labor.

Marx advises the reader that the exploration of value will present the greatest challenge, and then Marx proceeds to give the reader the key to meeting that challenge. He identifies the commodity as the commodity form of the product of labor. The value form of the commodity is labor in commodity form.

Marx assumes that the reader will be willing to struggle through the discussion of the value forms in order to learn something new. In this, Marx was displaying uncharacteristic optimism.

The wealth of those societies in which the capitalist mode of production prevails, presents itself as ―an immense accumulation of commodities,...

The above, the opening sentence of chapter 1, might just be an understatement. It, the wealth of the capitalist mode of production is more than an immense accumulation of commodities. It is a universe of commodities. It is the commodity as the universe. Both product and its means of production are at one and the same time expressions of each other, and each others relation to labor, and thereby, the expression of each others relations to all commodities. Both, all can be exchanged for the other, for an other, for all others. Exchange mediates the expression, the materialization, the realization, the accumulation, and the pocketing of value. Exchange then becomes the purpose of production.

Capital begins where value commands the labor of others. The commodity begins where its production is of no use, satisfies no direct need of the producer, but rather is produced for exchange. Capital begins where labor itself is not for the use of the laborer, satisfies no direct need of the producer, has no value for the laborer save its value in exchange for the means of its own sustenance or an equivalent thereof. Capital expands its reproduction, accumulates, as value commanding the labor of others.

Capitalist production, capitalist organization, ownership of the means of production is measured by its products, is the measure of the products. Production is, of, by, for value.

Social living labor, and the labor objectified, materialized in the private ownership, in the property of the means of production are each reproduced in the existence of the other. The value form of the means of production is the existence of labor as a commodity. This mutual reproduction is based on the historical separation, the opposition of the means of production in the conditions of labor to labor itself. Without that separation, that opposition, there is no organization of labor in commodity form. Value is itself the composed identity of this opposition, where the opposites are mediated.

The commodity in its specific form, as a shirt, a gallon of milk, a locomotive, is useless to the producer. It exists as a sink, a mule, a vehicle for carrying value to market. The capitalist purchases the use-value of labor, its ability to produce commodities, paying a wage which is calculated and distributed by the time of production. With this purchase, the capitalist obtains the power of labor to reproduce its social organization, its wage, its equivalent of subsistence [and even improvement] in less time than working time required by the capitalist. It is this power of labor to sustain more than its own existence, "more" than just its individual existence and "more" than just the immediate needs of both its individual and collective existence, in less than the total time of its existence, that is purchased by the capitalist. It is this power of labor when purchased that becomes the property of the capitalist, that becomes the basis of accumulation, that is converted into greater masses of the commodities that now command it to labor for the creation of greater masses of commodities that command it. It is this power that is inverted into value.

II. Marx continues his exploration of the commodity with an analysis of "The two poles of the expression of value: Relative form and Equivalent form." Here Marx states, "The whole mystery of the form of value lies hidden in this elementary form. Its analysis, therefore, is our real difficulty."

Using the well-worn example of the line and the coat, Marx begins his critique through the representation of the relation of equivalence, 20 yards of linen = 1 coat. The linen, for Marx, expresses its value in the coat. The linen has value relative to the coat. The coat represents value in the equivalent form.

Marx continues:

The relative form and the equivalent form are two intimately connected, mutually dependent and inseparable elements of the expression of value; but, at the same time, are mutually exclusive, antagonistic extremes – i.e., poles of the same expression. They are allotted respectively to the two different commodities brought into relation by that expression. It is not possible to express the value of linen in linen. 20 yards of linen = 20 yards of linen is no expression of value. On the contrary, such an equation merely says that 20 yards of linen are nothing else than 20 yards of linen, a definite quantity of the use value linen. The value of the linen can therefore be expressed only relatively – i.e., in some other commodity. The relative form of the value of the linen presupposes, therefore, the presence of some other commodity – here the coat – under the form of an equivalent. On the other hand, the commodity that figures as the equivalent cannot at the same time assume the relative form. That second commodity is not the one whose value is expressed. Its function is merely to serve as the material in which the value of the first commodity is expressed.

Here is where we get some head scratching-- expressions of the value form that are inseparable, mutually dependent, and mutually exclusive? How can any things be mutually dependent, inseparable, and at the same time mutually exclusive? No things can exist simultaneously that are inseparable and mutually exclusive. But Marx is not discussion the physical quantities of being. He is exploring the expressions, the manifestations, the commerce of and in social relations. In that commerce, value has forms, moments of expression in commodities that, while dependent upon the existence of the commodity itself as a value, excludes the expression of that other moment in that particular commodity.

Is it really, can it really be, that simple? Yes, and as Marx explicitly remarks, the very simplicity is the source of such difficulty.

If we look back at a previous iteration of these value expressions in Marx's notebooks, we find what is in my opinion, a much cleaner expression, and resolution, of this apparent antagonism:

Let us consider exchange between linen-producer A and coat-producer B. Before they come to terms,
A says: 20 yards of linen are worth 2 coats (20 yards of linen = 2 coats),
But B responds: 1 coat is worth 22 yards of linen (1 coat = 22 yards of linen).
Finally, after they have haggled for a long time they agree:
A says: 20 yards of linen are worth 1 coat,
and B says: 1 coat is worth 20 yards of linen.
Here both, linen and coat, are at the same time in relative value-form and in equivalent form. But, nota bene, for two different persons and in two different expressions of value, which simply occur (ins Leben treten) at the same time. For A his linen is in relative value-form – because for him the initiative proceeds from his commodity – and the commodity of the other person, the coat, is in equivalent form. Conversely from the standpoint of B. Thus one and the same commodity never possess, even in this case, the two forms at the same time in the same expression of value.
(c) Relative value and equivalent are only forms of values.
Relative value and equivalent are both only forms of commodity-value. Now whether a commodity is in one form or in the polar opposite depends exclusively on its position in the expression of value. This comes out strikingly in the simple value-form which we are here considering to begin with. As regards the content, the two expressions:
1. 20 yards of linen = 1 coat or 20 yards of linen are worth 1 coat,
2. 1 coat = 20 yards of linen or 1 coat is worth 20 yards of linen
are not at all different. As regards the form, they are not only different but opposed. In expression 1 the value of the linen is expressed relatively. Hence it is in the relative value-form whilst at the same time the value of the coat is expressed as equivalent. Hence it is in the equivalent form. Now if I turn the expression 1 round I obtain expression 2. The commodities change positions and right away the coat is in the relative value-form, the linen in equivalent form. Because they have changed their respective positions in the same expression of value, they have changed value-form (die Wertform gewechselt).

The forms are the moments of expression of the different facets composing the value relation. Marx makes it clear that regarding the content of the value relation itself, the expressions are not at all different. Regarding the forms, they exist only opposite to each other. A single commodity can never exist in the two forms at the same time. The forms are moments.

So.... so if it's that simple, can it really be that important? Again, the answer is "yes." In exploring the forms of expression of value, Marx is essentially rotating the commodity through the value relationship. Through this rotation, Marx establishes that the value in exchange of the commodity is not produced in the markets. Value is not a result of the relation of the commodity to all other commodities. Value is not the product of all commodities in relation to each other. Value is not the product of any or all commodities relative to the single commodity that exists as equivalent to all commodities but is itself no commodity, money.

The forms of the expression of value are important in the process of exchange in that these forms are moments in the calculus of the realization of the value aggrandized in production.

Further, because all commodities can be expressed in both relative and equivalent forms, all labors are equivalent, all labors are relative. All labors, no matter the advanced or rudimentary level of technique, can be expressed in any other labor. All labors can be expressed in relative and equivalent forms. All labors are equivalent, because they can be expressed, compared, quantified by and in a single measure, a single dimension, a single proportion. Labor is the source of value because labor itself has been transformed, clarified, reduced to a common social substrate, time. Time really is of the essence.

Marx puts it this way in The Poverty of Philosophy: 'Time is everything, man is nothing; he is at most time's carcass.' And he puts it this way in the Grundrisse: 'Economy of time - to this all economy ultimately reduces itself.' He wasn't kidding.

III. Because value has the relative and equivalent forms of expression, because all commodities are values, and because no commodity can simultaneously express its relative and equivalent forms, some representation of value which mediates these forms is required for exchange to proceed. The mediations of value require the services of an inter-mediation. The inter-mediation must embody the disembodied value from the commodity.

What is embedded in the commodity, value, exists in latency, as potential. The commodity's actual existence as both useful article and a value, given the social relations of production that give it life, the social relations that give the commodity the power over the human being, the social relations that give the commodity its existence as private property, is threatened by these exact relations, by its existence as private and not social production.

The commodity may not be useful, and the value goes unrealized. The commodity may be useful, but the market may discount its value based on the average time required for the reproduction of all such commodities. The value aggrandized in production comes to the market on a wing and a prayer, as a wing and a prayer, and money is the answer to all the prayers. Money is the ascension of the commodity, its transubstantiation.

Without the inter-mediation, commerce cannot proceed. Accumulation cannot occur. Reproduction ceases. The individual commodities remain individual commodities, oscillating in value forms, but not realizing the value relationship. Barter can continue. Trade can grow. Capital, however, as the expanding universe of commodity production, as the accumulation of value seeking more valuel, seeking expansion, valorisation, is impossible.

And this is where Marx is taking us in this first chapter of volume, to the role of money as the mediator of the value forms; to money as the disembodied embodiment of all the substance of all commodities; toward the conflict between accumulation of value and the growth of the means of production.

S.Artesian May 16, 2011

PS How about those Yankees?!?!

Bleeding Wisconsin

2011-03-11T14:48:00.003-05:00

Bleeding Wisconsin

1. In 1854, the US Congress passed the Kansas-Nebraska Act. The act, advertised as a compromise, was in fact a capitulation. The law proclaimed not equality, but the power of slave labor over free labor, and the power of slaveholders over the old order of the republic. The law embraced the spread of slavery into the territory purchased from France in 1803, thus annulling the Missouri Compromise, and allowing for the admission of new slave states to the Union.

For 35 years, the old parties of the North, whose vision and existence never extended beyond that of a merchants’ republic, had been accommodating to the slaveholders’ autarchy, presenting itself, and to itself, every capitulation as a compromise. In 1854 the capitulation to the slaveholders could no longer be disguised. The old parties represented only those interests opposed to capital’s free access to “free labor.”

In that same year, thirty people met in a schoolhouse in Ripon, Wisconsin for the purpose of creating a new political party. This party was organized around a simple principle—that political compromise with a system that enslaved human labor was intolerable.

One hundred and fifty seven years later, that same party founded in that same state is still attempting to make amends for the wild idealism of its youth when it dared to oppose the emancipation of the laborers to the plantation class’ claim to ownership, to property in the laborers themselves.

2. In 2011, having selected the incompetent former county executive of Milwaukee County to be the new governor of Wisconsin, our recidivist/arsonist/deconstructionist/liquidationist bourgeoisie submitted their shopping list of bills to the governor, Scott Walker, for introduction into the legislature.

