The Twisted DNA of Capitalism: Part I Dehumanized Rationalism

Nothing personal. Just business:

Efficiency and Dehumanized Rationalization

THE INITIAL CATASTROPHE

Early Exchange

Civilization was born when human beings learned how to cultivate surplus grain. Since that time, perhaps as much as ten thousand years ago, human produced surpluses have been exchanged. Those conducting these exchanges were motivated by enrichment, perhaps personal acquisition, maybe the advancement of some social grouping, a tribe, a clan, a kingdom. Arguably, this earliest “profit motive” suggests the rumblings of capitalism.

As the Neolithic Age spread, trade routes were mapped along old nomadic circuits. Those positioned along these trade routes tended to prosper. These trade routes, the Silk Roads, the Trans-Sahara, the Mediterranean sea lanes, the maritime Spice Routes, the Via Salaria, eventually grew to connect cultures from the British Isles to the Cape of Good Hope to the shores of Japan in a great Afro-Eurasian network of goods and commodities. In economic terms, they allowed diverse cultures to benefit from the resources and efficiencies of foreign lands.

This exchange was beneficial to everyone as each culture enjoyed commodities that they otherwise had no means to acquire. Brits could enjoy Arabian Frankincense while Arabs worked bronze from tin mined in Cornwall, that they exchanged for cinnamon and silks.

Arguably, the stirrings of capitalism can be seen in these early exchanges–benign and banal.[1]

This form of exchange, trade and mercantile, however, hardly resembles capitalism as we now experience it. Ancient merchants may have acted in their own interests and for their own profit, but there were limits. Trade and exchange represented a significant expenditure in time and energy. They also involved a transfer of goods having real value, often direct use value. These exchanges may have been one of barter, or the exchange of one good for another, or may have involved some medium or specie, coins made from some substance of value like gold or silver. Wealth in such an economy consisted of possessing tangible objects of value. Wealth was directly accessible.

For most merchants, this was a limiting factor of wealth acquisition. Great accumulation of gold or silver meant expending a great deal of energy to secure this wealth. That’s energy that could not be expended on mercantile. So only those with armies and castles could hold real fortunes. The great Malian emperor Mansa Musa was testament to this. But maintaining castles and armies is costly in both wealth and energy, requiring further acquisition through conquest and/or taxation. This meant that real wealth was out of reach for the merchant class through most of history.

Modern capitalism, is based on representative capital. Wealth is no longer tangible, but rather symbolic. When wealth can be accumulated on paper ledgers and account books rather than in vaults, there is virtually no limit to how much can be accumulated. There’s no limit to the flexibility by which this wealth can be used. Furthermore, there’s no need for an army to guard it.[2]

This evolution from tangible wealth to representative capital, however, required a revolutionary transformation that bound the Afro-Eurasian trade networks with the resources of what would become known as The Americas. This revolution created a global market that is and remains the driving force of modern capitalism.

Now, this revolution was bound to happen in some way, shape or form as transportation and navigation technologies improved. As human beings traveled, explored, and sought out new opportunities to trade, they could only make the world smaller and more accessible. This inevitable revolution could have happened in any number of ways, and may have resulted in any number of alternative possibilities distinct from modern capitalism. The possibilities, however, are lost to us as history never allows us to revisit the alternatives. Once the event takes place, be it constructive or catastrophic, once decisions are made, be they gracious, gratuitous or grave, the doors of possibility close forever.

In this case, modern capitalism was born from a grave catastrophe.

The First Catastrophe

Immanuel Wallenstein, in his invaluable book, The Modern World System, states, “…we consider 1450-1640 the meaningful time unit, during which was created a capitalist world-economy.” This time period was one of calamity and catastrophe for large segments of the global population.

The first catastrophe resulted from an unfortunate convergence of happenstance. This happenstance resulted in the first sustained trade routes between Afro-Eurasia and the Americas. Upon establishing this pan-continental connection, a vast exchange of goods, species and cultures was born. The world transformation laid the groundwork for modern capitalism and gave birth to the global economic system that exists today.

This is known as the Columbian Exchange.

It’s named after Christopher Columbus the man who established this first sustained exchange.

Herein lies the first component of the catastrophe that would be capitalism. Purely by happenstance–it didn’t have to turn out this way–Columbus, the man who set the foundation for the global capitalist system, was an awful human being.

