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Bichler and Nitzan, the new Foucaulvians
September 26, 2021
Copy/Pasting text out from PDFs nicely is too tedious so here is the PDF:
http://www.paecon.net/PAEReview/issue95/BichlerNitzan95.pdf
This is a short 8-page essay from Bichler and Nitzan advertising the theme behind their book ‘Capital as Power: A Study of Order and Creorder’. Bichler and Nitzan are two university professors based in Toronto, Canada and somewhere in Israel and are kind of maverick intellectuals. They say that the liberal and marxist economic theories of the past failed because they sought to find some objective substance to economic phenomena that would make them comprehensible in a Natural Science kind of way. The way we understand acceleration, gravity, force, etc. they sought to understand prices and profit. The error, say Bichler and Nitzan, is that there is no underlying substance to economic phenomena, and that capital does not seek to maximize profit but to maximize the difference in power between itself and its subjects and competitors. They propose an alternative: the Power Theory of Value, in which the value of goods and services isn’t determined by supply and demand or labor-content, but power. This framing of economics, they argue, makes economics a much more empirically sound body of thought in light of recent developments of capital which obsolesce older theories centered around profit-maximizing firms and rational actors.
I believe this thesis to be an enormously vicious lie, if not in design, then at the very least in function. For a couple reasons. Firstly, what they are attempting to do here is pull the objective foundation out from underneath the science of economics, which is partly a policy discipline and partly an understanding of capital’s behaviors. If the Bichler/Nitzan thesis were popularized, there would be no objective grounding for economic phenomena. The usefulness of economics is in explaining what the value of a thing is, what activities are productive of value, which are destructive or consumptive, by how much, how these activities are sustained and how they interact with each other and so on. Its highest usefulness is in lending the economist the ability to roughly predict the future based on the investment and credit trends he observes in the present. All of that is predicated on there being an objective foundation to these things. If there is no objective foundation, if there is no noumenon to the phenomenon, and everything you see is merely an expression of power, there is no alternative to compare the expressions of that power with. An economist trained in the physical, objective tradition can watch capital streaming into the purchase of urban land for speculative holding and say “While profitable for the investor, that will result mainly in higher rents and would be more productively spent, in the macro view, on tools, labor and equipment somewhere on the periphery of the urban area.” If the Bichler and Nitzan perspective is adopted, the economist is powerless to make any kind of counterfactual statement. Economics would cease to have any usefulness for dissidents or discontents as a path offering an alternative to elite abuse. Having slipped into the realm of subjectivity, it would be stripped of the predictive power that follows from its material grounding and would become only a way of professionally complaining about elite abuse.
The only friend that dissent has is capital-T Truth. When intellectuals try to destroy the foundation of objective truth in a performative attack on elites what they are really functionally doing is destroying the legitimacy of dissent, since dissenters become incapable of offering a better alternative. The Elite/Dissident struggle, wherein the latter attempts to rectify the wrongs done to him by the former, is collapsed into a vulgar Nietzschean Master/Slave struggle, wherein the latter is merely lashing out at the former because he feels pain – unable to articulate the wrongs he’s been dealt and the rectifications he’s owed, he loses the righteousness of his cause. Objective economics is our only friend because if we want an existence of plenty and harmony we have to understand the material pre-requisites for that. If the middle-class societies of the Keynesian Golden Age were mere expressions of power then there is no rational policy-path from here to there. We’ve seen this before with Foucault, whose epistemological subjectivism marked the first death of material class struggle in the Left.
Secondly, in collapsing the value theory of economics down to what is immediately apparent to them, they are making a big category error: they are supposing that everything that Firms do is on account of economic reasons. In effect, they are folding all of geopolitical strategy, statecraft and spycraft (all of whose principal modes of expression are in corporate decision-making) down into economics. In making power the basis of value, they are enveloping all of human affairs into economics. If the previous problem with their theory was nasty, this one is especially vicious. Vicious because it seeks to scientize the policies of elite abuse under the domain of economics. If major media conglomerates and tech platforms like NYT and Twitter lose money every year, then why do they continue to attract investment? Bichler and Nitzan would say: our economics says that they are maximizing power-differentials. But this would obscure the truth, which is that elite and state actors are rationally acting within the confines of economics, gladly incurring economic costs but for the sake of non-economic political goals. If we’re to accept their idea, then we also accept that the Deep Steering-Committees of the world – the secret societies, intelligence agencies, gangs, and religious groups that decide the policies of corporations, governments and NGOs – are epiphenomenal to the economic process of maximizing power-differentials.
Bichlan & Nitzer’s thinking is indicative of a dextrous, superficial, and greedy intellect that wants to take home 1st Prize after a flash of cleverness without really having understood anything substantial. But worse than that, it’s positively harmful to dissent everywhere because it undermines its rational basis.
