Herman Schwart's keynote address

[Daniel Moure]

I've been thinking about Herman Schwartz's excellent keynote address at the Crisis of Capital Crisis of Theory conference on Saturday, and about the important questions that Hannes Lacher asked in response.

I'm going to offer an incomplete summary of Schwartz's address, restate some of Lacher’s questions, follow with some preliminary baggy thoughts, and end with some questions.

A. SCHWARTZ AND LACHER

Samuelson once claimed that at first nobody understood Keynes’s General Economic Theory, not even Keynes. Marx also complained that nobody, except some Russian economist, understood Capital when it was first published. I guess that happens when somebody writes a work that breaks so fundamentally with its field. Schwartz's address was important because it began the process of making sense of what exactly Nitzan and Bichler's (NB) Capital as Power (CAP) means and is trying to accomplish.

In part, Schwartz argued that CAP is a macro-sociological theory that makes an empirically investigable scientific claim—that capitalization is the measurement of power, as well as a tool of power, in capitalist society. NB are criticized by others for excessive reductionism: there are, after all, all sorts of functionally differentiated types or sources of power (states, corporations, patriarchy, etc.) that are not reducible to a single measure. A scientific theory, according to Schwartz, tries to explain qualitatively distinct phenomena according to a common quantifiable measure. For example, the qualitatively distinct phenomena of rust and fire can both be explained by the same chemical process of oxidization. CAP is trying to do something similar with phenomenally distinct social processes.

Lacher asked a few questions, of which I repeat two here. First, he asked whether Schwartz agreed that CAP can adequately explain apparently distinct phenomena, or whether it is excessively reductionistic. And second, he asked what exactly CAP can explain. According to Lacher, CAP is a theory of the ruling class’s own self-understanding. As such, it investigates a narrow set of social phenomena (how the ruling class measures its power), from which it draws rather large conclusions (overall social dynamics are explained by capitalization). So can CAP actually explain, for example (and this is my own ad-lib), exploitation, the relationship between capital and state, the dynamics of the underlying population, international relations, etc.?

Schwartz didn't directly answer these questions, but he implied that the answer to the first question and part of the second question is yes. He claimed, much as Michael Mann does, that functionally different sorts of power are not actually that different. States and corporations, for example, share the same origins. And in examining the US foreclosure crisis, Schwartz correctly claimed that a supposedly sacred and autonomous legal right (the right to own property) is being ignored in the interests of Dominant Capital: banks are being permitted to foreclose homes even though they can't actually demonstrate that they own those homes. According to Schwartz, this phenomenon can be explained by CAP better than it can be explained by Marxist (or liberal or Weberian) theories of the state. For here the state is acting in the interests of Dominant Capital, not of the capitalist class in general (Poulantzas) (or of society in general (liberals), and it’s not maintaining its institutional autonomy (Weberians)).

B. PRELIMINARY BAGGY THOUGHTS

I think it's important to begin trying to understand what is necessary and what is incidental to CAP, what is implied by it, what it can and cannot explain, and what it can and cannot offer some narrative framework for explaining.

Necessary, incidental, implied

What is necessary to CAP: Dominant Capital (DC), Differential Accumulation (DA), Differential Capitalization (DK), sabotage, possibly industry and business.

What is incidental: the state of capital, the megamachine, the social hologram, and possibly absentee ownership.

What is implied: anarchism, elite theory, radical institutionalism.

CAP is a theory of distributive power under capitalism. DC is necessary to the theory, since it essentially constitutes the capitalist ruling class. DA is the process by which DC increases its power, and DK is the measure of that power. Sabotage, the ability to limit society's productive output, is necessary to the theory because that is how DC maintains and increases its power.

Because of the importance of sabotage, some distinction between those who produce and those who appropriate is also required. That does not necessarily mean that this distinction needs to take the form of industry versus business, though that form serves fine. It also doesn't necessarily mean, pace NB, that business can only sabotage industry. Business can influence the direction of industry (as NB sometimes acknowledge) and even unwittingly promote it in the attempt to sabotage it. (For example, Canadian merchants in the 1850s pursued the construction of railroads in an attempt to maintain their monopoly over the grain trade. But in the process, they unwittingly caused Canada to industrialize.)

In conversation with me, Nitzan has on several occasions attempted to explain why business can only sabotage industry, but I admit that I still don't understand why.

NB do not define the state as a social institution, but instead as a mode of power. Under capitalism, capital is not something distinct from the state; it is the state—the state of capital, whose key organizational bodies are corporations and government entities. One can accept this definition or not, but it is not necessary to CAP. None of DC, DA, DK, or sabotage require it. Likewise with the megamachine and the social hologram.

