Accumulation and Decomposition in the Era of Lift and Separate, More

Accumulation and Decomposition in the Era of Lift and Separate, 3

Mexico: Land, Labor, and the Forty Percent Bourgeoisie

5. OP LandL

The radical bourgeois....therefore goes forward theoretically to a refutation of the private ownership of land, which in the form of state property, he would like to turn into the common property of the bourgeois class, of capital. But in practice he lacks the courage, since an attack on one form of property,-- a form of private ownership of the condition of labor-- might cast considerable doubts on the other form. Besides, the bourgeois has himself become an owner of land.

--Karl Marx, Theories of Surplus Value, Chapter 8, 1863

Let's Review: For capital to become capital, for the bourgeoisie to become the bourgeoisie, the capacity for labor has to be detached from the means of labor, so that labor itself appears as a commodity with only one use, its usefulness in exchange for the medium by which labor can purchase its own subsistence. The laborers confronts the condition of labor as alien to themselves. The condition then dictates to the laborer the terms of his/her subsistence and social reproduction.

For the bourgeoisie, this original, repeating, and permanent dispossession or separability appears in the markets, as the alienability, the purchase and sale, of the means of production of subsistence itself, of the land itself. For rent to exist as a commercial relation, not a personal one, or one of service, land must be more than owned. It must be endowed with value, the value that only exists and survives by being reproduced as more value in the products of labor performed on the land. Land must be separated, and then opposed to labor. The social relation, the buying and selling of labor power precedes the commercial relation of renting land for production for markets, of production not for subsistence, but for the medium of subsistence that also represents the expansion of value. .

The ascendancy of the bourgeoisie, the measure of the strength, the advancement, the modernity of its rule over society, is indexed in the development of agricultural productivity, in the size of the population dispossessed, released from agricultural production-- in the changes in land tenure, from serf, slave, bondsman, peasant; from manor, hacienda, plantation; from lord, slaveholder, cacique, caudillo; from tenant-farmer, sharecropper, debt peon. And the change to agricultural capitalist and rural worker. The advancement of bourgeois rule over society, as opposed to the advancement of society, and the vitality of that rule, as opposed to the vitality of the society, are indexed in the degree of separation, individual, collective, and communal from landholding, and land-using, for direct subsistence of the producers.

Let's Continue: Economically, the district or the estate or the town or even sometimes the family is self-sufficing, producing its own food, making its own clothing, manufacturing its own tools, or bartering with neighbors for the few necessities that cannot be supplied from the domestic stock. The methods of agriculture, like the implements with which they work, are medieval...

Over a large part of the country (as in other nations of Latin America) the land is held much as it was in Spain before the discovery of the New World-- in that age when in Western Europe the feudal system of land tenure still survived the decay of feudalism as a recognized institution. -- George McCutchen McBride, The Land Systems of Mexico, New York 1923.

The Spanish invaders, upon conquering the Aztecs, intended to replace the Aztec elite in kind; to rule the same empire with a different name, New Spain, through commanding tribute, and service, from the conquered.

So small were the Spanish numbers, so backward their institutions of religion and property that if it hadn't been for the epidemics inflicted upon the indigenous peoples, the conquerors would surely have been swallowed up and absorbed by the conquered. Disease is the secret to Spain's success in New Spain. Taxation, tribute, the encomienda would have been nothing without the power of pestilence...in the beginning.

The first epidemics struck the indigenous peoples even before Tenochtitlan had fallen. By 1548, 70 percent of the indigenous population had died out. By the end of the 16th century, the decline exceeded 90 percent.

The conquistadores carried lots of germs with them, but not the germs of new relations of land and labor. They took the land in the name of the King and Queen, but their interests, and their god, was a lot closer at hand than the monarchy and its court. The conquerors required service, labor service to mine the metals, labor service to tend the land, labor service as a form of taxation itself on the life of the indigenous peoples. The encomienda which had been exported to the Spanish Caribbean from the Canary Islands was reexported to New Spain. The encomienda was presented as a system of mutual obligations between the conquered and the conquerors, with however, only one side required to actually serve and labor for the other.

In the Caribbean, the labor and service of the conquered was organized on the basis of kinship of the indigenous peoples. In New Spain, where much of the territory and the population was already organized in villages, towns, and districts-- where the original kinship relations of land and land use had already given way to territorial organization--, the encomiendas were likewise constituted in the aggregation of districts, villages, territory. With the original encomiendas, service of the conquered was demanded and delivered to the conquerors, while the property of the indigenous peoples was to be respected. Theoretically. With the encomiendas territoriales, labor service became indistinct from the land tenure relations that bound the conquered to conquistadores. The demand on the laborer for service became the demand on the laborers' property. The expropriation of property became the essential relation for the reproduction of the laborers' service.

The Spanish monarchy had acknowledged, granted, and even supported the villages rights to their own properties. The Spanish crown essentially incorporated the villages as tax and tribute paying units, collectivities. The encomienda obstructed that tribute relation.

This produced more than a little bit of conflict between the crown and the conquistadores, none of it of any benefit to the indigenous peoples. The conquistadores imagined themselves as the nobility of the New Spain, bequeathing their titles, their entitlements, as property to their offspring. Originally, the grants of encomiendas could be revoked by the crown at any time for any reason. That didn't sit particularly well with our noble plague-carriers. In 1536, grants were extended by law to include two generations-- the original recipient and his children. This didn't sit well either. In 1542 when new laws attempted to abolish the encomiendas, opposition in New Spain and Peru was so intense that the laws were withdrawn. Decrees were established allowing the bequeathing of the encomiendas to a third, fourth, and fifth generation.

The territory of the encomiendas itself was entailed. It could not be divided. It was inalienable, without the power of exchange, the power to be exchanged. Entailed estates were the earthly manifestation of the pretenders to nobility. Entailment prohibited the selling of estates to any church, monastery, or church official. This did not stop the church from accumulating its own entailed lands.

The immense size of the encomiendas, the personal appropriation of the labor of the indigenous peoples as a, and in a, form of service, radically restricted agricultural production and threatened the crown's administrative centers, the cities. The encomiendas had to be abolished. And they were abolished, although it took most of the 18th century to accomplish that task.

The decimation of the indigenous population, rather than the resistance of the crown, put an end to the conquistadores pretense at nobility. Labor service was difficult to obtain, and impossible to maintain without aggrandizing the land of the pueblos. While the encomienda disappeared, the aggrandizement of the indigenous peoples' lands continued. The mechanism of service crumbled, or rather was displaced onto the haciendas.

The hacendados did more than just dream of passing on their titles, now titles in land, to their offspring. They lived it, spending their time in the cities while overseers administered the estates. The lands of the pueblos, while still seized, were no longer just objects of accumulation. The indigenous pueblos themselves were incorporated into the haciendas almost as internal colonies, functioning in a sense as mitochondria in the autonomous cellular structure of the haciendas.

In 1767, the Spanish crown ordered the expulsion of the Jesuits from all the lands of the conquest. The Jesuits owned many haciendas which were seized and sold to the "public" under supervision of the vice-royalty. Before, during, and after the struggle for independence, church lands were seized and sold, rendering onto Caesar what was once, if not the property of the greatest absentee landlord of them all, then at least the property of god's favorite realty company.

While land tenure relations varied throughout Mexico prior to the conquest, with hunting/gathering tribes of the north, and some coastal regions having no concept of land ownership, collective and communal landholdings were widespread in the Yucatan and the Mesa Central. The callipulli, originally an organization of communal property based on kinship, became an organization of communal property based on territory. Each village held, as a village, surrounding land, called the altepetlalli, for cultivation and for hunting, quarrying, timber. Water rights were so precisely calculated and distributed that the Aztec code was preserved and adopted by the Spanish.

The indigenous pueblos also distributed plots of land for family use, called tlatlmilli. These plots were held in perpetuity by families. Within the framework of communal territory and clan holdings, individual holdings were allotted.

While land was held in common in the Aztec system, use of the land was dedicated to specific social relations of production; the land were worked in common by the calipulli, but the products of the calipulli were divided and assigned to the payment of tribute, the support of the priesthood, and provisions for military expeditions. Specific lands, called tlatocatlalli, were cultivated for the chiefs. Tecpantlalli were lands cultivated for the maintenance of the chief's family and court.

These lands, altepetlalli, tlatlmilli, tecpantalli, were also inalienable, and could not be appropriated from the callipulli by the chiefs.

Nevertheless, before and apart from the conquest, communal land tenure was being eroded by the growth of large estates on which tenants labored in share-cropping arrangements with the estate holders. These tenants were bound to the land as serfs. The estates themselves could be transferred, but not to the tenants, and when transferred, the tenants were transferred as part of the property of the estate. The tenants were a class apart from the callipulli, exempt from paying tribute to the chiefs or from working on the communal lands.

