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I had a useful Twitter exchange about CasP and conventional ‘capital theory’ with John Michael Colón (JMC), editor at Strange Matters and The Point. Here it is (with minor style modifications to my posts).
JMC:
[…] B&N seem like the most coherent “capital theory” of recent years — but a notion of capital as capitalization & capitalization the product of a power relations makes it by definition nondeterministic & contingent, I think, in ways old capital theories wouldn’t have been. Which is to B&N’s credit, but to the detriment of “capital theory” as a project.
JN:
If we take ‘capital theory’ as a general attempt to understand capital, would you argue that the notion of Capital as Power has undermined capital theory?
JMC:
Well, idk tbh — part of this is splitting hairs about terms, which I hate doing. But as I understand it…
… capital theory as articulated in classical, Marxian, and neoclassical econ was the attempt to outline how the nature or composition or current qualities of capital shape the trajectory of the entire economy (prices, profits, interest rates, etc) in some predictable way.
It’s my understanding that part of the upshot of your focus on power — which I’ve always regarded as analogous to what Veblen, Means, and Lee are talking about when they talk about “administration,” e.g. administered prices — is, the things capital theory would explain as…
…being determined mechanically by the macro-qualities of “capital” at a snapshot in time, are actually themselves contingent products of the actions of different sorts of actors under conditions of uncertainty, and therefore the answer is you can’t model it that particular way
Perhaps that interpretation’s incorrect idk. But it’s telling that, besides using the Cambridge capital debate in your demolition of neoclassicalism, y’all don’t really seem to concern yourselves much with “capital theory” as a framing for any of your big concepts it seems to me.
Rather, the picture I get in my head reading CasP is of various sorts of agent pursuing capitalization by one of any number of strategies, usually in a way that attempts to exert control over / access to the fruits of capitalization rituals initiated by others, with specific…
…decisions about the microeconomic particulars being downstream of the capitalization strategies adopted by the particular agents in control of them at any given moment, and therefore contingent and difficult to predict merely from the “structure of capital” at any given moment
Or not difficult, sorry, impossible. Like it’s just the entirely wrong framing. Perhaps I’m reading my own beliefs drawn from Fred Lee into your work though. Not sure. You’re the writers, what do you think?
JN:
Good thread, thank you. There are several differences between CasP and the two other main theories of capital, chiefly neoclassical and Marxist.
The first difference has to do with what we mean by ‘capital’. Existing theories focus on the so-called capital stock – namely, outstanding physical means of production, knowledge and cash with which capitalist pay workers. [Marxists see capital as a dynamic social relation, but they measure it using the capital stock.]
By contrast, CasP sees capital as risk-adjusted expected future earnings discounted to present value.
These are very different entities. The former is economic/productive/backward-looking, the latter financial/symbolic/forward-looking. And, not surprisingly, they oscillate inversely (https://bnarchives.yorku.ca/640/).
The inverse relationship between the conventional and CasP views of capital forces us to make a choice: either we stick with the economic/productive/backward-looking view and ignore capitalization, or we ignore the economic/productive/backward view and theorize capitalization.
The reason why CasP focuses on capitalization is twofold. First, the traditional view claims to but in fact cannot measure the so-called ‘real’ magnitude of capital. Second, capitalists are driven not by economic/productive/backward-looking capital, but by capitalization.
And since the two measures (expressed in nominal terms, because the ‘real’ magnitude of capital is impossible to measure) oscillate inversely, we feel our focus is correct and the economists’ isn’t.
And that’s just for starters. Whereas economics is concerned with absolute measures, we focus on differential ones: capitalists, we argue, try not to maximize profit but to ‘beat the average’. So again, our concept and analysis are another level removed from those of economists.
For example, in our work, we show the relationship between Middle East Energy Conflicts and the differential rates of return of the leading oil companies. This relationship does NOT hold for absolute rates of return (https://bnarchives.yorku.ca/432/).
And there is more. Not only do we focus on capitalization rather than the ‘capital stock’, and on differential rather than absolute magnitudes, but our explanations are anchored in power, not production. So CasP theory is three level removed from that of standard ‘capital theory’.
In other words, CasP theorizes capital, but it isn’t the same capital that economists talk about. The validity and robustness of our results are open to debate — but unlike in economics, this debate does not depend on fictitious quanta.
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I find this an interesting exchange.
“… a notion of capital as capitalization & capitalization the product of a power relations makes it by definition nondeterministic & contingent, I think, in ways old capital theories wouldn’t have been. Which is to B&N’s credit, but to the detriment of “capital theory” as a project.” – JMC.
