Download Capital - SOC 331: Foundations of Sociological Theory

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CAPITAL
Karl Marx
1867
Athens, February 12, 2012
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Capitalism is a system of commodity
production
• In a capitalist system, producers do not simply produce
for their own needs (subsistence), or only for the needs of
individuals with whom they are in personal contact -capitalism involves the production of commodities for
exchange in a nation-wide, or international market
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Commodities
• “A commodity is, in the first place, an object outside us, a
thing by its properties satisfies human wants of some sort
or another” (69)
• Commodities are products of labor, bought and sold on
the market
• All commodities have a two-fold character: a use value
and an exchange value
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Use value and exchange value
• The utility of a thing is its use-value
• an object can have use value whether or not it is a commodity, but
to be a commodity it must also have exchange value
• Use value is realized only in process of consumption
• Use values, which occur in all societies, are determined by their
physical properties in relation to human needs – clothing keeps one
warm, bricks provide shelter
• Exchange value refers to the value a product has when
offered in exchange for other products in market
transactions
• exchange value presupposes "a definite economic relation," and
only has meaning in reference to commodities, or the equivalent in
money
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Labor theory of value
• Labor theory of value: the value of an object is determined
ultimately by the amount of labor time that it took to
produce it
• Human labor is the one commodity that is exchanged for its
value while being capable of producing more than its value
• Surplus value: the difference between what workers earn
for their labor and the price or value of the goods that they
produce
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Labor exploitation
Surplus value is the source
of the capitalist’s profit: the
capitalist pays the worker
less than the value of what
she actually produces
• it is also the source of the
capitalist’s exploitation of
the worker because the
worker gives more than is
given in return without
having any voice in this
relationship of exchange
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Capitalism & the Fetishism of Commodities
• A fetish (from the Latin facticius, "artificial" and facere, "to
make") is an object believed to have supernatural powers, or
in particular, a man-made object that has power over others
• Fetishism is the belief that natural objects have supernatural
powers, or that something created by people has power over
people
• As labor increasingly becomes an abstraction in the capitalist
system of production, we come to forget the human social
relations behind the products of labor, even though the
products were created by people
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Commodity fetishism
• To producers, “the relations connecting the labor of one
individual with that of the rest appear, not as direct social
relations between individuals at work, but as what they
really are, material relations between persons and social
relations between things”
• Commodity fetishism refers to the distorted relationship
existing between individuals and the production and
consumption of goods
• We treat the goods we buy as if they have “magical powers,” losing
sight of the fact that we create commodities
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US Capitalism: 1940s – early 1970s
• Postwar boom (1945 – late 1960s): a long period of growth
in GDP and real median income
• aka the “Golden Age” of US capitalism
• 1940s – 1970s marked heyday of the “welfare state”
• Critics call it “Big Government”
• Postwar advanced industrialized economies featured
government intervention, subsidies to select industries,
protection of labor rights, expansion of public spending (in
education, infrastructure, etc.) trade protectionism (e.g.,
import tariffs)
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US Capitalism: late 1970s – present
• Deregulation
• Shift from manufacturing to service economy
 esp. FIRE (Finance, Insurance, Real Estate)
• De-unionization
• weakening of workers’ “collective bargaining” rights
• Globalization, offshoring
• Income stagnation for majority of workers, which led to:
• Increases in hours worked per household, rise of 2-income households
• Growing household debt, as credit is used to make up for income loss
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Financialization
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Financialization
• Financialization: economic process that attempts to reduce
all value that’s exchanged (tangible, intangible, future or
present promises, etc.) either into a financial instrument or a
derivative of a financial instrument
• Original intent was to be able to reduce any work-product or service to
an exchangeable financial instrument, like currency, making them
easier to trade
 financial leverage tends to override capital (equity) and financial
markets tend to dominate over the traditional industrial economy
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Financialization: benefits & costs
• Workers, through a financial instrument such as a mortgage,
could trade their promise of future work/wages for a home
• Students, through student loans, could trade the promise of future
work/wages for a college degree
• Financialization of risk sharing makes insurance possible,
financialization of US gov’t promises (bonds) makes deficit
spending possible
• Financialization also makes economic rents possible
• economic rents are "excess returns" above "normal levels" that take
place in competitive markets
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US wealth distribution today?
• Psychologists Dan Ariely and Michael I. Norton asked
people to identify wealth distribution in the US, by
quintiles, or fifths
“Home of the Free, Land of the Poor,” Making Sen$e, PBS Newshour, 8/16/2011
http://www.pbs.org/newshour/bb/business/july-dec11/makingsense_08-16.html
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Which countries do pie charts A, B and C represent?