The conquest introduced the presidio, mission, and the Castilian pueblo into Mexico. The Castilian pueblo was a landholding body, an incorporation, where land was administered, leased, rented. Pasture lands were held in common as were areas for threshing of grain, hunting, production of charcoal, and storage. The ejido, often mistaken as the simple communism of the indigenous peoples of Mexico, was in fact the name for the common land at the outside the gates, or exit, of the Castilian village, and was introduced after the conquest.

The Spanish crown, assuming the status of chief, recognizing in the indigenous pueblo as parallel to the Castilian pueblo, "awarded" legal status to the communal and collective land tenure relations by incorporating these pueblos. The communal landholding arrangements made the pueblo the "natural" vehicle for the collection and remittance of tribute to the monarchy. In all its glory, the Spanish Empire was nothing more than a "subsistence plus" economy, with tribute being nothing more than direct aggrandizement for, and of, consumption, rather than a basis for expanded reproduction and for accumulation. .

6. Legacy Assets

It is this legacy of the conquest, of mercantile-feudal Spain, of conquistadores and monarch-- a legacy that one and the same time embraces the near extermination of the indigenous peoples and the preservation and incorporation of communal relations of land tenure, and subsistence agriculture into an economy of tribute and extraction-- that determines in all their modernity the conflicts, contradictions, antagonisms of the capitalist economic development of Mexico. It is this legacy that organically fuses underdevelopment and overproduction.

Interruption: Two cents worth and repeated

1. The bourgeoisie, developed/undeveloped and all states in between, recognize dispossession as the foundation to private ownership of the means of production. If Duchamp, working with glass, stripped bare the bride, the capitalist working with history stripped bare the laborer, divesting him/her of the visible means of support so that life itself hung by the skimpiest of threads, and that the only value he/she had was that of labor, and the only value that labor had was as a means of exchange for a wage, for access to subsistence.

2. This stripping bare is an historical process, definitive for capitalism in its emergence and development, persistent in every manifestation of capital's reproduction but always circumscribed, mitigated, deformed by the actual existing relations of production and property, not the least of which is the unevenness of capitalism's development not solely internal to a nation or country, but unevenness on the global platform. As capital becomes the dominant social relation globally, as it achieves valorisation through aggrandizing that labor stripped bare somewhere, at home or away, the less this world of capital can, or achieves, the stripping bare of labor everywhere, the transformation of the "pre-capitalist" social relations, the more it, capital, absorbs, accommodates, adapts those relations to its plastic universe of value. Marx writes in Capital, Vol 2: "No matter whether a commodity is the product of slavery, of peasants [Chinese, Indian ryots], of communes [Dutch East Indies], or of state enterprise [such as existed in the former epochs of Russian history on the basis of serfdom], or of half-savage hunting tribes, etc., commodities and money of such modes of production, when coming in contact with commodities and money representing industrial capital, enter as much into its rotation as into that of surplus-values embodied in the commodity-capital, provided the surplus-value is spent as revenue. They enter into both of the cycles of circulation of commodity-capital. The character of the process of production from which they emanate is immaterial. They perform the function of commodities on the market, and enter into the cycles of industrial capital as well as into those of the surplus-value carried by it. It is the universal character of the commodities, the world character of the market, which distinguishes the process of rotation of the industrial capital."-- Kerr Edition Vol 2. p. 125. A neat, and prescient, analysis of the basis for uneven and combined development, bright fellow that Karl.

Resumption: About the same time as its neighbors to the north, the South and the North of the United States, were solidifying their great compromise of the Kansas-Nebraska with that overture to civil war known as Bloody Kansas, the Mexican Revolution of Ayutla overthrew Santa Anna and set the stage for the Liberal government and La Reforma.

La Reforma imagined the conversion of the corporate forms of landed property, entailed estates of the church, haciendas, and the communal lands of the indigenous pueblos into units of free soil, "yeoman" farms, but the legacy of the conquest and landed property condemned the liberals to power as an imaginary bourgeoisie, lacking the cohesion, depth, grasp of and on the economy, and not least importantly, the money required to actually turn dreams into reality.

In order to support an actual national government, in 1861 Juarez asserted federal control over the revenues flowing into the coffers and pockets of the state governors. At the same time, he imposed a moratorium on servicing the international debt, suspending interest payments for two years. France, Britain, and Spain temporarily put aside their differences to propose a joint occupation of the ports of Mexico, garnishing all customs payment due Mexico in compensation for the heartache and anxiety Juarez's actions had inflicted on the fragile health of the their gentile bankers. While Juarez organized against the proposed invasion, the dream of a yeoman's capitalism in agriculture faded in Mexico just as it was fading away globally.

Liberalism was incapable of transforming the relations of land and labor. However precise, stringent, detailed the the written laws of La Reforma disentailing estates of church and pueblo, however great the commitment of the liberals to individual private property, the liberals lacked the economic weight, the possession of a mass of productive apparatus, and a mode of production, capable of overpowering, bulldozing [almost literally] and burying [literally] its own antecedent. Juarez and his generals, Mariano Escobedo in the north and Porfiro Diaz in the south, could wage, lead, and conquer in the War of Intervention, expelling the French, executing that poor imitation of a poor imitation of an emperor enthroned by that other poor imitation of an emperor, Louis Bonaparte. They could not overcome the the convergence of Mexico's past with the future of capitalism, which future was already unfolding in the reconstitution of the Southern plantation class by the US bourgeoisie. Past and future joined hands when the Juarez government acknowledged its obligation to service 65.5 million pesos of debt owed to Britain.

Debt, that alpha and omega of value, was the kiss of death planted on the bride when she arrived at the altar of capitalism with her dowry of small property .

If the liberals imagined an economy of honest yeoman working small estates to support the edifice of capitalism, Porifirio Diaz was a man of spectacularly successful in lacking an imagination. Big property, incorporating small property through its aggrandizement was no dream; it was "progress." Diaz offered companies undertaking the survey of public lands ownership of one-third of the surveryed property. Between 1883 and 1910, 27 percent of the total area of the republic was conveyed to private companies. By 1910, Mexico, a country of 14 million rural producers representing 64 percent of the working population, was also a country where 95 percent of rural families were landless and 5 percent of the population controlled 90 percent of the land. The indigenous pueblos, most of which were incorporated into the physical territory and direct rule of the haciendas, had become villages of hired men and migrant plantation hands; a rural, semi-migrant proletariat.

Where debt and expropriation didn't suffice to eviscerate the indigenous pueblos, "progress" leant its hand. Marshes were drained to clear areas for tillage, properly set irrigation lines and other commercial reasons. The destruction of the marshes eliminated the pueblo's access to fish, an important source of protein. External sources of income from market activities, such as weaving, were destroyed when the rushes and reeds disappeared along with the marshes. Pueblo agriculture underwent a dramatic involution, where greater applications of labor on smaller plots of land were necessary to provide even near-subsistence yields.

With such dramatic destruction of the indigenous lands, the stage should have been set for Act 2 in the melodrama of capitalism's rise-- the movement of the landless, laboring populations into the cities, where an entrepreneurial bourgeoisie, rubbing its palms and licking its chops, having gathered the means of production beneath its skirts would now launch itself into the wonderful song and dance of "Accumulation Now and Forever!" Except there was little enough of those means of production in and around the cities. Except the accumulation that was taking place was accumulation based on the already existing markets of the advanced countries, not the domestic market. Except that the domestic market was not that of the yeoman farmer expanding production through applications of technology to agriculture; it was the market of the hacienda, the sugar plantations in Morelos, the henequen plantations in the Yucatan. Except capitalism in its international, world-historical development had already dropped the curtain on "independent," "small" production.

Labor on these plantations was in part labor of debt peonage, in part forced labor, that is labor compelled as punishment rather than by economic necessity. The Yaqui people were shipped to the plantations as punishment for their resistance to the expropriation of their access to water and land in Sonora. Indigenous people from other states were sentenced to plantation labor for similar reasons. At the beginning of the 20th century, the henequen plantations were controlled by a group of thirty planter families, called the casta divina.

These thirty families depended on selling their production to the US, and to one customer above all in the US, International Harvester. Harvester had taken care to "hedge" its vulnerability by reaching a secret agreement with the planter-merchant Olegario Molina. Molina, acting as if he just stepped out the pages of Capital granted loans to other planters that were collateralized by their production of henequen. The price of the henequen offered as collateral was fixed, of course, below market. Gaining control of henequen, Molina was able to leverage that control into the purchase of railroads and warehouses-- the elements critical to the transportation of the henequen to market; to the circulation of the commodity of henequen.

The agreement between Harvester and Molina stipulated that Molina would make every effort to "depress the price of sisal fiber," agreeing to pay "only those prices...dictated by the International Harvester Company." In order to give Molina the leverage in the market necessary to drive prices down, Molina was given access to 10,000 bales of henequen held in inventory by International Harvester. Molina was awarded a commission, naturally, on every bale of henequen he secured for Harvester under this agreement.

