What’s private about capitalist ownership?

Posted by Mike Ely on Sunday, 08 December 2013 in Political Economy

«I raise this for several reasons:


«First, because we can’t mechanically judge the political potential of classes and strata by simplistic means. (I.e. a worker who owns a 401k is not suddenly a capitalist, and suddenly doesn’t have fundamental interests in preserving capitalism.)

«And the quite common ‘theory of privileges’ often takes the complex situation of people in the large middle strata of society (and some of their relative privileges) and uses this falsely to portray them all as essentially corrupt, inherently reactionary and political enemies who should (in an unrelieved way) be treated as the main target of political conflict.

«Second, there is a mechanical method that says ‘all capitalists, big or small, are collectively  our enemy in absolute (and virtually moral) ways and therefore any communist who proposes alliances that potentially include owners of any kind is class collaborationist.’

«This is (in fact) a non-materialist, syndicalist (not communist) approach, that is sharply opposed to actual communist revolution (and the real-world dynamics of taking the socialist road). Class interests are quite a bit more complex than that — as shown by the historical examples of the U.S. civil war (when there was a broad alliance against slavery), or the example of the Chinese revolution (where small capitalists often joined in the revolutionary struggle that took the socialist road), we can’t approach class without considering actual conditions and contradictions.»

«Even in our society (where there is not any non-capitalist oppressors, like slave owners or feudal lords), there will be the potential to ally (at least in temporary and conditional ways) with sections or currents among lower strata of «small business owners» (for example) in the revolutionary upsurge that leads to socialism.

* * * * * * * * * *



by Mike Ely

Fox bat asks two excellent questions in parallel thread on «One fundamental contradiction and two forms of motion«:

«What does «private ownership of the means of production» mean in an age when that ownership has become highly distributed?»

«Is a construction worker who has a 401K or pension plan that owns part of the ‘means of production’ a bourgeoisie?» 

The first goes to the nature of capitalism (and specifically to the manyness of capital). And the second goes to the nature and definition of class.

And it helps us dig into some important strategic questions like «who are our friends and who are our enemies» (which strata can we consider as potential allies in a fight for the socialist transition?)

Form and Essence: A history of change

Let’s start here:

The form of capitalist ownership has changed in major ways over two hundred years, while its essence has remained.

To put it somewhat simply, capitalism is a system based on the self-expansion of capital (a specific social relationship).

Capitalism is a system of exploitation — where the surplus in society is extracted from working people. But (more) it is a system where the locii (the sites) of accumulation are inherently distinct and divided. In other words, accumulation (under capitalism) is maximized at many, rival, separate sites in the economic and social structure. That is what is «private» about capitalist ownership — i.e. that ownership is divided and separated into distinct and competing «locii» (sites) of accumulation.

And this causes the inherent anarchy of capitalism: that decisions central to society (about how wealth is invested, about the direction and nature of production, about research and implementation) are made by separate and distinct centers of capital accumulation — based on what is in their own parochial self-interest (literally: in the interest of maximizing profit at their site in the accumulation process).

Private ownership (in this Marxist sense) is not the same as «personal» ownership. Private ownership is a description of the shattered nature of economic life under capitalism (rivalry, competition, intercapitalist war, the roots of crisis of accumulation, the making of decision that are privately rational but socially insane). «Personal ownership» is a description of a particular juridical (i.e. legal) form that capitalist ownership sometimes takes.

Particular juridical forms are historically evolved, not inherent

To break that down: Capitalist ownership (in Europe) grew out of a system of merchant capital and artisan production. It had as its ownership form (generally) a situation where one person legally owned the means of production, and therefore owned the process of production itself (both owning the output of production, but also «owning» the right to make decisions about production and investment). This was often personal… so that Mr. Jones owned Jones Iron Works, and (after his death) his son, Mr. Jones, became the new owner.

