By Axel Kruse
In a recent Op-ed article for the Herring, Koh Okuno explains why neoliberalism is bad, but peculiarly the title of the article declares that “capitalism must not fall”. How does Okuno support such a statement? In the final parts of the article, the section where one typically wraps up the line of reasoning, he throws in ill-founded rhetoric on the misery of a world without capitalism. As an example, he writes that if capitalism falls, “you can never buy any new technology again.”
On the contrary, we must think of new ways of organising our economic lives. Okuno claims that, with regards to inequality, environmental destruction and other issues in the world today, “it is not the capitalist economic system that is problematic” but the “pernicious neoliberal form it has taken.” As with the inevitability of capitalism, he fails to substantiate why capitalism is unrelated to a form of itself. Regardless, he would be hard-pressed to find evidence for such a position. Capitalism was always about exploitation. The neoliberal ills Okuno describes in his article are as such a natural outcome of the capitalist system itself. Therefore, creating a more, in his words, “human-oriented” economy, necessitates breaking out of capitalism.
To start with, something Okuno and I do agree on is the definition of capitalism: an economic system where the means of production are held by private entities. What Okuno misses in his analysis is the dynamic this brings about. For, as these entities compete with each other, they are forced to maximise exploitation. Bear in mind that whether or not capitalism must fall, or how capitalism really works, is the stuff of books. All this article can hope to achieve is to inspire you to explore the issue further. That being said, because capital accumulates where exploitation is maximised, and more capital gives a competitive advantage, the overwhelming tendency in a capitalist system is towards exploitation (Marx, Das Kapital).
Exploitation here is used in a purely technical sense: the difference between costs of producing a good or service, including wages, and the revenue from selling this good or service. While it might typically be associated with “taking unfair advantage of”, “making productive use of” is also a possible meaning. For example, costs of producing a good or service can be reduced by improving the efficiency of the organisation, but also by underpaying desperate people.
As we lead our economic lives, capital accumulates with successful economic endeavours, where more money comes in than goes out. These endeavours may be the actions of any actor, be it a company, shareholders, a state, a private person, or what have you. In an ideal world the opportunity to make money is an incentive for entrepreneurs to get in on the action, resulting in more competition between actors, which drives prices down, allowing more people to share in on the improvement in material conditions. Crucially, market transactions are assumed to be voluntary, and so the system is to the greatest benefit of everyone (M. Jensen, “Value Maximisation, Stakeholder Theory, and the Corporate Objective Function”).
In reality, capital accumulation is a positive feedback loop (Marx, “Das Kapital”, Volume I, part 7) and the power imbalance this causes voids the possibility of voluntary market exchange (Odd Langholm, “Voluntary Exchange and Coercion in Scholastic Economics“). Here there is some agreement between Okuno and I. For example, some surplus value might be spent on lobbying legislators to write laws and policies favourable to the business operation that gave rise to that value in the first place. “[I]ndustry legislators and corporate members [interchanging] their roles”, in what Okuno calls “the revolving door”, is an even more powerful tool for corporations to gain influence. The policies may involve, for example, less regulation of working conditions, or more generally, anything that undercuts the bargaining position of any actor the business has to deal with.
Other funds can be used to enhance the business operation itself, making it harder for new actors to compete in the market. Furthermore, if an actor does not choose to maximise exploitation, they will soon find themselves outcompeted by those who do (Marx, “Das Kapital”, Volume I, part 7). All in all, as capital accumulates, the possibilities for broad, fair participation in the market is hampered, and we get monopolies like Standard Oil in the 20th century and the tech giants in the 21st century ( Lenin, “Imperialism, the highest stage of capitalism”).
Because assets are only valuable insofar as someone values them, if actors are outcompeted, their assets lose their value. Think of it this way: if nobody wants to buy their product, what good is their machine? Meanwhile, the assets of the actor which came out on top rise in value, because more people want to buy from them. The winning actor has effectively absorbed the capital of the losing actor. In conceptual terms, capital accumulates where exploitation is maximised. Given that capital provides a competitive advantage, the overall tendency in capitalism is towards exploitation.
From this point of view, problems Okuno attributes to neoliberalism, among others down-sizing, outsourcing, financialisation, and the deception of trickle-down economics, are all inherent to capitalism. As Okuno also seems to imply, however, improving organisational efficiency and the quality of the produced goods and services are also possible outcomes to capitalism. A line in the Communist Manifesto comes to mind: “The bourgeoisie […] has created more massive and more colossal productive forces than have all preceding generations together.” These productive forces have undeniably brought with them tangible benefits. That is not the issue.
The problem is believing that one can reform a system that so repeatedly has caused and causes harm, and will continue to do so, to be more “human-oriented” (Shoshana Zuboff, “Surveillance Capitalism”). Okuno writes in his closing line: “Only by putting ourselves and the planet at the center of our economic structure, can we move forward,” and I quite agree. Yet, as I hope to have shown, the core of capitalism is exploitation. Regulations, taxes– a wealth tax in particular (Pickety, “Capital in the 21st Century”) – and similar interventions might mitigate the adverse effects of exploitation in the short run, but the level of total knowledge and control I believe is required to put us in, as Okuno says, “the center of our economic structure”, is an impossibility.
Okuno will perhaps in the future treat us to something more elaborate on why capitalism is the only way. Following Mark Fischer, I dare say such “capitalist realism” is just a sign of the times (M. Fischer, “Capitalist realism”). Accordingly, I see every reason for us to critically and creatively explore radically new ways of organising our economic lives. My personal bet and perhaps a starting point for your own exploration is an often overlooked writing by Marx that “challenges every serious interpretation of Marx yet conceived” called “The Fragment on Machines”, and, along similar lines of thought, Jeremy Rifkin’s “zero marginal cost society.” Both these theories spell a bright future, but only if we realise that there is a world to win and nothing but a social construct to lose.