The overall social product of this Harvester-hacienda alliance was...not unlike the impact of the conquistadores on the indigenous people in the 16th century. Near extermination. Between the recession of 1907 and the outbreak of the Revolution in 1910, Diaz had 16,000 Yaquis shipped to the Yucatan. The average life expectancy after arrival on a plantation..... one year.

7. Extraction and Accumulation

After 1873, the inflow of foreign investment into Mexico increased and was welcomed by Diaz, his cientificos, and the governors of the state districts. Directed towards mines and plantations, into an economy of extraction, the investment still and always required a means of transportation. Without any inland waterway system, rail was the only efficient means. Even an economy of extraction requires some accumulation.

The first rail line was constructed in 1873, connecting Mexico City and Veracruz. By 1883, more than 3000 miles of railroads had been constructed; by 1893, 6000 miles; by 1909, 11,000 miles. By 1910, capital invested in railroads measured 2 billion dollars, 80 percent of which was US owned. This represented 70 percent of all foreign investment in Mexico. Transport costs decline from an estimated ten cents per ton-kilometer by wagon in 1878 to 2.3 cents per ton-kilometer by rail in 1903.

The expansion of the railroads was accompanied by widespread dispossession of pueblo lands. Access to rail connections was vital to hacienda and plantation production, and the hacendados acted according to their interests.

The railroad were instrumental in centralizing power in Mexico, undermining the internal tariffs between states. Willing to share the spoils with the caciques, the government funded creation of the rurales, armed gangs to control the rural poor and break strikes. While the country remained overwhelmingly agricultural, employment in mining, manufacturing, transport, petroleum, and construction accelerated as the railroads grew.

Even an economy of extraction requires some degree of accumulation, and accumulation did occur. The great merchant families, spying a glimpse of a national market in the tracks of the rail system, invested in steel, cement, textile, cigaret, and beer production. However, the conditions in Mexico, and in the world markets required these merchants to initiate their enterprises as joint-stock companies to raise the funds necessary to initiate production.

Lacking a capital goods producing capability, as well as an intermediate goods producing capability, industrial accumulation required importing these means of production from the advanced capitalist countries of Europe, and the United States. While the development of the domestic market in Mexico was perhaps 50 years behind that of the United States and England, the machinery imported for the industrial start-up was of the most modern design, requiring large initial outlays of capital that could be recuperated by operating the equipment intensely and ceaselessly, thus lowering unit costs, thus aggrandizing the maximum portion of relative surplus value.... and thus propelling overproduction as the intensified production outran and overwhelmed expanded reproduction.

For all the wealth that flowed out of Mexico, and the wealth that flowed into the pockets of the merchants, bankers, the pockets of the caciques, the pockets of the cientificos, Mexico was fundamentally a poor country, and poor not just in the incomes of its population, but poor in the development of the markets that could support--capitalize--industrial production. The bonding and bondage of the indigenous people to the land of the hacienda, of the plantation, and to the ejido, the bonding of the rural population to direct production for subsistence limited the exchange of industrial and agricultural commodities.

The products of the haciendas, the plantations, the fincas, the monterias had acted as commodities, has been absorbed by capital in the world markets, thus dissolving its expropriated value into the general stream of values in the markets; thus contributing, and drawing, a portion of the profits distributed by the total of exchanges in the market; thus drawing industrial capital towards itself.

And capital did follow the promise whispered by the hacienda, the plantation, the cacique, the hacendado, the cientifico. By 1895, 2 million labored in mines, manufacturing, transport, petroleum. In 1878, Mexico counted 99 textile mills with an average of 2000 spindles per mill. In 1910 there were 148 mills with an average of 4500 spindles each. Twenty mills had more carried more than 10,000 spindles.

The concentration of capital in textile production was severe. Two firms controlled 20 percent of all output and 100 percent of fine weave cloth production.

In steel and cement, similar concentrations existed. However, the limited nature of the market, and the importation of the production machinery from the advanced countries meant that the steel and cement industries output rarely exceeded 40 percent of capacity. Industrial capitalism in Mexico was a 40 percent endeavor, with a 40 percent bourgeoisie. Average real rates of return on for investors in industrial capitalism, boosted by the profitable tobacco and beer industries, rarely exceeded 3 percent.

In short, in essence, in actuality, what the United States and the advanced capitalist countries had experienced in the Long Deflation, 1873-1898 on a cyclical basis, overproduction, the pace of private production overwhelming the expansion of reproduction of the entire society, Mexico experienced as a congenital, structural, persistent condition. The obvious characteristics of Mexican industrial capital were its large initial costs of capitalization; its use of joint stock companies; its concentration and vertical integration; and most importantly, that its productive power exceeded, at the outset, its ability to achieve expanded reproduction. In this, Mexico showed the advanced countries, all of capitalism, its own future; a future of war and revolution as the means of production had outgrown the existing social relations of production, those relations of labor and land.

More than that, the more difficulty industrial capital confronts in its expanded reproduction, the more important become the values thrown into the market from the haciendas, the plantations, the "backward" units of "non"-capitalist production to the realization and distribution of any part of the total values in the market, as the lower wages paid to the rural labor force translated into reduced costs for advanced capitals. The less the relative exploitation of labor can develop, the more the absolute exploitation of labor becomes essential to maintenance of the entire system of exploitation.

The Mexican Revolution proved that the bourgeoisie had no answers to the problem of rural poverty; to the questions of land and rural labor. Not Madero, Huerta, Carranza, Obregon, Plutarco Calles, not the Convention of Aguascalientes, not the Constitutional Article 27, not Cardenas. Not even Villa or Zapata. Not even the Plan de Ayala. The rural struggles continued until 1940 and the beginning of World War 2, proving that.

The answers were in the expropriation of the haciendas, the plantations, the fincas, but how could a 40 percent bourgeoisie expropriate the landlords when landlords were the other 60 percent of capitalism?

The answers reside with a class capable of overthrowing all relations of private property in land and labor and then bequeathing a portion of that collective rural property to the indigenous peoples.

Mexico's development, its relations of classes, its very "national" revolution were international in origin; determined in and by the world markets. Likewise, the emancipation of the Mexican people, the indigenous peoples, the pueblos, the landless could not be achieved then, or now, on a national basis.

Sources: Zapata and the Mexican Revolution, John Womack, Jr., Vintage Books, New York 1968; The Mexican Revoluion 1910-1940, Michael J. Gonzales, University of New Mexico Press, 2002; Peace By Revolution, Frank Tannenbaum, Columbia University Press, 1933; Growth Against Development-- The Economic Impact of Railroads in Porfirian Mexico, John H. Coatsworth, Northern Illinois University Press, 1981; Industry and Underdevelopment, The Industrialization of Mexico 1890-1940, Stephen H. Haber, Stanford University Press, 1989; A Concise History of Mexico, Brian R. Hamnett, Cambridge University Press, 2006; The Railways of Mexico, A Study in Nationalization, John H. McNeely, Texas Western College Press, 1964; Agrarian Revolt in a Mexican Village, Paul Friedrich, Prentice-Hall 1970; The Land Systems of Mexico, George McCutchen McBride, American Geographical Society, New York 1923; The Mexican Revolution and the Limits of Agrarian Reform 1915-1946, Dana Markiewicz, Lynne Rienner Publishers, 1993.

March 2, 2010

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Here Comes, There Goes..

The Other Hand Clapping; The Other Shoe Dropping; The Other Lung Collapsing

Just a year ago, they were singing, not actually singing, this being the age of derivatives... they were lip-synching all of them, bankers, fund managers, credit default spouse swappers, private equity firms, quants, qualts, pros-- real pros, cons-- real cons, real pros at being real cons, all of them lip-synching in silent but off-key, atonal multi-part disharmony, in disunison, to Fontella Bass' Rescue Me. Then somebody, dressed in sequins and heels, flipped the record to the B side and this chorus of the line changed its tuneless tune, dusted off an old choreography for another extraordinary rendition of an old routine, stepped off, quick-quick-slow, and into Ms. Bass' Recovery.

Me? I love Fontella, but in these times, I go with Dinah Washington. What A Difference A Day Makes. And what a difference...

The Financial Times February 5 headline "Shares Fall as fears over Europe's weak economies hit global markets. The Wall Street Journal of the same day "Global Markets Shudder: Doubts About US Economy and a Debt Crunch in Europe Jolt Hopes for a Recovery."

So what happened? Was it Toyota's gas pedals? China's tainted milk? Haiti's destruction? Bernanke's confirmation? US deficits? Spain's unemployment? Ireland's austerity? Greece's debt?

Of course it was. Of course it is all of those things, as all of those things are but of one thing, the accumulation of capital, the "self-expansion" [hah!] of value, the demand of and for profit, the reproduction of capitalism as a whole, the whole being overproduction, the whole being the decomposition, the disaggregation of capital, the whole being the devaluation of capital by and for profit, the whole being the contraction of profits, the whole being the self-impairment of accumulation.

