web viewof course, throughout history people had taken land that others were using. the forcible...
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Primitive Accumulation: From Adam Smith to Angela Merkel
The Natural Economy of Adam Smith
The choice of Adam Smith as an introduction to a discussion of primitive
accumulation might seem curious even though he inadvertently began the
discussion of the concept. Like a modern astrophysicist trying to understand
the Big Bang, he asserted that "the accumulation of stock must, in the nature
of things, be previous to the division of labour" (Smith 1976, 2.3, p. 277).
Smith, who often unintentionally raised important questions in the course of
his confusion, was asking, what was the original accumulation that set off the
ongoing process of capital accumulation.
Smith's speculation about the economic Big Bang evoked no further comment
beyond his brief mention of the question until 1821, when Robert Torrens,
picked up the story. Torrens attributed original accumulation to individual
initiative rather than dispossession of others:
In the first stone which the savage flings at the wild animal he
pursues, in the first stick that he seizes to strike down the fruit
which hangs above his reach, we see the appropriation of one article
for the purpose of aiding in the acquisition of another, and thus we
discover the origins of capital. [Torrens 1821, p. 70-71]
Marx humorously responded to Torrens: "No doubt this 'first stick' [Stock in
German] would also explain why stock is synonymous with capital" (Marx 1977, p.
291, n. 10), knowing full well that the low hanging fruit of early capitalism
was a violent seizure of other people's means of production.
In Capital, Smith's concept of "original accumulation" appeared as a word
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that could mean either original or primitive. Then in the English translation
of the English translation of Capital "primitive accumulation" first appears.
Of course, throughout history people had taken land that others were
using. The forcible removal of peoples' means of production for the purpose of
commercial gain only came later, after an increase in the urban population of
northwest Europe increased the demand for wool. At the time, the agricultural
surplus in the country was relatively small. In 1520, 100 families on the land
could only grow enough to support 106 families (Wrigley 1986, p. 36). By
throwing most people off the land, a relatively few remaining people could take
care of a large flock of sheep. The cost of their upkeep was relatively small
compared to the market value of wool. The most famous early protest came from
Sir Thomas More's Utopia:
... sheep, which are naturally mild, and easily kept in order, may be
said now to devour men ... when an insatiable wretch, who is a plague
to his country, resolves to enclose many thousand acres of ground,
the owners, as well as tenants, are turned out of their possessions
by trick or by main force, or, being wearied out by ill usage. [More
1515]
Protests, such as More's were moral and ethical. In contrast, Smith was intent
defending capitalism, lest it be tarred with disreputable behavior. He set out
to make the case that primitive accumulation had nothing to do with capitalism.
The core of his ideological project was to present capitalism as a natural
system of voluntary of market relations, which are devoid of conflict, and
benefitted all of mankind.
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Such conflict had no place in Smith's vision of the world. Primitive
accumulation appears in three contexts: Marx's critique of Smith's excessive
emphasis on the division of labor to the exclusion of what Marx called the
social division of labor -- the distribution of labor among separate
workplaces; Smith's pin factory; the invisible hand as a metaphor for
capitalism as an efficient system of conflict-free development.
The concept of the social division of labor is interesting, even within
the context of conventional economics. Conventional economists who address
this subject explore how industries split off and specialize in a way that
maintains the presumptive market efficiency. Such work unintentionally casts
doubt on the typical perspective of economics in which business acts in such a
way that the economic achieves a timeless equilibrium. From Marx's
perspective, primitive accumulation is an essential part in the evolution of
the social division of labor, as was the case when displacement forced
previously self-sufficient peasants to find a way live by wage labor.
In the Wealth of Nations, Smith introduced the invisible hand to his
readers in the course of discussion that is especially relevant for a modern
version primitive accumulation as it is taking place in Europe today. Smith
correctly understood that England's self-interest would be to avoid a formal
empire in North America, realizing that an informal arrangement would provide
all the benefits of empire with a minimum of expense. He did not go so far as
to openly advocate primitive accumulation in North America, but he would have
had to engage in willful ignorance not to have realized the growing settler
economy would have been impossible without it, especially because the
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indigenous people did not share the European idea of property rights. In this
way, Smith unintentionally pointed to an international dimension to primitive
accumulation.
The Ideological Value of Adam Smith
Initially, Smith's Wealth of Nations (1776) was not a particularly popular
book. When Thomas Robert Malthus signed out the book from his college library
in 1789, he was only the third person to have done so. The modest interest was
surprising, given Smith's renown from a more philosophical earlier book, The
Theory of Moral Sentiments. Suddenly, with the French Revolution in 1789, fear
swept through the world of British property owners. The panic suddenly
stimulated demand in Smith's ideological defense of the status quo.
What explains the delay in appreciating Smith's book? After all, the
first chapters of the book successfully portrayed the market as a realm of
liberty and justice, devoid of conflict; however, Smith contradicted much of
what he said in later parts of the book once he addressed more practical
matters. For that reason, virtually every school of economics can find
something to admire in Smith. As Jacob Viner, a conservative University of
Chicago professor, wrote, "Traces of every conceivable sort of doctrine are to
be found in that most catholic book, and an economist must have peculiar
theories indeed who cannot quote from The Wealth of Nations to support his
special purpose" (Viner 1927, p. 207). Liberals, radicals, and even Marxists
often embrace Smith because of his frequent expressions of progressive
sentiments.
Well-read people understood the problem of Smith's inconsistencies. For
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example, Francis Horner, famous member of the Bullion Committee and editor of
the Edinburgh Review, rejected a request to prepare a set of notes on the book.
He explained his refusal in a letter to Thomas Thomson, written on August 15,
1803:
I should be reluctant to expose S's errors before his work had
operated its full effect. We owe much at present to the
superstitious worship of S's name; and we must not impair that
feeling, till the victory is more complete .... [U]ntil we can give
a correct and precise theory of the origin of wealth, his popular and
plausible and loose hypothesis is as good for the vulgar as any
others. [cited in Horner 1843; 1: p. 229]
Horner's fears were mistaken. Popular audiences generally read Smith
superficially as nothing more than a simple defense of laissez faire, mostly
recalling two ideas from Adam Smith: his expression, the invisible hand, and
his delightful illustration of the division of labor in the famous pin factory.
Smith's authoritarian pronouncements, his proposal to control religion, and his
antagonism to big business mostly went unnoticed. As a result, "There were
more new editions of The Wealth of Nations published in the 1990s than in the
1890s, and more in the 1890s than in the 1790s" (Young 2007).
Stumbling into the Pin Factory
In the case of Smith's pin factory, the reader is given a picture of a rustic
workshop in which a handful of workers are able to greatly increase their
productivity because of the division of labor, presumably organized by some
kindly entrepreneur. The picture that Smith painted has delighted generations
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of readers who enjoyed this idyllic explanation of capitalism. In this sense,
Smith was an important figure in obscuring the role of primitive accumulation.