I'm not sure if absentee ownership is required by the theory or not.

CAP lends itself to anarchism. Since industry flourishes if left to its own devices, we have to get rid of business and organize ourselves democratically. CAP also lends itself to elite theory/radical institutionalism, and I think it finds its intellectual origins there. In elite theory/radical institutionalism, elites are elites because they control social institutions for their own ends and because (at least in some formulations, such as that by C. Wright Mills) they can, under certain conditions, transform those institutions. In conversation with me, Nitzan has denied that CAP is a radical institutionalist approach, but that claim seems incorrect to me.

What it can and can't explain

(1) CAP can explain regimes of differential accumulation. Indeed, it offers the best explanation that I'm aware of for stagflation, mergers and acquisitions, and the relationship between the two.

(2) NB correctly claim that CAP is not a totalizing theory. While capitalism is a totalizing phenomenon, it is not a phenomenon that can actually totalize. Because capitalism is monological, it cannot, according to NB, comprehend that which does not conform to its logic. As such, what happens within the underlying population remains a "magma," ultimately unknowable and uncontainable. CAP can't explain what goes on in the underlying population.

I wonder if there's some confusion here. Just because something is unknowable by CAP doesn't necessarily mean that it is unknowable, period. Social anthropology and history from below do seem to be able to explain phenomena that escape ruling class control.

(3) As I mentioned above, CAP is a theory of distributive power. Because they insist on a radical distinction between industry and business, NB are unable to explain collective power, i.e. the ability of a coordinated group to achieve an outcome greater than its members could achieve as individual actors. If business can only sabotage industry, and if capitalism is the mode power that has most developed the art of sabotage, why is it that industry is at its highest point in human history at precisely the same time that business rules the world? NB can't answer this question because industry is part of the unknowable magma.

But the radical distinction between industry and business is not necessary to the theory, as I argued above. If that's acknowledged, then it becomes possible to explain how business, in its attempt to increase its own distributive power, unwittingly promotes overall social collective power. But that acknowledgment would require NB to abandon a naïve anarchism (though not necessarily anarchism). As I’ve argued in a previous critique of CAP, collective and distributive power are necessarily coexistent, and this necessary coexistence defines the fundamental tension at the heart of any radical political project. Collective power both requires and makes possible distributive power, so it becomes necessary to assess two things. First, to what degree should distributive power be tolerated in order to promote a given degree of collective power? And second, how can distributive power be organized in order to lessen its necessarily antidemocratic tendencies? One can answer those questions in according to anarchist principles, but one cannot ignore those questions.

(4) Schwartz’s comparison of CAP and oxidization does not necessarily hold. Oxidization causes and can explain both rust and fire. But does capitalization cause, and can it explain, state phenomena, for example? The answer depends on how we understand the state. NB understand the state as the state of capital, and they claim that any phenomena that becomes discounted by capital becomes capitalized and thereby becomes part of capital. If we understand the state as NB do, capitalization can explain state phenomena, since capitalization is a quantifiable manifestation of the state of capital. I'm not sure if capitalization can be demonstrated to cause state phenomena. I expect the best that could be said is that sometimes it does and sometimes it doesn’t.

But if we understand the state more conventionally, I don't think it can be said that capitalization either explains or causes state (or other social) phenomena. Instead, what can be said is that capitalization reflects state (and other social) phenomena. Capitalization is the algorithm through which social phenomena get priced. So when social phenomena happen, those happenings are manifested in the prices of assets.

What it can offer a narrative framework for explaining

CAP lends itself especially well to accounts of intra-capitalist competition.

Because CAP is a theory of how the ruling class understands itself, it can't directly explain the dynamics of the underlying population. But as long as the radical distinction between industry and business is abandoned, that dichotomy, and its implicit anarchism, can inform accounts of the relationship between the ruling class and the underlying population, the oppositional strategies of the underlying population, and the manner in which the underlying population is pacified through advertising, etc.

If the radical distinction between industry and business is abandoned, CAP can also inform accounts of technological change.

If a more conventional definition of the state is adopted, CAP can also inform explanations of state policy (through elite linkages, etc.) and thereby international relations.

I claimed above that I don't think capitalization either explains or causes state or other social phenomena, but instead merely reflects those phenomena. But the examples I've given in this section demonstrate that CAP can offer a narrative framework through which those phenomena can be explained.

C. FINAL QUESTIONS

Is CAP economically reductionistic? I'm not sure. As NB formulate it, I expect it probably is. But if the nonessential aspects of the theory are dropped or modified (especially its understanding of the state), I don't think it needs to be.