So here comes another flight to safety. Drop that euro, lift that dollar. Dump that emerging market, get those T-bills. Shed that risk, get that security. Go short. Go shorter. Go shorter than short. Forget yield, preserve principal. Drop, dump, shed, punt. Call your mother and see if she still has your room ready. Will she do your laundry?

Meanwhile.... meanwhile the US deals itself the strongest hand with cards off the bottom of the deck and up its sleeve-- which is, as it has been, making the workers pay, and pay more, to preserve capital when accumulation is impaired.

In its manifestation of the "real domination" of capital as opposed to the formal domination, the very advanced nature of capitalism mimics, reproduces, its most primitive features, and more and more the whole system reverts to compulsion, to "extra-economic" means of accumulation. "Beggar thy neighbor" is more than a business plan, it becomes the golden rule.

So... while capitalism as a whole "sinks," it doesn't exactly drown itself, it drowns "others," the others being everyone else, being us. . And the water will be combined with the fire this, as in past, time-- that wonderful tool that combines accumulation and decomposition in one-- arson. Arson in its social reproduction is called war. War of all against all is the first, and last, commandment of capital.

The EU's problem is that it needs a new role model-- Merkel's Germany is simply inadequate. The WSJ on January 12 carried an article that began, "Bulgaria, the newest and poorest member of the EU is emerging as a fiscal model for a number of EU countries struggling to fend off debt crises." The regime there froze wages, cut projects, reduced spending by 15%, reducing its budget deficit to 0.8% of GDP.

The article continued, "Economists say Bulgaria economic and fiscal management has made it a role model for other countries in Europe."

Isn't that just too precious? I've seen the future and it's called Bulgaria. Boutique, enclave, concession, niched capitalism grows into the capitalist balkanization of daily life.

Opposition, resistance, to capitalism's "plan" for austerity, its need for destruction, decomposition, cannot be focused on the wage, or wage level, of the individual worker, or sector of workers. Nor can it be based on demands for "full employment." Better might be a demand for full unemployment, with all needs met through the seizure of property. That is better, but not good enough. The response of a movement to build class struggle must grasp the social costs of the reproduction of capital as a whole and that it is those social costs of the totality of reproduction, not just the costs of machinery, of labor power, of transportation, but the total cost of the social organization built up and essential to capitalist accumulation, that now constitute the impairment to accumulation.

On February 3, an article appeared in the WSJ entitled "Radical Shifts Take Hold in US Manufacturing" examining the deep structural changes in US industrial production-- in essence the penultimate result of "moving up the value chain," and concentrating on "value-added" production.

US industrial capacity declined 1 percent in 2009, the largest single year decline on record. This is distinct and apart from the rate of utilization of existing capacity. This is a dismantling, decomposition of capacity. Capacity is increasing in semiconductor, communications equipment, computers, electricity, and oil and gas production [the last not exactly being value added, but offsets its "commodity" production through price increases that "drain value" from other sectors]. Capacity continues to decline in motor vehicles and parts, printing, textiles, plastics, rubber products, furniture.

Chemicals, a nice little profit center 20 years ago, reduced its US capacity 1.7 percent. Peter Huntsman, CEO of Huntsman Chemicals stated: "The chemical industry is leaving the US and it won't be back. When demand picks up, they'll build new plants overseas-- in the Mideast, Singapore, China."

This doesn't mean the US bourgeoisie is getting any weaker, and we shouldn't be deceived that declining production and capacity in the US means the decline of US capitalism.

At the same time, in the United States, Intel is, as almost always, increasing its capital investments and capacity. Of particular interest in the article is the almost off-hand comment about advanced technology production in the US. Avant Technology, a memory module producer, is increasing its output capacity by 60 percent:

"Manufacturing in the U.S., he said, allows Avant to turn around orders in 24 hours, and advantage in an industry where demand is volatile and clients try to keep inventories low. In addition, the reduced freight costs, compared with shipping goods from China, can offset the added cost of US labor, since labor accounts for less than a hundredth of his average sales price."

That bears repeating, since it manifests, encapsulates the critical contradiction of advanced capitalism's development: "...since labor accounts for less than a hundredth of his average sale price." And as capacity increases, and output increases, what will occur? The prices of production must, and will, inevitability decline to the level of the cost of production, and the rate of profitability of production will stagger and fall. Labor, despite its minimal portion of the cost/price of production, will be attacked in the attempt to restore profitability since wage rates do have an impact on profitability; as labor, requiring subsistence, must be driven below subsistence, below the total costs of its social reproduction, for a time-- and, of course, one of the best ways of driving labor below the costs of its reproduction is killing it off through wars. You can't get anymore below subsistence than actually dying.

The advance of the workers' movement begins with the workers own social protection, and demands for the protection, of the most vulnerable, most exploited, most marginalized under capitalism. It begins with demands for full equality of immigrant laborers regardless of "legal" status. It begins with demands for free, universal healthcare, operated by medical professionals for the social benefit of all those neglected under capitalism.

5 Februay 2010

address all comments to: sartesian@earthlink.net

just a WORD

Who gives a rat's ass what Huffington and Krugman, liberals, liberal liberals, radical liberals, liberal radicals think of Obama? Positive, negative-- same-same.

So he "lost" Massachusetts? SFW? He's caved on healthcare? NFS. So it's business as usual and war without end, amen? BFD, welcome to the military-industrial-evangelical complex. So he's Katrinad Haiti? See previous response.

Of course he's done all that and less. That's what he's being paid to do.

So everyone's disappointed? ROFLMAO. GTFU.

Keep in mind-- the US bourgeoisie select a Republican whenever they're going into a recession, and a Democrat when they think they want out of a recession. They, the bourgeoisie, thought they wanted out in 2008, as if wishing and hoping would make it so [obviously forgetting the immortal words of Dusty Springfield]; but wishes aint horses, and horses don't have wings.

The other shoes are dropping off the feet of the centipede we called modern, developed capitalism, faster than you can say "uh-oh," and double dip is not just for ice-cream.

The Association of American Railroads reported rail traffic declined in the 4Q 2009 with December 09 carloadings actually below Dec 08. The Association of American Railroads suggests that if COAL loadings were excluded in both Decembers, then Dec 09 exceeds Dec 08, which is fact, but there is also the fact that coal accounts for 40% of US rail freight traffic. See:

http://www.aar.org/Home/AAR2/NewsAndEvents/PressReleases/2010/01/011310-RailTimeIndicators.aspx

At the same time, US electricity consumption has recorded its steepest decline since 1938, German GDP declined 5% in 2009, its largest decline since WW2, with the 4Q being remarkably poor, JAL is bankrupt again, SocGen[France] and Citigroup record 4Q losses, enough in Citigroup's case to wipe out the entire previous 9 months profit. Commercial real estate in the US will be the next big thing, big like Lehman Bros was big in Sept 2009. Approximately 20% of all bank construction loans are now more than 30 days overdue. FDI flows were down 39% in 2009-- declining 57% in the US, 50% in Brazil, 19% in India, 40% in the rest of Latin America, 36% in Africa, but only 2.6% in China [anybody know how to write "bubble" in kanji characters?].


And the good news? Well, international buyers are still buying up US Treasury debt like there is no tomorrow [there better be, I've got tickets to see the World Saxophone Quartet tomorrow at Birdland], taking on $118 billion in notes and bonds in November, up from $39 billion in October. China has reduced its quantitative exposure, but has increased its interest rate exposure in the search for larger yields, swapping $100 billion of T-bills [maturity of 12 months or less] for $70 billion in notes and bonds with maturities greater than 1 year.

So... so the point is the bourgeoisie realize they're headed right back where they came from-- caught between the hammer of greed and the anvil of fear, and as markets slow down, things speed up-- like Obama has served his purpose, if not his full term-- winning the agreement of the union bureaucracies to the "new" austerity in his first year, so it's time to bid him adieu.

Here's the thing, when capitalism requires a moron, a fool, to front at the door to the abattoir-casino of impaired accumulation, it gets its moron.

When the liberal bourgeoisie think that the moron's replacement by a front-man with a larger vocabulary, a smoother delivery, bigger lies to sell, is an improvement, capital reminds everyone of the house rules, of who rules the house, and the fact that incompetence is just another management strategy.

In case nobody noticed, the NYSE has dropped 3% off its "value" in the last two sessions.

word

address all comments: sartesian@earthlink.net

January 21, 2009

Accumulation and Decomposition in the Era of Lift and Separate, Continued

The Long Good-bye

1. Heading South

Living the life it calls its own only because it has appropriated the time of others, the bourgeoisie--capital personified--imagines its order, its rule as eternal; as always a beginning without an end, just like the exchanges in its marketplace, an endless repetition of aggrandizement. It's as if for the bourgeoisie as if is quite enough. As if all thought, all exchanges, all labor, throughout all of history had a purpose, and the purpose was the perfection of accumulation. As if everything was meant to be, and every thing that was meant to be, was meant to be the bourgeoisie's.

"Give me a cash register and a place to sit," says our bourgeoisie, "and I'll reproduce the expanding universe. And call it value."