Walker, as county executive of Milwaukee County, had proven himself a loyal, obedient, belligerent, and oblivious errand boy for the liquidationist bourgeoisie. He had not, however, shown himself to be a competent county executive. Indeed, competence is not now, nor has it ever been a requirement for those handling the public money in government. Ideology is ever so much more effective when it comes to getting done, or not done, the things the bourgeoisie pay to have done and not done.

As county executive, Walker had been a master of incompetence; the apotheosis of ineptitude; the ideologist of decay, collapse, and pettiness that is currently called “privatization” and “outsourcing,” “balanced budgets,” and “entrepreneurship.

From public transit to mental health, from prisoner transport to courthouse to security, from medical assistance to custodial services, Walker uniformly proposed reducing the county’s fiscal and operating responsibility. Raising prices while reducing service was his basic approach when and where he could not accomplish the same thing by outsourcing and privatizing the work. Under the guise of balancing the budget and restraining taxes, Walker shirked the local responsibilities for providing social services, either awarding the tasks to private contractors, advocating the state government assume responsibility, and/or simply neglecting the need for improvements. This is the business acumen that the bourgeoisie requires at the highest levels of its government; that the bourgeoisie makes others pay for, secure in the knowledge that the return on this anti-investment is greater than any its class could obtain by actually satisfying a human need.

The truth of the obsolescence of modern capital accumulation is made painfully clear in the deliberate and instinctual incompetence of its selected government officials. Value admits no other need save the accumulation of value. Value denies, opposes, and attacks need. Value isn’t about squeezing blood from a stone; it’s about turning flesh into dust through malign neglect.

3. The bills introduced into the Wisconsin legislature in 2011 read like love letters exchanged among a ménage a trois of Ayn Rand, Alan Greenspan, and Milton Friedman. These sonnets to the higher organic rate of capital decomposition included:

--advancing the date of certain tax refunds to employers

--increasing the number of enterprise zones where employers may claim additional tax credits

--increasing tax benefits to employers hiring additional employees

--increasing the income tax exclusion on capital gains

--awarding grants to manufacturing associations for marketing and advertising

--more tax credits for business

--additional enterprise zones

--repealing the requirement that police motor vehicle motor stops be audited for racial profiling

--more tax credits for business

--prohibiting the state’s Department of Natural Resources from requiring cities to provide continuous disinfection of drinking water

--increasing investors’ tax credits

--eliminating the right of a school district resident to challenge the use of a race-based nickname, logo, mascot, or name for a school team

--more tax breaks

--expanding the arena for, and easing the requirements on, the establishment of charter schools, the costs of which will be funded by reducing the general appropriation for public education

And of course these bills are just probes, raids, tests, and diversions to the real attack, to the deep battle envisioned in Assembly Bill 11 “an act introduced….at the request of Governor Scott Walker.” The [unamended] bill:

… limits the right to collectively bargain for all employees who are not public safety employees (general employees) to the subject of base wages. In addition, unless a referendum authorizes a greater increase, any general employee who is part of a collective bargaining unit is limited to bargaining over a percentage of total base wages increase that is no greater than the percentage change in the consumer price index. This bill also prohibits municipal employers from collectively bargaining with municipal general employees in matters that are not permitted under MERA [Municipal Employment Relations Act].

… requires an annual certification election of the labor organization that represents each collective bargaining unit containing general employees. If, at the election, less than 51 percent of the actual employees in the collective bargaining unit vote for a representative, then, at the expiration of the current collective bargaining agreement, the current representative is decertified and the members of the collective bargaining unit are nonrepresented and may not be represented for one year.

… also allows a general employee to refrain from paying dues and remain a member of a collective bargaining unit.

… provides that the employee required contribution rate for general participating employees and for elected and executive participating employees must equal one−half of all actuarially required contributions, as determined by the Employee Trust Funds Board. For protective occupation employees, the bill provides that the employee required contribution rate must equal the percentage of earnings paid by general participating employees.

…provides that an employer may not pay any of the employee required contributions under the WRS [Wisconsin Retirement System] or under an employee retirement system of a first class city or a county having a population of 500,000 or more.

… provides that the employer may not pay more than 88 percent of the average premium cost of plans offered in the tier with the lowest employee premium cost.

[provides]…For the remainder of 2011, however, beginning in April 2011, the bill provides that state employees, as well as employees of public authorities created by the state, who work more than 1,565 hours a year shall pay $84 a month for individual coverage and $208 a month for family coverage for health care coverage under any plan offered in the tier with the lowest employee premium cost; $122 a month for individual coverage and $307 a month for family coverage for health care coverage under any plan offered in the tier with the next lowest employee premium cost; and $226 a month for individual coverage and $567 a month for family coverage for health care coverage under any plan offered in the tier with the highest employee premium cost.

UW System graduate assistants and teaching assistants must pay half of these amounts. Employees who work less than 1,566 hours a year are required to pay the same amount for health care coverage during 2011 that they were required to pay before the bill’s effective date. The bill further provides that a local government employer who participates in the local government health insurance plan offered by GIB may not participate in the plan if it intends to pay more than 88 percent of the average premium cost of plans offered in any tier with the lowest employee premium cost.

… requires GIB to design health care coverage plans for the 2012 calendar year that, after adjusting for any inflationary increase in health benefit costs, reduces the average premium cost of plans offered in the tier with the lowest employee premium cost by at least 5 percent from the cost of such plans offered during the 2011 calendar year. GIB must include copayments in the health care coverage plans for the 2012 calendar year and may require health risk assessments for state employees and participation in wellness or disease management programs

… requires the secretary of employee trust funds to allocate $28,000,000, from reserve accounts established in the public employee [emphasis added] trust fund for group health and pharmacy benefits for state employees, to reduce employer costs for providing group health insurance for state employees for the period beginning on July 1, 2011, and ending on December 31, 2011

[provides] the governor may declare a state of emergency if he or she determines that an emergency exists resulting from a disaster or the imminent threat of a disaster. This bill authorizes a state agency to discharge any state employee who fails to report to work as scheduled for any three unexcused working days during a state of emergency or who participates in a strike, work stoppage, sit−down, stay−in, slowdown, or other concerted activities to interrupt the of operations or services of state government, including specifically purported mass resignations or sick calls. Under the bill, engaging in any of these actions constitutes

just cause for discharge. [Note: former employees may be discharged for resigning.]

If the other legislation proposed for enactment comprises the love letters of Greenspan, Rand, and Friedman, then this act, this omnibus deconstruction and unreconciliation act, represents the pre-nuptial, the post-nuptial, and the last will and testament of that cluster fuck called capitalism.

4. So the party born in Wisconsin, that found slavery an intolerable burden to the advancement of human welfare had come full circle, finding human welfare an intolerable burden to the advancement of slavery.

Education, medical care, mental health, security for young and the elderly—any and every facet of what are most properly called the conditions of social reproduction [human beings being human precisely to the degree that they are social, do provide for the welfare of all]—is to be abolished by these new anti-abolitionists.

“I’ve seen future,” said the state’s chief incompetent executive, “and it’s right here,” he said pointing with his left hand to his right hand that was under the table, performing the secret libertarian handshake with the brothers Koch, the brothers of Koch Industries, those entrepreneurs extraordinaire, who made their money the old fashioned way, by inheriting it.

And so begins the fifth decade of the bourgeoisie’s assault on the living standards of the working class. The assault has gone on for so long that many have no memory of there ever being a time when the bourgeoisie were not engaged in such attacks; had not made Hobbes Leviathan their Gideon bible, placed in every hotel room, every abattoir, every MBA program, every prospectus offering securities that may or may not perform as anticipated; had not counted [literally] on the spread of misery and privation through cruise missiles, structured investment vehicles, capital flight, and that old time religion—driving the price of labor below its cost of reproduction.

It is an offensive that has gone on for so long that the offenders grow ever more nostalgic for their salad days of the second decade of the offensive, the decade of that pomaded but empty-headed empty suit, Ronald Reagan.

Walker, his stocking nailed above the fireplace, eagerly awaited Santa David and Santa Charles sliding down the chimney, helping themselves to the Wisconsin milk and Nabisco ‘Nilla wafers he had so thoughtfully spent the public money contracting a private caterer to supply, and delivering their goody bags of personal political contributions to the Scott Walker is the new Ronald Reagan Cosmetic Surgeons/Spin Doctors Stem Cell Recombinant DNA Makeover Fund [“Piece of cake,” said the head doctor, “We’ve been cloning sheep for years.”].

Walker imagined himself a Reagan, that is to say he imagined himself a man without imagination, he thought himself a man without thoughts. He pretended to be a man who was already a pretender.

The Wisconsin Democrats elected to the state senate proved that their greatest and only contribution to class struggle is their disappearance from the scene. Hiding out in the deep forests around Rockford, Illinois, the Democrats, who were not opposed, mind you to the attack on the workers’ living standards, just opposed to the attack on the right of workers to maintain membership in unions while under attack, the Democrats prevented the gathering of a quorum in the state senate, thus preventing the Republicans from conducting the important business of transferring wealth from the pockets of the workers, and from the public treasury, to the private accounts of their bankers and bankrollers.

The message from Wisconsin was broadcast far and wide: Class struggle begins where the Democrats leave off and just plain leave.

Meanwhile on the southern edge of these United States in the state of Alabama, hundreds of white people, good Republican church-going white people, wearing their favorite uniform in their favorite color, Confederate and in battle grey, gathered to wave the flag of the slaveholders’ rebellion and celebrate the 150^th anniversary of the inauguration of the single greatest traitor in US history, Jefferson Davis.

History holds something for everyone, but it seems it holds the most for the cynic and the fool, each acting in a play written by the other for the amusement of both. The party of Lincoln, a party born embodying the inseparability of the cause of union from the cause of emancipation had come to worship at the feet of slaveholders, secessionists, the anti-Unionists who were now the inspiration for its own anti-unionism.

After years of living the lie of “don’t ask, don’t tell,” the bourgeoisie had stepped boldly out of its closet, dressed in the white sheet and wearing the white camellia of the nightrider, the terrorist.

It was almost a most perfect world. Ignorance was its strength, slavery was its freedom, and treason was its patriotism.

Here in Wisconsin and Alabama, just two of fifty states, representing less than four percent of the US population, on public display were two-thirds of the makeup of American democracy: dolts and terrorists. Missing only were the looters. But they were there, they were everywhere, and in more than spirit.

5. The brothers Koch worked their way up the ladder of corporate America by climbing on their father’s knees as young boys. Upon the father’s death, they took over the control of an enterprise based on energy [oil refining was the source of their father’s triumph], and built it into a conglomerate with operations in minerals, ranching, fibers and polymer, forest products, process and pollution control equipment, polymers, fibers, chemicals, commodity trading, and finance.

