Are Corporations People? Is Romney?

Watching Democracy Now on Friday Jan 6th I saw another sad exchange on the topic of “corporate personhood”, the strange legalistic side-track that seems to have galvanized so much of the passions of Occupiers. Two days earlier Mark Provost of Occupy NH confronted Mitt Romney regarding Romney’s now famous defense of the idea that corporations are people. Provost prefaces his question by pointing out the growing disparities between the rich and the poor in America, alluding to some connection between this and corporate personhood.

What fascinates me is Mitt Romney’s response, which recapitulates an old argument from Adam Smith, and Provost’s complete inability to articulate a response to this argument. Romney responds with a simple question, “Where do you think corporate profits go?” Provost responds by arguing that profits could be hoarded or they could go to the 1%.

Romney had apparently been waiting for this question for a long time. He responds with a well-scripted, tight argument: “Corporations are collections of people that are trying to have good jobs for themselves and promote the future.” Profits go to shareholders, “some of which may be the 1%” (notice that he is perfectly comfortable embracing the 1% lingo) but also to people with pensions. Profits also go into growing businesses which creates new jobs. All the money always goes to people. “The money goes to hire people or to shareholders, and so they’re made up of people. So somehow thinking that there’s something else out there that we can just grab money from and get taxes from that doesn’t involve people- well they’re still people!”

Adam Smith made this exact same argument a couple centuries earlier. The argument is that the prices of commodities, or the total value in society, all resolve themselves back to wages. If you trace the price of a commodity back to all of the costs that went into its production all of these eventually end up at wages paid to workers. Now, you may ask where profit comes from then, since profit is, by definition, money you made above your cost of production. Profit, says Smith, is going to be spent on future wages. The greater the profit, the more jobs we can create in the future. So, for Smith, profit and capitalism are good news for workers. All value eventually resolves itself to wages paid to workers.

I can’t help but point out here that Adam Smith didn’t need to live in an age of “corporate personhood” to make this argument. This is because the basic logic of capital remains the same regardless of the specific legalese within which capital may find itself enmeshed at various times in history.

But back to Mark Provost…. Provost doesn’t get a chance to respond to Romney until he appears on Democracy Now two days later. Provost says that he doesn’t understand how Romney’s argument really related to his question which was meant to be a question about the growing disparity of wealth in the country, which he somehow, vaguely, sees related to corporate personhood. On Democracy Now he merely manages to mumble something about corporations needing to pay more taxes but he fails to try to take on Romney’s argument that corporations are just collections of people and that all corporate profits eventually go to job creation. He just repeats that there is growing wealth disparity in this country.

Then the discussion on Democracy Now immediately turns to a discussion of tactics: Are mic-checks still a legitimate way of interrupting public speeches? What are Occupy’s plans for the NH primary? This discussion takes up the majority of the interview. This is to be expected for a movement that is focused primarily on protest tactics and not on theory.

Now, if we take Provost’s comments and try to formulate them into a coherent argument it seems that they would be this: Corporations aren’t people because not all of the profit made by them goes to the workers. He defends this position by pointing to empirical data about wealth disparity, not by providing a theoretical counter-argument to Romney. Where does this profit go? Apparently, for Provost, they go to the personal consumption of CEO’s and shareholders, and to “deferred investment”.

Now, if there was no deferred investment (say, we were in a boom phase of the economy and profits were being channeled into growing businesses) and this money was instead plowed into production, and if wages were higher and CEO salaries were lower (say, because of a resurgent labor movement), then it seems that Provost would be forced to agree with Romney that corporations are just collections of people. Provost hasn’t actually shown that capital contains “something outside” of people. By focusing on wealth distribution and deferred investment he makes it sound like the problem is just the distribution of wealth between people within the corporation.

But I think that the beef with corporate personhood goes deeper than this. I think that what people are really upset about is not the legalistic framework of corporations. It is that we are intuitively aware that there is a greater, dominant force in society, something that is beyond relations between people. There is an autonomous, cold, calculating, impersonal nature to capital that follows its own rules. We work to enrich it more than we work to enrich the CEO’s that serve it. When Romney claims that there is nothing to see here, when he makes his “pay no attention to the man behind the curtain” argument that there is nothing “outside” of people in the corporation, we have two choices: 1. We agree with him that capitalism resolves itself to workers producing value for themselves and thus give up a real anti-capitalist project; or 2. We can try to identify what exactly this “something outside” is.

