Thursday, May 25, 2023

Part 2: Classical Marxism Strikes Again!

 “Capitalism in the 21st Century – Through the Prism of Value,” by Guglielmo Carchedi and Michael Roberts, 2023 (Part 2)

These sections are the application of classical Marxism to imperialism, a theory of materialist knowledge, the class character and nature of the USSR and China, robot mechanization and more.  It is quite an original work, loaded with data.  It’s not just people speculating with a thin reed of facts.  These are my notes.

Imperialism

Imperialism is primarily a financial process.  It's four key aspects are:  1) currency seignorage – dollars/Euro/yen, etc.; 2) income from capital investments (foreign direct investment - FDI); 3) unequal exchange through trade; 4)  changes in exchange rates.  Technology levels (the organic composition of capital - OCC) are the center of their analysis, along with the labor theory of value.  Their definition of unequal exchange is when imperial capital appropriates surplus value from weaker countries through the exchange of high-technology goods (high OCC) for raw materials and low-technology goods. They note that unequal exchange is not exploitation, but a relation between differing capitals where countries replace national economic sectors. Their analysis centers on the G7 v. G20. Their figures show that G20 and G7 growth and profit rates have been declining from 1951 to 2019.  Importantly, they also show that the 'blocs' have not converged, but continued in a pattern of underdevelopment. They theorize they will never converge, with China the only partial exception.  Their charts show surplus value transfers to the imperialist bloc – the G7, even regarding China.  Their GDP figures show this is around 1% per year over 70 years re 11 countries in the G20.  The figure is cumulative and would be larger if looking at more countries. Regarding surplus value transfers to the G7 based on export profits, it is around 20%.

China is not imperialist or even sub-imperialist according to them, as it has transferred surplus value of 5-10% of GDP to non-Chinese firms since the 1990s.  This is partly because China's productivity is still 25% lower than the U.S. and others.  The authors do not deal with Minq Li's figures that show China exploiting labor in certain poorer southern Asian countries, or their increasing FDI in many companies in the West, including Germany.  For the latter, they say China's FDI is negligible.  This is not the opinion of others like Werner Rügemer who have studied Chinese FDI.

Much of what the authors examine is aimed at various shibboleths of the soft or reformist Left who do not use classical Marxist analysis.  They debate various erroneous views of unequal exchange, much of which is highly technical.  They look at Lenin's list of the features of imperialism, but point out it's not an actual unified theory - nor do they claim to have a complete one.  They challenge the lazy 'super exploitation' theory that workers in 'the West' exploit workers in the 'periphery.'  Each country - even outside the G7 - has its own capitalists exploiting their own national proletariat; while imperialist capitalists do the rest. They note that politically this theory works to divide the workers of the world, not unite them. In this way reformists hide the local national capitalists - class struggle is subordinated to the needs of the local national capitalist class. As 'globalism' continues, this is more and more erroneous. 

They challenge the impressionist view that exploitation and poverty are the same - exploitation is related to extracting surplus value, while poverty is a lack of use-values.  They confront the associated "periphery/center; 1st world/3rd world; North/South; East/West" geo-political economic view.  They call it a “giant step backward” theoretically, as it confuses capital exploitation with a 'rich/poor' dynamic, confusing poverty and exploitation.  This theory, according to the authors, argues that workers in the global south are more exploited - which they agree with - but not for the same reason.  Some super-exploitationists argue, oddly, that suppliers and lead firms from the “North” have harmonious relationships with 'the South' when the opposite is true. 

Re seignorage, the overwhelming majority of international trade and FX reserves are still in dollars.  The optimism over a reordering of the international financial order is premature.  Re capital investment, most direct financial investment flows in the G7 are within its own bloc, at around 70+% - not into the broader G20.  They conclude that currency exchange rates are based on a nation's labor and technical productivity, with nations gaining or losing depending on what country they are dealing with. 

Robots and Knowledge

Capital aims to replace workers with machines and the AI/ robot/ computer/ internet/ digitalization/ automation 'revolution' is part of that tendency.  This increases the fixed capital component of the organic composition of capital, which later tends to lead to a reduction in profits.  This is the bind capital is heading towards.  The authors contend that 'cheap labor' has run out so the best source of profits is technological updates and imperial exploitation.  Unfortunately cheap labor still plays a role within the G7, though perhaps not as cheap as some.  The authors doubt re-shoring, even with rising wages in places like China, Vietnam and Taiwan, as they are still much lower. For instance in China, labor's share of national income is decreasing.  

Apple's Foxconn plans to install 1 million robots.  Studies have shown that robotization reduces employment in lower-skilled work.  Others estimate that in the future 47% of workers' jobs are at risk.  Estimates of AI capacity show that job replacement will move up to higher skill levels.  Capital's 'great revolutionary role' (GC/MR) is the development of the productive forces and computerization is part of that. This does not lead to a crisis of under-consumption, as liberal economists like Jeffrey Sachs maintain.  This concept leads to the politics of a universal basic income.   The authors discount any fantasy that robots will take over the world, do 100% of jobs, become physically adept, 'conscious' and creative, or engage in dialectical thinking.  It is another form of techno-optimism we have seen before.  A lot of robotization actually goes into military uses.  Sorry Sci Fi!

The authors take direct aim at another semi-Marxist sacred cow, that mental labor is not labor, but 'immaterial' labor.  Hence it is not involved in the profit cycle though it creates 'knowledge commodities.'  This is the outlook of some workerist Marxists who think white collar and service workers do not create value. Software, chemical formulas, patents, copyrights, recorded music, movies and all other intellectual property are part of the former. Marx pointed out that an employed hotel bell-hop is providing productive labor, as do myriad of other employed service workers. The authors do not consider this 'rent' – knowledge commodities are sold on the market, gaining surplus value for a capitalist.  Services are also sold. The concept of rent is extraneous.

