For a Ruthless Criticism of Everything Existing

Dialectical Magick

I have to thank the folks over at the Coffee Shop for the excellent article entitled Socratic Marx, which discusses this letter from Marx which was published in the Tucker Anthology The Marx and Engels Reader as: For a Ruthless Criticism of Everything Existing (1843).

This is one of my favorites short radical writings by Marx which expresses exactly what revolutionary thought is, philosophy in action. It is here we find the essence of Marx's revolutionary thought, and the phrase For a Ruthless Criticism of Everything Existing, was not lost on me when I first read this thirty-five years ago.

It is this letter which was to turn the entire socialist movement on its head, that communism is not just an extension of socialism it is something else, something different than existing socialism and social democracy. I have highlighted in bold those ideas which struck me as crucial so long ago, and remain embedded within my philosophical outlook. And this essay has not just influence me, it has influenced other radical thinkers like Raya Dunayevskaya, it is in this essay we find mention of the idea of her Marxist Humanism [1].

Out of the broom closet

I had forgotten how important the ideas in this essay had been in building the foundation of of both my view of libertarian communism and what I would later call dialectical magick; a historical materialist interpretation that magick[2] has acted as a ‘ruthless criticism of religion’ and of science/scientism. It is the original Libertation Teleology.

"The whole socialist principle in its turn is only one aspect that concerns the reality of the true human being. But we have to pay just as much attention to the other aspect, to the theoretical existence of man, and therefore to make religion, science, etc., the object of our criticism."

As Marx says in his Introduction to A Contribution to the Critique of Hegel’s Philosophy of Right Karl Marx (published in the same journal; Deutsch-Französische Jahrbücher, in February, 1844) “the criticism of religion is the prerequisite of all criticism”. I have included an excerpt from this below his letter to Rouge.

Magick historically fulfills this prerequisite, it has functioned both as a practice[3], gift economy, and a social movement that acted as a "reform of consciousness not through dogmas, but by analyzing the mystical consciousness that is unintelligible to itself, whether it manifests itself in a religious or a political form. "

Marcel Mauss; shows this in his Outline of a General Theory of Magic, which is still relevant today, the centennial of its publication. While not as well known as his The Gift: The Form and Reason for Exchange in Archaic Societies, the General Theory of Magic postulates that magic is different from religion and not only pre-dates it but represents a social function that is essentially anti-authoritarian and based on an economy of self consciousness of production. Just as The Gift shows that this magickal economy is not one that produces exchange value but a communist exchange, those with surplus exchange it with those who do not have it by holding a potlatch.

Mauss further contends that magickal thinking is still with us, and modern physics shows this with its M-theory of String phenomena. Or as Feyerabend says in "Against Method", 1975, "Thus science is much closer to myth than a scientific philosophy is prepared to admit."

Magickal economy is consistent with what Marx called "actually existing communism" in his letter to Rouge. Marx, influenced by the early anthropological work of Lewis Morgan, saw the gift economy as essentially communist. It was an economy based on magick and mediated by the shaman, as in later periods communal society would be mediated by witches, cunning men, wise women, etc.

In the gift economy the shaman reflects social power of both the status quo and its other. They can be insiders, leaders in the community or outsiders, those exiled from the community. In either case they act to make acceptable to the community 'the other' such as homosexuality and gender bending (the bardache) which Edward Carpenter, the English socialist and gay advocate, documents.

THE SHAMAN IN THE CAVE

Les Trois Freres, France

“The Shaman/Trickster appears in the cave paintings of the Early European Tribes, about 18,000 about years ago. Warriors don't appear until about 9,000 years ago. Kings appeared even later. It appears historically that the Shaman/Trickster came a lot earlier, perhaps even before the cave painters appeared. The Shaman/Trickster is closely tied to hunting, and hunting and gathering were the origin of human society, maybe 50,000 years ago. The warrior and the king are possible only after the development of cities. “ THEORIES ON THE NORTH AMERICAN TRICKSTER

Magick in practice is mnemonic, it is a remembrance of mans development of tool making and technics, the subconscious memory that labour altered our consciousness. The tools of magick, the cup, the pentangle, the athame, the wand and the sword are mnemonic symbols of the development and transition of the human from the dominance of the world of nature, into nature’s transformer, the magi. The invocations and the evocations of magickal chants are the voice of humankind speaking of and to the names of the natural world as it are transformed by our labour. [4] As the world changes so do the deities, the reifications of the world made in the image of man. Or to put it another way "That which is mostly observed, is that which replicates the most."