This catastrophe was compounded, also by happenstance–it didn’t have to turn out this way. The first people he encountered upon reaching “The Indies” were, by all accounts, good, gracious and peace loving people. There were hundreds of cultures in this “New World”. Many were quite war-like, even brutal. Had Columbus encountered them, he may have been slaughtered on the spot and this may be a very different post.

Alas, in Columbus’ own words, “…no one could believe that there could be such good-hearted people, so free to give, so anxious to let the Christians to have what they wanted, and, when visitors arrived, running to bring everything to them.” In a correspondence with Queen Isabella, Columbus described the people he encountered as, “…guileless and honest, and very liberal of all they have. No one refuses the asker anything that he possesses; on the contrary they themselves invite us to ask for it. They manifest the greatest affection towards all of us, exchanging valuable things for trifles, content with the very least thing or nothing at all…” In his journals, Columbus wrote, “…they have no arms and are without warlike instincts; they all go naked and are so timid that a thousand would not stand before three of our men.

From his interactions with this guileless and timid people without warlike instincts, Columbus concluded, “…I, with the force I have under me, which is not large, could march over all these islands without opposition.” His endgame was clear as he pointed out that the native Taino people were “…good to be ordered about, to work and sow, and do all that may be necessary…” Furthermore, the beautiful (according to account) Taino people “…should be taught to go about clothed and to adopt our customs.” For this reason, Columbus claimed the lands for the King and Queen of Spain by acclamation without complaint from the natives. Of course, it is unlikely that the Taino understood what Columbus was saying, but that’s nothing more than a technicality.

Columbus’s mission was more than simple exploration for the sake of seeing the world. The man who would be appointed Admiral of the High Seas was expected to bring back gold and spices from the Indies, for which he was to be well rewarded with a 10% share. In essence, the voyage that brought the world together into one global economic system was an investment. Not quite capitalism, as this was an investment on the part of the state in the interests of the fledgling Spanish nation that was forming on the Iberian Peninsula, but close.

It was not unusual for states to fund such voyages in hope of return. Famously, Columbus was preceded by Portuguese explorer Bartolomeu Dias. Columbus , however, had a distinctly different eye for bringing a return on the investment made in him. It turned out that gold and spice was not readily available on the lands he discovered. The natives didn’t value it.

That, however, did not mean that there wasn’t opportunity. The lands he explored, the largest of which was the Island he named Hispana, or what is now Haiti and the Dominican Republic, were fertile and lush with great ports and rivers. The people were relatively passive and easy to conquer.[3] Even without gold, there was opportunity to extract tremendous wealth from this land. All one needed was an eye for opportunity…

…and a complete disregard for human dignity.

Inhuman Rationalism and Economic Efficiency

These were qualities Columbus had in spades. Columbus left a contingent behind to begin the process of settling these new Spanish lands. He brought about 20 natives back to Spain, most likely against their will, and prepared his sales pitch. This pitch was successful. He was sent back to Hispana to begin the process of wealth extraction. He did this with a cruel vigor and perhaps even madness. Testimony of his inhumanity was so atrocious that Columbus was arrested and returned to Spain. Despite the recognized cruelty of his methods, he was acquitted. On the other hand, the people, indeed the entire ecosystem, of the Americas were condemned.

Now historians have commented on the many layers of catastrophe that this first sustained interaction between the “New World” and the Old wrought on the Americas. A great deal has been written about the introduction of invasive species that ravaged the environment, to the myriad diseases carried by European crews and settlers invading the unprotected immune systems of the natives. Historian Charles Mann pointed out that, “…there is growing recognition that Columbus’s voyage did not mark the discovery of a New World, but it’s creation.” This new world involved a vast “transculturation,” but this transculturation certainly privileged one culture at the expense of others. As Mann observes, “Most Africans live in Africa, most Asians in Asia, and most Native Americans in the Americas. People of European descent, by contrast, are thick on the ground in Australia, the Americas, and Southern Africa…”

Indeed, a deeper look reveals that the beneficiaries of this transculturation were predominantly of a single class within the European culture. Notably, the European merchant class, or as a Marxist scholar would insist, the Bourgeoisie, emerged to dominate the global system of private capital. To thrive in this world, one must embrace the foundational values of private capital and incorporate them into a twisted knot of morality and metrics.