Something Outside

I couldn’t help but beat my head against a copy of Vol. 2 of Kapital and moan disconsolately as I watched the broadcast of Democracy Now. Marx tackles this very argument of Smith’s in Vol. 2 of Kapital. He shows that there is a rather significant part of capitalist production that does not resolve itself to wages, that does not go to serve workers at all. It does not exist to enrich the capitalist. It is merely self-perpetuating accumulation of capital for its own sake. This is the real nightmare of capitalist production, a greater nightmare than wealth disparity or deferred investment. Marx’s argument is a long, complex argument which eventually exposes a very crucial insight about the nature of capitalist production, one that is quite relevant for contemporary debates over crisis theory. I attempt to summarize it here.

Building a model of the interrelated investments that make up a capitalist economy Marx divides production into two departments. Department 1 (D1) produces means of production. Department 2 (D2) produces consumer commodities.

Let’s take a look at D2 first. The capitalists of D2 spend their money on wages and non-labor inputs like machines and raw materials. Marx calls these non-labor inputs ‘constant capital’. From the perspective of D2 it looks like Romney and Smith are correct. The wages of D2 obviously go to workers and the money spent on constant capital seems like it should all go to the workers of D1. (Yes some of the money they pay to D1 also goes to the capitalists as profit. But if this profit is spent as revenue for the consumption goods of capitalists then it just goes to the workers of D2 who make these consumption goods. And if the money is used to plow back into production then it goes to hire more workers…. or so it seems thus far.)

But when we ask the same questions about D1 things look different. Obviously the money spent by D1 capitalists on wages goes to workers. But where does the money spent on constant capital go? It goes to other firms in D1. In other words, capitalists in D1 buy and sell constant capital from each other. This means that there is a portion of value in society that never actually ends up in the form of wages. It is constantly circulating within D1 in the form of constant capital (or money which has just been paid for constant capital and is about to be reinvested in constant capital.)

This is the “something out there” that Mitt Romney and Adam Smith don’t want you to know about. They are not hiding the 1% from you. They are hiding this. Why? Does this really destabilize Romney’s argument that what is good for corporations is good for people? Even if there is a small portion of value that never makes its way into wages isn’t it still true that growing corporations creates jobs and that most of this investment goes to into wages?

No.

Marx’s argument continues as he examines what is necessary for capitalism to grow, to expand the total amount of production each period. Through a series of complicated illustrations he shows that what must grow first, before anything else can grow, is this chunk of value that is not wages. By expanding the means of production capital can then expand the total size of production. But in order for this to happen money must be diverted away from consumption (away from consumer goods) and into the production of means of production. As capital grows the portion of the total value in society dedicated to the production of means of production grows at the expense of the portion dedicated to consumption goods.

Thus Romney is not correct that what is good for corporations is always good for people. What is good for capital is what is good for capital and this will always involve people getting the short end of the stick. When capital grows it may lead to some more employment (in certain conditions) but there will be a greater growth of capital value that never makes its way into wages.

Another way to put it is that as capital grows in the expansionary phase of an economic cycle it will need more workers. But the expansion of capital happens faster than the expansion of wages and worker’s consumption. This is because this expansion happens at the expense of workers. Oftentimes capitalists enrich themselves by siphoning off a lot of this expansion in the form of bonuses and dividends. But these bonuses and dividends are not the driving force of capital. The driving force of capital is expansion for the sake of expansion. Machines for the sake of machines. Money for the sake of money. The real entity that dominates the corporation is not a person. It a constantly growing chunk of value that takes the form of money and anonymous objects that have no purpose but to grow forever in a nihilistic quest to expand for the sake of expansion. I discuss this from a slightly different perspective in my latest video Subject/Object.

