Fictitious capital

What is fictitious capital, and is it a relevant notion to understand contemporary capitalism? I recently participated in a discussion on this subject. Rather than trying to reproduce all the arguments, I will just state my own view here. But at the same time I will also try to account for at least one important conflict line that exists regarding the concept and try to elucidate what theoretical considerations underlie the disagreement.


What is fictitious capital?

To begin with, what is fictitious capital? It is capital that is not involved in production, and production here, as always in Marx, means the production of surplus value. Instead, it merely involves a claim to part of the surplus value produced elsewhere. Typical examples include interest-bearing bonds, securities and stocks. Marx' clearest explication of the concept occurs in Chapter 29 ("Banking capital's component parts") in Volume 3 of Capital, where he clarifies that fictitious capital is fictitious because it doesn't function as capital. It seeks revenue or profit without being invested in production. The “profit” expected from the investment in fictitious capital does not derive from production per se, but arises through a mere redistribution of a surplus value expected in the future. As Michael Heinrich explains:

This term [fictitious capital] does not mean that these claims cannot be redeemed. Rather, it refers to the fact that the real capital the owner originally possessed in the form of money has been advanced only once, during the purchase of stocks and bonds. After that, it is possessed by the business and is advanced by it. Securities, stocks, and bonds represent mere claims to certain payments; their ‘value’ (the market price) has nothing to do with the amount of value originally paid for these claims... (Heinrich 2012:164)

All credit does not involve fictitious capital. To illustrate with a simple example, money that is borrowed to obtain capital for investment in production is not fictitious capital. But let’s say that the creditor in return for lending money obtains a promissory note stating his or her right to a certain percentage of the surplus value expected in the future. This promissory note is not capital in itself, since the “real” capital has already been advanced and invested in production. The note is a fictitious form of capital. Regardless of its fictitious character, however, it can be traded and become the object of speculations that drive its price upwards. Trading with rights like these can become an important source of profit. It's important to note that the price of these rights is unrelated to the value law since they are decoupled from production and merely involve the redistribution of surplus-value produced elsewhere.

The relation of fictitious capital to the larger circuit of capital can be illustrated by the diagram below (which I've borrowed from here; for the original formula of M-C-...P...C’-M’, see Volume 2 of Capital). As shown in the diagram, money that doesn't find productive investment may instead chase profit by investments in bonds, shares and the like, thereby creating fictitious capital. To the diagram one might add circuits going in loops around these shares and bonds to highlight the extensive trade going on in these assets. As the diagram shows, fictitious capital isn't necessarily trapped in fictitious form. Profits amassed through fictitious capital can potentially always return to the outer circle and become real capital.

The paradoxical quality of fictitious capital

To Marx, the fictitious character of this capital doesn’t mean that it is unnecessary or superfluous in the process of capital accumulation. Why is this? Let us note that the concept has an interesting, paradoxical quality. Fictitious capital is decoupled from production, but still somehow needed by capitalism - which seems strange since capitalism is supposed to be all about the production of surplus value. The paradoxical quality is most evident in the case of banks. Capitalism needs banks and credit, but almost all of banker's capital is "purely fictitious", as Marx writes (Marx 1991: 600). What is the relation between these seemingly contradictory statements, and how is it possible to combine them? Why does capitalism need fictitious capital if the latter is unrelated to the production of surplus value?

The answer seems to be that it facilitates circulation and redistributes money to those capitalist hands where it can become invested in real production. Such facilitation is essential to capitalism. As shown in Volume 2 of Capital, capitalism must constantly strive to shorten “turnover time”, meaning that capital must constantly be channeled back, with as little delay as possible, to those capitalists who are capable of finding profitable production processes where to invest it.

That fictitious capital can facilitate circulation without itself ever being involved in production is quite evident. Even a pyramid scheme facilitates the circulation of money, redistributing it to others who possibly might know of better ways to invest the money than in a pyramid scheme. As noted by Trenkle and Kurz, fictitious capital is therefore always "real capital in spee". No matter how fictitious an investment is, the money gained through fictitious capital always has the potential to become real capital, and the more it circulates the greater the chance is that this will happen. This is also why there is no way to just remove “speculation” and only have healthy, productive investments left.

