Capital III, Chapter 48 - Part 18

In the large corporations, this development of such a large tier of “functioning capitalists” as practical managers, increasingly tied economically, socially, and ideologically to the working-class, whilst still by function, the representative of big industrial capital, mirrors the same contradiction that resides within the worker owned co-operative.

It also makes the establishment of higher tiers of management – of the Boards of Directors referred to earlier – sitting above these functioning capitalists, to protect the interests of fictitious capital, more necessary. But, like any bureaucracy, these higher tiers of management attempt themselves to assert their own interests against the interests both of productive-capital, and the fictitious capital.

We, therefore, see repeated instances such as that of TYCO and Enron, where this bureaucracy seeks to pursue its own interests, and has to be brought to account by the fictitious capital whose interests it was appointed to protect. Just as Bonapartist state bureaucracies have to be brought under control by ruling classes, by a political revolution, so these corporate bureaucracies have to be periodically brought under control by the money-lending capitalists.

The corporate bureaucrats pursue their own interests by a variety of means, whether in lavish expense accounts, and use of corporate property, very high salaries that are only periodically called into question by shareholders, the payment of bonuses, unrelated to performance, and the manipulation of stock prices and stock options by using corporate finance to boost share prices via share buybacks and so on.

Many of these measures, even where they do not adversely affect the fictitious capital, do adversely affect big industrial capital. Any potential money-capital that is drained away as revenue is a loss of potential productive-capital, and consequently the potential for accumulation and expansion of surplus value. That is true whether this potential money capital is drained away as interest (dividends, bond coupon payments, loan charges) or as income received by executives acting on behalf of the money-lending capitalists, including where they act directly in their own interests, either within the law or corruptly. Included in this is the extent to which those executives act to avoid personal or corporate taxes, which acts to limit the resources available for the accumulation of the total social capital.

Any action to boost share prices by using corporate financial resources to buy back shares, means directly that those resources are not being used to expand the productive-capital. The money paid by the company to shareholders is then placed in their hands to be used unproductively, either for consumption or speculation. To the extent that such actions inflate share prices, by reducing the supply of shares, these actions directly promote financial bubbles and speculation. They make it more likely that the money handed to shareholders will thereby be used for additional speculation, rather than for productive investment, or even unproductive consumption.

“If capital originally appeared on the surface of circulation as a fetishism of capital, as a value-creating value, so it now appears again in the form of interest-bearing capital, as in its most estranged and characteristic form. Wherefore also the formula capital — interest, as the third to land — rent and labour — wages, is much more consistent than capital — profit, since in profit there still remains a recollection of its origin, which is not only extinguished in interest, but is also placed in a form thoroughly antithetical to this origin.” (p 829)

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