The thickest strand of this knot is rationality. By rationality I draw from Max Weber’s definition for substantive rationality, “…the degree to which the provisioning of given groups of persons…with goods is shaped by economically oriented social action under some criterion…of ultimate values…regardless of the nature of these ends.” To put this in simpler, non-Weberian terms, rationality is the process by which outcomes are maximized by strict control and evaluation of inputs. Rationalism is the discourse by which rationality is carried out and justified.

When Columbus observed that he could, with a small force, take control of the island and force the inhabitants to perform the labor required to gain a return for his royal patrons (his de facto investors), he was making a rational calculation. The inputs would be small, his meager military force, but the outcomes would be great. It’s a simple cost-benefit analysis that, to dedicated capitalists is almost instinctive. It’s just a matter of common sense.

Yet one cannot read the the Admiral’s cold calculus without a sense of moral revulsion. After all, Columbus was not making an ethically neutral observation such as suggesting the introduction of more efficient agricultural technologies made from iron rather than stone and wood. No. Columbus’s strategy was one of conquest and exploitation of human beings whom he already identified as guileless and peaceful people.

Hence, we must add a qualifier to the term rationalism. That qualifier must be some variation of Inhuman. Perhaps Dehumanizing, would also suffice. After all, Columbus could have made the observation that introducing iron implements would significantly decrease the amount of work necessary to increase the natural bounty of the land in such a way that benefited everyone, and this transaction can be made in such a way that would be fair to all involved. There was no reason why this could not have been the strategy. But it wasn’t.

Indeed, there is significant evidence that Columbus’s moral turpitude was not only well known, but abhorrent to the King and Queen of Spain. After all, as far as tradition was concerned, the people of Hispana were declared subjects of the Spanish Crown and entitled to certain protections as vassals. Francisco de Bobadilla, a knight of the Order of Calatrava, was dispatched to investigate on the reported atrocities in the Spanish Indies. Later, Bartolome de las Casas penned his influential Short Account of the Destruction of the Indies highlighting the genocide of indigenous people.[4] It was clear that the abuse and exploitation suffered at the hands of indigenous Americans was recognized as inhumanity. Within fifty years of the founding of European colonies in Hispana, the island was all but depopulated of its indigenous people.

Taino being hanged and burned by the Spanish. The Conquistador at right is smashing a baby against a wall.
The Spanish conducting a mass dismemberment of Taino men and women, cutting off their hands
When asked to repent his sins and earn a quick death, the Taino Cacique Hatuey refused for fear that he would end up in Heaven with the “good Spanish.”

Some scenes of horror as the Spanish imposed their regime of forced labor on native people in the Americas. Originally in this post about Haiti.

Despite the clear immorality, and the removal of the clearly cruel and inept Columbus, this Inhuman Rationalism expanded into a colossal systematic structure of human exploitation called encomienda. The dystopian world for those who bore the burden of production in New Spain, what could be identified as a working class, was so horrible that reports of women bashing the skulls of their newborn babies was not uncommon. On the other hand, this system was so profitable. T. R. Fehrenbach notes, “…Europeans believed the Indios must be made into productive, economic men…But they could be made to work only by utmost force, and the necessity for them to work was more powerful than Las Casas’ damning arguments or Isabella’s tears.” After all, in the sixteenth and seventeenth centuries, Spain rose from a newly united kingdom into a worldwide empire. This didn’t happen from an excess of charity.

The fuel of this empire was the vast wave of wealth extracted from the Americas and transported to Spanish coffers. Charles Mann has a vivid description of this literal extraction of wealth from the colony of Potosi. Here lay the discovery of one of the greatest deposits of silver on Earth. This silver was extracted through brutal forced labor, “Indian workers haul the ore on their backs up crude ladders from hundreds of feet below the surface, then extract the silver by mixing the ore with highly toxic mercury.” The silver was then transported by “…a series of military convoys…” until finally landing in Seville. Some of this silver was stamped into coins, the Peso, becoming arguably the first global reserve currency.[5]

This rational process of extraction and added value is referred to and evaluated by economists in terms of efficiency. It is a bedrock discourse of capitalism that it is the most efficient economic system in history. No doubt this is true. In economic terms, efficiency is the means by which costs are minimized and value added is maximized. This sounds sensible, even rational.