Living a life it can never really call its own because its existence is the appropriation of time belonging to others, our class of capitalists senses itself to be running short on time, losing time. Obsolescence shadows and illuminates, follow and leads our bourgeoisie in its every advance. Obsolescence is the cost and content of progress. At its most modern, the bourgeoisie embraces the most backward, and at the core of its universe of expanding value, the black hole of devaluation.

After the panic of 1857, the emergent capitalism of the Northern United States recovered just enough to take itself right into the recession of 1861. The solution to the problems of expansion appeared in the dream of unimpeded expansion. The obstacle to unimpeded expansion was, of course, the slave economy of the South; the economy that had been like mother's milk to the merchant and industrial bourgeoisie of the North, or more correctly, the Northeast. These big, or at least bigger, capitalists, survived, prospered by accommodating the needs of the South; by adapting its own needs to those of the plantation owners. They were a bit hesitant to slice off the breast that had suckled them.

Not so the case with the farmers of the North, with the farmers of the Northwest, with the farmers of the West. The slave economy of the South maintained its political control of the Union only to the extent that it maintained itself as the fundamental impediment to the expansion of free farming.

For our merchant capitalist, freedom was an abstraction, profit was the concrete. For the farmers of the North, freedom was earthly, freedom was a function of property. "Free soil" was simultaneously a political and an economic program. Freedom itself was a market transaction, an expanding exchange. Free soil, access to soil meant access to land, to buying and selling of land and the buying and selling of the products of the land-- the soil as distinct from the laborer. The farmer wasn't bought. The product of the farmer's labor was bought. Farming for subsistence, for subsistence plus surplus, for the satisfaction of domestic needs had been in decline since the close of the War of 1812. Farming was for the market. The moment of wealth, of value, became real, solid, capital, only in the distinction of the product of the farmer's labor from the farmer's needs, from the farmer himself.

Free soil meant free labor. Access to labor meant the buying and selling of labor, the power to labor, rather than the laborer himself/herself. The moment of wealth, of value, materialized only in the distinction of the product of the "free laborers" from the laborers' needs; the separation of labor-power from the laborers themselves.

This free soil army, if not a new model at least a new market army, would do for the bourgeoisie what the bourgeoisie was reluctant to do for itself. For the Union to survive, slavery had to go. It did go

Dragged along, our foot-dragging, line toeing, fence-sitting bourgeoisie reluctantly engaged the South in the Civil War, consoling itself with the government contracts it captured for supplying the Union army, soothing itself with the interest collected from the government debt-- resigned, optimistic, despairing, hopeful, somber, frantic- those qualities so essential to the progress of a salesman.

2. And After...

Victorious in the Civil War, with the triumph of free soil assuring the access to free labor, the bourgeoisie declared the property of the slaveholders to be free, but the freedom of property is not the emancipation of labor. Reconstruction in the South was designed to transform a population that had toiled collectively, that had labored socially, into a mass of individual small property holders. The radical Reconstructionists dreamed of a league of black yeoman farmers. The reality of capitalism was that the time of the yeoman farmer was long gone, gone even as the yeoman farmers of the North forced victory upon the bourgeoisie. The reality was that with the end of the Civil War, capitalism had established more than the "freedom" of property. Capitalism had secured the point of separation, the point of antagonism between the freedom of property and the emancipation of labor, the point at the heart of capitalist production.

The end of Reconstruction was determined well before the compromise of 1877. The defeat of Reconstruction was assured even before the panic of 1873; before even the Paris Commune had put the feet of the foot-dragging bourgeoisie to the fire. The end of Reconstruction was determined by the same objective of the bourgeoisie during the Civil war. That objective was the need to establish and consolidate a national market.

The North had secured its victory of the South when its army moved away from the "Anaconda" strategy of slowly squeezing the strength from the Confederacy through containment and blockade and embraced Grant's meat grinder strategy. Lincoln had found his general all right, two or three of them in fact, generals who where able to apply the weight of the North's quantitative and qualitative superiority in the means of communication, transportation, production to bear upon the South. Heavier battalions mean something in combat. Heavier maneuver battalions count for a whole lot more. When the battalions can be delivered rapidly ahead of or behind the enemy; when the battalions can be resupplied and refitted in the field during battle, losses can be absorbed without the loss of combat capability, pursuit can be maintained, and the most difficult movement of all, an orderly disengagement with the enemy to implement a new maneuver can be achieved.

The North's superior industry, telegraph, locomotives, provided the amplification of force through transport, communication, resupply-- through the management of logistics. The Civil War was prelude, overture, development, and coda to the great themes of modern capitalism: the creation of markets through destruction, the expansion of power through successive applications of mechanical force, the concentration of capital through the devaluation of existing capitals, through overproduction.

The need of capital is always for access to "free" dispossessed labor, itself a product of "free soil," of breaking the connections of subsistence, use, and use in common of land; establishing the distinction between owner and laborer, between possession and production, between product and commodity-- between land as a means of production and land as a means of subsistence.

The history of capital, however, is the history of self-contradiction; development of capital reproduces these self-contradictions, so that at one and the same time, capital breaks up the bondage of labor to land, of the ownership of the laborer rather than the products of labor, only to reconstruct those forms on a more "modern" basis. Deprivation of freedom becomes the immiseration of the quality of freedom. No longer a slave, the laborer is neither bought nor sold, he or she is leased, indentured to landed property through judicial penalty, debt peonage, non-economic compulsion, most all through terror.

Capital, the irresistible force, has run into the movable but ever present obstacle, which is itself, private property. The radical capitalists imagine the emancipating impulse of capital to be the creation of millions of small property holders, when it is nothing other than the impulse to create a social organization of labor that can be exploited.

The moment for the creation of yeoman free soil farming in the South had been crushed by the weight of the plantations; by the ability, and willingness of the plantation owner to work his slaves to death to preserve revenues as opposed to accumulating capital. The future for yeoman farming was being destroyed in the North by the immense concentrations of capital represented in the very railroads that carried, in just seven days, the yeoman farmers of the Union's Army of the Potomac from Virginia to Tennessee to effect the relief of Rosencrans.

4. For example...

[The following is, in large part, a brief summation of a critical period in Reconstruction presented by Scott Reynolds Nelson in his book Iron Confederacies: Southern Railways, Klan Violence, and Reconstruction, University of North Carolina Press, 1999]

Thomas A. Scott, vice-president of the Pennsylvania Railroad had worked diligently, and brilliantly, in moving the 11th and 12th Corps of that Army westward. At the conclusion of the war, Scott determined to create and control a unified network of rail lines in the South, extending from Washington, DC to Atlanta and on to New Orleans. Successful in gaining control of some state, and partly-state owned railroads, Scott faced the opposition of the once and ever prominent former officers of the Confederacy whose rail lines that would be eviscerated if Scott's plans were successful.

In Georgia, opposition to Scott's plan for rail consolidation was the vehicle for the violent "redemptionist" attacks on black legislators, skilled black workers, and the Republican governor, Rufus Bullock. Bullock had aided Scott's efforts, not the least by leasing out convict labor for the construction of Scott's railroad in Georgia.

In September1868, the Georgia legislature expelled all the black representatives, but voted to provide bond guarantees to the state's railroads, including Scott's.

In 1869, Bullock, knowing a terrorist when he saw a white sheet, utilized revenues from the state's Western and Atlantic railroad to pay for, among many other things, bounties for the arrest of Klan members.

Now it's one thing for the state to lease convicts to private contractors, and to award its tax revenues to railroads, and it's some of that same thing for the railroads to return some of those social revenues in the form of private payments to the representatives of the state. All of that falls into the category of businessmen doing business. Using the revenues of a railroad however to fund bounties on arrest of white men, white property owners is something else, and something else very disturbing to other white property owners, like Northern industrial capitalists, like Northern bankers.

By the time the federal government had restored the black representatives to the Georgia legislature, Bullock had leased the entire prison population to Scott's contractor. Bullock was attacked, and rightly so, as promoting chain gang slavery.

Scott knew Bullock's days were numbered, and he knew Reconstruction's days were numbered, in part because he was doing the numbering. Railroads required capital, capital required the stability of private property, the stability of private property required the acquiescence and subjugation of labor. In 1870 Scott, planning creation of the Southern Railway Security Company, a holding company which actually performed no business other than the holding of titles, deeds, stocks, sat down to dinner with Ben Hill, the voice of Klan terror in Georgia; Joseph Brown, former military governor of Georgia, Simon Cameron, former secretary of war in Lincoln's cabinet, and Columbus Delano, then current secretary of the interior in Grant's cabinet.

The topic of dinner table conversation was railroads. Not exactly. The topic was the ownership of railroads in order to make money. Scott's holding company would be fronted by Hill and Brown, in a show of reconciliation that would gag a maggot. The company would buy up the stock in major railroads in the South. Scott would have his network. Hill would have his redemption as Delano toasted the state of Georgia, essentially promising that Union troops would not defend Bullock, black legislators, and black voters.