I am indebted to Andrew Kliman for helping me to understand the significance of Marx’s argument in the latter half of Vol. 2 of Kapital. Interested readers should keep in mind that Kliman is currently working on a study guide to all 3 volumes of Kapital that should be ready in the next year of so. Also of interest is a section of Kliman’s brand new book “The Failure of Capitalist Production” which discusses these reproduction schemas (the models of a capitalist economy broken up into D1 and D2). Kliman tracks the growth of D1 empirically over that last century showing that as capital grew D1 grew at the expense of D2. Kliman also draws some important conclusions from this, conclusions that I don’t have room for here but will summarize/bastardize in short: if D1 can grow on its own, creating its own demand for its product, then there is something wrong with theories of crisis that claim that capitalism goes into crisis because of a lack of consumer demand due to low wages. If D1 can create its own demand, and if it is the growth of D1 which causes capital to grow, then lowering wages should actually be good for the economy not bad for it. This means that politics of wealth distribution that claim we can have healthy capitalism if wages are higher are logically flawed. Low wages are good for capital. Capital is good for capital but it is bad for people. Capital is not people.

My girlfriend chides me that I am too quick to criticize and too slow to offer constructive advice. In the spirit of rectifying this character flaw, I offer the following advice for Mark Provost and all others who may care to debate Mitt Romney in the future on this topic. When Romney tells you that corporations are just made up of people you can respond by saying one of the following:

1. “Actually there is a huge and growing portion of the value of corporations that never ends up in the pockets of workers or the pockets of capitalists! It is money that stays in the form of factories, machines, etc. and just grows for its own sake. It grows at the expense of the worker. We work for it not the other way around.”

2. “Put down the Book of Mormon and read volume 2 of Marx’s Kapital.”

3. “If I wrote Volume 2 of Kapital on a gold tablet and buried it in the hills of New York would you take the time to read it?”

4. “Fuck you, clown.”

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32 Responses to Are Corporations People? Is Romney?

  1. skepoet says:

    This made me happy. A thousand times, yes.

  2. Royall says:

    I’m gonna go with option 3.

  3. Jim says:

    Well said, well written.

    You have a typo here: “This is to be expected for a movement that is focused primarily on protest tactics and not no theory.”

  4. allan says:

    It is also to be expected from a movement which either has no clue how capitalism actually works or which is afraid to describe itself as Marxist.

  5. Matt says:

    This is a great post, and a great website.

    That Kliman book sounds alright too,

    Thanks, bye!

  6. Tom says:

    Another great blogpost albeit cheeky at the end.

  7. John K. says:

    Brilliant, as always. The third response option is epic.

  8. Please DO NOT PUBLISH this comment. Its a personal communication as I couldn’t find any medium to directly contact the blog-author.

    Dear Brendan, I wish to bring to your notice a book, written by an Indian Economist. This book is “Beyond the Invisible Hand: Groundwork for a New Economics” by ‘Kaushik Basu’. In that book, in chapter 1-’In Praise of Dissent’, Page no. 7, Paragraph 3, Line 3rd onwards he(the writer) goes on to criticize Marxian Economics as having “poor record to dislodge Neoclassical Economics”, which according to him is “a good warning sign of not considering it as a natural option to criticize Mainstream Economics. He also says that Marxian Economics claims to discover “laws that an economy may follow in long-run” but such claims appear to him delusional. Most of his book then is a criticism of Free-market fundamentalism.

    This book is good in the sense that it criticizes Mainstream Neoclassical & to some extent its vulgarest form- Austrian Economics(though selectively). But his such an assertion about Marxian methodology is something I cannot accept & hope you too wouldn’t.

    I request you to read that part of the book & put a reply to the writer’s concerns on your blog. I can assure you this will help many budding Marxian Economists of India to avoid falling in such traps. I shall attempt to reply his assertion too, but find that am still in the initial stages of learning of Marx’s methodology of argumentation. You being thorough & well-read about Marx, will give a better reply. Hope you spare some time for this. Thanks beforehand. Regards.

    • Here’s the complete text. This is what the writer of the book puts about Marxian Economics:

      “For some it may seem that a natural instrument for a radical critique of the mainstream is Marxian Economics. But the poor record of Marxian methods to dislodge neoclassical economics is a good warning sign.” He then states, “While I find Karl Marx’s utopian constructions and normative yearnings attractive, as scientific method Marxian Economics has little appeal to me.” Later he states, “The search for, and more alarmingly, discovery of, empirical regularities over large swathes of human history is inevitably flawed.”