NB attempt to counter accusations of economic reductionism by claiming that they reject the distinction between the economic and the political altogether, and so they cannot be economically reductionistic. This argument is unconvincing. One way in which the distinction between the political and economic can be erased is by subsuming the political within the economic. Whether or not that is what NB actually do (and I think an argument can be made that that is what they do), that is how their critics tend to understand their theory.

NB demonstrate that both neoclassical and Marxian economics face a transformation problem: neither can explain how they translate one set of quantities (utils and abstract labour, respectively) into another set of quantities (price). NB attempt to avoid this problem by having qualities on the one hand (social phenomena) and only one set of quantities on the other (price) and claiming that the translation between the two can only ever be a narrative one. Is that an adequate way to sidestep the problem? I don't know. It seems to me to echo theories about language and truth in the aftermath of Nietzsche. If language is an imperfect mediator between us and reality, absolute claims about truth are impossible, but claims about justified belief are not.

Let me briefly return to one aspect of Lacher’s second question: what exactly does CAP explain? As he argued, we don't need NB’s elaborate explanation of systemic fear to know that capitalists are scared. We just need to read the Financial Times. That's obviously true, but it seems to be a weak critique, and it’s equally true for most social scientific explanations of most phenomena. We don't need Marx’s theory of capitalist competition to know that there are joint stock companies. CAP doesn't attempt to reveal that capitalists are scared. Instead, it offers an explanation of why they are scared. The question is whether that explanation is convincing.

[troycochrane]

Thank you very much for this, Daniel. I am formulating a response, but I just wanted to let you know that this is very appreciated and quite impressive.

[joefrancis]

Hi Daniel,

Thanks for your post. Now I really wish I had been able to go to the conference!

A few thoughts:

Economism
I think the idea that Nitzan and Bichler are 'economistic' rests on the assumption that there is such a thing as 'the economy'. If you continue to make this ontological distinction, then yes, they might seem economistic. If you reject that it, however, then the idea of anything being economistic seems absurd.

An example of this comes from the recent exchange between Stefanos Kourkoulakos and Leo Panitch:

Kourkoulakos: Can Marxism maintain the notion of the separation of the economic from the political today?

Panitch: No, and if Marx and some Marxists ever did, they never should have, since this is hardly just a matter of today.

HURRAH!!! But wait... Panitch continues:

Most of my work in political economy has been directed at developing a more adequate Marxist theory of the political, and to insist that to overcome this false separation we also must avoid the mistake of thinking that the political is entirely determined by the economic, which is sometimes the case with those of an economistic bent, whether they accept or reject value theory. Of course, much of this comes down to what we mean by the “political” and the “economic.”

Thus, after claiming that the political and economic cannot be separated, Panitch immediately separates them again! Indeed, he even claims to want to overcome the false distinction by claiming that one does not determine the other. How can one thing determine the other (or not) if those things do not exist as separate entities? From the perspective of genuine political economy, Panitch's statement is nonsensical.

You might say this was semantics, and you would be right. Semantics is the use of language to assign meaning to the world. It is vital, therefore, that we use language correctly.

Capitalism as Ideology
I think you're absolutely correct when you say that 'CAP is a theory of how the ruling class understands itself'. I would elaborate by saying that capital as power is a theory of the ideology of the ruling class, and how, to the extent that the ruling class rules, it inflicts that ideology upon us.

Productivity and Politics
Regarding the question of wealth and capitalism, they do deal with this in their discussion of Mumford's megamachine. I think this passage is particularly relevant:

The mega-machine of the early kingships typically comprised three principal components: a labour machine of peasant conscripts to erect public works; a military machine to impose internal discipline and engage in external war; and a bureaucratic machine to keep the accounts. Control was in the hands of a tight caste comprising the royal court and the high priesthood – the former maintaining a monopoly over physical force, the latter over knowledge and ideology. Division of labour and advanced specialization (Egyptian mining expeditions, for instance, had up to 50 different job descriptions), strict regimentation, uncompromising discipline and tough punishment turned the workers, soldiers and officials of these organizations into mere mechanical components. Initiative was all but forbidden and flexibility disallowed. Taken as whole, these organizations formed ‘a combination of resistant parts, each specialized in function, operating under human control, to utilize energy and to perform work’. In short, they fulfilled all the requirements of Franz Reuleaux’s classic definition of a machine (Mumford 1967: 191).