Redemption had begun. The market was there to be made, but to be made it first had to be made secure. It was secured. The very advance of capital had conjoined the future of accumulation with the immediacy of deconstruction, expansion with regression, development with redemption. The progress of capitalism is marked in its embrace with reaction

The fate of Reconstruction was sealed. Reconstruction would die. Reconstruction had to be killed. It was killed.

In 1877, Tom Scott delivered the congressional votes that sealed the compromise that elected Hayes, that withdrew the last of the Federal troops from the South. In exchange, Scott received federal guarantees on the bonds of the failing Texas and Pacific railroad.

In 1877, the B&O Railroad unilaterally reduce wages twice in response to the depression that followed the Panic of 1873. The railroad's workers struck the railroad, blocking the movement of all traffic. The strike spread throughout the national rail network.

In 1877, Tom Scott of the Pennsylvania Railroad stated that strikers "should be fed a rifle diet for a few days and see how they like that kind of bread." Hayes delivered the rifle diet, with Federal troops, now removed from the South, ordered to break the strikes.

Standard Railroad of the World? Indeed, very low standards.

All the elements of modern US capitalism were in place.

Sources: Rescue By Rail, Roger Pickenpaugh, University of Nebraska Press, 1998; Railroads in The Civil War, John E. Clark Jr., Louisiana State University Press, 2001; The Northern Railroads in the Civil War, 1861-1865, Thomas Weber, Indiana University Press, 1952; Iron Confederacies; Southern Railways, Klan Violence, And Reconstruction, Scott Reynolds Nelson, The University of North Carolina Press, 1999.

4. OPM

The contradictions inherent in the movement of capitalist society impress themselves upon the practical bourgeois most strikingly in the changes of the periodic cycle, through which modern industry runs, and whose crowning point is the universal crisis. That crisis is once again approaching, although as yet but in its preliminary stage; and by the universality of its theatre and the intensity of its action it will drum dialectics even into the heads of the mushroom-upstarts of the new, holy Prusso-German Empire.

-- Karl Marx, Preface to the Second Edition, Capital, Volume 1, January 24, 1873.

In 1873, the United States entered into an economic contraction of greater severity and duration than those it had previously endured. The depression would last six years, and would only be relieved in the US when sustained crop failures almost everywhere except the US reversed the price declines of US grain exports in the world markets. The "uptick" lasted through 1881. In 1882, the US entered another recession, this one lasting three years to 1885. From 1885 to 1893, the US economy revolved in approximate three year cycles, with two years of expansion rotating into a year of contraction. In 1893, the United States entered into another severe and extended depression with unemployment levels reaching fifteen percent. The close of this cycle was marked by the initiation of the Spanish-American War.

The economies of France, Germany, Belgium, Australia, Britain operated in cycles similar to those of the United States. The entire period is known as the "long deflation," for the steady decline in producer, wholesale, and consumer prices. In the US, wages also declined. Overall, however, despite the periodic and intense declines, the period of the long deflation was a period of sustained growth in GDP per capita, GDP per hour worked, value of exports, and value of merchandise exports.

In his study, The World Economy, Angus Maddison extends the boundaries to include the period from 1870-1913. He calculates the growth in GDP per capita during this period at seventy five percent for twelve countries of Western Europe. For the US, his figure is one hundred percent. GDP per hour worked increased ninety percent for the Western European countries and 127 percent for the United States; the value of exports 329 percent for the twelve of Western Europe, 600 percent for the United States; volume of merchandise exports 300 percent for Western Europe, 800 percent for the United States, 800 percent for Argentina, 700 percent for Australia, and 1000 percent for Mexico.

The long deflation was rooted in the very same dynamic that propelled the cumulative growth of this period. The deflation was based on the amplification of labor productivity through the application of machine power to the production and transportation of commodities. More than an application, machine power was the substitution, reducing the proportion of labor in production; reducing the time of production and the time in transit; reducing the circulation time of the commodity so that it might be transformed into money.

If increased aggregate amounts of production, reduced unit costs of production, and greater profits constitute the paradise, salvation, and redemption, the trinity of capital, then the aggrandizement of surplus value through its expulsion from the labor process is its holy grail. Reduction in transit time, the circulation time, so that money can more rapidly, and frequently shed its earthly form of commodity-capital and achieve the miracle of transubstantiation-- where it assumes its heavenly form as profit-- is its holy sub-grail. With the opening of the Suez Canal, the application of steam power to the maritime shipping, with expansion of railroads, capitalism was feeling nearer to god than ever. Except, of course, when it wasn't; when its accelerated production of commodities at reduced costs swamped the decks of the good ship Lollipops, when the anchors of such machinery dragged profits under.

Reduced transit times create reduced the reproduction costs of transit. Reduced transit time equals more rapid conversion of the commodity into money, equals reduced time of turnover, equals more frequent turnovers, equals more rapid recoverty of amounts invested in the constant elements of production, particularly the "sunk" fixed assets, equals increased and more rapid conversions of money back into the components of capitalist production, into greater quantities, and values, of raw materials, more fixed assets, more fuel, more wage-labor, which equals accumulation, which equals expanded reproduction, which is the conversion of revenue into increased production. What a wonderful world it is when everything equals everything; when everything that is, equals more, and everything more equals cash flow.

Within accumulation during the long deflation, there was an alteration, a cumulative if uneven change in the proportions exchanged between living wage-labor and the inanimate materials of production. This change in ratios reduced unit labor costs, reduced production costs, increased production. Now industrial capitalism, industrial-based commodity production is not like other commodity production. Capitalism's markets are not like other markets. Prior to capitalism when, and if, commodities were produced, it was by chance, by fortune, by nature's bounty or benevolence. Commodities existed only after needs. As miserable as subsistence based production, as the production of owners who are both owners and direct producers, can be, its very existence is antithetical to capitalist commodity production. As lucrative as "subsistence plus surplus" can be for the direct producer, and/or the merchant intermediary, it too cannot sustain capitalism, nor reproduce itself as capitalism, as the direct producers' needs remain a priority and interrupt, obstruct exchange. Only when the producer is no longer directly producing and consuming for subsistence, only when the producer no longer possesses any means for subsistence, only when producers indirectly secure their subsistence by selling their labor power, only when the needs of the producers become essentially immaterial and invisible to the production of marketable values, only when labor itself is only a means of exchange do we get true commodity production, do we get "self"-expanding value-- capital.

This true commodity, this true commodity production, is not like any that has come before it, and there will be no commodity production to follow it. Invisibility is its vector, its ways and means, its transparent and evident manifestation. Value, cloaking the commodity, hides its own makeup in this act of camouflage. This true commodity is like no other in that the qualities of its existence are not need our usefulness, but need or usefulness as mediated, as presented, as materialized by the social relation of production. Value then, in all its invisibility obscures just that social relation. Value then as this materialized social relation can only maintain its existence to the degree that it renews itself through renewed demands on the organization of labor. Value then exists everywhere and invisibly only to the extent that it can command the production of more value; to the extent that it can create and populate a whole universe of increasing values. Value exists only as the process of valorization.

The social process of valorisation means that the unpaid labor concealed in the wage-form, and the paid labor displayed almost as a diversion in the wage form, and the value of the materials and machinery consumed at different rates in production cannot be realized by any single capitalist in aliquot parts apportioned to the components of value, to the components of the productive process. The return on the commodities is the return on the complete cycle of production.

The value existing in the commodities exists in a "shared state," a collective tension with all the commodites produced not just by that capitalist enterprise, but in a shared state of collective tension with the totality of commodities produced by all capitalist enterprises. Such is the meaning of exchangable value; of equivalent values. Surplus value cannot be aggrandized as profit through the circulation of fractions of the commodity-capital, because the surplus value can materialize as money by claiming a portion of the total profit in the markets as money. The individual commodity is meaningless, and useless, in capitalism. The metamorphoses of all commodities into money for the purpose of converting revenue into means of purchase of increased components of capital is....priceless.

The capitalist thinks he or she is retrieving all of his or her owned value in the market. In reality, the profit any capitalist obtains is a portion of the total profit realized through the expanded reproduction of capitalism as a whole.

In this collective tension is both the source and the manifestation of capital's success and failure, each through the other. The realization of the surplus value appropriated by any individual capital depends upon the realization of the surplus value appropriated by all capitals. At the same time, the market is a distributive mechanism. The realization of any value in relation to all other values is also dependent upon proportional devaluation, loss of marketability, of market share, of sections of the total commodity capital pushed into the markets.

With the continued amplifications of labor productivity through machine power production increased, costs of production decreased, greater masses of commodities crowded each other and the markets, prices declined, greater numbers of commodities could not realize their value, and died in the markets. Turnover slowed, extended, dragged. What a miserable world it becomes when everything that once equalled more now equals less.

Price drops were dramatic and sustained. Between 1870 and 1880, food prices declined twenty-three percent, rents by eleven percent, clothing by thirty-three percent, fuel prices by twenty-five percent.