It hasn’t all been a bed of roses for Koch Industries, as the conglomerate and its units seem to display a certain inability to abide by the laws of the country in which it is incorporated, the United States of America. While the American Enterprise Institute, that busy beehive of ideological advocacy endorsing the mythology of “invisible hand” laissez-faire capitalism refers to CEO Charles Koch as “The Principled Entrepreneur,” it is apparent that the principles themselves are not quite that ingrained in the business activities of Koch’s corporations—or if they are so ingrained, the principles themselves are not exactly principled.

In March 2000, the US Environmental Protection Agency announced:

Koch Petroleum Group (Koch), which operates a refinery in Rosemount, Minn., was sentenced on March 1 to pay a $6 million criminal fine and pay an additional $2 million in remediation costs to the Dakota County Park System in U.S. District Court in Minneapolis. This is the largest federal environmental fine ever paid in Minnesota. The defendant was also ordered to serve three years probation. Koch previously pleaded guilty to violating the Clean Water Act (CWA). Koch admitted that it negligently discharged aviation fuel into a wetland and an adjoining waterway. Even though Koch was aware of the problem, it did not develop a comprehensive plan to recover between 200,000 - 600,000 gallons of released fuel until June 1997. In addition, the establishment of the system to recover the fuel destroyed a portion of the surrounding ecosystem and wildlife habitat. In a separate offense, Koch dumped a million gallons of wastewater with high ammonia content on the ground between November 1996 and March 1997 and also increased its flow of wastewater into the Mississippi River on weekends when Koch did not monitor its discharges. These actions allowed Koch to circumvent the weekly monitoring and reporting requirements of its wastewater discharge permit. The case was investigated by EPA’s Criminal Investigation Division, the FBI and the Minnesota Pollution Control Agency and was prosecuted by the U. S. Attorney’s Office for the District of Minnesota.

In November of 2000, CBS News reported:

… that [Bill Koch, brother of Charles and David stated] Koch Industries engaged in "(o)rganized crime…”

"It was – was my family company. I was out of it," he says. "But that’s what appalled me so much... I did not want my family, my legacy, my father’s legacy to be based upon organized crime."

Bill Koch says that his brother Charles made a fortune stealing oil. Much of it from beneath Indian reservations and federal lands - places like national forests. Oil under federal lands belongs to the public. Koch Industries was the middleman – buying oil from the government at the well - then selling it to refineries. Bill Koch says that the company took more oil than it paid for by cheating on measurements.

A gauger measures the volume and the quality of the oil that his company is buying. The buyer leaves his measurements behind on what’s called a "run ticket." It's an IOU to the well owner.

"What Koch was doing was taking all these measurements and then falsifying them on the run sheets," says Bill Koch. "If the dipstick measured five feet 10 inches and one half inch, they would write down five feet nine and one half inches."

That may not sound like much, but Bill Koch says that it added up. "Well, that was the beauty of the scheme. Because if they’re buying oil from 50,000 different people, and they’re stealing two barrels from each person. What does that add up to? One year, their data showed they stole a million and a half barrels of oil."

In a written statement, Koch blames its problems on Bill Koch – calling him a "disgruntled family member" who has waged a "personal vendetta through lawsuits and the media against his brothers' company."

But in December 1999, the jury found that Koch Industries did steal oil from the public and lied about its purchases – 24 thousand times. The oil theft conviction was a heavy blow, but the troubles of Koch Industries don’t stop there. If the company was fattening its bottom line through theft – there is also evidence Koch was pinching pennies on safety and environmental protection - cutting costs with disastrous results.

But wait, that’s not all:

Former EPA administrator Carol Browner announced in 2000 that she was hitting Koch Industries with the largest civil penalty in the history of the federal Clean Water Act: a $30 million fine.

She said, Koch Industries spilled over 3 million gallons of crude oil in six states

Koch pipelines make up the largest oil and gas network in the nation. The EPA complaint targeted more than 300 oil spills, some poisoning fisheries and drinking water.

In a statement, Koch Industries claims that it has spent a billion dollars on environmental improvements and reduced leaks by 96 percent. The company urged us to look at its record at the federal Office of Pipeline Safety. We did and discovered that Koch’s records at OPS look good. But we also found that OPS doesn't cover more than half of Koch’s lines - including the lines that leaked.

And there’s still more:

"They don't care for any loss of human life. Like I said, it was the buck that counted for them," says Danny Smalley. He had the extreme misfortune of living near a Koch Industries underground pipeline that ran through Texas. In August, 1996, Smalley was home with his daughter Danielle and her friend Jason Stone. Danielle was packing to leave for school the next day – the first person in her family to go to college.

She and Jason started smelling gas. It was butane, pouring from a corroded Koch Industries high pressure pipeline, 200 yards from their home. Jason and Danielle set out in a pickup truck to find help. But their truck set off the butane, and caused an explosion.

Danny Smalley filed suit against Koch Industries. His attorney, Ted Lyon, says the investigation exposed a pattern of negligence and coverup involving the pipeline known as Sterling One. Lyon describes the pipeline as like "Swiss Cheese."

Koch is require by law to ensure that its vast pipeline system is protected from corrosion in two ways. The pipe must be wrapped in a protective coating. And, once in the ground, an electrical current is applied all along the pipeline – a technique that inhibits corrosion.

"If you don't have the current and you don’t have coating, you have a big problem. And that's what happened in this case. And the sad thing about it is, they knew it," says Lyon.

Federal investigators blamed the explosion on Koch’s failure to adequately protect the line. Koch industries told us the fatal explosion is the only incident of its kind in the company’s history. Still, in 1999, a jury found Koch Industries guilty of negligence and malice.

“They admitted to me if they had done things the way they should have, my child and Jason would still be alive,” says Danny Smalley.

"They said, 'We're sorry Mr. Smalley, that your child lost her life and Jason lost his life.' Sorry doesn’t get it. They’re not sorry. The only thing they looked at was the bottom dollar. How much money would they lose if they shut the pipeline down. They didn’t care, all they wanted was the money."

"Koch Industries has a philosophy that profits are above everything else," says Bill Koch.

And still more:

August 2001 Update

In May, 2001, Bill Koch and Koch Industries announced a legal settlement of all their disputes, effectively putting an end to the two-decade family feud. The settlement calls for Koch Industries to pay $25 million in penalties to the U.S. government for improperly taking more oil than it paid for from federal and Indian lands. About a third of it goes to Bill Koch or bringing the lawsuit.

Koch industries has faced other troubles with the government since the original broadcast in November. In April, Koch’s Petroleum Group was fined 20 million dollars after it released huge amounts of cancer-causing benzene from a Texas refinery and then tried to cover it up.

In July, 2001, thestatesman.com of Austin, Texas reported:

CHARLOTTE — Oil made many Texans rich. It's also killing grass and polluting creeks at the Hindes Ranch.

The beef and dairy operation 35 miles south of San Antonio is crisscrossed by gathering lines — pipelines no more than 8 inches wide that carry crude oil and natural gas from production fields to larger lines feeding refineries and other collection points. The decades-old gathering lines at the Hindes Ranch have sprung hundreds of leaks during the past 15 years, said Bob Hindes, who owns and operates the ranch.

Hindes has photographs to back up his claim. You can also tell by the dozens of brown patches, some of them 60 feet long, amid the grasses and wildflowers.

"It makes a mess," Hindes said. "The ground's real soaked with salt water and oil. The grass won't grow for years. We've had spills that would run half a mile down the creeks."

The ranch's oil rights were sold off before Hindes bought the land, and the out-of-state oil producer is not required by any law, regulation or government agency to meet safety or environmental standards on rural gathering lines.

The federal Office of Pipeline Safety does not regulate such lines. Nor do many state pipeline agencies, including the Texas Railroad Commission. Gathering lines in urban areas, by contrast, are subject to regulation by the federal and state pipeline agencies.

Federal officials estimate that there are more than 200,000 miles of rural gathering lines. That would be enough to reach three-fourths of the way to the moon. Texas alone has 43,000 miles of such lines.

The General Accounting Office, the investigative arm of Congress, warned lawmakers 23 years ago that incidents involving rural gathering lines were on the rise and that regulation was warranted. Lawmakers and regulators have declined to act despite mounting evidence of the hazard.

For example, Koch Industries Inc. had more than 300 spills into water supplies in six states from 1990 to 1997, mostly from unregulated gathering lines, according to the U.S. Department of Justice.

"We discovered that 80 percent of the spills were caused by corrosion," said Michael Goodstein, a senior attorney for the Justice Department, which with the State of Texas prosecuted Koch under the Clean Water Act.

The company had a better record with its larger-diameter, regulated lines, Goodstein said.

A 1998 Railroad Commission investigation of Koch's pipeline system in Texas reached a similar conclusion. It found that gathering lines accounted for a third of Koch's Texas mileage but nearly two-thirds of what would have been considered safety violations if the lines were regulated.

The problems the commission found included testing and documentation deficiencies, as well as shortcomings in corrosion protection, line marking, protection of valves against vandalism and other matters.

The staff of Texas' Sunset Advisory Commission, a legislative panel that reviews state agencies, recommended last year that the Railroad Commission regulate rural gathering lines.

A report by the sunset commission staff reached an unusually blunt conclusion: "State regulation of pipelines does not adequately protect the public."

The Railroad Commission opposed the recommendation, and the Legislature declined to compel the agency to regulate rural gathering lines.

The environmental and safety risks posed by the lines, which operate at low pressure in generally isolated areas, do not warrant the dramatic increase in funding that would be needed to regulate them, said Michael Williams, chairman of the Railroad Commission.

"We don't have a real history of gathering lines breaking, exploding or posing a danger to ground water," Williams said. "That doesn't mean it's never occurred."

Hindes isn't the only rancher with problems. The Texas Land & Mineral Owners Association says more and more landowners are discovering leaks as gathering lines age.

"There's no pressure-testing of these lines," said Doug Beveridge, secretary of the association and vice president of minerals for the King Ranch, which covers an area in South Texas larger than Rhode Island. "There's no requirement for the type of steel they put into these lines. No one even knows where they are. We've wondered forever for our ranch — where are all the lines?"

In June, 2003, the US Department of Commerce announced:

Acting Assistant Secretary of Commerce for Export Enforcement Lisa A. Prager announced today that a $200,000 civil penalty has been imposed on Flint Hill Resources L.P. - formerly known as Koch Petroleum Group, L.P. - of Wichita, Kansas to settle allegations that the company exported crude petroleum from the United States to Canada without the required U.S. Government authorization. The Commerce Department controls the export of crude petroleum to any foreign destination to protect the domestic supply.

The Commerce Department's Bureau of Industry and Security (BIS) alleged that between July 1997 and March 1999, Koch Petroleum committed 40 violations of the Export Administration Regulations by exporting crude petroleum to Canada on 20 occasions without the required export licenses and Shipper's Export Declarations. Acting Assistant Secretary Prager noted that in determining the amount of the penalty, BIS gave consideration to the facts that Koch Petroleum voluntarily self-disclosed the violations, stopped exports of oil once the violations were discovered, and enhanced its export compliance program.

