Capitalism - the long view

Tweet

"The more the world goes to hell, the more the prices of houses in Chelsea and Kensington ascend towards heaven."

I have been thinking about the evolution of capitalism, perhaps spurred by reading the London Review of Books – and having a little time on my hands.

The early emerging stage begins with the Italian city states and the aftermath of the Great Plague from 1350, marking the beginning of the end for western feudalism. The emergent period culminates with the print revolution, the Reformation and the Conquest of the Americas, as well as the institution of Atlantic-American slavery. 
By 1550, slavery in the Americas and expanding free labour in Europe combined with the destruction of the Church hierarchy in many lands to bring about social and religious revolution. The Anabaptists of Munster attempted to bring about a communist Jerusalem, a dystopian utopia that is besieged and destroyed by the forces of reaction. Meanwhile a peasant-hating Luther urged the slaughter of revolting commoners as the German Peasant War is likewise crushed.

Out of this early 16^th century upheaval emerges Mercantile Capitalism, a new world order dominated by the merchants of Italy, Holland and London, funded by the Spanish crown’s immense riches, in turn melted down from the treasures of obliterated Mezoamerican civilizations.

1600 was the year that marked the birth of capitalism proper, with the arrival of the world’s first stock-holding trading corporations – the East India Company and Dutch East India companies. Out of the new world trading system that tilted toward the Americas and Asia emerged the first great profit-seeking enterprises. 
Unlike the Spanish colonists, their treasure was not for the Crown, the Church and the slave-owning overlords of America, but for the stockholders in London and Amsterdam.

One sees here a common trait of capitalism that even today its propagandists deny is integral to it – free labour exists alongside unfree labour. The system has always required both.

From 1550 to 1770 the mercantile system prevailed, through England’s aborted bourgeois revolution and the rise of Dutch and English mercantile capitalism, built on slavery and commodity trade.

Then came the industrial revolution, and the republican revolutions of America and France. The third phase of capital from 1770 until around 2000 was defined by western dominance, the rise of industrial capitalism and western imperialism. 
It was also the age of bourgeois revolution, democracy and two other world movements: from 1870 to about 1945, working-class revolution, and then from 1945 until 1980, anti-colonial revolution.

While some have described the world that emerged after 1980 as post-industrial (and post-colonial), this is false, as it only describes a trend of deindustrialization in the West. 
Urbanisation and industrialisation actually reach their zenith in this final phase that takes us to the present. Only in 2005 did the majority of the planet find themselves living in urban centres (See Mike Davis’s Planet of Slums), leaving behind millennia of rural existence. 
The industrial revolutions of Asia, starting in Korea and Taiwan, and moving on to Malaysia, Indonesia, Vietnam and, most importantly, China, at last begin to universalise the new mode of production that started in Britain and America 200 years before.

Simply because the most valuable companies in the world now reside in the ‘digital’ or ‘weightless’ parts of the economy, does not mean that this era is not an industrial one. Human labour, organised in factories and offices, and the use of vast quantities of material in the production of consumer devices, mark simply the development of the consumer phase of industrial society, out of the steam and steel industrial ages that preceded it.
 The endless warehouses of whirring servers that power the networks that keep millions of us online, as much as the army of factory workers assembling the gadgets, these are the inescapable dirty secrets holding up the weightless age.

We can likewise discern, with our 21^st century environmental spectacles, that the fuel of industry was first peat and steam, then coal and now oil and gas. Over nearly 250 years of the age of industry, much has altered beyond recognition, but the underlying forces of capital and labour and the mediating technologies –productive, energetic and monetary – remain at work. 
What we can say for certain is that production and consumption are expanding exponentially, along with population. Bumps in the road do not alter that trajectory.

Since 1980 capital, most particularly finance capital, and also Asian industrial and energy capital, have been in the ascendancy. Labour has been corralled through competition from the new hinterlands, and the age of militancy has receded. The massive expansion of the global labour force has made the withdrawal of labour by any part of it less likely to strike terror into any capitalist. 
Perhaps a time will come when there is no longer a source of cheap, underemployed labour to replace the once uppity workers of the metropolis, but this seems unlikely. Capital is constantly destroying the foundations of social wealth, in a process of borderless rolling back of social gains, euphemistically known as structural adjustment, now, austerity, or better,  ‘disaster capitalism’ (Kline). 
As the last great recession has shown, capital recovers its losses quickly, while workers find it ever harder to hold onto their share of social wealth. This wage stagnation is mostly a western phenomenon, as across the developing world, wages are catching up. Some call this the 'great levelling'.

