Home > Uncategorized > Accumulation of what?

Accumulation of what?

BichlerNitzan1The answer depends on what we mean by capital accumulation. The common view of this process is deeply utilitarian. Capitalists, we are told, seek to maximize their so-called ‘real wealth’: they try to accumulate as many machines, structures, inventories and in- tellectual property rights as they can. And the reason, supposedly, is straightforward. Capitalists are hedonic creatures. Like every other ‘economic agent’, their ultimate goal is to maximize their utility from consumption. This hedonic quest is best served by eco- nomic growth: more output enables more consumption; the faster the expansion of the economy, the more rapid the accumulation of ‘real’ capital; and the larger the capital stock, the greater the utility from its eventual consumption. Utility-seeking capitalists should therefore love booms and hate crises.

But that is not how real capitalists operate.  The ultimate goal of modern capitalists – and perhaps of all capitalists since the very beginning of their system – is not utility, but power. They are driven not to maximize hedonic pleasure, but to ‘beat the average’. This aim is not a subjective preference. It is a rigid rule, dictated and enforced by the conflictual nature of the capitalist mode of power. Capitalism pits capitalists against other groups in society, as well as against each other. And in this multifaceted struggle for power, the yardstick is always relative. Cap- italists are compelled and conditioned to accumulate differentially, to augment not their absolute utility but their earnings relative to others. They seek not to perform but to out- perform, and outperformance means re-distribution. Capitalists who beat the average redistribute income and assets in their favour; this redistribution raises their share of the total; and a larger share of the total means greater power stacked against others.

Shifting the research focus from utility to power has far-reaching consequences. Most importantly, it means that capitalist performance should be gauged not in absolute terms of ‘real’ consumption and production, but in financial-pecuniary terms of relative income and asset shares. And as we move from the materialist realm of hedonic pleasure to the differential process of conflict and power, the notion that capitalists love growth and yearn for recovery is no longer self-evident.

The accumulation of capital as power can be analyzed at many different levels. The most aggregate of these levels is the overall distribution of income between capitalists and other groups in society. In order to increase their power, approximated by their in- come share, capitalists have to strategically sabotage the rest of society. And one of their key weapons in this struggle is unemployment.

The effect of unemployment on distribution is not obvious, at least not at first sight. Rising unemployment, insofar as it lowers the absolute (‘real’) level of activity, tends to hurt capitalists and employees alike. But the impact on money prices and wages can be highly differential, and this differential can move either way. If unemployment causes the price/wage ratio to decline, capitalists will fall behind in the redistributional struggle, and this retreat is sure to make them impatient for recovery. But if the opposite turns out to be the case – that is, if unemployment helps raise the price/wage ratio – capitalists would have good reason to love crisis and indulge in stagnation.

So which of these two scenarios pans out in practice? Do stagnation and crisis in- crease capitalist power? Does unemployment help capitalists raise their distributive share? Or is it the other way around?

Shimshon Bichler and Jonathan Nitzan

  1. graccibros
    August 4, 2015 at 5:29 pm

    Given the speaking fees he charges, one would think Bill Clinton should be addressing this crucial issue. After stressing competition and competitiveness for the U.S. for eight years, now he is in co-operative mode speaking before assembled capitalists, so he is saying, according to Michael Tomasky in the NYReview of Books, that humankind is one of the few “co-operative” species, along with ants, bees, and my favorite, termites.

    The authors quoted here have a similar take to Richard Smith’s on the true nature of capitalism…After 30 years of “animal spirits” – and not quite the co-operative ones, it’s hard to turn off the competitive power urges…even the green good guys – Elon Musk – seem to treat their employees like – well mill workers in Manchester in the 1840’s, firing his secretary when she asked for a raise., marooning his SpaceX engineers on a remote island…remember the stories about Ross Perot’s methods and his 24/7 operations from 1992?

    In getting Trump, aren’t we reaping the logical harvest?

  2. August 4, 2015 at 6:18 pm

    Reblogged this on My Desiring-Machines.

  3. David Richardson
    August 4, 2015 at 8:34 pm

    Aren’t we all capitalists? Capitalist fish in a capitalist ocean? The crisis we are in (and I think we are in a crisis) appears to be to do with distribution and redistribution. The only method of “downward” redistribution known to capitalism seems to be wages and salaries. But there is a conflict between the urge by owners to keep w and s down and the need for the rest of us to consume. The means so far tried is credit, so far as I can tell. But a credit bubble eventually bursts, as we have seen. An alternative method of redistribution is through taxation, and the delivery of the proceeds of taxation downwards into the economy by various means. There seems to be an unwillingness among owners and their representatives to conceive of taxation in this way. But perhaps it should be embraced, for everyone’s good.

  4. August 4, 2015 at 8:55 pm

    The new financial accounting standards groups , e.g. IIRC and SASB, categorize 6 forms of capital : financial, intellectual, human, social ,built and natural capital and rate companies on how they enhance or detract from these stores of value.(see my 56-pg e-book free downloadable on http://www.ethicalmarkets.com

  5. Macrocompassion
    August 5, 2015 at 8:36 am

    It depends on what you mean by “capitalist”. If such a person or entity accumulates durable capital goods, such as houses, machines and production lines, then he/she meets the criterion, which is preferred. But if this person holds shares in private and public companies, having loaned or invested in them (and having purchased shares on the stock-market), then many of us are indeed the hated capitalists and to the extent that our managering-directors manipulate the majority shares, we too come willingly under the spell of being controlled within monopolistic giants.

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