Profit or Society?

I want to talk about the profit motive, because despite being the cornerstone of capitalism it is highly misunderstood. All sorts of proclamations about the profit motive's success as a social and economic model are published in the media daily. Other causes for social and economic conditions are often avoided, and where profit has a clear negative bias, it is generally de-emphasized.

The profit motive is a simple form of the incentive model. Incentives are conditions in a system which reward or punish different kinds of behavior. Profits refer to one subset of incentives: those which resolve in positive or negative changes to net worth. Needless to say, human incentives are more complicated than this, and strictly for-profit business models still need to account for more different changes which may not be clearly linked to positive or negative account balances. But the capitalist system tends toward this model of profit, and incentives processes are typically explained in this way as well.

Measuring Marxism: The Centralization Myth

This post is part of a series attempting to quantify Marx's theory of Socialism.

Marxism is largely a method of accounting and interpreting the mechanisms of economic power. While political power is understood to play a role, it is largely considered subservient to the role of economic motion. In times of stagnation, wherein technological changes often do not correspond with expanding markets and economic power is uniquely centralized, contemporary nodes of power are entrenched, and their social relations tend to become apparent. In such times, the condition of civil society becomes increasingly apparent, with all its nuances and relations to these power structures. Gramsci notes of this phenomenon:

"when the state trembled, a sturdy structure of civil society was at once revealed. ... Hegel's conception belongs to a period in which the spreading development of the bourgeoisie could seem limitless, so that its ethicity of universality could be asserted: all mankind will be bourgeois. But, in reality, only the social group that poses the end of  the State and its own end as the target to be achieved can create an ethical state - i.e. one which tends to put an end to the internal divisions of the ruled, etc., and to create a technically and morally unitary social organism."¹

Measuring Marxism: Where Did We Go Wrong?

 In my previous series, I assessed one aspect of the moral vision in Marxism - its relationship to individualism. This time around I want to confront the so-called "failure" of Marxism, and how can we measure his vision of socialism. This post is part of a series attempting to quantify Marx's theory of socialism.

Comprehensive privatization in China. The bureaucratization that plagued the Soviet Union. Repressive policies in nearly all 'socialist' states. The dilution of democratic apparatuses in the same. The data seem conclusive: Marxism has failed. Either that, or our measurements are off.

In fact, these failures reveal a number of conditions which do more to support Marxism than anything else. The accurate measurement of the Marxist framework has very little to do with the propaganda efforts of the NATO / Soviet blocs, which often invoke the imagery of workers' power for their own political gain.

Furthermore, it is the self-proclaimed anti-communists themselves who long ago quantified the very measurements which prove just how right Marx was.

Capital Volume 1 Chapter 1 Notes

This is part 1 of a series in which I'll be summarizing the framework of Marx's Capital, Volume 1. For this series I am using the translation by Ben Fowkes, © 1990 & published by Penguin Classics.

All numbered and lettered lists are as they appear in the literature; further organization is my own doing. Occasionally, notes appear outside of the section they are sourced from in the book. This was done to improve the organization and flow of the notes.

I. The Two Factors of the Commodity: Use Value and Value (Substance of value; Magnitude of Value)

-There are two kinds of value applicable to commodities:

Use-value (substance: subjectively represents usability to consumer, represents wealth)

Depository for exchange value

Exchange Value (magnitude: realized by way of market exchange)

Since magnitude of value is our subject, ‘value’ and ‘magnitude of value’ are often used interchangeably.

-…and two creative factors for value:

Labor Value (prerequisite, subsumed into commodity, creates commodity value)
A value or quantity of labor is the common denominator among commodities
Resources (See Section II)

Economic Liberals Admit it: Capitalists Own Us

"Don't tax the rich, as they create jobs," so the mantra goes. However, this line of thinking betrays the underlying structure of production: namely, that the capitalist class has executive control over the means of production - control which is a concern of public policy, as Cato and the Heritage Foundation admit by requesting policy that regards its standing. Despite that fact, policy proposals argue for diminished public input. Indeed, history shows us that such control has always underlined this graft:^1,2,3,4

• Today, the Capitalist creates jobs by allowing the working class to use the means of production and sell their labor to him.
• Before that, the Lord created jobs by allowing the working class to use the means of production and give part of their labor to him.
• Before that, the Slaver created jobs by having the working class use the means of production and he (and it was always a man - patriarchy and all that) provided basic subsistence to them.

