Cooptation

In this post from a year ago, I quoted Franco Berardi: “Only the social force of the general intellect can reset the machine and initiate a paradigm shift, but this presupposes the autonomy of the general intellect, the social solidarity of cognitarians.” Bifo seemed to have in mind a communization that would save the world, or create one, but it’s also the case that capitalism needs this autonomous subjectivity to lead the way to a new regime of accumulation. It can’t do it itself. That’s always been so, but financialization has created a governance problem that is especially unbridgeable: The strategic scattering of production, the nullification of unions, and the destruction of welfare state provisos, among other things, have put the workforce and, to a lesser extent, its reproduction beyond capital’s direct command. As long as the subjects of debt adhere to the convention of this arrangement, it works, but once they start taking advantage of their not being managed, the equilibrium becomes upset. What capital needs right now is what it has fought against for thirty-plus years: mediation.

With this in mind, and without holding it up as a vanguard, it seems to me that the worst thing that could happen to the occupy movement is cooptation. The danger of cooption isn’t that it will make the movement fizzle out or that it will mean a taming of its agenda and a bringing into the Democratic fold. Those are, at least in softer forms, inevitable and are just symptoms of the real danger: the capturing of autonomous subjectivity to create a new regime of accumulation. It’s impossible to know what that would look like just now, but it was just as hard to imagine Fordism arising from, say, the CIO sit-down strikes of the 30s.

In a sense, all the debates that have surrounded the occupations revolve around the question of cooptation: demands and “organization,” “violence” and civil disobedience. The forces that have held the line against the former pair and refused to the condemn the latter pair have been waging a fight against cooptation. This isn’t to say that those who question the commitment to those strategies are craven sellouts, but it does seem to be the case that those who want demands and a program, and who question, for example, black bloc tactics and even occupation in general, are also eager to seek solutions to problems: full employment, greater social benefits, financial regulation, etc. That is to say, they want state management of the economy.

And for their political purposes, they are right. But other protesters, I would even venture to say most others, know that state involvement would in the long run benefit not the 99% but capital. Because even though the increased repression of the last few days might indicate otherwise, the occupations present capital with an opportunity it’s been needing but unable to create the conditions for on its own. I don’t think, at this point, that the movement is politically powerful enough to instigate a new kind of production, but it soon could be. If so, the question then becomes, Will capital be able to capture this new subjectivity and transform it into a mode of accumulation. If autonomy means anything, it means keeping this cooptation at bay.

Filed under: Control, Economy, Work

China, contracts, and capture

There have been a couple of interesting articles on China recently. One at Mute, by Sander, registers skepticism that China, the workshop of the world, can save world capitalism by transforming itself into a consumer economy, the household of the world.

And if [China] were to use its hoard not for massive investments but to finance a general rise of purchasing power, the consequences would be equally catastrophic: the price of labour power, which remains its main competitive weapon, would shoot up, inflation and speculative investment, which already have reached alarming levels because of the accelerated monetary creation, would become unstoppable. It’s as if there was a curse on China’s hoard: these trillions of dollars will keep their value only as long as they remain untouched.

The other article, by Mouvement Communiste, focuses on labor rather than capital, specifically the wave of strikes that hit the coastal manufacturing sector, particularly foreign-owned automakers like Honda, in the summer of 2010 – though really it was the continuation of increased militancy that dates to around 2005 – and theorizes that the “working class emerging from this process, more skilled, more urbanised and more militant, represents the risk of a political crisis (in the sense of class relations) for capital.”

Both are interesting reads. But I think they also miss the mark in some important ways. Sander’s article is good on the economic factors that would make China’s transformation to a consumption-led economy difficult, but he also underestimates both the vision of its state planning and the fundamental ways the state has already altered labor relations to make that transformation possible. MC rightly notes and praises the novelty and fierceness of the 2010 industrial strikes, but overlooks that the actions were tolerated – to what degree is debatable, of course – by the state as part of a strategy for making the transformation. Though I generally sympathize with MC’s employment of the autonomist hypothesis, I don’t think the strikes can simply be reduced to an intractable antagonism between labor and capital. Maybe I should explain.