With this decline, daily earnings of workers also declined. In 1865, the daily wage for non-farm employees stood at $1.54. By 1870, it had fallen to $1.47; by 1875, $1.27; 1880, $1.16; 1885, .90, a cumulative decline of forty percent in fifteen years.

The average monthly earnings, with board, for US agricultural workers follwed a similar downward trend, from $16.57 in 1870 to $11.70 in 1880. The monthly wage had recovered to $13.93 in 1890, but the 1870 peak was not exceed until the turn of the century.

Declining wage rates were one product of the tremendous improvements in labor productivity, unit output per unit time, brought about the substitution of machine power for labor power in the production processes. Time isn't the measure of all things, but it is the measure of all of capital. In US agriculture, labor-hours required for the production of one hundred bushels of wheat dropped from 233 hours in 1840 to the 1880 mark of 152 hours. The labor-hours required for production of 100 bushels of corn declined from 276 hours to 180 hours. Labor-hours declined even in the South, even in the production of cotton. The working time represented by 100 bales of cotton declined from the 1840 level of 448 hours to the 1880 level of 303 hours.

The social transformation precipitated by the increased productivity of agriculture and industry was the transformation from an agricultural based capitalism to an industrial based capitalism. While both the agricultural and urban laboring populations consistently grew during the post-Civil War period, by 1880 non-agricultural employment was twice that of agricultural employment. The "value-added" in agricultural production, the value/receipts for shipments minus raw material and intermediate inputs [fuel, fertilizer, etc.] exceeded that of manufacturing throughout the 19th century until 1884, when the relation was first reversed. By 1894, the value-added in manufacturning was 60 percent greater than the amount added through agriculture. Value-added by manufacturing grew, in constant 1879 dollars, from $1.96 billion in 1879 to $3.22 billion in 1884 to $5.48 billion in 1894. The ratio of value-added in manufacturing to the wages of production workers increased from 2.07 in 1879 to 2.83 in 1899.

The amplification of labor-productivity, the proportional expulsion of labor-power and its replacement by machines drove prices down and production up. The more the total capital increased, the more the means of production expanded, the more the output increased, the more the efficiency of the means of transportaton and circulation increased, then the lower the prices. The lower the prices, the greater the volumes of commodity capital poured into the markets to realize, to garner, a portion of the profits. The greater the volumes of commodities poured into the markets, the more capital required extension of the markets, the increase of the arena, geographically, those relations of exchange for which reason alone, capital existed. The greater capital's need for expansion of the markets, the greater the need for greater amounts of capital to be advanced in the production process. Consequently, capital existed in a perpetual, or near perpetual, condition of overproduction-- producing commodities at a far greater rate than it was capable of reproducing the social relations that could realize, and ration, the mass of profits necessary to the expanded reproduction. Production outruns reproduction. Devaluation of larger numbers and amounts of commodity-capital becomes essential to the realization and rationing of any profit whatsoever. The means of production, the productive power of labor, have outgrown the relations of production.

Between 1879 and 1889 the book value, in constant 1929 dollars of the capital invested in US manufacturing added 131 percent of its original value . Between 1889 and 1899, the capital invested in manufacturing added another 67 percent. By the turn of the century, the cumulative growth had added $13.8 billion to the original amount of $4.8 billion.

David A. Wells, in his Recent Economic Changes, D. Appleton & Co., 1889, writes in his preface:

"Concurrently, or as the necessary sequence of these changes, has come a series of wide-spread and complex disturbances; manifesting themselves in great reductions of the cost of production and distribution and a consequent remarkable decline in the prices of nearly all staple commodities, in a radical change in the relative values of the precious metals, in the absolute destruction of large amounts of capital through new inventions and discoveries and in impairment of even greater amounts through extensive reductions in the rates of interest and profits, in the discontent of labor and in an increasing antagonism of nations, incident to a greatly intensified industrial commerical competition."

Let the good times roll.

Wells, in this remarkable book, examines the depth and breadth of the recent changes, identifying at every turn the increased productivity of labor, the intensification of the production process through the substitution of machine for labor power, as the source for the price declines and the destruction of capital. In what reads like a catalogue of exasperations, Wells continues:

"...railroads, ships, houses, live-stock, food, clothing, fuel and luxuries have year by year been accumulating and with the greatest rapidity and offered for use of consumption at rates unprecedented of cheapness. If lack of capital, furthermore, by destruction or perversion, had been the cause, the rate of profit on the use of capital would have been higher; but the fact is, that the rate of profit on even the most promising kinds of capital during recent years has been exceptionally low."

Wells is perplexed by the seemingly unending expansion of trade despite the steadily declining prices and the shortage of profits:

"In fact the volume of trade, or the quantities of commodities produced, moved exchanged has never been so great in the history of the world as during the last ten of fifteen years; and the soc-called depression of trade during this time has been mainly due to a reduction of profit to such an extent that...it has not paid to do business. "

How to explain this? First, it still paid to do business, for some businesses, and it paid for the totality of business. In agriculture, between 1870 and 1880, the wholesale price for wheat dropped from $1.37 to $1.06 per bushel. Between 1880 and 1887, prices declined to 77 cents per bushel. Costs of production however had declined to 42 cents per bushel.

In manufacturing, some, but not all, rates of profit of some capitals were exceptionally low. The ratio of the total value of manufactured products to the total costs of raw materials, fuels, purchased energy plus wages was 124 percent in 1879, 133 percent in 1889, 136 percent in 1899. Through all its bankruptcies, contractions, deflations, capital was accumulating; accumulating profits, and accumulating through devaluation.

The increasing importance of manufacturing to the US and global capitalist expansion was built upon improved agricultural productivity, increased production, reduced transit times and costs of food products. Declining food prices not only, and were not the only force that, drove down the costs of reproduction of labor, that drove down wages. Across the globe reduced prices for agricultural output displaced less-efficient agricultural producers directly in their home markets. Wheat flour from Minnesota was cheaper in Milan than flour from wheat raised in Lombardy.

The small producers were being ruined. Outside the more advanced capitalist countries "subsistence plus" producers were reduced to less than subsistence producers by the lower prices of the agricultural goods being produced cheaply, and being delivered quickly, from Argentina, Australia, Canada, and the United States. Inside the more advanced capitalist countries, debt, the picture to the Dorian Gray of capitalism, was eating its way through the smaller producers. Where it was ruined, small agricultural production was not reconstituted along the model of the free-soil yeoman farmer. Capital's yeoman days were will in the past. Concentration of capital in manufacturing, concentration of capital amplifying the productivity of agricultural labor, required larger units of production. These rural producers, dispersed by the market, were likewise reconcentrated in cities, or across oceans.

The small farmers experienced everyday what capital experiences, recognizes with a shock, only during its crises-- that the accelerating productivity of labor, in reducing the costs of production in total, as a mass, socially, necessarily devalues the products themswelves. Yesterday's production, produced at yesterday's cost reaches the market just in time to be sold at tomorrow's price which is being steadily eroded by improvements in productivity. Sooner and later, all value is devalued in the pursuit of surplus value.

The "long deflation" was that period where capitalism was establishing its real domination of the world markets, of the productive process, by aggrandizing not just absolute surplus value, by working the laborer for an extended number of hours in order, consuming over a longer duration labor power to expand capital, but aggrandizing relative surplus value, intensifying production through the application of machinery so that the collectivity of laborers, the class of laborers, reproduced the value equal to their wages in less time, making more time surplus labor-time, making the total mass of surplus value extracted-- the valorisation process-- a relatively greater portion of the working time, even as value of the labor as expressed in wages declined in proportion to the total capital employed in the process itself.

In 1840, US cotton mills required 14 labor-hours to produce 9600 yards of cotton sheeting. In 1886, 10 labor-hours yielded 30,000 yards of sheeting. In 1840, the annual wage for mill workers averaged 176 dollars. In 1886, the annual wage averaged 285 dollars. Emerging now from the accelerated productivity of capitalism was its other great secret-- with productivity so high, and output so great, wage increases were increasingly insignificant in the relational costs of production. Wage rates are always significant in their demands on, and challenges to profits, but not as a factor in the pricing of commodities.

Between 1869 and 1890, the US wholesale price index, calculated in constant dollars, declined forty percent. By 1890, the price index for agricultural and manufactured goods was lower than it had been in 1820, or 1830, or 1840, or 1850, or 1860.

Increased productivity, declining prices, efficient transportation drove the expansion of exports from the capitalist countries.. Between 1870 and 1913, the value of exports from twelve western European countries grew 329 percent. Exports from Australia grew 400 percent . US exports grew 600 percent

Wells, and others, recognized that this period of the long deflation was anything but a depression in trade. It was not, except for the periods of its most severe contractions, a depression in production. It was exclusively a depression in profits-- in the rate of return on investment in production. And even then, it was not a depression in profits for all capitalists. Profits were realized. Capital did accumulate. Declining prices allowed the most efficient producers to establish their prices of production as the social prices of production, thus taking market share, and cash flow, away from the less efficient producers.

