A critical feature in Karl Marx’s theoretical construct of political economy provides a valuable insight on how economies in countries such as Aotearoa New Zealand, function and how they might function better in order to achieve the well-being of their peoples.
This construct begins with the statement that any product begins first with both a labour-value and a use-value.
The former is what produces the product. How it is materially used to satisfy a human requirement or usefulness is the latter (Capital, Volume 1, pp. 35-41).
Karl Marx distinguished between use and exchange-values in tradeable commodities
Under capitalism, which is more than simply commerce, when that product is traded as a commodity in a market, it acquires an additional exchange value.
That is, the proportion by which the commodity can be exchanged for something else, which is usually money.
This shifts the use-value of an economy away from human-needs towards wealth accumulation driven. Human needs are relegated to by-products.
It is this that differentiates capitalism from earlier forms of commerce including markets and trade.
Pandemic lessons
The Covid-19 pandemic has been arguably or potentially at least the greatest threat to the survival of capitalism.
The other main threats have been the fear of international socialist revolution arising out of the 1917 Russian Revolution and the 1930-40s with the economic collapse under the Depression and subsequent world war.
The pandemic’s arrival did not mean that New Zealand and other capitalist economies could somehow pause during a lockdown and then simply resume when it was over.
Capitalism’s addiction to profit means that its main purpose of wealth accumulation continues throughout; before, during and after.
The satisfaction of people’s needs is only a by-product in this endless process of accumulation. Consequently, insecurity of future profits instantly pushed capitalism into crisis.
On the one hand, the pandemic challenged the very foundations of capitalism. On the other hand, lockdowns provided nature for a much-needed break.
This break included cessations of industrial production and transportation restrictions. Carbon dioxide emissions and other pollution significantly reduced.
From production for profit to provision for need
Socialist Register 2021 on new ways of living beyond digital capitalism
The above ‘pandemic conclusions’ are those of Dr Christoph Hermann in his ‘Life under the pandemic: from production for profit to provision for need’ published in Socialist Register 2021 (pp.274-290).
Hermann, a history lecturer at the University of California (Berkeley), discusses the experience of the residents of smog-plagued cities such as New Delhi who could suddenly see the sky.
The pandemic lockdowns demonstrated that a focus on essential needs can provide breathing space for the global ecosystem.
Dr Christoph Hermann draws upon Marx for transition from production to profit to provision for need
But it also led him to conclude that the pandemic crisis “sounded the death knell to all attempts to solve the ecological crisis through profit-based incentives.”
The dramatic fall in oil prices caused by the decline in economic activities caused by the pandemic will undermine the shift to less damaging energy sources because this shift is contrary to capitalism’s prime driver, wealth accumulation.
Carbon cowboys
Hermann’s article was published in 2021 and so much has been learnt since then. However, his basic point remains valid.
This is evidenced by the increasing direct influence of the fossils industry at the United Nation COP28 Climate Change Conference in Dubai in December 2023.
Further, Hermann is right to criticise the dependence of commercial markets to reduce carbon emissions.
This is not just because these wealth accumulation driven markets have the greatest responsibility for increasing emissions in the first place.
It does not, however, mean reliance on market forces and technology to reduce emissions as presently advocated by New Zealand’s new government.
This is just political camouflage for a mix of lack of commitment to address climate change and largely covert climate change denial.
This point was well made in a critique from Pat Baskett published by Newsroom (11 August): The free market won’t solve our emissions problem.
Instead Hermann’s critique recognises that carbon emissions markets can create carbon emission beneficiaries in the form of profiteers.
This was discussed by Patrick Greenfield and Nyasha Chingono in The Guardian (15 March): Textbook example of profiteering carbon cowboys.
Levering off what is described as a “textbook example” at Zimbabwe’s Lake Kariba, which has the planet’s largest human-made dam, the writers describe the role of what are called ‘carbon cowboys’.
They quote a forest scientist revealingly that:
Nature-based carbon markets have largely been co-opted by groups affectionately known in the industry as ‘carbon cowboys’. These groups spent much of the last 15 years snapping up and enrolling large tracts of land in the developing world, with little care for Indigenous rights governing these areas, or ensuring that local inhabitants get paid for their conservation work.