Smith, as a professor of rhetoric and the author of an influential book on
the subject, had a clear grasp of what was required in order to convince
others. In the first part of the book, Smith took care to apply that skill.
His treatment of the pin factory, in particular, was a masterpiece of rhetoric.
Smith informed his readers that he visited the operation, but offered
statistics about workshop's output from plagiarized articles about French
operations -- statistics that were deceptively used. As a skilled rhetorician,
Smith knew the importance of obscuring anything that would complicate his
message -- especially the truth.
Smith's first presentation of the pin factory appeared during a course of
lectures to his students in Glasgow in 1762 and 1763, more than a decade before
the publication of his great book in the midst of his ruminations on class
warfare. The discussion of the pin factory emerged in his lecture on March 28,
1763, while he was explaining the importance of the law and government:
They maintain the rich in the possession of their wealth against the
violence and rapacity of the poor, and by that means preserve that
useful inequality in the fortunes of mankind which naturally and
necessarily arises from the various degrees of capacity, industry,
and diligence in the different individuals. [Smith 1762-1766, p. 338]
In order to justify this inequality, Smith told his students that "an ordinary
day labourer ... has more of the conveniences and luxuries than an Indian
[presumably Native American] prince at the head of 1,000 naked savages" (Smith
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1762-1766, p. 339). But then the next day, Smith suddenly shifted gears,
almost seeming to side with the violent and rapacious poor:
The labour and time of the poor is in civilized countries sacrificed
to the maintaining of the rich in ease and luxury. The landlord is
maintained in idleness and luxury by the labour of his tenants. The
moneyed man is supported by his exactions from the industrious
merchant and the needy who are obliged to support him in ease by a
return for the use of his money. But every savage has the full
enjoyment of the fruits of his own labours; there are no landlords,
no usurers, no tax gatherers .... [T]he poor labourer ... has all the
inconveniences of the soil and season to struggle with, is
continually exposed to the inclemency of the weather and the most
severe labour at the same time. Thus he who as it were supports the
whole frame of society and furnishes the means of the convenience and
ease of all the rest is himself possessed of a very small share and
is buried in obscurity. He bears on his shoulders the whole of
mankind, and unable to sustain the weight of it is thrust down into
the lowest parts of the earth from whence he supports the rest. In
what manner then shall we account for the great share he and the
lowest persons have of the conveniences of life? [Smith 1762-1766,
pp. 340-41]
Smith's train of thought is confusing. First, the law is needed to constrain
the fury of the poor; then the market provides for the poor very well; followed
by the wretched state of the people who worked on the land -- the least
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fortunate of the workers. For his grand finale, after decrying the "small
share" of the poor, Smith curiously veers off to ask what accounts for "the
great share" that these same people have. His answer should come as no
surprise to a modern reader of Adam Smith -- "The division of labour amongst
different hands can alone account for this" (Smith 1762-1766, p. 341). Voila,
the pin factory.
The Harmonies of the Pin Factory
In his description of the simple pin factory, Smith gave readers no indication
that the Industrial Revolution began in Scotland. Instead, he wrote as if it
did not exist at all. In fact, the largest industrial operation in the world
was located within walking distance of the small town in which Smith was
writing his book. This factory, the Carron Works, was producing cannons for
the British Navy, which permitted England to engage in primitive accumulation
around the world. Although the owners were Smith's personal friends, his
readers can find no mention of this important operation.
Smith wrote as if his pin factory was state of the art. It was not. In
fact, the Dockwra Copper Works, founded in 1692, almost a century before, had
an integrated factory, which included at least twenty four benches for drawing
wire to make pins (Hamilton 1967, p. 103).
In 1770, while Smith was working on his book, Arthur Young published A Six
Months Tour Through the Southern Counties of England and Wales. Young was a
prolific observer of agriculture, as well as economic life in general. His
books were widely translated in European languages. This particular book was
already in its third edition by 1772. A careful study of authorities used in
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parliamentary debates found that MPs cited Young far more than Adam Smith
(Willis 1979).
Young described an integrated pin factory, the Warmley Works, founded near
Bristol in 1746, which he recommended as "very well worth seeing" (Young 1772,
p. 170). Indeed, because people were fascinated by modern technology,
industrial tourism was popular. For example, Benjamin Franklin and some
friends engaged in a ten-day long excursion of industrial tourism (Williams
1771). Given Young's reputation, the Warmly Works are likely to have been a
popular destination.
After the factory produced 3-by-4 feet of metal, other machines would cut
these plates into 17 strips. Then, a different machine would cut the strips
again until they were thin enough to be drawn into 17 foot lengths of wire.
Finally, young girls would operate little machines to fashion the pins.
Ordinarily water power would run the machines, but when the water wheel would
not run on its own a steam engine would lift water from the stream to assist
the natural flow of the river (Young 1772, pp. 170-74; Allen 2009, p. 147).
Although Smith suggests that he visited the pin factory, he never
mentioned working conditions. However, the uncited French articles upon which
he relied for the data he used for the pin works were explicit about the
adverse health effects of working there: people died young from pulmonary
ailments (Duhamel du Monceau 1761; cited in Peaucelle 2006, p. 502).
Smith also skirted any discussion of working conditions in the same
section as the pin factory where he also mentions the work of the young boys
who were making nails in the neighborhood. Besides informing his readers that
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the boys were very dexterous, he neglected to add the context in which they
found themselves working there. The Carron Works paid nail makers one guinea
to move nearby to increase the demand for iron rods that would be formed into
nails. This program was successful enough that about 30 percent of the
nation's nail producers were located near the factory (Campbell 1961, p. 79).
Part of the incentive for moving their production near the factory was that the
owners would make arrangements with a poorhouse to supply children to work for
the nail makers. The mistreatment of the boys was an ongoing controversy
(Campbell 1961, pp. 80-81). Because the economy could produce more, workers
could consume more, and perhaps one day, even run their own trifling
enterprise.
The mere rearrangement of work created a great leap in productivity.
Smith told his students that without the division of labor, a single worker
"with his utmost industry, make one pin in a day, and certainly could not make
twenty." But with the division of labor, the output per capita soared to two
thousand. By the time he published The Wealth of Nations, the number more than
doubled to 4,800 pins (Peaucelle 2006, p. 494; Smith 1789, I.i.3, pp. 14-15).
In his lecture, Smith gave his students a more accurate picture of the pin
factory. There Smith explained that if "the same person was to dig the metal
out of the mine, separate it from the ore, forge it, split it into small rods,
then spin these rods into wire ... " they might be able to produce a single pin
each day (Smith 1759, p. 564).
No wonder the workers in the pin facture could produce so much more than
the single worker. Much of their work had already been completed before they
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began. They did not have to mine and process the wire. Smith's comparison is
comparable to giving a person who hangs a masterpiece on a museum wall credit
for the painting or crediting the cashier at a supermarket for producing the
food.