The authors insist that 'thinking' is a metabolic, energetic, material act – that there is no real barrier between 'manual' and 'mental' labor.  This split is a false dualism inherited from idealist conceptions.  They place mental work in a 100% materialist context.  Knowledge is the product of a material process in the body and every job – manual and 'mental' - demands some level of knowledge.  Minds interact with the world dialectically, transforming conceptions – they do not just reflect the world like a passive mirror as some earlier Soviet Marxists thought.  Consciousness constitutes a special property of highly-organized matter” is a better beginning.  

By making this argument, they contend that machines will never think like humans.  Machines use formal logic – yes/no – and computing out of pre-existing databanks, while humans, interacting on a material, physical level with the world, use dialectical thinking, which involves creativity, qualitative change, potentialities and new ideas.  Machines cannot understand that something can both be true and not true; or that a coin can land on its edge.  They do not understand the interpenetration of opposites, the movement of contradictions and quantity into quality.  They authors also argue against quantum logic as being able to approach human thinking; or that mental labor and knowledge is value neutral or only individual. They posit that class struggle exists in the realm of knowledge - a concept rejected by bourgeois scholars.  They argue against Negri that 'surplus value' is created throughout society by consumers.  Free labor is used by capital, but not compensated, so it is outside the Marxist labor paradigm.  It actually presages something else - socialism.  

Socialism

The authors detail the characteristics of the transition from the dictatorship of the proletariat - or workers' state - to socialism and communism as envisaged by Marx and Engels.  The 8 necessities are: 

         Loss of state power by capital and its armed men. 

•     Workers democracy replaces capital, partly based on recall of leaders and average wages for officials.

         Common ownership of the bulk of production and credit.

         Planning of investment and production instead of relying on the anarchic market.

         High and rising level of technology and productivity, lowering work hours.

         The gradual replacement of commodity production by production for use.

         The gradual ending of wage labor and money as means of exchange and value store.

         The progressive withering away of the state – armies, police, prisons, bureaucrats.


They look at the USSR and China as case studies.  They conclude that the Soviets never reached socialism and that China is in a 'trapped transition' between capitalism and socialism.  In the USSR workers' democracy was not instituted.  A higher level of technology and rising productivity existed for a time, then stagnation occurred.  Commodity production revived in the USSR, while wage labor and money still existed.  Nor did the state ever wither away or even head in that direction.  Marx, Engels, Lenin, Trotsky and the whole Bolshevik Party thought that socialism could only come about on an international basis.  That also did not happen.  The authors do not say it but the USSR remained a transitional workers’ state, a dictatorship of the proletariat in a distorted form, as the Party replaced the working class, still surrounded by a sea of capital.  

Re China, the authors consider it is not a capitalist country.  The commanding heights of production and finance are in the hands of the state;  the CCP controls and directs the economy even in parts of the capitalist sector; the Chinese 'Red” Army still holds military power and has never been overthrown or dissolved; international investment is controlled and limited, as are the finance markets; the renminbi is not an international convertible currency.  In this transitional situation, the economy can be geared towards production for profit or for use; to go backward or forward.

Of the 8 qualities, only 1, 3 & 4 are in operation in China right now according to the authors.  China is not moving 'towards socialism' - the danger is sliding back towards capital. Yet even before the Deng reforms, growth was strong. Life spans increased from 35 to 63.8 in that period. From 1949 to 1978 one source say growth at 9-11.4%; others put growth at 2.4% and 6.7%.  The Maoist adventures of the “Great Leap Forward” and the Cultural Revolution crashed productivity and growth, but then productivity recovered. China has now raised 850 million out of poverty, unlike its capitalist counterpart India.  The economy is not dominated by the market; by investment based on profitability; by foreign investors or corporate bosses. The statistics for state ownership, investment and stock all heavily favor state assets.  In China the CCP formed a popular front bloc with internal capital - and even some external capital - unlike the USSR.  'Socialism with Chinese characteristics' represents a stagnation of social progress for the working class and any real movement towards socialism.   

The Chinese capitalist sector is still large, which accounts for the constant see-saws by the CCP towards and away from 'liberalization' and neo-liberalism; and periodic economic crises like the present real estate crash.  The authors refute the theory of state capitalism put out by Maoists, Schactmanites and anarchists – a new stage of  capitalism unforeseen by Marx and Engels!  It actually leads to the conclusion that capitalism still has some life in it in a completely new stage in history!  Marx considered capital to consist of multiple capitals, not one, even in a national context. Capitalism cannot exist as one capital, a state. They contend the theory is based on formal logic not dialectics... though I fail to see even that.   

Lastly, von Mises used to accuse socialists of being unable to plan their economy, as planning would be too complicated.  With the advent of data-driven software, world connectivity, AI and sophisticated algorithms this objection has become moot.  Huge companies like Wal-Mart, Blackrock and Amazon are planned down to the T.  Estimates are that the technology now exists to make planning and real time production and consumption data take the place of the capitalist price mechanism on a national and even international scale.  

(The End.)   

Prior blog reviews on this subject, use blog search box, upper left, to investigate our 16 year archive, using these terms: “The Long Depression” (Roberts);  “The People's Republic of Wal-Mart,” “The Law of Worldwide Value” (Amin); “The Unstoppable Rise of the Petty-Bourgeoisie,” “From the Factory to the Metropolis” (Negri); “R.U.R. and the Insect Play,””Rise of China” (Li); “The Capitalists of the 21st Century” (Rügemer); "Four Futures" or the words “China,” “USSR,” “Robots.”

And I bought it at May Day Books!

Red Frog

May 25, 2023

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