“FACT: THE CAT EATS THE MOUSE.” — KARL MARX OCTOBER 2016 | #5

What is wrong with free money 1ISDS — Courts of arbitration within the TTIP treaty 8Since you mentioned “us” — Nationalism by example of Scottish independence 19“That’s just how these people are” — Racist essentialism 27Capital — Money 2.0 29

WHAT IS WRONG WITH FREE MONEY

Proposals for a Universal Basic Income orCitizen Income and variants thereof enjoysympathy from different camps: from con-servatives like Richard Nixon1, from liber-tarians who consider themselves disciplesof the free market2, from liberals like Mar-tin Wolf3, from social democrats like PaulKrugman4 and from people who considerthemselves Marxists5.

However, what each of these proponentsactually mean and want with a Universal Ba-sic Income is wildly divergent. Centrally, theMarxists want an end to the “compulsion towork”, liberals and libertarians rather wantto provide “incentives to work”.

Yet, despite these differing and at timesopposing aims, these proposals share morethan just a name: they share wrong premisesabout the capitalist mode of production andthe state which watches over it.

In the following, we first critique theseshared wrong premises about productivity,the welfare state and the budget. Then wedraw out the contradiction of some left-wingsupporters who, on the one hand, insist onunity with libertarian, liberal and socialdemocratic Universal Basic Income propos-als in order to acquire a whiff of seriousness

and, on the other hand, continuously denythis unity.

Productivity

The point of departure of most, if not all,agitation for a Universal Basic Income is thatproductivity gains produce poverty.6 Sincethis production of poverty is taken as mucha self-evident fact as the continued rise inproductivity in the future, new policies areneeded, so goes the argument, to deal with

these effects of technical progress. It is thisstarting point, though — productivity gainsproducing poverty —, which should givepause.

Taking a step back, gains in productivitymean that more stuff can be produced in thesame time. If two chairs can be produced inthe same time as it took to produce one chairbefore, the productivity of making chairsincreased.7 More generally, increasing theproductivity of labour means that it takesless effort to produce the same materialwealth aka. stuff.

This means, we either have to workless to produce the same amount or wecan produce more of the stuff we want toconsume. A society which produces moreproductively has more: measured either inmaterial wealth to consume or in free time.Hence, it is not self-evident that increases inproductivity produce poverty. Yet, in thissociety they do.

Productivity for profit

In this society, it is capitalist companies whoare increasing productivity and it is no se-cret that these companies produce to make a

1 “But probably the most significant of these events, and their decade longculmination, occurred in August 1969 when Richard Nixon called for the creationof a Family Assistance Plan only eight months after his election. Nixon’s planwould have guaranteed all families with children a minimum of $500 per adultand $300 per child or, as already noted, an extremely inadequate $1,600 for a twoparent family of four. In its efforts to include the working poor, Nixon’s proposedFAP was a form of guaranteed income although, as we have seen, a modifiedand specific version: it was a negative income tax.” — Lynn Chancer, “BenefitingFrom Pragmatic Vision, Part I: The Case for Guaranteed Income in Principle”in Post-Work: Wages of Cybernation, ed. Stanley Aronowitz and Jonathan Cutler(Routledge, 1998)

2 Matt Zwolinski. The Libertarian Case for a Basic Income,http://www.libertarianism.org/columns/libertarian-case-basic-income

3 Martin Wolf. Enslave the robots and free the poor,http://www.ft.com/cms/s/0/dfe218d6-9038-11e3-a776-00144feab7de.html

4 Paul Krugman. Sympathy for the Luddites,http://www.nytimes.com/2013/06/14/opinion/krugman-sympathy-for-the-luddites.html

5 For example, Kathi Weeks, The Problem with Work, Duke University Press, 2011.6 Three examples from three different political tendencies:

“Until recently, the conventional wisdom about the effects of technology onworkers was, in a way, comforting. Clearly, many workers weren’t sharing fully —or, in many cases, at all — in the benefits of rising productivity; instead, the bulkof the gains were going to a minority of the work force. But this, the story went,was because modern technology was raising the demand for highly educated

workers while reducing the demand for less educated workers. And the solutionwas more education. [. . . ] Today, however, a much darker picture of the effectsof technology on labor is emerging. In this picture, highly educated workers areas likely as less educated workers to find themselves displaced and devalued,and pushing for more education may create as many problems as it solves.” —Paul Krugman. op. cit.“The argument that a rise in potential productivity would make us permanentlyworse off is ingenious. More plausible, to me at least, are other possibilities: therecould be a large adjustment shock as workers are laid off; the market wagesof unskilled people might fall far below a socially acceptable minimum; and,combined with other new technologies, robots might make the distribution ofincome far more unequal than it is already.” — Martin Wolf. op. cit.“Clearly, the economic environment of the 1990s is one of fast-paced technologicalchanges producing massive insecurities amidst job displacement and job destruc-tion. Whether one draws on documentation provided by The New York Timesin depicting The Downsizing of America, or by Stanley Aronowitz and WilliamDiFazio in The Jobless Future, or by William Julius Wilson in his account ofneighborhood transformations in When Jobs Disappear, secure full-time jobs havebeen evaporating. Moreover, for the majority of people who find re-employmentamong the large numbers of new positions also recently created, benefits andpay are frequently lower than in the jobs held before. Compounding this loss ofjobs are also much-heralded processes whereby capital shifts around the globewith greater fluidity than ever before; even in the United States, sociologists havelong been noting that types and locations of new jobs are not coinciding withhow and where they are most needed.” — Lynn Chancer. op. cit.

7 In this example, we are assuming that the intensity of labour did not change.

2 K I T T E N S

profit. The profit is whatever they make onthe market in excess of what they paid formeans of production (machines, buildings,raw materials, tools) and workers.

They try to maximise profit. If a com-pany manages to produce cheaper than itscompetitors then it can sell its commodi-ties for the same price with lower expenseswhich translates to increased profits. To pro-duce at a lower cost they could, for example,buy their raw materials more cheaply, e.g. byexploiting price fluctuations. Or, they mightmanage to get more work out of their work-ers for the same wage. Or they may increaseproductivity, i.e. they change the way theirproducts are produced such that their costprice per unit drops.

To see how, let us consider an example.Assume a widget company normally has£50,000 invested in raw materials, tools,buildings and machines and £10,000 inwages for 10 workers. Also, let’s say itproduces 5,000 widgets with these means ofproduction and workers, so that each widgetcosts the company £12 to make. Further-more, say each widget sells at £15, i.e. eachwidget realises a profit of £3. The overallprice fetched on the market for all widgetsis £75,000. The profit is £15,000 (after sub-tracting the advance of £60,000 from theoverall price fetched).

Now assume, our company is the firstto find a new, more productive way ofproducing widgets. Less work is neededto produce a widget. Assume, so muchless that our company can now produce6,000 widgets with 7 workers in the sametime, costing them only £7,000 in wages.On the other hand, increases in productiv-ity have a tendency to require increasedoutlay in means of production. For ex-ample, more productive machines tend to(initially) cost more than their predeces-sors. Say, our company now has to invest£53,000 in machines, raw materials and soon. Each widget costs the company now£10 instead of £12. Our company couldnow either continue to sell its widgets for£15 a unit, which would mean a profit of(£15 · 6, 000 − £53, 000 − £7, 000) = £30, 000.Or, our company could decide to lowerthe price of its widgets to make sure itsells all 6,000 of them, say to £13. Thenit would make £18,000 in profit, whichis still more than before. On the other

hand, in the latter case, assume the newmachine would cost so much to push theoverall investment in means of produc-tion up to £56,000. Then our companywould not make more profit than before —(£13 · 6, 000 − £56, 000 − £7, 000) = £15, 000— and hence would have no reason to changehow it produces widgets.

A first thing to note is that companiesemploy labour saving technologies, i.e. in-crease productivity, to increase their profit.The standard by which such technologiesare judged is not whether they save labour,but whether they save on costs per unit.Companies will not always opt for the mostproductive technology. They opt, if theycan, for the cheapest per unit technology.The question for a company is not if a tech-nology is more productive than another, butwhether it allows producing more cheaplythan another. If a sweatshop achieves lowercosts than a modern factory, then sweat-shops are the adequate technological levelof production for that capitalist branch ofindustry.

This is also why the “conventional wis-dom” (Krugman) that in the past machinesreplaced low skilled labour but left highskilled jobs alone is wrong. Since the “in-dustrial revolution” machines were alsomeans to replace high skilled jobs with lowskilled jobs if that allowed companies to savecosts such as higher wages for specialists.8

However, regardless of why companiesincrease productivity, such increases stillmean that less work is needed to producethe same material wealth. Going back toour initial point, one might be forgiven forthinking that if all the required work is done,we would all get to relax and enjoy life. Butas observed by Universal Basic Income sup-porters, this is not the case. That people areout of work does not mean that all usefulthings are readily available to them, thatthere simply is nothing left to do, that ev-erybody is provided for and that people getto enjoy their free time. Instead, those outof work are condemned to idle poverty.

The premise of this kind of poverty isthat it became easier to produce materialwealth. Hence, a lack of it cannot accountfor this poverty. Indeed, in a capitalist so-ciety there is a juxtaposition of wealth andpoverty. If you can pay for it, you can fly to

space, if you cannot pay for it, you strugglewith basic needs.

People go to work for a wage, in orderto satisfy their needs and wants, to suspendtheir separation from the wealth of soci-ety. Unemployed people, in turn, are poorbecause when they lose their job they areseparated from their source of revenue andthus their access to social wealth. However,whether they can find another source ofrevenue, i.e. another job, does not dependon their needs. It depends solely on anothercompany finding use for them in order tomake profit. While workers go to work fortheir own benefit, i.e. to have a wage to spendon what they need, this is not the reason theyare employed, contrary to what some sup-porters of a Universal Basic Income mightbelieve when they denounce the failure ofthe capitalist mode of production to provideemployment.9

It is not productivity increases or tech-nology as such that produce the effects towhich proposals for a Universal Basic In-come react. It is rather productivity gainsas a means for increasing profit that do so.However, this distinction does not existfor most proponents of a Universal BasicIncome. As a consequence, they treat theproblems they identify with productivitygains as simply given instead of made. Tothem, technology just happens to producepoverty, whereas it is the pursuit of profit bycapitalist companies which produces thiseffect, not technology. Even those support-ers who use the word “capitalism” criticallyin their writings engage with this peculiarmode of production as a self-evident objectwhose law are merely encountered; just liketheir fellow reformers.10 They speak of cap-italism, but they might as well not, as thedistinction of whether poverty is producedor given makes no difference to their prac-tice. For them, it is something to be dealtwith, not criticised.11

Work for profit

But not even those who still have a job reapthe benefits of technological developments.Rather, the norm is that those who remainemployed are confronted with demands towork longer and more intensely with theirwage under threat. Technological develop-ment under the rule of profit produces a

8 cf. Karl Marx. “Chapter 15: Machinery and Large-Scale Industry” in Capital. ACritique of Political Economy, Volume 1, Penguin Classics 1990.

9 If the wage suffices is another question entirely as highlighted by, for example,precarious employment relations such as zero-hour contracts. These “changingemployment relations” are sometimes given as another reason for implementinga Universal Basic Income. Some reformers deem the current welfare systemunfit to deal with the newly successful demands of employers to have workersavailable whenever their profits need them, regardless of whether this enablesthese workers to pay their bills. A Universal Basic Income is then a way tofacilitate this demand of capitalist companies against their workers.

10 For example, Kathi Weeks contrasts economic necessities with social conventionsand argues that work in this society was structured by the latter not the former.She hence fails to recognise that these economic necessities themselves are social:“Work is, thus, not just an economic practice. Indeed, that every individual isrequired to work, that most are expected to work for wages or be supported by

someone who does, is a social convention and disciplinary apparatus rather thanan economic necessity. That every individual must not only do some work butmore often a lifetime of work, that individuals must not only work but becomeworkers, is not necessary to the production of social wealth.” — The Problem withWork, p. 7

11 “It cannot be overemphasized that a huge benefit of guaranteed income atpresent involves its explicitly anticipating, rather than denying, tendencies towardjob displacement and economic uncertainty that are blatant by-products of aglobalizing capitalism at the end of the twentieth century. Without some kind ofbetter insurance in place than unemployment benefits that rapidly run out andare not universally available in any event, huge numbers of people in the UnitedStates continue to have reason to worry that layoffs may not quickly result — orresult at all — in new jobs that offer adequate benefits and a livable income.” —Lynn Chancer. op. cit.

K I T T E N S 3

juxtaposition of unemployment for someand long hours for others.

This is firstly because increasing produc-tivity is only one technique to maximiseprofit in the permanent competition of com-panies for it. Lowering wages or pressingmore work out of workers for the samewages are also tools applied for that pur-pose. Secondly, because the poverty ofunemployed people — made redundantby new technology — forces them to com-pete for jobs with those still in employment,labour saving technologies increase compe-tition amongst workers for the remainingjobs, allowing companies to lower wages.

Thirdly, those employed have to workharder because labour saving technologiesunder the rule of profit produce a motiva-tion on the part of the company to get morework out of the remaining workers. Moreproductive technologies offer a relative ad-vantage as long as they are not in general use.A company which produces more cheaplythan the competition can sell its productsfor its target price because its competitorscannot undercut it. But if the competition iscatching up, this advantage is gone. Othercompanies produce more cheaply and canlower the price to (re-)capture market shareor to even get in on that extra bit of profitby still being ahead of the slower rest ofthe competition. Our more productive com-pany’s profits fall again. Maybe anothercompany finds an even cheaper way of pro-ducing, pushing our company out of themarket. This creates reasons to make thoseworkers remaining work longer: produceand sell as many commodities before thecompetition catches up.

Fourthly, all those companies which didnot yet introduce new machinery to increaseproductivity notice that their competitorsundercut them with lower prices. They, too,must sell for a lower price to stay in the

market. This lowers their profit which theycan try to recover by suppressing the wagesof their workers, thus saving costs. They arehelped in their endeavour by the fact thattheir competitors just made many workersunemployed, as explained above, who arenow looking for employment.

The lower the advance on the wage andthe higher the efficiency of the workers,the higher the profit, i.e. the higher the dif-ference between advance and return. Thepremise of wage labour, i.e. employment ina capitalist firm, is the separation of thoseemployed from the products they producewhich belong to the company. All thatworkers get on average is a wage to payfor what they need to get by, so that theyare dependent on employment again thenext day, week, month, year. The premiseof profit making is the poverty of workers.While many people believe that the wage issomehow founded in the performance of anindividual worker (this is only a necessarycondition), the opposite is true: precisely thelegal and economic separation of a worker’sproduct or output and her wage allows acompany to prosper. She is separated fromthe results of her labour, because she soldher labour time and all she produced in thattime belongs to the buyer.12

On that matter, Universal Basic Incomereformers hold that now technology pro-duces a problem: the wage fails as a mech-anism to distribute society’s pie.13 Theythink the purpose of the wage is that work-ers can participate adequately in the wealthof society which they produce under thecommand of capital. They think of the wageas a sort of reward for contributing to theproduction of social wealth and notice thatit does not currently live up to this ideal.14

To them technological developments putthe wage as a model of distribution intodisarray which prompts them to seek alter-

native ways of distributing social wealth.But, as argued above, the wage is not areward or remuneration but the lever tomake workers come to work for the pur-pose of profit of a company.15 This leveris as high and low as companies can getaway with in the universal competition ofworkers for jobs.16 Put differently, a smallpart of the wealth produced by workersis paid to workers in the form of wages.This way, they can sustain themselves asproducers of a surplus from which they areexcluded. In their agitation, proponents fora Universal Basic Income turn the wage intoits opposite: the economic function of thewage seems not to be poverty and exclusionfrom social wealth, but is posited as wealthand participation.

Capitalist state

Demands for a Universal Basic Income areaddressed to the state: the state is askedto react to an undesired economic devel-opment. This is apt, as the proponents ofa Universal Basic Income relate to sociallyproduced poverty the same way a capitaliststate presents its relation to the economy.In its laws the democratic, capitalist statereacts to the capitalist economy, which ittreats as an a priori fact. A democratic,capitalist state regards the economic rolesof its subjects as something given. It doesnot decree who engages in which produc-tion process or assigns roles in the capitalisteconomy. Instead, its law merely definesthat citizens have particular rights and du-ties if they happen to be in the situation ofbeing workers, bosses, landlords, tenants,lawyers, bankers and so on. To the statethese figures are given and they do theirthing anyway. The proponents of a Uni-versal Basic Income accept this relationship

12 Companies sometimes pay wages per piece or bonuses to motivate their employees.However, this should not be confused with an objective relation between moneymade and money spent on wages. For bonuses to make economic sense, theymust be lower than any “output” they stimulate. Even if a company offers anemployee, say, 8% of the money she brings in somehow connected to her activity,this money first of all is the property of the company which it then can chooseto pay as part of the wage to motivate the worker. That 8% is paid because ofthe company’s calculation that it will be beneficial. There is no objective, directconnection between the performance of the worker and even her bonus, in thesense that the former is the economic reason for the latter.

13 “I’ve noted before that the nature of rising inequality in America changed around2000. Until then, it was all about worker versus worker; the distribution ofincome between labor and capital — between wages and profits, if you like —had been stable for decades. Since then, however, labor’s share of the pie hasfallen sharply. As it turns out, this is not a uniquely American phenomenon.A new report from the International Labor Organization points out that thesame thing has been happening in many other countries, which is what you’dexpect to see if global technological trends were turning against workers.” —Paul Krugman. op. cit.

14 Kathi Weeks is a radical critic of the wage system and she even criticisesthe “Wages for Housework” campaign for aiming to expand it to housework.However, she shares the idea that the wage is a mechanism for social distributionwhich rewards contributions with those she criticises. Her criticism is that theserewards are arbitrary, agreeing with the false notion that the wage is a reward.“. . . the demand for basic income offers both a critique and a constructiveresponse. As a reform, basic income could help address several key problemsof the post-Fordist US political economy that renders its wage system unableto function adequately as a mechanism of social distribution. These includethe increasingly inadequate quantity and quality of waged labor manifest inhigh levels of unemployment, underemployment, and temporary and contingent

employment, as well as the problem noted in chapter I of measuring individualcontributions to increasingly collective and immaterial labor processes. Thedemand for basic income poses a critique but also provides a remedy: reducingour dependence on work.” — The Problem with Work, p. 143“Second, rewarding more forms of work with wages would do more to preservethan to challenge the integrity of the wage system. A possible reply is thatby drawing attention to the arbitrariness with which contributions to socialproduction are and are not rewarded with wages, the demand for wages forhousework carries the potential to demystify the wage system.” — The Problemwith Work, p. 149

15 The pressure of productivity gains on wages is observed by the authors of theBasicIncome subreddit FAQ at https://www.reddit.com/r/basicincome/wiki/index when they write: “Capital — equipment and machinery that helps toproduce things — is now creating a greater share of output compared to labour— human workers. This allows business owners, who own the capital, to payworkers the same or less while more is produced, so they make more profitfor themselves. We are already seeing that output per worker is increasing,while workers’ wages are not.” Equipment and machinery does not produce any“share” of the output whatsoever, the hammer does not produce a “share” ofthe nail in the wall, it is the means which we use to drive it in. Saying that acertain product is, say, 40% produced by labour and 60% by equipment is likesaying bread is 30% dough and 70% taste, i.e. equating two qualitative differentthings. This fallacy is then used to justify why workers are excluded from thewealth they produced by claiming that capital produced a greater “share”. Whatallows capital to suppress wages is the increased competition of workers forjobs because they were made redundant by capital not some distributive justicewhich somehow allocates to each a “share” according to how much they put in.

16 Because capital tends to “save” labour faster than it develops a new need forworkers, competition of companies for workers is far less intense.

4 K I T T E N S

between capitalist state and capital as givenand ask the capitalist state to react to a neweconomic development whose reasons are ofno concern to them. However, technologicaldevelopment for profit and the separationof workers from the wealth of society is notprior to the capitalist state but is premisedon it.

Private property

Through the capitalist state’s maintenanceof the principle of private property, it en-sures that people must earn money. Formost people this means they must workfor a company to earn a wage. For mostpeople the wage is the extent of their accessto social wealth and they must hence seekit. It is the institution of private propertywhich enforces that unemployed people areexcluded from the wealth of society, whichis produced with increasing productivity.Without the capitalist state’s guarantee ofprivate property, without coppers, courtsand prisons, we would not be having thisconversation about the relationship betweentechnology and poverty.17

Research and development

But the guarantee of private property doesnot suffice for a modern capitalist economy.It asks for a lot more. For example, tech-nological developments do not come aboutspontaneously but rely on a little bit of helpfrom the capitalist state.

Firstly, they require research and devel-opment which are expensive and have anuncertain outcome. The capitalist state fa-cilitates this research by educating parts ofits population to perform it. It educatesits population in the relevant sciences, sothat companies can find the staff of theirresearch and development departments onthe job market.18 The capitalist state alsoconducts fundamental research itself in itsuniversities and laboratories, paid for by itsgrants. It funds scientists engaged in basicresearch in mathematics, physics, chemistry,biology, labour process organisation, IT andso on whose results can be exploited by anyfirm for its individual pursuit of profit.19

Secondly, it is a long way from a scien-tific discovery to its successful exploitationin the interest of profit. When a technologyis not profitable (yet) but deemed beneficialto the national economy, the capitalist state

helps it along its way by either organisingits roll-out itself (train track networks, roads,telephone networks) or by subsidising therelevant industries (solar energy, nuclearpower).

Without these interventions technologi-cal development under the rule of capitalwould have taken a lot slower pace. De-mands for a Universal Basic Income reactto effects of technological developments,developments that were helped on theirway by the capitalist state. The capitaliststate, to which the supporters of a UniversalBasic Income turn, does not encounter thecapitalist mode of production, it maintainsand furthers it.

Social security

However, for those who seek to deal withpoverty, appealing to the capitalist state isnot wrong. After all, the capitalist state doesmaintain the working class. By paying inand out of work benefits the capitalist staterecognises that the economy it watches overdoes not provide for those who produce theprofits. Yet, it is not some socialist sentimentwhich explains the welfare state but harshnecessity. Left to its own devices, capital

17 We are keeping the discussion of private property rather short here but we have writ-ten about private property before. For example, see Private Property, Exclusion and theState available at http://antinational.org/en/private-property-exclusion-and-state, the first part of Free Property — On Social Criticism in the Form of a Soft-ware Licence available at https://gegen-kapital-und-nation.org/en/copyleftor the part on freedom in Liberté, Égalité and such matters available athttp://antinational.org/en/freedom-and-equality.

18 When companies develop new technology, they have no interest in sharingthis advantage with their competitors. They want to exploit their technologicaladvantage for themselves. On the one hand, the capitalist state appreciatesthis interest and grants these companies an exclusive right of disposal over theapplication of scientific discovers through its patent law. On the other hand,the capitalist state has an interest in the success of its whole national economy

and wants all companies to be able to exploit technological advances. It henceattaches an expiry date to patents. It also organises fundamental research whichis available to all competitors as described in the main text.

19 A lot of basic research is both expensive and not immediately exploitable, i.e. its“time to market” might be counted in decades if there is such an expected timeframe at all. Hence, engaging in such kinds of research is not interesting formost individual capitals.

20 Most environmental regulation is a testament to the nastiness the capitalist stateexpects from its economy — not without reason. That there needs to be a lawthat bans dumping toxic waste into the river speaks volumes about the capitalistmode of production. That a lot of environmental regulation specifies a limitvalue up to which point it is legal to expose your surroundings to poisonoussubstances speaks volumes about the state which watches over it.

K I T T E N S 5

would eat workers and the earth, in a word,it would eat what it needs to exist and thusitself.20

Capital in its drive for profit perma-nently makes workers redundant. It findsnew ways of producing without some of itsworkers. Yet, it also sometimes needs moreworkers, for example, when new labour in-tensive branches of industry develop. Also,the economy goes through boom and bust,or some branch of industry prospers whileanother falters. Capital wants to find work-ers readily available whenever it needs themand to throw them out whenever it does not.Only if unemployed people are not left tostarve, they are still available if or whenevertheir services are requested. What mightpresent itself as reacting to and dealing withthe effects of the capitalist economy is infact a contribution to its maintenance.

This creates a bit of a pickle: the capi-talist mode of production depends on thecompulsion to work. Workers produce theproducts companies turn into profits. Ifworkers are simply and comfortably pro-vided for without them needing to workfor some company, they would have noobjective reason to show up to work. On theother hand, when unemployed workers arenot provided for, they are not available tocapital when needed. They must be main-tained but this undermines their need towork for a capitalist company. The resultof these opposing interests — maintenancewhen out of work, but without makingworkers free from the compulsion to work —is a social security system which maintainspoverty below even normal working classpoverty levels. In addition, the permanentcompulsion by the job centre to be lookingfor work is meant to make life on the dole somiserable as to not present a real alternativeto wage labour, i.e. to producing profits forcapitalist companies.

These two opposing interests in the main-tenance of the working class produces thejungle of rules and regulations governingthe various social security schemes. In itsrules and regulations the capitalist staterecognises that its society produces povertywhich undermines the reproduction of theworking class. It wants its working classto have a place to live (housing benefits),to raise children (child benefits), to seekwork (job seekers allowance) and so on. Itwants to make sure that (only) these par-ticular results are attained with its benefits.It wants to maintain just the right level of

poverty which allows those subjected toit to do what it considers necessary butnothing else. Hence, when social securitylaw becomes more and more complicated,this is a consequence of what social securitylaw aims to achieve, not an expression ofa bureaucracy out of control. Proposals ofa Universal Basic Income on the basis ofcurbing unnecessary bureaucracy miss thepoint of why these bureaucracies exist inthe first place: to maintain useful poverty.21

The poverty and stress under the thumbof the job centre is a consequence of thepurpose of social security — maintaining auseful working class. This does not meanthere is no range of possibilities of how lifeon the dole might look like, but hopes ofthe social state ending poverty mistake itfor something which it is not. It maintains itas a service to capital so that it can find theworkers it needs even after it has discardedthem.