However Smith, the former professor of rhetoric, understood that leaving
out the basis of his calculation, he could capture his readers' attention with
the amazing increase in productivity that results from the division of labor.
Since Smith first published his book in 1776, generations of students continue
to learn about the amazing effect of the division of labor.
In effect, Smith was calling attention to the social division of labor.
Ironically, although Smith generally ignored the social division of labor, the
social division of labor was the centerpiece for his most memorable part of his
book, where with a new social division of labor, the workers no longer had to
make the wire from scratch; they began with wire already in their hands.
The exclusion of the Carron Works adds to the ideological power of Smith's
story. The capital embodied in the pin factory (not what anybody would really
call a factory) is small enough that one can imagine that the workers could
soon set up their own factory. In other words, class does not enter into the
picture. In the Carron Works, no such possibility exists. Finally, in Smith's
idyllic story, readers would not be likely to ask why anybody would choose to
work for wages in such a factory if they could live on their own.
The Slavery of the Market
The classical political economists who followed Smith were no more ready to
address primitive accumulation honestly than Smith had been. The subject had
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been carefully excluded from their published works, but privately in letters
and diaries they not only acknowledged primitive accumulation but recognized it
as a beneficial process without being explicit about who would be the
beneficiaries. However, one exceptional economist before Smith provided a
careful treatment of primitive accumulation.
Sir James Steuart was a remarkable figure in classical political economy,
growing up in the same small town as Smith and the Carron Works. Steuart's
great work, An Inquiry into the Principles of Political Economy (1767), written
nine years before Smith's, was, rhetorically speaking, the opposite of Smith's.
Unlike Smith, the master rhetorician, Steuart seemed to care little about
stylistic niceties, as he admits right from the beginning. Moreover, readers
found the material difficult because Steuart was brutally honest about the
workings of the capitalist economy he saw emerging around him.
Steuart was a great admirer of Sparta. He was not unique in that respect.
Collectivist ideals were common during the Enlightenment. What made Steuart's
use of Sparta unique was not his approval of totalitarian methods, but his
straightforward recognition that these methods could be used to further
capitalist development.
While Steuart (1767; 1: 51) taught that slavery was a "violent method
(for) making men laborous in raising food," he understood that the market,
properly arranged, could accomplish the same objectives that Spartan slavery
promised. In the past, he argued "men were ... forced to labour because they
were slaves to others; men are now forced to labour because they are slaves to
their own wants" (ibid.; 1: 52).
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What did Steuart mean by "wants"? He wrote, "Those who become servants
for the sake of food, will soon become slaves" (ibid.; 1: 28). Thus although
wage earners, unlike slaves, are formally free, Steuart understood that workers
would be subject to an increasingly strict discipline. In this sense,
capitalism seemed to be the next best alternative to a slave society.
Although no other classical political economist would have been so blunt,
this idea was not totally unique to Steuart. For example, Mirabeau, whose work
differed from that of Steuart in many respects (see Chamley 1965, 73 ff),
exclaimed, "The whole magic of well-ordered society is that each man works for
others, while believing that he is working for himself" (Mirabeau's Philosophie
Rurale; cited in Meek 1963, 70). Cantillon's analysis of how feudalism and the
market could lead to the same outcome offered an even closer parallel.
Not unexpectedly, Steuart's insensitive language did not win much
acceptance. For example, one reviewer took Steuart to task on this very point:
In plain English, that by one way or another, men are made slaves by
statesmen, in order that the useful may feed the useless. This is,
indeed, the present state of what is called liberty in England. But,
in fact, they are not made slaves to their passions and desires, for
that is common to all men. It is the hard hand of necessity at
present, like that of the taskmasters in preceding times, which
compels them to work. The hired husbandman has, indeed, one passion
that engages him to become a slave, and to labour; it is the goading
dread of starving that enslaves him, and urges him to toil without
desire. [Reviewers 1767, 127]
14
This review should not be read as a refutation of Steuart, but as a
clarification. Certainly, the reviewer's semantics, referring to hunger and
poverty instead of wants, is more informative than Steuart's. Nonetheless,
Steuart's presentation has the merit of reminding us of the power of the silent
compulsion of the market.
Improving Market Slavery
Steuart (1767; 2: 217) realized that the market had many advantages over the
crude Spartan system, but he also understood that it could run amok. In his
words, "The Lacedemonian form may be compared to the wedge .... Those of the
modern states to watches, which are continually going wrong."
As a result, Steuart looked to a statesman to guide the system. This
perspective led him to focus his attention on one overriding question: How
were wants to be structured so that they would effectively enslave people?
Here we come to the heart of Steuart's work. Steuart found himself in a
land where labor had not yet been fully subjugated to the needs of capital.
His agricultural experience was well suited to equip him to become the theorist
par excellence of primitive accumulation. He knew that the traditional
Highlanders had wants, but they were not yet "slaves" to them in the sense that
Steuart used the term. In responding to this situation, Steuart went farther
than any other classical political economist in trying to develop a program to
integrate the traditional sector into the economy.
Steuart (1767; 2: 80) clearly connected his desire to purge the land of
subsistence farming, with the rise of commodity production.
Steuart realized that merely throwing the people off the land would not
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necessarily lay the path for a smooth transition to capitalist social
relations. He recognized the complexity of the underlying dynamic of primitive
accumulation, along with the need to be specific about the nature of this
momentous transformation.
Unlike other classical political economists, Steuart stressed that one
cannot overlook the tempo at which changes are introduced. What may be
disastrous when abruptly introduced might well be beneficial if it could be
accomplished more slowly (ibid. i, pp. 160-61, 284; and chap. 19). In
Steuart's words, "Sudden revolutions are constantly hurtful, and a good
statesman ought to lay down his plan for arriving at perfection by gradual
steps" (ibid., i, p. 111). The recent experience of the countries of the
former Soviet Union also suggests how difficult the sudden transition to
capitalism can be.
In particular, primitive accumulation required much caution. With this
thought in mind, Steuart explained (ibid. i, p. 175), "A young horse is to be
caressed when a saddle is put upon his back." For this reason, he called for
the gradual conversion of corn fields into pasture (ibid. i, p. 181).
Unfortunately, many modern economists, even with the benefit of hindsight, have
failed to take the tempo of their project into account in confidently
dismantling traditional agricultural systems around the world. In addition,
some of the advisors of post-Soviet Russia could have benefited from finding
the warning in looking at Steuart's dusty volumes.
Adam Smith gave comfort to later economists, who were repelled by anything
like Steuart's honesty. According to Smith's laissez-faire ideology, markets
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were naturally harmonious. Force of any kind had no role to play in his
published analysis. However, in private communications Smith displayed a
willingness to resort to force.