The fusion of rational insight and highly irrational aspirations resulted in a massive explosion of what political economists now call ‘productivity’. (p.268)

What they are saying here is that hierarchical organisation brings productivity increases. It also means that their theory at least is quite opposed to anarchism because modern civilisation and its massive population would collapse without hierarchical organisation:

The need for such power was partly rooted in material circumstances. Physical surplus and the consequent amassment of material wealth for the first time had created the possibility of ‘total loss’. The population was large and growing, segmented by an increasing division of labour and evermore interdependent. Under these conditions, flooding, drought and later total war could easily have spelled catastrophe, if not complete annihilation. Whereas Neolithic culture could flexibly respond to the first two and rarely faced the third, in the urban amalgamates of the deltas these threats had to be counteracted resolutely and ruthlessly. And given the large scale of activity, such a response could be achieved only through the sanction of absolute authority. (p.266)

In other words, anarchism would be great, as long as you don't mind the idea of mass death (if not extinction) followed (if you were lucky) by a Stone Age-level of technology. As an illustration, have a look at the areas of the Third World today where government hardly functions.

To the extent that a political philosophy that fits their work, I would argue that it is French-style constitutionalism, i.e., recognising that hierarchical organisation is necessary, but submitting it to laws that are themselves the result of perpetual democratic debate. For instance, Jonathan has written:

Unfortunately, capital has everything to do with power. Discarding it therefore requires either an alternative form of power, or the elimination of social power altogether. This fundamental dilemma has been succinctly summarized by Koestler (1946), in his discussion of the kibbutz. Even there, under small-scale communism, he argued, ‘The instinct to dominate had not been abolished, merely tamed and harnessed.’ But then, he added, that ‘was as much as anybody could hope for’ (1946: 340–1). Perhaps this ‘harnessing’ will be the main task if capitalism is to give way to a better society. (Differential accumulation: towards a new political economy of capital, p.212

Anyhow, thanks again for your post. I hope someone taped the conference!

Joe

[joefrancis]

p.s. Oh! The point about the mega-machine was supposed to be this: The hierarchical organisation of the megamachine brought productivity increase. When capital emerged as a new megamachine, therefore, it too also brought productivity increase, generating increased wealth. I.e. there is a theory of growth in there too!

[Daniel Moure]

Joe,

Thank you for your reply.

The main purposes of my original post were to try to begin to make sense of CAP, in part by distinguishing between what’s necessary, what’s incidental, and what’s implied by the theory; and to claim, tentatively, that some of the possible problems in the theory derive from the incidental rather than necessary bits.

The purpose of this reply is to defend myself against your critique. I know that I’m asking a lot of people to read through all this, so I appreciate your graciousness.

Economism

There's more than one way to be an economic reductionist. The two reductionist extremes are (1) to maintain the distinction between economic and other things but claim that the economic determines those other things; and (2) to eliminate the conceptual distinction between the economic and other things while continuing to theorize or investigate only or almost only what (used to fall under) the economic. That is, simply eliminating the conceptual distinction between the economic and other things doesn't necessarily allow one to avoid economic reductionism.

As I said, I'm not sure if CAP is an economically reductionistic theory, but I expect that it is as it's currently formulated, for reasons that come closer to the second possible extreme. Three illustrations.

1. That which becomes capitalized becomes absorbed into capital.

“Numerous power institutions and processes—from ideology, through culture, to organized violence, religion, the law, ethnicity, gender, international conflict, labour relations, manufacturing techniques and accounting innovations—all bear on the differential level and volatility of earnings. When these earnings and their volatility are discounted into capital values, the power institutions and processes that underlie them become part of capital.” (9-10)

“Any process of power that systematically affects the expected level and patterns of profit is quickly capitalized.... Any regular effect on profit is instantly discounted into the present value [of an asset], and the power process this effect emanates from henceforth becomes part of capital" (271).

Capital "quantifies and reduces qualitatively diverse power processes into the universal language of capitalization, and by doing so absorbs them into the process of accumulation" (271-2).

These are examples of where a distinction between economic and other social phenomena is erased by absorbing those other phenomena into (what is typically thought of as) the economic.

Is there a non-sequitur in NB’s argument? Just because a social process is reflected in the price of assets and is thereby capitalized, it does not necessarily follow that that process becomes absorbed into capital. As far as I can tell, nothing needs to follow at all. It could just be that the risk or opportunity posed by that process to given corporations or sectors or the capitalist order as a whole is reflected in the price of assets.

Part of the problem is that I at least am confused about what capital is. Capital is finance and only finance. But it’s also “the algorithm that constantly restructures and reshapes [the capitalist] order" (9). Are those two the same thing? If they are, finance is what does the restructuring, and it includes all those social phenomena that have been capitalized. So capital might only be finance, but finance is a lot of stuff.

NB would argue that there is no non-sequitur. That what is capitalized becomes part of capital follows from NB's definition of the state. The state of a society is its mode of power. Finance is how the capitalist mode of power is expressed or manifested. So if one accepts their understanding of the state, something becomes part of the state of capital as soon as it’s discounted.

