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A blog of Post-Capitalist critique in general, economic, philosophical and political analyses, Post-Capitalist poetry and prose, Post-Capitalist philology, book reviews, Postcapitalist news, interviews, praxis, art and much more! For the record, Davide Ferri is a Postcapitalist, who graduated with a B.A.Economics(Honours) degree from Shri Ram College of Commerce, Delhi University, India. He currently lives and works in Mumbai.

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Wednesday, 14 December 2011

ARE YOU A COMMIE OR A CITIZEN?

ARE YOU A COMMIE OR A CITIZEN?

Written by: Davide Ferri
B.A.Economics(Honours)
Shri Ram College of Commerce, Delhi University
Delhi, India
First published: on December 14, 2011

INDEX:
1.INTRODUCTION
2.THE GENERAL PRINCIPLES OF CAPITALISM (A PREMISE)
3.SOME QUESTIONS WE SHOULD ASK (A SECOND PREMISE)
4.THE FAIRY WORLD OF SCHUMPETER-STYLE POLITICAL ECONOMY
5.THE WASTE OF PRIVATE PRODUCTION
6.THE MORAL LEGITIMATION OF AN INHERITED ENDOWMENT AND THE NATURE OF PROFIT
7.THE DECLINE OF FREE COMPETITION
8.ON CREATIVE DESTRUCTION, CRISES AND THE FALLING RATE OF PROFIT
9.ON MONOPOLY PRACTICES



INTRODUCTION


Communism is Godless!

(Dr. Ganus in the video)




Before talking about "Are you a Commie, or a Citizen" and "Schumpeterianism" in general, I wish to premise that:

•Whomever doesn't give a fig about this propaganda video analysis and wanna watch a cartoon may conveniently watch Karl Marx vs Captain Capitalism
•Whomever wants to gain a greater knowledge about the problems of USSR-style Communism may conveniently read my articles on Marxism-Leninism and the political problems of mainstream "Marxism"
•Whomever wants to know in specific terms about the (minor) philological/epistemological and (major) politico-economic problems of Stagism, may conveniently read my article on the problems of Stagism and the question of Frontism
•Whomever wants to read about my stance on the Occupy Wall Street movement may conveniently read my article the political character of the Occupy Wall Street Movement
•Whomever is interested to know more about all these dynamics may conveniently read my article/pamphlet MARX'S LABOUR THEORY OF VALUE AND THE HUMBUG OF LIBERAL ACCOUNTANCY (Davide Ferri) 

THE GENERAL PRINCIPLES OF CAPITALISM (A PREMISE)

Let us return to a critique of the above posted video!
This "Schumpeterian" Capitalist propaganda artwork teaches us a lot on the communicative fallacies and boss-friendly opportunism of bourgeois economics.

[in the following video, US cold war propaganda: 
United States of America Vs Soviet Union]
The Capitalist mode of production, as we may grasp from the first video, is based on the 3 major principles:

- Private ownership of property:

which allegedly defuses the wealth over the widest area and makes people independent, nay, "masters of their own life". Ownership entails appropriation of labour and therefore surplus value in labour terms/profit in money terms. (I shall return on this matter later.)

- The profit motive:
which is allegedly active in all human behaviour (false) and is the incentive for new development and accumulation (production expansion). The private initiative is peculiar to commodity production.

- The competitive open market:
whence the consumerists come and which allegedly brings about better goods and lower prices; as one companies compete with each other.
I will start the political economy discussion of this article with the economic implications of free competition.

[in the following video, "how to spot a communist", a US "armed forces information film"
These 3 concepts — as filtered by the video's communicative performances — echo like self-evident eternal truths for the benefit of humanity, in the eyes of a spectator!
The politico-economic views of the Austrian school — the dominant neoliberal academic force, whose views have now partially absorbed by academic Neo-keynesianism — definitely reflect the spirit of the video in question. They may be summarised, in broad terms, by the pious belief whereby Private profit, Private initiative and free market competition efficiently determine the Social Good.
These forces allegedly act in the interest of all.


SOME QUESTIONS WE SHOULD ASK (A SECOND PREMISE)


•Is it true that  Private initiative and free market competition efficiently determine the Social Good ?
•Is Capitalism a rational mode of production?

