It is self-evident that this unavoidable neglect of contemporaneous changes in the economic situation, the very basis of all the processes to be examined, must be a source of error.”
As, de-industrialisation, particularly in the US and UK, saw increasing amounts of big industrial capital relocate to China, and other Asian Tiger economies, so it saw, in the late 1980's and 1990's, its economic role replaced by the growing importance of money and commercial capital. Money-capital here should be understood as distinct from the concept of Finance Capital, as developed by Hilferding, which refers to a specific phenomena that was really limited to a period in Germany when the banks, and other financial institutions, held controlling stakes in industrial companies. Money-Capital here refers to it in the sense used by Marx, as a specific stage in the circulation of capital, which becomes the specialised function of banks and other financial institutions.
This money-capital is historically linked to landed property, as Engels cited in his 1892 Preface to “The Condition of the Working Class in England”.“The repeal of the Corn Laws was the victory of the manufacturing capitalist not only over the landed aristocracy, but over those sections of capitalists, too, whose interests were more or less bound up with the landed interest - bankers, stockjobbers, fundholders, etc.”
It is not just that there are personal reasons for this connection. Many aristocratic families, felt that “trade”, i.e. commercial activity, was beneath them, though it didn't stop them engaging in the very profitable slave trade! But, the loaning out of their money-capital, for a rent (interest), was essentially no different from their lending out of their land for similar payments of rent. The European aristocrats, thereby, had no difficulty in transforming themselves into the aristocrats of finance, as Marx's analysis in “The Eighteenth Brumaire” demonstrates.
Despite the bourgeois revolutions of the 19th century, those same aristocrats continue to be large land owners across Europe, not least in Britain. There, all residential development is crammed on to just 10% of the available land area. Much of the remaining 90% continues to exist in the form of large, landed estates, still in the ownership of the aristocracy, not least in the ownership of the Royal Family, or people such as the Duke Of Westminster
Although the US does not suffer from such feudal throwbacks, the same process, which results in the concentration and centralisation of capital, results in a similar concentration and centralisation of land ownership, under Capitalism, when land itself becomes capital. In the US, the State itself owns a third of all the land. But, the link between landed property, merchant capital, and money capital is clear from a reading of Capital III .
Surplus Value is produced by productive, industrial-capital. Landed property, money-capital and merchant capital obtain a share of this surplus value, essentially in the form of a rent. Each of these forms, therefore, have a shared material interest as against industrial capital. But, there is a further material interest. One consequence of the policy of money printing, over the last 30 years, has been that the asset value of property has exploded. For the owners of landed property, that is an obvious boon. Landed property has seen its notional wealth mushroom overnight, without having done anything to bring it about. It is not just the ownership of land. Most of these landowners are owners of the most expensive real estate on the planet, in the form of commercial property, in New York, London and other metropoles. The higher land values rise, the higher the net worth of these landowners, and the higher the rents they are able to charge. In London, landlords, renting out even to ordinary working-class families, have been able to rake in as much as £75,000 a year, for a single property, just in Housing Benefit, paid to them by the Capitalist State.
But, the old symbiotic relation, that existed under the Mercantilist regime, that preceded Capitalism, has seen the enhanced role of money capital benefit its old partners in other ways. As de-industrialisation proceeded in the 1980's, money-capital facilitated the growth of commercial credit, which financed consumer spending, even as workers wages fell, and their jobs disappeared. Commercial capitalists in the US and UK, like Wal-Mart, which bought 70% of its commodities from China, were able to share in the surplus value, created by Chinese workers, by selling the commodities they produced to US and UK workers. Workers in those countries moved from skilled, more highly paid, industrial jobs, to jobs in retail, selling commodities that, increasingly, were produced elsewhere.
As commercial capital grew massively, on this sea of expanding commercial credit, so landed property benefited from increasing land and property prices and rentals. Their fellow parasites, on the stock, bond and commodity exchanges, benefited as the same process bubbled up the prices of shares and bonds alongside property. The apparent ability to make money simply from money, which seemed superficially to legitimise the theories of the Neo-Austrians, that it is exchange not production which creates value, encouraged politicians even more to fête this section of capital.
Could the concept of Finance Capital (which you described as being coined to describe the huge corporations of Imperial Germany) also cover systems in other countries in which industrial and money capital are tightly coupled?
ReplyDeleteExamples would be the zaibatsu of Imperial Japan, the keiretsu of post-WWII Japan and the chaebol of South Korea.
George,
ReplyDeleteYes, although I'm not entirely sure whether in some of these cases its bank capital controlling industrial capital, or vice versa. In all cases, of course, the state itself also plays a central role in p-providing assistance,picking winners and then encouraging concentration around those enterprises that are most successful.
The US at the end of the 19th. Century, start of the 20th. had some features of Finance-Capital too. Lenin, in his "Imperialism" posited it as a characteristic feature of that stage of capitalism. In fact, it wasn't, and the most "Imperialist" of nations, Britain, was not only the one least dominated by monopolies, but one in which this kind of "Finance-Capital" did not exist.
An interesting aspect of the Asian models, is the extent to which the involvement of the state, and the corporatist nature of the economic model takes on board the "social-democratic" model I am describing.
These kinds of "Neo-Fordist" or "Toyotist" solutions, for example, have brought about massive rises in productivity even over the continuous flow methods of Fordism, by incorporating the workers own initiative in developing new flexible labour processes.
Rather like early Fordism they try to create a corporatist framework in which the workers feel that they are part of a company "family". That can go side by side either with the development of organised structures such as staff associations, or tame unions. For example, when Toyota, Nissan etc. set up in Britain, although they brought advantages for workers over many of the practices that British management had subjected them too, a condition was the establishment of single union agreements, with no strike clauses.
In part it seems to go along with a rather more professional, scientific management style that is similar to what happened with Taylorism at the start of the last century. Then the Taylorists frequently formed alliances with unions against management, because the managers were seen as amateur and incompetent in terms of scientific management.
It is a classic representation of the ideology of that social-democracy that the unions allied with the Taylorists, because they thought that having more professional management would make enterprises more efficient/profitable, which would create the best conditions for improving wages and conditions.