Over the last decade or so, the largest wage gains in China, by a fairly large percentage, have been enjoyed by workers employed by state-owned enterprises. Private and foreign firms, not surprisingly, have increased wages at a much slower pace. There are a few problems with this from the state’s perspective (even aside from capital’s many ideological objections to the SOEs). First, the wage gains have not been accompanied by any increase in productivity; in fact, productivity at SOEs is stagnant or even declining. So the state has financed a disproportionate share of income increases, relative to its output, which, in service of transforming the economy, it likely wouldn’t mind if it weren’t so clearly unsustainable fiscally in the long term. (It also needs money to finance its spectacular investment rates.) Second, even though the pace is slow (especially if you are an impatient western capitalist intellectual), the state does indeed want to shift all but the most “sensitive” of industries to private and/or foreign ownership, which is why it has spent the last twenty years mothballing SOEs at a phenomenal rate. China wants to be relieved of direct responsibility for its workers.

Putting these two elements together reveals a third problem: SOEs are responsible for most of the increased income of Chinese laborers, but they are a decreasing share of the national economy, and are trying to get out of production altogether (aside from those sensitive industries). Obviously, this has profound effects on the possibility of China’s transformation. If the state, directly through its enterprises, is less able to control the wage-directed financing of consumption, how does it create conditions for the realization of the transformation? That is, if the state can no longer artificially inflate purchasing power, how does it create the wage increases necessary both to pacify workers and to accomplish the move to a consumption-based economy?

Well, the obvious way would be for the state to dictate large, universal (or, conversely, targeted) rises in minimum wages. But between the hard laws of trade agreements and the soft laws of market opinion, such a move would be dangerous in that it could trigger litigation and capital flight. So, since the state can’t force higher incomes out of private enterprises, it has turned to a strategy of encouraging them, and it is capturing increased worker militancy to help accomplish a general rise in wages. This is why, for instance, as MC notes, the CEO of China’s state-owned automaker negotiated a settlement to the Honda strike that was beneficial to the workers. This is why the same CEO is in favor of laws that would legalize strikes by workers. This why the state strictly bans labor actions against SOEs but tolerates, to varying degrees, actions against foreign and domestic private firms. Generally, this is why, after years of suppressing labor actions, the government has turned to managing strikes rather than putting them down.

Of course China would be in trouble as a nation if it just allowed these wage increases to outpace productivity, which would cause investors to flee. So while it is allowing wage inflation, via its hands-off approach to settling labor conflicts, along the southeast coast – the first part of the country to liberalize and the destination of tens of millions of migrant workers – it has been pushing the interior, the large cities that dot the vast rural regions where labor unrest has been less tolerated, as the new site for foreign-owned industry. And by push, I mean both publicize and, more importantly, build the needed infrastructure for: the government has invested hundreds of billions linking interior nodes of production to the rest of the country, especially the southeast coast, with transportation and communications networks. The workforce of the interior cities, which is largely fed by migrants from the nearby countryside, will form the new low-wage centers, making possible the coast’s transformation to consumption-based, service-led industries while retaining the country’s industrial, manufacturing, and exporting base. (I won’t go into detail, but a shift in the site of production might also help China deal with its internal-migration problems and the disintegrating hukou system.)

The state, then, is planning the Chinese economy as much as it ever has, or at least it is engineering the movement and locations of its workforce. But at the same time, through rapid privatization, it is subjecting more and more workers to the discipline of the market. More central planning, yet also more of the invisible hand. There’s no contradiction here, as capitalist powers have always developed this way, though the Chinese state might be a bit more active and interventionist than its forebears. But just a bit.

So China is managing its workforce and using it to make changes to the national economy that can help make it a mature capitalist power. Nothing special there. But it is worth noting how it is managing the transformation, the techniques being utilized, because they amount not to repression of workers but to a capturing of their energy. As noted above, the state is harnessing, or attempting to, the power of workers’ actions and of industrial strikes to increase income levels and, eventually, consumption levels. The government is also increasing the welfare state by pushing toward universal health care, by doubling pension payments since 2005, and by increasing workforce retraining and unemployment payments. Generally, the state has embraced a, for lack of a better term, Keynesian/Fordist philosophy for forging new relations with labor, which will be based not on necessity and repression but on contracts, rights, and even unionization.

