Capitalism as Power Model of the Stock Market

bnarchives |  Most explanations of stock market booms and busts are based on contrasting the underlying ‘fundamental’ logic of the economy with the exogenous, non-economic factors that presumably distort it. Our paper offers a radically different model, examining the stock market not from the mechanical viewpoint of a distorted economy, but from the dialectical perspective of capitalized power. The model demonstrates that (1) the valuation of equities represents capitalized power; (2) capitalized power is dialectically intertwined with systemic fear; and (3) systemic fear and capitalized power are mediated through strategic sabotage. This triangular model, we posit, can offer a basis for examining the asymptotes, or limits, of capitalized power and the ways in which these asymptotes relate to the historical and ongoing transformation of the capitalist mode of power.

having peeped the power game on think tanks - we shift our gaze to schools with students...,

bnarchives |  Building on the definition of critical education residing in the crossroads of cultural politics and political economy, this theoretical article offers an inquiry into the intersection between critical education research and the central ritual of contemporary capitalism – capitalisation. This article outlines four current approaches in education research literature to the corporatisation of education. This article argues that the approaches must rely implicitly on one of the two major theories of capitalism: modern neoclassical economics or Marxist political economy, even when the approaches are built on cultural and sociological arguments. Without an explicit engagement with the concept of capital and capitalisation, the approaches risk appearing theoretically weak and reliant on moral assumptions. In this sense, critical education literature would be strengthened by engagement with international political economy (IPE) literature. This article proposes to redress this lacuna in the literature by mobilising Jonathan Nitzan's and Shimson Bichler's theory of capital as power to better understand the corporatisation of education.

the food, poverty, and power dialectic - how has the hunger to obesity transformation evolved?

bnarchives |  Food is still a crucial form of social control – only that now it comes in a very different guise. Whereas until recently – and even today in parts of China, South Asia and Africa – the main threat for the underlying population was having too little to eat, nowadays it is having too much. The poor, traditionally punished by hunger, are now much more likely to be penalized by obesity.

This massive, ongoing transformation is reshaping the heart, mind and body of the capitalist subject. The undernourished, underweight, work-till-you-drop poor are gradually being replaced by their overfed, overweight, shop-till-you-drop descendants. And this inversion is hardly for the better. Although the adipose poor live longer than their scrawny predecessors, they are not necessarily healthier. They tend to suffer from non-communicable diseases – primarily diabetes, hypertension, strokes, cancer, heart attacks, atherosclerosis and other cardiovascular ailments Diamond 2012: Ch. 11. And having been born into a hyper-capitalized complex of cheap industrial food, accessible pharmaceutical drugs and a highly intoxicating mass media, many of them are gradually losing their ability to control their inflating bodies and liberate their captured souls.

Ironically, this obesity revolution has been driven by wheat, rice, corn and potatoes – the very same crops that leveraged food power in the earlier hunger era. The plants that forced and lured hunters and gatherers into centralized state structures are now used – together with numerous supplements, both chemical and mental – to enslave capitalist subjects to their own irresistible cravings. And as the sedated, junk-food eating subjects become bigger and heavier, their previously ‘fat cat’ capitalist rulers eat organic, go to the gym and grow leaner and meaner.

why do you choose the lies of apokolips over the truths of the working man?

bnarchives |Is economic growth a miracle of the free market? According to mainstream theory, growth is best ensured through conditions of ‘perfect competition’. However, economic growth is tightly correlated with the concentration of power in the hands of large corporations. Why? The capital as power framework provides potential answers that turn mainstream theory on its head: growth seems to be intimately related to the formation of hierarchy.

capitalist power and the control of social creativity

bnarchives |  This dissertation combines an interest in political economy, political theory and cinema to offer an answer about the pace of the Hollywood film business and its general modes of behaviour. More specifically, this dissertation seeks to find out how the largest Hollywood firms attempt to control social creativity such that the art of filmmaking and its related social relations under capitalism do not become financial risks in the pursuit of profit. Controlling the ways people make or watch films, the thesis argues, is an institutional facet of capitalist power. Capitalist power—the ability to control, modify and, sometimes, limit social creation through the rights of ownership—is the foundation of capital accumulation. For the Hollywood film business, capitalist power is about the ability of business concerns to set the terms that mould the future of cinema.