Proposals for a Universal Basic Incomedo not ask what the capitalist state actu-ally does and why. They do not ask whatpurposes are realised by maintaining thepoverty of the working class in this way.These proposals instead posit their own im-age of how they would prefer the worldto be and suggest policies which ought toget us there.22 When left-wing supportersof a Universal Basic Income see UniversalCredit in the UK or social security changesin Cyprus as a first step towards realisingtheir aims — except, of course, “details” likeconditionality, compulsion to work and theamount of money actually paid out — theyare ignorant as to why the capitalist stateattaches conditionality and compulsion towork to its benefits, and why these benefitsare so low.

State revenue

A fair amount of writing about a UniversalBasic Income is spent on answering the an-ticipated question “can we afford it”. Theanswer by supporters of a Universal Ba-sic Income is a resounding “yes” backedby alternative budget plans. This way, de-mands for a Universal Basic Income presentthemselves as realistic.23 So realistic thatthey find nothing strange about an econ-omy where providing people with what theyneed is a burden to the economy instead ofits aim. The proponents are aware of thestate’s worries about the budget and wouldnot propose a reform without suggesting

how to finance it: firstly through changes totaxation and secondly through reallocationsof parts of the state’s budget.

The state collects taxes. It rules by par-ticipating in the economic success of itssubjects. In the case of the social state thismeans that the state reacts to the poverty ofworkers by expropriating part of their wagethrough taxation and mandatory insuranceto pay for hard times. Additionally, the statealso demands that employers pay for thecontinued availability of an able and sub-servient working class through taxation andmandatory insurance contributions. Anypenny expropriated from a firm, though, isa penny which is not profit, which is thedeclared purpose of every business and thepremise of taxation. The contradiction oftaxation is that it restricts citizens in theireconomic activity in order to support the eco-nomic activity of its citizens. The availabilityof poor people as a means for profit is inthe interest of capitalist companies. Yet, themoney spent on maintaining them is still adeduction from profit. This creates anotherpickle for the state: it collects taxes becausethere is much to do for a capitalist state, butit also wants to reduce taxes to allow its na-tional economy to prosper. All supportersof a Universal Basic Income appreciate this.They are sufficiently realistic to know thatthe provision for poor people in this societyis premised on the success of capitalist en-terprises in making profits. Their proposedunconditional provision for poor peopleis made rather conditional. That is, theyappreciate that taxation to alleviate povertyshould not threaten the endeavour whichproduces the poverty in the first place.24

The state vets every expenditure in itsbudget for its usefulness to the national inter-est. It asks of every expenditure — benefits,the NHS, environmental protection, Tridentand prisons — if they are really necessary forthe national interest. Not only in themselvesbut also in comparison with each other. Isthis or that expenditure more or less usefulfor the might of the capitalist state and thefunctioning of its capitalist society? Everyexpenditure only counts insofar as it is ex-pected to be useful to the national interest,more useful even than other equally appeal-ing expenses also competing for a chunk ofthe budget. In the case of the social state thismeans that the needs of poor people haveto pass this test. The question is not onlywhether maintaining the working class is anecessity and if paying benefits is too much

21 “A lot of government workers are required to ensure that welfare recipients arenot claiming their benefits fraudulently, and to administer the complicated systemof welfare payments and tax credits. [. . . ] A basic income would hugely simplifythe welfare system by replacing most of these bureaucracies, which would reduceits administrative cost significantly.” — BasicIncome subreddit FAQ, op. cit.

22 “If the picture I’ve drawn is at all right, the only way we could have anythingresembling a middle-class society — a society in which ordinary citizens havea reasonable assurance of maintaining a decent life as long as they work hardand play by the rules — would be by having a strong social safety net, one thatguarantees not just health care but a minimum income, too.” — Paul Krugman.op. cit.

23 “But if people are to take the idea of guaranteed income seriously, we mustalso return to pragmatic questions of cost. Let us assume that the intentionallymulti-dimensional argument I have been making in favor of guaranteed incomehas been to some extent persuasive. Still, a question that will need to be addressedrelates to funding. From where would money come to fund such a proposal?” —Lynn Chancer. op. cit.

24 “The cost of this would be recovered through a more progressive income tax system.We recognise that with the public finances in their present state this is not the time tointroduce such a scheme.” — Green Party General Election Manifesto 2010, http://www.greenparty.org.uk/assets/files/resources/Manifesto_web_file.pdf

6 K I T T E N S

of a burden for the budget, but also if payingthis or that benefit is more or less usefulfor the might of the state compared to a bitof the NHS, higher education grants, moreprison staff, a new weapon system and soon. This, too, is appreciated by proposalsfor a Universal Basic Income. Their uncon-ditional provision for poor people is alsomade conditional on the national interestand the adequate allocation of funds for it.Their realism is demonstrated by alternativebudget proposals which would enable thestate to finance a Universal Basic Incomewithout undermining other expendituresdeemed necessary for its might.25

Unity

Under the name “Universal Basic Income”contradictory purposes are pursued. Themutually contradictory purposes find ex-pression in different answers to the questionof how much it ought to be. This quantita-tive question expresses qualitatively ratherdifferent purposes.

For conservative or libertarian proponents,a Universal Basic Income is an interestingpolicy idea which would trim down thewelfare state. If a Universal Basic Incomeis low enough to merely cover necessitiesthen it would essentially amount to a re-structuring of social security which givesup the bureaucracy needed for determiningwhat a claimant needs and/or deserves inthe eyes of the capitalist state. That is, itwould express that the state — comparedto its current welfare regime — had lessof an interest in those particular problemsfacing its poor population that it currentlyrecognises. Such a reform, if it truly re-placed all other social security programmes,would express a new standpoint of state:here, the Universal Basic Income is a meansto maintain poverty which is indifferent tothe particular ways in which this poverty

undermines the ability of the state’s subjectsto function as its means.26

For social-democratic proponents a Uni-versal Basic Income ought to be enoughto make individual life choices about em-ployment while still being low enough tomaintain the compulsion to work in general.To them widespread life off wage labour andon a Universal Basic Income is not desirablebut it perhaps ought to be enough to allowpeople to take a while off work without fear-ing immediate destitution. Their purpose issimilar to that of the conservatives, exceptthat they consider as valid opting out ofwork in order to care for a relative or inorder to contribute to society through thevoluntary sector.27

For post-autonomist Marxist supportersa Universal Basic Income promises freedomfrom work.28 For them a Universal BasicIncome ought to be enough to not haveto worry about material needs. Not justenough money to get by, but enough moneyto deal with everything life throws at you:the washing machine breaks, moving toa different place, raising children, an acci-dent, taking care of someone, needing a newcar, Apple releasing a new Macbook witha quantum processor eventually obsoletingyour kit, etc.29 In this left-wing vision of aUniversal Basic Income it would be suffi-cient to never have to work for a capitalistemployer again. They want people to beable to opt out of work for a company.

Given these radically different purposes,there is no actual unity amongst the pro-ponents of a Universal Basic Income. Ithence makes no sense to be in favour of “theUniversal Basis Income”. What is called“Universal Basic Income” means radicallydifferent things depending on who proposesit and why.

Yet, it is important especially for left-wing supporters of a Universal Basic Incometo posit unity. If only a few post-autonomistMarxists demanded a Universal Basic In-

come the demand would be as “realistic” asa call for a revolution. If, on the other hand,they can point to bourgeois economists likeKrugman or Wolf, to a conservative US pres-ident like Nixon even, their project gets aveneer of seriousness and realism. By refer-ring to the ink being spilled on a UniversalBasic Income in the Economist and the FT

these radical critics of society can point outhow practical their suggestions are.

In the name of realism these radical sup-porters of a Universal Basic Income wantto end capitalism while presupposing itscontinued existence. If people are free fromany compulsion to work for a capitalistcompany, this would destroy the capitalistmode of production. This, after all, relies onthe workers to produce the products whichare turned into profits. It also relies on theexclusion of workers from these productsso that they can become profits. However,at the same time, the same supporters alsoask the same capitalist firms to produce theprofits to pay for freedom from them in theform of a Universal Basic Income. Theywant both: the continued existence — fornow — of the capitalist mode of produc-tion where the reproduction of each andeveryone is subjugated to profit and the endof this subjugation by providing everyonewith what they need. They want compa-nies to make profits, which relies on andproduces the poverty of workers, while atthe same time ending mass poverty. Theywant to maintain the exclusion from socialwealth through the institution of privateproperty and end this exclusion by givingeveryone enough money. Whilst realismtells these supporters to make the provisionof poor people conditional on the successof capitalist firms, it does not make themshy away from these paradoxes.

By insisting on unity with their oppo-nents these anti-capitalist supporters aim todemonstrate that they are not ivory-tower,dreamy intellectuals but serious, realistic

25 Here is an example from before the “War on Terror” proposing a transition to a“post-capitalist” future while maintaining American military supremacy: “Forinstance, one source of possible funding exists in the form of reductions in militaryspending. Some analysts estimate that close to 50% of the current military budgetof $265 billion could be reduced since much of that budget was predicated uponCold War assumptions rendered obsolete upon the demise of the Soviet Union.If so, then the military budget alone could provide a large proportion of thefunding needed to start a basic income maintenance program. But even if weassume that the 50% military budget cut is too extreme, a still significant portionseems now unnecessary and to be inflated (military expenditures were 50% ofthe fiscal 1998 discretionary budget in the United States). According to the CatoInstitute Handbook, the military budget could be sensibly reduced from $243 to$154 billion, a savings of $89 billion which might become part of the fundingneeded to start a basic income maintenance program. The Center for DefenseInformation publishes The Defense Monitor, which noted in its April/May 1996issue that ‘The United States can safely and sensibly reduce its annual budget toabout $200 billion and continue to maintain the strongest military forces in theworld.’ ” — Lynn Chancer. op. cit.

26 This standpoint is not completely alien to the British State. The benefit cap — nohousehold can receive more than £500 per week — expresses the same standpoint:this sum must suffice. It must suffice even if the state itself declares it does not:the benefit cap prevents the payment of a sum of money larger than £500 whichis calculated by applying the state’s own standard of what money is necessaryand what is not. The part of the population which is subject to the benefit cap isnot what the state is interested in maintaining at the previous standard any more.

27 The Green Party considers £72 per week (+ housing benefits) sufficient tocover basic needs and describes the goals of its Citizen’s Income proposal as:“The Citizens’ Income will eliminate the unemployment and poverty traps, as

well as acting as a safety net to enable people to choose their own types andpatterns of work (. . . ). The Citizens’ Income scheme will thus enable the welfarestate to develop towards a welfare community, engaging people in personallysatisfying and socially useful work.” — The Green Party Policy Site, Economy,http://policy.greenparty.org.uk/ec.html#EC730

28 On the one hand, Kathi Weeks wants a Universal Basic Income to allow people torefuse work. On the other hand, she presumes that most people would still wantto work, implying that she really means “basic”, i.e. poverty, when she speaksof a Universal Basic Income as “substantial rupture with the current terms ofthe work society”: “To be relevant to the politics of work refusal, as was thedemand for wages for housework, the income provided should be large enoughto ensure that waged work would be less a necessity than a choice (see McKay2001, 99). An income sufficient to meet basic needs would make it possible eitherto refuse waged work entirely, or, for the majority who would probably want thesupplementary wage, to provide a better position from which to negotiate morefavorable terms of employment. If the income were merely a small addition towages, it would risk supporting precarious employment and rationalizing thepresent wage system. At a level adequate to live on as a basic livable income itwould represent a more substantial rupture with the current terms of the worksociety.” — The Problem with Work, p. 138

29 We are spelling out this more or less silly list to highlight what it would meanto be truly free from material worries in a society where all material wealth isin private hands. It is not true, as claimed by some left-wing supporters of aUniversal Basic Income, that the median wage would achieve this goal. It is notlike people on a median wage have no serious material worries. The currentlyenforced level of median poverty is a poor standard for freedom from materialworries.

K I T T E N S 7

proponents of policy. However, now theyare confronted with a problem: what Krug-man, Wolf and Nixon want is not at allwhat they want. Mainstream supporters ofa Universal Basic Income want to maintainthe poverty that capitalism produces, theradical left wishes to end it. Hence, in asecond step, the posited unity must be de-nied.30 Radical writers distance themselvesfrom their mainstream counterparts andurge each other to caution. They insist thattheir successful opponents want what theywant so their project is not just blue skydreaming, but their successful opponentsalso do not want what they want, so theyhave to be careful. They want the sameas Richard Nixon, Martin Wolf and PaulKrugman which is why their proposals areserious and they do not want what Nixon,Wolf and Krugman want which is why theirproposals are radical.

The radical supporters of a UniversalBasic Income notice this contradiction. Forthem, it is the start of a debate on howto “strategically” deal with this situation;how to keep a radical profile while cam-paigning for this reform. However, by thetime they “problematise” that their realisticpolicy suggestion also finds support fromtheir opponents (but whose support makesit realistic in the first place) it is too late.They have already accepted that this societycan be for those subjected to it, when theyencounter that it is in fact not: when it getseasier to produce stuff, more poverty is theresult.

The problem with a demand for a Uni-versal Basic Income is not that it is not goingfar enough or that it is not radical enough.31

This criticism presupposes a unity of pur-pose and accuses this reformist demand ofbeing limited in its seriousness of pursuingit. But if people put forward demand A— a Universal Basis Income — instead of

demand B — the end of the capitalist modeof production, say — they have their rea-sons. To hit its mark a critique must takeseriously that the proponents of a UniversalBasic Income take the capitalist relation oftechnology and poverty as a self-evidentstarting point, that they claim the wage isa reward, that they consider the capitaliststate as a neutral arbitrator encounteringthe capitalist economy as an a priori fact,that they share the state’s worry about itseconomy and its budget, and that they be-lieve the welfare state to be a means toend poverty. These wide-spread but incor-rect judgements lie behind the appeal ofdemands for a Universal Basic Income andthat is why everything is wrong with freemoney.

Appendix: Giving poor people moneymeans inflation

A common criticism levelled against pro-posals for a Universal Basic Income is thatgiving poor people money to cover theirneeds would necessarily lead to inflation.Since all that money in the hands of poor peo-ple would produce an increase in effectivedemand, landlords and supermarkets couldramp up prices in response, leading to over-all inflation. Indeed, in a first step the arrivalof lots of money in the hands of poor peoplewould likely increase demand for the goodsaffordable on a Universal Basic Income. Inresponse, merchants, producers of mass con-sumption commodities and landlords couldincrease prices. As a result, their profitswould rise. This makes these branches ofindustry more appealing to other capitalists.Producing, say, milk would promise higherprofits for the same investment than, say,producing sports cars.32 Hence, other cap-italists would switch industries from, say,

luxury production, to producing commodi-ties within reach for those on a UniversalBasic Income. As a consequence, supplyof those commodities would increase, sup-pressing prices again. Whether this, in turn,would reduce supply in other branches ofindustry leading to rising prices there, de-pends on how a Universal Basic Incomewould be financed. Assume the funds forpaying for a Universal Basic Income camefrom taxation as proposed by most propo-nents: the capitalist state takes money awayfrom some citizens and gives part of it toothers. In this case, whatever additionaleffective demand will come from poor peo-ple, it was expropriated from others whowill now lack it. While effective demandfor, say, milk increases, it decreases for, say,sports cars or big machines. In this case, allthese proposals of a Universal Basic Incomeattempt to do is to redistribute wealth. Thisproduces hiccups in the reproduction of thecapitalist economy but does not necessarilylead to inflation. It is a different situation,though, if the money for a Universal Ba-sic Income were raised through sovereigndebt. If the state takes on debt for sucha capitalistically unproductive venture asproviding for its population then inflation isnot unlikely. This is, however, a question ofsovereign debt, its money-like qualities andthe unproductive nature of state spending;not a question of a Universal Basic Income.

More generally, the fallacy of the “eco-nomics 101: supply & demand” argumentis that it pretends that supply and demandwould determine prices but that priceswould not determine supply and demand.It posits supply as a fixed magnitude in asociety where production is directed by thepursuit of profit: production goes where theratio of return to advance is highest. 33

30 “The very fact that Milton Friedman and Erich Fromm shared a common belief inguaranteed income — while on most other political, social and intellectual issuesthey would certainly have been prone to disagree — should also be taken as acautionary reason for pause. For, as I also wish at last to emphasize, guaranteedincome is not a panacea for all social problems facing Americans into the 21stcentury. Should the idea be viewed narrowly and in isolation, the proposal can beperversely privatizing: it would end up according with, rather than challenge, thestrongly individualistic propensities which have tended far too characteristicallyto abandon people to their own devices.” — Lynn Chancer. op. cit.

31 Most of the time proposals for a Universal Basic Income are confronted with theopposite charge to which the authors of the BasicIncome subreddit FAQ respondcorrectly: “Isn’t this communism? Definitely not. Have another look at the list ofsupporters, for one thing — I doubt Milton Friedman and F. A. Hayek wouldsupport something that could be accurately described as communism! Let’s lookmore closely at the definition of communism from Wikipedia. This states that‘Communism’ (from Latin communis — common, universal) is a revolutionarysocialist movement to create a classless, moneyless and stateless social orderstructured upon common ownership of the means of production’. Basic incomeis not revolutionary (in that it doesn’t need a revolution to happen), does notrequire the eradication of classes, does not require the eradication of the state,

and doesn’t require common ownership of the means of production. It is in noway communist.” — BasicIncome subreddit FAQ, op. cit.

32 There are some things of which production cannot be easily increased such asreal estate in inner London. If more people have the means and the interestto rent a particular kind of property there prices for those kinds of propertieswould go up. This could simply mean a shift in what kind of housing is offeredin inner London, e.g. maybe some four room apartments would be split intoone room apartments since those would now be within reach of Universal BasicIncome recipients. That is, here too supply is not simply “fixed”. On howland prices are formed see Gentrification — the Economy of the Land and the Roleof Politics available at http://antinational.org/en/gentrification-economy-land-and-role-politics.

33 If prices determine supply and demand and supply and demand determine priceswe arrived at a circular explanation of price, i.e. not an explanation. Indeed, toexplain what determines prices a first question would be what a price actuallyexpresses. What is this quality of a commodity that is expressed in the price ofit. What does it mean to say a commodity is “worth” this or that much. Thisquestion is the starting point of Karl Marx’s Capital which we would recommendto anyone.

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ISDSCourts of arbitration within the TTIP treaty

Courts of arbitration are planned as a centre-piece of the Transatlantic Trade and Invest-ment Partnership (TTIP): after TTIP takingeffect, foreign investors could take legalaction against states when new legislationaffects — in a way that breaches the TTIP

treaty — the capital they have advanced.In principle, this is nothing new as similarcourts of arbitration are already part of var-ious international treaties. However, withTTIP these courts would for the first timeplay an important role between two power-ful, leading state actors: the US and the EU.1

Both the treaty and the courts of arbitrationit introduces signify shifting power: statesempower capital in a new way.

Non-governmental organisations andactivists criticise the disempowerment ofthe state. This analysis fails to recognise thetask at hand for capitalist states. Throughlaw and policy, states lay the foundationsfor economic growth, which is another wayof saying for the accumulation of capital.While TTIP and ISDS courts of arbitrationwould introduce new tools to pursue thisaim in transatlantic relations, the end itselfis not new. The question here is not why cap-

italist states look after capitalist growth, butrather why these states commit themselvesto something they already do.

This piece will first given an accountof what courts of arbitration are, how theywork, who can turn to them and what theycan decide. Then, it will explain the cal-culations of the US and the EU, what theyhope to gain from introducing this new le-gal instrument and what they are ready toaccept in return. In summary, our conclu-sion is that, while TTIP and ISDS deservecritique, nothing would be won if the wholetreaty or the courts of arbitration were to beprevented.

What is an “ISDS”?

The investor-state dispute settlement (ISDS)aims to provide foreign capital with moresecurity. If foreign capitals see their foreigninvestments damaged in a way covered bythe court, they can sue the foreign statein front of such a court of arbitration forcompensation of profits. The set up ofthese courts of arbitration is different from

courts under national law or internationallaw regarding what interests enjoy legalprotection, what is decided by the court andthe formalities of how decisions are made.

Firstly, ISDS is specific in who can takepart in an arbitration: a case can only befiled against states, i.e. only states can beaccused of wrongdoing under ISDS. Thismakes sense insofar as dispute settlementaims to protect investments from arbitrari-ness. Since the conditions of investmentsare decided by states (when passing leg-islation, granting subsidies or introducingnew regulations and industrial standards),they are the potential respondents. If sucha measure damages a firm in a way cov-ered by TTIP, then an ISDS court can awardcompensation.

Just as the group of potential respon-dents is limited — the states taking partin the treaty —, so is the set of potentialclaimants: only capitals can initiate a caseunder ISDS because only capitals invest inorder to make a profit, profits which ISDS

aims to protect.2 Yet, not every capital, notevery investor can file such a case. Theright to bring a legal case against a state is

1 The EU which is responsible for the external trade policy of all of its 28 memberstates is an alliance of states, not a state on its own. Yet, in this area of policymaking, the EU acts as one actor and will therefore (and for better readability) bereferred to as “one state” in this article.

2 States also act within the economy: whenever a governmental body commissionsthe construction of a street, a school or a prison. But the state does not aim tomake a profit.

K I T T E N S 9

reserved for foreign capitalist companies ofthe respective other state (see second part ofthis article for the reasons of that limitation).Compared to national law, it is nothing newfor companies — domestic or foreign — tobe able to take legal action against repre-sentatives or institutions of the state. Ininternational law, on the other hand, this isnot a given. In this area, states are the onlylegal entities that can sue.3 With ISDS, statespermit capitalist companies to take legalactions against states in front of an interna-tional court of arbitration — simply basedon a company’s calculations and regardlessof those by the involved states.

If the court decides that a company wasin fact harmed in a way that breaches theTTIP treaty, the question of compensationarises — which standard is applied to detectdamage? Damage is quantified as loss ofexpected profits; sometimes it is also mea-sured as damage to a company’s brand.To be compensated for a loss of expectedprofits reaches further than compensationfor already produced commodities that canno longer be sold, e.g. due to a newly in-troduced industrial standard with whichthey do not comply. In ISDS rulings (underseveral other existing treaties), damage isregularly accepted to have taken place ifa foreign company can show that it hasstarted investing and if it can demonstratethat expected profits cannot be realised dueto a state changing certain conditions inways prohibited by the treaty.

Compensation for loss of expected prof-its due to state actions does not exist assuch in national law, where current valueis usually taken as the basis for compensa-tion.4 Yet, there are many cases where sucha loss of future profits accompanies otherdamages that are protected by national law.If that is the case, a damaged investor canalso file a lawsuit in front of a national court.Three large electric power companies didthis in Germany after the country phasedout nuclear power: they brought legal pro-ceedings before the Federal ConstitutionalCourt of Germany.5 In addition to thatlawsuit within the German judicial system,

one of the companies, the Swedish firm Vat-tenfall, has also claimed against Germanyfor lost expected profits in front of an ISDS

court agreed upon in another treaty, the in-ternational Energy Charter.6 The outcomeis pending. The difference between thetwo proceedings: the highest German courtcan decide that a particular decision by thegovernment was unconstitutional or thatit lacked a legal basis. Furthermore, it canforce the government to revise its decision.In contrast, courts of arbitration only grantcompensation. This compensation aims toindemnify the loss of expected profits if thejudges see the latter to have been causedby governmental action prohibited by aninternational treaty. A victory in front ofsuch a court of arbitration can thereforeonly lead to a recovery of damages. This isthe third main difference between ISDS andregular, national court cases: compensationis the only possible victorious outcome forthe claimant.

The four legal grounds

Dispute settlement between a state and aforeign investor presupposes the basic con-ditions of a capitalist economy; these aretaken for granted as tasks for the state. In-deed, in the West, these are a given.7

ISDS builds on these premises. UnderTTIP, the contracting states agree not totreat foreign capitals in certain ways. TheISDS mechanism then allows these foreigntransatlantic investors to take legal actionagainst the host state. There are four pos-sible grounds on which a legal action canbe brought.8 In this text, these groundsare called the potential “legal grounds foraction”.

a. Protection of Property

The first of the four legal grounds for ac-tion protects investors against expropriation.This refers firstly to a direct expropriation,e.g. nationalisation. Thereby, similar tonational regulation, expropriation is notsimply outlawed. Rather, expropriations

are allowed if they are in the national inter-est, if there are implemented lawfully and ifcompensation is paid. Those provisions arealso known in national laws. However, in-vestment protection clauses also target thosestate actions that are defined as “indirect ex-propriations”, e.g. devaluation of a companythrough the introduction of environmentalregulations.9 With ISDS, a company thathas undertaken investments may sue if anew, unexpected regulation obstructs itsbusiness, say, by obliging it to use moreexpensive rinsers or to purify sewage to ahigher degree.