But as I tried to argue in my previous post, their understanding of the state is not necessary to the core of their theory, and it leads to an argument that at least appears to be economically reductionistic, as can be seen here and in (3) below.

2. DK is composed of both corporations and government organizations. As such, the ruling class should consist of both capitalists and government officials. Nonetheless, NB seem to identify only capitalists as members of the ruling class.

3. The relationship between corporations and government organs. Yes, NB claim that to understand the value of Microsoft, for example, we need to understand not only that corporation, but also intellectual property law, etc. But look at how they actually theorize the relationship between corporations and government organs. On the one hand, they examine "the degree to which the government has been capitalized by corporations." And on the other hand, they examine "the extent to which the various organs of government have been conditioned, habituated and shaped by the logic of capital" (299). "To be capitalized," if one accepts their understanding of the state, is "to be absorbed." As such, they argue that on the one hand government has been absorbed by corporations, and on the other that government has been shaped by capital. In either instance, it is government that has been impacted by capital. Again, they don't always make this claim in their empirical examples, but they do seem to be making this claim theoretically.

I want to add that my goal is not to read NB uncharitably (though I have done so in the past, and sincerely wish I had not done so). I use these three examples to demonstrate how CAP can be read as economically reductionistic. If its defenders want to claim that it's not, I think points such as these need to be addressed.

Collective and distributive power, industry and business

My argument is that NB don't seem able to account for collective power, or why industry is so productive under capitalism, precisely because they try to maintain a radical distinction between industry and business.

(Here I am borrowing heavily from the critique I made of NB’s work at the Rethinking Marxism conference last year.)

Your example of the ancient Egyptian megamachine demonstrates what I take to be possible confusion on NB’s part as to the relationship between collective and distributive power. Yes, here they imply that there is a necessary relationship between the two types of power. Organizing society for the purposes of distributive power also increases collective power.

Their understanding of creorder can also be read as implying a necessary relationship between collective and distributive power (305-6). And so can their understanding of the capitalist mode of power: it’s “counted in prices, and capitalization, working through the ever more encompassing price system, is the algorithm that constantly restructures and reshapes this order" (9, my italics).

But look at their distinction between industry (collective power) and business (distributive power). Industry belongs to the realm of the human magma, which is unknowable. The "principal goal of industry... is the efficient production of quality goods and services for the betterment of human life" (219). Business, in contrast belongs to the realm of power. And remember that power for NB is confidence in obedience, or the ability to impose order (i.e. distributive power only). As they put it, “business is the domain of pecuniary distribution…" (15). These two processes are "inherently distinct" (15-16). Business "does not and cannot make industry productive, by definition" (226). Or again, "business cannot 'promote' industry" (232). Instead, it must suppress industry because the profitability of business is not based on productivity, but on its ability to control productivity. Left to its own devices, industry becomes increasingly efficient and productive, which results in glut and therefore falling profitability for business. In order to remain profitable, therefore, business must engage in sabotage.

So why must industry be radically distinct from business?

As far as I can tell, NB develop three more or less explicit reasons, though I’m not sure they would agree with the exposition that follows.

First, unlike business, which can be measured in price terms, "the ends and means of industry do not have objective quanta" (225). It seems as if NB want to argue that (1) because industry cannot be quantified, it cannot be measured; (2) because it cannot be measured, it cannot be said to increase or decrease; and (3) because it cannot be said to increase or decrease, no causal relationship between it and business can be demonstrated. The conclusion in (1) follows from its premise, but the conclusions in (2) and (3) do not. In other words, even if it is impossible to quantify a qualitative process, it does not follow that an assessment of the growth in scale of that process is automatically invalid. And anyways, NB insist both that quantitative and qualitative processes are distinct and that the link between the two is necessarily speculative. That being so, they cannot argue that business cannot increase productivity because the former is a quantitative process while the latter a qualitative process that cannot be measured.

Second, NB claim that "business per se is distinct from industry and therefore cannot boost industry, by definition" (232). This claim seems to involve another non sequitur. Even if business were distinct from industry, it would not follow that the former could not boost the latter.

And third, NB argue that though capitalists are forced to innovate because of competition, they innovate only "in the expectation of adequate differential returns, and differential returns are possible only through restriction" (233). This argument seems to confuse intent with outcome. Capitalists want to earn differential returns. But even if differential returns were possible only by restricting output, it would not follow that capitalists succeed in restricting industrial output, as NB would also acknowledge.