The overall objective of Part I is to outline and rectify some of the methodological problems that obscure our understanding of how capital is accumulated from culture. Marxism stands as the theoretical foil for this argument. Because Marxism defines capital such that only economic activity can create value, it needs to clearly distinguish between economics and politics—yet this is a distinction it is ultimately unable to make. With this backdrop in mind, Part I introduces the capital-as-power approach and uses it as a foundation to an alternative political economic theory of capitalism. The capital-as-power approach views capital not as an economic category, but as a category of power. Consequently, this approach reframes the accumulation of capital as a power process.

Part II focuses on the Hollywood film business. It investigates how and to what extent major filmed entertainment attempts to accumulate capital by lowering its risk. The process of lowering risk—and the central role of capitalist power in this process—has characterized Hollywood’s orientation toward the social-historical character of cinema and mass culture. This push to lower risk has been most apparent since the 1980s. In recent decades, major filmed entertainment has used its oligopolistic control of distribution to institute an order of cinema based on several key strategies: saturation booking, blockbuster cinema and high-concept filmmaking.

the scientist and the church

bnarchives |  The Scientist and the Church is a wide-ranging biography of research, showcasing Bichler and Nitzan’s attempts to break through the stifling dogmas of the academic church and chart a new scientific cosmology of capitalism. Central to the authors’ work is the notion that capital is not a productive economic category but capitalized power, and that capitalism should be conceived and researched not as a mode of production and consumption but as a mode of power.

The articles collected in this volume outline the general contours of their approach, flesh out some of their recent research and offer personal insights into the broader politics of their journey. The first chapters reexamine the common foundations of the neoclassical and Marxist doctrines, sketch the contours of the authors’ alternative cosmology of capitalized power, identify the asymptotes – or limits – of this power and explore the all-encompassing logic of modern finance. Subsequent chapters research the connection between redistribution and cyclical crises, reassess the Marxist nexus between imperialism and financialism, rethink the oft-misunderstood role of crime and punishment in the capitalist mode of power and articulate a new theory and history of Middle-East energy conflicts. The closing chapters include two big-picture interviews, as well as riveting reflections on the authors’ own scientific clashes with the church.  BNA Fanboyism at Subrealism

theory of capital as power: call for papers

bnarchives |  The theory of capital as power (CasP) offers a radical alternative to mainstream and Marxist theories of capitalism. It argues that capital symbolizes and quantifies not utility or labour but organized power writ large, and that capitalism is best understood and challenged not as a mode of consumption and production, but as a mode of power. Over the past decade, the Forum on Capital as Power has organized many lectures, speaker series and conferences. Our most recent international gatherings include "Capitalizing Power: The Qualities and Quantities of Accumulation” (2012), "The Capitalist Mode of Power: Past, Present and Future" (2011), and "Crisis of Capital, Crisis of Theory" (2010). The 2015 conference seeks to broaden the vista. We are looking for papers that extend and deepen CasP research, compare CasP with other approaches and critique CasP’s methods and findings. Articles could be general or specific, theoretical or empirical, analytical or historical. The conference is open to everyone, with submissions vetted entirely on merit. We accept applications from established and new researchers, in and outside academia. However, we are particularly interested in submissions from young researchers of all ages, including MA and PhD students, private and public employees and free spirits. If you have an interest in the subject and something important – or potentially important – to say, please apply. Financial assistance: we may be able to assist presenters by partly covering the cost of travel and accommodation. This possibility is still tentative; it is conditional on ability to secure sufficient funding. Deadline for abstract submissions: March 20, 2015.

Statistical Physics of Self-Replication

isn't it impossible to be violent against the most powerful military political economy on the planet?

bnarchives |  On April 16, 2014, we published a short article in the Indian fortnightly Frontline, titled 'Profit from Crisis'. Scarcely had a day passed from the article’s publication that we got an angry email from an asset manager whom we'll call 'Mr. X'. Mr. X is an enlightened capitalist, and reading our piece had set him on fire. Our article, he protested, was 'terribly flawed'. It 'failed miserably' in understanding capitalism, and its allegation that capitalists do not want recovery is doing 'tremendous harm'. This note deconstructs Mr. X's protestations in the context of the current capitalist angst.