It is also wrong: there have been a number of empirical studies by a circle of marxist economists looking for evidence of the labor theory of value’s validity, them being David Zachariah, Anwar Shaikh, Paul Cockshott, Ian Wright, et al. These studies have found that when the Labor Theory of Value is kept within the proper parameters, i.e. when we look at industries in which labor processes result in a tangible commodity, the labor-content (the total social labor-time) of the commodity correlates to the price by 95-98%, with the least accurate correlations taking place in those economies in which ground-rents make up a large proportion of total prices (For Example: in heavily oil-producing countries, the LTV is a less accurate predictor for commodity prices due to the ground rent of oil fields making up a larger component of prices). It would be fair to say then that labor-time is a strong predictor of price when constrained to labor processes yielding tangible commodities, which would validate the LTV. The correlation of labor-time to price in other economic sectors like Service or Finance is murkier but this is less of a failing of the LTV and more indicative of the sterility of Marxian thought after Marx, in its failure to develop a more sophisticated taxonomy of capital.
Bichler and Nitzan addressed the LTV-advocates in their book by saying that these studies were not very meaningful because they ignored a third variable: size. They argued that big companies and big sectors laid out more prices (i.e. produced and marketed a greater volume of priced goods) than small ones. It’s understandable then, without recourse to the LTV, that there would be a high correlation because the LTV-advocates were ignoring Size as a third and independent variable, on which the other two were dependent. But this response betrays the shallow character of their intellects, because it begs the question: how is size measured? How do you measure the size of a company? Sure, measure its costs in money-terms, but then?… Convert them to real-terms and you will have come full circle back to … labor.
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XenForo seems confused.
Within the liberal tradition, which informed Marx and, therefore, informs Marxism and Marxists, arbitrary, coercive power is anathema to the human condition. By identifying capital as precisely such power, CasP theory is not neutral: it has made a value judgment that any dissident informed by the liberal tradition can use, quite effectively, to dissent and resist.
That said, CasP theory, unlike other schools of political economy, does not (yet) attempt to be normative. And I think that is xenForo’s real objection: how can he know what to think unless someone tells him what to think?
Yes, xenForo, we all get that labor (whether performed by humans or machines) is what creates “value,” but that really doesn’t matter in setting prices. If labor sat down with capitalists and agreed to the objective value of labor, capitalists will see that as a cost to which they add markup, not a value that scales with price. Why? Because they have to power to set prices, and labor adds NOTHING to that power.
And this is one of the reasons why I prefer to view CasP as not having a theory of value at all. Once you realize that labor’s value is the capitalists’ cost, and profit is the markup that capitalists have the power to add to that cost in creating the price, you can start focusing on the arbitrary, coercive nature of that power instead of demanding labor’s “fair share” of something labor has no hand in creating (markup).
Regardless, there’s nothing “post-modern” or Foucaltian about CasP (I even recall some virulent anti “postist” rants in some papers). CasP theory clearly has its own grand narrative that can be tested historically and empirically. It just doesn’t have its own politics (although its adherents all seem to abhor– or at least are concerned about– arbitrary, coercive power and the inequality it perpetuates).
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The commentator is “Jargon”. The site is obscure and the commentator’s argument is “not even wrong”. It is so confused it cannot be understood let alone refuted. I wouldn’t waste any time on it.
But I have to disagree with Scott on one point. Labor (and production machinery) create products and services not “value”. The products and services usually have “use-values” though I am sure we have all paid for products and services which we subsequently and angrily declared to be useless. I know I have. Nature also creates and/or presents things of use value to humans, like clean, potable water or edible wild berries to name two. In other words, these are the so-called “free gifts from nature” which are free until enclosed and claimed by a “property owner”. It is worth noting the Lauderdale Paradox in this context. The free gifts of nature are free (apart from the self-labor of gathering them) until enclosed by a so-called property owner. Ownership is simply a social and legal fiction backed (usually) by fences, walls and force.
We have to be really careful when talking about “value”. Which “value” do we mean? If we mean use-value (to humans) then it is clear nature, labor and machine production can all provide goods and services with use-value to humans. Consider the humble apple. Nature provided the wild stock or ancestral apple. People bred varieties but nature still provided the soil and water to grow the cultivated apple. People and/or machinery picked it, shipped it, wholesaled it and retailed it. Markets or other operations (like administered prices) put a numeraire price value on it. But how can we hypothetically or practicably allocate what proportions of its use-value or price-value are really due to free gifts of nature, people work and machinery work? We cannot. Yet the contribution of all is real. Without the free gifts of nature, humans would not exist let alone anything that they consume. The artificiality and arbitrariness of property holding and the market pricing system comes to the fore to solve this terrible dilemma that otherwise every human in society ought to have an equal birthright to the free gifts of nature. That view is anathema to possessing or acquiring large, private holdings. The developed capitalist system deems (price) value to exist only when a human holds something as property, the land, the tree or the apple for sale, and the system limits its calculations to those humanly controllable parameters. What is not controllable, not encloseable, is deemed to make no contribution until such time as it can be controlled and enclosed. Then, voila! It ipso facto makes a contribution which is capitalised and entered into the book-keeping of the system.
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