“Man makes religion, religion does not make man. Religion is, indeed, the self-consciousness and self-esteem of man who has either not yet won through to himself, or has already lost himself again. But man is no abstract being squatting outside the world. Man is the world of man – state, society. This state and this society produce religion, which is an inverted consciousness of the world, because they are an inverted world,” as Marx says in his introduction to his Critique of Hegel below. And we could add that man also makes science, and that magick which originates science[5], as it does religion, it continues to be a different form of science, natural science as opposed to technic based science of capitalism.

And as Frazer says in the Golden Bough; "So far, therefore, as the public profession of magic has been one of the roads by which men have passed to supreme power, it has contributed to emancipate mankind from the thraldom of tradition and to elevate them into a larger, freer life, with a broader outlook on the world. This is no small service rendered to humanity. And when we remember further that in another direction magic has paved the way for science, we are forced to admit that if the black art has done much evil, it has also been the source of much good; that if it is the child of error, it has yet been the mother of freedom and truth."[6]

We can see within the modern Occult movements in the 19^th and 20^th centuries this dialectic of religion and politics, of liberation and oppression played out in the microcosm of secret societies and the macrocosm of mass movements for social change which includes the neo-pagan and witchcraft revivals that are occurring today. We can see it in the popular response to Harry Potter novels by millions of children, for whom magickal thinking has not been repressed. This is not mere mysticism, but as Freud called it the ‘return of the repressed’[7]. Magick has influenced much of the modern revolutionary movements, from the time of Byron and Shelley (called satanic poets by their contemporaries) through to Surrealism, the beat poets such as libertarian communist Kenneth Rexroth and even Situationism, just as it has broadened our understanding of early human communities through the sciences of sociology and anthropology.

In the information age the return of magick in the 20th century , at the height of capitalisms ascendance its technological transformation of society, shows that the alienation of production and its reification into commodity and consumer, satisfies the individuals need to create meaning and power out of powerlessness. Magick functions not only for creating meaning and power for the individual, but to bring individuals back into contact with each other as creators of community; it answers the need for the village and commune in the midst of a mass consumer culture.

If we are to understand magick as part of the revolutionary movement, we must discard popular conspiracy theory notions of it and apply dialectical and historical materialist theory to it. This then is the challenge that dialectical libertarians face. The study of magick has long influenced revolutionary thinkers[8], as well as reactionaries[9]. The reactionary thinker sees the Occult as competing secret societies vying for power[10], the libertarian communist, sees magick as humanities gnosis of ourselves as self conscious creators of our world as Joseph Dietzgen[11] contends with his theory of Cosmic Dialectics.

Letters from the Deutsch-Französische Jahrbücher

M. to R.
Marx to Ruge

Kreuznach, September 1843

I am glad that you have made up your mind and, ceasing to look back at the past, are turning your thoughts ahead to a new enterprise.^[22] And so — to Paris, to the old university of philosophy — absit omen! [May it not be an ill omen] — and the new capital of the new world! What is necessary comes to pass. I have no doubt, therefore, that it will be possible to overcome all obstacles, the gravity of which I do not fail to recognise.

But whether the enterprise comes into being or not, in any case I shall be in Paris by the end of this month,^[23] since the atmosphere here makes one a serf, and in Germany I see no scope at all for free activity.

In Germany, everything is forcibly suppressed; a real anarchy of the mind, the reign of stupidity itself, prevails there, and Zurich obeys orders from Berlin. It therefore becomes increasingly obvious that a new rallying point must be sought for truly thinking and independent minds. I am convinced that our plan would answer a real need, and after all it must be possible for real needs to be fulfilled in reality. Hence I have no doubt about the enterprise, if it is undertaken seriously.