BIS administers and enforces export controls for reasons of national security, foreign policy, nonproliferation, anti-terrorism, and short supply. Criminal penalties and administrative sanctions can be imposed for violations of the Export Administration Regulations.

In December 2006, the EPA announced the following resolution of violations by a subsidiary of Koch Industries:

Anchorage, Alaska. – December 12, 2006) The U.S. Environmental Protection Agency (EPA) announced today that Flint Hills Resources Alaska, LLC (Flint Hills) has agreed to pay $15,867 for alleged federal Clean Air Act (CAA) emergency planning violations. Flint Hills operates a refinery near the City of North Pole, Alaska.

EPA alleged ten separate violations of the CAA including: failure to establish procedures for reviewing and updating the Company’s emergency response plan, and failure to establish procedures for informing the public and local emergency response agencies about accidental releases of flammable substances.

As part of the settlement with the EPA, Flint Hills has agreed to correct all alleged violations, pay the penalty and spend at least $60,000 on a Supplemental Environmental Project (SEP) involving the purchase of two hazardous substance spill response trailers and one incident command post trailer for the Fairbanks/North Star Borough.

"Flint Hills needed a better management system to ensure that their emergency procedures were continually updated and also needed a way to inform the public about accidental releases,” said Kelly Huynh, EPA's Risk Management Plan (RMP) Coordinator. "The program is designed to protect public health and the environment in the event there is an accidental release of hazardous or flammable substances."

The federal Clean Air Act, Section 112(r), requires the development of a Risk Management Program and submittal of Risk Management Plans for all public and private facilities that manufacture, process, use, store, or otherwise handle greater than a threshold amount of a regulated substance(s). Flammable gases and toxic chemicals, such as ammonia and chlorine, are covered by the program.

The Risk Management Program requires the development of an emergency response strategy, evaluation of a worst case and more probable case chemical release, operator training, review of the hazards associated with using toxic or flammable substances, operating procedures and equipment maintenance. These requirements are in place to protect the public from the accidental release of flammable gases and toxic chemicals.

In April 2009, the US Department of Justice reported after self-auditing and voluntary reporting of violations by Koch subsidiary Invista:

WASHINGTON— Invista will pay a $1.7 million civil penalty and spend up to an estimated $500 million to correct self-reported environmental violations discovered at facilities in seven states, the Justice Department and U.S. Environmental Protection Agency (EPA) announced today. The company disclosed more than 680 violations of water, air, hazardous waste, emergency planning and preparedness, and pesticide regulations to EPA after auditing 12 facilities it acquired from DuPont in 2004.

“This settlement is a significant achievement, as it will reduce air pollution in numerous communities, and demonstrates the United States’ commitment to ensuring that all facility owners come into compliance with environmental requirements,” said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “This settlement reflects an effective use of EPA’s audit policy and the value of companies performing audits and working with the United States to correct violations found at their facilities.”…

The settlement resolves violations disclosed under Invista’s corporate audit agreement with EPA. Invista conducted 45 separate audits of environmental practices and compliance at facilities located in Seaford, Del.; Athens, Calhoun, and Dalton, Ga.; Kinston, N.C.; Camden, S.C.; Chattanooga, Tenn.; LaPorte, Orange, and Victoria, Texas; and Martinsville and Waynesboro, Va.

As part of its corrective action requirements agreed to in the settlement, Invista will install pollution control equipment to treat air pollutants at its Seaford, Del.; Camden, S.C.; Chattanooga, Tenn.; and Victoria, Texas facilities. The company has also applied for applicable air and water permits, has installed adequate secondary containment for oil storage areas, and has notified state and local emergency planning and response organizations of the presence of hazardous substances.

To ensure continued compliance and minimization of the benzene wastes generated at the Victoria and Orange, Texas facilities, Invista is required under the settlement to either upgrade control equipment or make major changes to its processes used to handle these wastes. EPA estimates that these actions will reduce air emissions of benzene by more than nine tons annually and eliminate 25 to 750 tons per year of benzene from wastewater.

The emission reductions resulting from correcting these violations will result in estimated annual human health benefits valued at over $325 million, including 30 fewer premature deaths per year, 2,000 fewer days/year when people would miss school or work, and over 9,000 fewer cases of upper and lower respiratory symptoms.

Invista is a multi-national manufacturer of a wide range of polymer-based fibers, including Lycra, Stainmaster, and Coolmax…

The states of Delaware, South Carolina and the Chattanooga-Hamilton County Air Pollution Control Board in Tennessee have also joined in today’s consent decree and will share portions of the civil penalty with EPA.

The consent decree, lodged in the U.S. District Court for the District of Delaware, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree is available on the Justice Department Web site at http://www.usdoj.gov/enrd/Consent_Decrees.htm

Certainly, the bourgeoisie can find no person more capable of articulating the principles of enlightened entrepreneurship, the practical benefits to all of society of private enterprise, the negative consequences of government regulation, the impending loss of creativity, independence, freedom, productivity embodied in the socialization of the means of production than this CEO of an industry group that has been such a leader in the social responsibility of that most perfect of nature’s creations, the corporation.

Politically, of course, the brothers Koch have been active spreading the gospel by way of spreading the money, funding the Cato Institute, the Heritage Foundation, and Americans for Prosperity, where the banner headline on the website reads “Stand With Scott Walker.”

Koch Industries, when it isn’t paying out millions to settle environmental health and safety violations, has a Political Action Committee that certainly has stood with Walker. The PAC provided $43,000 to Walker’s gubernatorial campaign and a token amount of $1 million to the Republican Party Governors Association.

David Koch, co-owner and executive vice-president of Koch industries is a former Libertarian Party candidate for US Vice-President. Like his brother, he is a strong backer of the teabagger party.

A well-known philanthropist, David Koch is the guiding spirit behind the American Museum of Natural History’s so perfectly named David H. Koch Dinosaur Wing.

History does hold something for everyone.

6. The British, who have more experience than most in suppressing rebellion and revolt, in pre-empting, canalizing, and throttling class struggle with the garrote of electioneering, legislation, and trade union accommodation, compromise, capitulation, are very proud of their parliament. “It’s our substitute for civil war,” the parliamentarians will tell you.

Sooner or later history accepts no substitutes. The threatening and dangerous fact is that in the United States, the bourgeoisie realized this before, and has prepared itself for the combat of class struggle better than the workers, including those demonstrating in Madison.

The vanguard dinosaurs of the bourgeoisie, these once-crackpot-now-prophets of Jack-the-Ripper’s “invisible hand” capitalism have no allegiance to their prior forms of political organization.

“Parliaments? Bi-cameral legislatures? Representative government? Popular votes?” laughs our ruling dolts, thugs, thieves. “Who needs them? They cost too much. They are so inefficient.”

“Independent judiciary? Equal justice under the law? You thought we were serious about that?”

The arsonist/monetarist bourgeoisie don’t know Hegel, but they do know that form is mutable; the form is evanescent. It’s the content that counts. It’s the substance that matters. It’s necessity that rules.

That content is private property; the ownership of the means, conditions, and products of labor. That substance is the substance of accumulation. The necessity is precisely the destruction of the very forms once essential to accumulation, profit, expanded reproduction of capital. That necessity is the necessity of capital to drive the price of labor below the cost of its social reproduction.

The workers engaged in this struggle will need to move beyond, outside, and against their old forms of organization. To the extent that the clash in Wisconsin remains a struggle for unions, for collective bargaining, for “rights;” to the extent that the clash does not become a movement for new, open, class wide organizations beyond unions; organizations linking employed, unemployed, pensioners, students, migrants, private sector, public sector, temporary, permanent, insured, uninsured in bodies of collective power with the ability, desire, need to confiscate the revenues and income of the state, and seize the property of those financing the attacks on living standards —to precisely that extent the Kochs, the Walkers, the ideologues of decrepit capitalism will impose their necessity.

S.Artesian

address all comments to: sartesian@earthlink.net

OF FORESTS AND TREES, Part 1

2011-01-22T11:26:00.001-05:00

1. I could start off by saying “Marx has some problems in his analysis of ground-rent.” However, it’s not exactly the case that Marx is wrong in his analysis of the derivation of ground-rent or in his calculations of the comparative rates of ground-rent. It’s more that Marx misses a few things, a few important things; he misses the transformation of British agriculture that underlies the fluctuations in ground-rent and the fluctuations in agricultural commodity prices. It’s more that he takes Ricardo’s and others’ assertions about the availability of land, the “insatiability” of demand, about the “natural” fertility of land as not just accurate, but eternal. Does Marx do this as a matter of regard for Ricardo? Of faith? Of expediency so he can get to what he really wants to discuss, which is not really ground-rent at all? Beats the hell out of me, almost literally, which upon reflection means I need to change what I want to start off saying.

So… so after thinking about it for a little bit, I want to start off by saying that I have some problems with Marx’s analysis of ground-rent. He misses a few things, a few important things, like the transformation of English agriculture; like the transformation of English landlords; like the transformation of the social relations of production which rent does not cause, but which rent serves. Some things, some really important things, he doesn’t miss.

And more than that, I think various mis-apprehensions of Marxism, and mis-analyses of advanced capitalism stem from the ambiguity in Marx’s analysis of ground-rent. Normally, I could start that off by identifying Lenin’s theory of imperialism as an example; Lenin’s and others’ theories of rentier capitalism as another example; the various theories according to which monopoly has transcended the law of value for capitalism as an example; the theories that have US capital as a monopoly capital, and/or a financial hegemon extracting tribute, extracting rent, from

a) Other developed capitalisms

b) Other less developed capitalisms or

c) Both;

Through either

a) Artificial inflation of prices for its highly processed (large value-added) goods or

b) currency manipulation or

c) Both,

as an example. And all those examples, I would identify as so wrong, so transparently “left” recapitulations of the capitalists’ own mythology of “having finally, seriously, this time we’re sure, once and for all we have conquered the business cycle” mantras that it makes me laugh. I could start off by saying that. But only later.

2. We know how Marx engages with these categories of rent, capital, wage-labor, value. He engages through opposition and the opposition is elaborated through critique. Marx begins his critique of ground-rent when he begins his critique of capitalism. In the Economic and Philosophic Manuscripts of 1844 Marx launches his initial probe into the complexities of ground-rent. We see Marx establishing the characteristics, the determinants in and of rent that will occupy him for the next 25 years. We get fertility, the relation of rent to population, the ever-present and always unrealizable demand for food, and the landlord and rent as obstacles to both the industrial capitalist and the development of industrial capitalism.

In the first manuscript, we have Marx telling us:

(5) While, thus, the landlord’s interest, far from being identical with the interest of society, stands inimically opposed to the interest of tenant farmers, farm laborers, factory workers and capitalists, on the other hand, the interest of one landlord is not even identical with that of another, on account of the competition which we will now consider.