"The years of expansion were years of large return to the owners of the old investments."-- Arthur Hadley, Railroad Transportation, New York, 1885.

The valorisation process, the extraction of surplus value, cannot exist separate and apart from the production of commodities as both values and useful articles. Use-values are the mules that carry the gold of labor time, of value, through the exchanges of the market. Capitalist production is driven by the need for profit, for the realization of value through exchange. Reproduction, however, is dependent not just upon exchange value, but also upon the utility of the commodities produced. This usefulness is not an usefulness of the individual commodity to the individual consumer, nor of the mass of commodities to the mass of consumers, but rather the social usefulness of the social production of the mass of commodities. The utility of the commodities depends on the level of social development. When capital overproduces, it is always overproducing capital. It is producing commodities beyond its own ability to maintain social development. Production outpaces reproduction. Value struggles. Commodities accumulate, clump, coagulate rather than circulate. Markets don't just shrink in size, but falter in time. The shrinkage is simultaneously a decline in the volume of exchanges and a lengthening of the time of achieving exchanges-- turnover time, the velocity of capital's exchanges in the markets, lengthens. Commodities remain longer in warehouses, on ships. Ships become warehouses. The means of transport themselves accumulate, rather than circulate. Value, with a half-life measured in hours if not minutes, decays. The limit to the developmeent of capital is capitalist development.

"In the three years 1880-1882, we built 29,000 miles of railroads, an addition of thirty-four percent to the railroad mileage of the country. Not more than one third of these were justified by existing business. Another third, perhaps, were likely to be profitable at some future date, or at any rate to be of real service to the community; but not now. Of the remainder, some were built to increase the power of existing systems, where they were not needed on their own account. Some were built to put money into the hands of the builders, as distinct from the owners. Some were built to sell, as a blackmailing scheme against other roads....

The rest of the story is soon told. Insolvent themselves, they dragged their solvent competitors down to their own level. The causes whin in 1879-'81 had operated to produce an advance soon passed away. The natural decline, which at best would have cut down the profit of the permanent investments, found some of them loaded with a weight of new debt, and many of them struggling against the reckless competition of insolvent rivals...What has been true of railroads hs been true of other forms of permanent investment. First, high charges and high profitrs. Then speculative investments in the same line. Next an overstocked market, and no profit at all. Finally, cutthroat competition and the widespread insolvency."--Hadley

During the best of times, the circulation of commodities cannot keep up with the capitalist production of commodities. For the valorization process to be sustained, production must be maintained on a continuous basis. The application of more efficient machinery-- the fixed portion of the capitalist's "constant capital"-- requires, not individually for each production unit but socially, greater volumes energy, raw materials, intermediate inputs. Socially the process requires greater outlays of money before production can be valorized. Socially, circulation time cannot absorb, exchange the masses of commodities quickly enough to re-finance production, to sustain the rate of reproduction.

In this tension in between production and circulation, credit and finance are born. During the best of times, credit and finance are imagined by the capitalist as smoothing over the uneveness of the markets, as buying the time until the market makes the time of production good. During the best of times, credit and finance are the bourgeoisie's attempt to paper over, and to repress, the expanding hole in their pockets. Yet, credit and finance, secured by claims against the value of the commodities to be produced and circulated, are the extrusion of the self-contained negation of value inherent in every commodity. During the worst, or next to worst of times, which are any times not the best of times to our bourgeoisie, credit and finance confirm the inability of value to prove its own utility. The expanding production of value becomes the basis for the devaluation, the social devaluation, of the mode of value production.

Economists have long talked of a "scissors crisis" afflicting agricultural producers in modern capitalism; a crisis where the productivity of agriculture drives down the price of its products to its cost of production, but the capital costs of the inputs to maintain that productivity--machinery, fertilizers, pesticides, irrigation,etc.-- continue to rise. This creates an ever widening spread between the two points of the scissors, which the farmer attempts to close through the assumption of debt. However, the scissors crisis is not solely about the growing divergence between the cost of inputs and the cost of production. The scissors crisis is also about the time-lag between production and realization, where the farmer in essence mortgages the anticipated future yield to begin current production. Any delay, disruption, in production, and/or dimished yield in circulation wipes out the value, or a portion of the value of the investment made in the "capital assets" required for production, as the collateralization of the debt demands either liquidation of the these assets or the assumption of more debt as the small farmer is forced to mortgage next year's crops in order to fund this year's failed reproduction.

The intermediate result of the widening of the scissors is the expansion of debt, which compels greater production, greater masses of commodities pushed into the markets in the attempt to recuperate the previous loss. This overproduction further drives down the market prices of the agricultural commodities. With each increase in productivity, the value of and in each individual unit of the products-- a bushel of wheat, or corn; a gallon of milk--contracts, while the mass of values expands. The price of production, or market price, of any single unit, and all the units, tends towards the cost of production, compressing profits and profitability. Any failure to realize the total value of the total product creates a contagious devaluation of all products.

The scissors stretches and strains the agricultural producer as the points open, as the cost of the inputs and the price of the product diverge. The scissors cuts the agricultural producer as the points close, as the market price of agricultural commodities trends toward the actual cost price.

This process creates ever greater concentrations of capital in ever fewer hands; it creates ever larger units of production controlled by ever fewer owners.

Agriculture is not just agriculture, it is capitalist agriculture, and the scissors that strains and cuts the farmer is the same scissors at work in all of capitalism, in the development of industrial production, in the continuous amplification of the productivity of labor through the application of machinery to the production process, the scissors crisis becomes the emblem of all capitalism. Value production becomes devaluation. Declining prices and increased capital investment were the two points of a scissors that cut both ways against itself.

This was the source of the long deflation. It was the era that saw, and felt, the transformation of the valorisation process from one based on the extraction of absolute surplus value, lengthening of the working day, to a process dependent upon the extraction of relative surplus value, intensifying the productivity of labor.

The repercussions of this transformation were brutal to the workers, the poor, and the small producers, and terrifying to the bourgeoisie. The market, by which the bourgeoisie supposedly measured all things, was measuring capitalism and capitalism was coming up short. There was no reversing the effects of the transformation on the workers, the rural small producers. The bourgeoisie did not desire such a reversal. What the bourgeoisie did desire was insulation, protection from the market forces of its own creation. What the bourgeoisie did desire was relief from the conflict at the heart of commodity production, between value, appropriated from the productivity of labor-power, which could only be realized through the social utility of the commodities, and the very same productivity of labor which made value inconsequential, superfluous, and revealed capital as an obstacle to the development of social utility.

Relief was attempted in a variety of manners-- it was sought in the establishment of trusts, syndicates, in tremendous concentrations of capital, the largest of the large, the bourgeoisie knowing that size really does matter. The bourgeoisie thought they were establishing prices, controlling the market through control of production when in essence the trusts, syndicates were simply mechanisms for the rationing of the socially available profit.

Relief was sought in the linkage between industry and banks, in the creation of banks by industry, to provide financing, and to maintain a means for aggrandizing the already accumulated wealth of others.

Relief was sought in regulation, in the federal government pre-empting all the local and state governments and set uniform rates, rendering uniform judgements, with the government acting as the measure, a stand-in, for social utility.

Relief was sought in exclusion of sections of the population from the requirements, benefits, and costs of social development. In the midst of the 1893-1898 spasmodic contraction, the US Supreme Court confirmed that the South had not only risen again, had not only "redeemed" itself, but had indeed conquered, with its decision in Plessy v. Ferguson, excluding black Americans from equal protection.

Relief was sought in empire-- where the burdens, the costs, the responsibilities of social development could be ignored, repressed; where production was extraction and reproduction was subjugation; where modern capitalism declared it had not the desire, the need, nor the ability to revolutionize the relations of land and labor; where capitalism reinforced, and is reinforced by debt peonage, sub-subsistence wages made possible through the practics of subsistence agriculture; where capitalism in its real domination takes on the formal appearance of the inquisitor, the hacendado, the guarantor of immiseration, marginalization.

Sources: Railroad Transportation, Arthur Hadley, G.P. Putnam's Sons, 1885. Railroading Economics, Michael Perelman, Monthly Review Press, 2006. Special thanks to Michael for challenging me to read his book. Recent Economic Changes, David A. Wells, D. Appleton and Co. 1889. Railroads and Regulation 1877-1916, Gabriel Kolko, Princeton University Press, 1965. Capital, Vol. 2, 3, Karl Marx, Charles H. Kerr & Co., 1919. "Commodities as the Product of Capital," Karl Marx, as reproduced by the Marxist Internet Archive, www.marxists.org, "The Direct Production Process," Karl Marx, as reproduced by the Marxist Internet Archive. The World Economy, Vols. 1 & 2, Angus Maddison, OECD, 2006. BicentennialEdition, Historical Statistics of theUnited States, Colonial Times to 1970, Parts 1&2, US Department of Commerce, Bureau of the Census, 1975.

January 4, 2010

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