•Does Commodity production/Capitalism ensure the greatest socially desirable output possible?  

•What are the politico-economic reasons behind perennial crises and chronic unemployment?
•And above all, are the three basic general principles of Capitalism socially reliable?

This article, due to its scope, will not be able to answer all this questions in a very detailed way, but it will attempt to enrich the general political and economic stance of the reader on the matter.

First of all, so as to discuss the three above mentioned principle, it may be useful to consider the ambiguous pro-Capital analyses of Austrian school economist Joseph Schumpeter on the matter, insofar as his views seem to match the views of Dr. Ganus (the guy of Communism is Godless), as if free market could really be the ultimate solution to all the ills of the world!


[in the following video, just for fun, again Dr Ganus and his Schumpeter-style rhetoric]

It is important to premise that insofar as liberal economics claims that Capitalism is there to maximise the social good with its dynamics, it is important to falsify this perverse belief; in fact Capitalism does not maximimise the social good. 
Why? 
I will dwell upon it in a while.


THE FAIRY WORLD OF SCHUMPETER-STYLE POLITICAL ECONOMY

For a refutation of Schumpeter's theories may shine a light on the liberal utopia surrounding the maximisation of social good, dwelling upon his errors and idealistic belief is very important for our political economy analysis. I will therefore start discussing the validity of his theories, linking his idealistic constructions to the problems of old and present-day Capitalism.

According to the common neoliberal believer à la Schumpeter, Competitive production is economical and equitable in terms of a fair allocation of resource. 
Competitive production would be economical in the sense that there is little waste of commodities and equitable in I-don't-know-which sense, but Schumpeter believe it.
Such a system, in plain words, is socially desirable, at least according to the fantasies of bourgeois economists of the likes of Mr Schumpeter.
Conversely, Monopoly Capitalism would not allow higher and maximum desirable production performances, unlike free market, but it would ensure stability as compared to Competitive Capitalism where the process of perpetual innovation of the economic structure (creative destruction) brings forth catastrophic consequences in society.
Schumpeter ends up with an apology of Monopoly Capitalism, disguised as a desirable evolution of Capitalism. However, this is not what is interesting to the ends of this article.
Schumpeter unawarely summarises all its pious positive believes about the "private" determination of social good, in one phrase:

Perfect competition implies free entry into every industry. 
It is quite true, within that general theory, 
that free entry into all industries is a condition 
for optimal allocation of resources and hence for maximizing output.
(Joseph Schumpeter, Capitalism, Socialism and Democracy, page 104)

Actually, following the logic of Schumpeter, this is "quite untrue". 
There is no optimal allocation of resources and no maximisation of output, at least in "historical terms"; We will see why after a few paragraphs. 
Schumpeter, as a free market supporter and apologist of Monopoly Capitalism, praises Marshall-Wicksell economic analyses, whereby:

Firms are price-takers: 
entities that cannot influence the price. 
Hence, the price is equal to the marginal revenue (P=MR), namely, the revenue derived from an additional commodity sold and realised on the market.
Firms will expand the output until the price is equal to the marginal cost (P=MC), namely, the cost incurred to produce an additional unit of output.

THE WASTE OF PRIVATE PRODUCTION

As previously discussed, in perfect competition we allegedly have little waste of resources and — given a determined income distribution, which Schumpeter, of course, do not morally questions — there is an optimal allocation of resources. 
Even in free competition - not to mention monopoly Capitalism - huge economic and social waste is present.

Private production is not efficient. It is subject to the limit of private property, competition and profit.
In the light of this, innovation is curbed, technological development is suppressed and investment (therefore production) curtailed, war waged whenever is profitable.

In the absence of profit deriving from the ownership of the means of production and private entrepreneurial initiative an even greater output could be achieved — e.g. with the economic planning, following Lange’s trials and errors method — and this higher output would also be socially necessary, like in Capitalism.
Why?
Assume you're a Capitalist who just bought machinery at the price of, say, 100.000$.
In Capitalism, the private management will not adopt a cost-reducing method until the entire existing plant and equipment is entirely written off — given the profit constraint — whereas in Postcapitalism, people themselves would electively do that whenever it is desirable.