And anyways, NB themselves acknowledge that the distinction is not as clear-cut as they want to make it. The realm of business "endlessly crisscross[es] that of industry" (226). And though business can only limit industry, this limitation takes two forms. First, it limits "the growth of industrial capacity and output" (235). And second, and more importantly, it influences "the very direction of industrial development" (233). That is, business forces industry to develop in directions different from those in which it would have developed on its own. The first form of limitation is actually limitation, but the second is diversion. The problem is that diversion is not limitation, as NB seem to be aware elsewhere: "business enterprise diverts and limits industry instead of boosting it" (16).

As long as NB insist on the radical distinction between industry and business, I don’t see how CAP can account for the growth of industry. That radical distinction seems quite problematic anyways. So why not allow that business can boost industry?

And that brings me to....

Anarchism

All stripes of anarchism assume that there are two essential groups in society, though there can be gradations between them—those who appropriate and rule, and those who produce and are ruled. Debates revolve around the degree to which collective power is possible without distributive power. That is, are a high division of labour and a high material standard of living possible without coordinator-rulers? Primitivists (you know, back-to-the-lander-hunter-gatherer types) say no, and non-primitivists say yes.

I read NB’s theory as implying a non-primitivist anarchism. Their radical distinction between industry and business is a distinction between creativity and (distributive) power (e.g. 223). Creativity is an innate impulse in human beings to flourish, philosophize, organize democratically, and avoid control (xi, 15, 20, 225-6). Power, in contrast, is "the ability to impose order…" (305). Power seeks to quash creativity (20, 232, 263), presumably because creativity creates change, and change threatens power. Their argument about sabotage demonstrates that they believe that industry thrives unless it's controlled by business. Hence my anarchist reading.

I don't think NB claim that hierarchical organization is necessary. I think they'd argue instead that the predatory instinct is innate to human beings but that we can nonetheless organize ourselves in a way that minimizes the potential for that instinct to dominate society. Your quotation can be read that way, as can 225.

[joefrancis]

Hi Daniel,

I wasn’t intentionally critiquing you – more just offering my thoughts that were inspired by your thoughts. To paraphrase Kerouac, all each of us has to offer is our own confusion.

A few further thoughts:

Capital and the Economic

These are examples of where a distinction between economic and other social phenomena is erased by absorbing those other phenomena into (what is typically thought of as) the economic.

Nitzan and Bichler’s whole argument is that capital shouldn’t be thought of as ‘economic’, in that it is entirely political. Thus, far from trying to economise politics, they are trying to (re)politicise the economy. Indeed, as I understand it, they are trying to abolish economics, by saying that the way in which trade and industry are organised is a political issue.

The Human Magma
I’ve heard several people from York refer to this and about how it is unknowable. I looked it up and it’s a reference to a chapter by Castoriadis that I haven’t read. Nitzan and Bichler do say, however, that it is unknowable from the perspective of capital: ‘The language of capitalist power can neither describe nor comprehend these qualities and energies’ (CAP, p.20). As I understand it, they are not saying that it is unknowable per se, but merely from the perspective of capital. So I think you’re right that there’s some confusion here, but I think it’s the result of misinterpretation at York. (Although I would have to read Castoriadis to be sure!)

Business and Industry
Again, I think you’ve misintepreted Nitzan and Bichler on this point. It comes from your misreading of the sentence ‘business per se is distinct from industry and therefore cannot boost industry, by definition’ (p.232). You seem to think this is the belief of Nitzan and Bichler. In fact, they are describing Veblen’s ideas, which they immediately critique:

In our view, Marx was correct to stress the dialectical imperative of technical change, an emphasis that the evolutionist Veblen preferred to disregard. Over the longer haul, capitalists indeed find themselves compelled – and in turn force their society – to constantly revolutionize the pattern of social reproduction. They continually ‘invest’ in having industry develop for them new methods and products and in expanding their capacity to produce them. Yet all of this they do in the expectation of adequate differential returns, and differential returns are possible only through restriction. (pp.232-33)

Nitzan and Bichler then synthesise Veblen and Marx. Business must propel industry while simultaneously restricting it, because profits will be 0 if industry is operating at either 0% or 100% capacity. Business must therefore maintain it somewhere between the two in order to maintain profitability. This is why the distinction between business and industry is essential, irrespective of the rest of Capital as Power.

Creativity and Growth
I think you are treating creativity as a synonym for growth. E.g. when you say that industry would thrive without business. As I understand it, Nitzan and Bichler’s point is that the purpose of industry is industry itself – i.e. the process of creation rather than the production of objects. Whether or not that process is ‘productive’ in the sense of producing more things is secondary. Business, by contrast, makes industry produce more things (but not too many!), by making it speed up, invariably by making it harsher and more boring.