      Further he says, “I see no way that we can ever discover the trend that will unfold over the long run”. Lastly he notes, “There may well be laws that an economy follows in the long run, yet claims of discovery of those lwas appear to me, for the most part, delusional. It is one thing for something to exist, and quite another for it to be discovered or even be discoverable.”

      You might find this text directly useful rather than getting a new book itself. Good day.

  9. Paul says:

    I was absolutely struck to hear Romney presenting an ARGUMENT in response to the 1% / corporate profits / inequality narrative. This absolutely deserves to be taken seriously. But I have to feel sorry for the kid who finally had the chance to bring this up at all, suddenly having to to react impromptu to a retort like that with little to no chance to prepare or analyze. Romney is right that the top 1% are people too, and I think we need acknowledge confront that fact directly if we’re to make gains.

  10. Jack M. says:

    The reason why Marxist ideas haven’t really taken hold among occupiers is that Marxists haven’t done the grunt work that could win the movement to our ideas. Instead of participating in “logistical” working groups (food, housing, etc.) that were the bedrock of the protests, the Marxist left confined itself to participating in selective “political” working groups. They’ve generally shunned physical work in favor of intellectual work–putting themselves in a tailist position.

    The result is that Anarchists/anti-authoritarians and radical types who have no solid theoretical foundation (like Provost) have emerged as leaders of Occupy. If there was a united Marxist current doing all of the things that built the Occupy Movement, Occupy’s leaders could possibly be people who wouldn’t be stammering and studdering when the Mitt Romneys of the world poses a theoretical challenge. Nor would they obsess over the scary-sounding concept of “corporate personhood.”

    The fact that Occupy focuses more on protest tactics and is largely weak on theory points to the need for a revolutionary party. I’m not talking about the sort of sects that pass for left parties in the US (the ones tailing Occupy), but one that is truly engaged in and emerges out of the class struggle.

    As for the Mormon thing, I’m about as non-religious as they come, but I find mocking someone’s religion in this sort of context to be distasteful and counter-productive. If somebody wants to be Mormon/Christian/Protestant/Catholic/Jewish/Muslim/Buddhist/Hindu/whatever AND a supporter of the workers’ movement, we should welcome them with open arms. Mitt Romney’s religion really has nothing to do with the fact that he is leading a particularly reactionary wing of the ruling class, so why bring it up?

  11. ocowart says:

    While I agree with Kliman’s and your response to Romney’s assertion, I wonder how many people would be won over by such an argument? Just a thought.

    I would also say that there is more fundamental problem with the ‘occupy’ movements – that being that they are a reform-oriented type of movement with a (perhaps unconsciously) revolutionary motive. The approach of sitting around and being disruptive is much more effective when there is a clear goal (e.g. curriculum reform) and an institutional apparatus to enact that reform.

    Growing disparity in wealth is not an issue which legislation could address, and even if it could, which legislators would address it? There is no clear ‘endgame’ for the occupy protest because it has only the vaguest grasp of the problem; in many ways it is articulating it’s own discontent (corporate greed, wealth distribution) with the very ideological language which obscures the fundamental problem of the operations of a capitalist mode of production. Articulating the problem as one of the purposive action of various (perhaps ‘greedy’) corporations not only fails to address but actively obscures the fact that what appears as growing inequality is surface appearance of much deeper restructuring systems of accumulation and production.

    The problem it seems to me is that there is no genuinely radical critique which is taking place in a public forum, and even movements like ‘occupy’ tend to shy away from suggesting it is capitalism itself which is the problem, but ‘greedy bankers on Wall Street’. It will be interesting to see how the progression of the current crises affects the tone of the public discourse.

  12. Christian says:

    Provost should’ve made the argument this way. First, corporations aren’t people, but are instead a tool used by people to shed all personal responsibility and gain beneficial (obscene) tax privileges. (So tax and legal privilege.) Second, leaving exploitation aside, this type of privilege rigs the game in favor of the rich, who use corporations as tools to extract increasing amounts of surplus. Individuals don’t have these same privileges, so in a way, corporations are “super-human”.