Over the past few years, we have written a series of articles about the global crisis. [1] These papers try to break the conventional constrains of liberalism and Marxism, examining the crisis from the new theoretical viewpoint of capital as power. Capitalists and corporations, we argue, are driven not to maximize profit, but to ‘beat the average’ and increase their differential power. In this approach, the redistribution of income and assets is not a ‘societal’ side effect of the economy, but the central conflict that propels modern capitalism. And the main weapon in this struggle, we claim, is not investment and growth, but what the American political economist Thorstein Veblen called ‘strategic sabotage’ – the restrictions, limitations, hazards and pains that capitalists impose on the rest of society in order to sustain and augment their differential power.

Now, until 2011, distribution was a non-issue. Save for a few ivory-tower experts and justice-seeking activists, nobody spoke about it. It received little media coverage, let alone headlines, and elicited no meaningful debate. But with the global crisis lingering and upward redistribution continuing unfazed, the Occupy slogan ‘We are the 99 percent’ has finally gained traction. Suddenly, inequality and the excesses of the Top 1% are hot commodities, broadcast, discussed and written about all over the media.

The debate itself, though, remains largely conservative. The protest movements succeeded in putting distribution on the political table, but they haven’t figured how to take this achievement forward. So far, they have produced no new policy template, let alone a new theoretical framework, and this vacuum has left the political centre-stage open for policymakers, leading academics and Noble Laureates to recycle their worn-out platitudes.

In order to buck this trend, however symbolically, we wrote a short, pointy article titled ‘Why Capitalists Do Not Want Recovery, and What That Means for America’. The paper delivered a clear massage, backed by two highly contrarian graphs. The graphs showed that, contrary to the conventional creed, both mainstream and heterodox, accumulation thrives on crisis and sabotage. They demonstrated that, over the past century, the capitalist share of U.S. domestic income and the income share of the Top 1% have been tightly correlated not with growth and prosperity, but with unemployment and stagnation.

Looking for a publisher, we started with the two bastions of American liberalism: The New York Times and the Los Angeles Times. We sent them the article, free of charge, but neither replied. We then moved to England, emailing the paper to The Guardian. Again, silence. Our last stop was The London Review of Books. This time we got a polite response, stating that the article ‘isn’t quite right for us’.

Clearly, the enlightened capitalist press wasn’t particularly keen on showcasing the power basis of accumulation. The article was too counterintuitive for readers to digest and too politically incorrect for advertisers to subsidize. It suggested that upward redistribution and its associated sabotage were not unfortunate manifestations of ‘social injustice’, but the twin drivers of capital accumulation. And that message, apparently, was unpublishable.

There was no point banging our heads against the wall. It was time to head elsewhere. And since salvation always comes from the East, we turned to the emerging market of India. Unlike in the United States and England, capitalism in India is still being debated, including in the mainstream press. So we submitted the article to Frontline, a fortnightly magazine published by The Hindu Group. And to our pleasant surprise, it was promptly accepted, as is, and appeared in the very next issue (Nitzan and Bichler 2014). One must admit that globalization does have its upsides.

The Letter
Scarcely had a day passed from the article’s publication that we got an angry email from an asset manager whom we’ll call ‘Mr. X’. Mr. X is an enlightened capitalist, and reading our piece had set him on fire. Our article, he protested, was ‘terribly flawed’. It ‘failed miserably’ in understanding capitalism, and its allegation that capitalists do not want recovery is doing ‘tremendous harm’:

why capitalists do not want recovery and what that means for america...,

bnarchives |  Can it be true that capitalists prefer crisis over growth? On the face of it, the idea sounds silly. According to Economics 101, everyone loves growth, especially capitalists. Profit and growth go hand in hand. When capitalists profit, real investment rises and the economy thrives, and when the economy booms the profits of capitalists soar. Growth is the very lifeline of capitalists.