It's interesting to note that this function of facilitating circulation isn't necessarily impaired by crises that wipe out the numerical value of the fictitious capital. Even the burst of bubbles performs an important function to capital: thus the depreciation of securities "in a crisis is a powerful means of centralizing money wealth", as Marx writes (1991:599). In fact, it is easy to make the case that it is precisely in moments of crisis when speculative bubbles burst that the power of capital reasserts itself the most starkly and nakedly, with outrageous gains being made by the few while whole populations are ruined. Indeed, the burst of these bubbles almost always seem to involve huge transfers of wealth from the working class to the capitalist class. In this sense, fictitious capital represents an alternative and hugely important route to enriching the capitalists in addition to  the "regular" one represented by the production of surplus value.


The relevance of "fictitious capital" for understanding contemporary capitalism

The concept of fictitious capital seems particularly relevant for understanding contemporary capitalism. After all, aren't we living in times in which fictitious capital has completely overwhelmed and dwarfed all "real" production? The allure of the concept also lies in its seeming capacity to be generalized. In Capital, Marx applies it above all to trade in financial instruments, but wouldn't it be eminently applicable also to real estate speculation? That such a generalization of the concept would be possible is suggested by some definitions proposed by later Marxists, like the following one by Trenkle and Kurz:

Kapital ist einerseits definiert als Vernutzung ("Ausbeutung") von Lohnarbeit, andererseits als Verwandlung von Geld in mehr Geld. Fiktives Kapital entsteht dann, wenn der zweite Teil der Definition den ersten nicht mehr enthält, und zwar nicht etwa als bloß subjektive Einbildung, sondern als gesellschaftliche Realität.

This definition suggests that it would be possible to apply the concept to all transactions where capital seeks to obtain profit without being invested in production. This would open up for connecting it to what David Harvey calls "accumulation by dispossession", i.e. ongoing processes of so-called primitive accumulation. Harvey himself seems ready to make this connection. As contemporary examples of such accumulation he mentions the management and manipulation of crises, including the use of bailouts as excuse for pillaging, raiding pension funds and reducing whole populations to debt peonage (Harvey 2005) - all phenomena that are crucially mediated by fictitious capital.


Harvey and Hardt & Negri's "exchange" on fictitious capital

Still it is not self-evident that such a generalization will be fruitful and that it can be done unproblematically. One way to approach the question of the usefulness of such an operation is to look at one of the conflict lines that exist around the concept of fictitious capital. To illustrate it we can use the debate between David Harvey on the one hand and Michael Hardt and Tony Negri on the other (“Commonwealth: An Exchange”, published in Artforum 48:3, November 2009: 210-221).

First out is Harvey:

While Hardt and Negri occasionally mention financialization and concede its general importance in recent times, they have absolutely no theory of fictitious capital, no conjecture as to what it means for a market circulating six hundred trillion dollars' worth of derivatives of various kinds (and from which finance capitalists can extract vast personal wealth, like the three billion dollars George Soros gained in 2007) to be superimposed on a global economy that produces only fifty-six trillion dollars' worth of actual goods and services. This omission could be forgiven were it not for the brute fact that political subjectivities have been as deeply affected by fictitious-capital proliferation - everything from the credit-card culture to speculating on gains in housing value - as they have by any Foucauldian exercise of biopower (i.e., state power over life). Talk about immateriality!

And here's Hardt and Negri’s response:

Finance capital can be considered fictitious, in our view, only within the bounds of market relations and, in particular, in the competition among capitalists. From this standpoint, many conclude that the current crisis is due in large part to the separation between finance and real economic production, a view often accompanied by socialist rhetoric against the plutocracy and the parasitic agents of finance. When we focus not on individual capitalists but on collective capital, though, we see a different picture: Financialization is not an unproductive and/or parasitic deviation of growing rates of surplus value and collective savings but rather the central form of the accumulation of capital. Furthermore, whereas in the industrial framework the relationship between economic production and finance might have appeared as reality versus fiction, the economic forms emerging as central today cast this relationship in a new light. In fact, increasingly today the form of finance is symmetrical to the new processes of social and biopolitical production of value. The production of common goods we focus on in our book, such as the production of knowledge, codes, languages, images, services, affects, and social relations, has significant immaterial components but neither these immaterial goods nor finance are for that reason fictional.

What is the disagreement about? First let us recall how much Harvey and Hardt & Negri in fact agree about. They both agree that there has been a change in capitalism. Struggles around the “common” have become more central, reflecting the fact that the production of surplus value by exploiting wage labor is becoming less central to capitalism. Instead, capital relies for profits on processes such as “accumulation by dispossession” (a term Hardt & Negri take over from Harvey and use in their book Commonwealth) or “immaterial” commodities much more than in Marx' time. However, they disagree on how to interpret these processes. This in turn is reflected in their differing views on the relevance of the concept of "fictitious capital".