The rub, however, lies in what constitutes a cost. It turns out, with regard to capitalism, that just about anything that might sustain humanity, be it basic human dignity or sustainable environments, is to the capitalist a cost that must be mitigated. Any attempt to sustain human dignity or to sustain healthy ecologies comes at a cost to the value added to the commodity. So paying a fair wage is a cost to be mitigated.[6] Sustaining a healthy environment when extracting raw materials is a cost to be mitigated.

Now this was clear through most of the history of capitalist expansion. Workers, when they were not chained to systems of encomienda, hacienda, or flat out chattel slavery, struggled within the Iron Law of wages. This Iron Law, for which capitalists see no rational exception, condemn those who create the added value to a life of struggling for basic sustenance. As David Ricardo, a founding father of capitalist thought pointed out in his Principles of Political Economy and Taxation,

“As population increases, these necessaries will be constantly rising in price, because more labour will be necessary to produce them. If, then, the money wages of labour should fall, while every commodity on which the wages of labour were expended rose, the labourer would be doubly affected, and would be soon totally deprived of subsistence. . . . These, then, are the laws by which wages are regulated, and by which the happiness of far the greatest part of every community is governed. Like all other contracts, wages should be left to the fair and free competition of the market, and should never be controlled by the interference of the legislature. 

David Ricardo

It should come as no surprise then that capitalism, an inherently global endeavor, should develop in concert with the rise of nation states. It was one thing for the Lord of a Manor to assert power over his serfs, but the rise of modern capitalism involved a much more expansive, and therefore more expensive geography of coercion. Spain, among the first of the formal nation state structures, provided the necessary tools of extraction for the encomienda system–Namely, the conquistadore. The state, as a coercive instrument, emerged as the key to value extraction in the sixteenth century–and remains the key today.

Now, at this point, a critical reader should press me on the particulars. After all, what I’ve described above is not capitalism in the strictest sense of the word. After all, Spain and Portugal in the sixteenth century expanded their holdings and extracted their resources in the name of building empires in the name of their sovereign kings. The wealth extracted from the New World ecosystems and subjugated labor constituted a direct transfer of tangible goods into the coffers of royal treasuries in the interests of enriching the king or queen as the personification of the state (l’ etat c’est moi). This is mercantilism. Not capitalism.

The Abstraction of Wealth and Humanity

The main difference between Mercantilism and Capitalism is that of coffers vs. ledgers. Coffers are the tools of wealth accumulation for those who have access to the means of warehousing and protecting such constructs. Kings and princes use coffers and hire treasurers and surround their vaults with soldiers. Coffers must be filled with tangible goods, bullion, doubloons, coinage, etc. The king or the prince owns the coffers. The coffers represent real transactions of real resources that were extracted from over there and brought here, to the coffers. The measure of tangible wealth in the coffers of the king or the prince is also the measure of how one-sided the nature of the exchange. And for Spain in the sixteenth century, that exchange was one-sided indeed. It was about as pure an extraction as was possible with mercantile coffers.

A mercantile system, however, cannot be managed by a prince and his ministers alone. When this system is global in reach, one needs more than bureaucracy to manage the myriad insinuations. One needs a class–a merchant class. In Europe, this merchant class had been refining its science since the Black Plague. This class, dubbed by Marx as the Bourgeoisie, used ledgers rather than coffers to gather their wealth.[7] With ledgers, the new merchant class advanced the science of money, rents, and debt as major factors in economic growth. Money, rents, and debt gathered in ledgers constitutes the accumulation of capital.

This is a much more efficient system than the coffers of the mercantile. Ledgers require much less physical space and much less energy to defend. True, coffers were still important, but they were the problem of the state. The ledgers, however, were where the real action took place. It opened a whole new world of wealth acquisition available to those who understood the real nature of money, rents, and debt not as tangible goods extracted from the real world, but rather as abstractions available to be manipulated on paper.

It worked and continues to work something like this. The ship that carries men and material over there, offloads its cargo and replaces it with silver or furs or tobacco or gold or guano or slaves to be brought here is a natural allegory for the transfer of wealth taking place in modern times. To the untrained eye it looks very much like the same vessel that traveled the Mediterranean trade routes, or the Red Sea, or the Indian Ocean, or the South China Sea. Indeed, it is only different in kind to the camels or carts dragged along the Silk Roads or the Trans-Sahara. Stuff is brought from here and exchanged for goods found there, and returns.