I doubt, therefore, that anarchism would lead to greater productivity. Indeed, it is hard to imagine any large factory functioning while being (dis)organised on an anarchist basis. Anarchism would not, then, be able to sustain the current population that we have on Earth, at least not without a drastic reduction in the level of material well-being.

Conclusions
Anyhow, they are my interpretations, which of course form part of my own confusion. It’s interesting that you say that you initially read Nitzan and Bichler uncharitably, but now are becoming more open to them. I’ve kind of taken the opposite journey, initially adopting their ideas wholesale, but now becoming more critical, largely because I find their work very specific to the present moment, when capitalism reigns supreme. I’m hoping, therefore, that within my childrens’ lifetime Nitzan and Bichler's work will be of little relevance, as we will have evolved beyond capitalism toward a more democratic state. To get there, however, we must first recognise that there is no such thing as ‘the economy’ and that capital itself is an entirely political thing.

[troycochrane]

Great exchange.

I've already written one response, that was promptly lost when my computer inexplicably shutdown. Let's hope a second version is only better.

Economism & Finance
Although I understand Daniel's thoughts on why N&B's theory could be considered 'economistic,' I'm going to have to agree with Joe. Daniel is certainly right that one could eliminate the distinction between 'economics' and 'politics' by merely rolling the latter into the former. However, that is not what N&B have done. It is important to remember that for them finance is a symbolic order. This has to relevant consequences: 1) The quantities are not merely representation of a 'real' realm of productivity, which is how the dominant value theories conceive of it. When opponent make the charge of 'economism' they remain in the dominant mindset, even if they claim to agree with N&B's rejection of the economy-politics duality. Financial quantities are a measure of qualitatively diverse power. 2) The financial quantities are not deterministic of changes within society, even those generated by capitalists or motivated by the drive to accumulate. These quantities inform the behaviour of capitalists, but they cannot determine them as they have no qualitative content. Capitalization cannot tell Jeff Immelt whether to divest NBC or spend more on product development or raise advertising rates. Investors will render their judgements of these decisions in terms of capitalization, but it will not determine any of the decisions. One caveat: The power that capitalization measures is power over social assets in as much as those assets are expected to generate earnings. This could lead back to the charge of economism. However, the determinants of earnings cannot be isolated with a economic realm.

I'm going to add my name to those who have a problem with the notion of elements of the complex social landscape becoming capital. I agree with Daniel that it seems to contradict the central claim that capital is finance, and only finance. Being capitalized is not synonymous with becoming capital. This should be especially true for successful social movements targetting corporations that result in a lower capitalization. The research I've done with Jeff Monaghan has indicated moments when business disruption campaigns have caused dis-accumulation. Our very point is that resistance within capitalism should seek to be capitalized. If we are not entering into the calculations, either as lower expected earnings or increased risk, then we probably need to reassess our tactics.

Creativity, Sabotage & Accumulation
The matter of creation within capitalist society is one of the issues I'm interested in. An important point that Castoriadis makes is that creations have no necessary normative component. As he says: "Man, qua creative power, is man when he builds the Parthenon or the Notre-Dame Cathedral in Paris, as well as when he sets up Auschwitz or the Gulag" [1]. The inherent creative capacity of humanity is what constitutes the magma. It does not only create when it revolutionizes society. It creates every single day. Accumulation is only possible because of those creations; it feeds on the outputs of the exercise of our creative capacity. I know, based on conversations with Jonathan, that he disagrees with this claim. However, I'm not sure where the creations of capitalism come from, if we reserve the magma as inherently good, and therefore a creative force necessarily contrary to the sabotage of business. I think, given the ecological degradation associated with modern production and the psychological degradation associated with modern consumption, that we can no longer view industry as necessarily good, as Veblen did. Daniel expressed it in his posts, and we have discussed this matter before, but I think it is important to acknowledge that societies under capitalism have been extraordinarily creative. Where sabotage re-enters the picture is not simply that business stunts our creative capacity. Wrapped up with this restriction is a effort to direct creativity and then choose among creations those that will be proliferated and those that will be undermined or destroyed.

I think we can understand capital's direction of creativity in terms of Castoriadis' distinctions about where creativity comes from. He asserts that creation is ex nihilo - from nowhere. However, it is not in nihilo - without context, or cum nihilo - without ingredients. As the dominant mode of power, capital dominates the context and is responsible for the majority of the available ingredients. This means a great deal of humanity's creative output is implicitly for the purpose of accumulation. Castoriadis notes: "Some advertising people say, 'Our firm is more creative than others.' It actually can be so while creating idiocies and monstrosities" [2]. Just consider the genius involved in the creation of the slogan 'new and improved.' This is as much an ex nihilo creation as the internal combustion engine. I cannot recommend enough David Nobel's Forces of Production where he describes how the machine-tool industry chose to automate via 'numerical control' rather than a competing technology, 'record-playback' [3].