In Capitalism, before investing again, one Capitalist has to wait for the said constant capital of 100.000$ to be fully written off. In Post-Capitalism, an economic unit invests whenever people electively decide so, whenever it's socially necessary.

As we may notice, production in Capitalism is not elective. It is imposed on the people by historically inherited private initiative. In Capitalism, a Capitalist will use that raw material, which is the most inexpensive, that which allows him/her to produce more at the least cost, even if it's a polluting material and its usage is not socially necessary due to the potential damage of the environment. This occurs because of the contradiction of Capital and Wage-Labour, because of the presence of Competition, Profit and Activity property.
Is it "chance" that at the beginning of the 2010s humanity is still deprived with sustainable energy? ;)

THE MORAL LEGITIMATION OF AN INHERITED ENDOWMENT AND THE NATURE OF PROFIT


Schumpeter is so astonished by the ideal beauty of free market Capitalism and the "solution of Monopoly Capitalism" that he ends up rejecting class struggleYet, the market has little to say on the already-given endowment of resources. The already-given income distribution and the already-given distribution of Capital and Labour among layers of society greatly determines the income of all the economic agents.
What is the moral justification to this inequality as given by historically inherited conditions?
Schumpeter doesn't say. Nevertheless, he just indifferently rejects class struggle.


[in the following video, for the fetishists of USSR power: 
Soviet Army in Action]
It is important to point out that Capitalist production — against what all the Austrian School believes — is by no means the greatest socially necessary output achievable by civil society. 
The maximum output may be achieved exclusively by a rational mode of production, that is to say, an economic planning directed by the working people; which has neither Capitalists nor Wage-Labourers, but merely post-Capitalist non-exploited working people.

What all Schumpeter cannot grasp is first of all that the production possibility frontier is hindered by profit and private initiative and, secondly, that even if a fair allocation of resource were possible in Capitalism (a wrong conclusion), it is pre-determined by a certain already-given income distribution, among Capitalists and Wage-Labourers.


The nature of profit, the problems of private competitive production, the huge social cost of Capitalism, in all forms of Private Production?
Schumpeter makes short work of it.
He does not question the moral (and efficient) character of this income distribution; he does not because he refuses to analyse political economy in terms of value, in labour terms.
By doing so, he fails to understand the perverse nature of profit; which is appropriation of labour.
  
[in the following video, for Bourgeois romantics or, if you wish, for Stalinists fetishising military power as fostered by economic planning
(and not by the market): 
North Korea 2010 military parade]


Elsewhere I wrote on the appropriation of labour:

<<[..]the full produce of one's labour is the material/immaterial production itself: commodities and services, as desired by the buyers. The buyers - by desiring our commodities and services - implicitly desire the labour necessary to their production: our labour, the labour of the 99%; which is partially remunerated due to the profit absorbed by non-working owners, investors and financial parasites.
One's socially desired labour-time behind production determines the "value" of commodities; it is the only possible rational standard of measurement. Both labour and desire determines value.

Private property alone cannot create any value; simply because it is not the prerequisite for all production. Only desired human labour (namely, socially necessary labour) is the prerequisite for human social production.
Social production in general- as the most ancient mode of production (primitive communism) and the most modern Post-Capitalist microexperiments and macroexperiments proved - takes place even without private property and with the introduction of collective property.
Interestingly, it takes place at a higher level in Postcapitalism, with higher wages, no inequality, better human capital, full employment and no limits to production given by profit, property rights and competition.
With collective property of activity, there is no hindrance of innovation and technological development as promoted by the logic of profit maximisation. There is no pollution as fostered by cost-reducing profit-friendly initiatives on the part of a Capitalist. There is no waste of use-values, of commodities, generated by crises of Capital. And there is no waste of production due to the frictional labour time wasted on labour markets.
There is no labour market (or market of human beings treated as commodities)!
The very same tool, which exploit the workers thanks to market power of wealthy Capitalists, who own the means of production and are therefore able to depress their wages, especially during crises.
In brief, Postcapitalism - and with it the assertion of free labour - implies a contradiction-less framework, at a macro level.>> (Davide Ferri - Who is a Postcapitalist?)
Schumpeter makes short work of all this. It considers Capitalism and its laws as "eternal" and not as historical products. He doesn't question its moral character and he indifferently refuses to engage in a possible study of a Postcapitalist social structure.