Towards a needs based use-value economy
Hermann’s advocacy of a needs-based economy involves ensuring there is sufficient supply in order to remove the existential threat of wealth accumulation.
The more supply is addressed the more debt (an inevitable consequence of this threat) diminishes.
While achieving socialism may well require revolution of some form, transitioning towards a use-value society can be done incrementally in small steps.
Small examples already exist, including in New Zealand. Cooperatives, not-for-profit organisations and such as cooperatives (including food) and small family-owned farms already run on use-values.
A use-value society involves shifting to a more communal and cooperative based economy. But it does not require excluding markets, commerce or trade.
These elements preceded capitalism and would continue either in the absence of, or with diminished wealth accumulation influence.
Democratising democracy
But it does require democratising economic and social life well beyond formal political democracy. Democratising democracy means much more than spending a few moments in an election booth or completing a voting form.
Hermann concludes with the following:
This means genuine opportunities for active participation and administration – not just by taking surveys or forming committees that can voice concerns but have no power in decision-making processes.
Further:
Positive experience with growing islands of use-value orientation in the sea of profit-maximization can, hopefully, pave the way for a systemic change, ending capitalism and tackling the ecological crisis.
Currently in New Zealand due to the power of the vested interests of the beneficiaries of wealth accumulation (sometimes reinforced by cronyism) there is little appetite among the parliamentary parties for this form of transition.
Seeds of interest can be found within the policies of the Greens and Te Pati Māori. Hermann may be overly optimistic in his analysis. But without hope you cant have progress; you also can’t have waves without first having little ripples.
Just saying!
Ian Powell was Executive Director of the Association of Salaried Medical Specialists, the professional union representing senior doctors and dentists in New Zealand, for over 30 years, until December 2019. He is now a health systems, labour market, and political commentator living in the small river estuary community of Otaihanga (the place by the tide). First published at Political Bytes
We have the world that capitalists want. The only thing that can break it is information, not hope – information – hence why censorship is through the roof now days.
Capitalism has raised more people out of poverty than any other monetary system.
Socialism has thrown more people into poverty than any other political system.
Sorry mate, that’s total phony baloney. Capitalism is thee most prevalent economic system in the world has been this way for eons now and yet most of the world remains poor. On top of this is the fact that capitalism has attempted to nullify any and all competitors to it. These two points alone speaks to its obvious failings. Now, I am not looking to replace it, can’t say I am interested in other economic/societal models, at this stage, but without a friggin doubt we can do better. China’s form of capitalism /socialism/communism, whatever we want to call it has lifted over half a billion people out of poverty in record time…now there’s a model we could learn from, except for the fact that traditional capitalism is none to happy about this spreading the wealth, far and wide model that China has adopted. War looms for them as a result…..
I can’t see this working due to the mindset of those who benefit from Capitalism and the propaganda they spread so effectively – see previous post by my namesake. Those who benefit from capitalism have absolutely no desire to make any changes because it means they might actually have to share some of their wealth – crazy talk, right BtF?
In this post, Ian Powell displays a confusion about the ideas of Marx that he purports to explain.
Marx did contrast capitalism, or any commodity-producing society, with the first human societies, and with the communist society of the future, in both of which production is directly social. In capitalist society the labour expended in privately-owned units of production is indirectly social. There is no previously worked-out economic plan. The only way the individual producers can know if their commodities meet social needs is by bringing them to market and see if they sell.
Powell says “A use-value society involves shifting to a more communal and cooperative based economy. But it does not require excluding markets, commerce or trade. These elements preceded capitalism and would continue …” But this is simply wrong. By its very nature, the socialist society that Powell looks forward to (we can call it “a use-value society,” although Marx does not use this term) would not need markets. Markets are essential in the commodity-producing societies that preceded capitalism, and in capitalism itself, the society of generalised commodity production, but would be redundant in a planned economy, where private ownership of the means of production, which made markets necessary in the first place, no longer exists.