To understand the disagreement, we need to return to the question what it is that drives capital accumulation. This is arguably the central question around which Capital revolves. As we recall, the engima Marx seeks to solve is how such accumulation is possible at all. Famously, his answer is that long-term, systematic accumulation is possible only thanks to the existence of a peculiar commodity, namely labour power, which has the ability to produce more value than is required for its own reproduction. The exploitation of labour power, then, is the crucial source or motor of capital accumulation. Without it, the accumulation process would be erratic and unpredictable, dependent on the contingencies of luck and force. An example of this is the merchant capital of premodern societies that sought to obtain profits by utilizing price differences in different locations or by resorting to plunder, monopolies and political patronage. While such methods could certainly yield spectacular profits, they don't constititute a reliable way to systematically produce surplus value. The only lasting, systematic way for capitalism to grow is to rely on surplus value derived from labour power.

In view of this, it would seem that what is crucial for capital accumulation isn't so much profit in itself, as a steady production of surplus-value through the exploitation of wage labor. However, the problem with this position is that it cannot explain the explosive growth in financial capitalism in recent decades or the increasing reliance on “accumulation by dispossession”. In other words, it cannot explain why investors increasingly seek to draw profits from “fictitious capital” rather than real capital.

The alternative position would be to give up insisting on surplus value and state that what drives capitalists is simply the thirst for profit, no matter from where it is derived. Accumulation by dispossession or gains from speculation are fine as long as they yield profit. What matters to capitalism is that profits are made, not from where they come. As Wallerstein and others have pointed out, this is why capitalism has historically always been happy enough to rely on non-wage labor where it has been expedient, such as serfs in Russia, slaves in America, or unremunerated housework everywhere. The assumption that the crucial thing for capitalism is profits rather than the ability to exploit wage-labour may seem persuasive. Yet there are problems with this assumption too. It would make the value law redundant – or in any case not central to capitalism. Why is this problematic? Here we need to remind ourselves that to Marx, labour is the only reliable source of long-term capital accumulation. This means that to the extent that capitalism turns to other sources of profit than production, the process of capital accumulation will ultimately becomes less stable and orderly, more crisis-prone and more dependent on luck and violence. While fictitious capital can yield enormous profits, it's hard to organize it into a system for long-term, predictable capital accumulation.

To my mind, the concept of "fictitious capital" is still useful since it helps us trace this increasing migration of investment from production to rent and speculation and the like as sources of profit. To explain why fictitious capital is expanding is quite possible without jettisoning the idea that surplus value extracted from labour is central to long-term systematic capital accumulation (this is not a question I want to delve in too much here, but it seems to me that Arrighi for instance does a good job of it in The Long Twentieth Century). But the question then becomes: why do Hardt & Negri jettison it? To understand this we need to turn to their background in "workerist" Marxism:

Firstly, like other workerist Marxists, they see the workers as the driving force of history as well as of capitalism. Relying on the agency of the workers, they have no need for a Zusammenbruchstheorie, a theory of the inherent tendency of capitalism to break down. Capitalism is parasitical and hence in a sense perpetually in crisis, since it cannot do anything but piggyback on the workers, trying its best to keep up with them and extract profit from their powers of self-valorization. Coming from this background, it is hardly strange that Hardt & Negri see little of interest in a theory that says that a capitalism that relies increasingly on fictitious capital will tend to be more crisis-ridden.

Secondly, Hardt & Negri build on the idea that capitalism becomes more diversified as it follows the working class around. It spreads to more and more social domains, learning to profit from all kinds of everyday activities. It becomes increasingly hard (and meaningless) to try to draw any boundary between production and other activities that yield a profit. We end up with everything becoming production and everyone being a “worker” (the social worker) active in the “social factory”. When everything is production, it of course also becomes impossible to draw a boundary between real and fictitious capital.