    Romney’s argument is laughable; it’s like saying a car or a house is a person because the net benefit goes to people. Provost should have called Romney on begging the question, because that’s all Romney is doing.

  13. SMASHCAPITAISM says:

    some anarchists (im not sure if the author is an anarchist) seem to think that money and employment is perfectly fine as long as the business is worker owned. They miss the point. Wage exploitation is not the only form of slavery. I think the monetary system is equally wrong. Money (currency, buying and selling) is inherently evil. It forces a buyer and a seller. And the seller is always exploiting the buyer. Even in this worker owned system- you still have to “find a job” and youre still enslaved by it. Getting rid of the labor and monetary system is the only solution

    • MrEverpresent says:

      Thats the question. How can we organize a system that can still feed every human being on this planet. The population growth is there.
      There should be an alternative and it’s not very clear how an alternative system can sustain the world population. I’m really a pessimist. Capitalism has screwed the world decades ago. Its consequences are clear: environmental problems (perhaps solved by new technologies), population growth, liberal convergences in ideology. I think we are heading towards a world war. There is huge mass of surplus population in the world.

    • dola says:

      “And the seller is always exploiting the buyer.”

      What happens when one capitalist spends $30 million during a recession to buy the business of another capitalist who invested $60 million during a preceding boom? All things being equal, the profit rate for the new owner is now double what it was for whoever he brought from. You might not be concerned as to what happens within the bourgeoisie but you should be careful whenever you type the word “always.”

  14. Curious fellow says:

    Nice article, though I have a question. If part of the capital is invested in expanding the means of production, how does that capital stay there, shouldn’t it go to a potential D3 that produces let’s say machine parts for a factory, and then used to pay the wages? It’s not like that money suddenly evaporates.

  15. Marce P says:

    Since this is my first comment on this blog I would like to thank you for all the interesting material.

    Corporate personhood may well be a metaphysical issue, and if I were Provost I wouldn’t even try to debate a libertarian on these terms. The bottom line, however, is that many people think it’s wrong to treat corporations as persons since they have no interest in the well-being of communities (they feel no obligation towards others); small capitalists are (assumed to be) more interested in the well-being of other people, as workers or consumers.
    This could be an important issue for the 99%, because you can either imagine a world that works well for ‘the people’ and small capitalists as well (Smith), or a world where the productive forces now embodied in capitalist corporations are socialised (Marx).
    I may be overly optimistic, but I don’t think that the “99% lingo” commits one to a Smithian outlook, as long as the focus remains on abolishing the conditions that created the 1%.
    I think Marx wrote of the capitalist as the personification of capital. This insight could have helped Provost to see corporations not just as a tool in the hands of capitalists, but as the “something” that gives capitalists their distinctive personhood.

    • ocowart says:

      Marce,

      I think you touch on something really important here. Metaphysics aside, I think the most fruitful and intuitive grounds for rejecting corporate ‘personhood’ is the fact that corporations’ interests are not human needs but the needs of capital (i.e. profits) and that this is not wealth created for human needs but for the profit-motive. This seems to be a much more immediate level on which the issue of corporations as ‘people’ is a fundamentally flawed concept.

  16. Rob says:

    Excellent post. Pretty much sums up my feelings on the Occupy movement- that they (not all but many) are confused liberals and lifestyle anarchists with no real analysis other than “our democracy has been bought off by corporate banksters”. I saw a guy on one of the OccupyDC live streams last night talking about how “this isn’t capitalism it’s corporatism”. They are the left wing of the tea party. The way Mitt Romney handled Provost just shows how impotent the Occupy movement is. Unless we create a solid political reference-point and link the Occupy sentiments within the context of a international workers’ movement, I’m afraid it will either dissipate into irrelevance or be co-opted by opportunistic reformist politicians.

    • Rob says:

      PS I am about halfway through Andrew Kliman’s “The Failure of Capitalist Production”. IMO it is the best current analysis on the crisis which I have read. He does an especially good job of debunking the “underconsumption” and “financialisation” schools represented by Baran, Sweezy, Magdoff, Bellamy-Foster, Harvey, etc.