The case Moorburg I, filed under theEnergy Charter, is based on this clause.10

Vattenfall filed a lawsuit against Germanybecause the political circumstances changedwhile a coal power station was under con-struction. After a change to the regional gov-ernment, the State of Hamburg demandedthat Vattenfall fulfil higher standards thanwere previously required for the purifica-tion of the plant’s sewage. In response, thecompany claimed to have had its expectedprofits indirectly expropriated. Because ofincreased costs, Vattenfall now expected torealise lower profits than it had anticipated.Both parties settled: the city of Hamburghas revoked the stricter environmental regu-lations and has possibly paid damages (thispart is not on public record).11

Ethyl v Canada exemplifies the claim ofindirect expropriation as well: the chemicalcompany sued the Canadian State due toa newly introduced ban on MMT in petrol.MMT is an additive to fuel which enhancesthe engine’s performance. In most Westernstates, though, it is classed as a neurotoxinand therefore prohibited as a supplementto petrol. Ethyl filed for compensation ongrounds of indirect expropriation due tothe ban. The lawsuit was filed under theNAFTA framework, the North AmericanFree Trade Agreement of the US, Canadaand Mexico. After a positive preliminarydecision in favour of Ethyl, the CanadianGovernment agreed out of court to pay thecompany US $13m, to annul the ban and

3 This right to sue is increasingly being extended to international organisationssuch as the United Nations and the World Trade Organisation.

4 A well-known exception are claims of damages in US civil law which are notjust measured by the damage they caused but can entail a punitive element.

5 To be exact, the lawsuit was directed against the 13th amendment to the AtomicEnergy Act. Additionally, there are pending cases regarding the mandatedshutdown of several nuclear power plants triggered by the nuclear catastrophein Fukushima in 2011.

6 The Energy Charter was created in order to enhance investments in the energysector all over Europe after the collapse of the Soviet Union and the Eastern bloc.The aim was the “integration” of the energy sectors of the former members ofthe Eastern bloc into the European and the global market. The treaty and theprotocol was signed in 1994, the Charter became effective in 1998. There are 51members states, amongst them all EU countries, Russia, various former Sovietrepublics as well as Japan and Australia.

7 That means all of the following: private property especially of the means ofproduction is a precondition for profits to be made. Freedom granted to citizensby democratic states guarantees that everyone is left to oneself which for mostpeople means a silent compulsion to work for a living. Since capital does notalways need all the workers available, the state runs a whole department to dealwith that: social policy. With social benefits, people are enabled to survive on alow level and therefore are in principle available for work. Also, the state looks

after the infrastructure for transport and communication to happen. The stateprovides an education system, too, so that for all the different jobs in a capitalisteconomy, wage labourers with the relevant knowledge are available. Finally, thestate guarantees the whole thing with its monopoly on force which means policefor domestic affairs and the military for international confrontations.

8 What exactly will be included in the TTIP agreement, which is still beingnegotiated, is still unknown despite the recent leaks made public by Greenpeace(2.5.2016). Most other investment protection treaties include those causes ofaction in a more basic or a more elaborate form.

9 Indirect expropriation is also part of e.g. the German legal system.10 ICSID Case No. ARB/09/611 This settlement was agreed under the national legal system (in the Hamburg

Higher Administrative Court), where Vattenfall had initially filed a lawsuit. Inthe settlement, the different claims in front of the ISDS court played a decisiverole. The settlement lead to a stop of the ISDS proceedings. That was not the end,though. An NGO filed a claim against the settlement in a national court and won.However, this still was not the end of the saga, albeit it no longer being arguedin front of an ISDS court. With the settlement and the less strict regulations,Hamburg possibly contravened the EU’s Flora-Fauna-Habitat Directive. The EU

Commission now is suing Germany. This case seems to be developing into a testrun on which law trumps the others.

1 0 K I T T E N S

to run an ad campaign advocating MMT asharmless.

In both cases, planned policy changeswere revoked out of fear of having to awarddamages to investors. Yet, it would be a mis-understanding to see these lawsuits as proofof benign states being forced to their kneesby evil, greedy international corporations.Far from it. In capitalist countries, environ-mental policy is always subject to weighingup how much a state wants to burden com-panies like Vattenfall and Ethyl with costsversus how much damage it wants to tol-erate to its natural and human resources.Many environmental policies do not out-right ban a product or production methodon the grounds of its destructive effects onthe environment and people. More com-monly, capitalist states decide on a degree towhich those damages caused by the pursuitof profit are acceptable. As a consequence,limits are defined which ought to balancethe interests of both sides, i.e. do not damagethe interests of companies too much and donot ask so much of people and environmentthat their usefulness is undermined. Thestate defines when it becomes “too much”,lung cancer included. With ISDS, the US

and the EU reinforce a standpoint whichis part of the calculations of any capitaliststate.

b. Fair and equitable treatment

Secondly, TTIP demands “fair and equitabletreatment”. Said differently, predictabilityand reliability of the state as a negotiatingpartner are contracted in the treaty. Theparagraph in question demands access tothe national legal system for foreign transat-lantic capital and that investors must notbe blackmailed, treated arbitrarily nor dis-criminated against. Discrimination here ismeant in the classical sense, i.e. with regardto gender, religion or on a racist basis.12

Overall, this paragraph is no surprising in-novation — in contrast to what many criticsof TTIP claim. Democratic states considerthe predictability of their law as an essentialprinciple.

However, fair and equitable treatment isusually interpreted by courts of arbitrationas meaning that the so-called “legitimate

expectation of the investor” must not bedisappointed. The wording leaves leewayfor a variety of interpretations by the re-spective ISDS court. The case of Metacladv Mexico, also on the basis of the NAFTA

treaty, is an example of what that practicallymeans.13 The US waste disposal companyMetaclad Corporation had planned to builda landfill in the East of Mexico. The MexicanGovernment had not only given permissionbut also reassured the firm that no furtherpermissions were needed. Yet, the local gov-ernment had to sign off the building licence,which it eventually denied. Thereby, it madecommissioning the landfill impossible. Inthe case, Metaclad argued it had made thedecision to invest based on false claims bythe government. Metaclad claimed an in-fringement of fair and equitable treatmentand also claimed to have been indirectlyexpropriated. The company won on bothcounts and was compensated.14 If the statedoes not act as a reliable partner, e.g. be-cause its arms act in contradictory ways andin contradiction with agreed arrangementswith an investor, then the damaged foreigncapital of the partner state can receive com-pensation. This second legal ground is seento be the most far-reaching, offering themost leeway for the claimants.

c. Non-discrimination

Thirdly, foreign capital must not be discrim-inated against. That can mean, for example,a ban on those subsidies in which domesticcapital is favoured.15 Any benefit a domesticinvestor receives must be granted to capitalfrom the other state as well. In nationalregulation, this kind of discrimination isusually not prohibited (more on that furtherdown). Yet, the issue is covered by otherinternational treaties: in the context of theWTO, all EU states as well as the US haveagreed to treat foreign investors no worsethan their domestic companies.16

d. Protection and security

Finally, foreign capital must be granted“security and protection”. This provisionoriginated in times when such courts ofarbitration were part of treaties between

Western and Third World countries. In con-trast to the former, the latter generally didnot provide for a democratic order watchingover a relatively smoothly running capital-ist society (which relies on a monopoly onforce because it is continuous and universalcompetition). Today, this part of the treatystill protects foreign investors. After all,even in Western countries, no guaranteesexist that the generally comfortable situa-tion for investors will not change one day— temporarily or for longer.

What is new about the four legal grounds?

With these legal grounds, European capitalcould now invest in the US and sue thestate if it sees its interests damaged. This isan additional and powerful means whichdomestic capital does not have access to.Domestic capital can only take legal actionagainst their government under nationallaw.17 Furthermore, ISDS courts of arbitra-tion guard an interest which is not usuallypart of national laws: the protection fromloss of profits. The EU and the US therebyguarantee to each other’s capital good con-ditions for investment, by protecting themfrom certain changes in policy.

Because ISDS can take lost profits intoaccount, a foreign capital might gain a finan-cial advantage over a domestic companyif it is awarded a compensation for dam-ages by an ISDS court that is higher thanthe compensation awarded a national court.In contrast, the grounds for legal action infront of an ISDS court do not constitute ad-vantages for foreign capital over domesticcapital. These grounds correspond more orless to legal grounds in national laws or arecovered by WTO regulations already. Theselegal grounds are detailed above becausemany critics of TTIP paint them as new lawsfor foreign companies, which is not true.

National law in capitalist states is con-cerned with the protection and promotion ofcapitalist growth — just as much as ISDS andits foundations in the TTIP treaty will likelybe. Capitalist states guarantee the compe-tition of capitals, i.e. they administer thiscompetition and maintain their citizens assubjects of competition.18 This means thatthe economy is based on and the sustenance

12 It is the newer investment treaties like CETA or the one between the EU

and Singapore that define fair and equitable treatment more clearly thanolder ones. The EU Commission explains that it wants to prevent unwantedclaims of investors that are seen in the past to have exceeded the intent ofsome agreements. One example: a subsidy paid in an EU member statewas ruled unlawful by the EU. Therefore, the foreign company initially fore-seen to profit from that subsidy claimed and received damages. That wasseen to be like a reintroduction of the subsidy through the backdoor. http://trade.ec.europa.eu/doclib/docs/2015/may/tradoc_153408.PDF, p. 5–6.

13 ICSID case No. ARB(AF)/97/1.14 Mexico was made to pay US $16m.15 Whether public procurement will become part of the TTIP deal, is highly contested

from the US side.16 This is the so-called national treatment: it determines that contracting states of

the WTO must treat foreign capital on their territory equally to domestic firms.Additionally, the “most-favoured nation clause” requires that any advantagestate A agrees to offer to companies from state B, state A must also offer toany capitals from state C (if and when they invest in state A). Thereby, the

current rules of world trade stress more and more that foreign capital cannotbe discriminated against, i.e. domestic companies can no longer receive morefavourable treatment by its state.

17 Under CETA, the European-Canadian equivalent to TTIP, an allegedly damagedinvestor is prohibited from suing both in front of an ISDS and a national court.

18 Beyond the basic conditions, the capitalist state does a lot in order to administerthis competition: antitrust laws for instance aim to prevent the formation ofmonopolies, whereby the law aims to guarantee the competition in each sector.Other examples of the need to regulate include the prohibition of corruption andbribery, avoiding personal gains of state agents as a reason for the advancement ofsingle capitals. Then, there is public procurement law regulating how companiesreceive often ample contracts from public institutions, in order to avoid nepotism.In order for the total social capital to grow there are various protective standardsneeded. That aims to limit the permanent ruination of the population andparticularly of workers to a degree that avoids widespread deaths and aims tokeep the working class intact so that it can be used as wage labourers whenneeded.

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of everybody relies on exploitation: foodand shelter exist if and as long as money canbe made from producing and providing it.National law is just as little concerned withthe well-being of people as internationallaw is. In both forms, people only appearin their formal roles defined by the stateand its law. Everyone ought to be usefulfor the capitalist economy in their specificrole — as capitalists, as workers, as teach-ers, as pupils etc. Only in that capacity dopeople appear in the state’s calculation andin the calculation of capitalist businesses.ISDS presupposes all these conditions pro-vided by the state and then adds additionalprotection for transatlantic capitals.

Investment protection and the capitalistcommon good

In some newer treaties — like in theEuropean-Canadian CETA or the Free TradeAgreement between the EU and Singapore —a so-called “right to regulate” is codified.19

The contracting partners must have seen anecessity to clarify that states can indeed con-tinue to make laws to decide what goes on intheir territories. This is remarkable insofaras sovereign states make laws all the time.However, with the introduction of rightsfor foreign transatlantic capitals beyond thesovereign’s judicial system, potential forconflict between these rights and the state’sinterest to regulate arises. The clarificationin those newer treaties reaffirms, above all,that states are not wrong to claim responsi-bility for their land and people and to shapethe conditions for successful accumulation.

At the same time, external courts of ar-bitration are now asked to decide if a givenpolicy is fit for purpose and falls under the“right to regulate” or not. Does the stateoutlaw a certain chemical mainly becauseit considers the costs and damages to itsown population too high? Or is this merelya badly concealed, protective measure di-rected against some foreign capital? ISDS

courts would have to consider national inter-ests in two ways to decide these questions:firstly, is a given policy actually aimed atenhancing the common good? Secondly, isthe way in which the state pursues its legit-imate aim particularly harmful to foreign,transatlantic capitals, for example, when apolicy is not intentionally but effectively dis-criminating or when foreign capital suffersfrom indirect expropriation without com-pensation?20 More generally, the centraltask of such a state — to organise its societyas a well-oiled capitalist one — is affirmedwith the “right to regulate”, yet at the same

time, the interests of foreign, transatlanticcapital are affirmed in the form of legallyprotected interests.

The right to regulate is mentioned innewer treaties because many of the mea-sures taken to protect investments can con-flict with providing for a modern capitalistsociety. The introduction of a minimumwage, for example, aims to ensure that suf-ficiently many workers can be sustainedlong-term. States calculate that workersshould earn enough to sustain themselvesso that they are usable by capitalist com-panies whenever needed. But a minimumwage means more costs for those companiesthat make profits in sectors with minimumwages; their wage costs rise. The mention-ing of the right to regulate simply flags thiscontradiction; it does not achieve more thanthat. At the end, it would be up to courtsof arbitration to judge whether a particularmeasure harmful to foreign transatlanticcapital was aimed at causing harm to for-eign capital or whether this is a permissibleside effect of providing for the capitalistsociety. With ISDS, the partaking states givea licence to institutions other than its own torender verdicts over a state’s pursuit of com-monwealth. This is new. Contrary to whatcritics claim, it is not new that judges decideover a government’s policy and determinewhether it is constitutional or whether itimproperly harms the protected interests ofsubjects.

In the 1,000 and more pages of the treaty,the basis for the court’s deliberation is ratherminimal. The lack of clarity is easy to ex-plain: on the one hand, it is obvious toevery contracting party that itself and theother side will continue to make policy athome in order to shape the foundations oftheir respective capitalist economies. Onthe other hand, policy measures taken by an-other sovereign — e.g. by the US, especiallyif it is in the way of European investorsthere — can come under suspicion of beingintroduced to benefit domestic capital un-der the cloak of serving the common good.Additionally, every policy to facilitate eco-nomic growth ends up with some capitalswinning, some losing out. Finally, whethera certain policy has the desired effect ofbringing about more capitalist growth, isa matter of speculation and hence alwayssubject to scepticism.

In the second part of this article, it will beexplained why a capitalist state fostering itscommon good is something other countriesworry about: states indeed want to see theirparticular domestic capital grow. Whennecessary, states can be rather inventive in

using the tools available to them. Technicalnorms or health standards can be applied ina way that keeps unwelcome competitorsfrom abroad away and allows some domes-tic capitals that the state deems importantto flourish. Whenever other states do this, itis considered as a problem. Hence, the EU

(resp. US) monitors how the US (resp. EU)applies its right to regulate for its commongood.

ISDS v national law

The ISDS procedures show the particular con-tent at stake in these proceedings. After anaction is brought forward in accordance withthe ISDS mechanism, both sides, claimantand respondent, each name one lawyer toserve as a judge. Both of these judges thenagree on a third judge — and the ad hoccourt of arbitration is good to go.21 Thisalone is a rather peculiar procedure as thereis no fixed court but a list of lawyers whohave been named (or registered themselves)as possible judges for such internationaldispute settlement cases. Investor and stateeach choose their favourite candidates fromsuch a list. Once formed as an ad hoc court,these three judges analyse the facts of thecase which can take years. Whether the pro-cedure takes place in hiding or in public canchange. Sometimes it suffices for one partyto register their interest in keeping the casefrom the public for it to be private. Secrecy,though, is not an innovation of ISDS courts:under certain circumstances, the public canalso be excluded in national legal proceed-ings. However, that even the existence of acase can be kept secret under ISDS standsin contrast to national legislation.

The criteria for constituting an ISDS courthave more in common with a mediationprocess than a court of justice. It is called“dispute settlement” for a reason: both sidesare involved in defining who the “judges”are. In most national legal systems, by con-trast, if a judge were to declare an inclinationto deem a defendant guilty in current pro-ceedings, even during a private poker game,then she would be barred from the case ongrounds of being biased. For ISDS judges,on the contrary, it is more or less a given thatthey enter the whole process being partial.

Under ISDS, there is a possibility for theparties involved to reach a settlement beforeany verdict. If that is not the case, judgesagree by majority whether the suing com-pany was in fact damaged in a protectedright and if that damage was caused by stateaction. In case of a recognised damage, acompensation amount will be set and the

19 Critics hold that the right to regulate was nothing important to the signatoriesbecause it only appears in the preamble of the agreements. They claim itis not mentioned to enable state’s to regulate but that it is simply a sop forthe protest movement. These critics overlook the fact that in US case law,for example, the preamble plays an important role: it is used by judges toclarify the intent of the contracting parties — For TTIP, the EU Commissionhas announced its aim to include the right to regulate in an own article,

cf. http://trade.ec.europa.eu/doclib/docs/2015/may/tradoc_153408.PDF,p. 6.

20 Such an inquiry is also standard procedure in national courts when lawsuits arefiled against expropriation, e.g. in front of the Federal Constitutional Court ofGermany.

21 Some bilateral treaties allow for 5 or 7 judges.

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state as the respondent party will be askedto pay.22 This decision cannot be challengedexcept for breaches of the formal rules ofthe proceedings; there is no right of appeal.

Courts of arbitration make decisions thatare completely independent of other awardsgranted and other judges’ arguments underthe same treaty. Verdicts can relate to one an-other and the reasoning for one decision canbe argued by relying on another verdict andits supporting arguments. Or two verdictscan be in open contradiction to each other.On the one hand, this means that each deci-sion can be used as a precedent for the futurethereby continuously interpreting the textof the treaty.23 On the other hand, this is notlike US case law where courts are obliged tofollow verdicts of higher courts. Ultimately,the ISDS mechanism offers little legal cer-tainty because different ad hoc courts candecide differently each time. Therefore, afurther progression or binding interpreta-

tion of the TTIP treaty text cannot comeinto being. The treaty cannot develop anauthoritative life of its own.

The legal mechanisms of ISDS differ fromnational law insofar as the state has muchless control over who is a judge.24 In na-tional law, the state wants its judges, whorule over the recurring confrontations of itssubjects, to be partial in one sense only: tobe above all disciples of the legal regime.They must not be partial in the sense ofhaving sympathy for one side in a legaldispute. The state in the national contextinstitutionalises this demand of impartialityof its judges by a myriad of regulations andby controlling who is fit to serve in such aposition. It refrains from doing that in theISDS framework. Both sides, EU and US,would give up their usual competency inthis regard.

The EU is getting cold feet: reformproposals for ISDS

In the EU, some politicians started to havedoubts whether the current construction ofcourts of arbitration in TTIP is indeed fitfor purpose. In September 2015, the EU

Commission announced that its positionon the dispute settlement mechanism hadchanged: in the negotiations, it would nowpress for a permanent trade court with thepossibility of appeal in a separate court. Asimilar change was already agreed uponbetween the EU and Canada who had pre-viously finished their negotiations on CETA.The ad hoc courts of arbitration initiallyincluded were replaced by a permanentcommercial tribunal including a court ofappeal, consisting of 15 judges. These arenamed by Canada and the EU and three ofthem will be appointed for each particularcase. They appear as judges and as judges

22 Dispute settlements under the WTO — which only take place between statesas companies are not a legal subject here — allow for verdicts asking (i.e. notobliging) for national laws to be changed. But most of the bilateral treaties —where companies are legal persons — are limited to paying compensations asthe only possible outcome of arbitration.

23 The arguments supporting a certain court’s decision are often dozens of or evenhundreds of pages long, the legal basis to which they refer is often only a handfulof pages specifically on investment protection in the treaty.

24 Pointing out how the ISDS mechanism differs from national law should not bemistaken for a praise of the latter. Both regulate and mediate the daily with andagainst each other of capitalist societies, both approaches structure and maintainthe conditions of accumulation for capital. However, they differ in how theyaccomplish this.

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only, i.e. they cannot be lawyers in anotherproceeding. The proceedings are open tothe public. Therewith, all formal odditiesof the ISDS courts are done away with inCETA.

The EU now seeks the same result in thenegotiations with the US.25 If the US wereto agree, the formal differences comparedto national law would disappear.26 Thelegally protected interests, however, i.e. thegrounds on which companies can claimcompensation, would not change, only theprocedures. Also, the EU is still committedto all other aspects of the treaty. Equallyuntouched by the proposed changes is thefoundation for how external trade policy asa part of imperialist conflicts is dealt with:international legislation and its enforcementstay the same.

Law and trade agreements underimperialism

The purpose of any international economicpolicy remains to achieve the best condi-tions for its domestic capital. At home, thecapitalist state can decide which laws tomake and how to apply them on its ter-ritory: it is sovereign. It has full controlover its territory. But its full control is re-stricted to that territory; anywhere else inthe world, it is limited by the power of theother sovereigns. Yet, successful capitalistcompanies seek business beyond nationalborders to capture markets, to buy suppliesand produce wherever deemed advanta-geous. Therefore, any capitalist state isconfronted with a problem that only inten-sifies with growing international trade: thestate cannot provide beneficial conditionsfor its national capital in the rest of the worlddespite it being interested in its growth.27

For this reason, states make internationaltrade policy: states negotiate the conditionsfor their respective national capital’s activityon the other state’s territory.

In these negotiations, each side hopes toliberate its own capital from limits imposedby the other state and therefore to makethe other state’s territory more attractivefor its own capitals. But since these limi-tations are implemented by the other statefor its own benefit, conflicts are inevitable.This constellation explains the seed of con-flict in bilateral trade agreements as wellas during World Trade Organisation (WTO)negotiations.28

Treaties are not expressions of peacefulco-existence of states, which depend on andcompete with each other. The opposinginterests do not disappear by means of acontract, they merely are brought into a formto make productive use of them. This formhas a particularity: even with the WTO andits set of rules by which to play on the worldmarket, there is no international authoritywhich would permanently and systemati-cally mediate arising conflicts. There is nomonopoly on force over nation-states withan interest only in the rules of internationaltrade and which enforces decisions taken byWTO or ISDS courts. This “lack” of an inter-national monopoly on force is often — notonly on the Left — seen as a problem as thismonopoly, to them, means the minimisationof violence. This criticism misunderstandswhat a monopoly on force is. It is not merelythe suppression of competing authoritiesand therefore of violence, but the license ofthe state to itself to enforce its policies.

In most cases on the international stage,the role of the monopoly on force is ful-filled by the leading world power or, in lessimportant cases, by a regional power. Itdecides if need be with its superior militaryforce. Thereby, it enforces its particular inter-est, whereas nationally the entity exertingthe monopoly on force is not part of thecompetition but rather orchestrates it.

The dispute settlement mechanism is away of addressing the problem that stateshave immediate control only over their ownterritory but want to provide for their capi-tals in the rest of the world. In other words,ISDS is an attempt to find a legal formfor this problem, hence the unusual legalconstruction. TTIP changes nothing aboutthe reasons for conflicts amongst capitaliststates, i.e. imperialism. Rather, it providesa new form in which states can facilitatethe accumulation of their domestic capitalwhile also attracting foreign capital.

The courts of arbitration are an interna-tional legal mechanism and therefore partof international law. The subjects of inter-national law are states — and to a growingdegree international organisations. Onlywith the dispute settlement mechanism docompanies become legal persons of and ininternational law. Capitals thereby turn intopotential claimants who can sue indepen-dently of states and their calculations.

However, this does not entail indepen-dence of capitals from their home states.This becomes apparent with the regulations

on how to deal with states who have beenunsuccessful in defending an action broughtagainst them but are unwilling to pay therequired compensation. In that case, thehome state of the damaged capital has theright to seize property of the unsuccessfulstate. Whether the state decides to make useof that right, is down to its own calculations.As rare as this case may be, the ISDS foreseesa procedure for dealing with it. There is anecessity for such a regulation, as usual withinternational law, since there is no globalmonopolist on force to back up the rules.Any legal arrangement amongst states isbased on these states obeying it. In the caseof trade agreements, they generally have aninterest in following the rules agreed upon— otherwise they would not have signed thecontract in the first place or would rescindtheir membership.

How ISDS changes laws withoutchanging laws

While the sole direct outcome of a disputesettlement is compensation for damages,the indirect result of cases brought underthe ISDS mechanism can still be a change tothe law. Claimant and respondent can cometo an agreement before the court rules. Thishappened during the case of Moorburg I. Theinitial change in law, against which Vatten-fall brought a legal action, was withdrawnas part of a deal between the two parties.

The fear of a lawsuit alone can convincestates to not pass certain legislation, theso-called “chilling effect”. Philip Morris’slawsuit29 against the Australian Govern-ment’s decision to impose larger warningnotices on cigarette boxes and to ban almostany possibility for brand distinction hadsuch an effect. The government of NewZealand had planned to introduce a similarprovision but put that on the back burnerbecause it wanted to wait for the result ofthe case against Australia and if need beavoid a similar challenge by dropping theproposed law.30

The amount of the damages can be inthe billions. These numbers are beyondpetty cash even for successful countries.Taking the standpoint of the national bud-get, i.e. thinking about which expenses astate wants to allow itself, defending an ex-pensive legal action and risking a possibleadverse award of damages is somethingto be avoided. Therefore, there are incen-tives for states to settle with the claimant

25 http://trade.ec.europa.eu/doclib/press/index.cfm?id=1365&title=Reading-Guide-Draft-text-on-Investment-Protection-and-Investment-Court-System-in-the-Transatlantic-Trade-and-Investment-Partnership-(TTIP).

26 However, thousands of investment protection treaties worldwide still containISDS mechanisms and its ad hoc courts of arbitration to provide protection forforeign investments.