So are they right? Is this a reasonable way to look at capitalism? Harvey obviously doesn’t think so. To him, it’s still meaningful to draw a boundary between real and fictitious capital. Not because he disagrees with the portrayal of capitalism as relying less on real production, but precisely in order to be able to trace this shift more properly. Against that, Hardt & Negri would probably reply that the pursuit of profit in new forms, through new "immaterial" forms of production, has achieved a new stability and systematicity that means that capital accumulation can rely on it in much the same way that it once centrally relied on exploiting wage labour. In reply to that, however, one might argue that Hardt & Negri don't really show that this is true in regard to fictitious capital. While they are quite right that there has been a growth in "immaterial" forms of labour, they do not clarify how this is related to the growth of financial transactions in securities, derivatives and so on - most of which seem unrelated to labour, even of the "immaterial" kind. In contrast to such fictitious capital, capital that is invested in "immaterial" commodities does involve labour, the creation of a use-value that can be consumed, and the production of surplus value. In that sense, it doesn't represent any break with Marx' analysis of capitalism as dependent on the exploitation of labour. As Negri (1999) himself has stated, labour is still the producer of value in today's capitalism, even if it has lost its role as the "measure" of value (it becomes immeasurable since it has become affective). Fictitious capital, by contrast, is not only devoid of any value input through labour; it also fails to yield any consumable use-value. Since it can never "land" in consumption, it always exists in limbo, unable to complete the circuit of capital on its own accord. As Marx points out, it remains a mere title or claim to a surplus-value produced elsewhere. To my mind, this strongly suggests that it cannot really constitute a reliable ground for systematic capital accumulation. This is also why I'm not prepared to accept the idea that all activities that yield a profit are production. This also makes it relevant to retain the distinction between real and fictitious capital.

As a matter of subjective motivation, it is probably true that capitalists will always strive for profit rather than surplus-value. This is also why fictitious capital will always attract them. It performs wonders for them: not just through direct profits, but also through the rapid redistribution of wealth that it can facilitate, especially in moments of crisis. In its ability to suddenly conjure up masses of fresh "capital" to certain capitalists, it is similar to "accumulation by dispossession", as well as to the windfalls to be had through real estate speculation. All these terms suggest operations that yield profit without any actual production happening. What makes them interesting is that capitalism today seems to rely more and more on such operations. This means that today, capitalism is increasingly driven less by value and surplus value than by profit, no matter in what form. To trace this process, the concepts of real and fictitious capital remain relevant. Marx might still be right: in the long run only the extraction of surplus value through labor power can guarantee a stable capital accumulation. But never in its history has capital been able to rely only on such extraction. There has always also been "primitive accumulation", as Rosa Luxemburg and others have pointed out - always plunder, colonialism, the extraction of money through violence and political power. But the more capitalism shifts towards such forms of accumulation, the more unstable will it be.


References

Arvidsson, Adam & Elanor Colleoni (2012) “Value in Informational Capitalism and on the Internet”, The Information Society 28(3): 135-150.

Harvey, David (2005) A Brief History of Neoliberalism, Oxford: Oxford University Press.

Harvey, David & Hardt, Michael & Negri, Antonio (2009) “Commonwealth: An Exchange”, Artforum 48(3): 210-221. 

Heinrich, Michael (2012) An Introduction to the Three Volumes of Karl Marx’ Capital, New York: Monthly Review Press.

Marx, Karl (1991) Capital: Volume III, London: Penguin.

Negri, Antonio (1999) “Value and Affect”, boundary 2 26(2): 77-88.

Trenkle, Norbert & Kurz, Robert (ND) ”Fiktives kapital”; http://www.exit-online.org/textanz1.php?tabelle=schwerpunkte&index=6&posnr=130&backtext1=text1.php

* However, there are others who, inspired by Negri, have attempted to bring together financial capital and the concept of immaterial labour. Arvidsson & Colleoni (2012), for instance, see Facebook as a clearinghouse bridging the "affective economy" of its users and financial markets. The data it gathers on the affective distance between users and a variety of potential consumer goods enables Facebook to introduce principles of valuation that operate according to a logic analogous to financial derivates, i.e. that function even in the absence of "fundamentals" like labour time. While this is suggestive, one might object that the analogy between financial derivates and Facebook isn't exact. In the case of Facebook, the ultimate point of reference remains the potential consumer - in other words "valuation" still rests on accurate referencing to a real objective world where an actual commodity can be sold. The example of Facebook, then, hardly justifies abandoning the distinction between real and ficitious capital.

   

Like a fire? Rosa Luxemburg and primitive accumulation

The idea of primitive accumulation is having a renaissance. Here I will sketch how the idea develops from Rosa Luxemburg to contemporary thinkers like David Harvey, Saskia Sassen, Giovanni Arrighi, and Michael Hardt & Antonio Negri. By right, I suppose I should have started these notes with Marx, but that will have to wait. After all this is only a blog. Suffice it to say that to Marx, primitive accumulation - the appropriation of wealth derived from non-capitalist modes of production, often through means such as fraud, looting, conquest or oppression - played a crucial part in the origin of capitalism.