THE DECLINE OF FREE COMPETITION

Schumpeter merely laments the growing decline of free competition, which he implicitly regards as the factor behind the maximum possible desirable output, a fair allocation of resource and a fairy world of human possibilities.
In fact, Schumpeter rejects class struggle and endorses the necessity of entrepreneurial action and profit as socially necessary self-evident factors. 
In short, competitive Capitalism, perfect competition — a system where firms are price takers and profit-maximising entities — is the deus-ex machina of all the humanity problems. 


During depressions, huge amounts of commodities — and with them their own use-value (the value of needs satisfaction) — simply go to the devil, insofar as commodities are not saleable on private initiative. The weird paradox is that this perverse impossibility of commodity-selling on the part of private initiative occurs for the sake of private profit, at the immense detriment e.g. of thousands or even millions of unemployed people, who need those a very large part of those commodities.


That's Capitalism: 
a system of waste and spoilage, which cyclically produces crises! 
The profit cannot be realised on the market and the Capitalist prefers to let the commodities go stale and lose all their value in warehouses, waiting for his profits to rise.
That's the "private initiative" of Capitalism!

How can these violent events happen? 
How can crises materialise themselves? 
In my article on the Fall of Berlusconi and the Rise of Monti I tried to briefly explain one possible reason for realisation crises in Capitalism:


It is well-known, at least by whomever carefully read Marx's works, that the investors expect an average rate of profit on Capital and whenever this rate goes below the average they end up holding back investment, expecting future higher returns until the average rate of profit is not restored or a rate of profit above the average is not achieved. This "held" investment produces overproduction, insofar as the absent investment will not be able absorb a share of production in department I (machine-producing firms), spreading the crises of realisation of commodities among all departments (even department II: consumer goods), with consequent layoffs, mass under-consumption and so on and so forth. The tendency of the rate of profit to fall (TRPF) has always been a reality. There will be a point at which the decreased variable capital and increased constant capital, as well as the increased surplus value, will not yield enough profits for the mere existence of a Capitalist class. The growing costs of depreciation on the grown size of Capital and the lack of a mass of variable capital who can absorb the production of Capitalists that keep producing — hoping for growing returns— will exacerbate the crisis of realisation of Capitalism, sooner or later.
(Davide Ferri — The Fall of Berlusconi and The Rise of Monti, november 2011, bolded added)

Crises, as the reader may notice from what all I wrote on the basis of Marx's analysis, are inherent products of Capitalism.


ON CREATIVE DESTRUCTION, CRISES AND THE FALLING RATE OF PROFIT

As Schumpeter argues, a process of creative destruction — carried out by private entrepreneurial action — is, alas, needed for Capitalism to survive. This particular process involves the production of new consumers’ goods, new methods of production and transportation, new markets, new forms of industrial organisation et cetera. The process of creative destruction, carried out by the entrepreneur, is allegedly socially necessary for progress; as if wage-labourers "asked" for the existence of an exploiting entrepreneur.

This evolutionary process that leads to development comes from within and it’s the essence of Capitalism, without which the system could not survive.

[in the following video, North Vietnamese Communists (Vietcong) entering Saigon — the Capital of US-allied South Vietnam — and urging to the US imperialists to a desperate retreat. The Vietcong would rename the city "Ho Chi Minh" in the name of the famous Communist leader, to then reunify the country under "Communist" (ahem) rule]

Like all Capitalist activities, this process of creative destruction is monopoly oriented, and produces crises/unemployment.
It drives pre-existing Capitalists out of competition and absorb their profits through an ever-growing large-scale establishment in  a process centralisation and concentration of production, namely, through monopoly practices. 

