What Is Pure Capitalism?

by
Robert Vienneau
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This post is fairly stream of consciousness. It is a bit more about how many find me odd.

I have previously mentioned, as an aside, Kozo Uno and his reading of Marx's Capital as a theory of pure capitalism. I like this idea, although it needs to be noted Marx had a lot to say in Volume I about concrete practices in his day and the historical development of capitalism. The theory and history are entwined. But Marx certainly presents the capitalist, not as a person, but as an embodiment of capital, in some sense.

I often bring a book with me when I go out to eat by myself. Sometimes people ask me what I am reading. For example, I have lately been re-reading the first volume of Capital; Marx's Value, Price, and Profit; and Böhm-Bawerk's Karl Marx and the Close of his System.

Many I run into are small businessmen, that is, petty bourgeois, in Marxist phraseology. I think of restaurant owners, general handymen, providers of mowing and plowing services, owners of auto repair shops, landscaping artists, and even one movie producer, musicians, consultants on Information Technology and Information Assurance, and so on. They do not obtain income solely from returns to capital, but, rather, from some combination of labor and capital. Their labor includes general scut work, managerial direction, and strategic planning. (Which of these tasks comprises the labor of superintendence?) Some have partners with finance capital invested in the business, often family members. Some sometimes have a few employees, and some have many more.

Maybe this is politeness, but I often say that Marx is not writing about you. I do not want to try to explain that capitalism restricts even your agency. I think many are conscious of trade-offs in staffing too much or too little on any given day, on the level of service provided, and on ensuring that staff do not quit. I bet many might agree that some staff that fall into the category of so-called unskilled labor, such as bartenders, baristas, waiters, bussers really know a lot about their tasks, do them well, and would take much time to train replacements. When they bid on jobs, they are conscious of socially necessary labor time and are worried about whether, for some reason not necessarily within the control of the worker, a job might take longer than assumed in the calculations which a bid was based on. Yet they feel that, with competition as it is, they cannot include a reserve time or even fully charge their own time. (Come to think of it, I am not including here those I know who make their income from profit on alienation, by buying collectibles low and selling high.)

I am more likely to explain to workers that the business owners' income comes from value added by their labor but not paid out in their wages. I also say that my income from Apple also comes from the exploitation of workers, and that this would be so even if Foxconn was not treating their workers so badly that they had to line their dorms with nets at ground level. And, of course, I am a consumer of commodities produced under capitalism. I am amused to attempt to explain that the labor theory of value can be seen not to work, as a theory of price, because of the existence of such products as wine and whiskey.

If you think about it, small businessmen do not fit in with the abstraction of pure capitalism since their earnings do not come solely from capital. Self-employed artisans and those close to such are, for Marx, survivors from a period of time before capitalism was fully developed. With John Kenneth Galbraith, I think this sector, however, will always exist, aside with the large corporate sector, in which many are somewhat sheltered, for a time, from the gales of competition.

Many skilled workers in the United States have savings, often in the form of mutual funds. They might not be able to access this wealth immediately, without a penalty, if it is in a 401K or Individual Retirement Account (IRA). (Defined-benefit pensions are now rare.) My casual empiricism is consistent with the observation that a tiny fraction of the population owns most of the wealth in the United States.

Here is another class of people whose income consists of returns to both labor and ownership of capital. And they have deferred not only the day-to-day management of the firms they indirectly have ownership shares in, but even decisions about investing and disinvesting in such firms to paid professionals. Does it matter to how the system works whether these savings are managed by financial experts on Wall Street or specialists more closely connected to labor unions? How should analyze executives corporate suites whose income is often classified as salaries, but anyways seems to have something to do with being in a class with control, but not ownership of the means of production? (I have not actually read that book or the one linked above by Drucker.)

So what kind of society is Marx describing abstractly? I think that in pure capitalism, some capitalists should be making investment decisions, but not being paid for labor power. Perhaps we want to think of the mid-nineteenth century when industrialists like John D. Rockefeller, Andrew Carnegie, or Karl Wittgenstein were starting out, but before they had obtained oligopolistic power.

One can build on this model to describe historic capitalism. You might think my account of small businesses shows something about a system organized around the production of commodities by means of commodities. Others have developed analyses of monopoly and finance capitalism. In the Post Keynesian tradition, Richard Kahn, Nicholas Kaldor, Luigi Pasinetti, and Joan Robinson had developed a model in which workers save, but investment decisions are driven by another class. Maybe a different model is more appropriate for the neoliberal era after the end of Bretton Woods, and in which workers do not seem to find their wages growing with productivity.