      • Xan says:

        Aren’t the Stagnation (different from Financialization) theories of Sweezy et al. very similar to Kliman’s claims about TRPF as the cause of the crisis? I haven’t read Kliman’s book (yet), but from what I’ve seen they appear to be largely similar. I’d appreciate if you could elaborate a bit on this, thanks!

      • Xan,

        The two approaches are different for many reasons, though it is understandable why one might conflate them at first.

        The Sweezy school argues that we live in a chronic state of underconsumption which is leading us down the path of stagnation. There is a mass of surplus value that is constantly looking for new avenues for investment and constantly not finding such avenues. It turns to more and more desperate measures in its quest, financialization, etc.

        The Tendency of the Rate of Profit to Fall (TRPF) argues that capitalism experiences cycles of boom and bust, rising profitability followed by falling profitability. This cycle has nothing to do with demand or workers wages. It has to do with labor-saving technology.

        I’d write more but I just saw this review of Kliman’s book which might be a start:
        http://critiqueofcrisistheory.wordpress.com/responses-to-readers-austrian-economics-versus-marxism/the-failure-of-capitalist-production-by-andrew-kliman-part-1/

  17. Xan says:

    (Continuing the debate about Kliman vs. Sweezy et al.)

    OK, so I just read http://critiqueofcrisistheory.wordpress.com/responses-to-readers-austrian-economics-versus-marxism/the-failure-of-capitalist-production-by-andrew-kliman-part-1/, and I also have just recently read The Great Financial Crisis (http://monthlyreview.org/press/books/pb1849/) by Magdoff and Bellamy Foster, who are pretty much the intellectual heirs to Sweezy. I think I don’t exactly agree with how their ideas are pictured, and I have a couple of questions about the whole thing, but for a start I’ll try to write down what I think Sweezy-Magdoff-Foster say in their books and articles, perhaps someone can correct me.

    The main idea, as far as I can tell, is that the *natural* state of Monopoly Capital is that of a stagnant economy. This happens for two reasons: one, the markets are already pretty much saturated in this late phase of capitalism; most of the world is industrialized, there’s no entire new continents to build up, no groundbreaking technological revolutions that create entirely new massive markets, etc. Two, competition is stiffled by the enormous concentration of capital in a few companies, who fix prizes and just compete in reducing production costs and in the sales effort. These two factors create a situation where a bunch of capitalists have a bunch of money that they don’t know how to spend, since there’s not enough productive investments in the “real” economy that would give them the desired returns.

    Sweezy, in the 70s, argued that there are some counteracting factors like goverment spending or the military industrial complex that can temporarily revert stagnation, but that in the long run they are not able to stop the tendency altogether because they are self-limiting in nature. The big example is the Second World War, that stopped the 10+ year downturn of the US economy (the New Deal had not been very effective, with unemployment being close to 20% in the late 30s) and ushered in 3 decades of growth only for the stagnation to kick in again since the mid 70s.

    Magdoff and Bellamy Foster, and Sweezy before his death, have argued that a new counteracting tendency since the 80s has been the financialization of the economy and the increasingly frequent speculative bubbles. Capitalists resort to these as new strategies to invest their capital and restore growth for a while, but as we have seen they are also self-limiting since they make the economy extremely unstable.

    For all these reasons the authors claim that reform within the system is unlikely to solve anything in the long term, since we are dealing with basic inherent problems of capitalism, and that something-like-socialism will be needed if we are ever to overcome the present situation.

    Now the questions:

    - The way I see it the authors argue that the causes of the crisis are the inherent contradictions of the late phases of the capitalist mode of production, not the gap between the rich and the poor. Wealth inequality is just a consequence, not the cause. I see a bunch of people categorically saying that Sweezy is an underconsumptionist, so I’m probably confused about this point and I’d appreciate any clarification. Perhaps this is a matter of definition, but in particular I don’t see how the problems of the monopoly phase of capital (extreme concentration of capital, saturation of the markets, etc) are caused by an unequal distribution of wealth between rich and poor.