The internal difficulties seem to be almost greater than the external obstacles. For although no doubt exists on the question of “Whence,” all the greater confusion prevails on the question of “Whither.” Not only has a state of general anarchy set in among the reformers, but everyone will have to admit to himself that he has no exact idea what the future ought to be. On the other hand, it is precisely the advantage of the new trend that we do not dogmatically anticipate the world, but only want to find the new world through criticism of the old one. Hitherto philosophers have had the solution of all riddles lying in their writing-desks, and the stupid, exoteric world had only to open its mouth for the roast pigeons of absolute knowledge to fly into it. Now philosophy has become mundane, and the most striking proof of this is that philosophical consciousness itself has been drawn into the torment of the struggle, not only externally but also internally. But, if constructing the future and settling everything for all times are not our affair, it is all the more clear what we have to accomplish at present: I am referring to ruthless criticism of all that exists, ruthless both in the sense of not being afraid of the results it arrives at and in the sense of being just as little afraid of conflict with the powers that be.

Therefore I am not in favour of raising any dogmatic banner. On the contrary, we must try to help the dogmatists to clarify their propositions for themselves. Thus, communism, in particular, is a dogmatic abstraction; in which connection, however, I am not thinking of some imaginary and possible communism, but actually existing communism as taught by Cabet, Dézamy, Weitling, etc. This communism is itself only a special expression of the humanistic principle, an expression which is still infected by its antithesis — the private system. Hence the abolition of private property and communism are by no means identical, and it is not accidental but inevitable that communism has seen other socialist doctrines — such as those of Fourier, Proudhon, etc. — arising to confront it because it is itself only a special, one-sided realisation of the socialist principle.

And the whole socialist principle in its turn is only one aspect that concerns the reality of the true human being. But we have to pay just as much attention to the other aspect, to the theoretical existence of man, and therefore to make religion, science, etc., the object of our criticism. In addition, we want to influence our contemporaries, particularly our German contemporaries. The question arises: how are we to set about it? There are two kinds of facts which are undeniable. In the first place religion, and next to it, politics, are the subjects which form the main interest of Germany today. We must take these, in whatever form they exist, as our point of departure, and not confront them with some ready-made system such as, for example, the Voyage en Icarie. [Etienne Cabet, Voyage en Icarie. Roman philosophique et social.]

Reason has always existed, but not always in a reasonable form. The critic can therefore start out from any form of theoretical and practical consciousness and from the forms peculiar to existing reality develop the true reality as its obligation and its final goal. As far as real life is concerned, it is precisely the political state — in all its modern forms — which, even where it is not yet consciously imbued with socialist demands, contains the demands of reason. And the political state does not stop there. Everywhere it assumes that reason has been realised. But precisely because of that it everywhere becomes involved in the contradiction between its ideal function and its real prerequisites.

From this conflict of the political state with itself, therefore, it is possible everywhere to develop the social truth. just as religion is a register of the theoretical struggles of mankind, so the political state is a register of the practical struggles of mankind. Thus, the political state expresses, within the limits of its form sub specie rei publicae,[as a particular kind of state] all social struggles, needs and truths. Therefore, to take as the object of criticism a most specialised political question — such as the difference between a system based on social estate and one based on representation — is in no way below the hauteur des principes. [Level of principles] For this question only expresses in a political way the difference between rule by man and rule by private property. Therefore the critic not only can, but must deal with these political questions (which according to the extreme Socialists are altogether unworthy of attention). In analysing the superiority of the representative system over the social-estate system, the critic in a practical way wins the interest of a large party. By raising the representative system from its political form to the universal form and by bringing out the true significance underlying this system, the critic at the same time compels this party to go beyond its own confines, for its victory is at the same time its defeat.