For example, in August 1757, a few months after the Militia Act first
authorized raising a militia, a small group of village militiamen demanded a
barrel of ale from an aged clergyman. Later, they demonstrated their
discontent, asking for money. According to an article in Scots Magazine,
participants said they would willingly sacrifice their lives for King and
country but "would not be obliged to quit home for sixpence a day to serve in
the militia" (Mossner and Ross 1977, n p. 22).
Although one might commend these reluctant militiamen for their
merchant-like calculation of the value of their time, Smith's reaction was
harsh. He wrote to a friend, "The Lincolnshire mobs provoke our severest
indignation for opposing the militia, and we hope to hear that the ringleaders
are all to be hanged" (Smith 1757, pp. 21-22). So much for laissez faire!
Economists' Secret Support for Primitive Accumulation
In my Invention of Capitalism, I discussed a wide range of the treatments of
primitive accumulation among the economists who followed Adam Smith. Here, I
will confine myself to David Ricardo, the most sophisticated English economist
of the early 19th century. Ricardo generally limited his economic analysis to
questions of banking and trade. In doing so, he anticipated the approach of
contemporary economists by appealing to extraordinarily abstract analysis -- so
much so that Henry Brougham, a leading financial authority in Parliament and
later Lord Chancellor, rebuked Ricardo's speech in Parliament favoring the
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repeal of the Corn Laws. According to the Parliamentary record, Brougham
responded:
His hon. friend, the member for Portarlington, had argued as if he
had dropped from another planet; as if this were a land of the most
perfect liberty of trade -- as if there were no taxes -- no drawback
-- no bounties -- no searchers -- on any other branch of trade but
agriculture; as if, in this Utopian world, of his hon. friend's
creation the first measure of restriction ever thought on was that on
the importation of corn; as if all classes of the community were
alike -- as if all trades were on an equal footing; and that, in this
new state, we were called upon to decide the abstract question,
whether or not there should be a protecting price for corn? But we
were not in this condition-we were in a state of society in which we
had manufactures of almost every description, protected in every way,
even to criminal enactments, to prevent the raw material from going
out of the country, in order thereby to assist the native
manufacturer.'
(Ricardo 1952-1973: v, pp. 56 and 85).
In contrast to Ricardo's abstract theoretical analysis, Riccardo was quite
blunt about matters touching on primitive accumulation in his private
correspondence. For England, where the labor force had already largely been
saddled with wage labor -- to use Steuart's metaphor, Ricardo recommended large
farms and cheap food to lower the cost of wages. In Ireland, however, he
advocated small farms and expensive food, which makes perfectly good sense in
18
terms of the logic of primitive accumulation.
In response to the suggestion of his friend, Hutches Trower, that "no
permanent or substantial good [in Ireland] can be done until all small farms
and small tenancies are got rid of" (Ricardo 1951-1973, ix, p. 145), Ricardo
agreed with the ultimate goal of eliminating small-scale agriculture in Ireland
(ibid.; 9: 153); however, he believed small farms were an effect rather than a
cause of conditions in Ireland.
Ricardo added that he understood that small farms reduced the cost of food
in Ireland. In words almost indistinguishable from those of Malthus, he wrote
to Francis Place:
The evil of which the Irish ought to complain is the small value of
food of the people compared with the value of other objects of their
consumption, and the small desire they have of possessing other
objects. Cheap food is not an evil, but a good, if it not be
accompanied by an insensibility to the comforts and decencies of
life. [Ricardo 1951-1973, xi, p. 56; emphasis added]
Ricardo's (Ricardo 1951-1973. vi, p. 48) fear of cheap food in Ireland was so
great that he maintained: "The evil they (the Irish) experience proceeds from
the indolence and vice of the people, not from their inability to procure
necessaries." In the first edition of his Principles, he repeated the idea
that the population of Ireland might be insufficiently large to encourage
people to work enough:
The facility with which the wants of the Irish are supplied permits
that people to pass a greater part of their time in indolence; if the
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population were diminished, this evil would increase, because wages
would rise, and therefore the labourer would be enabled in exchange
for a still less portion of his labour, to obtain all that his
moderate wants require. [Ricardo 1951-1973; i: p. 100; see also vii,
p. 334]
This section is worth examining in more detail. The relevant portion began:
In those countries where there is abundance of fertile land, but
where from ignorance, indolence, and barbarism of the inhabitants,
they are exposed to all the evils of want and famine, and where it
has been said that the population presses against the means of
subsistence, a very different remedy should be applied from that
which is necessary in long settled countries, where from the
diminishing rate of the supply of raw produce, all the evils of a
crowded population are experienced. [Ricardo 1951-1973; i, p. 99]
The first edition continued, "In the one case, misery proceeds from the
inactivity of the people. To be made happier, they need only to be stimulated
to exertion" Ricardo (Ricardo 1951-1973; i, p. 99, 100) continued:
In some countries of Europe, and many of Asia, as well as in the
islands in the South Seas, the people are miserable, either from a
vicious government or from habits of indolence, which make them
prefer present ease and inactivity, though without security against
want .... By diminishing their population, no relief would be
afforded, for productions would diminish in as great, or even in a
greater proportion. The remedy for the evils under which Poland and
20
Ireland suffer, which are similar to those experienced in the South
Seas, is to stimulate exertion, to create new wants, and to implant
new tastes.... The facility with which the wants of the Irish are
supplied, permits that people to pass a great part of their time in
idleness: if the population were diminished, this evil would
increase, because wages would rise, and therefore the labourer would
be enabled in exchange for a still less portion of his labour, to
obtain all that his moderate wants require. Give to the Irish
labourer a taste for the comforts and enjoyments which habit has made
essential to the English labourer, and he would be content to devote
a further portion of his time to industry, that he might be enabled
to obtain them. Not only would all the food now produced be
obtained, but a vast additional value in those other commodities, to
the production of which the now unemployed labour of the country
might be directed.
George Ensor roundly attacked Ricardo for these words. He pointed out that the
English labourer "is no object of admiration." Then he asked: "But how are
these tastes to be excited in Irish labourers? Is it supposed that they are
not like other human creatures? but that they make choice of privations?"
(Ensor 1818, p. 106; cited in Ricardo 1951-1973. i, p. 100n). After the
section came under the critical scrutiny of Ensor, Ricardo changed its tone,
but not its meaning. He wrote, "To be made happier, they require only to be
better governed and instructed, as the augmentation of capital, beyond the
augmentation of people would be the inevitable result" (Ricardo 1951-1973; i,
21
p. 100).
Although food was cheap in Ireland, so too was life. British observers
commonly denounced the Irish for their laziness, noting at times their
excessive number of holidays (Mokyr 1983, 218, 222). Yet, for all the talk of
indolence, the people had to go to great lengths to survive. The Irish
collected and dried seaweed for manure. Irish children had to search for horse
droppings on the roads in an effort to coax a few more crops from the soil
(McGregor 1992, 479).
