Die Neue Zeit
7th October 2007, 07:26
Reading the contents of this particular article on Luxemburg's theory of imperialism (http://www.metamute.org/en/Fictitious-Capital-For-Beginners) reminded me so much of what was said in this blog (http://theoldmole.blogspot.com/2006/02/structures-of-imperialism.html):
Originally posted by Blog+--> (Blog)Capitalism could not take off without the existence of massive, concentrated stores of wealth, which could then be thrown into circulation as capital. The primitive accumulation of capital refers to the violent and lawless process by which this concentration occurred. The process of primitive accumulation also destroys pre-capitalist social formations and allows capitalism to expand into new areas. This type of global integration is central to Rosa Luxemburg's theory of imperialism. It has been picked up of late by David Harvey, who uses the term "accumulation by disposession" to encompass not only the process traditionally included under the heading of "primitive accumulation", but also things like the commodification of traditional knowledges through the patent system, and the privatization of public institutions...
Specifically, dollar hegemony allows the U.S. to maintain structural budget and trade deficits without triggering massive domestic inflation. In order to maintain their massive trade surpluses, China and other countries buy up massive amounts of U.S. Treasury bonds, thus underwriting U.S. government spending. This system means, in essence, that "world trade is now a game in which the US produces dollars and the rest of the world produces things that dollars can buy." Yet no-one wants to upset this arrangement by selling their dollar reserves, since the resulting process of global rebalancing would destroy the production of our trading partners at the same time it demolished American consumption.[/b]
Yet the article posed an idea that linked the two concepts - the basic idea of primitive accumulation and dollar hegemony - together with the shattering of the "free market" myth (warning: lengthy quote):
Article
Whatever her minor flaws (to be discussed momentarily), she was absolutely right about the permanence of primitive accumulation – what much of imperialism and the contemporary world is about – in capitalism. Primitive accumulation means accumulation that violates the capitalist ‘law of value’, i.e. non-exchange of equivalents, beginning with the emptying of the English countryside in early modern history (16th to 19th centuries) by what would today be called ‘economic reforms’.
...
Let’s go back to the pure system, only capitalists and workers, no banks, no other distorting ‘titles to wealth’. Let us further imagine that the entire world is capitalist and that everything exchanges at its value. In such a world, with rising productivity over time, a greater and greater mass of capital is set in motion by a smaller total amount of living labour, the exploitation of the latter being (for Marx) the source of all profit. Hence (with many ups and downs along the way) the rate of profit capable of sustaining all those titles, unless adequately supplemented by what I have called ‘loot’, declines historically.
But, as Luxemburg points out in her Anti-Kritik, the falling rate of profit does not prompt the capitalists to ‘hand the factory keys over to the working class’. Her framework enabled her to see how capitalism could ultimately destroy society – barbarism, in her words, or the ‘mutual destruction of the contending classes’ as the Communist Manifesto put it in 1847 – by being required to turn more and more to primitive accumulation and non-reproduction, a prophecy we see materialising before our eyes today.
...
Of course, the pure model of capitalism has never existed and never will exist. As we know, titles to wealth (profit, interest, ground rent), central banks regulating the markets of such titles, and a state enforcing such titles all pre-existed the full blown triumph of capitalism, i.e. the transformation of means of production and labour power into commodities as the dominant source of wealth.
Once we add titles to wealth to the pure model, as Marx does in the middle and concluding sections of vol. III of Capital, we see a different picture. It is precisely because of these titles and because of capitalism’s ability to loot non-capitalist populations and nature that we do NOT, over long cycles, see any mechanical fall in the capitalist rate of profit.
...
We are of course, in 2007, in the midst of probably the biggest fictitious credit bubble in the history of capitalism. What we have been living through, particularly since the early 1970s, has been a huge operation of credit pyramiding, managed by the world’s central banks, aimed at PRESERVING the paper value of existing titles to wealth, and a significant transfer of working class wages and capital not invested in either plant or infrastructure to help prop up those titles. That latter phenomenon is what I call the ‘self-cannibalisation’ of the system when the ‘primitive accumulation’ mechanism turns inward, i.e. non-reproduction, as referred to above.