Luxemburg

The first important step in the development of the idea after Marx is taken by Luxemburg. She criticizes Marx for viewing primitive accumulation as merely "incidental" to the functioning of capitalism or as "illustrating merely the genesis of capital" (Luxemburg 1951: 364). She stresses that capitalist accumulation proceeds on two tracks: both through the exploitation of wage labour emphasized by Marx and through ongoing processes of primitive accumulation (ibid. 452). Capitalism's inability to survive without primitive accumulation is part of her explanation of imperialism. Capitalism needs a non-capitalist environment into which to expand and which functions as a safety-valve that saves it from its overaccumulation crises. But this will prove to be its undoing:

Capitalism is the first mode of economy [...] which tends to engulf the entire globe and to stamp out all other economies, tolerating no rival at its side. Yet at the same time it is also the first mode of economy which is unable to exist by itself, which needs other economic systems as a medium and soil. [...] In its living history it is a contradiction in itself, and its movement of accumulation provides a solution to the conflict and aggravates it at the same time. (ibid 467)

Luxemburg conjures up the image of capitalism spreading like a fire, consuming itself: “thus capitalism prepares its own downfall under ever more violent contortions and convulsions” (ibid 453).


Harvey, Arrighi, Sassen

Contemporary authors like Harvey, Sassen or Arrighi have learnt much from Luxemburg. Like her, they stress that capital in today's world is accumulated both through the exploitation of labour and through primitive accumulation, and that spatial expansion plays an important role in maintaining capitalism. What they add is the acknowledgement that: 1) spatial expansion is sometimes a much more subtle process than the image of colonial conquest suggests, and that 2) the "non-capitalist" environment from which capitalism can draw its profits is more diversified.

Harvey develops the first of these realizations into his idea of the "spatial fix" and the second into the idea of "accumulation by dispossession" - his term for primitive accumulation. Let me start with the spatial fix. Luxemburg identified spatial expansion with imperialism, implying that capitalism’s possibilities of expansion were very nearly exhausted by the time she was writing. The “spatial fix” is something much more flexible, consisting in geographical expansions and restructurings that are used as temporary solutions to the overaccumulation crises that are inherent in capitalism. As Harvey points out, spatial fixes are available even in a world that is already more or less fully incorporated in capitalism. Spatial fixes make use of geographical unevenness, but uneveness is not simply a product of "underdevelopment". Capitalism produces its own unevenness, often plunging already “developed” regions into destructive devaluations (a central point in Neil Smith's Uneven Development). The idea implied here is that processes of primitive accumulation are turned not only against the remaining few non-capitalist formations but also against parts of capitalism itself.

Since such processes of primitive accumulation are part and parcel of today's capitalist world, Harvey prefers to term them "accumulation by dispossession". Under this rubric he includes a wide variety of phenomena which have in common the appropriation of wealth that has been formed outside the production processes of capitalism proper, i.e. not through “the expansion of wage labour” (Harvey 2005:178). It includes things like the privatization or commodification of resources like water, land or public services; intellectual copyright; "biopiracy" (”pillaging the world’s stockpile of genetic resources”); or the use of the credit system to redistribute wealth ("reducing whole populations to debt peonage" by rescue packages or managing crises in order to be able to use bailouts as an excuse for pillaging). Things like using traditional songs for making profit in the music industry or the medical knowhow of indigenous peoples in the pharmaceutical industry would be examples of accumulation by dispossession.

Arrighi's and Sassen's analyses of primitive accumulation are inspired by Harvey's and differ only in emphasis. In line with his own theory of accumulation cycles and moving hegemonies, Arrighi (2004) puts particular stress on the tendency for the core of capitalism to move geographically with the search for profitable investment through spatial fixes. Using structural adjustment programmes and the sub-prime mortgage crisis of 2008 as examples, Sassen is even more emphatic than Harvey that today's processes of primitive accumulation are not about the incorporation into capitalist relations of pre-capitalist modes of production but ”the destruction of traditional capitalism in order to extract what can be extracted for the further deepening of advanced capitalism” (Sassen 2010:24).


Hardt & Negri

Hardt & Negri refer to Harvey's idea of "accumulation by dispossession" several times in their 2009 book Commonwealth, but give the idea their own peculiar twist. The "non-capitalist" environment on which capitalism feeds is here designated as the "common". The “common” is defined as consisting both of the wealth of the material world – air, water, fruits, nature – and of those social products that need to be shared in order to for social interaction and further production to take place. The latter make up an “artificial common” consisting in language, images, knowledges, affects, codes, habits, practices, and relations (Hardt & Negri 2009:viii, 139, 171). Their central claim is that capitalism increasingly tends towards a “biopolitical” stage in which it increasingly relies on the common for production, meaning that capital can only parasitize on the resources of the common without being able to create them by itself. In particular, they emphasize the urban environment as a resource for free production and creativity that is central to capitalism. The city “is to the multitude what the factory was to the industrial working class” (ibid. 250). 