From Ricardo's perspective, the problem was not indolence but a failure to
adjust to the demands of wage labor.
Echoes of Primitive Accumulation?
Skip ahead almost two centuries to the contemporary world. In many ways,
primitive accumulation displays considerable continuity. The confiscation of
land continues unabated in many parts of the world, but on a far more extensive
scale than ever before, without the pretension of a shroud of legalism. The
victims of this practice are frequently indigenous people.
Excessive debt burdens foisted on relatively powerless countries leaves
governments in desperate need of money. Government officials might propose
sweeping people off their land to make way for private business as a means to
some public benefit, such as necessary tax revenues. Although the ostensible
purpose is always presented as beneficial for the country, their leaders are
often people who appreciate well-directed bribery.
In such countries with large reservoirs of society in which capitalist
social relations have not entirely displaced traditional economies, advanced
22
capitalist interests behave in much the way as Marx's traditional primitive
accumulationists -- at least from the perspective of the people victimized by
the process.
For example, in India, the so-called communist government of West Bengal
used a colonial law that permits the government to seize land for industrial
purposes. In addition, the grasping spirit of an emerging capitalist economy
on the make is perfectly consistent with both classical primitive accumulation
and modern capitalist practices.
Something similar occurs in the United States, where the legal concept of
eminent domain allows governments to seize property to be used for some
supposedly public purpose. The legal system justification was to assist in the
development of essential public services, such as roads or bridges. The
application of eminent domain has been extended to cover commercial property.
For example, someone can approach a government with a proposition to take over
a property to build an expensive housing or shopping project on private
property. Although the existing property owners must be compensated, the final
price generally comes nowhere near what the property is worth to its previous
owners. However, this practice is relatively limited in the United States,
perhaps because of the importance of the sanctity of property there.
What comes next is an echo of primitive accumulation, but on an
international scale. This pervasive seizure -- a central part of neoliberalism
-- is not directed at the private property of individuals but rather at the
basis of social welfare throughout the globalized world, typically by using
extra market forces.
23
This especially pernicious form of primitive accumulation is underway on a
global scale is part of an all-inclusive program to remake the entire structure
of the world economy with an eye to improve profits by undermining peoples'
livelihood. It has already progressed very far.
Globalization is an obvious component, but it is only one of many methods
to carry out a modern version of primitive accumulation, which is operating on
an international scale. I recall many years ago overhearing Milton Friedman in
a conversation about the beneficial effect of opening up the United States
economy to trade with China. With many millions of unemployed and
underemployed Chinese, he correctly predicted that American business would
relocate production there to take advantage of cheap Chinese labor there. As
domestic industry would move production abroad, domestic wages were to decline.
Later, with creation the North American Free Trade Agreement, U.S.
business routinely confronted unions with the threat that they would relocate
to Mexico unless workers agreed to substantial cuts in wages and benefits.
Friedman was taking account of one side of a more complex arrangement.
Just as James Steuart recognized centuries ago, pushing people too far into
poverty is self-defeating. Although poverty may be useful in cutting costs of
production by lowering wages, poverty also constricts demand, hurting capital
from the other side.
This contradictory effect created contractionary pressure, which induced
capital to intensify the financialization of the economy to make up for the
loss of opportunity to profit as much from the direct sale of commodities.
A New Kind of Primitive Accumulation
24
Classical primitive accumulation reflected the optimism generated by the new
opportunities that adolescent capitalism offered -- especially the growth of
urban markets in the low lands of northern Europe with a domestic incapacity to
produce enough wool to satisfy demand. This situation opened up a lucrative
export market for England. All that was required was to seize the land that
supported peasants to raise sheep and, perhaps, to become rich. Today, matters
are more complex.
In contrast, modern primitive accumulation reflects a more pessimistic
vision associated with the need to confront serious contradictions of an aging
capitalist system. Of course, judging by the availability of an extraordinary
range of consumer commodities, capitalism might seem to be more vital than
ever. However, because of an even more extraordinary development of the
capacity to produce the same commodities (ignoring environmental and human
costs), relatively few factories employing relatively few workers are capable
of flooding the market with a seemingly infinite supply of their products. As
a result, new profit opportunities are somewhat limited. Perhaps the clearest
indicator of this phenomenon is the growing share of financial profits.
Friedman's delight in the prospect of Chinese peasants defeating the
working class in the United States beautifully caught the spirit of the new age
of primitive accumulation in the face of intensifying contradictions of the
market.
Ironically, the United States had a long history of salivating over the
prospect of opening up China as a market for U.S. production. As far back as
its first Secretary of the Treasury, Alexander Hamilton, China represented "an
25
additional and extensive field for the enterprise of our merchants and
mariners, and as an additional outlet for the commodities of the country"
(Hamilton 1791, pp. 20-21).
Initially, the bloody conquest of the Philippines was intended to provide
a bridge to the Chinese market. Chastened by the horrendous costs of that war,
the United States' colonial ambitions became less ambitious. The new strategy
centered on undermining the old colonial forces with an Open Door policy, which
would make a peaceful way for inroads into world markets. The balance of trade
with China suggests that the United States' over-optimism about a market-based
victory was equal to that which accompanied its rush into the Philippines.
Instead, the direction the imperial dream has largely reversed: the United
States has become the market for Chinese production, but so far the balance of
trade has been tilted largely in China's favor. Of course, the original
salivation has continued without interruption
In contrast, Friedman's vision was one of pure redistribution. The goal
was not to wage war against less developed nations or the established colonial
powers, but against domestic labor. Putting pressure on labor would increase
profits by lowering wages. Even better, unions would lose power, lowering the
resistance to modern primitive accumulation. In this respect, Friedman's
analysis had more in common with Karl Marx than Adam Smith.
Modern primitive accumulation is a central part of the project of creating
a world of hypercapitalism in line with Milton Friedman's worldview. The
Confiscation of Economic Prosperity lays out the relentless way in which the
primitive accumulationists carried out their siege of the public sector.
26
One might be tempted to concentrate on the more superficial aspects of
this class war. For example, despite the importance that Friedman seemed to be
giving to the reduction of wages, lowering wages in only one part of an
extensive program of the primitive accumulationists. Yes, modern primitive
accumulation certainly takes an active interest in doing everything possible to
cripple labor unions and to diminish workers' rights has an entirely different
kind of seizure in mind -- the seizure of the public sphere.
Is it a stretch to claim that the class war of neoliberalism constitutes a
modern counterpart of classical primitive accumulation? Are the Austerians
primitive accumulationists? Karl Marx may suggest an affirmative answer,
judging by a famous passage: "The public debt becomes one of the most powerful
levers of primitive accumulation" (Marx xxx). More recently, Milton Friedman,
reflecting the perspective of the modern primitive accumulationists,
unintentionally echoed Marx, calling public debt a "blessing (Friedman 1988;
Perelman 2007).