Powell’s vision is basically the old utopian one shared by petty-bourgeois “socialists” from Proudhon of Marx’s day to the Green Party of today — a society of small independent artisan producers, ideally including some cooperatives, all happily meeting up in the village market place. Powell talks of “small family-owned farms already run on use-values” But no economic unit can run on use values in present capitalist society unless it isolates itself from the world and lives entirely off what it itself produces. And as soon as it enters the market it will by definition face competition — there are no such things as non-competitive markets — and be subject to the law of the concentration and centralization of capital described by Marx, based on what has actually happened in history:
“The battle of competition is fought by the cheapening of commodities. The cheapness of commodities depends, all other circumstances remaining the same, on the productivity of labour, and this depends in turn on the scale of production. Therefore the larger capitals beat the smaller. It will further be remembered that, with the development of the capitalist mode of production, there is an increase in the minimum amount of individual capital necessary to carry on a business under its normal conditions. The smaller capitals, therefore, crowd into spheres of production which large-scale industry has taken control of only sporadically or incompletely. Here competition rages in direct proportion to the number, and in inverse proportion to the magnitude, of the rival capitals. It always ends in the ruin of many small capitalists whose capitals pass into the hands of their conquerors, and partly vanish completely.” (Capital, vol. 1, chapter 25.)
Powell also opines “While achieving socialism may well require revolution of some form, transitioning towards a use-value society can be done incrementally in small steps.” Well, no argument with the first half of this sentence. The transition to a “use-value” society can be done in small steps, or at a faster pace, depending on the circumstances. But the important point is that the transition cannot begin now as Powell implies, but only after a revolution which takes power out of the hands of the capitalist property-owners and places it in the hands of working people.
Terry is far too structural and linear in his response. He focusses on historical epochs (feudalism, capitalism, socialism). I’m interested in their overlaps through uneven and combined development. Relatively speaking his focus is much more macro and sweeping whereas mine is more micro and incremental. Depending on how they are expressed, they are not necessarily oppositional. Incidentally Marx respected Owen albeit critically. Marx supported cooperatives although he also understood their limitations within capitalism. Terry misunderstands my argument here. He’s a tad too doctrinal.
Sure, there are overlaps between different modes of production ( or different “historical epochs” or “socio-economic systems” if “modes of production” sound too “doctrinal”.) There are elements of traditional communal tribal societies or feudalism and other modes lingering on to various degrees in capitalist societies around the world. But there are qualitative breaks between epochs too, called revolutions. We live in a capitalist, not a tribal or feudal, world.
When I first read Ian’s post I wondered if he had noticed a basic contradiction in what he wrote. If I didn’t misunderstand him, he was saying use values good, exchange values bad, let’s live in a use value economy. But markets, commerce and trade — which assume exchange values — would remain!
Before he even got on to capital itself, Marx spent the first few chapters of volume one of Capital examining the commodity, which, as Ian said, he defined as a unity of a use value and an exchange value. That allowed him to explain why in a post-capitalist society commodities as a category — and for that matter money, the universal form of exchange value — won’t exist.
In contrast to Terry I use Marxism as an insightful zoom lens to focus on relevant matters. While the lens is great, the form of capitalism today is different from that of Marx’s time. This does not been that the underlying driver of wealth accumulation is any less.
Further, a planned economy and markets/trade/commerce are not mutually exclusive. It depends on the role of wealth accumulation.
A market is held in a town nearby us every Friday morning in the season. Various people take their produce to that market for sale. On the whole, I could say exclusively, they are domestic producers. I don’t think that one would call them capitalists because they don’t employ labour. Friends, neighbours and visitors buy their produce, and they presumably make enough to get by on.
I don’t take any of my own produce to the market. When I have a surplus I will give it to the kura or the marae or to the other folk around who give me a share of their own produce from time to time. It is not even barter. It is sharing. What we share are not “cheap commodities” but “free goods” although out of respect we would not use that term because we know that they have been produced through the “blood, sweat and tears” of our friends and neighbours. Therefore they have a spiritual value which outweighs any exchange value they might have had if taken to market.