We won't deal with "exploitation" again, as we did above, because Schumpeter is simply uninterested in that. But one should recognise that crises - disturbing the worthy theoretical enjoyment of Schumpeter - occur both in free market Capitalism and monopoly Capitalism, It must be borne in mind that Competitive capitalism died and was buried by its natural product: growing monopoly practices, as Schumpeter also recognises. In general, growth of monopoly Capital is fostered by cyclical systemic crises, allowing big capitalists to take possession of the properties of ruined competitors (R.I.P.).

Noteworthy is that comedy personas of the likes of Ayn Rand kept believing throughout their intellectual activity that free competition cannot produce monopoly and it's a viable solution for the individualistic good.
In metaphoric terms, Ayn Rand simply indulged in setting a toy army against the attacks of the critics; insofar as free competition ceased to exist in the XIX century; and is no more recoverable under the natural and "self-regulating"laws of the market.


The growth of Monopoly Capital worsens the frequency of cyclical crises, as the XX century chronology of crises proved.
Capitalism — as Marx well described in Capital with scientific rigour and as Schumpeter also recognises — is clearly a self-destructive system; competition feeds monopoly practices in the long run; which in their turn feed growing wage-labour poverty with the coming of growing realisation crises and growing attacks on the working class, in the form of austerity for instance.

The ever-growing size of constant capital as managed by one holding affects the investors' decision based on the average rate of profit of one economic firm.
I shall recall, for the sake of communication, Marx's formula of the rate of profit which helps us shining a light on the tendency of the rate of profit to fall (TRPF):



π = s/(c+v)
where: 

π = rate of profit
s=surplus value (labour appropriated by the owners)
c=constant capitalist (machines, tools et cetera)
v=variable capital (working people)

The law of the falling rate of profit expresses the socio-economic dynamics through which, over a long period of time, Capitalism comes across accelerated growth to then witness decelerated growth and stagnationThe tendency of the rate of profit to fall arises from the mechanisation of production, namely, an increase of constant capital, whilst variable capital increases a little, remains constant or even decreases.
Variable capital (workers) may even increase but in absolute terms, not in relative terms vis-à-vis a rise in constant capital.
The contradiction between dead and living labour makes itself felt, with the mechanisation of labour craved by the Capitalist's drive for higher profits. 
Through the industrial employment of larger constant capital (larger-scale plants) a given amount of workers can convert a greater amount of raw materials into a greater amount of output. This investment process will lead to the end of Capitalism in the long run, once the Capitalist cannot get enough profit to satisfy its investment requirements and capitalist consumption.
•Why?
Because the rate of profit —namely, how much surplus value is achieved given total capital employed (variable and constant) — keeps falling over time with the steady rise in constant Capital and the slight or null advance in variable Capital; not to the mention the latter's decrease, which would bring down surplus value further (assuming the rate of exploitation to be constant).
As a result of this mechanisation of production, the cost per unit of commodity decreases enabling the capitalist to decrease the price, so as to compete better with the other capitalists and possibly get a higher share of market.



[in the following video, again, the "saddest day", namely, the fall of Saigon: the capital of pro-"Capital" South Vietnam]
With growing monopoly, production is scaled down and social consumption falls whilst the shopkeepers e.g., not able to make a living, will cartelise by (all together simultaneously) increasing their prices and reducing supply in their turn.  In a regime of perpetual issuing of government spending and growing aggregate demand, this can foster hyperinflation, as the monopolist prefers to "scale up" prices rather than scaling up production!
According to Schumpeter, however, creative destruction, stemming out individual entrepreneurial action, possibly counterbalances monopolistic practices by e.g. reducing the price thanks a technological improvement. 
This tendency, however, by no means hinder the very same occurrence of cyclical crises/unemployment and the contradiction arising from this wretched process, that is to say, the growing concentration and centralisation of Capital in the long-run.