This is technique is perhaps most evident in the law governing contracts that came into effect in 2008. Whereas previous to that year laws governing labor agreements were liberal and, where they even existed, locally enforced, the 2008 law made contracts universally mandatory: every employer in China must provide employees with a written contract. And the law is strict: contracts are for life and only employees can nullify them; short-term arrangements are strictly limited, and in the case where a contract has lapsed, the employee retains rights to re-employment; employees have the right to sue for wrongful termination, and severance packages are mandatory; etc. China’s policy on labor contracts is as all-encompassing as anything in Europe.

And as in Europe, despite the law’s formal universality, its real effects and its enforcement are distinctly segmented. According to an analysis by a U.S. consulting firm:

Enforcement will likely be less strict away from the major coastal cities like Beijing, Shanghai, Guangzhou and Shenzhen. In addition, inland provinces often have lower non-labor costs and lower minimum wage requirements. For this reason, many foreign companies have begun plans to shift production inland to such provinces as Hunan and Anhui.

Already contained in the law is the understanding that it will be selectively enforced and that it’s being used to relocate the nodes of industrial production.

Regardless, the shift to contracts and an independent workforce is real. The development of China’s economy and, more importantly, its workforce, while not as novel as some have it, is nonetheless notable because it represents a shift to, as Deleuze/Foucault might say, techniques of inciting, inducing, and seducing. This path of development contradicts the imaginations of many westerners, for whom China is a brutally suppressive place where labor rights, like political rights, are nonexistent. The sweatshop of the world. No doubt there’s still plenty of that, but the recent state policy changes show that something else is afoot: instead of repressing, which the strike wave of the last few years has shown to be impossible anyway, the state now wants to manage proletarian productivity. It is meeting workers’ demands for rights and benefits and using them to transform the economy. It is tolerating workers’ organization and revolt to craft new kinds of exploitation. Its governance is now typified less by repression and more by capture.

Filed under: Control, Economy, Work

Ungovernable

Look at the discourse of the European political class (almost without exception): If deregulation produced the systemic collapse with which the global economy is now confronted, we need more deregulation. If lower taxation on high incomes led to a fall in demand, let’s lower high-income taxation. If hyper-exploitation resulted in the overproduction of unsold and useless cars, let’s intensify car production.

Are these people insane? I don’t think so. I think they are incapable of thinking in terms of the future; they are panicking, terrorized by their own impotence; they are scared. The modern bourgeoisie was a strongly territorialized class, linked to material assets; it could not exist without a relationship to territory and community. The financial class that dominates the contemporary scene has no attachment to either territory or material production, because its power and wealth are founded on the perfect abstraction of a digitally multiplied finance.

This last part, from Franco Berardi’s intriguing and insightful article “Cognitarian Subjectivation,” misstates the change financialization enacts and comes close to repeating populist finance-as-parasite arguments. Finance is linked to both territory and material production: private equity attaches to productive companies, some of which even make things you can hold in your hands; currencies are translated between markets that align with the borders of nations; investments in public securities depend on the (fiscal, financial) health of states. Certainly the relationship between finance and territory/production has changed, just as the territorialities and modes of production have changed, but Berardi’s claim of “no attachment” goes against the work, by Christian Marazzi and many others, that assumes that the distinction between the real economy and the financial economy no longer holds, if it ever did. Finance is less of a “perfect abstraction” than it has ever been.

Or maybe what Berardi is registering here is a difference between Europe and the United States, where a mania for (industrial) deregulation, lower taxation, and hyper-exploitation reigns that can’t be attributed to financial-class domination. If anything, in the United States finance leads the (admittedly feeble) calls for more regulation and taxation (though not of its sector, of course), while the political, industrial, and merchant classes scream for more freedom for capital. This freedom for capital includes two components, two demands: for the unrestricted exploitation of labor, and to be rid of its “obligations” toward nonproductive subjects — those too old, young, or disabled or otherwise unable to produce. The unemployed and the unemployable.

