My ninth lecture: labour and capital, talking about the distribution of newly created wealth, the way to conceptualise this, the political stances deriving from this and the light these shed on ethical perspectives about economic and financial issues.
Translated from the French by Tim Gupwell.
In our capitalist system, the « advances » which are consented to by some, the holders of capital or « capitalists », in order to render a production process possible or to allow a consumer to consume are remunerated by interest payments. In my book Le prix (2010), I showed, using examples of “separate systems” in Africa or in Europe, how this system of interest must have appeared: interest being originally conceived as part of a newly created wealth, attributed to one of the partners who had contributed to its creation. The enduring dimension of this original logic in the current form of the capital system is the fact that each time interest has to be paid out, new wealth will have been, or will have to be, created in one way or another, in order to be the source of it. This aspect of the problem usually remains unnoticed but its implications are dramatic because they ensure that the capitalist system is, in economic terms, a dead-end.
We have treated the non-renewable resources of the planet on which we live as a “godsend” in Proudhon’s sense, as a “gift from Heaven” to share amongst ourselves, following the dividing lines traced out by the principles of private property. The non-renewable character of some of these “gifts from Heaven” has remained unseen for as long as the Earth has seemed to us to be infinite. Today, the Earth appears to us to be far too small when we take into consideration our insatiable appetites.
The exhaustion of the planet resulting from our activity is what is discreetly termed negative external factors, which are, moreover – just like godsends – loftily ignored in the calculation of the Gross Domestic Product. “Growth”, or in other words a rising GDP, implies therefore the irreversible destruction of the planet and, as capitalism requires this same growth (so that the interest can be paid), the fact that the logic of capitalism implicitly contains the destruction of the planet, assumes the value of a theorem.
An English translation of my post QUESTIONS À RÉSOUDRE (I) TOUS CEUX QUI SONT RÉMUNÉRÉS LE MÉRITENT-ILS VRAIMENT?
There is a question that neeeds to be answered at all costs; 19th century thinkers have devoted much thought towards its solution. Here it is: when we consider rent obtained by a landowner or by the owner of mineral ore extracted from the ground, interest obtained by the owner of capital also known as capitalist, the profit gained by an industrialist or entrepreneur, and the wages paid to a worker, is one of these incomes unjustified and thereby undeserved?
The only point of agreement reached so far is the following: wage-earners truly deserve their earnings, without a shred of a doubt in any case for that part of those wages needed for mere survival. Workers provide their labour and it goes without saying that they should for their own good turn up at work the following day; they therefore deserve without any dispute wages sufficient to survive until tomorrow. For all other types of earnings unfortunately, the answer to that question remains desperately out of reach.
Karl Marx (1818-1883) took up this question from the same point of view as David Ricardo (1772-1823). He simplified the problem radically by asserting that the only justified income are wages: value is created by work and by work only, therefore any other income allocated to other interested parties, such as land owners, “capitalists” as holders of capital, or industrialists as entrepreneurs is undeserved. Marx calls “spoliation” any payment to participants other than workers.
Other 19th century authors, essentially socialist and anarchist thinkers such as Sismondi (1773-1842) or Proudhon (1809-1865), following on the tracks of 18th century economists such as Richard Cantillon (1680s-1734), François Quesnay (1694-1774), or Adam Smith (1723-1790), were of a different opinion. For them several types of advances participate in the production process and each of them deserves as its reward a part of the newly created wealth (*). Thus income ensuing from property rights was according to some authors a reward for work previously performed – sometimes several centuries prior – by some forefather of the current beneficiary; profit accruing to the entrepreneur was a reward for management and supervision of the production process; lastly, interests and dividends collected by the capitalist were compensation for relinquishing control of the loan amount until later.
A solution to such a baffling conundrum remains far from obvious: newly created wealth obviously results from the combination of a number of elements but how can one assess the true contribution of every one of them? The only sure thing is that lacking an unambiguous answer to this question, throughout the ages and until now only the power balance between parties has determined how much every party ends up getting at the end of the day.