To this new merchant class, however, this ship looked very different. To the merchant, that ship upon leaving port was more representational, aspirational, than it was real. It represented potential profit and therefore, on paper, represented an investment opportunity with a probability of payoff. It could return empty. It might never return at all. If the material value and the human beings on the ship are ignored, the ship represents an opportunity for material gain for those willing to take the risk that it would return with more resources than were put into it at port.

So, if I own the ship and I staff the ship and I supply the ship, those are my costs. I then let the ship sail, keep my fingers crossed, and hope that upon return, the cargo is of greater value than the investment that I put into it. On the ledger, my costs are in one column, my returns in the other. Simple math.

Ah, but what if instead of owning the ship, I owned a percentage share of the ship. What if I could convince ten of my friends to share the costs of purchasing the ship, staffing the ship and supplying the ship. I then mitigate my risks. I have more money to put into purchasing shares in other ships, not all of which are likely to sink or be taken by pirates or washed away in a storm. I maximize the probability of a return while minimizing the likelihood of loss.

Now I have this share of a ship that represents a quantifiable cost, but a variable return. I could lose. I could gain. I could gain a great deal. That share in the ship now has value separate from the ship itself. I could sell my share, or a percentage of my share. I could borrow money from somewhere else, purchase my shares in the ship, sell my shares in the ship at a profit and then pay off my debt keeping the balance as my return without ever putting up my own money and never seeing or thinking about that ship again. It all takes place on my ledgers.

Whether or not that ship returns laden with gold or guano is irrelevant to me. The ship is nothing more than an abstraction. I may have made my money from that ship even before it cleared the port. I made my money from that ship without even the least knowledge of nautical terms or knots or navigation. All I knew how to do was mitigate the risk of the numbers in one column being lower than the numbers in another column of my ledger.

That is capitalism.

Capitalism allows for the growth of wealth in the form of capital. Capital, however, is an abstraction. The more abstract, the greater the potential to accumulate even more capital. From the founding of the first joint stock company to the computerized algorithms fueling contemporary derivatives trading and hedge funds, the process is the same. An abstraction of potential return as divorced from any material and human reality as possible.

Once upon a time it could be argued that wealth was the sum of material resources and human labor. Capitalism, however, makes such a metric irrelevant. Capital is representational of the potential return on the efficient use of material resources and human labor verses the potential risks that the return will be less than the costs.

With this abstraction, the human element is completely divorced from the transaction. The sailors could all drown. It doesn’t matter. The cargo could be human beings in chains dying of disease. It doesn’t matter. An entire ecosystem could be stripped of life. It doesn’t matter. What matters is the potential that the number in the gains column will be greater than the number in the costs column, and how I as an owner of some percentage of this abstraction can maximize that potential.

Diagram of a Slave Ship

The ultimate expression of capitalist efficiency. This diagram instructs slave traders on the most efficient way to stack human cargo to maximize profits.

Rise of the Capitalist State

It is no coincident that the rise of capitalism corresponded to the rise of the nation state. Despite the claims made by the Ayn Rand camp, capitalists are not trail blazers. Blazing trails is inefficient and unprofitable. Capitalists are road travelers. Using the roads built and paid for by others to move resources is much more efficient, much more profitable. Roads are constructs of the state.

Of course, by roads I mean any technology by which the influence of the nation or culture is extended. This may very well be actual roads. But these roads are made safe by policing provided by the state. So policing is a road by which capitalism travels. Roads are extended into more expansive territories by military action displacing or “pacifying” those who see no value in these roads. The capitalist follows the conquistador. The capitalist does not tame the wilderness. The capitalist exploits resources made available once the wilderness is tamed by the state.

So the relationship between the state and the capitalist is no accident, but it was no planned development. Gunpowder made it possible for kings in the most advantageous position to break the diverse military power of the landed nobility. With cannons and muskets kings established a monopoly on violence over greater and more expansive territories. These territories had to be managed, and most importantly, taxes had to be extracted in order to pay for and sustain this monopoly on violence. A vast, rational technology was put into place. A bureaucracy presided over by a king and delegated to ministers. This vast bureaucracy became the arm of the sovereign, the state.

As a result, the interests of the sovereign king became the the interests of the state. Stable and growing populations. Expansion of territory to accommodate that population. Infrastructure to tie the territory and the population together. A vast policing institution to maintain order over expansive infrastructure and diverse peoples. These very structures, once established, allowed the merchant class to blossom.