It’s interesting to consider what JMC means by “nondeterministic and contingent” in this context. The “idea I get”, to use JMC’s later and very apposite phrase for difficult theorising, is that;
(a) fixed capital operations (as classically theorised) are considered to be somewhat deterministically moving prices, profits, interest rates, etc., around, whether by direct ratios (like cogs with different numbers of teeth) or by fluctuation of pressures and flows (as in a complex hydro-dynamic model where the apertures of valves, frictions of pipes, elasticity of pipe walls etc are at least partly unknown and continuously fluctuating); but
(b) financial capital operations (in the CasP view) are undetermined by fixed capital operations but, rather, causation runs the other way.
That is the picture I get from JMC’s statements.
The picture I get from CasP and Jonathan’s statements here is (to cut it right down) that production from fixed capital determines supplies of goods and services but not prices. Markets and prices can be looked on wholly as a distribution mechanism. Prices, of ownership, labour and goods, determine distribution. Ownership extracts a price too in capitalism.
Something I bang on about is the idea of how do we analyse what happens in a full complex system, the political economy system, which is a hybrid of a set of real systems and a set of formal systems? We need an ontology and a method for unifying real systems and formal systems in a single model. This could be simplistically characterised as “What happens when a human rule meets a fundamental law?” or “What happens when axioms meet fundamental laws?” We need to see causation as flowing both ways in this hybrid system. Causation flows between real and formal systems by information (defined as patterns encoded in media and then in turn decoded, by human agents and now computer agents).
To my mind, neoclassical economics has not grappled properly with the plain fact that prices do not measure value but instantiate power. My feeling about CasP is that it remains on-track but an incomplete project. Either that or I don’t understand the completions it has arrived at. The theory is difficult. When empirically supported theory is complex and difficult the public prefer a simple lie. This is one reaosn why capitalism works so well. “Supply and demand” is repeated like a catechism: a self-evident truth to everyone. These are the conclusions political economy in practice forces on me. To take the contemporary example, it’s the case that evolution, virology, immunology and epidemiology are wickedly complex as we are finding out in this global pandemic. Then they become, in theory and praxis, distorted by the forcefield of capitalism. The capitalists prefer the exercise of capital as power to the pursuit of any empirical truths or consequentialist ethics, in these matters or in any others. The public prefer the simple lies they are being fed. This is because beginning to realise the complexity of real systems (let alone the complexity of our superstructures of formal systems) and to realise our lack of understanding of and control over these systems and even over our own actions is simply too frightening for most people. They prefer to remain cocooned in the lies of the system.
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Thank you Rowan.
“… a notion of capital as capitalization & capitalization the product of a power relations makes it by definition nondeterministic & contingent, I think, in ways old capital theories wouldn’t have been. Which is to B&N’s credit, but to the detriment of “capital theory” as a project.”
Neoclassical theory and its economic offshoots are ‘deterministic’ only on paper. In practice, their inner arguments cannot be operationalized (utility and util-denominated productivity are mirages) and their indirect ‘testing’ almost always fails (generating a multiples ‘measures of ignorance’ compensated for by an even greater number of ‘distortions’).
CasP’s argues that the trajectory of capitalist societies reflects the capitalist creordering of power against opposition. The capitalist attempt to creorder society, being subjugated to the ritual of differential capitalization, is relatively simple to articulate and often possible to predict. Resistance to this creordering, however, can be open-ended, which makes it difficult to map and anticipate. One way or the other, the resulting clash between these two moments is complex and non-linear, which means that we can only say so much about its immediate results and even less about its future outcomes.
With this limitations in mind, CasP research has managed to map a growing number of historical power patterns related to stagflation, M&As, energy use and hierarchy, wars, societal U-turns, military spending, risk reduction, popular culture, sabotage, consumption, debt, high-technology, etc. And what’s more, it demonstrated that some of these patterns continue to hold beyond the time period for which they were originally mapped and theorized. Not bad for a non-deterministic science of society.
My feeling about CasP is that it remains on-track but an incomplete project.
The idea that capital is power and that capitalism is a mode of power is just a theoretical shell. It has to be concretized, and this process has barely begun.
[CasP] theory is difficult. When empirically supported theory is complex and difficult the public prefer a simple lie. This is one reason why capitalism works so well. “Supply and demand” is repeated like a catechism: a self-evident truth to everyone.
The theory of demand and supply may be based on a lie, but it’s anything but simple. Most economics students don’t really understand it, and most non-economists cannot decipher a single paragraph of a neoclassical paper. By comparison, CasP is readily accessible and can be understood by any intelligent person who puts her/his mind to it.