(to be continued…)
(*) See for example what I have to say about the splitting of “parts” in the case of an african dugout canoe used for sea fishing in Le prix 2010 : 145-149
An English translation by Bernard Bouvet of my « QUOI QU’ON FASSE, CE SERA LA MÊME CHOSE ! » of March 11.
77% of you, my dear blog readers, not all of you, but a “comfortable majority” of you, happens to be French. Your country is now in full “election showbiz” mode, and the mainstream media, in the press, on the radio, on television, are full of it, news on why the moment is “crucial” and “how to vote”, are front and centre.
Still, you are perfectly conscious of the fact that whatever which way you vote, either for one of the two candidates facing each other in the second round, or someone else, as a protest vote favouring either the extreme-left or the extreme-right, or a blank vote, or even if you don’t bother voting, all that is of no importance since the result will be the same: either actively or passively, you will elect or help elect a candidate who will either immediately set out to carry out the program of any such “troika” (EU, IMF, ECB) forgetful of the meaning of “democracy” – if it ever understood it – or a candidate who will, after a perfunctory six month delay, carry out the exact same program, in “former president Miterrand’s fashion”, following a “valiant” last stand.
No doubt, that last stand will turn out to be “valiant”, but again, a fat lot of good it’ll do you.
One can sense the weariness, the discouragement pervading your comments on this blog since the election campaign started.
Throughout history, particularly in the 19th century, that kind of hopelessness had led to several social change attempts from within the system. For instance, it gave birth to an array of communal groups, rendered vulnerable from the very start, to some extent, by an exaggeratedly idyllic view of human nature, but mostly due to the hostility of an outside world, a world which had stood unchanged. How many a grandiose project of a cooperative, of a social workshop, of abolishing money, of an alternative currency, did not succumb to the assaults of those from the outside who had retained their, let’s call it… “business sense”? Virtue, as Saint-Just realised far too late, can only be exercised within a protective institutional framework, otherwise, it is purely and simply trampled under foot.
What to do? Those unanswered questions require resolving, if the goal for a preferred tomorrow is to achieve a decent, livable world. A world where, in retrospect and in contrast, we will realise what a nightmare the previous world had been that we contended ourselves with.
Indeed, those 19th-century associationists, collectivists, socialists, communists, anarchists, even enlightened liberals such as Saint-Simon and Auguste Comte, posed those unanswered questions, but still, they remained unresolved. The 20th century, for its part, has had its share of false solutions ending in atrocities.
In France, the Revolution of 1848 gave birth to numerous projects founded on generosity but soon failing, due to the instigators’ lack of a proper analysis of principles. Proudhon laments the “premature birth” of the Revolution. But aren’t all revolutions always, and by definition, born prematurely, otherwise they wouldn’t even have been considered as necessary. The excuse has been abused throughout human history, of having been caught unprepared in the face of an “unpredictable” collapse, even if predicted with some accuracy by a few.
Last Sunday, I launched a five-part series called: “The Remaining Unresolved Questions”. I have only been back home last night, following a series of speeches in Belgium and Holland, with no time yet to read your contributions to the debate, but I am readying myself to do so.
Anyway, those “Remaining Unresolved Questions” are already well-known. What I am expecting of you, is for a few (the rest of the troops fill follow suit in no time) to initiate an undertaking of resolving those questions. A precise list will take shape along the way, but in the meantime a few questions can be clearly formulated: “How do we smash the wealth-concentrating machinery?”. “How do we terminate speculation?“. “How should newly created wealth be redistributed?”. “How do we re-invent an economic system neither based on private property, nor on “growth”, both recognised as life destroying on our planet?”. “How do we eliminate work, without reducing to misery those who lived from it?”. Etc. Etc.
Time has come to define in new terms this insane world that – because of weariness and because of discouragement – we have contented ourselves with until now.
So, have a nice day, get set, ready, go! Use your pens, emails, phone calls, your arms, your legs… whatever works!