So the merchant class tended to support the emergence of strong kings and disdain the messy clamor of democracy rising from the streets.

At the same time, kings at the top of the state pyramid benefited from the rising merchant professions, not just in terms of nationalist support, but also in the form of all important taxation. Kings took it upon themselves to encourage the rise of the merchant class, chartering banks and companies to pursue the interests of the state. The merchant class reveled in state patronage.

But not the taxes.

Taxes fall on the “cost” side of the ledger. If the merchant class were to pay for the state, then they should expect the state to serve their interests–their ledgers.

On the other hand, the merchant class sustained the state through more lucrative means. Debt. Endless wars of domination and denomination often drained the crown’s coffers. When this happened, kings turned to the merchant class with their hands out. Loaning money to an institution with its own army is a fairly safe investment.

The state as an institution, since its inception, was a mechanism for serving elite interests. In the sixteenth to the eighteenth centuries, the elite interests were those of the king and his court. During this time, however, the rising merchant class, the bourgeoisie for my Marxist friends, became more wealthy, more insinuated in the functioning of the nation, and thus, more powerful. As the merchants became more powerful they created their own institutions, their own bureaucracies and were in a greater position to make demands of their own.

They did so by leveraging debt, but also in constructing knowledge. In the eighteenth century Europe experienced a great paradigm shift with regard to sovereignty and dominion over the state. Whereas Thomas Hobbes rendered the paradigm justifying the existence of a powerful king as a social contract, other thinkers, like John Locke, often educated in bourgeois institutions, posited an alternative to royal sovereignty. Sovereignty of the people. Res Publica. The merchant class, with its wealth and power–and a very different understanding of contracts–demanded a renegotiation of the social contract. This new contract would emphasize the rights of life, liberty, and, of course, property. It would be a contract not of royal decree, but of laws deriving their legitimacy by the “people” who had a say in how they were governed. A republican state.

So the contemporary debate was born from one simple question. What is meant by “people”?

If “people” means the propertied merchant class, then we have a Capitalist Republic in which the people could exploit resources, both natural and human, in the most efficient way for the greatest profit. A great deal of wealth could be extracted and the nation would grow more powerful by the force of enterprise and profit motive. The Capitalist State would serve the needs of the merchant class by taking on the expense and the risk of taming and protecting the wilderness. The merchants would benefit from the efficient exploitation of resources and use part of their largess to sustain the state.

On the other hand, if “people” were synonymous with “human”, then we have a problem. We have democracy. And democracy is inefficient and hardly profitable.

As the Enlightenment of the eighteenth century progressed into the nineteenth, the former was the default definition. The people were the owners, the investors, and they strove for profit. They invented a concept of capitalism that allowed for the possibility that anyone could rise among the classes based on merit. The term merit, however, had a specific meaning. Merit meant serving the interests of the capitalist class. If that meant stepping on the necks of fellow human beings, this was all in the name of greater opportunity.

By the middle of the nineteenth century, an increasingly urban and industrialized population began to see itself as a working class, with its own interests and its own power. They organized and created their own institutions and their own paradigms with regard to the social contract. They started to use this power and organization to leverage their own demands on the state–and this could not be tolerated.

So we have the contemporary debate. Should the state continue to serve the interests of the economic elite, as it was initially established to do, or should the state serve the Demos, those who actually create the wealth? In the first case we have what was once called oligarchy, but now carries the designation of plutocracy (Freeland). Since the rise of the Capitalist State, the trend for republican governance has been one that favors the holders of capital. This stands to reason. The state, governed largely by capitalists or those beholden to capitalists, write the laws that allow for the efficient exploitation of natural and human resources, referred to by economists as the factors of production. The state then uses its monopoly of legitimate violence to enforce this exploitation.

Marx believed that such a systematized, rationalized process of dehumanization sows the seeds of its own destruction. In this, his analysis is flawed. Indeed, such an exploitative system sows the seeds of alienation and discontent. The same infrastructure used to rationalize capital can also be used to exchange ideas and to rationalize dissent. When this dissent is empowered enough to threaten the capitalist state, however, the government has learned to negotiate with the mobilized Demos. As Chrystia Freeland notes in her book, Plutocrats: The Rise of the New Global Super Rich and the Fall of Everyone Else, “America’s New Deal and western Europe’s generous social welfare systems were created partly in response to the red threat. Better to compromise with the 99 percent than to risk being overthrown by them.”