Then there is the whole commercial system represented by the shops in the town which sell goods for a fixed price, employ labour on wages, pay GST to the government and so on. These different ways of distributing produce easily co-exist and most of us participate in more than one mode of distribution. In theory we could restrict ourselves to only a single mode of production and a single mode of distribution but in practice we tend to cover the full gamut in order to fully satisfy our material, social and spiritual needs.
The statement of Marx quoted by Terry “The battle of competition is fought by the cheapening of commodities. The cheapness of commodities depends, all other circumstances remaining the same, on the productivity of labour, and this depends in turn on the scale of production…etc” only applies in so far as we accept the logic of capitalism. But there are whole areas of life where we do not accept that logic. For example in the traditional family, parents do not charge their young children for services rendered, or vice versa. (Yes, parents pay pocket money which is a way of training children for the day when they go out into the capitalist labour market, but it is in no way integral to the family arrangement). In our society the traditional non-monetary relations extend from whanau into hapu, though I concede that it is different for families of European New Zealanders who lend money at interest to their adult children or sell rather than give assets to close relatives. As Ian says, there are overlaps, and things can lap over both ways. The real danger for New Zealand will be when the brute logic of capitalism completely overwhelms all the other considerations of whanau, hahi and our common interest as a people. I don’t see that happening within Maori communities, but the trend of the past forty years makes it an unfortunate possibility for European New Zealanders.
Capitalism – exchange value – products – commodification – profits – energy requirements.
Square the circle.
Capitalism has prospered for 200+ years – notwithstanding a few crises – and for the last 100+ has accelerated in pace and intensity with ‘cheap’ energy /technologies derived from carbon-based fuel. Surely its just a matter of time. Decades? If the climate prophets are to be believed. But climate change/ climate catastrophe aside, the wheels of history turn slowly and perhaps even a century or two. Perhaps electricity will be the savior of capitalism’s hungry need for energy. Once technology solves the storage problem. But long term the electricity needed won’t be carbon based!
Perhaps Ian Powell is correct, and a reevaluation of current capitalist system – and its massive energy requirements – might give birth to a new paradigm and a new social order – but most likely not without a fight. Global conflict? A dystopian world order?
Or somehow – and I’m not entirely sure how – will the advent of a new use-value society shift the economic system to a more communal and cooperative based one, one that does not necessarily exclude markets, commerce or trade? But still the elephant in the room is energy. Perhaps at a local level – communal and cooperative – energy needs can be met by renewable technologies. A way forward? If we aren’t all incinerated, frozen or drowned by floods or rising sea levels!
Marx is the chap who died a stateless pauper in London,a complete failure who exposed his family to extreme poverty.
Marxist-Leninist societies failed primarily in the political rather than the economic sphere, and it is the failure to develop a truly democratic political model which currently hamstrings Marxism, and the left in general. The economic crisis of capitalism is contentious. Capitalism has shown a resilience in the face of wars, depressions and gross social inequality, yet Marxists forecast the final crisis of capitalism as regularly as religious millenarians predict the end of the world.
At the present time the working class are not turning away from the capitalist system of production. How could they? Their conditions of life depend on a wage coming in to put food on the table and pay the rent. However they are deserting the political system of capitalism in droves for which they receive no thanks from the left. Instead they face recriminations, and are stridently urged to return to the fold of capitalist politics. That is a barmy response for anyone who seriously counts themselves as a friend to the working class and a foe of capitalism.
Proletarian politics (rangatiratanga) is totally at odds with the failing capitalist political system and with the system imposed through the Marxist-Leninist movements of the twentieth century which merely provided the political vehicle for a return to capitalism on an enhanced productive base.
The “dictatorship of the proletariat” was a snare, a ruse and a sham propagated by those who used it to advance their own interests and ultimately to restore a thorough-going system of explicitly capitalist exploitation.
The democracy of the proletariat (the system present in embryo in the first months of the Soviet revolution before being aborted in the interests of a political elite) returns power to the base through the open ballot, continuous election and variable self-determined constituencies, in contrast to capitalist politics which employs the secret ballot, periodic elections and uniform geographic constituencies for the simple reason that this combination of features provides for an eminently corruptible political system. The left, being part of this capitalist political system, has also fallen victim to its corruption.
Comments are closed.