Commonwealth is perhaps the book by Hardt & Negri that I like most. It has, however, its weaknesses. Some derive from their neglect of some of the factors in contemporary capitalism that Harvey and the other contemporary authors highlight. In their insistence that the new "non-capitalist" frontier is right here among "us" in the developed world, in the midst of the metropole, they tend to disregard the continuing exploitation of wage labour and the role of spatial fixes in the international division of labor - the fact, to put it bluntly, that next to post-industrial “immaterial labor” there are sweatshops too. This problem is not solved by their insertion of a rather incongruous chapter (chapter 2.1) which is full of praise for anti-colonial struggles and calls for solidarity with the south. This chapter feels too much as an ad hoc reply to certain critics (such as Caffentzis or Dyer-Witheford) and is not theoretically integrated with the rest of the work.  


The fire is still raging

To Marx, primitive accumulation was part of the origin of capitalism, but not an organic component of capitalism itself. Luxemburg took the next step, arguing that capitalism needed constant access to non-capitalist areas into which to expand. With the onset of neoliberalism, the idea of primitive accumulation gained prominence again. Authors like Harvey, Arrighi or Sassen argued that the appropriation of "non-capitalist" wealth could also take the form of predatory attacks on wealth formed within capitalist societies themselves. This transformation of the idea reaches an apogee with Hardt & Negri, for whom the "non-capitalist" environment consists of language and other common resources that make creativity possible and on which capitalism is increasingly dependent. The common denominator of the contemporary authors is that they make primitive accumulation a central feature of contemporary capitalism. Capitalism, they suggest, is losing its capacity to regenerate itself through the surplus value generated by the employment of labour-power and has to rely on appropriating wealth created elsewhere.

For some reason, neither Luxemburg nor any of the theorists of primitive accumulation today point out that their observation that capital accumulation can be driven by other sources than labour power appears to make Marx' so-called value law less relevant to understanding contemporary capitalism. As much as labour remains crucial as a source of "value" in the theoretical sense intended by Marx, I think we need to pay more attention than we have until now to the fact that capital accumulation doesn't depend on the generation of such value alone. Capital can be created through a variety of means, many of them involving the use of state power (so called free trade treaties would be a prime example) or other forms of coercion that enable profits that by far may surpass what would have been possible through the mere exploitation of wage labour.

Many Marxists hold that exploiting wage labour is the only way to generate surplus value in a systematic and long-term fashion. Thus the merchant capital of premodern societies, for instance, is said to have been unable to generate a stable process of capital accumulation since it remained almost entirely within the "sphere of circulation" rather than producing any value itself (except for transportation). Although the profits obtained by merchant capital were sometimes spectacular, it obtained them erratically, depending on the vagaries of power and luck. What is missed in this argument, however, is that power relations aren't necessarily erractic. They too can be systematic, and hence systematic capital accumulation can be based on any kind of capital - even mere merchant capital - to the extent that it can rely on a stable and predictable alliance with political power. As Luxemburg points out, this is exactly what happens with imperialism. Customs, patents, trade monopolies, administrative guidance, lobbying and trade wars are, of course, other ways in which the alliance between capital and state manifests itself.

So, capitalism cannot be understood adequately by focusing only on the extraction of surplus value through wage labour. The political conclusions from this should be clear. As Harvey points out, just as today's neoliberal capitalism is relying not only on exploiting wage labour but also on the plunder of non-capitalist formations, resistance to capitalism likewise must have a dual character. The struggle of wage laborers must be complemented by the struggle to defend things owned by the public or possessed by us in common against expropriation.


References

Arrighi, G. (2004) “Spatial and Other ‘Fixes’ of Historical Capitalism”, Journal of World-Systems Research, X:2 (Summer):527-539.

Hardt, M. & Negri, A. (2009) Commonwealth, Cambridge, Mass.: The Belknap Press of Harvard University Press.

Harvey, D. (2003) The New Imperialism, Oxford: Oxford University Press.

Harvey, D. (2005) A Brief History of Neoliberalism, Oxford: Oxford University Press.

Harvey, D. (2006) The Limits to Capital (new edition), London & New York: Verso.

Luxemburg, R. (1951) The Accumulation of Capital (tr. Agnes Schwarzchild), London: Routledge and Kegan Paul.