It’s this, I think, that gives rise to the “insane” and frightened political responses: not the lack of connection to community or country but the inability to command labor and populations and to direct financial resources. The root of the crisis lies in the realization that “empire is ungovernable.”

And this digital-financial hyper-abstraction is liquidating the living body of the planet, and the social body. Only the social force of the general intellect can reset the machine and initiate a paradigm shift, but this presupposes the autonomy of the general intellect, the social solidarity of cognitarians. It presupposes a process of autonomous subjectivation of collective intelligence.

Yes. As has happened at other times, the impossibility of command means that capitalism can only rely on the autonomous activity of workers (broadly speaking) and then hope to capture their subjectivity for a renewed sociality. The problem right now is that the general intellect seems tilted toward the pole of machinic enslavement and away from the pole of social subjection that could produce new value and create new subjectivities. The fear comes from not knowing if the tilt will ever reverse itself.

Filed under: Control, Economy

Suicidal

 

“For the moment, at least, most capitalists are no longer even thinking about capitalism’s long-term viability. It is terrifying, to be sure, to understand that one is facing a potentially suicidal enemy.” — David Graeber

What Graeber gets at here seems essential for understanding what’s going on now: the repression, austerity, and intentional devalorization that have constituted capital’s response to the crises. What’s happening now can’t be ascribed to rot, decay, stupidity, or lack of leadership, all of which assume eternal modes of recovery, and extant but unobtained logics to accompany them. The New Deal was a historical event, not a blueprint. Capital today seems bent on suicide, and no amount of proof of its intellectual and moral defects will cure it of its death-wish. It has to be fought, not shown its errors. Antagonism, not therapy.

Graeber’s wish to “snap the productivist bargain” is a political program that expresses this desire to maintain the antagonism, not dissolve it into newer deals. I don’t share his imperative to “expose … pernicious illusions” about money — since illusions are an inextricable part of the money relation — but I agree that refusing productivism sharpens the conflict and recognizes a largely unacknowledged fact: bargains will only ever benefit a very small portion of the world, while surrendering the rest of it to a strengthened market.

Filed under: Economy, War, Work

Capital flows and nations

The previous post doesn’t imply that resistance to nation-based solutions has been the only response to the crises. That’s not been the case, as the recent explosion of nationalist idiocies — to use just some of the proper names: tea parties, Germany’s program of austerity in defense of its exports, and France’s explusions of the Roma — show clearly enough. Not surprisingly, the twin crises, of the economy and of finance, have produced autarkic fantasies everywhere, and not just on the political right.

The key word here, I think, is produced. It’s become standard analysis to describe nationalist upsurges in the last few decades as reactions to the increasing borderlessness of capital. The implication is that older economic forms that used the nation as the primary determining economic and political boundary actually tamed, or at least rationalized, these latent tendencies, while globalization’s deterritorializations have loosened them. But even though such views give the nation a certain amount of autonomy that is missing in economistic accounts, they still assume that nationalism is natural, eternal even, and overlook how it is created and maintained, however fragilely and imperfectly. It would be better to investigate how the global movement of capital has produced these nationalisms — in both their quotidian and evental expressions — rather than relegate them to the status of mere anachronism.

Of course that’s a big project, one definitely worth researching but more than I will or can do here. For now I’d like to look at just one aspect of the recent crises and its relation to a nation: the flow of foreign capital into the United States. Obviously it’s impossible to draw definitive conclusions from these very partial figures, but I think the flow of money is certainly a matter worth investigating.

 

As this first chart shows, at the onset of the crises, the flow of private capital into the United States completely stopped. Of course in one sense this is hardly a revelation: as everyone already knows, in 2008 private credit flows completely froze. But less frequently acknowledged is that their immobility was due in large part to the fact that the multibillion dollars coming into the United States each day, which was required to sustain the current world dynamic, dropped to below zero. (Significantly, it was also at this time that another incoming flow turned negative: the flow of labor.) Nonstate investors everywhere held on to their cash.

In the absence of flows, the world economy started living off its stock.

