Zombie Capitalism Global Crisis and the Relevance of Marx

CHAPTER ONE

Marx's Concepts

A world of commodities

The most obvious feature of the economic system in which we live is that it is centred around the buying and selling of goods of all sorts. We have to pay for food, shelter, clothing, energy to light and heat our homes, transport to move around, everything we need to keep ourselves and our families alive. And in order to buy we have to sell, even if all we have to sell is our capacity to work for others. Our very lives depend on the movements of commodities. Hence Marx's starting point in Capital:

The wealth of those societies in which the capitalist mode of production prevails, presents itself as an immense accumulation of commodities.

Marx was writing at a time when market relations had still not penetrated large parts of the world. There were still societies in which all production was for people's immediate needs, whether in "primitive communist" societies based on hunter-gathering or light agriculture, 1 where people agreed freely among themselves how and what to produce, or in peasant societies where a local lord or ruler dictated to them from above. Even in most of the societies where the market already existed, the majority of the population were still subsistence farmers, producing most of the things they needed to keep their families alive, with only a small proportion bought or sold. Today we can extend Marx's words to say that "the wealth of the whole world, with a few exceptions, presents itself as a mass of commodities". And the exceptionsthe provision, for instance, of free health and education in a number of advanced countries-are increasingly subject to forces seeking to commodify them. This near universality of commodity production marks society today off from anything that has ever happened before. To understand what is happening to the world we have to begin by understanding the workings of commodity production.

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Marx was not the first to try to understand such workings. He was preceded by the classical political economists-early supporters of capitalism who tried to understand its basic dynamics as it struggled to break through, in a Europe still dominated by landowning classes. Two were of special importance: Adam Smith, who wrote in the 1 770s at the time when the first modern factory, a spinning mill, was opening at Cromford in Derbyshire; and David Ricardo, who defended the interests of the early industrialists against the big landowners 40 years later in the aftermath of the Napoleonic wars.

Use value and exchange value

Smith is often treated as the patron saint of present day capitalism and of its neoclassical economic theorists. But he made an important point, developed further by Ricardo, which has been completely obliterated by nearly all those mainstream economists who claim to follow in his footsteps. He noted that once society is based on production for the market, every commodity can be seen from two completely different points of view:

The word value . . . has two different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called "value in use"; the other, "value in exchange". The things which have the greatest value in use have frequently little or no value in exchange; and on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarce any thing; scarce any thing can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it.2

Marx's Capital took up and developed this insight, removing certain ambiguities found in Smith's work:

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Understanding the System: Marx and Beyond

The utility of a thing makes it a use value . . . Being limited by the physical properties of the commodity, it has no existence apart from that commodity. A commodity, such as iron, corn, or a diamond, is therefore, so far as it is a material thing, a use value, something useful. This property of a commodity is independent of the amount of labour required to appropriate its useful qualities.

But commodities are also:

the material depositories of exchange value [which] presents itself as a quantitative relation, as the proportion in which values in use of one sort are exchanged for those of another sort, a relation constantly changing with time and place. 3

This distinction is not made by today's mainstream neoclassical economists.4 The only sort of value they see is "marginal utility", based on people's subjective appreciation of use values. Nor is it made by some of those dissident economists who claim to be in the tradition of Ricardo (the so-called "Sraffians" ).5 Their model is based on the inputs and outputs of physical objects, in other words, again on use values. Finally there are some present day Marxists who argue the distinction is not relevant, since the important point Marx was making was about exploitation, not value. 6

In erasing the distinction made by Smith, Ricardo and Marx, all such theories miss something essential to a system based on commodity production: everything that happens in it is subject to two different sets of scientific laws.

On the one side there are the laws of the physical world-of physics, chemistry, biology, geology and so on. It is these which determine the ways in which different things have to be combined to produce goods (the different components of a machine, the material structure of a factory, the techniques used in a surgical operation and so on) and also the usefulness of those goods to those who finally consume them (the nutritional value of food, the warmth provided by fuels and electricity, the number of children who can be accommodated in a school or patients in a hospital, etc).

On the other side, there is the way things relate to each other as exchange values. These often behave in a very diferent way to use values. The exchange value of something can fall while its use value remains unaltered. This has happened to the price of computers in recent years-the computer I used to write my last book was twice the price of the much more powerful one I am using now. What is more, exchange values are infinitely divisible while use values are usually not; you might say that a bicycle is worth one twentieth of a car, but if you cut a car up into twenty parts it is of nil use to anyone. This matters immensely when it comes to things which are important for modern capitalism like factories, oil wells, airliners, schools and hospitals. The market treats these as exchange values that can be infinitely divided into parts (worth so many pounds, pence, etc); but they have a physical existence that cannot usually be divided in that way.