Sassen, S. (2010) ”A Savage Sorting of Winners and Losers: Contemporary Versions of Primitive Accumulation”, Globalizations 7(1-2)(March-June):23-50.

Wallerstein, Amino, Harvey

Some of you probably already know, but let me start by recommending this anyway: http://fbc.binghamton.edu/cmpg.htm. Its a site where you can read and subscribe to Immanuel Wallerstein's bimonthly commentaries to the contemporary world scene (as seen from the perspective "of the long term").

Lately I’ve been reading some of the older well-known texts by Wallerstein, Robert Brenner etc. The occasion has been my preparations for a course next spring. Partly this has been a rereading of books I once read as a student. This has been a pleasant exercise, which has suggested some interesting possible connections and similarities.

One of the things I’ve been thinking about is how similar the debate between world-system analysts and their critics is to the debate in Japan between Amino Yoshihiko and Araki Moriaki – with one side leaning towards emphasizing the role of trade and transborder traffic in the birth of capitalism, and the other side focusing on the class relations between landlords and peasants and more or less staying within the bounds of the nation-state as a unit of analysis. The template for the Brenner-Wallerstein debate, the classic debate on the ”transition from feudalism to capitalism”, is similarly structured with Paul Sweeney on one side and Maurice Dobb on the other. 

Braudel and Wallerstein, 1977

In these debates the proponents of the ”trade”-side, although part of a broadly Marxist tradition, have usually been viewed as heterodox and marginal to this tradition. Sweeney is less of a ”good Marxist” than Dobb, Wallerstein less than Brenner, and Amino is certainly less so than Araki. The role of the French Annales school as a catalyst of Marxist heterodoxy in these debates is interesting and deserves to be pointed out. World system analysts like Wallerstein and Arrighi endorse Fernand Braudel, Sweezy relies on Braudel’s forerunner Henri Pirenne, and Amino’s historiography is often compared to that of the Annales historians (although he was unaware of them when he developed his ideas).

There are also differences (of course) between Amino and world-system theorists. Wallerstein somewhere mentions the debate on the ”Asiatic mode of production” among Soviet scholars as one source of inspiration for world system analysis. However, far more than Wallerstein (or any of the classics dealing with this issue, such as Wittvogel), Amino has contributed to clarifying this concept. Above all his discussion of the role of the emperor in promoting ”non-agricultural” activities such as trade have shown how conductive such a mode of production in fact is of a certain kind of capitalism. He's also better than either Wallerstein or Brenner in bringing out how inappropriate labels such as ”feudalism” are when applied to societies or periods as a whole, entities which are inevitably much more complex composite formations in which feudal social relations can co-exist with ”Asiatic” as well as capitalist elements.

Speaking of Japan, it is gratifying to note how the Brenner-Wallerstein debate links up with the old "capitalism debate" (shihonshugi ronsô) among Marxist scholars in prewar Japan (as well as, incidentally, to what appears to have been a similar debate in Latin America mentioned by Wallerstein as the background of the emergence of dependency theory). From the theoretical vantage-point of people like Brenner or the Japanese Kôza faction, countries outside of the industrialized West are not yet part of capitalism, and rather than aiming for socialist revolution they should concentrate on overcoming feudalism and achieving economic development. To Wallerstein and the Rônô faction, by contrast, so-called underdeveloped or non-Western countries can already be considered part of a fully capitalist world. We can note that the position of the Rônô faction was considered a heterodox one in Japan, departing from the “official” Comintern standpoint of the time.

Part of the air of heterodoxy of people like Amino or Wallerstein springs from their unmistakable and, to many, provocatively positive view of the ”market”. To Amino the market is a space of muen and an area of relative freedom for outcasts, lepers and other marginals. Wallerstein claims that capitalism is possible only by virtue of oligopolistic or monopolistic tendencies that run counter to the ideal of a free market (in which, he claims, profit would be impossible). 

In rejecting the identification of capitalism and market economy Wallerstein relies on Braudel (see Wallerstein's "Braudel on Capitalism, or Everything Upside Down", The Journal of Modern History 63:2, 1991), and no one is as eloquent as Braudel in expressing the incompatibility of the market with capitalism. I can only recommend the reader to have a look at his Civilization and Capitalism 15th-18th Century (especially volume one and three) for the wonderful formulations that express his evident nostalgia for markets, the local beehives of fairs, shops, and transparent transactions – a world on ground-level that exists apart from the forbidding ”commanding heights” of the properly capitalist economy, a shady world in which the great capitalist predators roam, controlling the international flows of capital shielded from public view.