 

The next chart shows this in more detail: In 2008 and 2009, there was no incoming capital from private sources for private investment. But notice also that as total inflows dropped off massively, the levels remained the same or increased dramatically in three areas: foreign official (i.e., government) purchases, U.S. Treasuries, and U.S. currency. In other words, though foreign private capital fled away from the United States (and back to its “home”), foreign states still invested strongly in the United States and they did so by resorting to safe-haven investment: government bonds and currency. (This turn to certainty was mirrored by domestic private investors, who either hoarded their money or parked it in nationalized instruments.)

The intertwinement between the U.S. government and foreign governments grew ten-fold in five years, and this relation became almost exclusively based on conservative modes of investment, became directly correspondent with and even determinative of national regimes of production and accumulation, and became the primary mover of capital. Without the government’s direction of flows, there would have been almost no movement of capital at all. So Tea Party delusions about Obama’s socialistic expansion of government are not entirely fanciful, but they ignore that their beloved market turned to government, not vice versa, and that the state only performed its historic role both as chief reterritorializer, and added to its resume the role of only efficient allocator of capital.

It’s probably also worth pointing out that also in 2008 foreign ownership of total U.S. Treasuries decisively topped 50%, after hovering around 35-40% for most of the aughties.

So private capital is largely staying to its national territory while public capital seeps more fully into the pores of global capitalism, looking primary for safe, nation-based investment. Meanwhile, within the United States something else notable is happening: an immense increase in the rate of domestic/household savings, and to a lesser extent business savings. As the following chart shows, U.S. households underwent an epochal transformation from huge deficit spender (“the consumer of last resort”) to huge saver almost overnight.

 

As soon as the crises hit, Americans withdrew from the world, holding onto their cash and not spending either on investment or consumption. This hoard of money became, I think, the basis for the moral revulsion of government debt and of the foreign lenders who enabled it.

So what does this very brief statistical sketch indicate? Well, as I said, drawing exact conclusions directly from the figures would elide the contingencies of politics, but it might be possible to draw a (segmented, perhaps convoluted) picture from the flow of money. As private capital stopped flowing productively, as it either sought safe (i.e., national) foreign investments or (along with the flow of labor) returned home, the U.S. government became the de facto receiver and director of capital flows. This increase in state-directed investment was largely underwritten by foreign investors, particularly foreign governments. It’s not coincidental that this (foreign-financed) state became so hated in the political imaginary, a hatred no doubt magnified by the U.S. president’s race and complicated, enigmatic national history. Rhetoric about Kenyan-Islamist-Marxist-Nazis crept in, but what produced it was as much the decisiveness of foreign capital in the U.S. economy as a president with suspect loyalties.

As the state became so despised, questions about national orientation became primary. There are right-wing versions (kill state socialism!) and left-wing versions (where’s the new New Deal?) of the questions, but the aspirations of independence and self-renewal were fueled by the huge surge in the household savings rate and the government’s increased role in directing industrial policy.

And so from this something like the current situation emerges: a bunch of material (monetary) factors have increased the importance of national economies, which has given rise to politics that are bounded by those national dynamics. The increase in nationalism is not limited to the exceptional varieties I listed at the beginning of this post. The everyday mechanisms of national difference — currency differentials, central bank policy, etc. — which never disappeared even during the high point of “globalization,” are becoming more, not less, decisive. As the recent quantitative-easing flap between the United States, China, and Germany shows, nations’ function of projecting or protecting their economies remains a central element in the world economy. It’s no surprise that political programs would follow from these national requirements.

Filed under: Economy, The State, Walls and Lines

Becoming-rent

The essays collected in Crisis in the Global Economy: Financial Markets, Social Struggles, and New Political Scenarios were researched and written in early 2009 and translated from Italian into English earlier this year. And thank god for that. They are a welcome respite from the social-democratic obsessions of Anglo-American writers: how parasitical finance and predatory lending caused the crisis, the greed of oligarchs who prevent recovery, etc. To say nothing of the technocratic alternatives offered: nationalizing banks, more robust stimulation, etc. In short, the same old moral analysis and the same old nation-based solutions.