Luxemburg of course did not live to see either the post-1933 American or German versions of quasi-permanent military production, supported by the taxation of the working class, and still less the post-1944 Bretton Woods system, in which the US financial markets and the US State acquired the ability to tap wealth from every part of the capitalist world (until recently, minus Russia and China) through dollar seigniorage (the latter referring to the ‘free lunch’ acquired through the US’s ‘maintaining empire through bankruptcy’). And quite obviously, credit has increased a thousand times in significance since Luxemburg’s time, as a way of temporarily prolonging business cycles, while changing nothing of the fundamental contradictions in play.
...
The fictitious bubble in the contemporary world is first of all the huge ($3-4 trillion, at current, conservative estimates) dollar ‘overhang’, the net US external debt ($11-12 trillion held abroad, minus $8 trillion in US assets overseas), held mainly in central banks. Everything, from a capitalist viewpoint, must be done to prevent its deflation. The US government is busy depreciating it by its ‘managing empire through bankruptcy’, and its foreign creditors fret at the erosion of their holdings. But they re-lend the money to the US government and US financial markets, making possible more domestic US credit, more consumption, and more imports from America’s creditors, because for now the collapse of the dollar would be their collapse as well, and they as yet see no alternative.
...
Suppose, in some yet to be concretised scenario, China and Japan (who, despite the rhetoric, have ever closer economic ties), along with the tigers (e.g. Korea, Taiwan) and the ‘flying geese’ (Malaysia, Thailand, etc.) manage to constitute an economic bloc, an Asian currency. Given geopolitical realities, and above all US opposition (as evidenced during the 1997-98 Asia crisis, when it nixed the creation of an Asian Monetary Fund proposed by Japan), it’s hard to imagine this happening without some equivalent of World War II in whose outcome the US, Russia and India will all have a stake [...] With the dollar declining by the day on world exchanges, how much longer will the Chinese, the Koreans, the Japanese, the Middle Eastern oil sheiks, the Russians, the Venezuelans, and the Medillin drug cartel – all major holders of dollars – be willing to hold onto a depreciating asset?
Can the shattering of the "free market" myth be explained by just three words: permanent primitive accumulation? I think this phenomenon occurred under Yeltsin and under Deng, but without the "mass" violence and lawlessness (well, probably more of that stuff in Russia, though) associated with traditional concepts of primitive accumulation. I also think it has occurred under Putin and... Chavez (!) in regards to energy (the latter would explain why manufacturing has grown enormously in Venezuela even without a cost to food production).
Originally posted by Blog+--> (Blog)Capitalism could not take off without the existence of massive, concentrated stores of wealth, which could then be thrown into circulation as capital. The primitive accumulation of capital refers to the violent and lawless process by which this concentration occurred. The process of primitive accumulation also destroys pre-capitalist social formations and allows capitalism to expand into new areas. This type of global integration is central to Rosa Luxemburg's theory of imperialism. It has been picked up of late by David Harvey, who uses the term "accumulation by disposession" to encompass not only the process traditionally included under the heading of "primitive accumulation", but also things like the commodification of traditional knowledges through the patent system, and the privatization of public institutions...
Specifically, dollar hegemony allows the U.S. to maintain structural budget and trade deficits without triggering massive domestic inflation. In order to maintain their massive trade surpluses, China and other countries buy up massive amounts of U.S. Treasury bonds, thus underwriting U.S. government spending. This system means, in essence, that "world trade is now a game in which the US produces dollars and the rest of the world produces things that dollars can buy." Yet no-one wants to upset this arrangement by selling their dollar reserves, since the resulting process of global rebalancing would destroy the production of our trading partners at the same time it demolished American consumption.[/b]
Yet the article posed an idea that linked the two concepts - the basic idea of primitive accumulation and dollar hegemony - together with the shattering of the "free market" myth (warning: lengthy quote):
Article
Whatever her minor flaws (to be discussed momentarily), she was absolutely right about the permanence of primitive accumulation – what much of imperialism and the contemporary world is about – in capitalism. Primitive accumulation means accumulation that violates the capitalist ‘law of value’, i.e. non-exchange of equivalents, beginning with the emptying of the English countryside in early modern history (16th to 19th centuries) by what would today be called ‘economic reforms’.
...
Let’s go back to the pure system, only capitalists and workers, no banks, no other distorting ‘titles to wealth’. Let us further imagine that the entire world is capitalist and that everything exchanges at its value. In such a world, with rising productivity over time, a greater and greater mass of capital is set in motion by a smaller total amount of living labour, the exploitation of the latter being (for Marx) the source of all profit. Hence (with many ups and downs along the way) the rate of profit capable of sustaining all those titles, unless adequately supplemented by what I have called ‘loot’, declines historically.