Or is it?

What motivates capitalists?

The answer depends on what motivates capitalists. Conventional economic theories tell us that capitalists are hedonic creatures. Like all other economic “agents” – from busy managers and hectic workers to active criminals and idle welfare recipients – their ultimate goal is maximum utility. In order for them to achieve this goal, they need to maximize their profit and interest; and this income – like any other income – depends on economic growth. Conclusion: utility-seeking capitalists have every reason to love booms and hate crises.

But, then, are capitalists really motivated by utility? Is it realistic to believe that large American corporations are guided by the hedonic pleasure of their owners – or do we need a different starting point altogether?

So try this: in our day and age, the key goal of leading capitalists and corporations is not absolute utility but relative power. Their real purpose is not to maximize hedonic pleasure, but to “beat the average.” Their ultimate aim is not to consume more goods and services (although that happens too), but to increase their power over others. And the key measure of this power is their distributive share of income and assets.

Note that capitalists have no choice in this matter. “Beating the average” is not a subjective preference but a rigid rule, dictated and enforced by the conflictual nature of the system. Capitalism pits capitalists against other groups in society – as well as against each other. And in this multifaceted struggle for greater power, the yardstick is always relative. Capitalists – and the corporations they operate through – are compelled and conditioned to accumulate differentially; to augment not their personal utility but their relative earnings. Whether they are private owners like Warren Buffet or institutional investors like Bill Gross, they all seek not to perform but to out-perform – and outperformance means re-distribution. Capitalists who beat the average redistribute income and assets in their favor; this redistribution raises their share of the total; and a larger share of the total means greater power stacked against others. In the final analysis, capitalists accumulate not hedonic pleasure but differential power.

why did the correctional population start to rise in the 1980's together with the onset of neoliberalism?

bnarchives | The United States is often hailed as the world's largest 'free market'. But this 'free market' is also the world's largest penal colony. It holds over seven million adults – roughly five per cent of the labour force – in jail, in prison, on parole and on probation. Is this an anomaly, or does the 'free market' require massive state punishment? Why did the correctional population start to rise in the 1980s, together with the onset of neoliberalism? How is this increase related to the upward redistribution of income and the capitalization of power? Can soaring incarceration sustain the unprecedented power of dominant capital, or is there a reversal in the offing? The paper examines these questions by juxtaposing the ‘Rusche thesis’ with the notion of capitalism as a mode of power. The empirical analysis suggests that the Rusche thesis holds under the normal circumstances of ‘business as usual’, but breaks down during periods of systemic crisis. During the systemic crises of the 1930s and the 2000s, unemployment increased sharply, but crime and the severity of punishment, instead of rising, dropped perceptibly.

clever canadians explain how corporate power shapes inequality

bnarchives | Presentation by Jordan Brennan, PhD student at the Department of Political Science, York University and an economist with UNIFOR.

ABSTRACT: 'Economic inequality' has recently appeared on the public radar in North America, but much of the attention has been confined to its ominously high level and its socially corrosive impact. The long-term drivers of inequality, by contrast, have attracted less attention. This presentation will explore the linkages between corporate power and inequality, arguing that both the level and pattern of inequality in Canada closely shadow the differential power of capital.

This presentation is the second in a four-part Speaker Series on the Capitalist Mode of Power. The series is organized by http://capitalaspower.com and sponsored by the York Department of Political Science and the Graduate Programme in Social and Political Thought.

October 29, 2013, York University, Toronto

can capitalists afford recovery - the presentation

bnarchives | Theorists and policymakers from all directions and persuasions remain obsessed with the prospect of recovery. For mainstream economists, the key question is how to bring about such a recovery. For Marxist and heterodox critics, the main issue is whether sustained growth is possible to start with. 

But there is a prior question that neither seems to ask: can capitalists afford recovery in the first place?

This presentation is the first in a four-part Speaker Series on the Capitalist Mode of Power, which is organized by capitalaspower.com and sponsored by the York Department of Political Science and the Graduate Programme in Social and Political Thought.