    - Is the main difference between Sweezy and Kliman the fact that Sweezy claims oligopolistic companies have enormous profits that they cannot invest productively, while Kliman argues that the rate of profit in the XX century has in fact declined, at least since the 70s (as Marx predicted)? I think small differences in how the data is interpreted are reasonable, but how can two people arrive at the exact opposite conclusion using the same information?

  18. Magpie says:

    Brendan,

    I liked all the potential answers (although I personally prefer the 4th), but to me there is a better more fundamental answer: the answer is that the capitalist, as capitalist, gets a part of the profit, but does not contribute to the value added. It is a parasite.

    Think of a guy who bought Apple Inc shares ten-twelve years ago. Maybe the guy was really smart and a “visionary”, more likely, it was just a fluke. Regardless, during all those years he has shared in the profits, as dividends paid, and has enjoyed capital gains more than what he invested; and what was his contribution to Apple Inc? Diddly squat.

    He did not assemble a single computer, iShit, or whatever (the Chinese Foxconn slaves did). He did not design those gadgets or write the software they run (the Apple engineers, industrial designers and programmers did)

    If he bought the shares in the secondary market, his investment did not even go into funding Apple Inc.

    The situation with an owner-manager is only superficially different: wearing the owner hat he does nothing, he only puts capital (which, as we know, comes from the work performed by others, but appropriated by capitalists) to fund the company and he gets a profit for that; wearing the manager hat, he does no productive work (although the work he may do could or could not be important), but he is also paid for that work: acting as a manager he a worker and is paid as a worker would be paid for doing whatever it is managers do.

    And that describes Jobs and Wozniak (not sure how’s written) when they started Apple. Initially, they wore all hats: capitalists, managers, designers, programmers and assembly line workers.

    As Apple grew, they kept receiving profits, even though the actual productive work was done by someone else. This is parasitism.

    • Magpie,

      I don’t think Romney wold be phased by your answer. As I quoted him above, he seems perfectly comfortable using the language of 1%. He argues that the profits paid to the 1% go to grow the business or they are spent on commodities which spurs economic growth. So maybe it’s ‘unfair’ that some people get to be the 1%, but if this is what is necessary to keep the economy growing, keep people employed, then this is ok. And a liberal would probably add that you can always just tax the 1% and redistribute the income if you are really concerned about the ‘fairness’.

      Adam Smith would continue that all revenue acquired by capitalists eventually ends up as workers wages. Capitalists spend their money on producing more commodities.

      The only way we can counter this trickle-down economics is to look to the argument made by Marx in volume 2, and by Kliman in The Failure of Capitalist Production. The argument I outline above. There is a growing portion of production which does not resolve itself to wages. It is value always in the sphere of production of means of production. This is production for its own sake, not for society’s sake. It shows that capitalist production is not driven by consumer demand but by the compulsion to produce surplus value for its own sake. It shows that workers are not the intended beneficiaries of the system but that value production is.

      Brendan

      • Magpie says:

        Brendan,

        Thanks for the reply.

        “I don’t think Romney would be phased by your answer. As I quoted him above, he seems perfectly comfortable using the language of 1%.”

        You are absolutely right on this. For that matter, I doubt he would pay attention to any of the answers, with the possible exception of 4, which is my preferred option.

        I would not attempt to explain to Romney why capitalism is shit. It is not shit for him: he’s doing just fine as things are. From his point of view, to suggest otherwise is to try to fool him with something that obviously is not in his best interests.

        But, I don’t need to explain Romney anything. The people I would say need to have things explained to them are the workers. And, trust me on this, it doesn’t feel good when one realizes there’s a fat leech sucking from one’s veins.

        “He argues that the profits paid to the 1% go to grow the business or they are spent on commodities which spurs economic growth. (…) Adam Smith would continue that all revenue acquired by capitalists eventually ends up as workers wages. Capitalists spend their money on producing more commodities.”

        The passage above touches many subjects, and I don’t think we could treat them adequately here; so I suggest we leave most of it for another occasion.

        However, let me comment on the fairness thing.

        As I see it, any talk about fairness or morality is irrelevant.

