IMPORTANT: Stammtisch will not be a Cafe Buchhandlung today, but
rather at Cafe Kotti in Kruetzberg to be closer to the May 1st
festivities
Intermodal Value Flows in the Macroeconomy
It's May 1st today, I'm sure that I could, rather than test your
patience with yet more wonkish macroeconomic explorations, publish a
more exiting and popular article today, celebrating the history of May
Day, but I wont. I want to follow this macroeconomic line of thought
through.
As I've argued previously, the history of May 1st demonstrates that
that reform and revolution are hardly in conflict, and often go hand in
hand. From the very beginning May Day has been coloured by the whole
spectrum of the methods of class strugle, from demonstration of labour
solidarity and effective organized campaigns that dramatically improved
the working conditions of the world's workers, to demonstrations of
uncontrollable rage and revolutionary uprisings that drew uncompromising
lines in the sand resisting the endless encroachment of capitalism into
our private and public lives, resisting the misery and alienation this
creates.
Also, Telekommunisten was founded on May 1st, 2006, so it's also always
an anniversary for us, this year is our 6th birthday.
In my last article I begin sketching out what I'm calling an intermodal
macroeconomic model, hoping to understand what an revolutionary social
transformation would look like from the economic perspective.
In this model, we have two economies, each representing a given Mode of
Production, capitalism and communism.
We often say we live in a Capitalist society, but yet this does not
mean that all forms of producing and sharing that occur within our
society are Capitalist. This is more than evident when looking at social
relations in family and personal life, in intentional communities of
various kinds, within co-ops and other non-capitalist organizations, the
charity and profit sectors, and, of course, the emerging world of
peer-production including free software, free culture, etc. It's quite
clear there is a lot more going on than just Capitalism.
When we say we live in a Capitalist society what we mean is that
Capitalism is the dominant mode of production, and as such, it is able
to apply the greatest amount of wealth towards it's own expansion and
the enforcement of it's interests. As a result, our private and public
institutions, including our law making and financial institutions are
set up according to the interest of this dominant mode.
We can not change our society, neither the public or private
institutions that make it up, nor the laws and financial constraints
that are imposed without first building the capacity to overcome the
capacity of those who resist such change.
Only when the commons based economy exceeds the market based economy
can we achieve a society that is organized around the interests of
creating wealth for the many instead of creating profit for the few.
Starting with the Kaleckian model, Y = Cw + Cp + I that introduces
classes on the consumption side, by dividing consumption into
consumption of workers (Cw) and consumption of capital (Cp), Kalecki is
able to isolate profit as P = Cp + I. Reasoning that Cw = W, In other
words, reasoning that worker's spend whatever they earn. This assumption
is of course true within capitalism. However, if we understand that
Capitalism itself, while dominant, exists among several other modes
occurring simultaneously, we need to take this into a different
direction.
If the commons-based economy must become the dominant economic mode,
then instead of understanding the level of profit within the capitalist
sector, we need look at relative growth between the capitalist and
communist sector, in other words between the sectors that produce for
private profit and the sectors that produce for public wealth, the
predatory sector and the co-operative sector.
To do so, me move Kalecki's class division to the investment side,
since with capitalism, workers spend everything they earn, but in the
more complex social context that capitalism exists within worker's also
invest. So our starting point becomes Y = C + Ip + Iw. With Ip
representing Capital's capacity to invest, and Iw representing workers'
capacity to invest, as result as both classes have the capacity to
invest in production.
We now divide C, not on classes, but on mode, creating Cm and Cc,
market based consumption that returns profit to it's investors
privately, and Cc, commons based consumption that does not capture
profit privately, and returns wealth to society collectively. This gives
us Y = Cm + Cc + Iw + Ip.
This now allows to us divide these two sectors as Capitalism, Ym = Cm +
Ip and Yp and Communism, Yc = Cc + Iw.
So, from a macroeconomic view, you could say that the revolutionary
aspiration of May 1 is to make Yc > Ym, and thereby overcome the
dominance of Capital on our society.
In order to understand how this might be possible, we need to look at
the flows of value between the two modes.
We can not assume that workers will only invest in the commons and
consume from it, nor can we assume that Capital will only consume and
invest inversely.
We started to include this last week by drawing on the way import and
export between nations is included in macroeconomic identities, adding
"net imports" to the model, so to expand what we have above with N, Ym =
Cm + Ip + Nm and Yc = Cc + Ow + Nc. Nm and Nc representing the net
relative imports of each mode. Being net imports, Nm + Nc would equal
zero as these would balance out by definition.
If, in balance, workers consumed the products of capitalist controlled
production more than capitalists consumed the products of workers
controlled production, then they would have a trade deficit with the
capitalist sector and thus have relative reduced economic power as a
result, capital would increase it's dominance, conversely, if worker's
could create a intermodal trade surplus with capital, then then would
decrease, and perhaps eventually overcome the dominance of capital.
Likewise, investment can also flow between the sectors, for instance
workers buy shares on the stock market, and capitalists may, for
instance, finance the development of free software.
It's hard to identify such intermodal capital flows as investment,
since from a class perspective they don't directly reproduce the wealth
that was used, as returns aren't recaptured according to the relative
mode, thus such investment is not directly "valorized."
Production in capitalism is driven by exchange value, a capitalist
commodity can not properly be considered produced until it consumed in
such a way that creates more capital. As Capitalism is not directly
concerned with producing things because they are useful, but because it
is profitable. When the commodity is just given away the "productivity"
of the producers who made it is calculated as zero, since zero capital
was recaptured.
Therefore, I propose to call such capital flows "Sustentation," where
value creation within one mode is sustained by inflows from another.
Individual capitalists may benefit from such sustentation, and often do,
such as the capital cost reduction that free software provides to
business that use it. However despite the benefit to some specific
businesses, such flows represent a drainage of capital from the point of
view of the class as whole, as this expenditure is not directly
valorized, and even replaces potential valorized consumption, such as
expenditures on commercial software made unneeded by using free
software.
Likewise, workers' using their retained earnings to buy stocks can be
be understood as a similar sustentation. This drains wealth from the
commons-based economy as to sustain capital finance, even though
individual workers may privately benefit, by essentially becoming tiny
capitalists.
We can add net sustentation to the model as follows. Ym = Cm + Ip + Nm
+ Sm and Yc = Cc + Iw + Nc + Sc.
Excluding taxation, which is not intermodal, so activity in both modes
is subject to the same government, we have a complete macroeconomic
picture of class struggle and can start discussing how venture
communism, counterpolitics and insurectionist finance can be employed in
the struggle.
But, that will need to wait until next week.
In the mean time you can join us at Cafe Kotti at 8pm or so:
http://bit.ly/K04wqf
A shareable version of this text is available here:
http://www.dmytri.info/intermodel-value-flows/
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