[1] "The Revolutionary Force of Ecology" in The Rising Tide of Insignificancy, p. 123. This is a rogue translation available at http://www.notbored.org/RTI.pdf The story of how these rogue translations came about is an interesting tale of academic sabotage and intellectual protectionism.

[2] "The Rising Tide of Insignificancy" in The Rising Tide of Insignificancy, p. 149.

[3] This is the back blurb on the book:

Focusing on the postwar automation of the American metal-working industry--the heart of the modern industrial economy--this is a provocative study of how automation has assumed a critical role in America. David Noble argues that industrial automation--more than merely a technological advance--is a social process that reflects very real divisions and pressures within our society. The book explains how technology is often spurred and shaped by the military, corporations, universities, and other mighty institutions. Using detailed case studies, Noble also demonstrates how engineering design is influenced by political, economic, and sociological considerations, and how the deployment of equipment is frequently entangled with certain managerial concerns.

[lowlytheworm]

(This is my first post from Alberta, there may be a double post here, apologies for my learning curve of the site.)

Probably I am off target. And definitely I am not aware of the internal narratives
of political science, at least, not yet.

In a corporate finance doctrine, as embodied by Aswath Damodaran, one uses
techniques of valuation in order determine if corporate project should use shareholder
money for the project. The danger is that the value of the shareholder capital
held by the company is worthed less by the managers than the shareholders
so that the managers have a corporate funded plaything for themselves.

To explain, cutting every corner, if a new corporate project was offered to a bank
and the bank were to accept to finance the project, then one has an indication of
the risk/reward profile for the project made by an objective outsider with fixed
risk expectations. The rhetorical statement (after all the calculations) he provides
students is if the bank is willing to finance the project, then the shareholders ought
to have invested in the bank instead of the company. And therefore managers
should compare the project's risk/reward profile to the entire company and ask
1. is shareholder's money cheaper (to the shareholders) than the banks?
2. is shareholder's money dearer (to the shareholders) than the banks?
If the money is cheaper than the banks, but the bank would still invest, (that is,
the project is not beneath the banks), then shareholders may win even more.
If money is dearer than the banks, use bank financing and reserve the money
for projects that fit the risk/reward profile that investors must have considered
to be for the entire company.
If no project can be found to meet this metric, its time to consider returning
the money to its owners and let them decide the risk profile for their dividends.

(Calculations, procedures and assumptions abound to drive this decision process.)

In part, this mindset affects the historical change of companies to stop
paying dividends. Or this mindset gives excuses not to pay them in order to
finance more management playthings.

Where am I going with this? Many places.

1. There is already a quantitative ethical decision making process mapped out
the in the corporate finance literature. That literature tries to quantify the
isolated case when corporate managers use capital for their power when a
project must have been detrimental to shareholders. CAP seems to indicate
that the power problem is not isolated to corporate governance, potentially, all
economic transactions, using this doctrine's own calculations, provide a window
into the ruling classes themselves.

2. Now these calculations are not done in reference to the small fry but in
reference to risk/reward calculations that a company's major shareholders
ought to have done to maintain their investment relative to the major's
risk/reward profile. Potentially an alias for "dominant capital".

3. A positivistic decision making process is an unpleasant thing to critique
because the other side always has "a procedure for that."

Anything else I might say ventures too far into speculation for a first post.

[troycochrane]

Sorry it has taken so long to acknowledge your post. Know that it was read and appreciated.

The nitty-gritty of corporate decision making is certainly a more than worthy topic for consideration. My suspicion is that the more it were considered the more we would discover evidence that 'capital as power' captures the meaning of capital far better than either 'capital as utility' or 'capital as labour-value.' Of course, one charge from the Marxists would be that we are confusing 'appearances' for 'essences.' As soon as they can tell me 1) why appearances are not important and/or 2) where these essences are, I might take the complaint seriously. As it is, I can do no more than set it aside as stale metaphysics protecting failed empirics.

[Scott]

This is a great discussion and kudos to the OP (Daniel). Am still working through it and the seminar videos. Will just say, and this is not in response to anything particular in this thread as I havent gone through it carefully yet, and this is more of a suggestion or observation -- that CAP may be too young at this stage to begin to vigorous a critique as to what it may or may not be. However, due to its underlying principles, the research on it would be fruitful, unlike so many other approaches that are more collages than theories (ie neoimperialism).

I will say I was, not astonished, but I wish I had been in attendance when Panitch had the audacity to sputter that CAP was "narrow".