THE CANCER STAGE OF CAPITALISM Smith supposed a set of powerfully qualifying conditions to his principle of coincidence for investor and market gain. The market and its investors were assumed to have the following characteristics before the principle could apply. Smith did not assert these conditions for this specific principle, which has been blown far out of proportion to the one paragraph of text in which he expressed it. The conditions which follow were far more central to his theory, and they qualify all that he says in the Wealth of Nations. First, there could be no private monopoly or oligopoly of production or distribution. Smith deplored monopoly and oligopoly above all – the Royal Charters of his day – because they undermined the normative ideal of the market: independent producers and sellers competing to undersell one another in a condition of equal inability to manipulate market supply, demand or price. What Smith above all deplored, however, has largely come to pass in another form. Monopoly and oligopoly is not instituted by royal proclamation, but by processes of government-subsidized transnational corporations which by 1993 controlled market sales of over 70 per cent of market durables, 60 per cent of cars and trucks, airlines and aerospace (the latter so subsidized by governments that they are dependent on it for most of their capital formation), almost 60 per cent of electronic components and steel, and nearly 50 per cent of oil, computers, mass media and chemicals. Second, because of the unavoidable inconvenience, cost and insecurity of investing in foreign countries, Smith took it for granted that domestic capital would not migrate to foreign nations so long as the investor was able to receive ‘ordinary’ or ‘not a great deal less than the ordinary profits of stock’. Again, what Smith assumed as a natural disposition to retain investment in the host society has turned out to be the opposite in the global market. Small margins of higher returns across the globe propel tidal capital outflows from societies overnight where it has been earned with no more identification or commitment to the home society than one not living in it, even if the investment elsewhere leaves the majority of the society plunged into poverty. Indeed, the ‘fiduciary duty to stockholders to maximize returns’ has been absolutized as sole and final authority, thereby ruling out the minimal loyalty to one’s country that Smith took for granted. Third, Smith specified that investment which is ‘productive’ or ‘wealth creating’, the only kind of investment which he supported, must manufacture ‘some particular subject or vendible commodity which lasts for some time at least after that labour is past’. Note that Smith confines his idea of a market commodity to what has some lasting value and is made by human labour. As we will see in more detail ahead, this condition too has been reversed by the global market system. Commodities have an average life of 42 days, and most investment is in financial vehicles with no labour input and with no production of material commodity at all. Fourth, Smith explicitly stated that ‘the sole use of money is to circulate consumable goods, provisions, materials and finished work’, thereby ruling out stock, bond and currency speculations where money is invested and multiplied as an end in itself in decoupled, reiterating circuits that circulate nothing of use or productive work whatever.8 In this movement from money as a medium of exchange between people’s work, their means of production and their consumables to money-demand as the beginning, middle and end of delinked sequences of self-multiplication with no committed function to production or use lies the pathway of mutation to which we devote much of Chapter 3. Fifth, Smith strongly stipulated that capital must be reinvested in productive jobs, or else it is ‘perverted from its proper destination’. As Smith put this foundational principle in fuller context (my emphasis): ‘No part of private capital ... can ever afterwards be employed to maintain any but productive hands, without an evident loss to the person who perverts it from its proper destination. By diminishing the funds destined for the employment of productive labour, [such an investor] necessarily diminishes, so far as it depends upon him, the value of the annual produce of the land and labour of the whole country, tending not only to beggar himself but to impoverish the country.’ There is no principle more emphatically specified by Adam Smith, and no principle more completely in contradiction with the global market’s systemic disemployment of productive workers by downsizing, job-shedding, and public sector dismantling as an automatized choice-path. Sixth, government taxation must fall on citizens ‘in proportion to their respective abilities’ [to pay], and on those to whom ‘the benefit is confined’.10 Flat taxation, taxation of the majority to pay for government services serving only transnational investors and corporations, competitive lowering of corporate taxation across the world, off-shore tax havens for the rich, and increasing reduction of income taxes on the wealthy for equal consumption taxes on poorer income groups are all dominant tendencies of the global market, and all clearly invert Smith’s principle of fair taxation. Seventh, ‘no two characters seem more inconsistent than those of trader and sovereign – the mean rapacity, the monopolizing spirit of merchants and manufacturers neither are, nor ought to be, the rulers of mankind’.11 Smith thus implicitly prescribes against what has today become normalized – the rule of society by ‘business methods’ of ‘efficiency’ and ‘productivity’ which mean no more than the reduction of all money inputs to interests other than business so as to maximize money outputs to business, a law of partiality and greed ruling society with no limit recognized to its spheres of extension and appropriation. In the contemporary reality of the global system now re-engineering all societies to its prescriptions, we may conclude, not one of these conditions Smith specified or assumed as ‘the free market’ is adhered to by global system theory or practice. On the contrary, as we can see the more deeply we examine the matter, every one of Smith’s classical principles of the free market has been turned into its effective opposite.
Posted on: Thu, 06 Jun 2013 06:11:11 +0000
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