        To speak about the law, however, is not. Under capitalism it is entirely legal to exploit one’s workers. If one is exploiting someone else, then one likes the law as it is and one supports it. One finds it vital. It can’t be any other way: one’s existence as exploiter depends on it.

        If one, at the other hand, is being exploited, the only way out is to change the law. But capitalist law is vital for capitalists, so we’re left with no choice: capitalists must go, so that the law goes. Not because it is fair or unfair, not because we like them or not, or because they are good or bad, ugly or pretty, but because exploitation goes against the workers’ interests and there is no way around.

        I have used what I call the “preaching to the wolves parabola” to explain this. If you are interested, I can leave a link to it.

        “The only way we can counter this trickle-down economics is to look to the argument made by Marx in volume 2, and by Kliman in The Failure of Capitalist Production. The argument I outline above. There is a growing portion of production which does not resolve itself to wages. It is value always in the sphere of production of means of production. This is production for its own sake, not for society’s sake. It shows that capitalist production is not driven by consumer demand but by the compulsion to produce surplus value for its own sake. It shows that workers are not the intended beneficiaries of the system but that value production is.”

        I am no expert, or scholar, so I say this for what is worth. I am reading the material produced by Prof. Kliman I could get and is accessible to me, and I find a lot of merit in many things he says.

        But I am not fully convinced (especially by his empirical articles, where he deals with economic history and data).

        Regarding Marx. Again, I am no expert; I may be mistaken and so I am open to be convinced otherwise, but I believe the situation is not as clear cut as you seem to believe.

        And I am not convinced at all on a special need to counter the trickle-down bullshit on theoretical grounds: what’s empirically obvious does not require theoretical demonstration.

        Thanks for your attention.

      • What I’m saying is that pointing to the fact that workers are exploited by capitalists is not an answer to Romney’s trickle-down argument. Yes I agree that it is important to talk about exploitation, and to counter all of the justifications for surplus value that are created by bourgeois economic theory. But that is a separate argument than the Smith-Romney argument about profit all resolving itself to wages. If profit just ends up benefiting workers in the long run, no matter who might benefit unduly from the process in the interim, then there is not point in fighting it. To counter the Smith-Romney-trickle down argument we have to show that actually profit does not all resolve itself to wages. The only way to do this is to use Marx’s argument from Vol. 2. It is not an empirical argument for Marx, but a theoretical one. Kliman, in his recent book Failure of Capitalist Production, gives an empirical account of the phenomenon which seems to verify Marx’s claim.

        This way of looking at the problem actually deepens the analysis of capitalist production. We see that capitalist production is more than just a system of one class exploiting another class. It is also a system of dead-labor dominating living labor…. a system where our productive activity takes on an autonomous, alienated form which dominates us. In order to eliminate the capitalist mode of production we have to eliminate production of value.

        And I think it is extremely important to have a theoretical explanation for any empirical phenomenon. It is not obvious how to interpret the phenomenal world of capitalism. One only needs to look out the many different theoretical stances that can be found around the same phenomena. Take corporate personhood, for example. Are corporations greedy because they are considered people by the law? Is it bad corporate culture or bad individuals? Or are they greedy because they are compelled to produce for profit by the capitalist mode of production? Is this compulsion to be greedy ultimately of benefit to society or not? This is an argument that can only be had on theoretical grounds and the answer is extremely important for framing political struggles.

  19. 4theunion says:

    I think that lines of argument that go to the tune of “corporations aren’t people” have deeper roots in the capitalist system than just the buildup of constant capital for the sake of it.

    The argument is an embodiment of liberal naivete and ignorance, its an effort to embody the abstractions that govern life under capitalism into an easier-to-grasp abstraction they call “corporations.”

    You won’t hear most occupiers chanting about the Law of Value or abstract labor because they don’t have a theoretical understanding of the concepts, but they’re still witness to the manifestations of those abstractions, so they need a line of criticism that addresses it. Provost’s floundering is the manifestation of that disconnect.

    Still though, fuck Romney, the fuck.

  20. RNL says:

    Brendan, do you have any more info about Kliman’s study guide to Capital that you mention in this piece?

  21. MrEverpresent says:

    I would love to hear this aswell. :)

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