The reason why neoclassicism reigns and CasP ignored has to do with the monopoly economists hold over all things ‘economic’, not the simplicity of their arguments.
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Jonathan,
I agree that neoclassical descriptive theory is ‘deterministic’ only on paper. I assume by ‘deterministic’ we mean that at least some causes can be known and that that knowledge can be used to predict some outcomes and even manipulated to cause some effects. The thing about neoclassical (and neoliberal) political economy is that it is a prescriptive system not a descriptive system (except secondarily as describing the outcomes of the prescriptions). A prescription cannot be operationalized without power, persuasion or allure.
I see a prescriptive system as an instruction set. I see humans (at one level) as coming with hardware and firmware (or wetware is a term also used). I also see them as both programmable and autonomous. The former term is easy to define, the latter term is very difficult to define, at least if one tries to define the source or origin of autonomy or posited autonomy, for example as “free will”.
Your statements resonate with me, particularly;
“The capitalist attempt to creorder society, being subjugated to the ritual of differential capitalization, is relatively simple to articulate and often possible to predict. Resistance to this creordering, however, can be open-ended, which makes it difficult to map and anticipate.” – J.N.
The ritual of differential capitalization is an instruction set. In the final analysis, it instructs people how to act. Indeed, it programs them how to act. This is just as learning about and from language, math, rituals, mores, money and markets, instructs us how to act. The instructions are operationalized as I identify it by power, persuasion or allure or perhaps simply by punishment and reward. We are enculturated and inculcated into this system, or some other system, from birth. This is as true for hunter gatherers, enculturated and inculcated into their system (the Dreamtime for example) as it is for modern humans under a capitalist political economy.
The resistance to the capitalist creordering is the interesting thing, to me and no doubt to many others. It is clearly now a matter of life, morbidity and death for most humans. I refer of course to at least climate change, mass extinctions and the “pandemicene”. The “pandemicene” is a currently emerging crisis of capitalism and still much underestimated, in my opinion. I won’t say much here except to assert we are already engaged in a “red queen evolution” struggle with SARS2 and all the other potential pandemic diseases, existent and emerging, which will opportunistically exploit the infection pathways (physiological and socioeconomic) [1] opened up by SARS2 due to its unique combination of characteristics.
“The reason why neoclassicism reigns and CasP ignored has to do with the monopoly economists hold over all things economic, not the simplicity of their arguments.” That’s a very valid point, though simplisms are pushed at the public discourse level. “Supply and demand” is repeated often by people who are aware of none of the complexities of the advanced theory. “Balance the budget” is another one. The slogans function to stop thinking. They mean “this is the way it is, was and always shall be”. The advanced theory exists to give economists careers, to build up the theology and priesthood of academic and business economics and to provide ever more advanced and complex sophistries which brainwash people and require years of unpicking to debunk and refute. Complex fallacious theories trap the intelligent, not the dull. But all of us can believe six mutually impossible things before breakfast, to slightly misquote Lewis Carroll.
I’m still trapped by aspects of Marxism, I am sure, and that’s from simply reading Marx for myself. For idiosyncratic reasons, I’ve gone back to what I call “empirical ontology” and have been looking at a (no doubt entirely Quixotic) theory of unifying real system and formal system ontology. I find it interesting that I can only understand some of your (and CasP’s) statements through the framework I am creating. This tells me that;
(a) I lack the science and philosophy of science underpinning which you have; and
(b) I am trying to reverse-engineer this underpinning (from the collision with political economy of all forms including CasP and collisions with other thought systems and enterprises as well).
This is the reason I wonder if there are some key texts you could name as central in building your understanding to the point that CasP became conceivable, derivable to yourself and Shimshon Bichler? In philosophy, I’m stuck (very much autodidactically) at the level of British Empiricism and American Pragmatism. Science I have followed overall, as a layperson again, but not modern philosophy of science.
Note 1. The evolving characteristics of SARS2 have made it necessary for neoliberal capitalism to downplay (deny, minimise, obfuscate) empirical truths about the pathogen, the disease it causes and its characteristics: and thence to further normalise social Darwinism, ableism, “social murder” (in Engel’s sense) and Veblenian sabotage of the population’s health to permit the circuits of capital, the rituals of capital, to proceed in the prescribed manner. This takes the broad form of downplaying the importance of airborne contagion and pathogen-induced decompensation and degeneration of the human immune system, not just from SARS2, but from all or most other airborne, or potentially air-borne, high-consequence pathogens.