There are two contradictions to such a power dynamic: Retrenchment and Mutation. These contradictions arise from the fact that a negotiated compromise between the Demos and the capitalists merely mitigates the dehumanizing rationalism inherent to the political-economy–it thus far never succeeds in creating a human rationalism. After all, such would be the end of capitalism and, I would posit, the end of the state as we know it. And institutions, do not negotiate the end of their existence.

The first contradiction, Retrenchment, results from of an ever narrowing cycle of alienation, mobilized discontent, negotiation, and retrenchment. This corresponds well with Weber’s Routinization of Charismatic Authority. In essence, the exploitation inherent to capitalism leads to human alienation. However, the efficiencies of capitalism also provide opportunities for people to communicate that alienation with others and to mobilize themselves rationally in the interests of their mutual discontent. If this mobilized discontent becomes powerful enough (meaning it incorporates enough people who are willing to put their energies into the mobilization) to challenge the established political-economy, one of two things happens, negotiation or dissolution.

In the first instance, the State negotiates with the mobilized Demos to institute some reforms that reduce the level of exploitation and improve the quality of life. On the other hand, the state guarantees the perpetuation of the political-economy of a Capitalist/State government. Over time, however, these reforms are undermined by the Capitalist/State. Capitalists working through the state chip away at and retrench the reforms in the interests of efficiency and dehumanized rationalism. They often use economic crises or natural disasters to mobilize this retrenchment, a process described in detail by Naomi Klein in her invaluable book, The Shock Doctrine: The Rise of Disaster Capitalism. Only now, as a new system of alienation is put into place, the capitalist/state has learned from its mistakes and entrenches new structures and constructs new knowledge to retain its legitimacy in the face of future mobilization. This pattern is clear as Neo-liberals all over the world dismantle social safety nets and impose austerity on the desperate.

The second contradiction, Mutation, occurs when the mobilized become powerful enough to overthrow or dissolve the state. To date, the overthrow of the state has only happened when the state loses its monopoly on legitimate violence, while another entity gains that legitimacy. This does not, however, dismantle the state. It dismantles a state, only to reproduce another state often more despotic than the original.

It also fails to dismantle capitalism. It may, as was the case with the Russian Revolution and the rise of Marxist/Leninism/Maoism, confiscate the capital from private owners. Such revolutions, however, fail to democratize the factors of production. Instead, the capital is placed in the hands of those at the top of the newly created revolutionary state, the apparatchiks if you will, thus reproducing the very same incentives of dehumanized rationalism inherent to private capitalism. In this case, however, the efficiencies incentivized by the private holders of capital no longer exist. As Cynthia Freeland aptly observes, “Ironically, the proletariat fared worst in the states where the Bolsheviks had imposed a dictatorship in its name.”

In such a case, the state is reproduced, capitalism is reproduced, but the concept of the Capitalist State is mutated into what Dr. Richard Wolff refers to as State Capitalism. “State capitalism exists when the state apparatus – rather than a group of private citizens – positions state officials to function as capitalist employers.” The Capitalist State and State Capitalism. Two different phenotypes with largely the same genotype behave in much the same way. The DNA of Capitalism, the dehumanized rationalism inherent to this political-economy, remains in place.

Dehumanized rationalism allows the capitalist to maximize wealth production without limitations inherent with recognizing the value of human dignity and natural sustainability. It is this emphasis on economic efficiency that produces pools of poverty, destitution, desperation. Families do not send their children to work in the coltan mines if they see any other viable option. Economic efficiency is also the poison that turns forests into deserts, converts thriving mountainsides into moonscapes, reduces thriving rivers into toxic pools.

Capital as it exists in now integrated digital accounts as binary information is abstracted to the point where wealth production is conceptually decoupled from those who produce the wealth and the ecosystems from which the wealth is extracted. The holders of capital pull the economic potential from “over there” and transfer it to their own ledgers without any direct interaction with the inhumanity that they demand from their boardrooms. Even the most callous feudal lord had to face the consequences of his decisions, and that system was certainly not without it cruelty. The board of directors has no reason to visit his mines, to face the impoverished. He simply collects his dividends.