It has always been the narrow control over the means of production that allowed the interests of a group of oligarchs to consistently stand as a barrier to the production process. Interestingly, when these power structures shifted, it was always by diminishing the returns that older systems could replicate. The oft-revered Mises agrees: it is by diminishing the surplus value on capital investment that the same is disincentivized.² Is calling for safer structures for capitalism simply another incarnation of the tactical perpetuation of power? And does this activity fit the theoretical model of consumer-driven capitalism?

Paving an Interstate on the Moral High Ground

Lev Lafayette reminded me of something easy to forget:

On one level such attitudes are the result of an apparent inability to consider life from the perspective of a person living in such countries. For decades these countries have been ruled by absolute monarchs, dictatorships, or regimes with only a pretence of democracy, all of which have engaged in gross violations of basic human rights. -Lev Lafayette, How beautiful is freedom / Isocracy.org

The same kind of alienation occurs throughout human activity every day. It variously manifests as the structural-procedural diminishing of general human interests to the end of efficiency, political maneuvering and one-sided interest-fulfillment, to things like the very structure of language meant to engineer - consciously or not - the refutation or dilution of interests competing with one's own.

Thomas Jefferson: Marxist

"I am conscious that an equal division of property is impracticable. But the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind. The descent of property of every kind therefore to all the children, or to all the brothers and sisters, or other relations in equal degree is a politic measure, and a practicable one. Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise. Whenever there is in any country, uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. The earth is given as a common stock for man to labour and live on. If, for the encouragement of industry we allow it to be appropriated, we must take care that other employment be furnished to those excluded from the appropriation. If we do not the fundamental right to labour the earth returns to the unemployed." Thomas Jefferson - Letter to James Madison (Oct. 28, 1785) / My Emphasis / HT:ExiledOnline.com

 Some highlights:

• Cites the disproportionate dispensation of property as the cause of misery
• Government would do well to increasingly "subdivide property" or break up this accumulation of property
• Supports progressive taxation
• Property rights "violate natural right" when it acts as a barrier between the working class and resources (a.k.a. capital)
• Earth is "common stock"
• Labor is a fundamental right

Marx, wrong on one count

One of the preeminent aspects of Marxism is the conflict between the capitalist, who owns the means of production, and the producer, who is represented by the working class that executes the labor required to bring the commodity-value to the table. It is precisely this conflict of interests, the competition for the value this operation provides, that leads to working-class upheavals across the globe.


Marx noted the upheavals in his day, and suspected that a new class would soon rule over the means of production once these conflicts were resolved. In terms of the shifting of value to the hands of the working class, this indeed occurred across the globe during the innovation and industrialization of many of the high-infrastructure  societies of today - a feat that the expanded employment of labor helped accomplish. This expansion of employment has helped (or is helping) create an high rate of value-exchange: when high-consumption wages (lower class wages go primarily to consumption) are a large percent of income and total value('currency'), a greater sum of money returns to the consumer to augment aggregate demand.

Demand 101

Perhaps the right way to start off a new blog is to discuss one of the more obvious points that have been ignored in recent economic austerity measures. Namely, the issue of aggregate demand has been roundly ignored by the "clear cutter" majority who view any and all cuts to public service as the starting point for fiscal reform. Not only this, but the narrow focus on government regulation and spending has crippled the narrative of economic reporting in all major media outlets. In fact, any accumulation of wealth constitutes a game-changer in economic structure: not only the distribution, but the direction and velocity of exchange are all tied to this issue.

Aggregate demand in particular is critical to the structure of production and distribution, and then the disbursement of wages which provide a basis for - demand. As Nick Rowe points out, demand is the measure of growth (or lack thereof) in an economy:

"Quantity sold is whichever is less: quantity demanded; or quantity supplied. If there is excess supply of goods in aggregate, then realised sales of goods, and income from those realised sales, is demand-determined. And if people are unable to realise their plans to sell as many goods as they wish (if they face Clowerian quantity constraints) then their demand for goods will depend on their realised sales, which is demand-determined." - Rowe