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This is the reason I wonder if there are some key texts you could name as central in building your understanding to the point that CasP became conceivable, derivable to yourself and Shimshon Bichler?
The books that have influenced us are referred to in our works, but I don’t think the ‘secret’ is in what you read: from our experience, the pivot is actual research. It is research that raises the simple questions that nobody seemed to have raised before, that leads you to question what the experts believe, that opens your horizons to totally new spaces, entities and processes. And it is research that directs you to search for forgotten writings and helps you weave them into a new understanding of the world.
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“… treading along unfamiliar paths, (one) is extremely dependent on criticism and conversation if he is to avoid an undue proportion of mistakes. It is astonishing what foolish things one can temporarily believe if one thinks too long alone, particularly in economics (along with the other moral sciences), where it is often impossible to bring one’s ideas to a conclusive test either formal or experimental.” – John Maynard Keynes.
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As a more general comment on this thread, a mistake I have made, and many others have made it over the years, is to expect a grand unified theory or a theory of everything for economics or political economy: “a hypothetical, singular, all-encompassing, coherent theoretical framework … that fully explains and links together all aspects of…” the political economy. Of course, we haven’t even got a GUT or TOE for physics, let alone for anything else. Many classical and neoclassical economists seemed to be operating in a framework where they expected and sought a GUT or TOE. They were seeking “Laws” (fundamental laws), as in the “laws of motion” and “general laws” of capitalism (Marx) or a “general theory”, albeit nominally limited to employment, interest and money (Keynes).
A comment of Jonathan’s keyed me into the above thought.
“CasP argues that the trajectory of capitalist societies reflects the capitalist creordering of power against opposition. The capitalist attempt to creorder society, being subjugated to the ritual of differential capitalization, is relatively simple to articulate and often possible to predict. Resistance to this creordering, however, can be open-ended, which makes it difficult to map and anticipate. One way or the other, the resulting clash between these two moments is complex and non-linear, which means that we can only say so much about its immediate results and even less about its future outcomes.” – Jonathan Nitzan.
CasP, as I see it now, limits its model. It is not trying to explain everything or predict everything, as per J.N.’s statement above. Thus, it is fully consistent that it limits its definition of capital; especially given the empirical truth warrant that fixed capital and financial capital are ontologically separate in at least one important sense. Fixed capital is material, with its quantities and processes anchored to the fundamental laws of nature which hard sciences investigation has uncovered to date. Financial capital is notional, with its quantities unanchored to the fundamental laws of nature as defined above, except that the calculations and operations of finance are anchored to physical reality in terms of the time, material and energy commitments required to generate, process, code, decode, transmit and receive information. Information is materially real but in the sense that it exists as patterns in media and specifically, for our purposes here, as patterns which influence the generation of other patterns (via agent actions).
Information is powerful when it encodes the formation of other real patterns (by processes of decoding and then fabrication according to the information). We only have to look at human DNA and then consider what it encodes, what can be built from its codes. The DNA is an instruction set. Likewise (and it’s a rough analogy at this point, at least on my part), the axioms of capitalism are a meta-instruction set (instructions on how to make instructions and what instructions to make). The fundamental axiom set, in modern neoliberal terms, is propertarianism and all that that entails. Specific instruction sets and rules (rules are instructions) are developed out of that theory. The current “rituals of capitalization” as identified by CasP and the current construction of finance (in all its forms) can be seen as the DNA of capitalism in this rough analogy. Putting together what I have read from Bichler, Nitzan, Martin, Fix and Cherizola, I am tempted to say money is the enzyme or catalyst in this system.
Now, if any of these “insights” above have any validity or applicability at all then they are wholly derivative from the CasP project and its authors. There are not any fundamental insights I can lay claim to. They are the way I try to understand CasP. It seems to me that the CasP approach is valid and expressly limited as per Jonathan’s quoted statement above. It’s not an attempt at a grand unified theory or a theory of everything which would be entirely wrong-headed. That would be an exercise in “essentialism”; believing that the model could contain and explain both the essence and expression of the full set of real and formal systems involved. That would be an exercise in ignoring the fact that all models are necessarily incomplete. (I’d been hoping my post on “Essentialism and Models” which harks back to and takes a little inspiration from “Essentialism and Traditionalism in Academic Research” (Ryan Kyger and Blair Fix) would generate a little more comment.)
The value of a limited model (the only kind we humans can make) is that, if it’s scientific, its predictions can be tested. I could write more, maybe about the idea of the collision of human rule sets with material reality, but I always write too much so will I stop here.
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