Hence, nothing prevents us from making criticism of politics, participation in politics, and therefore real struggles, the starting point of our criticism, and from identifying our criticism with them. In that case we do not confront the world in a doctrinaire way with a new principle: Here is the truth, kneel down before it! We develop new principles for the world out of the world’s own principles. We do not say to the world: Cease your struggles, they are foolish; we will give you the true slogan of struggle. We merely show the world what it is really fighting for, and consciousness is something that it has to acquire, even if it does not want to.

The reform of consciousness consists only in making the world aware of its own consciousness, in awakening it out of its dream about itself, in explaining to it the meaning of its own actions. Our whole object can only be — as is also the case in Feuerbach’s criticism of religion — to give religious and philosophical questions the form corresponding to man who has become conscious of himself.

Hence, our motto must be: reform of consciousness not through dogmas, but by analysing the mystical consciousness that is unintelligible to itself, whether it manifests itself in a religious or a political form. It will then become evident that the world has long dreamed of possessing something of which it has only to be conscious in order to possess it in reality. It will become evident that it is not a question of drawing a great mental dividing line between past and future, but of realising the thoughts of the past. Lastly, it will become evident that mankind is not beginning a new work, but is consciously carrying into effect its old work.

In short, therefore, we can formulate the trend of our journal as being: self-clarification (critical philosophy) to be gained by the present time of its struggles and desires. This is a work for the world and for us. It can be only the work of united forces. It is a matter of a confession, and nothing more. In order to secure remission of its sins, mankind has only to declare them for what they actually are.

Introduction to A Contribution to the Critique of Hegel’s Philosophy of Right

Karl Marx in Deutsch-Französische Jahrbücher, February, 1844

For Germany, the criticism of religion has been essentially completed, and the criticism of religion is the prerequisite of all criticism.

The profane existence of error is compromised as soon as its heavenly oratio pro aris et focis [“speech for the altars and hearths”] has been refuted. Man, who has found only the reflection of himself in the fantastic reality of heaven, where he sought a superman, will no longer feel disposed to find the mere appearance of himself, the non-man [Unmensch], where he seeks and must seek his true reality.

The foundation of irreligious criticism is: Man makes religion, religion does not make man. Religion is, indeed, the self-consciousness and self-esteem of man who has either not yet won through to himself, or has already lost himself again. But man is no abstract being squatting outside the world. Man is the world of man – state, society. This state and this society produce religion, which is an inverted consciousness of the world, because they are an inverted world. Religion is the general theory of this world, its encyclopaedic compendium, its logic in popular form, its spiritual point d’honneur, its enthusiasm, its moral sanction, its solemn complement, and its universal basis of consolation and justification. It is the fantastic realization of the human essence since the human essence has not acquired any true reality. The struggle against religion is, therefore, indirectly the struggle against that world whose spiritual aroma is religion.

Religious suffering is, at one and the same time, the expression of real suffering and a protest against real suffering. Religion is the sigh of the oppressed creature, the heart of a heartless world, and the soul of soulless conditions. It is the opium of the people.

The abolition of religion as the illusory happiness of the people is the demand for their real happiness. To call on them to give up their illusions about their condition is to call on them to give up a condition that requires illusions. The criticism of religion is, therefore, in embryo, the criticism of that vale of tears of which religion is the halo.

Criticism has plucked the imaginary flowers on the chain not in order that man shall continue to bear that chain without fantasy or consolation, but so that he shall throw off the chain and pluck the living flower. The criticism of religion disillusions man, so that he will think, act, and fashion his reality like a man who has discarded his illusions and regained his senses, so that he will move around himself as his own true Sun. Religion is only the illusory Sun which revolves around man as long as he does not revolve around himself.

It is, therefore, the task of history, once the other-world of truth has vanished, to establish the truth of this world. It is the immediate task of philosophy, which is in the service of history, to unmask self-estrangement in its unholy forms once the holy form of human self-estrangement has been unmasked. Thus, the criticism of Heaven turns into the criticism of Earth, the criticism of religion into the criticism of law, and the criticism of theology into the criticism of politics.