I’m not about to disagree with the accuracy of Marx’s characterization of the landlord as all that is petty, venal, and vicious in human history, however much I think those attributes are better applied to the nuclear family. If the landlord isn’t the sum total of cynicism, avarice, pettiness, dishonesty and brutality in all of human history, then he or she still comes close. And close does count.

However, Marx’s claim that the landlord stands inimically opposed to the interest of the industrial capitalist is indicative of the ambiguity that persists throughout his analysis of rent.

Marx regards rent as the way in which:

…property in land realizes itself economically, that is produces value. [Capital, Volume 3, Chapter 37 “Transformation of Surplus Profit into Ground-Rent]

Rent is the means by which land produces value. Except it isn’t because the land doesn’t produce value. Ground-rent is the mechanism by which labor in agriculture manifests its transformation from the supplier of surplus-product and into the source of surplus value. Marx says, but does not pursue as much in Theories of Surplus Value, Part 2:

…the very existence of rent is feasible because the average wage of the agricultural laborer is below that of the industrial worker. Since, to start with, by tradition (as the farmer turns capitalist before the capitalists turn farmers) the capitalist passed on part of his gain to the landlord, he compensated himself by forcing wages down below their level…Surplus-value can be increased, without the extension of labour-time or the development of productive power of labour, by forcing wages below their traditional level. And indeed this is the care wherever agricultural production is carried on by capitalist methods…Here then we already have a potential basis of rent since, in fact, the agricultural labourer’s wage does not equal the average wage. This rent would be feasible quite independent of the price of the product, which is equal to its value.

Ground-rent is the capitalization of land; its organization as a means of production for exchange rather than a means of consumption.

Still, this transformation, this capitalization of land is stymied, incomplete, and necessarily so. Capital does not encounter land, at least not in Europe, in either its “natural” state, or in its “commodity” condition. Capital encounters landed property as encumbered by the pre-existing relations of production. Capital encounters land as constrained by a form of private ownership that is at once archaic and powerful.

Ground-rent then is a bit more than just the capitalization of land. It is capital adapting, and adapting itself to, feudal property that is refracted through the lens of market exchange and market value.

Even in, especially in, the most advanced capitalist country in Europe, capital is confronted with the obstacle of its own uneven and combined development.

Marx’s target is not this uneven and combined development. His target is not ground-rent as the preservation, extension, and dissolution of the archaic relations of production. His target is not the part ground-rent, and landed property play in the reproduction of capital. His target is not the part ground-rent plays in driving the social differentiation, the class relations, which accompany and signify the transition to capitalism.

Marx’s target, more than anything else, more than anyone else is David Ricardo.

3. For Marx, Ricardo is the best bourgeois political economy can produce; a figure of profound analytic capabilities and severe shortcomings, like capital itself. Ultimately Ricardo is constrained by the power of his own analysis. Ricardo’s examination of the economic categories of capitalist production begins with, requires, and reproduces the excision of those economic categories from the social relations of production that give the categories life. At its end, Ricardo’s analysis substitutes ideology for history.

Next to bayonets, cruise missiles, and beehive rounds, ideology is the bourgeoisie’s sharpest tool. Ideology tells the bourgeoisie exactly what they want to hear: There was a history. History has come to its end. The circumstances surrounding the birth of capital, the origin of the bourgeoisie, are not immortal, but rather completely natural. Capitalist markets are nature’s way of organizing humanity. There was creation. Capital is the crown of creation.

Landed property, as capital confronts it, is not so natural, but the political economist regards economic categories of landed property, and rent as excised from their social relations. To the political economist ground-rent is a-historical. For the English political economist, the origin, function, movement, and result of ground-rents in the period 1794-1815 versus the period 1500-1550 are immaterial. Ground-rent by any other name is ground-rent, and is an obstacle to the accumulation of industrial capital.

Marx is in hot pursuit of Ricardo, and in this hot pursuit he is inclined to allow, repeat, and even accept Ricardo’s less-than-historical critique of landed property and ground-rent. Marx is not doing this for the purpose of exposing the inadequacy of Ricardo’s critique. Before Marx begins his own critique of Ricardo’s theory of ground-rent, it’s as if Marx feels he needs to defend Ricardo’s “natural/unnatural” a-historical conceptualization of ground-rent in order to achieve his real objective. That objective is the rescue and recovery of the labor theory of value from the equivocation, the qualification and disqualification it suffers in Ricardo’s analysis of rent.

So we have Marx repeating Ricardo’s “materialist basis” for ground-rent: The supply of fertile land is limited. The supply is limited by “natural” conditions as the “more fertile” land is the land occupied; as “less fertile” land is always brought into cultivation as the population grows. The supply is limited by the social relations in that landlords monopolize the land.

Ricardo maintains, and Marx accepts, that not only is land of inferior quality brought into cultivation as the population expands, but also that proportionately less productivity gains are realized with successive applications of additional capital to the same plots of land. In Capital, Volume 3, Chapter 37 Marx writes:

That Mr. Lavergne is not only familiar with the economic achievements of English agriculture, but also subscribes to the prejudices of the English tenants and landlords, is shown on page 48:

"One great drawback attends cereals generally ... they exhaust the soil which bears them."

Not only does Mr. Lavergne believe that other plants do not do so, but also believes that fodder crops and root crops enrich the soil:

"Forage plants derive from the atmosphere the principal elements of their growth, while they give to the soil more than they take from it; thus both directly and by their conversion into animal manure contributing in two ways to repair the mischief done by cereals and exhausting crops generally; one principle, therefore, is that they should at least alternate with these crops; in this consists the Norfolk rotation" (pp. 50, 51).

No wonder that Mr. Lavergne, who believes these English rustic fairy-tales, also believes that the wages of English farm labourers have lost their former abnormality since the duties on corn have been lifted.

The Norfolk four-course rotation was no fairy tale, and the ability of clover, legumes, etc. to fix nitrogen in the soil is no myth. As Mark Overton writes:

The effects of the rotation were to increase yields of grain and to allow much higher stocking densities. These effects are modeled in Table 3.19 which demonstrates convincingly that the Norfolk four-course could indeed have been responsible for unprecedented changes in both crop and livestock productivity and output…

Partly because the integrated mixed-farming systems comprised so many mutually dependent components their evolution took time. Hence the long lag between the appearance in England of clover, turnips and other components of the Norfolk four-course system and the perfection of the system itself, whose widespread diffusion must be dated to the first half of the nineteenth century. Nevertheless there can be no doubt of the superiority of the new system at whose root quite literally lay the improved management of soil nitrogen. This of course was not the farmer’s intention, since the chemistry was unknown to them. Their concern was with fodder. Sowing grass leys focused attention on the range and suitability of grasses that could be grown and so clover was selected…; turnips were an alternate source of fodder. Once grown, and integrated into arable rotations, their probably unintended outcome was an increase in overall output. Although systems such as the Norfolk four-course rotation increased output of both stock and crops their major contribution maybe have been that optimum output occurred with a larger proportion of arable crops than under a system of permanent grass and permanent arable. The much increased amounts of manure from more efficient fodder crops, and the rotational use of crop residues, allowed this substantial increase in grain area, while still maintaining, or even boosting, yields. [Mark Overton, Agricultural Revolution in England, p. 117, 120-121, Cambridge University Press, 1996]

So here’s my point, what I would have said first, if I didn’t have to provide the background: Marx, in his pursuit of Ricardo, fails to comprehend exactly what Ricardo failed to apprehend: the revolution in English agriculture, the revolutionary increase in output and yield between 1750 and 1850. This failure is not so much a case of Marx failing to see the forest because of the trees as it is the case of Marx failing to see the deforestation because of the tree farms.

4. For Marx, the transformation of agricultural, the capitalist transformation of agricultural that actually operates through rent just isn’t the issue, and that’s a shame. This is the only instance in Marx’s writings, that I know of, where Marx actually adopts the position, the attitude, and the analysis of an economist, in essence abstracting the economic categories from the historical relations, and the historical development, that produce the economic category.

Ground-rent, for Marx, is the grand exception that is the proof of the rule of the law of value. Ground-rent will be the vector by which Marx, accepting the elements of ground-rent as Ricardo describes them, will prove how the apparent anomaly in the prices of agricultural commodities—where the less efficient producer, and the dearer product, set the market –actually validates the labor theory of value.

For Marx, following Ricardo, ground-rent exists as a transfer of value from industrial capital to the landlord. Rent is a deduction from profit, but not just from the profit of the tenant capitalist-farmer. Value moves, through the mechanism of price, from the superior productivity of industrial capital, and lower cost of industrial commodities, to the inferior productivity of agricultural capital and the higher cost of agricultural commodities.

Says Marx:

Incidentally, however the phenomenon of rent may be explained, the significant difference between agriculture and industry remains in that in the latter, excess surplus value is created by the cheaper production, in the former by dearer production. [Theories of Surplus Value, Part 2, Chapter 8]

So… ground-rent does not cause the higher prices, or the increase in price of agricultural commodities. The possibility for rent exists in those higher prices. The values of agricultural commodities are, like the values for all commodities, determined by the labor-time embodied therein as mediated by the time necessary for their reproduction. In agriculture, however, increased production necessarily entails, creates, an increase in the time necessary for the reproduction of any individual commodity. In agriculture, unlike industry, the expansion of production does not mean the relatively greater production of use-values with the same or proportionally less expansion of exchange-value.

In agriculture, the increased production does not reduce the socially average time necessary for reproduction and all of this occurs because demand is not satisfied.

Says Marx:

If the area of fertile land were enlarged or the fertility of the poorer soil so improved that I could satisfy demand, then this game would end. [TSV, Part 2, Chapter 8].

In The Poverty of Philosophy, Marx gives us the outline of Ricardo’s argument that he will use, and maintain, for his own examination of rent throughout his economic manuscripts, including volume 3 of Capital:

We have seen that, according to the Ricardian doctrine, the price of all objects is determined ultimately by the cost of production, including the industrial profit; in other words, by the labour time employed. In manufacturing industry, the price of the product obtained by the minimum of labour regulates the price of all other commodities of the same kind, seeing that the cheapest and most productive instruments of production can be multiplied to infinity and that competition necessarily gives rise to a market price – that is, a common price for all products of the same kind.