This form of juridical ownership was prominent (and symbolic), but it was hardly the only form, and with time became less and less the main form of capitalist ownership.

To simplify the history a bit… some trends:

1) Finance capital emerged. Suddenly capitalist rooted in banking were «investing» in companies, moving their funds from here to there pursuing maximum profit. They were not tied to particular plants or industries (the way the owners of «family businesses» tended to be). So you had General Motors (owned by stockholders) in contrast to Ford (owned by a family).

2) State ownership emerged. In a growing number of places and cases, the state (operating on behalf of the capitalist class as a whole) would energetically develop key industries (that otherwise might not easily compete). So you had in a number of countries, the state initiating or buying up key industries (either because they were not attracting enough private capital, or because the larger capitalist class of that social formation needed that industry to be expanded for their general profitability). In the U.S., the government developed a post office and other forms of infratstructure (that had once been «personally» owned). Highways used to be private «turnpikes» but became more often a federal operation (with lots of smaller capitalist firms operating as «private contractors.») This kind of state ownership became (for a period) a marker of capitalism in third world countries — which often developed a large «state sector» that was essentially «owned» by the corrupt «bureaucrat capitalist class» (i.e. exemplified by people like Marcos, Suharto, Chiang Kaishek, Somoza, etc.) One of the cases where capitalist classes move for state enterprise is military production — where they have political-strategic reasons to develop/maintain a branch of industry, and don’t want production to rise or fall merely based on sectoral profitability. (Example: it may be cheaper to produce all computer chips in low wage areas, but several imperialist countries want to maintain production facilities within their borders for strategic-military reasons. The problems of profitability are then solved by setting up state concerns in some cases.)

3) One of the markers of the «neo-liberal» era, was that such joint-capitalist state enterprises were more and more returned to non-state forms (UPS replaces post office, British state «sells off» or closes state enterprises, Soviet Union «enfranchises the nomenklatura» and allows state ministry officials to directly buy/own former state capitalist corporations.)

In short: The private nature of capitalist ownership does not require a specific form of juridical ownership. There are many forms of capitalist ownership (personal family ownership, stock ownership, state ownership, and many versions of each of those three around the world.)

In the case of state ownership, there are (historically speaking) two different kinds in the twentieth century: «ownership by the whole people» in genuinely socialist countries (where the state ownership is, in fact, a way of ending capitalist ownership and producing social control) and state capitalist ownership. State capitalist ownership is social in form, but remains private in essence — including in the sense that state capitalist production operates as competing locii of accumulation. (Note: here «competing» is not mainly competing for markets, but competing for capital investment based on rate of profit. Capital investment moves in search of maximized profit).

The manyness of capital even when it is state owned

One of the confusions and controversies in modern communist debates is how to evaluate state ownership — and the (somewhat simplistic) assumptions of some are: «If there is operation of the law of value it must be capitalism.» (Meaning if there is production of commodities for exchange on markets, this indicates the dominance of capitalism in the social formation.) And also «If there is a juridically unitary state ownership of the means of production and the land then the society CAN’T be capitalist — because there is no basis or possibility for the manyness and rivalry of blocks of capital.»

In our experience with real existing socialism and then (unfortunately) with capitalist restoration i nthe twentieth century, we know a great deal more about these phenomena — i.e. we have real practice on a global scale for the first time.

First, we know that the socialist transition (between capitalism and communism) involves (by its nature) some continuation of the commodity form (and of commodity production). I.e. it is not possible to quickly eliminate markets and wages. But what separates socialism from capitalism, is that the DOMINANCE of the law of value is ended — and particular labor power is no longer circulating as a commodity (i.e. the core decisions of society are made on a socialist, planned basis in the interest of the masses of people, not on a fragmented capitalist based serving profit and accumulation.)