For Donalda Cassel, Larry Gambone, Jane Leverick, Sam Wagar

FOOTNOTES

---

[1] communism is itself only a special expression of the humanistic principle

[2] The use of Magick with a 'k' comes from Giambattista della Porta (aka John Baptist della Porta) (1535-1615) Natural Magick , Published in 1558 in Italian and then in 1658 in English. ( In this wildly popular series, now expanded to 20 books, della Porta claims the natural world can be manipulated by the natural philosopher through theoretical and practical experiment. He describes ways of beautifying women, tempering steel, counterfeiting precious stones, identifying natural magnets, and forming new plants and animals.) Natural Magick predates Aleister Crowley’s use of Magick spelled with a K, though he is credited with popularizing this spelling.

[3] Magick is the Science and Art of causing Change to occur in conformity with Will.

In one sense Magick may be defined as the name given to Science by the vulgar.

[4] Mircea Eliade's The Forge and the Crucible (1956) asserts that the ancient art of alchemy begins in the bronze age with the forging of tools, and that western systems of initiation into secret knowledge originate in this era with the metal crafts guilds and secret societies of smithy’s.

[5] Astrology is the mother of Astronomy, and Alchemy is the mother of Chemistry as historians of science like to say, but Alchemy is also different from chemistry in that it postulates that the observer affects what is observed, which is the quantum theory of Schrodingers Cat, and that the observer is transformed in the process.

[6] Definition and Theorems of Magick , Magick in Theory and Practice, Aleister Crowley

[7] The Return of the Repressed The strange case of Masud Khan, Robert S. Boynton, The Boston Review

[8] William Godwin, the Lives of the Necromancers, 1834

[9] Sir Walter Scott, Letters on Demonology and Witchcraft, 1833

[10] “the history of the world is the history of competing secret societies” Mumbo-Jumbo By Ishmael Reed which deals with Hoodoo and the spirit of Jazz Age which 'jez grew' in 1920's America to create a black autonomous culture. A very funny work on conspiracy theories in the vein of Robert Anton Wilson/Bob Shea’s Illuminatus series.

[11] Joseph Dietzgen Internet Archive, also see: Joseph Dietzgen and the History of Marxism

Canada's Billion Dollar Rip Off

Canada's Ruling Class Hides Billions Offshore

File This Under; Capitalism is a Criminal Enterprize

I wrote yesterday about the scandal of Offshore Investments by Canada's ruling class in my Red Between the Lines Blog.

And as I predicted Conservative Fianace Critic Monte Solberg was whining that we need more tax breaks for the rich in order to make sure they don't hide their profits offshore in private bank accounts, as reported in the National Pest. (see below). Gee I wish I could say I was a great prognosticator, by commenting in my blog yesterday, but damnit the Tories and the Canadian Taxpayers (sic) Federation are so damn predictable in their knee jerk reaction. To them the solution to everything is Tax Cuts for the rich and Privatization.

The use of offshore banking by Canada's Millionaires and Billionaires, and lets call a spade a spade it's NOT Canadians investing offshore it's THE RULING CLASS, means you and I pay more taxes even after the government has so generously given the corporate capitalists major tax breaks at home. So Monte and the right wing's solution rings hollow.

And it gets better because many of those involved in this criminal enterprize of hidding profits from an already low tax rate for corporations are; Canadas Banks. These are the folks who already have a reputation for money laundering in their offshore banking operations. See my Skimming Kreme for more on Canadian Banks criminal use of offshore banking.

Even more infuriating is the fact that Canada's banks have defered their taxes, again, paying less taxes than they should. Remember that the next time you pay excessive service charges for using their monopoly Interac machines that charge you $1.75 a pop.

The Ruling Class like the Irving Family in the Maritimes makes no bones that as capitalists they should pay NO TAXES, and the old man of the family set up offshore accounts to make sure they didn't. With their Monopoly in New Brunswick they control the lives of the islanders with an old fashioned robber baron paternalism.