 

Crisis in the Global Economy accounts for the last few years of multiple crises in a much different way, starting with a reckoning of finance’s centrality to the global capitalist economy. Though all of the writers have different points of emphasis, they agree that financialization, far from being nonessential and parasitic, represents, in Carlo Vercellone’s phrase, the “becoming-rent” of profit: Finance is today the primary site of valorization and accumulation. As Vercellone says, there is a “general tendency of capital to transform profit into a rentier mechanism of drawing surplus value from a position of exteriority in respect to production and/or founded on the creation of an artificial resource rarefaction.” So for most capitalists, their business is less about the organization of production and the accumulation of capital and more about using financial products to increase profit.

This is a pretty standard take of course, and it’s not really a problem for capital as long as the flows of credit, rent, and labor are moving toward and away from the beneficial targets. But when those flows are blocked — e.g., the freezing up of credit markets — or when their segmentations change in ways that upset the conventional balance — e.g., the default on subprime mortgages — it does become a problem, one that, because most large firms, the ones with the global reach required to help end the crises, operate from a “position of exteriority” to production, can’t as easily or quickly correct those flows.

In response to this situation, socialists and capitalists have articulated a shared set of demands: reregulation of finance, stimulation of demand and credit flows, and state reintegration into industrial planning. All things governments over the world have achieved, from stimulus packages to central bank pump-priming, from huge investments in green energy to nationalization of banks, financial firms, and even auto manufacturers. But still none of it helps, as it appears the world economy is headed for, at best, a double dip recession, and maybe even decades of stagnation. But still, socialists want more of the same, a return to the policies that made Fordism.

Part of the value of Crisis in the Global Economy is that most of the essays predicted this happening: a mantra of the book is the impossibility of Keynesian solutions to the crisis. As Christian Marazzi says, and several others elaborate, “classical Keynesian actions lack transmission channels of state stimuli to the real economy, to the demand of goods and services, and investment goods,” those diminished channels being impoverished welfare states and the state’s lack of involvement in industry, to name but two. (Obviously, these conditions vary by country.) Karl Heinz-Roth points out that Keynesian mechanisms would still be operating in a financialized environment, so that they necessarily wouldn’t be able to increase aggregate demand, only income inequality. Andrea Fumagalli says that’s what lacking is a global system of governance that could direct the transnational flows of “cognitive accumulation,” which remain blocked by national institutions.

All of these impossibilities have been shown to be true by in the nearly two years since the essays were written. But I’m struck by the fact that all of these are, to use the archaic language, “objective” factors. In other words, for texts written by people who are mostly from or associated with autonomism, there is remarkably little “subjective” analysis — very little about class composition, in other words. And it’s in no small part because of the composition of working classes that Keynesianism remains impossible. The working classes are simply not centralized enough to allow it to work. Even more, they seem unwilling to be integrated: Can anyone imagine women heading back to the home? (It’s actually the opposite: in the US, more women now work than men.) The indigenous in Bolivia and Ecuador refuse to allow their populist governments to incorporate them into the world of petrochemical rents. The industrializing proletariats in Africa and China are demanding increases in wages just as the raising of prices of commodities becomes more difficult for producers.

Not that any of these factors will stop governments and their oppositions from asking for more integration and regulation.

Filed under: Economy, Value

The herd instinct

Heavy trading in exchange-traded funds means more stocks are likely to move in the same direction on any given day. Analysts call that correlation, a mathematical term meaning similarity of behavior. Correlation is on the rise, to the frustration of investors who are trying to analyze stocks based on their underlying strengths and weaknesses. [...]

Filed under: Economy

Slow and fast

In some ways the debate over slow cinema and fast cinema seems like a reformulation of a much older opposition — that between high art and low (popular) art.

Filed under: Economy, Walls and Lines

Europe is dead; long live, etc.

Etienne Balibar:

Filed under: Economy

Exit, language, community

It is not surprising, then, that during the last few years the focus of women’s struggle has “shifted” from mobilization for the right to equality to less visible but no less significant and effective forms of struggle.

Filed under: Economy, Value