In agricultural industry, on the contrary, it is the price of the product obtained by the greatest amount of labour which regulates the price of all products of the same kind. In the first place, one cannot, as in manufacturing industry, multiply at will the instruments of production possessing the same degree of productivity, that is, plots of land with the same degree of fertility. Then, as population increases, land of an inferior quality begins to be exploited, or new outlays of capital, proportionately less productive than before, are made upon the same plot of land. In both cases a greater amount of labour is expended to obtain a proportionately smaller product. The needs of the population having rendered necessary this increase of labour, the product of the land whose exploitation is the more costly has as certain a sale as that of a piece of land whose exploitation is cheaper. As competition levels the market price, the product of the better soil will be paid for as dearly as that of the inferior. It is the excess of the price of the products of the better soil over the cost of their production that constitutes rent. [Poverty of Philosophy, Chapter 4, “Property of Ground Rent”]

Marx concludes the paragraph with what he regards as near insurmountable obstacles to the “parity” of industrial and agricultural production:

If one could always have at one’s disposal plots of land of the same degree of fertility; if one could, as in manufacturing industry, have recourse continually to cheaper and more productive machines, or if the subsequent outlays of capital produced as much as the first, then the price of agricultural products would be determined by the price of commodities produced by the best instruments of production, as we have seen with the price of manufactured products. But, from this moment rent would have disappeared also.

Yet, here is exactly the transformation imposed upon agriculture by capitalism, a transformation that finds its agents, in part, through the receivers of rent, the rent-seeking, profit-seeking landlords.

5. Marx certainly achieves his objective. He pursues Ricardo and brings him to ground [-rent]. The critique of Ricardo that Marx produces using ground-rent as a vector absolutely restores the integrity and viability of the labor theory of value.

The analysis of cost-price and the differentiation of cost-price from value establish the mediation through which the law of value must operate given the private ownership of the means of production. Marx demonstrates not only why prices deviate from values, but more importantly how the deviation of specific, individual, numerous prices from specific, individual, numerous values is the mechanism through which the law of value enforces itself. The analysis by Marx at one and the same time answers the “transformation question” before it is asked; embeds the labor theory of value as the center around which all of capital spins and morphs; proves that profit is derived from exchanging commodities at their values, but the profit so derived for any commodity is a distribution of, a proportion, a relation to the totality of value of all commodities.

Marx has climbed the ladder of Ricardo’s labor theory of value, and having done so, has no more need for ladders. The labor theory of value is firmly established at ground [-rent] level.

Here are the determining conditions of Ricardo’s theory of ground-rent, and Marx reproduces in and as his own in the critique of Ricardo: increased and increasing population; increased demand for agricultural commodities; inability of cultivated land to satisfy the demand for agricultural commodities; cultivation of less fertile lands; inability of new areas of cultivation and/or successive applications of capital to old areas to maintain or improve yields.

Marx certainly recognizes the weaknesses in Ricardo’s theory of the persistent, if not eternal, scarcity of agricultural output. We have Marx’s recognition of the feasibility of rent in the lower wage paid the agricultural laborer. We have Marx explaining how the new land brought into production is not necessarily less fertile, naturally, but that successive applications of capital are required to this new land to establish productivity equal to that of the already cultivated property. We don’t see Marx recognizing that his very recognition of this quality contradicts the assertion that successive application of capital produce declining returns.

We hear Marx telling us that if, in agricultural production, the machinery and constant capital inputs stood in the same ratio to the labor, variable capital as the ratio is industry, then rent would disappear:

If the mode of production changed in such a way that the ratio of variable to constant capital became the same as the average ratio in industry, then the excess of value over the average price of wheat would disappear and with it rent—excess profit. [Marx, TSV Part 2 “Herr Rodbertus. New Theory of Rent (Digression) {9} Differential Rent and Absolute Rent in Their Reciprocal Relationship. Rent as an Historical Category. Smith’s and Ricardo’s Method of Research”]

We don’t hear Marx analyzing exactly this trend in the development of capitalist agriculture, even though he writes:

In our view rent arises from an historical difference in the organic component parts of capital which may be partially ironed out and indeed disappear completely, with the development of agriculture.

But this is exactly the point where the historical analysis of rent, of its function in expanding the capitalist relations of production in agriculture, the capitalist organization of labor in agriculture should begin.

6. Ricardo’s study of ground-rent and price formation in agriculture is heavily informed by the dramatic price inflation in agricultural commodities in the period 1794-1815, the period of the anti-Jacobin and then Napoleonic Wars. In part, it was the military’s demand for agricultural commodities, and not just agricultural commodities, that drove the price inflation of these years.

This period is also the initialization period of the industrial revolution, when steam power was harnessed to the production of textiles; to the production of coal; and to the processing of grain.

The military’s requirements in the midst of this dramatic transition in the technical basis of production worked to the benefit of some, but not to the benefit of all. There was little or no benefit to the cottagers living in and around the villages and manors, who depended on rights of common for pasture, for maintaining production and productivity of their smaller, rented plots. There was no benefit to the commoners who rented almost no land for their direct production and relied almost completely on the common rights. There was certainly no benefit to the agricultural laborers. Between 1780 and 1810, real wages for agricultural workers declined by twenty percent.

For the most part, the dramatic price inflation and the subsequent climb in rents were driven by the number of poor harvest years, and the number of successive poor harvest years. Bad harvests were recorded in 1794, 1795, 1799, 1800, 1809, 1810, 1811, and 1812.

During this period of bad harvests, the population of England continued to grow, nearly doubling in the 1780 to 1806 period.

All the elements for the basis of rent are in place: population growth, inability of agriculture to meet demand, declining wages, apparent failure of successive applications of capital to maintain yield, cultivation of less fertile lands. Marx writes:

But apart from absolute rent, the following question remains for Ricardo:

The population grows and with it the demand for agricultural products. Therewith their price rises, as happens in similar cases in industry. But in industry, this rise in price ceases as soon as demand has become effective and brought about an increased supply of commodities. The product now falls to the old, or rather below the old, level of value. But in agriculture this additional product is thrown on to the market neither at the same price nor at a 1ower price. It costs more and effects a constant rise in market-prices and along with that, a raising of rent. How is this to be explained if not by the fact that ever less fertile types of land are being used, that ever more labour is required in order to produce the same product, that agriculture becomes progressively more sterile? Why, apart from the influence of the depreciation [of money], did agricultural products rise in England from 1797 to 1815 with the rapid development of the population? That they fell again later proves nothing. That supplies from foreign markets were cut off proves nothing. On the contrary. This in fact created the right conditions for demonstrating the effect of the law of rent as such. For it was the very cutting off of foreign supplies which forced the country to have recourse to ever less fertile land. This cannot be explained by an absolute increase in rent, because not only did the rental rise but also the rate of rent. The quarter of wheat, etc. rose in price.

It cannot be explained by depreciation because although this might well explain why, with greater productivity in industry, industrial products fell, hence why the relative price of agricultural products rose, it would not explain why in addition to this relative rise, the prices of agricultural products were continuously rising absolutely. Similarly, it cannot be explained as a consequence of the fall in the rate of profit. This would never explain a change in prices, but only a change in the distribution of value or of price between landlord, manufacturer and worker. [Karl Marx, Theories of Surplus Value, (Chapter IX) History of the Ricardian Law of Rent [6] Ricardo’s Thesis on the Constant Rise in Corn Prices. Table of Annual Average Prices of Corn from 1641 to 1859].

Marx is a bit over-zealous, but he is writing in his notebooks. If the price increases tell us something about the mechanisms of accumulation and apportionment, then the price declines also tell us something about accumulation and apportionment. In fact, it is Marx’s contention, at least for industrial capital and industrial commodities, that it is only in the totality of those changes in those prices, in that inflation and devaluation that the truth of accumulation and apportionment is manifested.

The correlation between population growth and price increase is a strong correlation, but it is not an absolute correlation. Again, Mark Overton in his Agricultural Revolution in England points out that there is a positive correlation between the rate of growth of the population in England and the rate of growth in prices:

It indicates a strong positive relationship from the 1540s to 1780s: the rate at which prices were growing followed the rate of population growth. But after the 25 year period starting 1781 the relationship changes: population growth rates rise to unprecedented levels [over 1 per cent per annum], but the rate of growth in prices starts to fall, from a peak of over 2 per cent per annum…Although population was growing, the agricultural sector of the economy was able to expand output to meet the additional demand, so that prices failed to rise so rapidly as they had done under pressure of demand in previous centuries. [emphasis added] …at the start of the eighteenth century English agriculture seemed unable to expand output significantly, but by the end of the century such expansion was well under way. [Overton, Agricultural Revolution in England, p.69-70]

As a matter of fact, after 1800 the correlation between population growth and rate of growth of prices turns negative, with the steady population growth rate of about 1.4 percent per annum coincident with a negative rate of growth of prices. This negative trend is reversed only when the rate of population growth declines after about 1825.

It’s not Ricardo’s fault that the poor state of English record-keeping regarding its agricultural revolution prevented him from recognizing that such a transformation had occurred. It’s not Marx’s fault that the English record-keeping and analysis of the record that did exist was still in a poor state at the time he undertook his critique. However, it is Marx’s “fault” that in his defense of the law of value, he abstracts, in his discussion of rent, that law from the social relations that it embodies and reproduces.

The law of value is not some deus ex machine, nor is it some divinitus machine. It is a law derived from the social relations of production. It is derived from and reproduces the relations of classes. It is a law containing and expressing the way society organizes its own reproduction. That organization is of time itself as the means of exchange. It is the conversion of time into labor-time; the conversion of labor-time into the production of values; it is the exchange of labor-time for value. The law of value is nothing but the reproduction of the conflict between labor and the conditions of labor. The core to that reproduction, to that law, is the dispossession of the immediate, direct, producers.

So if the law of value is not compromised by ground-rent but rather confirmed and expressed through ground-rent, and Marx most definitely proves exactly this, then ground-rent must be vehicle, a vector, a mechanism, a mediation for the realization of that core to the reproduction of value. Through ground-rent, the class renting out the ground, must be reproducing the social relation of value even to, especially to, the point of transforming itself as a class in the process, and in the relation, itself.

This transformation is exactly what ground-rent accomplishes. This transformation is exactly what ground-rent accomplishes painfully, acutely, chaotically in the inflationary period of failed harvests during the anti-Jacobin and then Napoleonic Wars.

7. So what is this revolution? What is transformation of English agriculture? And what about the period 1794-1815, what processes are quickened by and during this period of inflation? What is the legacy of this period?

First and foremost, the effects of the price inflation, the changes in land use, land tenure, rights of common are very different for different regions, and for different villages within the same region in England. Still there are trends, and the trend is our friend.

During this English “revolution,” the growth in agricultural yield outpaced the increase in new lands brought into cultivation. Jonathan Theobold in his paper “Agricultural Productivity in Woodland High Suffolk 1600-1850,” [from the Agricultural History Review available on the website of the British Agricultural Historical Society: www.bahs.org.uk volume 50, part 1, 2002. See note at end on how to access paper from this site] writes:

For example, figures show that although the area under grain grew by approximately 160 percent between 1670 and 1850, the total grain yield in this period increased by over 500 percent implying that land productivity was noticeably improving.

…in the 170 years after 1700 the agrarian economy of England was utterly transformed, and agricultural practice and productivity significantly improved. Overton noted in 1996 that ‘the magnitude of changes that occurred [in Norfolk between 1750 and 1850] were out of all proportion to those which had occurred during the preceding 500 years, and changes of similar magnitude were happening elsewhere’ in England.