Video duration: 2:03 Hours

how capitalists learned to stop worrying and love the collapse....,

bnarchives | Economic, financial and social commentators from all directions and of all persuasions are obsessed with the prospect of recovery. The world remains mired in a deep, prolonged crisis, and the key question seems to be how to get out of it.

There is, however, a prior question that few if any bother to ask: Do capitalists want a recovery in the first place? Can they afford it?

On the face of it, the question sounds silly: of course capitalists want a recovery; how else can they prosper? According to the textbooks, both mainstream and heterodox, capital accumulation and economic growth are two sides of the same process. Accumulation generates growth and growth fuels accumulation, so it seems bootless to ask whether capitalists want growth. Growth is their lifeline, and the more of it, the better it is.

Or is it?          

Accumulation of What?
The answer depends on what we mean by capital accumulation. The common view of this process is deeply utilitarian. Capitalists, we are told, seek to maximize their so-called ‘real wealth’: they try to accumulate as many machines, structures, inventories and intellectual property rights as they can. And the reason, supposedly, is straightforward. Capitalists are hedonic creatures. Like every other ‘economic agent’, their ultimate goal is to maximize their utility from consumption. This hedonic quest is best served by economic growth: more output enables more consumption; the faster the expansion of the economy, the more rapid the accumulation of ‘real’ capital; and the larger the capital stock, the greater the utility from its eventual consumption. Utility-seeking capitalists should therefore love booms and hate crises. [2]

But that is not how real capitalists operate.

The ultimate goal of modern capitalists – and perhaps of all capitalists since the very beginning of their system – is not utility, but power. They are driven not to maximize hedonic pleasure, but to ‘beat the average’. This aim is not a subjective preference. It is a rigid rule, dictated and enforced by the conflictual nature of the capitalist mode of power. Capitalism pits capitalists against other groups in society, as well as against each other. And in this multifaceted struggle for power, the yardstick is always relative. Capitalists are compelled and conditioned to accumulate differentially, to augment not their absolute utility but their earnings relative to others. They seek not to perform but to out-perform, and outperformance means re-distribution. Capitalists who beat the average redistribute income and assets in their favour; this redistribution raises their share of the total; and a larger share of the total means greater power stacked against others.

Shifting the research focus from utility to power has far-reaching consequences. Most importantly, it means that capitalist performance should be gauged not in absolute terms of ‘real’ consumption and production, but in financial-pecuniary terms of relative income and asset shares. And as we move from the materialist realm of hedonic pleasure to the differential process of conflict and power, the notion that capitalists love growth and yearn for recovery is no longer self evident.

The accumulation of capital as power can be analyzed at many different levels. The most aggregate of these levels is the overall distribution of income between capitalists and other groups in society. In order to increase their power, approximated by their income share, capitalists have to strategically sabotage the rest of society. And one of their key weapons in this struggle is unemployment.

The effect of unemployment on distribution is not obvious, at least not at first sight. Rising unemployment, insofar as it lowers the absolute (‘real’) level of activity, tends to hurt capitalists and employees alike. But the impact on money prices and wages can be highly differential, and this differential can move either way. If unemployment causes the price/wage ratio to decline, capitalists will fall behind in the redistributional struggle, and this retreat is sure to make them impatient for recovery. But if the opposite turns out to be the case – that is, if unemployment helps raise the price/wage ratio – capitalists would have good reason to love crisis and indulge in stagnation.

So which of these two scenarios pans out in practice? Do stagnation and crisis increase capitalist power? Does unemployment help capitalists raise their distributive share? Or is it the other way around?

who owns the u.s. public debt?

bnarchives | This dissertation offers the first comprehensive historical examination of the political economy of US public debt ownership. Specifically, the study addresses the following questions: Who owns the US public debt? Is the distribution of federal government bonds concentrated in the hands of a specific group or is it widely held? And what if the identities of those who receive interest payments on government bonds are distinct from those who pay the taxes that finance the interest payments on the public debt? Does this mean that the public debt redistributes income from taxpayers to public creditors? Who ultimately bears the burden of financing the public debt?