But, as Luxemburg points out in her Anti-Kritik, the falling rate of profit does not prompt the capitalists to ‘hand the factory keys over to the working class’. Her framework enabled her to see how capitalism could ultimately destroy society – barbarism, in her words, or the ‘mutual destruction of the contending classes’ as the Communist Manifesto put it in 1847 – by being required to turn more and more to primitive accumulation and non-reproduction, a prophecy we see materialising before our eyes today.
...
Of course, the pure model of capitalism has never existed and never will exist. As we know, titles to wealth (profit, interest, ground rent), central banks regulating the markets of such titles, and a state enforcing such titles all pre-existed the full blown triumph of capitalism, i.e. the transformation of means of production and labour power into commodities as the dominant source of wealth.
Once we add titles to wealth to the pure model, as Marx does in the middle and concluding sections of vol. III of Capital, we see a different picture. It is precisely because of these titles and because of capitalism’s ability to loot non-capitalist populations and nature that we do NOT, over long cycles, see any mechanical fall in the capitalist rate of profit.
...
We are of course, in 2007, in the midst of probably the biggest fictitious credit bubble in the history of capitalism. What we have been living through, particularly since the early 1970s, has been a huge operation of credit pyramiding, managed by the world’s central banks, aimed at PRESERVING the paper value of existing titles to wealth, and a significant transfer of working class wages and capital not invested in either plant or infrastructure to help prop up those titles. That latter phenomenon is what I call the ‘self-cannibalisation’ of the system when the ‘primitive accumulation’ mechanism turns inward, i.e. non-reproduction, as referred to above.
Luxemburg of course did not live to see either the post-1933 American or German versions of quasi-permanent military production, supported by the taxation of the working class, and still less the post-1944 Bretton Woods system, in which the US financial markets and the US State acquired the ability to tap wealth from every part of the capitalist world (until recently, minus Russia and China) through dollar seigniorage (the latter referring to the ‘free lunch’ acquired through the US’s ‘maintaining empire through bankruptcy’). And quite obviously, credit has increased a thousand times in significance since Luxemburg’s time, as a way of temporarily prolonging business cycles, while changing nothing of the fundamental contradictions in play.
...
The fictitious bubble in the contemporary world is first of all the huge ($3-4 trillion, at current, conservative estimates) dollar ‘overhang’, the net US external debt ($11-12 trillion held abroad, minus $8 trillion in US assets overseas), held mainly in central banks. Everything, from a capitalist viewpoint, must be done to prevent its deflation. The US government is busy depreciating it by its ‘managing empire through bankruptcy’, and its foreign creditors fret at the erosion of their holdings. But they re-lend the money to the US government and US financial markets, making possible more domestic US credit, more consumption, and more imports from America’s creditors, because for now the collapse of the dollar would be their collapse as well, and they as yet see no alternative.
...
Suppose, in some yet to be concretised scenario, China and Japan (who, despite the rhetoric, have ever closer economic ties), along with the tigers (e.g. Korea, Taiwan) and the ‘flying geese’ (Malaysia, Thailand, etc.) manage to constitute an economic bloc, an Asian currency. Given geopolitical realities, and above all US opposition (as evidenced during the 1997-98 Asia crisis, when it nixed the creation of an Asian Monetary Fund proposed by Japan), it’s hard to imagine this happening without some equivalent of World War II in whose outcome the US, Russia and India will all have a stake [...] With the dollar declining by the day on world exchanges, how much longer will the Chinese, the Koreans, the Japanese, the Middle Eastern oil sheiks, the Russians, the Venezuelans, and the Medillin drug cartel – all major holders of dollars – be willing to hold onto a depreciating asset?
Can the shattering of the "free market" myth be explained by just three words: permanent primitive accumulation? I think this phenomenon occurred under Yeltsin and under Deng, but without the "mass" violence and lawlessness (well, probably more of that stuff in Russia, though) associated with traditional concepts of primitive accumulation. I also think it has occurred under Putin and... Chavez (!) in regards to energy (the latter would explain why manufacturing has grown enormously in Venezuela even without a cost to food production).