27 There is no difference here between states like EU and US who define and fostertrade and liberalisation and states which are simply confronted by the rulesdeveloped this way and have little to say on the matter. All states are confrontedwith this problem.

28 An agreement is bilateral if it is concluded between two states. It is plurilateralif more nations are involved.

29 Philip Morris Asia Limited v The Commonwealth of Australia, UNCITRAL, PCA CaseNo. 2012–12

30 In December 2015, the lawsuit was dismissed (i.e. the court considered the claimsto be invalid) by an ISDS court. According to Philip Morris, this was due toprocedural failure (the verdict is still secret, the details therefore unknown tothe public). It nevertheless had the effect of stalling legislation elsewhere, sincethe lawsuit began in 2011. http://www.iareporter.com/articles/breaking-australia-prevails-in-arbitration-with-philip-morris-over-tobacco-plain-packaging-dispute/

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before such a judgement is given, whichhappens in roughly one-third of the cases.This incentive to come to an agreement withthe claimant does not only play a role infront of ISDS courts, as the New Zealandexample indicates, but already when prepar-ing new legislation. This shows how thedispute settlement mechanism can indeedinfluence which laws are passed or with-drawn. By introducing this mechanism,states create an instrument for capitalistcompanies from the other state. This in-strument can cause follow-up costs, whichnow need to be calculated with when pass-ing legislation. This does not make ISDS

courts the big bad weapons they are oftenportrayed to be by critics of TTIP. Rather,the involved states are willing to committo a new basis for their calculations: tostrengthen foreign transatlantic investors ascontributors to their ongoing facilitation ofcapitalist growth. Therewith, they intensifythe competition amongst themselves. WithTTIP, it would be a matter of which state isseen to be more friendly to foreign investorsand which state refrains more from favour-ing domestic companies. That is, whichstate shapes its policies most compatiblywith TTIP rules or — alternatively — wheresuccessful ISDS claims prove that the stateis not as committed. If the state complies,it would not need to fear additional strainson its budget caused by claims of compen-sation.

A brief history of trade imperialism basedon ISDS

The increase in security which possible pro-ceedings under the ISDS mechanism aimto offer to foreign capital is mostly agreedupon in treaties concerning the protectionand promotion of investments. The firstof these was established between Germanyand Pakistan in 1959 but it did not includeprovisions on any dispute settlement. Adecade later, an ISDS was part of such a bi-lateral agreement for the first time (betweenItaly and Chad). The first treaties were his-torically important for European capital asthese capitalist companies wanted to investin Third World countries. Until the end ofthe Cold War, Germany, for instance, hadtrade agreements almost exclusively withAfrican states. Only since state socialismhas been almost completely a thing of thepast and since market liberalisation has be-come a global doctrine in trade policy, havetreaties been agreed upon between Westerncountries. Additionally, multilateral treaties

such as the aforementioned Energy Charterwere signed. Today, there are over 3,000such agreements worldwide; Germany ne-gotiated the most (140) and all EU countriestaken together have 1,400 treaties with avariety of third countries.31 Over time,the ISDS mechanism became part of moretreaties. With a little delay, the number oflawsuits filed under this legal mechanismalso rose: until the turn of the millennium,only a double-digit figure of proceedingswere brought; by now, there are hundredsof publicly known cases per year.32

This historic development is no accident:countries in the capitalist periphery did notprovide the security of investment and polit-ical continuity that Western capital wanted.Western capitals had a lot to worry about:a possible change in the political climate sothat governments would turn more socialistat the blink of an eye,33 potentially nation-alising the property of foreign investors;insurrections and other disruptions of thecourse of exploitation. To protect foreign ca-pital against these perils, investment treatieswere signed with countries considered atrisk. The corresponding proceedings wereaccordingly one-directional: Western capi-tal filed cases against relatively poor stateswhereas Western states were usually sparedfrom such hassles. This is not surprising, asthe treaties are mostly used by financiallystrong capitalist companies. In poorer coun-tries, capital flourishes only to a limiteddegree. Less successful states lack the con-ditions for capital to be successful enoughfor it to be invested abroad, let alone inricher regions of the world.

That Western states now negotiate suchagreements with one another shows thateven in these states investors are left withsomething to desire. That is, they worrydespite an established monopoly on force,a high degree of continuity and security,an interest of these governments in foreigninvestments, hardly any revolt worth notingor any other form of disruptive dissent bythe working class. They worry because astate with such a tight grip on its societycannot only assert the conditions for capitalaccumulation but can also make decisionswhich might ruin some business.

That now even the leading players US

and EU enter into a mutual obligation tothe ISDS rules, shows their dependency onforeign investors from the other contractingparty and their accumulation. It will beshown in the following how states want toturn exactly that growth into a means fortheir own ends.

Other treaties between Western states

Besides the American-European TTIP, West-ern states are involved in a number of otheragreements: Canada and the EU have fin-ished negotiating their trade deal (CETA); itsratification is the next step. Equally, the ne-gotiations for a pacific free trade agreement(TPP) have been finalised. Some leadingcapitalist countries are part of that project(US, Canada, Australia, Japan, Singapore —yet not China, against whose economic dom-inance in Asia this treaty is also aimed) aswell as states from the second and third tierin the ranking of capitalist states (amongstothers, Brunei, Malaysia, Vietnam). Count-ing all of these important current treaties —CETA, TPP and the envisaged agreementsbetween China and the US as well as Chinaand the EU — 80% of the world trade wouldbe covered. This changes the relevanceof the dispute settlement mechanism andwho they would affect. The introduction ofthe mechanism in treaties amongst Westernstates means that it is much more likely thatthey find themselves in front of ISDS courts.Therefore, now they factor in the risk oflegal actions against them by foreign capital.Why?

Opening up national markets — forwhat?

TTIP, CETA and TPP all reach far beyondthe previous policy of tariff reduction34 andaim to minimise trade barriers on a largescale. In the WTO, members could not agreeon a general lowering of national restric-tions to international trade during the Doharound which started in 2001 and which istechnically still running.35 This is part ofthe reason why other agreements spring up:to reach trade liberalisation on a bilaterallevel or amongst a group of states.

What does TTIP want?

In their trade and investment treaty, the US

and the EU want to make access to theirrespective markets easier for each other’scompanies. This ought to be accomplishedby reducing any so called non-tariff tradebarriers, i.e. anything besides tariffs whichmakes business crossing borders more ex-pensive or harder than domestic economicactivity. Environmental or labour standardsshall increasingly be coordinated in someway.36 For example, such a standard couldbe a set of requirements which a product

31 In the Lisbon Treaty (in effect since 2009) the EU has been assigned the competencefor external trade policy of all its member states. Hence, the EU now negotiatesagreements on foreign trade for the whole of the EU with other states. Before,the EU was already responsible for the tariff policy but not investment treaties.

32 Before 2000, just under 80 cases were publicly known; in 2010 alone there were331 known cases.

33 If governments do not say goodbye to the world market altogether but becomemore particular about which investments they want and under which conditions.

34 Tariff reduction is something that has broadly advanced since the WTO’s foundationin 1994, as a consequence they are generally quite low.

35 This round of negotiations was discontinued, suspended or declared to be deadseveral times — it is still being negotiated, though. One crucial disagreementconcerns agricultural products for which Western states want more liberalisedtrading but emerging countries and the poorest states object to it.

36 Initially, the US and the EU even planned to create common standards. That fellthough because neither state wanted to submit itself to the rigour of accord thatwould have been needed.

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must meet to be sold legally. With TTIP,these nationally set standards are plannedto be valid also on the other market. If thisis realised, TTIP would allow a companymeeting US requirements to compete onthe European market without re-certifyingits products.37 It would make it easier forcompanies to invest and to sell on the otherside of the Atlantic.

The US and the EU want to avoid somehassles of nationally divergent regulationsby cooperating on future legislation: theyplan to introduce “regulatory cooperation”.It shall ensure the suitability of legislationfor a largely barrier-free transatlantic trade.Additionally, public procurement plays aprominent role in the TTIP negotiation talks:if it was up to the EU, companies of thepartner state should be free to bid for publiccontracts and should not be discriminatedagainst. This is a pretty important mar-ket especially considering that TTIP willinclude the service sector — think every-thing from transportation to infrastructure,from hospitals and prisons to schools anduniversities.38 Furthermore, existing im-port restrictions (such as import ceilings forcertain products) are being targeted. Freemovement of capital is another issue on thetable: both sides want to ensure that anycapital invested and augmented can be dealtwith absolutely freely, that none of the stateswill limit its free flow across the borders.There is also an energy chapter aiming toliberalise that sector. All these measures aimat making it easier for companies to produceand to trade across the Atlantic. About 20%of the worldwide trade of commodities andservices would be subject to these liberalisa-tions as this share of global trade takes placebetween EU and US. It would then be easierto compete on both sides of the Atlantic,to have a sales market of 700m people andthe corresponding business, to realise theprofits they squeeze out of workers here orthere.

First estimates of the expected economicgrowth due to TTIP quickly proved to beway too optimistic. Nowadays, proponentsexpect less than 1% additional growth. Inthe public debate this is often consideredas too little to be worth it. But even growthof, say, 0.5% spread over several years isnothing to be ignored. It still is growth.39

Besides, at least the more competitive com-panies in the EU and the US would becomeeven more competitive through TTIP whichis something both states can benefit from.Such businesses are vital particularly witha view towards China which caught up and

has outstripped Germany as the world’schampion of export. During the last crisis,China’s economy not only grew faster thanother national economies but its companiesalso captured market share from Europeanand American companies. The profits thusrealised strengthen the Chinese economy,which is a threat to the world power, theUS, and to the EU.

If the US and the EU can agree on a tradeand investment treaty, it would create newcommercial terms between these two pow-erful economic zones. It can be assumedthat the agreement would be a blueprint forwhat is still to be negotiated in other partsof the world: if the TTIP conditions wereto define transatlantic trade, both playershope to set new standards for any futureinvestment agreement.40 After all, here theworld power and another important eco-nomic force, the EU, redefine trade amongstthemselves. Any other state is likely to seethat as a blue print for newly crystallisingglobal trade terms. Not least, TTIP playsa role in the negotiations EU and US eachhave with China. TTIP affects not only thestrongest capitals but also two of the leadingpowers, which will have its effects on othernegotiations to come.

The dispute settlement mechanism ISDS

as part of the TTIP agreement aims to con-tribute its share to spur the accumulationof EU and US capital by providing it withnew legal means for its business. It has notbecome clear in this article yet, though, whythis supplementary legal means is providedonly to foreign companies of the contractingpartners. To answer that question, we needto look at the interest of the modern state incapital on its territory, how and why it treatsdomestic and foreign capital differently andwhy states negotiate trade policy in the firstplace.

What is external trade policy and howdoes it work?

a. The capitalist state wants capital toflourish . . .

A capitalist state concerns itself rather ac-tively with its economy: it establishes thegeneral conditions for the economic activ-ities for profit and maintains them con-tinuously. The state thereby guarantees acapitalist order which asks everyone to par-ticipate and materially even forces people todo so. The state’s law and the state’s actionsare one big appeal: if you have sufficientmoney, then go and multiply it, invest, be

active in a capitalist sense — if you do nothave that amount, well, then you betterget yourself a job. The capitalist state is abeneficiary of this kind of economy as itsmight is based on how much accumulationhappens on its territory. In the form of taxes,it collects its share of all economic activity.The more successful capital accumulates,the better for the treasury. Yet, no exchequercan manage purely with tax revenue. Everystate goes into debt in order to finance thefar-reaching necessities of maintaining itssociety. It obtains loans on the financialmarket where it offers sovereign debt bondsto investors. A state’s power depends onthese two means — taxes and debts — whichenable it to exercise its influence over otherstates economically, politically or militarily.Therewith, its demand against business lifeon its territory is defined: capital needs toaccumulate, companies are to be successful.This is also a demand against governancewhich ought to provide the best conditionsfor this success. TTIP, in line with thispurpose, ought to develop a productivepressure. Successful capitalist companieswould have more opportunities to outper-form less successful ones and hence to growever more.

b. . . . in particular domestic capital

With its interest in capital flourishing onits territory, the states knows how to distin-guish between domestic capital and foreigncapital. The domestic or national capitalforms the backbone of a state’s durable eco-nomic activity. National capital is any capitalthat has its head office in a country and paystaxes on revenues there. If it is successful, itmight spread out — yet it would have to gobankrupt for it to disappear from the homemarket completely. Domestic capital usu-ally has its origin in doing business on thedomestic market and — as a net contributor— is listened to by politicians (when it fits inwith stately calculations). Whether a state’sdomestic economy is deemed suitable forlong-lasting capital accumulation, is firstdecided by the success of national capital.

The special significance of national capi-tal to each state is visible in bilateral nega-tions. When a head of state travels to, say,China, the delegation often includes repre-sentatives of important companies. Theystand for (particularly strong) domestic com-panies whose success the government wantsto foster on a political level. The govern-ment wants to improve their conditions forinvestments abroad and therefore negoti-

37 Though some commodities and sectors are either exempted from the treaty orspecial provisions might apply to them.

38 In the negotiations, the EU is arguing for the US to open public procurement notonly on the federal level but also on the state level, which awards many publiccontracts. In some states, the Buy America Act explicitly encourages favouringregional or US companies.

39 Sometimes, the total amount of expected monetary gain in the EU is divided bythe number of its citizens. That supposedly expresses how much more everyonewould have at the end of the month: a three or four digit figure. It is not clear

who came up with such a stupid idea first — as if capitalist growth were eversplit up and everyone got an equal share of it.

40 To state the aims related to TTIP in the language of the EU Commis-sion: “to influence world trade rules [and to] project our values globally.”http://ec.europa.eu/trade/policy/in-focus/ttip/about-ttip/

41 Not every single company is supported by its home state. Yet, whereas a statemight take its chances to see some domestic capital go bust, it does not care asmuch for foreign firms to begin with.

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ates with other states all over the world. Itdoes so in order to maintain and strengthenits own basis of power.41

Foreign capital is more fleeting as ithas chosen this location based on the bestopportunity for valorisation. Domestic com-panies by contrast are bound to the territorybecause they just happen to have startedtheir business there. They use it as theirheadquarters from which they expand else-where. Capitalists invest in successful West-ern economies when that other territory iseconomically well developed. That is thecase when the country can on its own gener-ate so much growth and set such favourableconditions that it attracts more capital toinvest. If however it does not look so rosy,foreign investors might still be interested— due to low wages, for example. Yet, thatalso means that money earned will usuallyflow off quickly.

Interlude: the role of the currency

For the strength of its economy, the state isnot only interested in powerful capitals onits territory. To secure and widen the basis ofits power, the state also watches its currencycarefully. In the first step, it is a question ofhow strong that currency is. This strengthflows from the purchases and sales that areaccounted for in a particular currency. Onits territory, trades are typically done in thedomestic currency, at least in the West.42

In the Eurozone, trades are processed inEuro. Therefore, any inner-Eurozone busi-ness strengthens the Euro. Next, there isbusiness to and from the Eurozone that isdenominated in the same currency. For anycross-border deal, the two sides of the busi-ness are free to agree upon the currency. Itis the same for financial products, securitiesor derivatives trading43 — these are denom-inated in a particular currency chosen bythe contracting parties.

A currency is properly established whenbusiness happens in it where neither of thetwo parties are based in the economic areaof that currency — say an Indian and aTunisian company agree to trade in PoundSterling. If a currency attracts this kind ofbusiness, it is established at least region-ally if not globally. By choosing a specificcurrency, any international deal contributesto passing an economic vote of confidencein, for instance, the Euro. A deal donein Euros certifies that there is successfulaccumulation to be had in this currency.

Companies additionally seek a moneywhich is easily tradable, which enables themto get rid of the currency at any time. If acurrency always finds buyers, because it isaccepted and traded worldwide, then it is anattractive currency to do business in. Thisis true for capitalists from the productivesphere as well as from the financial spherebecause the currency itself and financialproducts denoted in it will likely find a newbuyer. Hence, a strong currency supportsthe demand for accumulation that any sumof money carries. For money to be retained,it needs to be increased — and that is bestdone in a strong currency. The success of acurrency shows that it is a great means todo business in.

A strong currency is of interest to West-ern states because it expresses a strong do-mestic economy as well as success beyondthe national market. But the interest of statesin their currencies goes further because thestrength of a currency determines a state’sability to take on debt. The trust put in theUS dollar and the political power backing itmade it possible for the US to sell sovereigndebts unabatedly. Recently, this enabled theUS to finance two wars — Afghanistan andIraq.44

With TTIP, the US and the EU want toboost trade or at least keep transatlantictrade stable compared to the rest of theworld. ISDS as part of TTIP shall addition-ally protect investments in one of the twocurrencies insofar as trade is done on eitherof the territories. Moreover, both states hopeto have more trade accounted for in theirrespective currency by attracting more busi-ness to do their deals in the “right” money.Despite all that, currency itself hardly playsa role in the treaty itself. There is a good rea-son for this: both sides hope their currencyto gain from the economic outcome of thetreaty, which solely rests on their respectivetrust in the strength of their respective cur-rencies; which money is the strongest is upto the economy to decide. This is premisedon the free convertibility of the currency: thefluctuations in the relations of currencies arean expression of the compared economicstrength of each money only under thatpremise and only if the state does not fix anexchange rate.45

TTIP refers to the topic explicitly onlyby guaranteeing that companies are freeto dispose over their capital: restrictionsby either state on capital export is banned.This is the mutual obligation to leave it

completely up to the economy and its actorsin which currency they want to hold theirmonetary assets and if they, for instance,want to exchange any profits made in Euroright into US dollar.

The economic success of a state is ulti-mately expressed in its currency and canimmediately be compared to all other states.It expresses how well capitalist wealth canbe accumulated in a currency. A strong, in-demand currency, therefore, has become thecentral aim of economic and foreign tradepolicy. Hence, successful Western states con-tinue to have a particular interest in theirown domestic capital: The companies’ busi-ness at home happens in the currency of itsstate. The same is true for the trade they dowith foreign capitalists (in particular withthose of countries with weak currencies).The more fit one’s own capitalist companies,the more likely it is that their operationswill foster the strength of the currency bysimply doing their business. The strongerthe currency, the better for the state.

c. Competitive economies: free flow of capital

However, states do not only aim to supportdomestic capital abroad. Foreign companiescan also bring advantages for a state: thesecompanies, too, pay taxes, employ people,and they usually process some intermediate,local product, i.e. create business for sup-pliers. They also denominate some deals inthe national currency and generally standfor successful accumulation in this area asthey deem it worthwhile to invest there. Na-tional policy making, therefore, looks afterforeign investors, too. Western states aimto create conditions that will attract thesecapitalists, e.g. by providing infrastructure.They maintain and develop their territoriesas an attractive place to invest.

Improving the attractiveness to foreigninvestors and advancing domestic capital,these two interests of the state can collide.Some national companies or whole sectorscould go bust if they are not competitiveon the world market. For that reason andduring some periods of world trade, evolv-ing capitalist states used to protect theirdomestic capital from foreign competitorsthrough tariffs, import restrictions for for-eign commodities and technical standardsmore favourable to national capital etc. Sincethe second half of the 20th century, in par-ticular, this conflict gets addressed with arather different approach. Especially since

42 Economic activity in less successful states does not necessarily take place in thenational currency.

43 These are financial products traded at a stock exchange which might speculateon the value of other financial products or which are compiled from part of otherpapers.

44 There is no question about what the leading currency is these days: the US dollarkeeps dominating world trade, it is the world money. This is exemplified bythe oil trade, which is dealt with to a large degree in this currency. Many otherinternational business deals are also being processed in US dollar. With the Euro,the EU attempted to set something of their own against this dollar dominance.The initially successful project is not in the best of shapes since the financial crisis

of 2008 and following and even more so since the sovereign debt crisis since 2010.Nevertheless, the Euro is still one of the leading currencies and the EU continuesto plan for the expansion of the Euro’s worldwide importance. Another currencyto be counted with is the Chinese Yuan which is gaining attraction.

45 In the background of this free availability of the strong currencies are the foreigncurrency reserves of the central (or reserve) banks. The European Central Bankholds a large supply of US dollar by which it expresses: everyone can deal andtrust in the Euro. Any time you want to get rid of the Euro and exchange itinto some other leading currency, I, the central bank with my foreign currencyreserves, am happy to provide you with that if there is no other buyer on themarket for Euro.

K I T T E N S 1 7

the collapse of state socialism and the endof the East-West conflict — during whichinternational trade was strongly determinedby political prices within the blocs46 — an-other trend is prevalent: national companiesare generally expected to be competitive onthe world market. Within the WTO, thistype of trade policy is dominant. Even ifnot all members (immediately) agree to thisline, the main thrust now is: far-reachingreduction of tariffs, elimination of othertrade barriers, cutback of advantages fornational capital (e.g. the ban on discrimina-tion, principle of national treatment and themost-favoured-nation clause).

The disagreements in trade negotiationsstem from the fact that it would be best foreach state if all the others were to lift theirtrade barriers, but this state were still ableto have any protective measures it deems fit.Yet, the interest of other states to have easyaccess for their respective companies is thebargaining chip each state holds: how muchof this or that do I have to allow for gettingwhat I want for my capital in the other state?The key question for TTIP accordingly ishow much of its protective measures theEU must drop — deliberate deterrents liketariffs or product standards that have thesame effect — for the US to agree to do thesame with regulation standing in the wayof EU capital.

Thereby, those states advocating andagreeing to a general liberalisation of na-tional markets make a slightly differentcalculation: instead of protecting their owncapital by practically isolating it, these lead-ing states confidently count on the power oftheir capitals. They renounce their formerprotectionism up to a point and therebymight allow some of their domestic com-panies — or even a whole branch — to gobust.47 The capitalist state does this in orderto reduce the costs for its more competitiveindustries and companies to spread out intothe world and do their exploitation busi-ness abroad as well. The EU has masteredthis strategy: in order to create the Euro-pean Single Market, the participating stateshave giving up their protectionism and haveopened up their economies fully to the com-petition from within Europe. The idea isto establish this bigger market as a playerin the world and to create sufficiently bigcapitals which are among the fittest on theworld market. By contrast, poorer countriesand their hardly existing domestic capitalsonly have the choice to comply with thedemands of the West — and in return maybeget better market access for their exports

(typically food and raw materials) — or elseto completely drop out of the cross-borderhierarchy of competition.48 That would en-tail even more brutal consequences than theones yielded by the world order already.

How does ISDS contribute tocompetitiveness?

a. ISDS is a means for domestic capitalinvesting abroad

The EU and the US want to set new con-ditions for global trade. They do this withconfidence, they are not merely pressuredor forced by capital to do so. They bothexpect to gain from this endeavour, includ-ing from the courts of arbitration. Fromthe viewpoint of the EU: the Union firstlythinks about its own companies and how itcan support them abroad. If in the futurea European capitalist invests in the US andthen cannot make its expected profits dueto a change in policy that is incompatiblewith the ISDS regulations, it can sue the US

for damages.This way, foreign capital is to be pro-

tected from damages stemming from theother state supporting its own domesticcompanies. The fear of not being explicitlytaken into account by US politics or by theAmerican legal system is not completelyirrational. The same is true the other wayaround, i.e. for US companies investing inthe EU. As shown above, in national calcu-lations foreign capital is less of a priority.Capitalist states undertake diverse manoeu-vres in order to keep foreign competitionat bay whenever deemed necessary. Thecontracting partners of TTIP would bindthemselves and each other to follow theISDS rules and therefore to look after for-eign companies from the other side of theAtlantic just as much as after domestic ca-pital. The idea is to even the playing fieldfor companies from the respective other ter-ritory through this new legal process. ISDS

is a means against the valid suspicion thatforeign capital plays a lesser role when theother state balances competing interests.

This supplementary tool offers some-thing new and different in one regard, asdeveloped above: damages can be grantedfor loss of expected profits caused by par-ticular actions by the host state. Foreigncompanies therefore do not only have theirown legal forum in the form of ISDS but alsoa legal basis of their own. This special juridi-cal construction comes about because thecontracting states thereby agree that their

own capital investing in the territory of theother state can itself take that host state upon its promise to treat it completely equallyto its own domestic companies. Neitherside trusts the other national legal process,which is why they establish ISDS courts. Itis the mutual obligation to the programmethat lies at the heart of ISDS: the contract-ing states make European companies whichare active in the US legal persons underinternational law — just as much as Amer-ican companies investing in Europe. It isa licence given to those capitals to recoverfinancial compensation for damages in frontof external courts.

This is a licence to act juridically, in-dependently of their home state, in theinternational arena — which is the key dif-ference compared to the settlement disputeembedded in the WTO, where only statescan sue other states. There, states thinkabout whether they want to engage in adispute with another country over someissue. The state might shy away from such aconfrontation and accept the damage to itsdomestic capital because other imperialistcalculations are deemed more importantthan compensation for lost profits for aparticular firm. With ISDS, the contractingstates grant each other’s capitals permis-sion to sue them and their own capitals toindependently sue the other state. Compa-nies are thereby empowered by and in theframework of TTIP to sue independently ofany calculation of their home state.

b. ISDS is an invitation to foreign capital

The second positive reason why the US andthe EU want courts of arbitration is con-cerned with foreign capital from the otherstate investing on their territory. As shownabove, states rule over their territory in partto be attractive to foreign investments. Thedispute settlement mechanism within TTIP

would be part of this strategy for both con-tracting states. It would not only strengthencapital abroad but would also be an offerto foreign capital that its interests are takenmore into account. It is a clear signal totransatlantic foreign capital to come andinvest on the other state’s territory. Thestate plans on not getting in the way of thatcapital more than strictly necessary. This iswhat the state commits itself to with ISDS.