The last time western capital showed fear of its populace was the last time it had to call on them to fight its wars, and the last such war was Vietnam. In the age of drones, who needs worker soldiers? History tells us that worker soldiers are the most dangerous force for any old regime, since they can demand, and often get, altered social arrangements. 
With their drone wars, perhaps our crafty rulers have abolished the possibility that a New Model Army, or heroes of the wars in Europe, can ever return to demand the end to the system that made them fight.

Meanwhile Asia and the Gulf increasingly hold the great surpluses with which they can acquire strategic assets in the western heartlands. 
This is achieved without blood, like a backdoor coup, much as the blood and treasure of the Spanish and Portuguese empires ended up in the coffers of Dutch, Venetian and English financiers.

Not that capitalism is any less bloody than it was in previous centuries. The American empire keeps order, following the brief interlude of the Cold War, maintaining a status quo that allows the billionaires of Europe, Asia and the Middle East to remain safe in their fortresses. The ability of this gradually declining empire to maintain such order is now in question. 
But if instability strikes in one of the world’s forgotten corners, London is always there to provide a safe haven for money, whatever its colour. Strange how it was that London welcomed the refugees of the world in previous centuries, including Karl Marx, and now welcomes its oligarchs. 
It is a common fact known to London estate agents that the Chinese are the main buyers behind the latest property bubble, getting their money to somewhere safe. The more the world goes to hell, the more the prices of houses in Chelsea and Kensington ascend towards heaven.
This is part of a trend whereby rent of various kinds is eating into the earnings of workers and other producers. Rent is acquired through monopoly control of an asset, and is charged purely by virtue of this ownership, not for adding any value to the economy. The major rentiers include energy producing countries, especially the Gulf monarchies, landlords and banks - who charge us rent (interest and fees) for loans created through leverage on minimal or sometimes zero deposits, which costs the banks nothing but make them rich. The housing bubbles of recent years have been the biggest example of a rent-seeking spree - allowing house prices to rise way beyond any sustainable values - that has actually cost the 'real' economy trillions of dollars in bailouts and debt austerity.
If we ask who has survived best and grown mega-rich in recent decades we note that it is oil-producing countries, the financial sector and property owners. Essentially, rentiers. The only rivals in wealth terms to this are the new manufacturing nations of Asia, firstly China. 

There is a related secular trend worth noting for futurologists and students of political economy. Technological revolution makes anything manufactured cheaper over time. (Is it a coincidence that burglaries are less of a threat nowadays, when most household items, consisting of the latest technology, come so cheap and plentiful that it is not worth the criminal’s bother and risk to break in and take them?)

By contrast, as production expands exponentially, the planet is relentlessly denuded of its finite mineral wealth and consequently, the price of this natural wealth rises. We see this most obviously with oil, but it applies to any number of commodities. 
The stuff we make gets cheaper, but the stuff that we make it from – that the planet has created over millions of years - becomes more precious and expensive. Thus at some point, barring a new form of production that is entirely based on recycled material, a crisis occurs.

We cannot keep producing goods that are built with an ever-decreasing lifespan. The natural resource components make up a greater part of the value of the product, while the product’s inherent human labour and technology becomes cheap as chips, thanks to rising ‘efficiency’. (Efficiency is a very misleading word for a system that is so wasteful of resources; its prime efficiency is to extract profit from the production-circulation process - the accumulation of capital. In terms of materials, it is utterly profligate - see the oceans full of plastic waste).

The holders of the natural wealth become the rulers of the world, while the makers of things, unless they also own the materials, become the slaves of the resource owners. 
The proprietors of the land or sea under which such wealth exists become the greatest rentiers in history. All they do is dig stuff up (or get someone to dig it up for them) and sell it to the highest bidder. This is the future of capitalism unless it can re-use materials more effectively, or make things that last much longer. 
Which of course, it will have to learn to do in order to survive as a system. Unfortunately, capitalism has been moving in the other direction entirely, with products designed to become obsolete more rapidly than ever. 
This is the process of circulation and accumulation speeding up. If I cannot sell you the same thing next year as I did this year, how am I going to make money?

To change such an immanent feature of capitalist production seems unthinkable, and it ought at some point to mark the end of the consumer capitalist age.

Will this end see the beginning of green [recycled] capitalism, or green socialism? The age-old question of whether any private person or corporate body can ‘own’ what lies beneath then becomes the paramount question of the age, since this is ultimately where future wealth lies, just as it did in ages past. 
This will likely be the fight of the – rapidly approaching - future.