"The Mayor of Saint John is defending the city's decision to give Irving Oil a huge tax break. City council voted Monday to approve a deal that would see Irving pay $500,000 annually in property taxes on land where it will build its liquid natural gas terminal. The deal is good for 25 years. The city could have expected as much as $5 million a year in business taxes on that land.
He told council the deal had to be done by midnight Monday or the plant wouldn't be built. McFarlane says he spoke with Kenneth Irving several times over the last few months. "I asked him very clearly, and looked into his eyes, and said, 'Kenneth, you look into my eyes and tell me, if this does not happen, will this facility not be here?'" says McFarlane. "And he very clearly said, 'Yes, it is true.'" Taxpayers aren't so happy about the decision. It sounds like blackmail, says Saint John resident June Garfield. "Billionaires get all the breaks and the ordinary citizen gets nothing," she said. "I'm sure if Mr. Irving doesn't get his own way, there'll be somebody else will be only too willing to come in and we'd have some competition in New Brunswick."
Mayor defends tax deal with Irving CBC March 16, 2005

Its the logic of Capitalism, the capitalist sees himself as the creator of wealth, and since they create the wealth and give us poor suckers our jobs out of the goodness of their hearts and pocket books we should all be grateful and not tax their profits.

Ah thats the logic of neo-classical liberal economics, that the capitalist produces jobs and wealth. Its the logic of the Canadian Taxpayers Federation which is front for these same capitalists as is the Federal Conservative Party. To bad its a big lie, as I point out in my article; It's the Labour Theory of Value, stupid it is labour that produces this wealth not the Capitalist.

And even our very own Prime Minister Paul Martin, has his shipping company registered offshore. So he obviously agree's with Monte even though he will never admit it publicly. But actions always speak louder than poltical speeches or rhetoric.

Remember Trickle Down Economics, or as I like to call them Tinkle On Economics (the capitalist gets the gravy and we get p***ed on), the theory that the more tax breaks given the more the capitalist will invest. Can't forget it can you, its the usual canard of the right. Well since all these Canadian Corporations got their tax breaks for the past decade what did they do with them? Pocket the profits of course.

As the Globe and Mail reported yesterday:"Canada's performance in corporate research during the late 1990s was weaker than earlier believed, a new report concludes. The report, released yesterday, says the increase in the number of Canadian companies conducting research between 1994 and 2001, a period of strong economic growth, was salvaged only by government incentives. Earlier reports had suggested that Canadian companies had been showing more commitment to research during this period. "Much of the apparent activity was simply companies taking advantage of available government money," the document concludes. "There are very few positive stories in the multitude of data presented in this report." The report, called The Demographics of Industrial Research in Canada 1994-2000, was conducted by consultants The Impact Group and paid for by a consortium of federal and provincial governments.

This theft of surplus value and its investment in private bank accounts of the ruling class had a major impact on Canadian manufacturing over the past decade. Had the money been invested back into the Canadian economy as capital investments; R&D, technology upgrades, etc., we would not be facing the decline in manufacturing and it subsequent lay offs as we are now and the resulting decline in so called productivity that Canada has faced for two years now.

Canada's corporations continue to whine for handouts from the State either as tax breaks or as tax credits and investments. I have written about these corporate welfare hand outs to Bombadier, and other Canadian Corporations including those that are American owned like GM.

This is the capitalist economy in the epoch of State Capitalism. Unlike Stalinism or Keynesian Social Democracy, the epoch of Corporate State Capitalism is one which giveth to the corporations and taketh from the workers. The whole gamut of trade agreements that are identified with globalization WTO, NAFTA, FTA, APEC, etc. etc. are symptoms of this epoch of State Capitalism.

Tax Breaks, Tax Credits, Flat Tax initiatives, direct investment, lax regulations in Securities, failure to regulate offshore banking, failure to apply the Tobin Tax , giving Federal tax relief to billionaires like the Bronfmans, all this corporate welfare is symptomatic of state capitalism. Meanwhile not satisfied with workers producing surplus value and then using our taxes to prop up their companies the corporate capitalists continue to whine they need more or we will lose jobs. Hmmm, we are still losing jobs and they are banking their profits in safe havens offshore.