Despite centuries of debate, political economists have failed to come to any consensus on even the most basic facts concerning ownership of the US public debt and its potential redistributive effects. Some claim that the public debt is heavily concentrated and that interest payments on government bonds redistribute income regressively from poor to rich. Others insist that the public debt has become very widely held and instead redistributes income progressively. The lack of consensus, I argue, boils down to both the empirical and theoretical problems that plague existing studies.

Empirically, only a handful of studies have attempted to map the ownership pattern of US federal government bonds, and even fewer have made efforts to measure the redistributive effects associated with a given ownership pattern. And to make matters worse, those few studies that do attempt to map the pattern of US public debt ownership make little effort to theorize in any systematic way the distributive and redistributive dimensions of the public debt.

Anchored within a ‘capital as power’ theoretical framework, my purpose in this is to shed some much-needed light on the dynamics of distribution and redistribution that lie at the heart of the public debt. I show for the household and corporate sectors how over the past three decades, and especially in the context of the current crisis, the ownership of federal bonds and federal interest has become rapidly concentrated in the hands of dominant owners, the top 1% of households and the 2,500 largest corporations. Over the same period the federal income tax system has done little to progressively redistribute the federal interest income received by dominant owners. In this way, this dissertation argues that, since the early 1980s, the public debt has come to reinforce and augment the power of those at the very top of the hierarchy of social power.

can capitalists afford recovery: economic policy when capital is power

bnarchives.yorku | Economic, financial and social commentators from all directions and persuasion are obsessed with the prospect of recovery. The world remains mired in a deep, prolonged crisis, and the key question seems to be how to get out of it. The purpose of our paper is to ask a very different question that few if any seem concerned with: can capitalists afford recovery in the first place?

This question does not come out of the blue. Over the past several years, we have published a series of papers on the crisis (Bichler and Nitzan 2008, 2009; Nitzan and Bichler 2009b; Bichler and Nitzan 2010; Kliman, Bichler, and Nitzan 2011). Our basic argument in these papers is that this is a systemic crisis and that capitalists have been struck by systemic fear: fear for the very survival of the system.

"From now on, depressions will be scientifically created."
Congressman Charles A. Lindbergh Sr. , 1913

This fear, we have further argued, is objectively grounded. Our reasons, though, are very different from those given by heterodox political economists, particularly Marxists. Whereas for the Marxists, the crisis is the symptom and culmination of weakening accumulation, for us it is the consequence of its unprecedented strength.

The two views are anchored in very different cosmologies (Bichler and Nitzan 2012b). Liberals and Marxists see capital as an economic entity and capitalism as a mode of production and consumption, so for them the accumulation crisis is anchored in the economics of production and consumption. By contrast, we see capital as a symbolic representation of power and capitalism as a mode of power, so for us, the crisis of accumulation is a crisis of capitalized power.

According to our research, the accumulation of capital-read-power might be approaching its asymptotes, or limits (Bichler and Nitzan 2012a). The closer capitalized power is to its asymptotes, the more difficult it is to augment it further. Capitalists, though, have no choice. They are conditioned and compelled to increase their capitalized power without end, and that relentless drive breeds conflict. It forces capitalists to increase their threats, escalate their sabotage and intensify their use of force – and this intensification is in turn bound to trigger stronger resistance, contestations, uprisings and more.

By the early 2000s, capitalists began to realize the unfolding of this asymptotic scenario. They started to sense that their power is nearing its limits and that accumulation is becoming ever more difficult to achieve and might be reversed. And given that capitalization is forward-looking, the result has been a major bear market.