Lower taxes not only bloat the wealth of the wealthy; they also increase
profits. However, the overriding goal of the tax cuts was to create severe tax
cuts that would create crises, forcing governments to surrender in a tsunami of
austerity. In the face of great debt, governments direct the burden of
austerity on those less able to support such burdens.
Privatization is the order of the day, preventing governments from meeting
pressing public needs with the justification of the supposed efficiency of the
profit motive. In the case of government-supported privatized businesses, such
as schools, the more privatized operations cost, the more government spending
27
occurs, but money spent in that way is transferred into profits at the same
time it increases the pressure for deficit reduction.
Perhaps the most obvious attack on a public institution is directed at the
Post Office. Private operation of the post office would offer a new source of
profits, but, more important, the Post Office holds very valuable buildings on
prime downtown real estate in most cities. To hobble the Post Office, Congress
made the impossible demand that the postal system set aside enough money to
fund its workers pension and health care costs for 75 years in the future.
Very few private corporations could meet such a demand. This policy has been
very successful because the postal system is presently incapable of meeting
this unnecessary obligation. The privatization of public property is perhaps
most severe in the case of Greece.
As governments surrender traditional roles, primitive accumulation strips
away public supports that serve or protect the interests of most people. For
example, by starving public pension funds of adequate resources to meet their
obligations, they have no choice but to throw their lot in with speculative
private equity funds and hedge funds, leaving them vulnerable to collapses,
such as that experienced beginning in 2007. The result is that the condition
became even worse. Given the fiscal stringency of the time, around the world,
calls to rein in pension benefits have become commonplace.
Modern primitive accumulationists smooth the path toward hypercapitalism
by restricting unions. Lowering wages is a secondary benefit. More important,
undermining unions disempowers people, leaving them less able to resist modern
primitive accumulation.
28
Similarly, by starving higher education of needed funds the need for taxes
falls, but, even more important, colleges and universities have no choice but
to call upon major corporations for support. Universities have no choice but
to remake themselves in a way that serves corporate needs. Liberal arts
suffer, while fortunes are spent on elaborate research facilities producing
results that corporations can monetize. Besides losing much of their autonomy,
universities integrity suffers in the process. Because tuition soars, in part
because of intentional defunding, for-profit colleges seem more reputable,
opening up a lucrative new market. Lacking adequate financial resources,
public transportation cannot afford adequate maintenance and restricts the
services it can provide, laying the groundwork for privatization while serving
to increase the market for private transportation.
Perhaps the most grotesque attack is directed toward public schools. A
combination of defunding together with the drumbeat of propaganda blaming
teachers and their unions for all the ills of public education has been
effective in building up support for privatized-for-profit charter schools,
which can reduce costs by paying teachers less and by refusing to educate
students who might be more difficult to teach, such as disabled students. By
excluding students with learning disabilities or limited language proficiency,
these schools can make their performance look better relative to public
schools, which have an obligation to take on all students. Of course, this
sabotage of public education is supposedly intended to save the educational
system, which is almost universally accepted as a major bulwark of a successful
society. Yes, the modern primitive accumulationists are intent on eliminating
29
regulations and lowering taxes, but the crippling of the public sphere opens up
new markets that offer even greater profits. The ultimate effect of this
hypercapitalism will be a reduction in the ability to serve public needs:
education, health care, environmental protection, etc.
Privatization of social security promises an immense pool of money,
capable of generating enormous fees, which will serve to deplete the funds
available for payment to the supposed beneficiaries. Privatizing Medicare
promises a boon to the insurance companies and medical providers.
Primitive Accumulation as Economic Reform
As if they were making personal sacrifices, the advocates of modern primitive
accumulation trumpet their heroic efforts to save popular programs and
institutions by reforming them, when in reality they stand to profit mightily
from such policies. However, profits never enter into the conversation.
Instead, "reform" becomes the operative word. The stated objective is always
to protect what most people value. In this environment, modern primitive
accumulations present themselves as virtuous and disinterested public
benefactors, behaving as if the world owes them a debt of gratitude for their
willingness to "make the hard choices." Their propaganda bombards the public
at large to convince people that public institutions are inherently
dysfunctional; only profit-oriented operations can work efficiently.
Privatization is the only hope for salvation.
Some of the primitive accumulationists may have deluded themselves into
believing they are actually performing a public service by following the
natural law of the market, or perhaps God's work, as the CEO of Goldman Sachs,
30
Lloyd Blankfein, remarked, perhaps only half humorously.
The brazen actions of the classical primitive accumulationists almost seem
honest in comparison with the effrontery of their modern counterparts. Modern
primitive accumulation obviously differs from its classical counterpart in
another respect. Modern primitive accumulationists are not directly seizing
peoples' means of production. Frequently, their booty is public wealth,
created by the working class. For example, two prime targets for primitive
accumulation in the United States are Social Security and Medicare, both of
which can be described as "earned benefit programs" because of the extent that
workers have directly contributed to them. In this sense, much of modern
primitive accumulation might resemble the theft of the crop rather than the
land upon which it was grown. In both classical and the modern versions of
primitive accumulation, the result is the impoverishment of the masses for the
benefit of a small minority.
Modern primitive accumulation does not usually directly confiscate
property of individuals. Instead, it operates indirectly by eliminating public
benefits.
The immense scale, scope, and intensity of contemporary primitive
accumulation makes the dispossession of relatively few peasants in rural
England a few centuries ago seem almost bucolic. Instead, modern primitive
accumulation threatens entire populations, and even states, worldwide, with a
shocking degree of acquiescence. Modern primitive accumulation even spouts its
own distorted version of morality based on individual responsibility in spite
of the abhorrent irresponsibility of the modern primitive accumulationists.
31
Railroading Economics
David Harvey interprets capital's attempts to solve its contradictions as
merely displacing problems. Perhaps, one should go further in saying that
capital "solves" problems by creating even bigger ones. Looking at the
succession of supposed solutions over time gives the impression of flailing
about -- without any clear understanding about the nature of the workings of
capitalism. As a result, the supposed American dream has morphed into a
nightmare.
In my book, Railroading Economics, I tried to analyze the history of the
U.S. economy in terms of the way such presumed solutions played a major role in
driving the economy into new difficulties, which required new solutions, which
created still newer problems.
For example, by the end of the Civil War in the United States, the economy
was entering what may be called the real industrial revolution, with industry
rapidly developing the technology to harness fossil fuels more effectively than
ever before. By taking advantage of this technology, large-scale production
facilities became almost commonplace. The result was a capacity to produce
commodities that far outstripped the capacity of the population to purchase
them.
Under these conditions, intense competition broke out, so much so that
many industries were on the ropes. Business survival depended upon finding new
cost-cutting technologies, but each advance in technology required an
increasing scale of investment in fixed capital, which increased productive
capacity, worsening the already severe problem of overproduction. The further
32
saturation of markets intensified competitive pressure.