Thereby, the chances for transatlantic in-vestments being worthwhile are increased,despite that foreign companies cannot counton getting the same attention from the for-eign state as its domestic capital. ISDS would

46 Both sides, the US and the Soviet Union, made trade deals with other states inorder to tie them to their respective bloc. Prices were “political prices”, as thepriority for both the US and the Soviet Union was to form alliances: the bigpowers wanted less successful states to align themselves with their respective bloc.The aim of this kind of trade was to score politically rather than economically.

47 For instance, the European clothing industry after the WTO agreement (moreprecisely: after the transitory Multifibre Agreement ran out in 2005).

48 Some Latin American states and South Africa have developed a more scep-tical evaluation of the ISDS mechanism. Some investment protection treaties

have already been cancelled, some others are being reconsidered. Australiahas announced that it does not want ISDS to be part of any future treaties(cf. CEO pamphlet “Profiting from injustice” http://corporateeurope.org/sites/default/files/publications/profiting-from-injustice.pdf, pp. 9,16–17 and the World Investment Report “Towards a new generation of investmentpolicies” by UNCTAD, 2012, http://unctad.org/en/PublicationsLibrary/wir2012_embargoed_en.pdf, pp. 86ff.).

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be one more positive factor in a long list of as-pects that each capitalist investor takes intoaccount when deciding where to invest.49

For the state, ISDS is a chance to attractforeign capital — but it is also a threat be-cause these investors can cause domesticcompanies go bust if the latter are not com-petitive enough. While a state expects togain from foreign investments on its terri-tory, it knows the price it might have topay — foregoing protective measures — alltoo well. Yet, a successful capitalist countrycan take losing a domestic capital here andthere. The state expects to be able to bearthat, because while the provisions to reducetrade barriers take their toll, at the sametime they also result in domestic capitalbeing able to expand elsewhere with lesserrestrictions.

c. The costs of ISDS to the state

Both advantages that the EU and the US

hope to gain from the ISDS provisions — theempowerment of their domestic capital onthe territory of the partner state, as well asincreased attractiveness to foreign capital— come at a price. This is what critics takeissue with: why on earth would states will-ingly burden themselves with a deal thatcan make them respondents in big lawsuits?As much as the same critics ignore the firsttwo arguments laid out here, their questionis still standing. The price is obvious in-deed: ISDS means the self-commitment torising costs of some changes in policy. Inthe future, the state will have to pay forfavouring some domestic capital. In theseand similar cases damages would have tobe paid. All of that is part of the calculation;both parties have the assessment that thetrade policy instrument ISDS is worth somuch in potential gains that they are readyto pay the price.

Foreign v domestic capital

With the two positive reasons for courts ofarbitration, it can be explained why the ISDS

mechanism is introduced only for foreigncapitals. The contracting states do not trustone another to treat and support foreign,transatlantic capital fully equally to domes-tic capital. They aim to agree to a superiorauthority, which is not duty bound to eithernational politics and therefore should beable to judge neutrally on whether a for-eign, transatlantic capital was put in a worseposition.

For domestic capital, this mistrust whichis the starting point for ISDS does not exist.The superior authority of dispute settlementwithin a country is the domestic state. Itis interested in capitalist companies in asmuch as they contribute to the economicmight of that state. There simply is no-oneelse who would and could insist that do-mestic capital can sue its state in front of athird, non-state court. Even the ISDS courtsindicate the dependency of capitals on theirhome state: it is that state which negotiatescompanies’ freedoms towards other states.

Summary

By introducing the dispute settlement mech-anism ISDS, foreign investors from the otherside of the Atlantic would be provided witha new means against the state in which theyinvested. The novelty of these courts ofarbitration is the offer of better security forforeign investment. Contrary to what manycritics claim, the legal grounds for actionof the ISDS mechanism, as shown, do notfavour foreign capital over domestic capital.

The bigger a foreign investment, themore of an incentive for the state to con-sider its investor’s claims. The larger theinvestment, the higher the possible compen-

sation claim and the bigger the potentialdamage to the national budget. This wouldraise the importance of these aspects com-pared to other national interests. In order toimplement its interests, a foreign capitalistcompany would not have to rely on thecalculation of its home state and what partthis particular company and their problemsplay in it. With ISDS, it would have itsown judicial means and be a legal subject ininternational law. The power of the foreigncapital would still be based on the EU andUS having an ongoing interest to complywith the TTIP agreement — the same basisas for any treaty between states. If theystick with it, they are likely to accept thedecisions taken by the external courts ofarbitration and to pay damages wheneverthey lose a case. If they do not, they will not— there is no power above states that couldforce them to honour the agreement. Thesubjects of the TTIP negotiations are states,which grant each other and each other’scapitals certain freedoms.

ISDS means a strengthening of the West-ern capitalist companies that are active onboth sides of the Atlantic. Any improvementin the conditions for capital accumulationsignifies a cementation of the subordinationof the world under the adage of profit max-imisation as the highest command of anyeconomic activity.50

That is the kernel of a reasonable cri-tique of TTIP and ISDS. The inversion ofthis argument could not be more wrong.A prevented TTIP or a TTIP without thesettlement dispute would not mean a betterworld, and not even the preservation of astatus quo as a lesser of two evils. Withor without TTIP, everyone is the materialof the accumulation of capital and for themight of the democratic state.

49 In as much as this might mean more jobs in times of boom, it is the same boomthat flushes money into the accounts of capitals, which is money to buy new,more productive machinery, making workers redundant. Not even in economicprosperity can workers bank on a positive outcome.

50 See Karl Marx. Capital. A Critique of Political Economy, Volumes 1–3, PenguinClassics 1990–1992.

K I T T E N S 1 9

SINCE YOU MENTIONED “US”Nationalism by example of Scottish independence

We oppose nationalism.1 With this oppo-sition, we are not alone. For many people,nationalism has a bad reputation. For exam-ple, in the debate around the referendum forScottish independence, the “Yes” campaignwas repeatedly accused of being nationalist.On the other hand, few take issue with identi-fying with their home country — they mightcall this standpoint patriotism.2 Many takebeing English, British or Scottish as a self-evident part of their own identity. But theymight get a bit annoyed about others wav-

ing flags, because they do not want to makea big fuss about nationalism. Some peoplemight even reject mainstream or right-wingnationalism as oppressive but posit the “realnation”3 or (local) “community”4 againstit. Finally, from left to right, big fuss or not,many protests invoke the greater, nationalgood to make their point: unions calculatehow higher wages would benefit the wholeeconomy5, students point out that they area key resource of the nation6, bankers andbenefit recipients are criticised for putting

their interests before the nation (from theleft and right respectively)7. The word na-tionalism might have a bad reputation insome places, the appreciation of the nation,however, is undaunted.

Many people who distance themselvesfrom some forms of nationalism opposethe overt racism that often accompanies it.When the Left opposes nationalism, theyusually take issue with the nationalist seg-mentation of humankind into peoples. Incontrast, we criticise nationalism not just

1 This text is not quite finished. For example, is the relationship between nationalism,law and the standpoint of rights correctly characterised or should more be said?However, because we had to send Kittens #5 off to the printers, we did notfind enough time to finalise our discussions. We might provide a revised andupdated version of this text later at https://antinational.org/en.

2 “I know my fellow Scots are, like me, patriotic and proud of our country. [. . . ]But I say this to the SNP. Don’t equate our patriotism with your nationalism.” —Gordon Brown. We Will Not Stop Fighting for Scotland and Social Justice, speech 5May 2015, full text available athttp://www.scottishlabour.org.uk/blog/entry/we-will-not-stop-fighting-for-scotland-and-social-justice-gordon-brown, 2015

3 “Ralph Miliband was not a patriot because he served in the navy. He was a loverof this country and its people precisely because he understood that institutionslike the monarchy and the House of Lords symbolise and perpetuate inequality,and that militarism usually encourages the poor to die defending the interestsof the privileged. His patriotism has more in common with long progressivepatriotic traditions in Britain, from the Diggers and Levellers to the Chartists andanti-privatisation campaigners. It was about claiming land and country for the

majority of its labouring denizens rather than the plutocrats and the powerfulwho live off the fat of the land while spouting an insincere ‘nationalism’ whichserves less to create collective wellbeing than to prevent their privileges beingquestioned.” — Priyamvada Gopal. The Daily Mail may not realise, but Marxistsare patriots, http://gu.com/p/3j8yx/stw

4 It is not uncommon for antifascists in the UK to call on the local “community” tooppose fascists who are portrayed as external invaders. For example, Anti-FascistNetwork had a call-out for “Community Self-Defence” against an EDL splintergroup, cf. https://www.facebook.com/events/669927613109443.

5 We criticised this idea in Jobs, Growth, Justice — an alternative that isn’t avail-able at http://antinational.org/en/jobs-growth-justice-an-alternative-that-isnt and in A poor future available at http://antinational.org/en/poor-future.

6 See our critique Education is a duty available at http://antinational.org/en/education-is-a-duty.

7 We criticised this idea in Benefit envy without benefit available at http://antinational.org/en/benefit-envy-without-benefit.

2 0 K I T T E N S

because of a wrong segmentation but alsobecause it posits unification of actual peopleinto the people. This particular critique isnot one which is widely shared.8 Hence, inthis piece, we want to explain what nation-alists think, what nationalism claims andwants and why we oppose it in any form.9

As a running example, we are going touse the referendum for Scottish indepen-dence held in late 2014. While we realisethat we are rather late to the party in writingabout Scottish independence, we chose thisexample for three reasons. Firstly, Scottishnationalism did not go away with the ref-erendum. Repeated calls are made for asecond referendum. Secondly, the question“Should Scotland be an independent coun-try”10 asks exactly what any nationalismasserts and hence takes us to the core ofthe matter. Thirdly, Scottish nationalism —being often more left-wing — prides itselfwith avoiding some features of nationalismoutlined above which many people objectto. Scottish nationalism only serves as ourexample, though, the arguments presentedin this article also apply to English, Britishor German nationalism.11

“We”

Nationalism posits the people. This is anassertion of a distinction between a nation’speople and the rest of humanity (“The Scotsare Scots and not English, not German, notFrench”). The starting point of any nation-alism is the assertion and appreciation of aparticular group: “we”.

“We” is also the assertion of an accor-dance between the people of the nation(“Scots belong and fit together”). When na-tionalists speak of “us”, they do not simplymean to describe a group that is somehowdistinguished from the rest of humanity like“all people with brown hair” or “all peoplewho like tea”, instead “us” characterises acommunity. Nationalists think that theirpersonal interests and the interests of othermembers of the community — and henceof the community in total — are somehowaligned. Not necessarily perfectly so but atsome level. Nationalists think that some-how the national community is the placewhere they fit in, where their purposeshave a place, where people accomplish theirrespective goals somehow with each other.They believe that there is a connection, someaccordance, some cohesion even, that “we”are “better together”.12

Justification

Nationalists differ in where they see thebasis of this accordance. Some see the ba-sis for why “we” fit and belong togetherin a presumed common biology (“Celticblood”, “Aryan race”), some in a commonculture (language, customs, cultural values)and some even in a common conviction(constitutional patriotism).13 None of thesereasons holds water. There is no “Celticblood”, language does not preform thoughtbut ideas can be expressed in any language,a habit of drinking tea makes for a teadrinking society, not an all-encompassingcommunity.

It is of no use, though, for the critiqueof nationalism to pick apart these reasons,because nationalists do not ask if their peo-ple exists. The point of these reasons is notto actually establish that a particular peopleexist. Rather, the existence of their peopleis the nationalist starting point and convic-tion. We can see this by looking at hownationalists relate to these reasons. Askingmost English nationalists what exactly char-acterises the English as a nation, typicallyearns you a blank stare and maybe some halfworked out argument. Moreover, withoutsuch prompting nationalists hardly ever askthis question. Most nationalists tend not toinquire about each other’s reasons and twotypical nationalists would not find anythingtoo worrying about finding out that theydo not agree on, say, whether drinking teais a defining British pastime or not. Simi-larly, most racist nationalists tend not to betoo invested in the particularities of theirracist theories. The relationship of mostnationalists towards specific foundationalarguments for their nation is characterisedby a lack of interest: the reasons that na-tionalists give are not reasons they have.14

Instead, these reasons are justifications forsome “us” which is presupposed.

Scotland as a nation was taken forgranted by all sides arguing over Scottishindependence.15 The British State considersScotland a nation and itself a country of fournations. Consequently, Scottish nationalistsdid not have to agitate for its recognition asa nation.16 The taken-for-granted startingpoint for all separatist and unionist agitationwas Scotland and the referendum simplypresupposed Scotland and the Scots as a

8 A notable exception is the Anarchist Federation which recognises that nationalcommunity is not something to be cherished in any form: “Anarchist communistsdo not simply oppose nationalism because it is bound up in racism and parochialbigotry. It undoubtedly fosters these things, and mobilised them through history.Organising against them is a key part of anarchist politics. But nationalism doesnot require them to function. Nationalism can be liberal, cosmopolitan and tolerant,defining the ‘common interest’ of ‘the people’ in ways which do not require asingle ‘race’. [. . . ] In many western countries, official multiculturalism is a keypart of civic policy and a corresponding multicultural nationalism has developedalongside it. The shared ‘national culture’ comes to be official multiculturalismitself, allowing for the integration of ‘citizens’ into the state without recourse tocrude monoculturalism. If the nationalist rhetoric of the capitalist state was of themost open, tolerant and anti-racist kind, anarchists would still oppose it. This isbecause, at heart, nationalism is an ideology of class collaboration.” — AnarchistFederation. Against Nationalism, https://afed.org.uk/against-nationalism/

9 In Why anti-national? available at http://antinational.org/en/why-anti-national we already set out to answer what nationalism is. Many of thearguments in this article can also be found in that previous article, but this pieceproceeds differently.In Why anti-national?, we first debunked false explanations of the nationalcommunity (nature, language, culture, civic nationalism) and then tried to answerthe question why nationalism is so successful (regardless) by giving an account ofhow bourgeois subjects require the state above them in order to pursue their ownprivate interests. The private antagonistic interests of competitors necessitates aninterest in the institution which limits their own “pursuit of happiness”.Hence, Why anti-national? actually explains the appreciation of the state by itscitizens. In this perspective, fellow citizens appear as competitors whom the stateought to tame. In contrast, here we emphasise that nationalism is an ideologywhich posits nations as communities. For a nationalist, other citizens also appearas fellow members of the decent community. They make a positive reference tothem, think of them as the community which finds actualisation in the state,and do not merely see them negatively as competitors against whom the stateprovides protection.

10 We know that this question is not the question the Scottish National Party wantedat that time. We also know that restricting the choice to “Yes” or “No” — withno option for maximal devolution — is also not what the SNP wanted at thattime. Regardless of the reasons how this particular referendum came about, it

is the question “Should Scotland be an independent country” which the “Yes”campaign and the Radical Independence Campaign mobilised around.

11 Our object is nationalism in capitalist, democratic countries. We do not discussnationalism in state-socialist or Fascist countries (but we briefly touch on Fascistnationalism towards the end of this piece). Across capitalist, democratic countriesthere are also differences in how nationalism presents itself. For example, inthe US there is a much stronger emphasis on the competing individual and itscalculations than in European countries. Despite these differences, we set out toexplain and criticise the common core of democratic nationalism.

12 “Better Together” was the name of the main Unionist campaign against ScottishIndependence, trying to convince the Scottish electorate that the “we” is British.

13 Constitutional patriotism plays almost no role in political life even in Germanywhere it originated. It is, however, sometimes referenced in the context of the EU

whenever its institutions are mainly justified with respect to a certain set of values— freedom, justice, etc. — and not necessarily with respect to some Europeanheritage. In this text, we will only deal with it in footnotes. For those, however,who want to understand how liberal democrats formulate their demands againstthe subjects of liberal-democratic states, the constitutional patriotic literatureprovides some interesting reading material.

14 To avoid a potential misunderstanding, the argument here is that nationalistjustifications of the nation are not reasons because nationalists seem ratherdisinterested in the particularities of these justifications. We are not saying thatthese justifications cannot be reasons because they are wrong like “this is obviousnonsense, let’s move on”. Just because we recognise them as wrong does notmean that nationalists must do so, too.

15 This is not something that just happens. Rather, this is a result of polit-ical agitation and policies by the British State. The Anarchist Federationhave written a good account of the history of Scottish nationalism in TheSNP, Scottish Nationalism, and the Class Struggle: Yesterday, Today, and Tomorrowavailable at https://afed.org.uk/the-snp-scottish-nationalism-and-the-class-struggle-yesterday-today-and-tomorrow/

16 Yet, what British patriots mean when they refer to it as a union of four nations issomething rather different from what Scottish nationalists want. To the former“four nations” has no more significance than perhaps the federal structure ofGermany or the USA. The political self-actualisation of these “four nations” tothem is the UK and this was the kernel of the disagreement.

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collective who now decide on an importantaspect of their lives.

In contrast, when nationalists struggleto have their nation recognised, these justi-fications play a greater role. For example,Cornish nationalists invoke a wide range ofhistorical, political, linguistic and culturalreasons to illustrate that Cornwall does con-stitute its own nation. But these reasonsought to justify the “us”, not establish it.They do not ask if Cornwall is its own nation,but ask how to demonstrate it.

General differences between justifica-tions, cultural or biological, play a role inpolitical life. For example, people may bemore or less relaxed about immigrationbased on whether they believe in blood andsoil or in culture. Yet, here too, the questionis not if the citizens of the host nation indeedconstitute a nation, but they argue abouthow their national bond is characterised.

The indifference of nationalists towardsthe particular foundational arguments oftheir nation does not mean that they do notcare about justifications. The point of thesejustifications is to assert cohesion. Askingmost nationalists about the particularitiesof their justifications is met with disinter-est. But when they smell that the inquiryseeks to undermine the certainty of theircommunity, they get upset. How the com-munity is justified is not that important, thatit is justified is without an alternative to anationalist.

Identity

Nationalists identify with their nation.17 Na-tionalism not only asserts the existence ofa group but being part of that group is anidentity of its members.

If people have a shared interest in drink-ing fine wine they may decide to find otherswho share this particular interest and de-cide to form a wine tasting club. The peoplein this wine tasting club might also havedifferent interests outside of wine tasting,but they are an affinity group based ontheir mutual interest in wine tasting. Themembership in a wine tasting club is bothconscious — they decide to join and leave— as well as based on a shared activity orinterest.

The nation is no such collection of peo-ple based on some particular shared interest.To nationalists, being Scottish or Englishis not something you decide to do, but it

is something which claims to define yourbeing. For an English nationalist when 11English players win a world cup, we wonthe world cup, not just someone from ourgroup. Also, this is something for the wholenation, not only for football fans. Our greenvalleys are a feast to look at. If the Britisheconomy does well, we grew our GDP. Ifthe British State goes to war, we go to warand its soldiers are fighting for us.18 Somepeople even say that we won World War I,despite all the people who fought in thatwar having died now. When nationalistsappreciate something about their country, itis somehow also partially themselves whodid it and it fills them with pride. Whenthey accept that atrocities were committedby their people (usually in the name of thenation), it fills them with shame. Both ofthese reactions presuppose identification.

The criteria employed to decide whogets to be Scottish, English, US Americanor German differ, in some cases the criteriamight be lower than in others, sometimesit might be possible to be a member oftwo nations, but nationalists assert that be-longing to a certain nation is not a lifestylechoice, a conscious, calculated decision or aparticular interest, it is an identity.

However, nationalists do not rely just onself-evident and immediate identity. Wherethey can, they foster traditions, customs,national language and national culture. Inestablished nation states, a lot of energy isspent by professional nationalists — politi-cians, journalists, teachers, etc. — on edu-cating the population about “their” nationalcustoms, culture and history. Students learnthe national language, learn about nationalhistory, about their “cultural heritage” andto respect other cultures. Cultural institu-tions and museums provide the populationwith national culture and history. Nationalholidays encourage the celebration of thenation. Scottish, German, British might besomething you are in the eyes of nationalists,it is certainly also something whose perfor-mance is encouraged and maintained — nonationalist movement trusts in self-evidentessence alone.

“State”

Nationalists hold that a national commu-nity requires actualisation in a state. Thereare many ideologies which claim that cer-

tain (ostensible) criteria would establishsome group and the identities of groupmembers: racism, sexism, homophobia, etc.Nationalism is distinguished from all theseessentialist ideologies in that the group it isconcerned with is a community and requiressome form of stately authority.19 Nation-ality — in the eyes of nationalists — is anidentity which requires a political authority.The nationalist proposition is “the right ofnations to self-determination”. Or rather theright of their nation to self-determination,e.g. “Scotland should be an independentcountry”. That is, nationalists posit the na-tion which then finds its actualisation inits own state. For example, the ScottishGovernment wrote:

If we vote for independence, the eyes of theworld will be on Scotland as our ancient na-tion emerges — again — as an independentcountry.20

In established nation states this ideaoften finds expressions in the preamble ofconstitutional documents where it is claimedthat it is the people who establish a state oflaw.21

The true relationship between statepower and nation is the other way around.A state does not make itself dependent onthe nationalism of its human resources, itsubjugates them and the territory they liveon. Borders of states, and therefore whatis and is not a people, are results of warsbetween states, a question of power. Whenmost European states were established, therespective nationalisms were ideas amongstsmall groups of intellectuals. It was onlythrough the subjugation of “the people of. . . ” by their state that the unity which na-tionalists posit was produced. When theUnited States were founded, it was not “thepeople of the United States” who foundedthem but some people with enough powerbent on subjugating their fellow country-men to a new democratic state. Despitewhat preambles in constitutional documentsmight claim, “the people” have never giventhemselves a state.

Even if the “Yes” campaign had wonthe independence referendum, it would nothave been “the Scottish people” who wouldhave given themselves a state. The Scottishindependence referendum was an attemptof a nationalist movement — around theScottish Government — to subjugate Scot-

17 “83% of the Scottish population feel they have a Scottish national identity” —Scottish Government, Scotland’s Future, November 2013, p.2

18 Anti-war protests in turn like to point out that a particular war is fought “not inour name”. With this, some might simply and sensibly want to point out thatthis war indeed is not their project, while others want to assert that it is not inthe name of the “true nation”.

19 Some nationalisms seem to be content with some limited form of autonomy withinanother state. This might be a tactical admission that their national collectivefares better (for now) within a larger structure or that full autonomy is currentlynot on the table. It might also express that when these people speak of nation,they mean something else than what most people mean. Regional identities are,for example, not unheard of in Germany, but the idea of regional autonomy hasvirtually no support, most Germans are German nationalists. These regional

ideologies deserve critique in their own right, but they are not the object of thispiece.

20 Scottish Government, Scotland’s Future, p.321 “We the People of the United States, in Order to form a more perfect Union,

establish Justice, insure domestic Tranquility, provide for the common defence,promote the general Welfare, and secure the Blessings of Liberty to ourselvesand our Posterity, do ordain and establish this Constitution for the United Statesof America.” — Preamble to Constitution of the United States of America“Conscious of their responsibility before God and man, Inspired by the deter-mination to promote world peace as an equal partner in a united Europe, theGerman people, in the exercise of their constituent power, have adopted thisBasic Law.” — Preamble to Basic Law for the Federal Republic of Germany

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tish people under a new state. If the “Yes”agitation had been successful, then the Scot-tish Government would have subjugatedthose it defined as Scottish under a new Scot-tish state, regardless of whether they voted“Yes” or “No”. It would have been ableto do this because it was tactically backedby the existing monopolist of force — theBritish State. The referendum could hap-pen because the British State, which assertsabsolute authority over its citizens, gave apart of itself — the Scottish Government —permission to subjugate a part of the Britishpopulation in the case of “Yes” vote.22 Usu-ally, separatist movements are not met withtactic approval from the state they seek toseparate from. In this case, the question ofviolence is posited directly: who can assertpower over those defined as the chosenpeople against the contender also claimingto represent them.

Foreign rule

A demand for political autonomy is a re-jection of rule from outside of the nationalcommunity. Foreign rule is not simply re-jected because of what it wants and does,but because it is foreign. In the words ofthe SNP:

Today, we have a Tory government in West-minster that most of us did not vote for,and yet that government is able to take deci-sions that cause real harm to families andcommunities in Scotland.23

The SNP notes that the Westminster Gov-ernment rules over a majority of people inScotland who did not vote for it, just as itrules over many people in England whodid not vote for it. This is a feature of ev-ery democratic election, elections the SNP

stands in and wants to happen in an in-dependent Scotland: in some part of thecountry or in some strata of society thereusually will be some majority who did notvote for the government.

Hence, one could be tempted to accusethe SNP of hypocrisy, but this is not fair. Bymaking a distinction between Labour votersin the North of England and in Scotland,both of which are ruled by a governmentthey did not vote for, the SNP expresseswhat standard it applies. If Scottish people

are ruled over by a party in Westminsterthey did not vote for, this is a problem. Forpeople in England not so much. The SNP

does not propose to split up the UK alongvoting lines or interests. The problem forthe SNP is not rule but that it is exercised bypeople from the wrong community. West-minster is wrong because it is not Scottish;that it is Tory is just an additional sin. Putdifferently, if a Scottish government votedin by the Scottish people would do “realharm to families and communities”, then itwould at least be home rule. The rejection offoreign rule on the grounds that it is foreignis an affirmation of home rule.24

Self-determination

A demand for political autonomy wantsrule by a nation state over those who be-long to its nation. The self-determinationof a nation means that the members of thenational community are subjugated to theirnational political authority. Practically, apeople realises itself by its people beingsubjugated under their nation state.