Second, we have seen (particularly in the experience of the Soviet Union from the mid-50s to the late 80s) how a system with a juridically state-ownership system can (in fact) operate as the manyness of capital (where state ministries operate and compete as capitalist corporations, where nominally-social state planning serves military priorities of a ruling class and then also operates as a shell through which capital accumulation is served etc. I.e. we discovered over a whole historical period how even in the most state-owned society in history, the manyness of capital could emerge and operate.

Does having savings make you a capitalist?

Let’s go to fox bat’s second question:

«Is a construction worker who has a 401K or pension plan that owns part of the ‘means of production’ a bourgeoisie?»

This is, of course, the claim of U.S. capitalism: that everyone has interests in capitalism, and everyone «benefits» from capitalism, etc.

The basic answer is «no.» A construction worker, whose main wages and livelihood comes from participation in selling labor power for wages is a worker.

In modern U.S. capitalism, the finance capitalists found innovative ways to mobilize (and deploy) massive amounts of social accumulation (including the pension savings of the workers) for production purposes. The vast expansion of stock ownership played a major ideological role (in getting workers «invested» in «their» companies to worry about profit, and getting working people to «worry» about the «competitiveness of the U.S. worldwide» and so on). And it also played an economic role of organizing blocks of capital for investment.

But this stock ownership does not make the workers themselves into capitalists.

Here is how that breaks down:

Class is mainly defined by relationship to production. People who have nothing but their labor power, who need to sell themselves to live, are proletarians.

People who live off capital (the exploitation of others) are capitalists.

But (as Fox bats question reveals) life is not so simple.

When I worked in the mines, many of the miners also had a farm, some had a bulldozer that they rented out on weekends. So some of them owned a little chunk of «means of production.»

And it needs to be said: It gets complicated when we have socialist states. The Chilean communist leader Jorge Palacios once asked (I was lucky enough to hear him say this over dinner one night) «If we have a country, and state power somewhere, does our class still have ‘nothing to lose’?» Obviously not, and when «we» have state power (and a socialist country operating within a system of reactionary states), we suddenly have new interests (in preserving and expanding that liberated area) that influence our politics and strategies. (As a class we have «nothing to lose» in the sense of wanting all-the-way revolution, but at times we actually have «something to lose» — and this injects some major contradictions into policy and conduct).

But as for the workers who had a little land or owned an earth-mover, in the main, they were workers (i.e. their MAIN relationship to production was as wage workers). But there are many intermediate strata and situations in society. (As Lenin says: All dividing lines in nature and society are relative and conditional.)

The divides of economic and political among strata within the capitalist owning class

Similarly, there are huge (huge!) differences within the capitalist class (seen large).

One of my best friends in grade school was part of an immigrant family that ran a cleaning business. The father owned the business and exploited his own kids as workers (with some amazing ruthlessness) and an occasional employee from outside the family. On one level, he was a small (very small) capitalist. On another level, he really is in a very different class from billionaire Mayor Bloomberg.

Several things come up conceptually:

1) In Marxist class analysis, class is not mainly a way of labeling an individual’s status (as it is, by contrast, in bourgeois sociology). In communist theory, class analysis is a way to analyze aggregated groups in society, their interests, their conflicts, their political potential  and their historical development.

So the point of communist class analysis is not MAINLY to decide «what exact class is a farmer-miner in?»

And the existence of an exploiting working class (in the U.S.) is a fact independent of whether there are large intermediate strata (between that exploited class and the more wealthy upper classes.)

2) Class is determined by how people relate to production. Workers who have pensions invested in stocks are not capitalists… and certainly they don’t dominate or control production. (I.e. at the locus of accumulation around Fidelity investment corporation, it is never the interests or desires of the worker pensioners that influence investment and production decisions. Those decisions are made by people who (as Marx said) operate as «capital personified» — sometimes they are big financial owners, sometimes they are capitalist managers trained to operate as the soul of a soulless profit taking.