Business reacted by lowering prices, a process that continued until prices
fell towards the cost of producing one more unit. These prices did not include
any allowance for the money sunk into investments in expensive capital goods.
Because that money has already been spent, it does not affect the cost of
producing another unit of output. For example, the cost of filling a seat on a
plane would include the extra costs that a new traveler imposes. In that
sense, the original cost of the plane is irrelevant.
In his presidential address to the American Finance Association, Michael
Jensen offered some dramatic examples of this rapid deflationary process
associated with the Real Industrial Revolution: the Bessemer process reduced
the price of steel rails by 88 percent from the early 1870s to the late 1880s.
During the same period, electrolytic refining reduced aluminum prices by 96
percent, and synthetic blue dye production costs fell by 95 percent (Jensen
1993, p. 835).
Because this intense competition forced prices to decline to a level
insufficient to cover the costs of invested capital, an epidemic of bankruptcy
broke out, creating what was then known as the Great Depression, a name that
was later re-appropriated during the Twentieth Century. This Great Depression,
which soon engulfed the great economic powers, began in 1873 and only ended in
the 1890s.
The leading young economists in the United States were trained in Germany
in a tradition similar to what Karl Marx experienced as a student. The German
economy, with its cartels, seemed relatively healthy, despite restrained
33
competition. The lesson of the depression for these young American economists
was that competitive markets have an ingrained deflationary bias.
Disgusted by the effects of competition, J.P. Morgan initiated a wave of
corporate consolidations, culminating in the creation of United States Steel.
As trusts, cartels, and monopolies began to form, the resulting lack of
competition depressed economic dynamism. However, the fear of renewed
depression eventually subsided. Ignoring the monopolistic structure of the
economy, business became enthralled with free market ideology once again and
economists fell in line.
While corporate consolidation helped to treat one problem, it created
another. Lacking sufficient incentives for investment in modernization,
productivity stagnated, while excessive speculation developed in a few dynamic
sectors, symbolized in the soaring price of stock in the Radio Corporation of
America, the precursor of the later dot.com boom, which eventually morphed into
the Great Depression.
The Golden Age
First, a little historical background will help to put the recent crisis in
context. After the speculative excesses of the proto-neoliberalism of the
1920s culminated in a stock market crash, the Great Depression hit the United
States, along with much of the rest of the world; however, some parts of the
world benefited from the temporary inattention of the great capitalist powers.
Just as was the case before the recent speculative meltdown, investment in
new technologies was relatively limited with one exception: the use of electric
motors in factories. Previously, factories ran on steam power, which depended
34
upon a complex network of belts and pulleys. This awkward system consumed a
great deal of space, which otherwise might have been used for the direct
production process. A good deal of power was dissipated by friction. Finally,
this system was plagued by frequent shutdowns caused by the rupture of the
leather belts, which could not hold up after a period of wear and tear.
The Great Depression was not an unmixed setback for the market economy.
As was the case in the previous depression, business was forced to modernize.
In the process, it discarded an enormous amount of old and obsolete equipment,
similar to the case of the earlier steam-driven belt and pulley power. The
result was a surge in productivity. However, oligopolistic industries, such as
steel, which did not face serious international competition, were an exception.
Here we come to an important contradiction of capitalism. Economists
generally agree that competition is essential for a healthy economy. That idea
resonates in all of their textbooks. Their textbooks also agree that
depressions are a symptom of a sick economy. This distinction between
depressions and competition is at odds with reality. In fact, depressions may
be understood as an intensification of competition.
Alexander Field recently published a valuable book that will make the case
that the Great Depression represented what may have been the most productive
decade in the history of the United States so long as we measure productivity
by output per unit of input. This soaring productivity stands as clear
evidence of the connection between competition and economic collapses.
By the way, economics textbooks also teach that as productivity increases
higher wages will necessarily follow, even though a glance at the current
35
economy around should be enough to disprove that theory without a need to look
back at the Great Depression.
With the economy in shambles, the New Deal became a virtual necessity.
Government programs reduced the degree of competitive pressures by creating new
sources of demand, but not enough to put an end to modernization.
The Depression also increased the future economic viability of the country
by wiping out large amounts of debt. The depression also "paved" the way to
future prosperity by New Deal policies to build roads and other infrastructure,
which helped to reduce the costs of bringing goods to the market. Finally, New
Deal regulation of the financial system helped to bring about decades of
relative financial stability.
The renewal of competitive forces meant that the period was accompanied by
soaring increases in productivity. Although greater productivity meant less
employment, economic modernization prepared the way for a better future. World
War II followed the Great Depression. Just as was the case with the tragedy of
the Depression, the horrors of war had a positive economic legacy. This
sequence of depression and war, together with accumulated savings and a backlog
of demand, set the stage for the longest period of sustained prosperity in
history of the United States, justifying the label of the Golden Age.
A number of post-war conditions lined up almost perfectly. In addition to
inducing a burst of productivity, the Depression wiped out much of the
economy's accumulated debt. During the war, factories that ordinarily produced
goods, such as cars and refrigerators, were converted into military suppliers.
The restricted consumer market created additional savings. With the end of the
36
war, consumers, flush with their wartime savings, could finally purchase
previously unavailable goods. As an added benefit, competitors of the United
States, such as Japan and the European powers lost a considerable amount of
their capital stock. Postwar recovery required major dependence upon the
productive capacity of the United States.
The Golden Age created the expectation of a new normal -- high profits
coexisting with increasing wages. Under such conditions, the competitive
pressures that had been at work during the Depression were no longer active.
In particular, business felt little need to modernize its productive structure.
Instead, it rested on its laurels, while foreign competitors were rebuilding
their industries with modern equipment at breakneck speeds. As the Golden Age
was drawing to a close, the Vietnam War also put serious economic pressures on
the economy.
Confiscation of American Prosperity
The economic vigor that characterized the Golden Age disappeared by the late
1960s. Falling profits, increasing balance of payments deficits, and a restive
labor force were creating a panic within industry circles.
How could profits be restored? Vigorous economic growth did not seem to
be on the horizon. If the economy was incapable of producing a greater output,
capital had to claim a bigger share of the economic pie by means of modern
primitive accumulation. I set out to chronicle the evolution of this process
in my book, Confiscation of American Prosperity: From Right-Wing Extremism and
Economic Ideology to the Next Great Depression.
After a long gestation period, just as the financial crisis in United
37
States was becoming obvious in October 2007, the book finally appeared,
predating the new genre of crisis literature. This book follows the unfolding
of a destructive corporate coup that eventually led to the recent crisis. In
that book and in an earlier book, Manufacturing Discontent: The Trap of
Individualism in a Corporate Society, I tried to document the massive program
of redistribution -- a full-scale class war designed to remake every aspect of
society. As a result, the legal system, the judiciary, the educational system,
the entire regulatory system, as well as the social safety net -- to name only
a few of the targets -- all had to be transformed in order to carry out this
program. To make it worse, this virus of neoliberalism spread throughout the
entire globe.