The present paper contextualizes and examines this process from the viewpoint of economic policy. The analysis is divided into three parts. The first part deals with the mainstream macroeconomic perspective. This approach claims to have already solved all the theoretical riddles, so the main emphasis here is on the practical question of how to engineer a recovery. The second part deals with the Marxist view. Marxists stress the inherent contradictions of accumulation, so the question for them is the very possibility of sustained growth. The third and final part takes the view of capital as power. Capitalized power hinges not on growth, but on strategic sabotage. So from this viewpoint, the key question is not how capitalists can achieve and sustain a recovery, but whether they can afford it in the first place.

food price inflation as redistribution

bnarchives | This paper outlines the contours of a new research agenda for the analysis of food price crises. By weaving together a detailed quantitative examination of changes in corporate profit shares with a qualitative appraisal of the restructuring in business control over the organisation of society and nature, the paper points to the rapid ascendance of a new power configuration in the global political economy of food: the Agro-Trader nexus. The agribusiness and grain trader firms that belong to the Agro-Trader nexus have not been mere 'price takers', instead they have actively contributed to the inflationary restructuring of the world food system by championing and facilitating the rapid expansion of the first-generation biofuels sector. As a key driver of agricultural commodity price rises, the biofuels boom has raised the Agro-Trader nexus’s differential profits and it has at the same time deepened global hunger. These findings suggest that food price inflation is a mechanism of redistribution.

An Interview with Joseph Baines on Food Price Inflation as Redistribution

Arnesen, Arnie and Baines, Joseph. (2013). The Attitude, WNHN 94.7 FM. 1 May. (Interview; English).

no way out: crime, punishment and the limits of power...,

bnarchives | In May 2011, the U.S. Supreme Court ordered the State of California to release 30,000 to 40,000 of its 140,000 inmates.[2] California’s prisons have become so overcrowded that the Supreme Court declared the situation unconstitutional. The decision was imminent. For nearly two decades, California, along with many other states, was busy getting ‘tough on crime’. In the early 1990s, the state enacted the ‘Three-Strikes Law’, which mandates life sentences for third-time serious crime offenders, and it pursued the country’s ‘war on drugs’ and other law-enforcement campaigns with increasing zeal. Soon enough, its prisons were overflowing at nearly twice their capacity.

The United States is often portrayed as the archetypical liberal model. It is the world’s largest, most prosperous ‘free market’ and the greatest generator of profit on earth. And yet this very liberal haven is also the largest penal system in the world. There are now more than two million inmates in its prisons and jails and another five million on probation and on parole. If you add these two numbers together, you get a ‘correctional population’ of over seven million. This correctional population is the largest in the world – both absolutely and relative to the overall population – and it is also the largest the country has ever seen.

To some, this combination of market prosperity and intense punishment may seem puzzling. Many people intuitively expect crime and punishment to correlate with poverty, backwardness and deprivation; to be a feature of the Third World, not the First.

Knowingly or not, this expectation is grounded in the conventional separation of production from state and capital from power. According to the liberal version of this separation, accumulation breeds economic prosperity, and prosperity in the economic sphere reduces crime and calls for less punishment in the socio-political sphere. However, if we discard this separation and instead think of capital as power, and of capitalism as a mode of power, the puzzle disappears. The greater the capitalization of power, the greater the resistance to that capitalization and the larger the force needed to prevent this resistance from exploding. As profits increase to make distribution more unequal, the result is mounting resistance from below, and this resistance in turn leads to retaliation from above. The rising crime and intensifying punishment that we now see in the United States are key manifestations of this dialectic of capitalized resistance and retaliation.

capitol as power...,

bnarchives | Conventional theories of capitalism are mired in a deep crisis: after centuries of debate, they are still unable to tell us what capital is. Liberals and Marxists think of capital as an economic entity that they count in universal units of utils and abstract labor, respectively. But these units are totally fictitious: they can be neither observed nor measured. They don’t exist. And since liberalism and Marxism depend on these non-existing units, their theories hang in suspension. They cannot explain the process that matters most – the accumulation of capital.

This breakdown is no accident. Every mode of power evolves together with its dominant theories and ideologies. In capitalism, these theories and ideologies originally belonged to the study of political economy – the first mechanical science of society. But the capitalist mode of power kept changing, and as the power underpinnings of capital became increasingly visible, the science of political economy disintegrated. By the late nineteenth century, with dominant capital having taken command, political economy was bifurcated into two distinct spheres: economics and politics. And in the twentieth century, when the power logic of capital had already penetrated every corner of society, the remnants of political economy were further fractured into mutually distinct social sciences. Nowadays, capital reigns supreme – yet social scientists have been left with no coherent framework to account for it.