Also, unemployment is inherent to Capitalism and not only for crisis-related reasons. 
Unemployment is there even during "boom times". Unemployment is there to stay in Capitalism.
Marx explained that a rise in real wages, which could decrease the capitalist rate of profit, is offset by the countervailing effect of the growing reserve army of labour (unemployed masses).
The reserve army of labour is inherent in Capitalism and is constantly fed by the workers-displacing power of machinery.
As proved by Marx and Ricardo, mechanisation of production displaces workers to an amount that is much higher than the amount of workers potentially re-absorbable by mechanised production. By no accident, the "natural" rate of unemployment is there in any bourgeois economics textbook and is implicitly taken for granted as a necessary evil, a legitimised imbroglio; whilst Capitalism is regarded as the ultimate truth for humanity.
One should recognise that unemployment is also there to stay if the private sector realises that it is not profitable to produce in one determined area, which perhaps desperately needs employment.
Bourgeois economics, dealing with this scenario, would comment by crying out "people may conveniently shift/migrate according to the requirements of the labour market!" 
(and alas, not vice versa, whatever). 


Whilst in post-Capitalism unemployment is kept at 0% through economic planning — in Capitalism the labour market dynamics not only ensure high profits for CEOs and low wages for wage-labourers, but also offsetting of growing real wages by means of a growing reserve army of labour.
Further, Labour mobility is not always so high, as there are social and  economic costs for migrations as well as information-related problems; on the part of Capitalists and wage-labourers.
The migrating wage-labourer is not sure whether s/he'll find employment out of his/her inherited socio-economic habitat.
Even if s/he is, labour market dynamics perpetually send wage-labourers into unemployment thanks to the "untouchable" decisions of supply and demand; and the desired post may be inexistent at the time of an accomplished migration.

In the process of creation described above, existing structures are destroyed, posing a serious threat to Capitalism, which during crises has to politically resolve the socio-economic problems with reformist, austerity or fascist politics, according to the context. 
Communist radicalisation is one possibility, fostered by the sharpening of dialectical contradictions during crises. On the other hand, it must be remembered that the negative impact of the contradiction of Capital over that of Wage-Labour may have the upper hand (e.g. with fascism or reformism).

Returning to the liberal economic humbug, Schumpeter himself suggests, what counts in Capitalism is not competition but growing technology and new commodities, as well as new types of organisation. The traditional competition whereby prices are decreased by revolutionising the means of production and the forms of organisation (recall e.g. the above-mentioned mechanisation process) are not as profitable as creative destruction, according to Schumpeter. In brief, profits through creative destruction may be much higher than profits achieved by reducing of cost per commodity sold; which allows lower prices. Schumpeter, in this case, is right.


ON MONOPOLY PRACTICES

Since dangerous restrictive practices (monopoly) may become desirable for some Capitalists during crises, it is necessary to modify the social structure so as to curb these tendencies (see anti-trust laws), in a reformist fashion, within the analysis framework of Schumpeter.
Cartelisation, in fact, may be a monopoly "remedy" during depressions, Schumpeter also argues. 
More than a remedy, we argue, it is a necessary consequence of capitalist destruction of use-values through inherent crises.
Further, it is a perverse practice, which leads to centralisation and concentration of production in the hands of fewer owners and to more intense crises in the future.
The phenomenon of monopolisation is a complex one, which will not be discussed in its entirety with this article, due to its scope. However, I will give a general recap on what all Monopoly signifies in political economy terms. First of all, it is important to premise that Monopoly entails in general:

• The existence of single sellers whose commodities have an independent demand relation
Higher prices and lower outputs as compared to those achievable with perfectly competitive outputs; and less social need satisfactions.
Occasional monopoly, even in perfect competition: a shopkeeper may be a monopoly producer for some hours, for instance.

Mark-up profits (those higher than the competitive production ones), deriving from monopoly practices, are certainly detrimental for the social good; they represent net social losses. However, Neoclassical economics considers only "Monopoly Capital" as detrimental for the social good, doing away with all the economic analysis I made above.  Schumpeter honestly recognises that the process of creative destruction entails this problem and perfect competition cannot do anything against it.  Competitive production entails free entry into every industry. But the process of creative destruction — involving new methods of production, new technology or new commodity — creates a monopoly situation in which entry becomes quite difficult for new market agents. 
Further, competitors that are already on the market would also have to waste capital against monopoly practices to survive as Capitalist as they are in a far lesser favourable position to concoct new strategies. In case of a bankruptcy, the ruined competitors' profit will be absorbed by the huge concentrated and centralised production of big Capitalists, which will keep accumulating and producing systemic contradictions, whether on a higher or lower scale.
What Schumpeter hasn't grasped, however, is that not everybody is able to become a Capitalist and enjoy "free entry" into private production, even in a regime of free competition and even if one workers wants to become a Capitalist.

