Capital as Power in the 21st Century: A Conversation

Well, a nice opportunity to engage with a researcher who carries a good reputation and considerable popularity (at least on the fringe of political economy discourse). And I appreciate the comradely discussion. But as the talk progressed I felt a growing sense of frustration. The potential was there for a meaningful engagement, but it did not materialize, in my opinion. Hudson was generally satisfied with pointing out apparent similarities, when anything of value actually lies in examining the differences of the two approaches more closely.

It made me think of dozens of conversations (with political partners, friends, sympathizers) I have had over the years, about the usefulness and necessity of a (new) power theory of capitalism. Unlike debates with orthodox Marxists, and similar to the one with Hudson, the faultlines were not situated at the heart of theories of value but at the boundaries of each.  Later on, I’ll try to find the time to explain what I mean by that. For now I’ll just say this conversation is useful for identifying some practical hurdles CasP is facing, in appealing as an alternative framework for political praxis. So, it’s worth our attention, even though it doesn’t provide a lucid theoretical engagement.

Michael Hudson: “…But instead of using the general term ‘power’, I wanted to be very specific and focus on the term economic ‘rent’ as distinguished from ‘value’, as the unearned element; as was just described, the capitalization of corporate wealth over and above the actual value, cost value. (The book value of the tangible wealth — the socially necessary labor costs, ultimately, necessary to create the means of production.)”

This is the most substantial theoretical claim I could track down in what Hudson said. At face value, it points to a plain adherence to some labor theory of value, at the core at least. But it’s totally secondary. When Jonathan claims the distinction between productive and unproductive entities is meaningless, Hudson skates through the problem by saying something like – nowadays, all industrial capital is “infected” by capitalization, so sure, I can go along with that (I’m paraphrasing into lingua CasPa). So it’s not the categorization of different entities which is at the heart of disagreement. It is the apparent radical difference between book value and financial value, and their qualitatively different meanings.

A different line of argument from a CasP perspective could emphasize commodities in general, pointing out that book value is just historical value recorded, dependent on prices which are themselves the product of capitalization at a specific time (a machine worth is determined by discounting expected future earnings associated with control of the machine in a certain production setup). So all “cost value” is already “financial”, in a way. And if we can convince this is the case, then there is no radical difference between those categories of prices.

Now, the gist of the matter lies here. I would argue the inability of heterodox scholars to engage with CasP is not rooted in adherence to different theories of value. I’m thinking here about Keen, Varoufakis, Hudson and the likes (mostly post-Keynesians and neo-Marxists). They are not dependent on a quantitatively meaningful “real” theory or quantities. Implicitly, I think they accept it’s all about power, but they regard the power associated with controlling production directly (as supposedly manifested through cost value) as “good”. But good in what way? I don’t think it’s mainly based on morals, as Blair indicated. It’s based on functionality: The rational power-based order of production under capitalism (we could agree it’s more rational than the centrally planned economy of the USSR, right?). It functions in reproducing social order and sustain needs, and that is considered good (at least as a starting point, politically).

The rest is rent, finance, crises, bubbles, etc. Not the bubbles of the real/nominal divide, but the ones emerging from the mismatch of different rational orders. After all, the nominal sphere of capitalist production is grounded in real bio-physical quantities, or at least, it must take them into account when operating as a quantitative ordering of society. Prices are all nomos, yes, but it’s not the detached, parasitic and often delusional nomos of finance. Of course, capitalist production shouldn’t be autonomous. It should be directed, for example, to take into account the ecological crises. It’s not a perfect rational system, but it’s a whole other beast than finance.

Responding with fundamental critiques of neoclassical or Marxist value theories is not really effective in this context. So a reorientation of exposition and argument might be required if we to facilitate more fruitful engagements.

• This reply was modified 3 days, 21 hours ago by max gr.