The crux of the Confiscation book was that this round of primitive
accumulation was bound to be self-defeating, a point highlighted in the final
part of the book's subtitle: To the Next Great Depression. Of course, the
great crash of 2007 was not a great depression, but only a symptom of more
serious underlying problems. Nonetheless, for the time being, capital has able
to regroup, restoring much of its wealth and power, at the expense of society
at large. It did so without suffering any serious political or legal
repercussions for its often illegal actions
One might get the impression that the recent economic turmoil is
responsible for this contemporary wave of primitive accumulation that began
with the end of the Golden Age. What we are experiencing today is part of a
long-standing program that predates the iconic figures of Ronald Reagan and
Margaret Thatcher, who are often credited as the inspiration and architects of
38
modern neoliberalism. The book, like much of this paper, concentrates on the
country I know the best, but many of the abuses will be familiar throughout the
world, especially in Europe today.
The Golden Age, with its unparalleled prosperity, left a trap for the
economy. Just as a depression means an increase in competition, prosperity
means a decrease in competition. During such prosperous times, business can
coast, largely ignoring the need to become more efficient. For example, when
inexpensive foreign cars first began penetrating the US market, the automobile
companies were unconcerned. Henry Ford II famously dismissed the competitive
threat with a comment, "minicars mean mini-profits."
At the same time, in war-torn Europe and Japan, many industries had to be
rebuilt from scratch, meaning that they were operating with the newest and most
efficient available capital goods. In the United States, businesses frequently
rested on their laurels, squeezing profits out of obsolete factories. Over
time, foreign competition overwhelmed many of these companies, leading to hard
times. Profits sagged, causing something between consternation and panic.
By 1971, Lewis Powell wrote his famous letter, a call to arms for
launching a neoliberal project. The Confiscation book follows that
revolutionary remaking of the U.S. economy, which supported a recovery of
profits at the expense of wages, unions, the social safety net, and the last
shreds of decency. This process also dismantled the regulatory system that
helped to shield the economy from some of the worst abuses of capitalism. The
consequences of this campaign became clear with the financial meltdown.
Within a relatively short period of time Europe fell in line with this
39
Anglo-Saxon version of political economy. Europe went even further, saddling
its economy with a structural inability to respond to crises.
In the United States, serious discussion, let alone strong political
resistance, seems almost impossible at this juncture. Modern Primitive
Accumulation is treated as "Sound Economics." The consequences of modern
primitive accumulation are probably more severe in southern Europe than what
the United States has experienced. Ironically, Germany, where some of the most
important innovations in social welfare policies first emerged, has become the
leading enforcer of neoliberalism in Europe. Even more ironically, the German
finance ministry is located in the former headquarters of the Luftwaffe.
A Procrustean Economy
The remaking of the society for the convenience of capital filtered down into
everyday life. In my latest book, The Invisible Handcuffs of Capitalism: How
Market Tyranny Stifles the Economy by Stunting Workers, I use the Greek myth of
Procrustes in which unwary travelers find themselves in an iron bed upon which
their bodies are ether stretched or part of their limbs removed to fit the bed.
The ultimate goal of reform is a world in which justice means the assurance of
even greater profits for business and financial interests at the expense of
society, even if this so-called justice means shredding every last remnant of
humanity that has still managed to survive the onslaught of hypercapitalism.
The scale and scope of this ruthless round of primitive accumulation is so
thorough-going that one might almost imagine the original primitive
accumulationists as rather compassionate. Nonetheless, the world of
hyper-capitalism is Procrustean. Everybody is expected to alter their lives in
40
order to conform to the need for greater profits.
Almost a century ago, during the miners' strike in response to hardships
imposed by England's attempt to reform the economy by returning to the gold
standard, John Maynard Keynes, hardly a radical, expressed the Procrustean
spirit of his time:
like other victims of economic transition in past times, the miners
are to be offered the choice between starvation and submission, the
fruits of their submission to accrue to the benefit of other classes.
[Keynes 1925, p. 223]
A crucial front in the new class war was a strong dose of sado-monetarism to
slow the economy down to create unemployment. The purpose was to keep wages in
check. When Paul Volcker announced his intention to use the Federal Reserve as
an instrument of class warfare -- actually he was not so blunt in public -- he
invited the editor of the Wall Street Journal editorial page, a deputy, and the
features editor to a lunch at the New York branch bank of the Federal Reserve.
Volcker asked his guests, "When there's blood all over the floor, will you guys
still support me?" The deputy editor responded affirmatively, later proudly
recollecting, "There was blood indeed, as overextended Latin borrowers and
American farmers were caught out by a return to a sound dollar. But we held
fast" (Melloan 2003).
This policy was so successful that Greenspan, then Chairman of the Federal
Reserve Board, gloated about the traumatization of labor. Such policies are
ironic, considering that policymakers pretend that all social objectives --
whether higher wages, better working conditions, environmental protections, or
41
even the quality of life -- must give way to the promise of job creation. The
two concluding sections of the in The Invisible Handcuffs chapter on
sado-monetarism attempts to catalogue some of the human and economic costs of
labor discipline.
At his seaside villa in Dubrovnik, Croatia, the Chief Executive Officer of
American International Group Inc. Robert Benmosche, recipient of the largest
bailout of the financial firms in the United States updated Keynes. Benmosche
said Europe's debt crisis shows governments worldwide must accept that people
will have to work more years as life expectancies increase: "Retirement ages
will have to move to 70, 80 years old ... That would make pensions, medical
services more affordable. They will keep people working longer and will take
that burden off of the youth" (Cerni and Tracer 2012).
References
Cerni, Boris and Zachary Tracer. 2012. "AIG Chief Sees Retirement Age as High
as 80 After Crisis." Bloomberg (4 June).
http://www.bloomberg.com/news/2012-06-03/aig-chief-sees-retirement-age-as-high-
as-80-after-crisis.html
Friedman, Milton. 1988. "Why the Twin Deficits Are a Blessing?" Wall Street
Journal (14 December): p. A14.
Hamilton, Alexander. 1791. "Report on the Petition of the Merchants of
Philadelphia Trading with India and China." Communicated to the House of
Representatives (10 February, 1791). In Harold Syrett et al., eds., The Papers
42
of Alexander Hamilton, 27 vols., vol. 8 (New York: Columbia University Press,
1965): pp. 20-21.
Keynes, John Maynard. 1925. "The Economic Consequences of Mr. Winston
Churchill." in Essays in Persuasion, vol 9, The Collected Works of John Maynard
Keynes (ed.) Donald Moggridge (London: Macmillan, 1972): pp. 207-30.