1/US, Spain, Egypt
Country A
2/Freedonia, Sweden, US
Country B
3/Luxembourg, US, Somalia
Country C
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Economic Policy Institute delivers annual
analysis of the “State of Working America”
• Despite an increase in productivity of more than 22% by 2010,
typical wage earners made roughly the same amount per hour
as in 2000
• Median family income was 6% lower in 2010 than in 2000
• This lost decade of no wage and income growth began well before the
Great Recession—which started in Dec. 2007—battered wages and
incomes
• In the weak economic expansion following the 2001 recession, hourly
wages & compensation failed to grow for either high school– or
college-educated workers
• Consensus forecasts predict that unemployment will remain
high for many more years, suggesting that typical Americans
are in for another lost decade of living standards growth
• E.g., as a result of persistent high unemployment, the incomes of
families in the middle fifth of the income distribution in 2018 will likely
still be below 2000 levels
http://stateofworkingamerica.org/subjects/mobility/
State of Working America’s mobility
• Less than 1% of those making under $28,000 a year
would rise above $117,000 ten years later
• 73% of those in the top 1% stayed within the top 5%
within that ten-year period
• The top stay at the top, and the bottom stay at the bottom
• And education DOES NOT solve this: EPI finds that “high-scoring
students of low socio-economic status are no more likely to
complete college than low-scoring students of high socio-economic
status”
Note: Moving far means moving at least two income fifths (e.g., from the bottom to the middle fifth, or from the top to the
middle fifth). Data are missing for 1986–1996, 1988–1998, 1990–2000, 1992–2002, and 1994–2004.
Share of people in the bottom and top family
income fifths moving along the income
scale, 1970–1980 to 1995–2005
Note: Bars show how much the chance of leaving the bottom income fifth changes if the head of household has the identified characteristic relative to not having
it (e.g., being white relative to being nonwhite or having a high school education relative to not having it.
Characteristics associated with leaving
the bottom income fifth
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Wealth gap greater than income gap
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Wages and compensation stagnating
Hourly wage and compensation growth for production/nonsupervisory workers, 1959-2009
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Median income growth slows
substantially since early 1970s
Real median family income, 1947-2009
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Low-, middle-, and high-income growth,
1973-2010
Real income growth for different income percentiles diverged in 1970s, with real
incomes flattening in 20th percentile and median, and increasing in 95th percentile
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Poverty no longer falls as economy grows
Actual and simulated poverty, 1959-2010
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Top 1% hasn't controlled such a large share of
the economy since eve of the Great Depression
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US Income Distribution, 1979-2007
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End of the Golden Age of US capitalism?
(“30 More Years of Hell?” C. Kilpatrick, Jacobin)
• “Boomers grew up under a capitalism that had to be hammered and
shaped into respectability over a 30-yr period. But for us, we’re left
staring at the monstrosity in its natural state. With a quarter-century’s
worth of quasi social-democratic reforms either neutralized or withered
away, and with no more credit to hose us down, we’re able to see the
beast for what it truly is.”
• “While a liberal looks upon the New Deal and Great Society generation
as a pantheon of benevolent patriarchs, I see a bunch of technocrats
who slapped together a crude simulacrum of social democracy and
called it ‘free-enterprise.’ Just as in the submerged state of 2012, they
did their best to make the government’s hand all but invisible, all the
while using the machinery of the Cold War to purge labor radicals–
McCarthyism’s real target–leaving us helpless after the onslaught
began. They then told their children–the Boomers–to scorn these dirty
reds, and to thank good ol’ American capitalism for the chicken in every
pot.”
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Thirty More Years of Hell? C. Kilpatrick, Jacobin
• Kilpatrick presents a radical left critique of the myth &
reality of US capitalism from a Millennial perspective
• New Deal & Great Society reforms are misrepresented by
Baby Boomers
• The welfare state was never as strong in the US as in west
European social democracies
• The “ruling class” benefited more from reforms than the workers and
the poor that struggled for them
• Much of the benefits they’ve gotten from the government are
“hidden” in the “submerged state,” making it easier for them to
preach the gospel of “free enterprise” and rail against Millennials’
“sense of entitlement”
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Comparing the cost of college
• Average state tuition in early 1980s was around $8k (in
2008 dollars) for four years
• Most Millennials are forced into the mid-five-figures range for a
second rate public university education
• Pell Grants–when the Boomers were attending college–
covered 77% of the cost for a four-year public university
• For Millennials, the figure is 35%
• Student loans: “a servitude from which we can never escape. Forget
bankruptcy. Default on a student loan and the government will garnish your
wages until they get it all back, plus interest. They can even go after your
social security money, off limits for all other debts.”
• The actual cost of universal free higher education is negligible–estimated
somewhere between $15 and $30 billion.
[“30 More Years of Hell?” C. Kilpatrick, Jacobin]
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Metatheoretical Map
Nonrational
commodity festishism
alienation/estrangement
ORDER
Collective
Individual
A
C
T
I
O
N
surplus value
class conflict
class interests
labor exploitation
forces & relations of production
Rational
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Metatheoretical Map
Nonrational
A
C
T
I
O
N
DURKHEIM
Collective
Individual
ORDER
MARX
Rational