With an already-historically-established income distribution, workers are compelled to sell their ability to work (their labour power) in the market in order to survive, where Capitalists - who own the means of production - hire them.
Owning the means of production is more remunerative than working with the means of production. It goes without saying that the very fact Capitalists had the "historical luck" to engage in private production is not a matter of concern to Mr Schumpeter.
Further, if the market is already saturated and demand cannot absorb the potential production of "a proletarian willing to become a potential Capitalist" (assuming fantastically he could start an activity with his miserable savings), the "potential Capitalist" would go bankrupt with all the negative consequences for him/her and his/her family.


Talking about growth, one might argue that Monopoly capital, namely, the large-scale establishment or the big business, is by no means separable from the economic progress. 
To have progress in a Capitalist way, one must accept the non-human consequences of monopoly practices as well as those of perfect competition, on workers and capitalists. 
Of course, we are forced to accept this humbug only if we accept Capitalism as the ultimate eternal truth for humanity.

Schumpeter, as a pious Liberal, does not question the perverse nature of crises, unemployment and, of course, the non-human consequences of private property of the means of production and appropriation of labour. 
Schumpeter expresses all its economic idealism by perpetually underestimating the catastrophic nature of Capitalism in remarks of the likes of “nor can it be argued that these catastrophes occur in any case” [Capitalism, Socialism and Democracy, page 91]; as if the crises and daily tragedies of the labour market were not inherent (and fruitful for some) in Capitalism! Crises, as already discussed, were not interrupted by the coming of "pro-Stability" Monopoly Capitalism! Also, Schumpeter paradoxically patronises e.g. the Weberian concept whereby Capitalism is a rational system. For Schumpeter, actually, any human mode of production is a rational one. The manufacturer’s and trader’s interest, says Schumpeter, was the interest of all during the free market years of Capitalism. On the other hand, we have already seen that Capital in general — whether of Merchants or Industrialists — by no means pursue the interest of all.Capital is always willing to apply a negative force on Wage-Labour.
It always tries to drive down wage-labourers' real wages for the sake of profit. Wages can be raised through pro-labour state action or trade union action, it is true. But this is not a dominant tendency.
Capital can counterattack with employers' association, lobbies and by supporting pro-Capitalist state action, austerity and much more.
Further, monopoly Capital can achieve profits even through inflation, which has a negative impact on the workers' real wage


Real wages = w/p
where:
p=price level
w=nominal wages

In case a Capitalist raises the price level and for any reason the wage indexation lags behind the rise in the price level, the Capitalist can even achieve profit by inflation!
In many countries of the world, wages are not properly indexed, namely, they don't rise in proportion to a rise in the price level. Hence, whenever the real wage decreases, the workers are poorer; while few Capitalists are richer, of course.
One Capitalist can increase his profit with appropriation by dispossession of land, natural resources, by increasing the intensity of work imposed wage-labour, by displacing workers through the effect of machinery as materialised by a growing reserve army of labour, by promoting competition among workers, by despoiling the wealth of other capitalists through the financial system or through monopoly practices et cetera.
There are many way one Capitalist can do that.

Capitalism is a system in which workers are set out against capitalists, who in their tun are set out against workers and other capitalists. It is a system based on lack of human genuine co-operation, a degenerated historical produce. Human beings — social by nature — are turned into mere "isolated individuals" by the historical contradictions of Capitalism. Capitalism alienated the real essence of one person, that of a social being.
Schumpeter-style political economy make short work of Capitalist contradictions. It is bad non-critical and idealistic economics, which ends up legitimising the most horrible contradictions of the system of Capitalist reproduction and accumulation.
Neoliberal economics à la Schumpeter is purely idealistic and speculative, insofar as it takes for grant existing relations whilst not helping us to shine a light on the nature of profit, crises and the reason behind the growing poverty within this planet of slums.

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