Output exceeded, and by far, increases in arable acreage. Yields improved, but yield is a very “soft” measure of agricultural improvement, as one of the factors determining yield is the amount of land devoted to the cultivation of crops.

Liam Brunt in his paper “Estimating English Wheat Production in the Industrial Revolution,” [available at: http://www.nuff.ox.ac.uk/economics/history/paper29/29bruntweb.pdf] writes:

By 1771 the effect of crop rotation reached a peak because the average crop rotation featured a large proportion of turnips and a relatively small proportion of grain crops- so the wheat yield was correspondingly high. But as the price of wheat rose dramatically through the Revolutionary and Napoleonic Wars (1793 onwards) farmers grew a higher proportion of wheat and accepted a lower wheat yield per acre. In the post-war depression the proportion of wheat in the rotation shrank dramatically (thus improving yields) but thereafter increased in response to rising prices. Two aspects of this process need to be stressed.

First, the change in crop rotation was a rational response to temporarily high prices. The soil is effectively a ‘nutrient bank’ where the farmer can either make a deposit or a withdrawal. When wheat prices were temporarily high during the Napoleonic Wars it was optimal for the farmer to make a withdrawal (i.e. grow more wheat in the rotation) and run down the quality of the soil.

We see there is a moment that corresponds to Ricardo’s claim, and Marx’s endorsement of the claim, that successive applications of capital to the same land provide a declining rate of return in agriculture. But this moment is not a “natural event” but a market decision to apply capital in order to deplete the land of its potential, improved yield and output in favor of a compressed, reduced but more valuable immediate yield and output.

We see a possible moment that corresponds to Ricardo’s and Marx’s theory of increased agricultural prices due to the incorporation of marginal, less fertile land. There follows increased effort for increased production, theoretically, but at a higher price, practically. The marginal lands require more capital, more labor, more time to provide the yield and output of the land already in cultivation. The increased cost of this expanded production to meet the moment of insufficient supply or increased demand raises the average social cost of reproducing the total agricultural product. Again, however, this is a moment, a market decision, and not the permanent characteristic of agricultural production.

Says Brunt:

The point to note is that variations in total wheat output are much more sensitive to changes in crop rotation than changes in arable acreage. There are two methods of raising wheat output by 25 percent. Once option is to keep the same crop rotation and increase the arable acreage by 25 percent. This is clearly very costly because it involves a high fixed cost for bringing new land into production (even if the farmer simply ploughs up pasture land). Moreover since the new land is likely to be of lower quality it will require an acreage increase in excess of 25 percent… The second option is to keep the same arable acreage and grow 25 percent wheat instead of 20 percent wheat.

Marx’s claim that agricultural producers cannot multiply and reproduce their critical instrument, the land, at will and with the same level of productivity as the bourgeoisie can multiply their machines ignores the ability to bring fallow land into production, and to alter rotations.

Certainly the price inflation of 1790-1813 brought new lands, formerly marginal lands into production but neither massively nor quickly enough to determine the price of wheat. The weather conditions that limited the harvest by exacerbating the underlying low level of technology, in particular the poor drainage, of most English agriculture did act that massively and that quickly.

J.A Perkins, in his paper “The Prosperity of Farming on the Lindsey Uplands: 1813-1837,” [available on the BAHS website, volume 24.2, 1976] writes:

The high prices of cereal prevailing during the majority of the war years offered the prospects of a return to farmers for bringing the light soils of the Lindsey uplands permanently under the plough, to be cultivated with cereal and fodder crop rotations designed to raise the fertility of the soil and the profitability of farming in the longer term. To bring the land to a peak of fertility required a considerable investment of capital, which was largely borne by a tenantry occupying their farms without the security of leases, and which—although inflation during the war years reduced the time-span between investment and return—was not completely returned before a number of years had elapsed. The landlords provided the framework [emphasis added] for progress by financing the enclosure of the land and the relocation of farmsteads…Thereafter, the landlords mainly assisted their tenants by permitting a lag to exist between the level of farm rents and the productivity and profitability of farm. But the initiators of the agricultural revolution on the Lindsey uplands were the tenant farmers, and the overwhelming bulk of investment in the land from the turn of the 19^th century consisted of tenant outlays.

In converting the land from pasture to permanent tillage the tenants had to expend a total of £ 8 to £ 9 per acre, of the equivalent of fifteen to twenty times the unimproved annual value of the land in the late 1790s…. the land had first to “pared and burnt,” by gangs of men….Next the land war “marled” or dressed with chalk at the rate of 80 cubic feet per acre to…counteract…the tendency of turnips grown on light soils to run to a taproot. Finally the process of reclaiming the land for tillage was completed by a dressing of 60 bushels of bones per acre on the initiating turnip crop in the rotation…..

…There were, however, important differences of emphasis between the farming of the wartime and that of the postwar years. Where previously the farmers had striven to raise output without according much consideration to costs, whose increase was retarded in the instances of rent and wages by custom and tradition, and whose general significance was eroded by inflations, after 1813 they were motivated to increase the productivity of labor and capital as well as the productiveness of land. After 1813, the prosperity of farming came to depend not only upon the farmer’s ability to increase the gross output of their farms, to maintain the level of their farm by means of a larger volume of produce, but also upon a lowering of costs per unit of output to maintain profit margins. Both of these objectives were achieved by the continued development of the farming system.

What we have here is half the story of the revolution in English agriculture, the story of increasing applications of capital providing increased output and demanding the modern measure of value, profitability.

No revolution is so benign as to simply be the product and the record of hardy, hard working entrepreneurs, conquering nature with drill and plow, overturning the soil inspired by their innate acquisitiveness. Revolutions, even those that don’t overthrow kings, tyrants, and classes; even those that don’t establish kings, tyrants, classes; even revolutions in the prosaic practice of agriculture involve more than just “improvement.” Within, and under, those indexes of output, yields, productivity—those measures of the change in the forces of production—are the measures changing the relations of production.

Within those measures that record, between 1700 and 1850, the 100 percent increase in sown arable acreage; that productivity of land doubled; of the 100 percent growth in labor productivity [Mark Overton, “Re-establishing the English Agricultural Revolution,” BAHS website, volume 44.1, 1996]; is the coded record of the transformation of the land and its products into capital, and the changes in the proportions of that capital to the labor it commanded. That code, when deciphered into its measures of capital and labor, tells us that improvement was a by-product of acquisition and accumulation.

The level of technology circumscribed by capital sets for the farmer an optimum scale of operations—an expanded area to be cultivated where the relationship between costs and benefits is optimized. This expanded area, this “new” land brought into cultivation is not “virgin” land of unknown fertility, existing at the edges of established agriculture, but the land cultivated by the cottagers, and small farmers who cannot afford the cost of enclosure and must sell or abandon the land. The expanded area is the “wastes,” the fens and moors and marshes utilized as resources for subsistence by cottagers, commoners, small farmers, hunters, artisans, day laborers, seasonal laborers. The “improvement” of agriculture is the attack on the right of common to tillage and pasture, to gleanings, to the folding of livestock. The expansion is the expansion of private property.

“The landlords provide the framework by financing the enclosure of land,” the major result of which was the increase in average farm size. J.A. Perkins writing again about Lindsey in “Tenure, Tenant Right, and Agricultural Progress in Lindsey 1780-1850” [BAHS website, volume 23.1, 1975 ] states:

In 1787, to take one example, the 2200 acres of land in the parish of Beelsby on the Wolds were divided between four farms of over 300 acres each, four small farms of between 10 and 40 acres each, and eight small holdings of from 3 to 9 acres each, which shared with two other cottages without land in the exploitation of the 70 acres of “Cottagers Pasture.” Thirty years later, the whole parish was divided into two large farms of 1,086 and 1,080 acres respectively.

The loss of rights to common, of access to the wastes, fens, marshes, all these made the market dependency of producers, big and small, more acute… and more desperate. The high prices of the Napoleonic War years seemed to provide relief, and prosperity, to the small farmers and the cottagers, as prices for their surplus product brought higher prices. However, the rising prices of inputs to production, of the means of subsistence, and the rising rents that the small farmers and cottagers had to absorb made them that much more market dependent, and that much less capable of withstanding any economic adversity such as reduced harvest due to poor weather. Subsistence required income. Income meant production for exchange, for the market.

And when income was not enough to provide for subsistence and rent? Then the direct producer, the smaller tenant, the commoners, the cottagers were dispossessed, and were left with only one thing of value to exchange in the markets, their labor-power.

And here we can see the social function of the price inflation of agriculture products, and the resulting high rents. Inflation is accumulation by almost, but not quite, primitive means. Landlords are the personification of that almost, but not quite, primitive means.

8. Enclosure effectively concentrated capital—land, buildings, implements, livestock, seed—into fewer hands, operating expanded acreage. Certainly the process was uneven, but the trend was the trend to larger farms cultivated “in severality”—without obligation to the community of producers, large, small, poor, and even landless.

The trend to larger farms was not confined to enclosed acreage but was the trend in both open and enclosed field farming. Enclosure, however, was the dominant response to increased market dependency. The effects of enclosure on the social relations of agricultural production were the “other half” of the agricultural revolution in England, transforming class relations from those of common right, common obligation, common allocation, and common service to those of private accumulation. With the transformation of the relations of land to labor there comes, necessarily, the “disappearance” of those who depended upon the common appropriation, on the reproduction of the common right. The disappearance is, of course, the transformation through dispossession of that class reproducing itself as private producers engaged in agricultural production through the common management, supervision, regulation of the source of surplus-- landed labor.

J. M. Neeson writing in Commoners: Common Right, Enclosure and Social Change in England 1700-1820 [Cambridge University Press, 1993] concludes in his study of twenty-three parishes in Northamptonshire between 1780 and 1815:

We can summarize the findings on disappearance of landholders and decline of survivors’ holdings as follows: First: half of all landholders sold all their lands in enclosing parishes during the enclosure period, compared to only one quarter of those in open parishes. Occupiers sold as frequently as owners who let their lands; and tenants left the land at the same rate. The smaller the holding, the more likely was the sale of land….One exception to this rule seems to have occurred in forest parishes, where smallholders stayed on the land in greater numbers than elsewhere, perhaps encourage by continued enjoyment of common right.

Second: surviving landholders sold some of their land too, and tenants worked smaller holdings. One third of the remaining original landholders lost a significantly larger amount of their lands than would have gone to the tithe-owner for tithe compensation. In contrast only one eighth of open parish landholders lost land on this scale…. [p.239-240].

Thus, with the possible exception of parishes where pat of the old common-right economy survived, many smallholders sold all their land at enclosure and most sold some of it. Although there was no common parish experience, there was a common shareholder experience…

…it becomes that enclosure dealt small peasants a double blow, for not only did they lose common right, they lost land too. No argument about the rise and fall of classes can do justice to this effect of enclosure. Whether the English peasantry disappeared or not, the effect of enclosure on the last generation of open field peasants was profound. [p.242-243]

Open-field agricultural communities were no utopias for small proprietors, for small tenants, for cottagers, and commoners, but they were less market-dependent, less exchange-driven. The organization of production, the use of land and labor, was fundamentally opposed to the capitalization of agriculture.