Marx's Concepts

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The exchange values of commodities are also infinitely fluid. In the form of money they can move from one part of the economy to another, from one part of the world to another, be spent on one item or any other of the same price. But the fluidity of use values, like their divisibility, is restricted by their physical make up. You can move £100 million in cash from Britain to India overnight, but you cannot move a factory worth £100 million at anything like the same speed. Use values and exchange values operate according to different, often contradictory, logics and a failure to see this leads to a failure to understand the most basic thing about a commodity producing economy. It does not operate smoothly, just through the flow of exchange values, but is always subject to bumps, to stopping and starting, due to the embodiment of exchange values in use values with physical properties that limit their fluidity.

Labour and money

Smith and Ricardo were not content just with seeing the double nature of commodities. They went on to argue that it was only possible to ascribe exchange values to objects with very different physical properties because they have one thing in common-they are all products of human labour.

As Smith wrote:

The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. What is bought with money or with goods is purchased by labour, as much as what we acquire by the toil of our own body . . . They contain the value of a certain quantity of labour which we exchange for what is supposed at the time to contain the value of an equal quantity.

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Understanding the System: Marx and Beyond

Labour was the first price, the original purchase-money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command.7

This understanding Marx also incorporated into his own analysis:

The exchange values of commodities must be capable of being expressed in terms of something common to them all, of which thing they represent a greater or less quantity. This common "something" cannot be a geometrical, a chemical, or any other natural property of commodities . . . If then we leave out of consideration the use value of commodities, they have only one common property left, that of being products of labour.

But Marx refined the analysis of Smith and Ricardo in a very important way. It was not the particular concrete exertions of labour as such that determined exchange value. For different people with different skills take different amounts of time and use different amounts of efort to produce particular commodities:

Some people might think that if the value of a commodity is determined by the quantity of labour spent on it, the more idle and unskilful the labourer, the more valuable would his commodity be, because more time would be required in its production.8

Rather the exchange value of a commodity depends on the "socially necessary labour time":

that is required to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time . . . 9

Marx's Concepts

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It is social labour that has transformed nature to create the means that humans depend on for a livelihood. So it is the amount of social labour incorporated in it that constitutes the underlying value of a commodity. The concrete labour of individuals is transformed through exchange in a commodity-producing society into a proportionate10 part of "homogenous", "social" labour-or "abstract labour". Marx calls this abstract labour the "substance of value". It finds expression in exchange value and determines the level around which the commodity's price will fluctuate on the market:

Every child knows that any nation that stopped working, not for a year, but let us say, just for a few weeks, would perish. And every child knows, too, that the amounts of products corresponding to the differing amounts of needs demand differing and quantitatively determined amounts of society's aggregate labour . . . And the form in which this proportional distribution of labour asserts itself in a state of society in which the interconnection of social labour expresses itself as the private exchange of the individual products of labour, is precisely the exchange value of these products.11 All the diferent kinds of private labour, which are carried on independently of each other . . . are continually being reduced to the quantitative proportions in which society requires them.12

Neoclassical economists tried to develop a notion of value out of people's subjective judgements, with some even trying to incorporate labour as "disutility". Marx, by contrast, saw value as something objective, as indicating the proportion of total social labour "embodied"13 in it. But what that value is only comes to light as a result of the continual, blind, interaction of commodities on the market.14 The system as a whole forces its individual components to worry about how the individual labour they employ relates to labour elsewhere.15 He calls this process the operation of "the law of value".

Values, however, are not unchanging. All the time there is the introduction of new techniques or new methods somewhere in the system. This results in a change in the amount of socially necessary labour needed to produce certain commodities-and that changes their exchange value. The use values of objects remain fixed until natural processes of wear, tear and decay damage them. But the exchange value of things-the value that matters for the system as a whole-declines every time the technical advance somewhere in the system decreases the amount of labour required to make them.