On the one hand, nationalists want anauthority which objectively subjugates thepeople. The people are its objects. On theother hand, those people are assumed towant this authority and their collective willis thought to find actualisation in this au-thority. To a nationalist, the people is thesubject.25

To a nationalist, this is no contradictionas she posits the state not as a force of dom-ination but instead as an administrator ofthe community. This is not because shedoes not understand what a state does, butbecause she considers this as an adequateactualisation and administration of the com-munity she wants. Nationalists know thatlaws passed in Parliament apply to every-one regardless of whether they like themor not and they know that states have cop-pers, judges and prisons to enforce thoselaws. But to them, this means us taking careof ourselves. In the words of the ScottishGovernment:

Independence means that the people of Scot-land will take responsibility for our futureinto our own hands.26

The Scottish Government wants to ruleover those who it called to the polls, but thisdemand for subjugation is understood as theScottish people taking matters into their ownhands to do what they want. Nationalism isconsent to domination, which is understoodas a people’s freedom, self-determination andself-actualisation.

As with any other nationalism, Scottishpeople are invited to think of acts done tothem by the state as actualisations of them-selves. If an imagined Scottish governmentbans nuclear energy, this is done by our gov-ernment, we are banning nuclear energy. Ifa Scottish government guarantees the rightof my boss to cut my breaks, this is an act ofour government. If a Scottish governmentinstitutes a maximum working day, this isan act of our government. The order ofpolicy and rule is so that identification withand affirmation of rule comes first, thencome questions of policy which may affectme positively or negatively.27 In the wordsof a Scottish nationalist:

There is widespread confusion among somepoliticians and media pundits regarding theindependence referendum planned for Au-tumn 2014 and the Scottish general electionscheduled for May 2016. Many pundits aretreating the two events as if they are thesame thing. They are not. This cannot bestressed, underlined, or shouted from therooftops loud enough. 2014 is a referendumon relocating power, relocating the tools ofdemocratic governance, from London to Scot-land. 2016 is about the people of Scotlandpicking up these tools and using them inany damned way we choose. I’ll say it again:2014 is about DEMOCRACY. 2016 is aboutPOLICY.28

The “Yes” campaign and the RadicalIndependence Campaign argued for inde-pendence by listing many nice things whichcould be done in an independent Scotland:better health care, higher benefits, greenerenergy . . . None of these policies wereactually on the ballot. The ballot did notask voters what they think of the welfarestate, citizenship laws or where governmentspending should be directed. The questionwas if the authority ruling over Scotlandshould be Scottish and this is the first stan-dard by which nationalists judge it.29

22 The point of this referendum in the eyes of Westminster was for it to fail andthus to reaffirm British unity. This did not quite work as expected, but that isanother story.

23 Scottish National Party. What is in it for me?,http://www.snp.org/referendum/whats-in-it-for-me

24 The same logic shows in anti-EU agitation by British nationalists such as UKIP.Sure, they also tend to find something wrong with the specific regulations passeddown from Brussels. But they make it clear that their qualms are a lot bigger,that they are concerned about sovereignty. For example, UKIP agitates for homerule against perceived foreign rule: “If you believe that we are big enough tomake our own laws, in our own parliament; if you believe we should have thesovereign right to control our own borders; [. . . ] then we are the party for you.”— Nigel Farage. The UKIP Manifesto 2015, http://www.ukip.org/manifesto2015

25 This sentiment is not a monopoly of democratic nationalists. For the Nazis, theFührer was the immediate expression of the German people, executing its will.

26 Scottish Government, Scotland’s Future, p.4027 This does not mean that nationalists would find nothing to criticise. On the

contrary, they busy themselves with accusing the state of not living up to itsresponsibility. See below.

28 http://www.yesscotland.net/news/referendum-2014-about-democracy-scottish-general-election-2016-about-policy

29 The connection drawn between social democratic policies and Scottish indepen-dence was that Scottish people tend to vote more left wing. Hope for socialdemocratic policies was premised on an assertion about the national character ofScotland. When people argue that they expect better chances for winning thisor that fight under different social conditions, this is one thing. When people,however, argue that social democracy is a better actualisation of Scottishnessthey switched means and end.

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However, the rule these people appreci-ate does not make itself dependent on theirappreciation. While nation states want andencourage the appreciation of their popula-tions (hence the referendum), if consent isabsent then time after time the question ofrule is settled by force. This does not makeconsent to domination a harmless privatematter, though, with no effect on the world.Rule over people is easier if they accept andappreciate it. When, for example, peopleargue if this or that politician is fit to ruleover them, the question what purpose therule over them serves is not one to worryabout. Furthermore, if people think of whatis done to them as their own doing, it notonly saves costs on coppers and prisons, butalso mobilises their energy and creativityfor the rule over them.

Opposition and cohesion

Nationalists demand self-determination inthe form of a state and seek to subordinatetheir people to their nation state. Theirnational community must be enforced bysuperior force; the same community whichthey hold to be a self-evident part of theirbeing. Therewith nationalists practicallyacknowledge that their community is notas self-evident and matter-of-fact as theyclaim, it does not simply flow from theiressence but needs a nudge or two from thestate. Nationalists posit their community asself-evident and — in insisting on a statelyauthority over it — as frail. In other words,to them, the members of the community aredrawn together and apart. While Scottishnationalists posit a self-evident ancient na-tion which has to find actualisation in a stateyet again, they find this status quo unten-able: to them the Scottish need a state. Theydo not merely seek to drive out Westminster,but to establish a rule over Scottish peoplefor Scottish people because they are Scot-tish people. The unquestionable essencein them which they believe to bind themtogether — being Scottish — is not firmenough to bind them together — this theScottish state ought to provide. Amongst allclaimed unity and accordance, nationalistsalso presume divisions within the nation.The interests and actions of the individualsare not simply assumed to be aligned withthe interests of the community and, hence,each other.

Thereby, nationalists address the objec-tive divisions that exist in their community.Democratic nationalists know of and do not

deny the many little and big divisions thatcharacterise life in a capitalist society. Work-ers know of the pressure to work harderand longer, they know of the threat of unem-ployment, tenants know that their landlordhikes the rent when she can, they know thatthey struggle to make ends meet. The econ-omy — how a society produces, distributesand consumes — is a continuous source ofconflict.30 At the same time, nationalistsposit a common interest with those on theother side of their disputes. In the words ofa British nationalist:

Whatever happened to that post-electionstuff about “one nation”? It is clear thatDavid Cameron and some of his ministersgenuinely believe in the Disraelian ideal ofsocial cohesion at some important level. Yetin the wake of the government’s latest moveagainst trade unions, the commitment willlook to many like mere hypocrisy. Part of theessence of any kind of one-nation politics,whether from the left or the right, must bean effort to reconcile old antagonisms. Butthese new measures to make it more difficultto join a union are only designed to provokethis antagonism still further.31

The author acknowledges the continuednecessity for workers to organise in unionsagainst their employers and calls for a recon-ciliation of “old antagonisms”: oppositionand cohesion.

To nationalists, oppositions are, in prin-ciple, not in opposition to their community.Instead, oppositions amongst the membersof the community fit in with their commu-nity, are accepted and filed as part of howit functions. Life in their community isno easy, harmonic life. Oppositions andtheir consequences are, in principle, to beexpected, accepted and endured. Indeed,democratic nationalists appreciate “every-one for herself” in the economic sphere as acontribution to their community. This way,they think, the community becomes moreproductive, this way all give their best, thisway the community prospers. Collateraldamage and benefit is part of communitylife.32

However, nationalists distinguish be-tween opposition and antagonism. The ac-cepted and presumed conflicts ought to havetheir limits. They notice the expressions ofoppositions around them, but would denythat systematic, fundamental antagonismsare produced from the way their commu-nity functions. Amongst all divisions theyseek cohesion and call for restrictions on

the pursuit of opposing goals; they seek abalance.

Decency

Nationalists do not ignore that they haveto follow the rules of the community(cf. “State”), that their community doesnot allow them to do whatever they want.In the nationalist perspective, though, therestrictions placed on them are for them, notan external constraint: this community istheir community, where they can pursuetheir interests, it is the place and premisefor their “pursuit of happiness” (cf. “We”).

They appreciate the community for al-lowing opportunities for its members —they can try to get that job, apply for thatloan to start a business, win the lottery —and think of moderation as an exchangerelation: if each of us moderates herself,lives by the rules of the community thenthe community prospers which means thatwe get to pursue our respective goals in thiscommunity. They moderate their goals inthe hope that this allows these goals to be re-alised: voluntary compulsion or worthwhilerenunciation.33 They expect this imaginedrelation of exchange to be honoured, expectwhat is fair and what is deserved: a fair wagefor a fair day’s work, a just minimum levelof sustenance as a member of the nationalcommunity, a just reward for providing jobsetc. In the words of a Radical Independencecampaigner:

We believe the success of a country comesfrom the hard work and commitment of all.We believe that a good country is one inwhich all share fairly the success of goodtimes and all share fairly the burdens of badtimes.34

In the nationalist ideal, if everybodytakes a step back from their respective in-terests, if all work hard and commit, if allinterests are moderated in the name of thecommon good, then they all get the fairshare they deserve.

They demand the national communityto be a community of the decent, a commu-nity where participants want the restrictionsplaced on them, a community where theparticipants are willing to a step back in theinterest of the greater, national, collectivegood. The Radical Independence Campaignversion of this ideal goes like this:

30 The capitalist economy is characterised by opposition and mutual dependency.We explain how in Appendix: Economy.

31 Martin Kettle. Wake up, unions: there will be no Prime Minister Corbyn”,http://gu.com/p/4bbxv/stw

32 The point here is not that democratic nationalists are people who also appreciatecompetition in the economic sphere. Instead, the point here is that they appreciatethis competition as nationalists, i.e. as a means for their community.

33 In Why anti-national? we referred to this as “virtuous materialism”, i.e. materialismwhich is restricted in order to be realised in its restricted, permitted and decentform.

34 Robin McAlpine, Declaration for Radical Independence, http://radicalindependence.org/2012/11/26/declaration-for-radical-independence.

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Scotland can be a moral nation. Wheremutuality, cooperation and fellowship de-fine our relationships. Where we are goodstewards of our country and hand it on tothe next generation in a better state thanwe inherit it. Where our values are notdominated by greed, selfishness and disre-gard for others but by patience, generosity,creativity, peacefulness and a determinationto be better.35

Different nationalists address their callsfor “determination to be better” towardsdifferent groups. Some ask for jobs andpayment of taxes from companies, somedemand wage moderation from workers,some demand decency and guidance frompoliticians. But they all demand decency.

Essence

For nationalists, cohesion, decency, the willto the nation, — “we” — is not a calculated,rational decision but a natural part of them.

The assertion of a self-evident unity ofthe nation is not merely a mistake thatcould be rectified by educating a nationalistabout differing interests in a capitalist soci-ety. They know of them, which is why theywant to moderate them. The assertion “we”is as much an invitation as it is a demand.Firstly, “we” is an invitation to look beyondthe day-to-day competition and to recog-nise the needs of the community as beinggreater than mere individual materialismand calculated decisions for personal gain.36

Secondly, “we” is also a demand that thisunity is not up for debate, it is an invitationyou cannot refuse, it is essential.

For a biological racist nationalist, it isa natural essence which guarantees the na-

tional bond, which is not only self-evidentbut natural. She asserts that the will to thenation is not a product of volition but of a bi-ological essence. To her, this founds a strong,irrefutable bond because the members ofthe community have it in their bones. Theycannot but stand for their community andact decently for the benefit of their commu-nity. This is an uncompromising demandagainst the members of the nation.

Nationalists who invoke culture (lan-guage, customs, values, etc.) seek the sameresult but without a recourse to biology.They, too, found the will to the nation ina pre-voluntary essence of the members ofthe community but an essence which is pro-duced by society — which is why they canbe more open to the idea of others beingintegrated into the collective. They disagreethat biology can account for a will but seekthe same, firm result from a source outsideof the will, beyond decisions.

Here, too, the demand against the mem-bers of the community is expressed as theassertion that these members have theirnational bond in their being.37 They haveno choice in the matter, they are English,Scottish, German and so on. For example,“National Collective”, a group of artists cam-paigning for Scottish independence, offeredtheir view on a progressive civic nationalismin Scotland:

In Scotland, we make a lot of noise aboutour ‘civic nationalism’ — an open, inclusivebrand of national pride based on shared goals,values and institutions, summed up by thelate Bashir Ahmed, Scotland’s first AsianMSP: “It is not important where we havecome from; it’s where we’re going together,as a nation.”38

Civic nationalists claim that sharing cer-tain liberal values is part of a particular na-tional identity and they are proud of thesevalues: freedom, equality, democracy, therule of law — the accomplishments of mod-ern democratic rule. People who criticisenationalism for excluding others from thenational community might read statementslike these as an open invitation to everyonewho shares Scottish values. However, thisis a misunderstanding. Who would get tobe Scottish is not some individual choiceof sharing a certain set of values, but upto the Scottish Government to decide inthe interest of the nation.39 Civic national-ism posits that the members of the nationshare certain values, not that sharing certainvalues makes you a member of the nation.

When civic nationalists speak of shared“goals, values, and institutions” this ex-presses that they expect those who are partof the national collective to share these. Es-pecially, when a politician says “It is notimportant where we have come from; it’swhere we’re going together, as a nation”this is not merely a true or false analysis ofwhat constitutes the nation, but a demandto get in line. When someone in power tellsyou “this is how we do things”, this is animperative indicative: a demand againstyou to follow through. When someone whoshapes the values and goals of the nationtells you that you share those defined goalsand values, this is the demand to want whatthey want for the nation.

The same applies to other pictures thatnationalists draw of their respective peo-ples. Nationalists will not shy away fromstatements like “Germans are punctual” or“British are polite” when confronted with adisorganised resp. rude person. These state-ments are not intended as statements of fact

35 Robin McAlpine, op. cit.36 Constitutional patriots are rather explicit about their invitation being a demand

against citizens: “However, constitutional patriotism is decidedly not a theoryof self-determination: it does not start with a picture of unattached individualsasking themselves the question: ‘Where do I belong? Where do I find the bestliberal-democratic constitution?’ Rather, it asks how citizens within existingpolitical communities should think about their allegiances, and also what theymight do to improve the kinds of political arrangements with which they findthemselves confronted. It is not so much foundational (motivating a choice ofpolitical allegiances or constructing political order ex nihilo) as transformative(moving existing political cultures in a more universalist direction).” The sameauthor then also responds to the charge against constitutional patriotism of notproviding enough reasons to sacrifice for the community by insisting that itdoes: “As for the alleged motivational deficit: it cannot simply be taken as anobviously correct empirical observation that something like ‘national culture’inspires quite large sacrifices of resources — at the limit: life itself — whilenorms and values do not. While clearly family and friendship are special in thisregard, nothing justifies an analogy between family and nation as somehow botha matter of kinship and therefore equally capable of motivating loyalty, even ifit is very costly. Charles Taylor is undoubtedly right when he points out thatattachment ‘has to motivate a degree of giving’: serving in the armed services,paying taxes to enable large income transfers, but ideally also a willingness toinvest in civic activities and political participation.” — Jan-Werner Müller. SevenWays to Misunderstand Constitutional Patriotism, notizie di POLITEIA (96): 20–24.

37 At first glance constitutional patriotism bases the will to the nation and itsstate on a decision. However, a denial usually follows immediately and it ispointed out that those decisions are grounded in a national culture themselves:“[C]onstitutional patriotism can neither take shape in social practices nor becomethe driving force for the dynamic project of creating an association of free andequal persons until they are situated in the historical context of a nation ofcitizens in a way that they link up with those citizens’ motives and attitudes’” —Jürgen Habermas. Between Facts and Norms: Contribution to a Theory of Law andDemocracy, MIT Press, 1996, p. 499

38 National Collective, Editorial: Finally, Britain is beginning to understand civic na-tionalism, http://nationalcollective.com/2012/08/05/editorial-finally-britain-is-beginning-to-understand-civic-nationalism

39 For instance, the “Yes Scotland” campaign answered the question “Who will beeligible for Scottish citizenship on independence and in the future?” as follows:“The current Scottish Government has set out detailed plans for citizenship onindependence. British citizens habitually resident in Scotland on independencewill be considered Scottish citizens . . . Following independence, other peoplewill be able to apply for Scottish citizenship. For example, citizenship by descentwill be available to those who have a parent or grandparent who qualifies forScottish citizenship. Those who have a demonstrable connection to Scotland andhave spent at least ten years living here at some stage, whether as a child or anadult, will also have the opportunity to apply for citizenship. . . . Procedures willalso be put in place to allow certain migrants lawfully resident in Scotland toapply for naturalisation as a Scottish citizen. . . . Future changes to citizenshiplaws would be a matter for Scottish governments elected in 2016 and beyond.”— http://www.yesscotland.net/answers/who-will-be-eligible-scottish-citizenship-independence-and-futureThat is, in addition to receiving Scottish nationality at birth as stipulated by mostcountries, people who would have managed to live in Scotland for at least 10years with the consent of the Scottish state, would also be given the chance toapply for citizenship. If anyone should have any illusions about what standardwould be applied to permitting migrants to live lawfully in Scotland, the ScottishGovernment clarifies that Scotland’s needs — and not some shared values —would set those standards: “Scotland’s differing demographic and migrationneeds mean that the current UK immigration system has not served our interests.. . . Historically Scotland’s population has grown at a lower rate compared tothe rest of the UK. The latest population projections suggest that Scotland’sworkforce will not grow as rapidly as the UK as a whole. Scotland’s populationneeds are therefore different to the rest of the UK and Scotland has a cleareconomic rationale for growing our population — in particular our working agepopulation.” (Scottish Government, Scotland’s Future, p.268) The proposed rulesfor citizenship might be more permeable than other states, the standard in anycase is the same: can these migrants be useful human resources for the nation.

K I T T E N S 2 5

but expectations and demands against themembers of the national collective. “We” isa demand.

Force

Nationalists think of the national commu-nity as a moral community, a communitywith just rights and responsibilities, a com-munity formed by and for decent people.This is a peculiar view towards their actualsocial relations.

In their daily lives, the subjects of ademocratic state are endowed with rightsand responsibilities by the state; it providesits subjects with general rules which theyhave to follow. There is much to regulate,permit, prohibit and sanction when peoplewho are dependent on each other competeagainst each other. For their interactionsin the economy, the actors make contracts.These are agreed upon because each partyexpects to gain from them but this doesnot extinguish the economic opposition ofthe contracting parties. A low or no priceis better for the buyer and worse for theseller. More concretely, a low wage is ameans for profit and a detriment to work-ers sustenance. Capitalists have reasonsto squeeze more out of their workers andworkers have reasons to resist this throughcollective action.40

The capitalist economy needs an arbiterto decide who prevails when the members’interests collide and to provide general re-strictions keeping competition from eatingitself, to make the unity of competition andmutual dependency feasible. This feat isnot accomplished without force: when ev-erybody’s goals are pursued against theothers, under rules which restrict the meansof success of each party, then it makes senseto bend or break the rules here and thereto realise these goals — theft and fraudare ways to take part in competition withother means. Therefore, a capitalist econ-omy requires a state ruling over it withforce. Capitalist states happily oblige be-cause they rely on their capitalist economiesas the basis of their might. They guaranteeprivate property and provide the rule oflaw, infrastructure, the welfare state andeconomy policy to facilitate accumulationof their national capital which they count asthe growth of the gross domestic product(GDP) and which provides their rule withmeans.

Where the state in its laws defines theconditions under which its subjects mustpursue their own interests, nationalists seeconditions under which they can pursuetheir own interests. Conditions becomeopportunities. Where the state excludes

the mass of its citizens from the wealtharound them, where it ensures their contin-ued existence as human resources for theaccumulation of capital, they see generalregulations being implemented which en-sure that their decent community — andhence them — can function and consider therights provided by the state as their means toparticipate justly in their moral community.They treat conditions, which they do notdecide about, as their own, as expressionsof themselves and of their morality.

Escalation

This reversal — that the objects of rule thinkthemselves as the subjects — does not meannationalists are content. When they inter-pret law as a realisation of their morality,not as the form in which the state organisesits society for its own might, they also judgeit this way. Hence, as much as they are onewith their nation and its state in principle,they always tend to find some transgression,some violation of decency, some instancewhere someone receives what is not de-served and where those who deserve donot.

Nationalist criticism detects deviationsfrom decency, identify culprits and demanda correction from the state: more crack downon benefit scroungers, more restrictions onstrike action, a tighter tax regime for corpo-rations, restrictions on banker bonuses etc.Left-wing and right-wing nationalists oftentarget different groups with their criticisms,but both want to mobilise the guardian ofthe national community against “excessive”self-interest.

However, because the state’s purpose isnot to realise the often conflicting moralisticnational ideals of its subjects but its ownmight and a strong capitalist economy, itoften fails to live up to the expectations ofits nationalist critics. What they imagine asdecent and fair is not on the agenda. Mostnationalists are content with airing theircomplaints down at the pub, armed withthe righteousness of their respective stand-points of justice. Some of them, though, be-come critical of the government, which theyaccuse of having lost sight of what is impor-tant and seek more grounded alternatives.Some become even critical of the form ofthe state in general and become disciples ofa fascist state which ruthlessly cracks downon vested interests everywhere.41 Someturn the claim of national identity aroundand seek culprits amongst those they do notconsider the right kind of English, Scottishor German. They extend the idea that iden-tity ensures national cohesion to the ideathat the wrong kind of identity undermines

it — just as firm and unchangeable as theformer.

Not every nationalist takes these laststeps. In fact, many do not. But what theyall share when they say “we” is plenty: ap-preciation for a community which requiresforce over its members to make their rela-tionships passable, acceptance of the antag-onisms produced by the capitalist economywhich ought to be endured, identificationwith the conditions we are confronted withby the democratic state and moralistic de-mands to submit to these conditions.

Postscript: Into the world

Nationalists judge all and sundry from theirnationalist standpoint, also other nationsand their states. On the world stage, na-tion states confront each other with theirdemands and compete for power. They com-pete economically, threaten each other withtheir military might and engage in openwar. Nationalists observe these conflicts ina peculiar way. To nationalists, their ownnation is the home of the decent and uni-versal, the guarantor of everything that isgood in the world. In contrast, other nationsare merely French, Russian, US Americanetc. The respective national standpoints aremerely their particular standpoints. Thisdoes not necessarily make them foes, butevery nationalist can identify base motivesdriving other nation states’ policies. Read-ing any British newspaper’s reporting onRussia or watching an hour of Russia To-day provides ample material of this kind.From this perspective then, it only makessense for nationalists to wish their own thebest of luck in every endeavour, even baseones because this is the basis of success foreverything that is decent in the world.

Appendix: Economy

The arguments in this text rely on how thecapitalist economy works, that it is a con-tinuous source of conflicts while being astrange form of cooperation, outlined in thefollowing.

Any act of sale or purchase — i.e. ex-change, the fundamental economic socialrelation in a capitalist economy — containswithin itself an opposition between the twoinvolved parties: the lower the price thebetter for the buyer and the worse for theseller. The advantage of one party is thedisadvantage of the other and vice versa.

On the other hand, every exchange isalso some form of cooperation. A commod-ity producer does not produce immediatelyfor herself, but her products ought to be

40 See Appendix: Economy.41 When the German National Socialists accused the Jews of being the driving force

behind communism and finance capital this expresses their nationalist criticism:

both are criticised for being egoistical — one for being the egoistical pursuit ofworkers interests, one for being the egoistical pursuit of capital’s interest.

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consumed by others such that she can ex-ploit the need of others to realise her owninterests, i.e. get paid. Only through otherscan she realise her own goals. Commodity-owners exclude each other from their re-spective property so that they can pursuetheir respective interests using each other.Moreover, not only do they need each otherwhen they confront each other directly, butthey also need each others success in theireconomic endeavours elsewhere. If some-one wants to sell, the buyer must previouslyhave earned her money somehow. The suc-cess of others is the premise for using them.Exchange is characterised by both a witheach other and an against each other.

The opposition contained within saleand purchase is rather abstract. While ahigh price is better for the seller, there isno general reason why the relation can-not work out satisfactory for everybodyinvolved. Buyer and seller could in principlearrive at a deal which allows each side toget what they want, enough money to fulfiltheir needs and desires. However, moneyis the one thing which allows them to gainaccess to the world of commodities fromwhich they otherwise exclude each other:all material wealth is the private property ofsomeone, under their exclusive right of dis-posal. With money everything is available— storms can be weathered, obstacles over-come, previously unknown desires fulfilled— without money nothing is available. Asa consequence, the pursuit of money is thedominant economic purpose of this society.

Those who can use money to make moremoney: they invest to make profits. Com-panies produce commodities in order to sellthem for more money than invested andare successful if they earn more selling theirproducts than what they pay for wages, ma-terials, machines etc. Their suppliers havethe same measure of success — buy cheap,sell dear, make profits — which means intheir transactions a company and its sup-

pliers confront each other with opposinginterests. The suppliers want to sell dear, thecompany wants to buy cheap, both tryingto maximise their respective bottom line.When a company comes to sell its own com-modities, it confronts its customers in thesame way. When a company asks for a loanfrom a bank, the bank and the company alsooppose each other, for example about howmuch interest the bank charges — a sourceof profit for the bank.