Open-field agricultural practices were not less “efficient,” less “productive” than enclosed field agricultural practices. Much of the advance in crop rotation, land “conditioning,” and convertible husbandry had been developed on and incorporated into open-field cultivation without reductions in common rights.

Enclosure was first and foremost the reconfiguration of the relation of land to labor, of landed labor, institutionalizing profit and accumulation as the determinants of production. The reconfiguration of labor was not limited to the small holder of land but extended to the village. Destroying the common rights excluded the landless, the small-holding artisan, the craftsman from supplementing his or her income; from maintaining himself or herself as a small private producer insulated from the expanding market dependency. Destroying the common right also prevented the artisan, the landless, from presenting himself or herself as a casual wage-laborer, seeking wages only at various times and only as individual circumstances dictated.

Enclosure was not simply dispossession from land, from property, but the dispossession of labor from any direct attachment to the products of its own creation. It is the extended moment in English history that transforms production into production for exchange; where the market becomes the mechanism for subordinating labor to property by transforming land into capital.

In this historical transformation of the social relations of production, we can determine why it was that while modern capitalism begins its existence in the transformation of agriculture, the accumulation of capital proceeds more slowly in agriculture than in industry. We can even account for the different rates of capitalist accumulation and development among countries.

Those different rates have little to do with the “strength” of the landlords, the level of rents, the “diversion” of profits from the industrial capitalists and to the landlords through rents. That difference indeed has its origin, as Marx noted, in the fact that capital does not confront landed property in a “pristine” state, but in its pre-existing social organization. However, that condition is not the “one-sided” domination of the feudal lords. The social organization of agriculture in England was also the prevalence of the small-scale, “subsistence plus surplus” cultivators of open-field, common right land.

The more that small scale “subsistence plus surplus” mode reproduces itself, actually “fractalizes” itself, the more difficult is it for capital, and the capitalists, to establish the commercial relations of land to production, of labor to product, that can create and sustain the market. The more difficult it is to create those relations that can transform production into production for exchange, and exchange into accumulation.

Rent is no integument to that market relationship. On the contrary, rent is its hand-maiden. The rent-seeking, profit-seeking landlord, in the very process of rent-seeking, is transforming land into capital and, at the same time, doing away with class of landlords. After the wave of enclosures during and after the Napoleonic Wars, the number of landlords in some parishes of the English countryside was reduced by one-third, as landlords too sold out, and cashed in.

In the end, the revolution in English agriculture sets the stage for eclipse of those old tenets of ground-rent theories, where less productive land is always brought into cultivation, where demand can never be satisfied, where successive applications of capital provide reduced yields, and where excess surplus value accrues to the higher priced product, to the least efficient producer. In the end, the revolution in English agriculture sets the stage transforms agricultural production into the reproduction of capital and thus sets the stage for overproduction.

In his paper “Adjustments in Arable Farming after the Napoleonic Wars” [BAHS site, volume 28.2, 1980], A.R. Wilkes writes:

For twenty years after the Napoleonic War the response of England’s farmers to low wheat prices was to produce more. While some of the increase was obtained from higher yields, the major part came from vastly expanded acreages. This development seems to have taken place throughout the country. Although on some farms, it was a positive economic response…on many it represented the only possible response by farmers already growing wheat as their main crop. Such people were unable or unwilling to adjust to other types of farming, and they were forced increasingly to pin their hopes on the traditional rent-payer, often at the expense of good farming. This pattern did not change until the mid-1830s.

9. Capital accumulates so much faster in industry than in agriculture for the very reason, in part, that Marx identifies as being the basis for rent—the lower average wage paid to agricultural labor in comparison to the wage paid to industrial labor.

Accelerated accumulation in industry is precipitated by the higher wages paid to urban workers who cannot supplement their own subsistence through access to common rights in agriculture. Consequently, the source of industrial capital, the wage, and the wage alone as the source of reproduction of the laborer consistently pushes against the capitalists’ need to restrain costs.

Capital attempts to resolve this tension by aggrandizing greater wage labor through proportional expulsion—by reducing the amount of time of the working day required for the reproduction of the workers’ wages. The expulsion requires the substitution of the inanimate, insensate, machine—the application of increasing amounts of fixed capital to the production process.

The fixed component only transfers its value, its cost to the capitalist, piecemeal, incrementally in the value of the individual product. The ability of fixed capital to amplify accumulation exists solely in its ability to reduce the time of production of the commodity, which also reduces the amount of value transferred from the machinery to commodity. The capitalist has no choice save to operate the fixed capital on the largest scale, running continuously, ceaselessly.

No such continuity of production is possible in agriculture practiced on the small scale, limited by subsistence, circumscribed not only in space by area, but in time, by its very seasonality, disrupting the continuing of production, extending the lag between production and product.

Only through expansion of the area for cultivation, through dispossession of the small producer, can capital in agriculture begin that process leading to accumulation. In this, the trajectory of capital, rent is not the barrier, it is the facilitator. Rent launches capital.

S. Artesian

December 29, 2010

Part 2 will examine rent and “natural resources”- and the suitability of rent as an explanation for price fluctuations in a representative natural resource like… oil.

Note: How to access papers from the BAHS website.

1. go to www.bahs.org.uk

2. in the left margin, click on Agricultural History Review

3. on the new screen click on “search and read past articles from the Review…”

4. on the new screen click on “to search an index to articles with links…”

5. Scroll to volume in which the paper appears and click.

Facets of Value, 3

2010-11-23T20:37:00.003-05:00

The English translation of vol 1 of Capital that most of us have is not based on the the first edition of Capital, but on the 4th German edition.

If we look at a translation from that first German edition [the Marxist Internet Archive has one of Chapter 1, The Commodity, by Albert Dragstedt], Marx's language, analysis, and demonstration of the relative, equivalent, and value forms of the commodity are clear examples of Marx's extraction of the rational kernel from Hegel's dialectic.

Marx in this first chapter is explaining the most critical facet of his investigation into capital [which is why it is the first chapter] and his materialist dialectic- the interpenetration of form and substance, of identity and opposition are clear.

He writes:

Quote:

The expression of the value of linen in the coat impresses a new form upon the coat itself. After all, what is the meaning of the value-form of linen? Evidently that the coat is exchangeable for it. Whatever else may happen to it, in its mundane reality it possesses in its natural form [coat] now the form of immediate exchangeability with another commodity, the form of an exchangeable use-value. or Equivalent. The specification of the Equivalent contains not only the fact that a commodity is value at all, but the fact that it in its corporeal shape [its use-value]counts as value for another commodity and consequently is immediately at hand as exchange-value for the other commodity..

Marx continues:

But commodities are objects. They have to be what they are in an object-like way or else reveal it in their own object-like relationships. In the production of linen, a particular quantum of human labour exists in having been expended. The linen's value is the merely objective reflection of the labour so expended, but it is not reflected in the body of the linen. It reveals itself [i.e., acquires a sensual expression] by its value relationship it to the coat. By the linen's equating the coat to itself as value-- while at the same time distinguishing itself from the coast as object of use-- what happens is that the coat becomes the form of appearance of line-value as opposed to linen-body: its value-form as distinguished from its natural form.

"..what happens is that the coat becomes the form of appearance of linen-value as opposed to linen-body"

The emphasis is in the original, as supplied by Marx.

Where does this get Marx? Where it always gets us-- back to the specific social organization of labor:

Quote:

The use value coat only becomes the form of appearance of linen-value because linen relates itself to the material of the coat as to an immediate materialization of abstract human labour, and thus to labour which is of the same kind as that which is objectified within the linen itself. The object, coat, counts for it as a sensually palpable objectification of human labour of the same kind, and consequently as value in its natural form. Since it is, as value, of the same essence as the coat,the natural form coat thereby becomes the form of appearance of its own value. But the labour represented in the use-value, coat, is not simply human labour, but is rather a particular useful labour: tailoring.Simple human labour [expenditure of human labour-power] is capable of receiving each and every determination, it is true, but is undetermined just in and for itself. It can only realize and objectify itself as soon as human labor-power is expended in a determined form, as determined and specified labour; because it is only determined and specified labour which can be confronted by some natural entity-- an external material in which labour objectifies itself. It is only the 'concept' in Hegel's sense that manages to objectify itself without external material.

Here we have Marx's material extraction of the rational kernel from Hegel's dialectic. Human labor is capable of receiving every determination, and remaining human labor. But the labor can only realize itself as labour power embedded in the specific commodity. the labor can only realize itself as labour power, as an abstract quality-less expression when expressed in specific, determined material.

So the determination is two-fold-- as the concrete specific object of production, in all articles of production as value. It is the social determination, transforming labor into raw undifferentiated labor power, that contains the antagonism, the conflict, in Marx's word, the "contradiction" where labor power becomes opposite to and the negation of the power of labor.

S. Artesian November 23, 2010

sartesian@earthlink.net

Facets of Value, 2

2010-11-21T01:28:00.001-05:00

In the exchange of commodities Marx examines the different rotations, appearances, of the commodity in its relative and equivalent forms of the expression of value. For exchange to expand, to dominate, to determine production, an equivalent for all commodities must be established. Just as human labor in general, in abstract, in its distilled, estranged existence as labor time is projected into the commodity as value, value is projected out of the commodity into the abstract, general, featureless, existence of money. Estrangement is now complete. Accumulation begins.

From here, Marx takes us to his essay on the fetishism of commodities in which Marx explores how and why it is the form of labor, the organization of production in capitalism that expresses human relations as the relations between things, and endows those relations between things with power over the relations of human beings. Direct production for direct need has disappeared. Production and need are associated only indirectly, mediated by the market, by exchanged. Value appears as an independent force, even a rational one, commanding equivalence, ensuring equity with a wave of its invisible hand.

As concise as Marx’s essay is, the essay itself is condensed in one sentence in the second footnote Marx provides: “When, therefore, Galiani says: Value is a relation between persons—‘La Ricchezza e una ragione tra due persone,’—he ought to have added: a relation between persons expressed as a relation between things.”

Having established the relative and equivalent forms of value from the exchange of commodities; the money form from the relative and equivalent forms of value in the process, the circuits of exchange; fetishism, form supreme, from the value expressed as money over human beings, Marx now returns to examine exchange— not simply to reiterate the different forms, or moments of the commodity as value, but rather as expressing historical moments, measures and manifestations of commerce. The transformation of exchange from barter or simple trade into commerce is the “record” of the transformation of a useful surplus article into a commodity.

The commodity as a specific product, a useful article, and organized as value, then manifests the conditions of its production, i.e. labor as a specifically useful article that is organized as value.

S. Artesian November 21, 2010

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