The integration and insinuation of capitalism into the functioning of the state means that democratic action in the face of capitalist exploitation is necessarily limited by the interests of the state. Capitalism cannot be tamed through political reforms, as the capitalist ultimately holds the political power. Nor can the state be democratized in a capitalist system. The entire political-economy must be addressed. Indeed, the entire political-economy must be dismantled as a piece, but done so in such a way that doing so doesn’t merely reproduce a more cruel, less efficient system.

Yes. It must be admitted that capitalism is the most efficient system of production in the history of the world. That’s not a particularly high bar. It could be said that everyone, even the most destitute, benefit from capitalism, after all, even the poorest among have clothing, they may even have cell phones. Indeed, the poor have always lived off the garbage left by the rich. That the quality of that garbage has improved under capitalism is not a testament to it beneficence.

Capitalism alienates. Capitalism dehumanizes. Capitalism evaluates the costs of creative destruction without regard to the casualties and sorrows inherent in that concept. That it also enriches, and empowers some at the expense of the many is an integral part of its DNA.


Notes

  1. That is, of course, until one culture decided it was strong enough to take the resources it wanted by force rather than dealing with the merchants. But that’s another story.
  2. Which is not to insinuate that there is no need for an army. That will be elaborated. The army, however, was someone else’s expense.
  3. Though not as easy as Columbus thought. They did resist and destroyed the first Columbian outpost at San Isabel. Despite their lack of steal weapons, the Taino came up with other martial innovations including gourds filled with ground pepper…an early tear-gas.
  4. Though Las Casas was an advocate for the humane treatment of indigenous Americans, he did suggest using more “hardy” African slaves for necessary labor, instead. We can’t candy coat one’s actions.
  5. It’s important to note that relatively little of this silver remained in Spain to benefit the Spanish people. Much of it went to China. The Ming Dynasty, having defeated the ruling Mongols, eschewed Yuan paper currency in favor of silver specie. This was a fortuitous circumstance for a Spanish royalty wishing to regale itself in finery. It wasn’t of much value to Spanish laborers who could have benefited from easier access to currency.
  6. Paying the full value of one’s labor is not possible in a capitalist system. As Marx and other critiques of capitalism point out so well, profits are derived from the value added by labor to the commodity. If workers were paid the full value that they added to the commodity, no profit could be made and no incentive would exist to invest capital in that endeavor. So we are stuck negotiating a “fair” wage rather than requesting the full value of one’s labor.
  7. I prefer the more banal term “merchant class.”

Sources

Anthony, Dani. July 2015. “Bartolomé de las Casas and 500 Years of Racial Injustice.” Origins: Current Events in Historical Perspective. Ohio State University. Retrieved June, 01, 2020. (http://origins.osu.edu/milestones/july-2015-bartolom-de-las-casas-and-500-years-racial-injustice)

Bergreen, Laurence. 2011. Columbus: The Four Voyages 1492-1504. New York, NY. Penguin Group.

Fehrenbach, T. R. 2014. Fire and Blood: A History of Mexico. Open Roads Media.

Freeland, Chrystia. 2013. Plutocrats: The Rise of the New Global Super Rich and the Fall of Everyone Else. New York, NY. Penguin Books.

Klein, Naomi. 2007. The Shock Doctrine: The Rise of Disaster Capitalism. New York, NY. Henry Holt and Company.

Mann, Charles C. 2011. 1493: Uncovering the New World Columbus Created. New York, NY. Alfred A Knopf.

Marx, Karl. 1952. Capital. From Great Books of the Western World. Ed. Robert Maynard Hutchins. Chicago, IL. William Benton.

Ricardo, David. 1821. Principles of Political Economy and Taxation. John Murray. On line version. https://www.google.com/books/edition/On_the_Principles_of_Political_Economy_a/wjBjAAAAMAAJ?hl=en&gbpv=0

Wallerstein, Immanuel. 1974. The Modern World System: Capitalist Agriculture and the Origins of the European World Economy in the Sixteenth Century. New York, NY. Academic Press.

Weber, Max. 1978. Economy and Society. Berkely and Los Angeles, California. University of California Press.

Wolff, Richard D. June 27, 2015. “Socialism Means Abolishing the Distinction Between Bosses and Employees.” Truthout.org. Retrieved June 16, 2020. (https://truthout.org/articles/socialism-means-abolishing-the-distinction-between-bosses-and-employees/)

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