The theory of Capital as Power offers a unified alternative to this fracture. It argues that capital is not a narrow economic entity, but a symbolic quantification of power. Capital has little to do with utility or abstract labor, and it extends far beyond machines and production lines. Most broadly, it represents the organized power of dominant capital groups to reshape – or creorder – their society.

This view leads to a different cosmology of capitalism. It offers a new theoretical framework for capital based on the twin notions of dominant capital and differential accumulation, a new conception of the state of capital and a new history of the capitalist mode of power. It also introduces new empirical research methods – including new categories; new ways of thinking about, relating and presenting data; new estimates and measurements; and, finally, the beginning of a new, disaggregate accounting that reveals the conflictual dynamics of society.

the asymptotes of power

bnarchives | My presentation today is a follow-up to a talk I delivered last year at the 2010 inaugural conference of the Forum on Capital as Power. Both presentations are part of my joint research with Shimshon Bichler on the current crisis. Last year, my purpose was to characterize this crisis. I argued that it was a ‘systemic crisis’, and that capitalists were gripped by ‘systemic fear’. This year, my goal is to explore why.

Begin with systemic fear. This fear, we argue, concerns the very existence of capitalism. It causes capitalists to shift their attention from the day-to-day movements of capitalism to its very foundations. It makes them worry not about the short-term ups and downs of growth, employment and profit, but about ‘losing their grip’. It forces on them the realization that their system is not eternal, and that it may not survive – at least not in its current form.

Last year, many in the audience found these claims strange, if not preposterous. Capitalism was obviously in trouble, they conceded. But the crisis, though deep, was by no means systemic. It threatened neither the existence of capitalism nor the confidence of capitalists in their power to rule it. To argue that capitalists were losing their grip was frivolous.

That was twelve months ago.

Nowadays, the notions of systemic fear and systemic crisis are no longer farfetched. In fact, they seem to have become commonplace. Public figures – from dominant capitalists and corporate executives, to Nobel laureates and finance ministers, to journalists and TV hosts – know to warn us that the ‘system is at risk’, and that if we fail to do something about it, we may face the ‘end of the world as we know it’.

There is, of course, much disagreement on why the system is at risk. The explanations span the full ideological spectrum – from the far right, to the liberal, to the Keynesian, to the far left. Some blame the crisis on too much government and over-regulation, while others say we don’t have enough of those things. There are those who speak of speculation and bubbles, while others point to faltering fundamentals. Some blame the excessive increase in debt, while others quote credit shortages and a seized-up financial system. There are those who single out weaknesses in particular sectors or countries, while others emphasize the role of global mismatches and imbalances. Some analysts see the root cause in insufficient demand, whereas others feel that demand is excessive. While for some the curse of our time is greedy capitalists, for others it is the entitlements of the underlying population. The list goes on.

But the disagreement is mostly on the surface. Stripped of their technical details and political inclinations, all existing explanations share two common foundations: (1) they all adhere to the two dualities of political economy: the duality of ‘politics vs. economics’ and the duality within economics of ‘real vs. nominal’; and (2) they all look backward, not forward.

As a consequence of these common foundations, all existing explanations, regardless of their orientation, seem to agree on the following three points:

1. The essence of the current crisis is ‘economic’: politics certainly plays a role (good or bad, depending on the particular ideological viewpoint), but the root cause lies in the economy.

2. The crisis is amplified by a mismatch between the ‘real’ and ‘nominal’ aspects of the economy: the real processes of production and consumption point in the negative direction, and these negative developments are further aggravated by the undue inflation and deflation of nominal financial bubbles whose unsynchronized expansion and contraction make a bad situation worse.


3. The crisis is rooted in our past sins. For a long time now, we have allowed things to deteriorate: we’ve let the ‘real economy’ weaken, the ‘bubbles of finance’ inflate and the ‘distortions of politics’ pile up; in doing so, we have committed the cardinal sin of undermining the growth of the economy and the accumulation of capital; and since, according to the priests of economics, sinners must pay for their evil deeds, there is no way for us to escape the punishment we justly deserve – the systemic crisis.