3) The ruling class of the modern world is not simply «capitalists» in some general sense. It is specifically those called «monopoly and finance capitalists» (or «imperialists») in communist theory: I.e. those commanding and owning the heights of society and owning the core of production.And there are, objectively and constantly, major differences of class interests between strata that are (nominally) «in» the capitalist class.

For example: Take the small cleaning company owner who exploits five people. His/her interests (or more precisely the interests of the class to which they belong) is very different from those of the monopoly capitalists. And those class differences can become part of the terrain on which the revolutionary forces operate.

In other words, if we imagine the revolutionary alliances that could overthrow the existing order and put society on the socialist road — those alliances, in the U.S., will potentially (and hopefully) include significant numbers of people who are (nominally) involved in some ownership of small-scale production.

Example: Class alliances during China’s taking of the socialist road

During early stages of the Chinese revolution (1919-1949), the main target of the revolution (in those initial stages) was seen to be «the three mountains»: foreign imperialists, domestic feudal oppressors, and the bureaucrat-capitalists who controlled the Chinese state.

In the overthrow of those forces, there were sections of Chinese owning classes (especially small owners who were squeezed and ruined by cheap foreign goods and corrupt GMD/warlord officials) who were quite radical, and participated heroically in the revolution. These forces were labeled «the national bourgeoisie» — because they were (naturally) a lower stratum of the bourgeosie, and were «national» in their inclinations.

It was not always possible to unite with the «national bourgeoisie» — and naturally, not all of them were politically inclined to support the Chinese revolution. But the revolutionaries (led by Mao) developed a policy of building a core «worker peasant alliance» and then (on that basis) seeking to «mobilize all positive factors» — including (when possible) encouraging the «national bourgeoisie» to fight against Japanese occupiers, the GMD bureaucrat capitalists, and the feudal landlords.

It is possible to get a sense of the nature of this national bourgeoisie in this way: After the 1949 revolution, only reactionary capitalists were nationalized (and their enterprises formed the core of a new nascent state socialist induatrial sector). However that nationalization involved about 80% of the Chinese industrial capacity. In other words, the national bourgeois were numerous, but they were economically very small and weak, and mainly concentrated in virtually artisinal enterprises exploiting a few (or a dozen) workers. To maintain the alliance: their operations were controlled by the socialist forces in society (i.e. there were laws setting conditions, and «encircling» the remaining capitalist enterprises with socialist distribution and transportation systems). And they were eventually not able to transfer their temporary capitalist ownership by inheritance…

And (when the communist forces led to victory in 1949), significant sections of the «national bourgeoisie» joined in the policies of the new economy through the 1950s. Some did not (and there were, for example, sharp struggle against corrupt meat packers during the Korean war). But in the main, when threats of capitalist restoration emerged (and they did, with a vengance) it did not come from the «national bourgeoisie» but from capitalist roaders within the Communist Party itself (whose social base was not the national bourgeoisie, but rather capitalist forces emerging within the socialist state sector, the military, the Communist party etc.)

I raise this for several reasons:

First, because we can’t mechanically judge the political potential of classes and strata by simplistic means. (I.e. a worker who owns a 401k is not suddenly a capitalist, and suddenly doesn’t have fundamental interests in preserving capitalism.) And the quite common «theory of privileges» often takes the complex situation of people in the middle strata of society (and some of their relative privileges) and uses it falsely to portray them all as corrupt and inherently reactionary.

Second, there is a mechanical method that says «all capitalists are our enemy and any communist who proposes alliances that include owners of any kind is class collaborationist.» This is (in fact) a non-materialist (and historically absurd) approach, since class interests are quite a bit more complex than that. As the example of the U.S. civil war (when there was a broad alliance against slavery), or the example of the Chinese revolution (where small capitalists often joined in the revolutionary struggle that took the socialist road), we can’t approach class without considering actual conditions and contradictions.

– See more at: http://kasamaproject.org/threads/entry/what-s-private-about-capitalist-ownership#sthash.1mnQCjKH.dpuf



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