What people like Brenner, Araki or Dobb might ask is what role production plays in the distinction between capitalism and the market. In fact, the image conjured up by Braudel is of an economy in which trade and finance play the central role - with labor being largely confined to a third level, that of everyday "material life". The sinister nature of capitalism seems to derive more from secrecy, ruthlessness and power than from the fact that workers are exploited. Here we approach one of the most central points of difference between the antagonists in the abovementioned debates. Their definitions of capitalism are not identical. While the exploitation of wage labor is central to most orthodox Marxist definitions, Amino, Wallerstein, Sweezy, Braudel and the Rônô all appear to be interested primarily in capitalism as a trade-based, profit-driven activity. 

In view of this wide definition, it is not surprising that, to them, capitalism goes far back in history. Locating any proper temporal limit when capitalism starts has in fact usually been rather difficult for these scholars. Amino discovers capitalism in the exchange taking place already in primitive times. The Rônô-ha faction argued that capitalism developed in Japan long before the Meiji Restoration. A forerunner and fellow-traveller of world-system analysis like A. G. Frank claims that a trade-driven "world system" (without the hyphen) has existed for five thousand years. Wallerstein himself settles for around five hundred years since earlier long-distance trade had been more episodic and production for such trade less systematic. 

To their critics, by contrast, capitalism is defined not by trade but by a particular class relation, involving capitalists extracting surplus through the employment of free wage labor (and, in order to prevent the fall of the rate of profit, the drive to constant improvement of the means of production). The two sides in the debates, then, seem to arrange themselves somewhat along the old divide of “production” versus “circulation” as the source of value in Marxist theory. The fact that these debates seem to connect up with one of the central problems in Marxist theory, that of the value form, was one of the most pleasant realizations I had while reading these texts.

This brings me to a final point – a point which I think suggests a contemporary relevance for these debates about the origin of capitalism. In works like A Brief History of Neoliberalism, David Harvey famously claims that today’s capitalism is increasingly relying on on an ”accumulation by dispossession” rather than on extracting surplus through the wage-relation (an idea which has influenced Hardt and Negri). Such dispossession includes, broadly, all kind of appropriations of value that is produced outside the capitalist system proper – including the redestribution of already formed wealth from the poor to the rich, the commodification of natural resources such as water or forests, the exploitation of the knowledge of indigenous peoples or the privatization of public goods provided by states. Although the exploitation of labor (through precarization, the intensification of work or outsourcing of production to places of weak labor rights, or the colonization by work of so-called leisure time) is an undeniable fact, capitalism is increasingly relying on taking rather than producing wealth for its accumulation of capital. 

As Harvey points out, this is a return to what Marx called ”primitive accumulation”. The idea of such accumulation, Harvey suggests, shouldn't be seen as a dubious myth about the violent origins of capitalism. It is a process that is constantly repeated today and that perhaps is even necessary to keep capitalism alive. That capitalism isn't limited to systems of wage labor may sound like an un-Marxist idea, but the idea of ”primitive accumulation” shows that not all value in capitalism needs to be derived from wage labor, even from a Marxist point of view. As Wallerstein points out, the capitalist world-system works comfortably with all kinds of relations of exploitation – from slavery to wage labor, and from serfdom to unpaid housewives. 

"Accumulation by dispossession" would certainly be easier to fit into a world-system analysis than into the theoretical framework of its critics. World-system analysis could also supplement Harvey's analysis in important ways. His portrait of "neoliberalism" is rather insensitive to regional variations (his analysis of China is one example) which I am pretty certain could be better captured with a world-system model.

I admit that my attempt to link together the debates on the origin of capitalism to the theory of the value form really should be done with much more care. What makes people like Wallerstein so heterodox is in part that their theories no longer rely on a Marxian theory of value. But in order to theorize any linkage between world-system analysis and "accumulation by dispossession" properly, clearly some form of reworked theoretization of value is necessary. Above all it would be interesting to look further into the relation between the labor theory of value and the idea of primitive accumulation in Marx. That Brenner rejects the very idea that Marx ever seriously considered ”primitive accumulation” to have had any basis in reality looks symptomatic of the uneasy relation between these two theoretical ideas (see Brenner’s “The Origins of Capitalist Development: A Critique of Neo-Smithian Marxism”, New Left Review I /104, July-August 1977, p.66f). While exchange and labor can't be neatly separated in Marx' theory of value, it seems undeniable that a stubborn tension exists between these two elements.