So if this isn't a criminal attempt to avoid paying taxes explain what investment opportunities exist in Barbados, or Luxemburg, or the British Virgin Islands. None, zip, nada. Capital is not being invested for anything more than making more money, hence more capital,(Marx's formula M-C-M) and the fact these are nice vacation spots to sit back in the sun on the beach with a cooler, well thats just one of the perks of watching your money grow. And how much you wanna bet the ruling class also applies for a tax credit for the offshore investment!

And who does Revenue Canada go after to bust for not paying their taxes? Coke dealers! If you are member of the Bronfman family or other members of the Ruling Class they forgive you your taxes.

It must be nice to be rich. Next time some company is about to lay off its workers because it can't get concessions, or tax breaks lets remember where they have hidden their profits.

OFFSHORE TAX HAVENS MORE POPULAR THAN EVER
Statscan Says The Amount Canadian Firms Socked Away Soared To $88-Billion In 2003

By PAUL WALDIE,
Globe and Mail
Tuesday, March 15, 2005

Canadian companies are stashing more money into offshore tax havens than ever, a study indicates.

Between 1990 and 2003, the amount of money Canadian corporations put into tax havens, mainly in the Caribbean, soared to $88-billion from $11-billion, according to a study by Statistics Canada.

Direct investments in these countries increased 18 per cent annually on average. That compared with an annual increase of 8 per cent for investments in the United States and 14 per cent annually for investments in other countries. Tax haven countries "accounted for more than one-fifth of all Canadian direct investment abroad in 2003, double the proportion 13 years earlier," the study said. It added that of the $88-billion, $53-billion ended up in offshore banks.

The most popular tax havens were Barbados, Ireland, Bermuda, the Cayman Islands and the Bahamas.

"This was the first time that we were measuring direct investment abroad in a subgroup of countries which we refer to as offshore financial centres," said François Lavoie, a balance of payments analyst at Statscan.

"The interesting findings were that the amount is important and increasing. [Offshore financial centres] represent now, in 2003, one-fifth of the direct investment abroad."

Mr. Lavoie said the study did not look at motivations for the investments, but he said tax issues were the most likely reason. "We know that these types of countries are characterized by low or zero taxation and moderate to light financial regulation," he said.

Canadian tax officials have raised concerns about the amount of money headed to tax havens. According to a document prepared in 2001, the Canada Revenue Agency estimated that individual Canadians invested $44.1-billion in tax haven countries. That compared with $4.5-billion in 1988.

The Internet has made it easier for individuals and businesses to set up banks and brokerage accounts in far-flung countries famous for their secrecy, said the document, titled "Tax Havens, An Evolving Taxation Issue."

The paper noted that officials are concerned that the secrecy provisions in many countries make it difficult, if not impossible, to get information from a financial institution and collect taxes owing from Canadians.

A study last year by researchers at the University of Quebec said Canada's major banks have used tax havens to avoid paying $10-billion in taxes since 1991. The study found that the banks had a total of 73 subsidiaries in tax haven countries such as Barbados and Cayman Islands.

For example, according to researchers, Bank of Nova Scotia reduced its tax bill in 2003 by $309-million to $784-million because of a "lower average tax rate applicable to subsidiaries and foreign branches."

The Canadian Bankers Association has challenged the study, saying "the underlying premise is entirely unfounded and misleading." The association added that there is nothing wrong with what the banks are doing.

Francis Wade, who runs Can-Offshore Services, a Belize-based company that specializes in offshore banking, said regulations in many countries have been tightened and he questioned Statscan's figures.

"We read these statistics with a grain of salt," Mr. Wade said. He added that most banks in the Caribbean have less than $20-million in total customer deposits and could not accommodate the sums indicated by the report.

The Statscan study also found that, between 1990 and 2003, foreign direct investment in the United States tripled to $160-billion, but rose much faster in other regions.

The United States accounted for 41 per cent of total foreign investment in 2003, compared with 60 per cent in 1990.