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Understanding the System: Marx and Beyond

This leads Marx to a "counter-intuitive" conclusion which distinguishes his account of the system-and it is one which even some Marxists have difficulties coming to terms with. A rise in productivity reduces the value at which things exchange. It seems absurd on the face of it. Yet there are numerous examples of increased productivity causing some goods to fall in price compared to others. Marx provided one from his own time:

The introduction of power-looms into England probably reduced by one-half the labour required to weave a given quantity of yarn into cloth. The hand-loom weavers, as a matter of fact, continued to require the same time as before; but for all that, the product of one hour of their labour represented after the change only half an hour's social labour and consequently fell to one-half its former value.16

Thousands more examples could be given today. For we are living in a period in which technical advance is much faster in some industries (especially those involving microprocessors) than others, and so the prices of things like DVDs, televisions and computers produced by industries using the most technologically advanced equipment are tending to fall while those in other industries using older techniques remain fixed or tend to rise. This is something of central importance as we shall see later when we discuss the dynamics of 21st century capitalism.

Once commodity production is generalised across a society, one particular good comes to be used to represent the value of all others-money (Marx calls it "the universal equivalent" ). In Marx's day it was usually in the form of gold (or sometimes silver), and a certain quantity of gold (say an ounce), produced by a certain amount of average labour time, could act as a measure of the value for all the other goods that were bought and sold. As capitalism developed as a system, banks and then governments found that they could use paper notes to stand in for gold in many transactions and eventually to dispense with reliance on it at all, so long as people believed others would accept those notes (known technically as "fiat money" ) for goods. Credit from banks could also function in the same way, so long as people continued to trust the banks.

Marx's Concepts

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The development of commodity production had one important efect. It systematically distorted people's understanding of reality through what Marx called the "fetishism of commodities":

The . . . relation of the producers to the sum total of their own labour is presented to them as a social relation, existing not between themselves, but between the products of their labour . . . A definite social relation between men assumes, in their eyes, the fantastic form of a relation between things. In order to find an analogy, we must have recourse to the mist-enveloped regions of the religious world. In that world the productions of the human brain appear as independent beings endowed with life, and entering into relation both with one another and the human race. So it is in the world of commodities with the products of men's hands.17

People speak of "the power of money", as if its power did not come from the human labour for which it is a token; or of the "needs of the market", as if the market was anything more than an arrangement for linking together the concrete acts of labour of different human beings. Such mystical attitudes lead people to ascribe social ills to things beyond human control-the process which the young Marx had called "alienation" and which some Marxists since Marx have called "reification". Simply seeing through such mysticism does not in itself deal with the social ills. As Marx noted, simply arriving at a scientific understanding of the character of existing society leaves it intact just as "after the discovery of the component gases of air, the atmosphere itself remained unaltered" .18 But without seeing through the fetishism, conscious action to transform society cannot take place. Hence the importance of grasping the distinction between use value and exchange value and of grounding value in socially necessary labour.

Exploitation and surplus value

We do not only live in a world of commodity production. We live in a world where control of most of that production is concentrated in relatively few hands. In 2008 the sales of the world's biggest 2,000 companies equalled about half of total world output.19 If we assume that around ten directors sit on the board of each of the multinationals, then the out of a world population of over six billion, a mere 20,000 people exercise decisive control over the creation of wealth; in fact, the figure will be considerably lower than that because most of the directors will sit on the boards of more than one firm. Production, of course, is not carried out simply by the multinationals. Alongside them are a mass of nationally based medium-sized firms that have not achieved multinational status, and alongside them exist an even larger number of small firms, some little more than family operations employing perhaps a couple of people. But, even taking all these into consideration, only a small percentage of the world's population control the means of production responsible for producing the major portion of its wealth.

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Understanding the System: Marx and Beyond

Those who do not own and control such means of production have no choice if they are to make a livelihood, beyond the minimum provided by welfare programmes, other than to try to sell their ability to work to those that do. They get paid a wage, while their labour produces goods that are the property of those who control the means of production. Some of the value of these goods is used to cover the wages of the workers, some to pay for the materials used in production, some to cover the wear and tear of means of production. But some forms an excess which is the basis of the profits of the owners-what Marx called "surplus value" and some non-Marxist economists simply call "the surplus" .

Adam Smith had already suggested where this surplus came from (although he did not stick consistently to this view) :

In the original state of things, which precedes both the appropriation of land and the accumulation of stock, the whole product of labour belonged to the labourer . . . But as soon as the land becomes private property, the landowner demands a share of the produce . . . The produce of almost all other labour is liable to the like deduction of profit. In all arts and manufactures the greater part of the workmen stand in need of a master to advance them the materials of their work, and their wages and maintenance till it be completed. He shares in the produce of their labour, or in the value which it adds to the materials upon which it is bestowed; and in this share consists his profit. ²⁰

Profit, then, arises when the land, tools and materials required for production become the private property of one section of society. This section is then able to get control of the labour of others.

Marx's Concepts

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