The examples so far spoke of opponentswhich both pursue and realise a profit. Theadvantage of one is the disadvantage of theother, but both might still realise a profit.Workers, in contrast, do not have the meansto buy cheap in order to sell dear. Theyhave no choice but to rent themselves outto employers. Their interest is a liveablewage while minimising the damage (time,exhaustion, stress, RSI) they incur for it.Their employers, in contrast, want to max-imise the difference between what they paye.g. on wages and what they earn — theirprofit. The result can be observed all aroundus, companies make profits while workerswork long hours and remain excluded fromthe vast wealth accumulated in this society.Any success workers achieve against theiremployers such as longer breaks or higherwages is to the detriment of the expressedpurpose of their employment: profit. Inthis relation, the opposition between theinvolved parties is anything but abstract,because one interests — more profit — ishostile in its nature towards the other andundermines it. It undermines it to such anextent that the state intervenes to provideworkers with basic necessities.42

Yet, even this relation is not only charac-terised by opposition: capitalist companiesrely on workers to produce and sell theirproducts. At the same time, workers cannotearn a wage without the success of capitalistcompanies in this society. As workers, theyneed the success of their opponent. Only

if their company realises its purpose ofmaking profits — which entails low wagescompared to output — they can take homea wage at all. Thus, even the antagonisticrelationship between capital and labour isalso characterised by mutual dependency.

However, mutual dependency in compe-tition against each other does not mean theinvolved parties share a common interest,that their respective purposes fit togetherand are realised through each other.

As long as business is good, the goodsprovided by a supplier are the means todo business and hence her success is thepremise of the buyer’s success. Moreover,the participants of a capitalist economymight consider even their competitors ashelpful means and their success as a meansof their own. For example, one manufac-turer successfully raising prices might en-able other manufacturers of the same goodto raise their prices, too. But as soon asbusiness hits a slump, the price asked bya supplier becomes an obstacle to success.Similarly, one seller lowering prices under-mines the ability of his competitors to selltheir goods. Unity quickly comes apart.

The mistake of identifying dependencywith a common goal is particularly crasswhen workers make it. Workers go to workfor a wage, the money they need to pay fornecessities, to reproduce themselves. Thisis their reason. Capital, on the other hand,needs workers for its production of prof-its. It will only hire workers insofar theiremployment is deemed productive in thissense. The reason why workers have a jobis not so that they can make a living, butto be useful for the production of profits.This is the reason for their employment.43

Only insofar they are useful for profit canthey realise their purposes, after a fashion.When they are not, their purposes countlittle and they have to make do with less.

42 See What is wrong with free money available at https://antinational.org/en/what-wrong-free-money and in this issue of Kittens.

43 The capitalist process of production produces a constant surplus of workersover jobs, such that workers cannot usually successfully assert their reasons foremployment against the reasons of capital. See What is wrong with free money.

K I T T E N S 2 7

“THAT’S JUST HOW THESE PEOPLE ARE”Racist essentialism

In every racism, assertions are made abouthow people as such are.1 These assertionsare not about human beings in general butabout specific groups. Racism assumes thateveryone belongs to some alleged group,i.e. that people are “white” or “Caucasian”,“Arabic”, “Native American”, “Gipsy” etc.This enumeration is not a real descriptionof actual groups, as there are no races; raceis a nonsense category. Neither biologicallynor culturally can humanity be sorted intosuch groups. Hence, this classification, thatis the first point here, has, in reality, nothingto do with the people being classified.

That does not unsettle racists. They con-tinue on Racist Road and add to this wrongdefinition of fixed human groups another

mistake.2 These groups of people are as-signed certain, unchangeable attributes —a few examples from a Western racist per-spective: white people allegedly are cleverand a bit stiff, Arabic people backwardsand fanatic, native Americans are in touchwith nature and gipsies are as lazy as theyare musical. These attributes are not onlyascribed to the group as a whole but also toevery member of the group. Each imaginedmember of the group is regarded as a speci-men or representative of the whole group:every gipsy is considered to be lazy. Thesefeatures are seen to distinguish every personof that group from every person of anothergroup, it forms them and it shows in theirvery essence.3 This is the essentialisation.

Racism does not start where people areoffended, humiliated, persecuted or mur-dered. It starts when people are sorted intobiological or cultural groups and are seento share essential characteristics — simplyas alleged members of the group.4

Although the groups racists create donot exist, there are certain modes of be-haviour or preferences which can be widelyshared in certain regions while being lessprevalent or even non-existent in others.Racism declares this to be the behaviourof a racified group, i.e. of a so-called race.Yet, even if people living in the NorthernMediterranean gesture more, it does notmean that people from South Europe aremore passionate. The logical mistake is to

1 For this issue, we planned to include a longer piece on racism in general. Timinginterfered, so it did not get finished. Hence, we are just publishing the excerpt onessentialisation. This short text does not claim to explain racism. It describes andcritiques the general mistake of essentialising which is the form of any racism.

2 We separate the logical steps of ideology, which is an analytical distinction. To aracist, these logical steps do not appear as separate steps, they think them alltogether.

3 So far, nothing has been said about the content of these judgements. In this piece,it will be shown how racist judgements are applied to people, who have already

been sorted into racist groups. There will be more about the content of thesejudgements in a later edition.

4 Essentialism is also the form of sexism: on the basis of a few, in many regardsrather unimportant differences between people, sexists claim a myriad of socialattributes. These are seen to be self-evident. Then, there is biologism in a moregeneral sense, where people are ascribed with characteristics that are, in fact,either socially produced or else not even existent in everyone. “Man is a wolf toman.” is an example for such thinking. It claims this is how all people as suchare and abstracts social conditions away.

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interpret such a cluster (as useful or uselessfor the community, or often at least as goodor bad) and to link it to all members ofthe alleged group. While these differencesexist, they are not a feature of everyoneliving in a certain region. Or else racism tiescharacteristics that some people might pos-sess to all members for their “race”. Here,too, the racist processing of reality considerssome actual difference and generalises themincorrectly.5

Why certain manners are particularlywidespread in some areas, can already bethe result of racism: slaves in the US forinstance used to play “dumb” to avoid yetmore work.6

Finally, there are racist essentialisationswhich do not correspond at all with real-ity. That is, for example, the idea of somegroups of people being cannibals. This ispure fiction and has no basis in facts.

In reality, these attributions are not trueeither in their entirety or not at all. The es-sentialising conclusion is wrong either way.Racism, however, homogenises and whatdoes not fit in is mentally aligned. Existingdifferences in a group are ignored. Otherideological judgements are by contrast in-corporated into the racist image. Genderdifferences play a part in racism, for example“Arab women” are seen to be submissive,“Arab men” quick-tempered.

When racists engage with somethingthat their racist explanation does not accountfor, they commonly brush this aside as an“exception from the rule”. They considertheir “hard-working and coldly calculatingLatin American” neighbour as just as LatinAmerican albeit her being different fromthe racist’s idea of “such people”. It is re-markable that this does not lead to racistideas being given up. Instead, it is seenas a deviation from what that person asa “representative of her race” ought to be.Racists are rather creative when it comesto incorporating contradictions into theirtheory to maintain it.

Racism is often perceived as an old-styleway of thinking which differs greatly fromthe normal, enlightened, modern way ofinterpreting the world. Hence, it is regularlydownplayed. By extension, it seems to be a

socio-psychological riddle to some: in timesof enlightenment, how can anyone thinkthat way? They must have psychologicalreasons.

However, the form of racism, essential-isation, is not uncommon in the everydayworld. It is a wide-spread ideology to thinkof people being the way they are becausethis is their essential character rather thanbecause they experience things, then thinkabout them and then practice their skills.“My child is highly gifted” is that kind ofjudgement: she can do all these awesomethings not because she wants to and tries tolearn the required skills enthusiastically orbecause I encouraged my child. The essen-tialising view rather sees this to be the resultof the kid’s mere being, no matter if thisis ostensibly grounded in her genes or herbrain. The reverse is even more widespread:that underachiever in school, well, she isjust more “practically dexterous”, i.e. notvery useful when it comes to abstract think-ing. It is the same form of thinking as inracism, volition and awareness only expressa presumed being. People are what they are:that explains their position in society andtheir successes and failures in the competi-tion. The difference here with racism is thatessentialising the social standing is a judge-ment about how individual people fare inthis society whereas racism is a judgementon a whole imagined group.

Even though the idea to take perceivedattributes of certain people and with these ex-plain their position in society has increasedin modern times, it is nothing new. In otherauthoritarian pre-capitalist societies, somepeople exercised power, appropriated thesocial surplus product and claimed thattheir essential characteristics called them tosuch a noble deed. The others were calledto serve — that, too, due to their being. Inthe classical or feudal mode of production,reasons given to justify the hierarchy werenoble blood, descent, kinship with godsor at least a divine decision. But becausegod was in play, the hierarchies were notas rigid — feats and piety could have aneffect. With the transition to modern society,nature comes into play as the explanation —

and you cannot argue with nature, it meansinescapable fate.

Racist essentialisation means that fea-tures or modes of behaviour, which can bechanged, are presented as unalterable, andpeople are sorted into groups which areascribed with these as core characteristics.Real differences are levelled out or are con-sidered marginal, i.e. racism homogenises.Racism does not have its root in the givenexamples nor the perception of people. In-stead, the particular racist judgements arejust illustrations or expressions of ideolog-ical notions. The image of the gipsy, forinstance, as musical, work-shy and livingoff the expenses of the community is thecounter-image to the demand against allmembers of a capitalist, successful collec-tive. You can be musical, that is ok, butwhat really counts is success in competition,on the job market, for which every workerhas to be willing, useful and available. Onlythus can an income be earned, only thuscan everyone contribute something to thecommunity (e.g. taxes) without “freeload-ing”.

This demand re-appears as a mirror-image of the negative racist attributes givento other groups: the racist attributions toothers are an inverted expression of thedemand against everyone in the alleged in-group on how they are supposed to behave.For that reason, it is not just the negative at-tributions which are a problem. That “whitepeople” allegedly think better, is a harshjudgement on all “white people” who arenot perceived to be clever. It certainly is ademand against the in-group to apply their“cleverness”.

Despite all the randomness in how theracist images came about and which peopleare sorted into what groups and then whichcharacteristics each group is ascribed with,they all have a lot to do with the constitu-tion of capitalist societies and the demandsagainst members of the national collectives.These demands do not need to be madefrom above; racism survives despite theending of colonialism as a state-orchestratedprogramme of direct domination and subor-dination, to which the racist ideology wasthe ideal accompaniment and justification.

5 This can come about on a subjective level: somebody sees gipsies — or whoeveris considered to be one — making music and concludes in a racist way thatgipsies “just have music running through their veins”. (Whenever it is a case ofsocial characteristics, the essentialising generalisation from some to all membersof any group is always wrong because they are changeable.) This is not a claimthat racism comes into being by a “naive” conclusion and a wrong generalisation.People who judge like that already have a racist concept in their head. They

think that “these people just are like this and that” and with such a thought,they go into the world and “find” corresponding characteristics. Racism mightbe reproduced that way but only on the basis of already racist thinking.

6 This behaviour was so minting that is has grown into a collective self-image.Some people with a darker skin colour started to think of themselves as notbeing able to do certain things, like abstract thinking, well.

K I T T E N S 2 9

CAPITALMoney 2.0

The following article is a translated excerpt froman introductory book on the critique of capital-ism. So far, the rest of the book is only availablein German.1

In this society almost every aspect of life isdependent on money. Hence, it is useful tohave a lot of it2 — although most people areall too familiar with having rather little of it.Common sense has it that the best strategyagainst a lack of money is to put moneyaside. If someone puts enough money aside,they can then buy something which wasout of reach before. This, however, is onlyaccomplished by first relinquishing other

items. If a person spends her savings, theyare gone — damn, carry on, new money isneeded.

With money as capital this is different.If someone has so much money that notall of it is needed to pay for necessitiesbut instead some of it can be invested thenmoney is augmented by spending it. Moneyfunctions as capital when it is invested. Ifthe investment is successful, not only theprincipal sum returns but more: profit.

Industrial capital realises this by sellingthe commodities its workers produced formore money than was expended on theirproduction.3

Profit and its contradictions

To illustrate this, let us consider an example.Ms K somehow got her hands on a decentamount of money and now wants to investit, i.e. she wants to use it as capital. Sheconsults experts, compares different spheresof investment and finally seizes the oppor-tunity to buy an apple sauce factory.4 Whensetting up her new company “Squish” herprimary goal is to realise stable profits inorder to fund her lifestyle.5

For production she needs materials (ap-ples, sugar, jars . . . ) and employees. Allthis costs money. For her plan to augment

1 https://antinational.org/page/die-misere-hat-system-kapitalismus/2 If you can or must restrict your consumption, you might be able to get by.

However, that’s about it. To give a few examples: with increasing age you mightbe confronted with increasing care costs, a friend has some troubles which couldgo way with a bit of money, the car breaks down.

3 We focus on that kind of capital which is engaged in production and organises it(industrial capital) — and do not explain finance capital (e.g. banks) or merchantcapital (e.g. supermarkets). The point here is to investigate how concrete wealth(all that stuff which can be used like apple sauce or apple sauce machines) comesinto the world under capitalism. We are interested in the peculiar way in whichthe satisfaction of needs and desires is organised in this society. In contrast, manycriticisms of finance capital contain within them a praise of industrial capital.Even though the apple sauce which comes out of a capitalist apple sauce factoryhas a usefulness besides business, i.e. it satisfies the need and desire for applesauce, this does not mean that “producing useful stuff” is the purpose of capitalistproduction. We consider the capitalist mode of production in its entirety as anobstacle to the satisfaction of needs and desires. In this book, we are content with

showing that industrial capital produces such conditions, without any interventionfrom finance capital. For the critique of finance capital, see Financial Crisis 2008ffavailable at https://antinational.org/en/financial-crisis-2008ff. As anaside, if our critique is correct, it is a rather bad taunt to talk of this society as aconsumer society.

4 The authors of this piece do not actually know how modern apple sauce factoriesare organised. For example, we have no idea what happens with foul fruit there.It should be mentioned, though, that capitalists do not need to know either, theysimply buy the relevant expertise on the labour market. Even managers do notneed to understand this stuff in detail, which is illustrated by the ease withwhich managers switch from, say, the chemical industry to an energy company.This illustrates that running a capitalist company is firstly about understandingthe capitalist way of calculating and enforcing it. Knowledge about the involveduse-values and the steps to produce them is only of secondary relevance.

5 We presume this purpose to show in this chapter what running a capitalistcompany entails even if the owner does not want to maximise profit in the firstinstance.

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money she hence has to spend money inaddition to the money expended on thefactory itself, she must advance or investmore. When planning her production, shecalculates with averages. She calculateswith the current market prices for buyingand selling and assumes standard wagesand working hours.

When Squish now enters the market asa buyer, it changes that market. Demandfor those raw materials it requests changes,which might have an impact on their prices.If prices increase then Squish’s own engage-ment on the market has a negative impacton its purpose. Once production started andSquish’s product (“Squish Apple”) entersthe market then this increases the overallsupply of apple sauce, which might sup-press its price. This, too, would be bad forMs K’s conditions of success. Ms K’s actionshave, just as the actions of other companies,“side effects” which she does not control, butwhich — the horror — threaten her profits.

Whether prices for raw materials actu-ally rise or whether the price for apple saucein supermarkets actually falls depends onmany factors not determined by what hap-pens within the factory gates of Squish. Forexample, it depends on what happens inother branches of industry (suppliers of ap-ple sauce and competing products to applesauce) and if effective demand in societyfor apple sauce overall increases. The pointhere is that Ms K’s actions for her profit con-tain within them effects which act againstthe realisation of this goal.

For now, Ms K finds the prices of hermeans of production (apples, machines, re-placement parts, lubricants, energy, . . . ) onthe market at the current rate. She can onlygradually try to influence how high theseprices are, for example, by putting pressureon her suppliers. But this has its limitsin the prices that other customers of thesesupplies are willing to pay and ultimatelyin the prices at which these supplies canstill sell with a profit.

The project “consistent profits forMs K’s lifestyle” demands additional en-trepreneurial finesse: other techniques areneeded to ensure profit. If influence onthe market “outside” is limited, then thesearch turns inwards. A strategy could be“quantity has a quality of its own” — simplyproduce more? This could increase profitsabsolutely but also demands more invest-ment: more must be advanced on wagesand raw materials, perhaps also more on ma-chines. On the other hand, this expansionhas the same effect as above, but in escalatedform: if Squish buys and sells more, it hasthe same reasons to do this as any othercompany. Hence, we have to assume thateverybody does it and that this way they all

undermine prices for themselves and eachother. Marketing companies offer to opti-mise the sale, but their services are neitherfree of charge nor can they accomplish themiracle of enabling Squish to sell its applesauce for whatever price it wants.

Simply expanding production hence hasits limits. Perhaps the particular organisa-tion of production allows optimising.

Squish apple must become cheaper, with-out diminishing profit. This is accomplishedby reducing the cost of production per com-modity; the unit cost of each community isreduced. This way Squish can sell more com-modities, as those are cheaper, and realisemore profit because costs are reduced.

At Squish they are now busy with con-densing the working day, i.e. reducing oreliminating interruptions. Furthermore,Ms K realises the usefulness of her workersworking longer hours — in particular if shedoes not have to pay higher wages for it.6

Even when this means that per day moreraw materials are used up, which bringswith it an increase in expenses, this reducesunit costs because less wage needs to bepaid per commodity, i.e. unit labour costs arereduced. The same result would be attainedif wages were simply cut. Whether a wageallows workers to go on holidays abroad ornot is, after all, a subject of negotiation. Thisdirect suppression of wages or the indirectsuppression by making the working daylonger or more intensive is conditioned bythe labour market. If demand for work-ers increases substantially, the negotiationpower of workers improves slightly andvice versa.

But even if Squish had to pay higherwages for extending the working day, thereis still an advantage. Firstly, because otherexpenditures such as land and buildingshave to be paid regardless of whether workis done in them or not. Working, say, tenhours a day instead of eight hours meansthat the same rent is spread over more com-modities, decreasing unit costs.

Secondly, there is an advantage becauseof the increased speed with which commodi-ties are produced and sold. Apple saucedoes not leave the factory jar by jar but inlarger quantities which are negotiated withtrade partners, say, a supermarket chain.Whenever a certain amount is delivered,i.e. when the corresponding production pe-riod is over, Ms K gets the money for hersauce. If the apple sauce is produced orsold faster, the money advanced for it re-turns faster and can be used to buy rawmaterials and workers anew. That is, withthe money earned for the sauce she cannow pay for wages and raw materials of thenext working period. For slow production,too, money earned in one period can be

used to pay for the next period’s produc-tion. However, when we consider a wholeyear, it makes a difference if the procedureof using already earned money to pay forwages and raw materials happens ten timesor twelve times. In the latter case, the sameinvestment allows producing and sellingmore commodities per year. In relation tothe whole year, this reduces the investmentper commodity as the same advance is nowspread over more commodities. Producingand selling faster reduces the need for anadvance.

While all techniques of pushing workersare being exhausted, speeding up produc-tion is also accomplished through improvingtechnological efficiency. In order to produceeven faster, new machines are needed. This,too, costs money.

The plan is to eventually moderniseSquish. The old machines still work butare not state-of-the-art. The existing pro-duction process does not allow productionto speed up further. For example, a fewpeople were employed to scan the belt forfoul apples, something which slowed downthe production process overall. Now, themarket provides an apple scanner and sorter,which can do this task and is considerablyfaster, too. This is worthwhile despite thebig investment necessary to buy it becausethis new technology might allow improvingunit costs: applying this machine lowersthe wage bill. The company compares howmuch work the machine would save andthen further compares the price of the ma-chine (repair and maintenance included)with the saved hourly wages over the com-plete lifespan of the machine. If the machineis cheaper in this regard, it is bought andworkers are made redundant. This is calledrationalisation. However, those reduced unitcosts require selling a greater amount ofapple sauce because typically productiv-ity gains are at least partly a result of theeconomy of scale.

If it is only Squish that introduces newmachinery, Ms K has an extra edge overthe competition. Her costs are lower thanthose of the competition but she can sellat the old, average prices. However, if hercompetitors also introduce the more produc-tive machines, this edge is gone since priceseventually come down to the new level.This is because the competitors can now af-ford to lower prices in order to (re-)capturemarket share. In the end, this could lead tono advantage in the cost benefit calculation.Still, this process has a nice side effect: theestablishment and increase of unemploy-ment by making workers redundant. Thisway Ms K and her competitors relax thelabour market to their benefit, which allowsthem to assert their cost-benefit calculation

6 Not every employment contract specifies an hourly rate. For example, it could alsospecify targets. Furthermore, it hardly needs mentioning that unpaid overtime isexpected or contractually mandated in many jobs.

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against their workers: suppressing wagesand more performance for the same wage.

Intermediate results

– Capital is money spent with the purposeof being augmented. The surplus over in-vestments is the profit. For the moment, itis still open what happens with this profit.Whatever the case, profits are partly usedto finance the livelihood of the capitalist.

– The measures which are available in capi-talism to secure profits all result in gener-alised pressure to lower prices and to sellmore commodities. In order to continu-ously make profits, the measures listedabove are necessary: lowering wages,expanding production, prolonging theworking day, more intense and fasterwork, faster sale (incl. marketing), ratio-nalisation.

– The dilemma of capitalists, which theypresent to each other in their competition,leads to pressure on workers.

– All tasks which are available as means formaking money need constant attention.The market is always on the move. Forexample, Smith & Sons and everybodyelse reacts to the actions of Squish, whichthen reacts again to which then everybodyelse reacts etc.

Growth as a necessity

Ms K is a critical person. She not only readsthe Guardian but she also wants to be aresponsible businesswoman. She does notbuy into the “hype” of growth and thinksthat it is silly that all companies alwayswant to get bigger. She thinks it should besufficient if her company simply preservesher investment. She wants to siphon off allprofits and use them to realise a nice life forherself. Yet, it is now clear that she cannotdo that. Simply to keep profits stable, sheneeds to apply the methods outlined above,which increases costs. The source for theseadditional investments is the profit itself.7

Ms K’s purpose, constant profit for a nicelife, demands splitting up profits: only apart can be used for her immediate con-sumption, the other part becomes necessaryfor the existence of the company.

There is another way in which profitbecomes the means for continuous profit.Ms K estimates risks and imponderables. Itcould be that her funds are not sufficient atsome point to, for example, do some neces-sary repairs. Or one of her main customersgoes bust and cannot pay for a big shipment.To keep production going continuously she

needs a reserve fund. Where does she take itfrom? Again from profits. The same applieswhen a food scandal makes people less ea-ger to buy apple sauce or when pears gainpopularity or when there was a bad harvestand so on. The only way to keep businessgoing in all these cases is to have a reservefund which is funded by profit. In orderto make profits fit for this purpose, capitalmust grow and for this profit is needed.At least a part of it must be reinvested inorder make the company more robust. Therelationship is rather circular: the conditionfor continuous profit making is continuousprofit making.

Firstly it is important to make a lot ofprofit because the bigger the profit the morecapital can grow. For example, assumeSquish made £1 million in profits, but Smith& Sons made £1.5 million. The profit ofSmith & Sons is better in absolute terms.Secondly, it is now relevant what the ratioof advanced capital to realised profit is. Ifthere are currently £10 million invested inSquish, the ratio would be 10% profit. IfSmith & Sons had invested £20 million intheir factory, they would make 7.5% profit.In terms of relative profit, Squish wouldlook better. The ratio of advance and returnis called the profit rate and expresses how ef-ficient each invested pound has augmenteditself. The higher the profit rate the moreefficient a given advance is as a “moneymaking machine” and the better capital canbe bolstered with profit.

Several ways in which absolute profitand the profit rate can be increased were il-lustrated in the previous example of Ms K’scompany. These require additional outlays,capital hence must grow and profits mustbe reinvested. This results in the followingcircular movement into which companiespush each other: in order to keep capitalcompetitive, it needs to be made more ef-ficient using an ever increasing amount ofmoney. The optimal application of capital,the optimisation of the profit rate, is theway to maximise the amount of profit. Thisin turn is the way to grow the initial ca-pital sum with which the profit rate andabsolute profits are increased. Squish ra-tionalises, sells more apple sauce, makesmore profit. Profits are then the means tooptimise further.

This growth of capital, by reinvestingprofits, is called the accumulation of capital.Squish needs to grow even for the sake of itsmere continued existence. The new demandagainst profit is that it does not only have tosuffice to provide Ms K with a nice lifestyle,but business demands it — permanently.Hence, there is now a demand against Squishwhich might not have been Ms K’s personalmotivation: she must try to increase profits,

not (just) to have a nice life, but in order topreserve her business as a money makingmachine. After all, not only her profits areunder threat but her whole investment — ifher company goes bankrupt she is unlikelyto recover her initial investment. Merelyfor the preservation of her capital, it needs togrow — permanently. This follows from thepeculiarity of the source of revenue capital,which includes constant competition withothers pursuing the same aim.

Neither profit nor growth have, as ex-plained above, an “enough”: they are lim-itless. Spoken from Ms K’s position: sinceshe cannot be certain that her investment ispreserved nor that she makes any profits atall, she time after time takes care of renewedinvestments and pursues a permanent, prin-cipally infinite growth as a goal. If hercapital has grown, and perhaps even herprofits, it, too, is only a given magnitude ofmoney and hence only has a limited powerin competition.

The project is hence to permanentlymake as much profit as possible. The slo-gan of capitalist competition is not merely“attack is the best defence”, but “attack isdefence”.

Competition hence has two sides: on theone hand, Ms K is confronted by the com-petition, she might seem to be at its mercy.After all, she has to assert herself against thecompetition. Every jar of apple sauce whichis sold by the competition is not SquishApple. Even worse, the profits of the othersallow them to have better means of com-petition and hence are dangerous. On theother hand, the other companies see Squishthe same way. They, in turn, must assertthemselves against Ms K. The success of oneside means a loss for the other side. Thisway, capitalists continually compete witheach other. The actions of individual capi-talists put the standard higher for all otherswithout there being an end in sight. Themoaning of capitalists that the competitionwould force their hands ignores the fact thatthe moaners are the reason for moaning ofother capitalists. This way, more is investedand all attempt to grow further.

The size of profit itself is a decisiveweapon in the competition of capitalist com-panies. That means, big companies havean advantage as they are already of consid-erable size and correspondingly realise bigprofits. These companies have an advantagein another regards, too: if competition hasthe effect that in a branch of industry profitsfall because all companies try to grow andnobody really gets the upper hand againstthe others until bankruptcies relax the situ-ation, some capitalists will want to switchbranches of industry in order to pursuehigher profits. Yet, this step is not available

7 In this example, we ignore credit to keep things simple. However, what is beingsaid here also applies if we include credit. Credit is only available if it seemsthat a company is in a strong economic position so it can be successful with the

help of credit. These assessments are based on the current success of a companyin competition.

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for all capitalists: it entails considerablecosts.

Ms K realised that without growth shedoes not stand a chance. She must giveup on her plan to use all her profits forher personal consumption and give up herplans not to expand. If she wants to beand remain a capitalist, she must pursuethe expansion of her capital by reinvestingher profits, i.e. she needs to organise the ac-cumulation of capital. Whatever her initialplans for her business were, she must actaccording to the logic of capital.8

The desire of capitalists to live their lifefrom profits is the reason why they run acompany (or hire managers to do so). Thecontinuous growth of a company throughreinvestment of a good chunk of profitsmight also allow capitalists an increasinglyluxurious lifestyle, when profits indeed in-crease. The rhythm of growth, however, isnot determined by the need for luxury ofcapitalists. It is not that they figure that asecond mansion by the beach would be niceand then expand their company accordingly.

The increased satisfaction of needs andwants of capitalists is rather a sort of by-product of capitalist production but notthe principal reason for rationalisation andso on. The money a company earned isreinvested for a company to be a source ofprofit in the long term. Merely for this pur-pose, to stay on the market, Squish increasesproductivity continuously and accumulatescapital. Profits are reinvested in order to beadequate for the rising technical conditionsof profit-making. Insofar as this leads toincreased profits, we can say: capitalistshave their luck forced upon them. Theypermanently must earn more, their wealthin their companies must permanently grow,so that capital can be preserved as theirsource of revenue.

Capitalist relations: no accident butprinciple

As shown, Ms K cannot just run her businessthe way she wants to if she does not want tobankrupt. Instead, she has to live up to herrole as a capitalist. She can make decisions,but cannot act as she pleases, if her businessis to succeed.

More generally, the capitalist economyimposes its logic on all its participants. Therules of this logic are at the same time the re-sult of and the precondition for how peoplerelate to each other economically. They expe-rience results and conditions of their actionsas a force which determines their economicactions and towards which they are, on theone hand, powerless. On the other hand,this force is a result of their own actions —

it is neither a godly nor a natural processwithout consciousness. A system of laws,with capital as the dominating economicprinciple, is hence at play.

Capitalist relations are looked upon bybourgeois economics and other people in acontradictory way. When concerning them-selves with the big picture, they take thestandpoint of principles and praise the invis-ible hand of the market. People who thinklike this know and appreciate that individualparticipants do not control what happensin the market. This way, “misbehaviour” isostensibly corrected. Sometimes they evencompare this with natural selection. If, how-ever, results are produced which they donot like, the same people start looking forculprits.

These people think that the actions ofindividuals can undermine the invisiblehand of the market which contradicts theirbelief in the invisible hand of the market.With their pursuit of culprits, they thengive the capitalist mode of production a bigtheoretical hug as a good endeavour.9

Of course, the principles of this econ-omy only exist as long as there is a majoritywhich not only obeys it but also considers ita rational or at least best-possible compro-mise and acts accordingly. This is why wecriticise everyone who speaks favourablyof the capitalist mode of production, be itworkers or capitalists.

Capitalism or Stone Age?

One commonly made assessment of capi-talism is: “Without capitalism, significanttechnological progress is impossible, we’dstill be in the Stone Age.” Let’s look at thenature of progress under capitalism.

Let’s assume that Ms K from the earlierexample had rationalised her production asexemplified above. This could well have ledto making workers redundant who wouldnow lose their jobs — possibly not only atSquish, but also in competing businesses.At this point, one of the cynical oddities ofthe capitalist mode of production becomesapparent: the same technological progressthat leads to a decrease in the amount ofnecessary work does not lead to less workfor workers and more free time to enjoy thefruits of labour.

In fact, the opposite is the case. Thosewho get to keep their jobs are now madeto work harder. The aim is to use a possi-ble advantage over other competitors in arace against time (that is as long as otherbusinesses do not work as efficiently) to thelargest extent possible. This can only beachieved by selling many products in a shorttime, so these goods have to be produced

faster. Since a day consists of 24 hours, butonly 8 of these are used “productively”, itmeans not selling two thirds of the prod-ucts that could actually be produced in aday — night shift, morning shift etc. areintroduced.

Furthermore, neither competitors andnor researchers at universities ever rest —newer, better machinery is constantly beingdeveloped and there is always the possibilitythat it might soon be applied by competitors,regardless of whether their old machinesare still working. They then make Squish’sprices turn sour because the release date ofthe next, faster or cheaper apple sorting ma-chine is not in Ms K’s hands. Competitorscould even gain an advantage by acquiringthe machine at a later time — for example,if it had become a lot cheaper by the timeMs K’s competitors decided to buy it.

Thus, Ms K has to make sure that shebrings in the cost of the machine as quicklyas possible — or else she puts her businessat risk.

Thus, in order to rationalise, a capitalistbusiness has to spend money — most of thetime a lot of money. This money must firstbe earned as profit10 by capitalists selling theproducts that their workers have produced.If these rationalisations take place, makingworkers superfluous, a frequently voicedcriticism is that even though profits weremade, the business lets workers go. Thispoint of view is based on the misguided as-sumption that a capitalist business’s interestis to create or maintain jobs.

It is the other way around: because profithas been made, rationalisation is possible.Rationalisation happens in order to continuemaking profit. This is what a job is for andit is only because of this, that the job exists.A job is a means for making profit; it is notan end in itself of a business.

This is the dire reality: if you give all youhave at work, this can, on the one hand, leadto you being able to call yourself part of thesad remaining active workforce — becauseyou were able to create the impression thatyou are a useful and compliant tool for thecompany’s profit. On the other hand, youcould also lose your job because (togetherwith your colleagues) you contributed tothe accumulation of enough money for ra-tionalisation to be possible. Innovation isexpensive after all.

Technological progress is an importantmeans in capitalist competition. Comparingcapitalism with past societies, it will mostlikely win the medal for “most inventionsper year”. However, the reverse — thatcapitalism is necessary if progress is to beachieved — is not true. Progress can alsotake place without capitalism. We are notsaying, though, that a non-capitalist econ-

8 Marx calls people “characters” (p.179), when they act in accordance with economicprinciples which could perhaps even stand in contrast to individual preferences.

9 They do not only fail to get to the bottom of all that suffering which perhapswas their original motivation. Instead, they cause more harm when they go

about punishing whomever they identify as responsible for their problems, realor imagined.

10 Even if the business takes out a loan, investors need to see that the businessaims at producing profit. Otherwise, it would not be creditworthy.

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omy would produce more technologicalprogress than a market economy. However,the question is moot before having settledto which end technology should be used.For example, progress in chemical scienceis used for increasing productivity, wagingwar and for improving cleaning products: if“a lot of progress” is the abstract yardstick,progress in the production of napalm is justas cherished as progress in cleaning dishes.

Some people see technological progressas the scourge of humanity. This disregardswhat this progress is for and claims that alltechnological development has bad effects.Under capitalism, progress may lead to a de-terioration in the quality of life, for example,if machines make human labour superflu-ous which leads unemployment. But evenif people can keep their jobs: at least interms of time, work forms the centre ofmost people’s lives and modern machinerytends not to make work more comfortable.In this regard, the technological progressmight as well be called regression — buthardly so from a capitalist point of view.

Machines, in themselves, are a meansto the end of producing useful things. In

capitalism, the end of production is earningmoney. This is what production is for andthis is what it looks like. The means, inthis case: the machines, are neutral — theyare geared towards the ends of production,but can also be used in different ways, forexample at a more leisurely pace. It is nottechnology in itself nor scientific knowl-edge that deserves to be criticised; it is theend and thus also the form of technologicaldevelopment in capitalism.11

Not a handshake in vain, not abreadcrumb wasted?

Capitalism has the rather good reputationthat it ensures labour and resources to beemployed as efficiently as possible, whichmeans that as much as possible is gainedfrom labour and a given amount of resources.It is further claimed that this is the case be-cause capitalism simply cannot afford towaste anything since whatever is wastedcosts money. Let us take a closer look atthe apparent self-evident soundness of “themore efficient, the better”.

First, let us look at a production processwithout taking its capitalist peculiarity intoaccount. It is certainly convenient for manypeople to produce a thing rather quicklysince it means that they are done with workearlier. However, productivity needs to beviewed in relation to how work is done:for example, we have to take into accounthow arduous and monotonous it is to workwith a machine, and trading productivityfor health and well-being seems like a badchoice. It is quite possible that people wouldprefer work to be a little more comfortableand less dangerous. Saving resources isnot a value on its own either. Constructingair filters for the ventilation of workplacesalso requires spending some resources andwe doubt that many people would sacrificetheir pulmonary function on the altar ofthrift.

The primary end of capitalist productionis the business of making money and, leav-ing state interventions aside, this is also itsonly standard for waste and thrift. Whateveris available for free is used, polluted andwasted without concern for environmentalor other consequences. Water, woods and

11 In a reasonable society, one would, for example, see to it that dangerous oruncomfortable types of work are mechanised where and as soon as possible, butone would also help to develop machines in a way that they are productivewithout harming workers or environment — be it through noise, pollution or

whatever. When testing technology, it would, for example, be called for to watchfor such effects and to mend machines accordingly.

12 How and when the state intervenes depends on its own calculations and trade-offs:it wants capitalist accumulation and the continued availability of the resourcesfor this accumulation: human and environmental.

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air, the health of workers in or neighboursof a factory: all of this is used without con-sideration of “sustainability” — unless thestate interferes.12

If an expenditure is necessary for thesale of a product, then it will be made: inorder to produce rye bread, rye flour isneeded — otherwise the result will not berye bread. When it comes to worker protec-tion and work safety, there is less necessityand willingness to spend money. Whethera flour-dust filter was used to improve airquality at the workplace is not visible in thefinal product.

The following examples shall serve toreject the fairytale of a highly rational re-duction of work produced by an economythat is dedicated to the increase of money.

– Products are produced for the market;whether there are any actual buyers isonly determined afterwards.13 Therefore,despite of all market analyses, produc-ing “past the market” is quite common.What happens with dead stock differsfrom case to case: cars, for example, areusually disassembled and their usableparts are built into the next series, whichrequires a lot of labour; food is usually de-stroyed in order not to undermine marketprices — regardless of whether there arepeople who are hungry but cannot affordfood. Often products are disposed of orrecycled, again using sometimes more,sometimes less labour to do so. Neitherthe labour nor the resources that went intothese products were useful to anybody.

– Scientific activities are also organised com-petitively. While there is a certain level ofexchange of ideas at conferences, there isalso a lot of secretiveness. Even knowl-edge that has been published is not neces-sarily free for use. In the form of patents,knowledge is separated from its practicalapplication by giving the latter the statusof private property. Competition and itsconsequences thus impede technologicalprogress: if, for example, new techniquesto accomplish a certain task have to bereinvented differently time and again toavoid patent restrictions; or because thereis simply no knowledge of the procedurethat research lab XY has developed butconceals for strategic reasons.14

– Many types of jobs only exist in societiesof private property and money. Cashiers,for example, are only needed where thepossession of money is a prerequisite for

acquiring a useful good. Furthermore,advertising agencies, insurance compa-nies, banks, lawyers and most securitycompanies only exist because of the mar-ket and money economy. All the labourthat goes into these companies’ buildings,office supplies and energy would simplybe superfluous without capitalism.

– It becomes apparent that “low price”refers to “low wages” rather than “lit-tle labour” when looking at shrimp pro-duction in Germany, for example. Ger-man shrimp are being shipped to low-wage countries, where cheap workersshell them, then they are being shippedback to Germany. So much for “economicand efficient”. What a waste of resourcesand human labour. However, under cap-italism, this is efficient and not a waste,of course, since its criterion for efficiency,i.e. the profit rate, is measured in money.

– New machinery is only used if it is prof-itable. For example, if a machine were tosimply make labour easier without givingthe capitalist cause to think that it wouldcontribute to her workers’ motivation andthus their productivity, it is not acquired.Where labour power is available at lowcost, it is possible to produce competi-tively and profitably even when usingtechnology from 10 or 100 years ago.

Division of labour and planning

There is no doubt that the capitalist economyis a division of labour. Indeed, capitalismrepresents a historically unique degree ofthe division of labour. Many people arriveat the conclusion that specialisation anddivision of labour are impossible withoutcapitalism or that some sort of coercion isnecessary for division of labour to work.Another widespread opinion is that capi-talism has the advantage that people pullthemselves together because they want toget paid. In this way, so the idea continues,they are forced to show discipline and goto work. Without the incentive of a wage,everything would go down the drain andpeople would never manage to arrive at acomplex social division of labour.

In order to determine whether there isany truth to these ideas, we want to takea closer look at the division of labour incapitalism. First, we have to distinguish be-tween different forms of division of labour:social division of labour or division of labour

in a society as a whole (it is not necessary foreveryone to know everything: some peoplespecialise as mechanics, others as program-mers or hairdressers) and the division oftasks in a process of production (division oflabour within a factory).

We will first examine the social divisionof labour and then turn to division of tasksin a process of production.

The social division of labour by privateproducers means that they use their mutualdependency to make money. The devel-opment of a capitalist division of labourcame about because of the purpose to createnew dependencies. Therefore, the divisionof labour on a social level takes place un-planned. It arises “behind the backs of theproducers”, mediated via the market, andas a result of “private labour . . . carried onindependently”.15 The producers, however,are dependent on each other; the variouscompanies depend on, for example, findingsuppliers of raw materials. These suppli-ers also want to make a profit; as laid outabove, this remains the prerequisite for theirexistence. A lot can go wrong here: theremight not be enough money, even thoughthe needed goods are all there or a suppliergoes bust and therefore the necessary goodshave not been produced.

The fact that — at least in successful in-dustrial nations — survival is somehow pos-sible fascinated economists such as AdamSmith. He praised the market’s “invisiblehand” for this accomplishment.16 Thosewho prevail in competition, might have rea-sons for this compliment, but not all is welleither, not even for capitalists. For exam-ples, they are also affected by capitalism’sruinous effects on the environment (albeitthey have more means to protect themselvesfrom some of these effects).

Many people are of the opinion thatplanning the economy and the division oflabour on a large scale is impossible. Itis true that it poses a complicated prob-lem — to pronounce it impossible, however,is not correct: the fact that even within achaotic capitalist production with all its un-knowns and uncertainties big corporationsare able to come up with, e.g., five-yearplans in order to schedule the productionis a strong hint that economic processes ingeneral can be planned. States keep records,at least concerning the basics such as foodprovision and energy demand, and system-atically intervene in social processes in orderto guarantee these fundamental matters ofproduction for the future — for capitalist

13 Products are rarely made to order. Usually it is simply produced and the hope isthat one’s own products will be bought rather than the competitors’ products.Capitalists want to avoid consumers purchasing from a competitor because theirown company has not placed enough products on the market. This is one of thereasons why there is constant overproduction in capitalism.

14 Leaving efficiency and resources aside: it becomes most crass in the area ofmedication. Even if a drug is easy to produce and a factory with all the necessaryequipment is available, the cost for acquiring the patent can turn the venture intoan unprofitable one. Production is not commenced because its end — making

profit — is undermined by the cost of the patent. People stay sick even thoughthey could afford the medicine.

15 Both quotes from Karl Marx. Capital. A Critique of Political Economy, Volume 1,Penguin Classics 1990. p.135 resp. 167 (or similarly on 133).

16 Capitalism in Smith’s view seems as if it were a natural process, but in reality, itremains the result of purpose-driven human deeds. Nevertheless, people aresubject to the results of their actions regardless of what they did why and how.The market eludes any form of control by the individual; it becomes independent.It confronts the individuals like a force of nature, like the weather. This is exactlyhow experts and analysts treat it when it comes to market forecasts.

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production, of course. Furthermore, whendisaster strikes, nobody relies on the invis-ible hand of the market but planned andcoordinated responses are, rightly so, putin motion.

Division of labour in companies

Inside a capitalist business, the division oflabour is planned and directed. The indi-vidual steps of production are coordinatedaccording to two factors. On the one hand,the organisation of the process ensures thatthe result is a usable product, i.e. the prop-erties of the product of labour are taken intoconsideration. Cheese, for example, has tomature before it can be cut into pieces etc.This is the labour process, and as such, ithas to be coordinated. This coordinationis arranged by capital itself in the form ofmanagers, supervisors etc. On the otherhand, the labour process is organised inorder to produce more wealth in moneythan advanced.

It has been explained so far that capitalhas an interest in workers working long andintensively in order to maximise profit —which is not something that simply followsfrom the mere production of useful things.It affects, of course, workers who have tocope with it during their working hours andwith its effects in their free time in the formof fatigue and health issues. Even the tiniestof their movements at work can potentiallybe regulated — when and for how long theycan use the toilet and when and for howlong they are allowed to eat.

Capital enforces these requirements onworkers by pressuring and controlling them.Capital’s leverage are sanctions, dockedwages, fewer shifts and the threat of dis-missal. Just like the coordination of theproduction of useful things, it is the com-panies that organise this harassment andcontrol. Thus, managers, supervisors etc.do everything at the same time: they co-ordinate the different operations of theirworkers in such a way that the end productis a useful thing, i.e. that it has use value andthey harass the workers in such a way thattheir performance allows for an increase incapital.

The view common among workers, cap-italists, politicians and economists that acomplex division of labour is not possiblewithout pressure and control is false. Themistake lies in seeing control as the naturalbasis for any kind of division of labour. An

aspect that is necessary for capitalist divisionof labour is declared essential for all kindsof production. Planning and coordinationof a work process is simply equated withcontrol and coercion.

This false conclusion has its basis in cap-italist production, in which coordinationand harassment coincide in terms of bothtime and staff. Yet, control is only necessarybecause of the opposition of capitalists andworkers, which would not exist without cap-italism. All the above ideologies share thatthey twist the attitudes of modern citizens(a social factor) into a sort of eternal humannature. The points laid out above also serveto demonstrate — without a dogma like“that’s just the way people are” — that peo-ple have very valid reasons for avoidingwage labour when- and wherever possible.

Passion for pressure and theself-contradictory stance on planning

Division of labour in capitalism is a typeof cooperation through competition — atype of cooperation that leaves numerouspeople wanting. That products get to a placewhere they are used, even though somebodyelse has produced them, is a result of thepressure exerted by producers or capitalistcompanies through their commodities andmoney. This kind of social division of labouris full of contradictions.

Both in the factory and on the sociallevel, the division of labour in capitalismis generalised within the ideology: withoutpressure, nobody would lift a finger. Coop-eration in which the working individualssimply agree on how to divide labour be-cause they care about the actual, immediateresult seems to be wishful thinking — justlike a person wanting to fly by jumping offa cliff and by flapping their arms: the bestpossible result is a broken leg. The form thatsaid pressure should take varies with dif-ferent ideologies. On the one hand, withina business, direct control and command iswelcome, pushing workers to be efficient.On the other hand, a big fear for many is awhole society functioning like a factory.

In both cases, however, the form of coor-dination is welcome, bringing to light thatthe two opposing statements serve to praisecapitalism: the market is praised for beingable to get by without planning, while capi-talist companies are applauded because oftheir detailed planning and foresight.

Addendum on the concept of “capital”

We use the term “capital” in our texts indifferent meanings. At the beginning ofthis chapter, “capital” was used in quite anabstract way, denoting money that is spentin order to increase money.17 A specificcompany, such as Squish, can also be called“a capital”. It expresses the aim of a modernenterprise — the increase in money. This istrue for all capitalist companies. The sumof these actions results in an overall move-ment in society, which we also frequentlycall “capital”.

We speak of “individual capital” whencompanies depend on specific things in or-der to reach their goal, but they do notmanage to procure these things on theirown, thus depending on the total socialcapital. “Total social capital” then meansthat the individual capitals depend on theactions of all other capitals, i.e. the sumof the individual capitals. This term canalso refer to the aim that capitalism takenas a whole should flourish, while individ-ual capitals might as well go bust. This isespecially relevant when it comes to stateintervention.

Conclusion

Society as a whole depends on the successof the accumulation of capital. The stateacquires its means in the form of taxes frombusiness transactions, owners of landedproperty need capital and paid wages inorder to be able to collect rent and the peo-ple depending on wages are at the mercyof the economic success of the capitalistcompanies employing them. If the capital-ists’ business does not work out, everybodyelse is in trouble as well. Through this, thebusiness interest, i.e. the capitalists’ privateinterest, is turned into the public interest.

Therefore, the term “capitalism” hits thenail on the head when trying to express thiseconomy’s fundamental quality. If profitmaking is the prerequisite for productionto take place at all, this entails that societyas a whole has to comply with this peculiarlogic: the principle of capital. Taking capitalas a point of reference, employees are “hu-man resources”. In order to sell their labourpower, workers have to force themselves tocater to the requirements of capital.

17 Whether it actually was capital, is something that only becomes clear in hindsight.If money has increased, it acted as capital. If it has not, it was not capital after all.

ABOUT THIS JOURNAL

This world has a lot of misery to offer:poverty, long work, stress, unemployment,war, hunger, racism, anti-semitism, sexism,homophobia — to name but a few. Pointingthis out does not distinguish us from mostpeople, many even resent these phenomenaor at least some of them. However, theyalso quickly volunteer wrong explanationsfor why these exist.

We claim that modern misery ultimatelyis the result of the capitalist economy, thenation-state watching over it and the wrongideas people have about them. This sepa-rates us from most other critics. The pur-pose of this journal is to prove this claimby explaining phenomena such as thoselisted above and by criticising the ideas andideologies that misrepresent the prevailingconditions — whatever the well-meaningintentions behind them.

Since we refer to Marx’s Capital quite abit, a few clarifications. We do not do thisto prove our worth as Marxists but becausea lot can be learned from studying that oldbook carefully. Besides explaining how thecapitalist economy works, many ideas helddear also by people on the Left were alreadycriticised in it. Capitalist crises are nothingbut interruptions of the accumulation ofcapital. We do not criticise it for sometimesnot accumulating all that well but becausecapitalism causes harm to people as an in-evitable part of its package both in crisesand in booms.

Modern democracy, where politiciansstrive to improve the well-being of the na-tion, is a fitting form of government forthe capitalist mode of production. Theseparation of rule from individual capital-

ist enterprises is a necessary condition forthe existence of general capitalist relations.Nation-states are not capitalist players onthe market – they rather make markets possi-ble. We do not criticise modern democraciesfor being undemocratic but explain whatdemocracy, freedom and equality — as theyexist — are.

We do not follow the wide-spread “re-alism” which consists of doing stuff wedo not want and of not talking about thestuff we do want. The lesser of two evilsis still an evil. We do not merely aim forsuccess but rather want a particular critiqueto succeed. We do not oppose “revolution”to “reform” but criticise the mistakes thatpeople make when they want this or thatreform or revolution or neither.

Declarations of love towards the work-ers, “the people” and “the little man” areabsent from our texts since this preventsthe critique of their wrong consciousness.This critique is necessary because we needallies in order for anything to change. Thekind of anti-capitalism which suspects evilparasites behind everything and conspira-cies everywhere will not be found in ourtexts; however, arguments against theseideologies will be.

Insight does not follow from a socialposition in a positive (operaism) or negative(Marxism-Leninism) way. Arguments donot have a standpoint, they are either corrector else wrong, insufficient or incomplete.Speaking of which, we throw around termslike “truth”, “correct” and “wrong” likethere is nothing to it; this is because there isnot. Those who dispute the existence of aworld which we can understand contradict

themselves: they themselves claim to makea true statement. Also, we do not expressour “opinions” but “judgements”, we donot “believe” but “know”. Please do notmistake this for dogmatism or arrogance.Let us explain: we know that everythinganyone ever says is a result of their thinking.This means that we can — and frequently do— err. We do not have a monopoly on truth.Every sentence can always be prefixed with“as far as we know”. This is a tautology,which is why we save the ink. Instead, wegive the reasons that lead us to a certainconclusion. When these reasons are wrongor we overlooked something, we appreciatecritique. This journal and every piece in itis also an invitation to critique.

We lay no claim to being clever, innova-tive, original or sophisticated. Our projectis to be correct and clear. Hence, writing ina way which is too difficult is an obstaclefor our own project. Yet, we struggle withwriting in a way that is sufficiently accessi-ble and clear. If our pieces are difficult tounderstand, we would really like to knowabout it, so we can do something about it.

This journal is jointly produced by peo-ple from Critisticuffs (London) and fromGruppen gegen Kapital und Nation (groupsagainst capital and nation, Germany andAustria). We are happy to do discus-sion meetings, reading groups or seminarsaround topics we write about, also outsideof London. Get in touch at

– https://twitter.com/portandcheddar

– kittens@espiv.net

– https://antinational.org/en

– https://critisticuffs.org