Offshore investment

The largest growth in direct Canadian investment in offshore financial centres has been in Barbados, Ireland, Bermuda, the Cayman Islands and the Bahamas. These five centres are now among the top 11 nations with the most Canadian assets.

$11-BILLION: CANADIAN ASSETS INVESTED IN OFFSHORE FINANCIAL CENTRES IN 1990

18%: ANNUAL RATE OF GROWTH IN CANADIAN DIRECT INVESTMENT OFFSHORE (1990-2003)

41%: U.S. SHARE OF CDN. DIRECT INVESTMENT IN 2003, DOWN FROM 61 in 1990.

$88-BILLION: CANADIAN ASSETS INVESTED IN OFFSHORE FINANCIAL CENTRES IN 2003

8%: ANNUAL RATE OF GROWTH IN CANADIAN DIRECT INVESTMENT IN THE U.S. (1990-2003)

$169-BILLION: AMOUNT OF CDN. DIRECT FOREIGN INVESTMENT IN FINANCIAL SECTOR ASSETS

Direct Canadian investment assets in offshore financial centres in 2003.
$million Rank
Barbados 24,690 3
Ireland 18,226 4
Bermuda 10,845 6
Cayman Islands 10,619 8
Bahamas 8,802 11
Switzerland 4,044 18
Singapore 3,735 19
Hong Kong 2,535 22
Malaysia 716 32
Luxembourg 683 33
British Virgin Is. 307 45
Panama 131 64
Netherlands 107 69
Costa Rica 94 74
Cyprus 92 76

Offshore centres ranked, but where data is confidential under the Statistics Act.

Channel Islands

Belize

Mauritius

Saint Lucia

Antigua/Barbuda

Malta

Aruba

Seychelles

Bahrain

Macau

Source: Statistics Canada

$88B FLEES CANADA:
TAXES BLAMED AS INVESTMENT IN OFFSHORE HAVENS SOARS

Eric Beauchesne; with files from Scott Stinson
CanWest News Service; with files from National Post

March 15, 2005

OTTAWA - Canadian direct investment in tax havens and other offshore financial centres has soared eight-fold since 1990 to $88-billion in 2003, says a report that has renewed calls for lower taxes to spur investment in this country.

The Statistics Canada report, released yesterday, rekindled opposition demands for a crackdown on Canadian firms' use of offshore financial centres to avoid paying taxes in Canada.

"From 1990 to 2003, Canadian enterprises invested substantial and growing amounts in countries known as 'Offshore Financial Centres,' many of them in the Caribbean," StatsCan said. "These centres include countries that are often referred to as 'tax havens,' as well as those which have important financial sectors, such as Switzerland, but also Ireland."

The largest increases went into Barbados, Bermuda, the Cayman Islands, the Bahamas and Ireland, the five countries being among the 11 nations with the most Canadian assets.

John Williamson, federal director of the Canadian Taxpayers Federation, said yesterday the inclusion of Ireland among the top five should send Ottawa a message.

"That is a country that Canada could learn so much from. They pursued a policy of lower taxes to stimulate economic growth and have succeeded to the point that not only is their economy strong, but it is attracting Canadian capital," he said.

Mr. Williamson noted the Caribbean countries have long attracted foreign investment, because banking is a cornerstone of their economies, but Ireland has a goods-and-services economy similar to Canada's. "[Ireland] is the one that jumps out on that list.... There's certainly a lesson for the Canadian government in terms of their tax-and-spend policies."

Conservative finance critic Monte Solberg said Canada should follow Ireland's lead and use low taxes to attract investment.

"That's something we should strive for," Mr. Solberg said.

Jack Mintz, president and chief executive of the C.D. Howe Institute, said the StatsCan study underscores the reality that "we're not as attractive enough as a country for foreign investment, and that's a concern."

Mr. Mintz said it is not suprising Canadian investment in tax havens has jumped in recent years, given that Canada has one of the highest corporate tax rates among industrialized countries.

"We have a significant issue that we have to deal with on the tax side to make Canada more attractive," he said. "We've actually created a policy disadvantage for investment in Canada."

The report also brought charges that Ottawa must follow through on promises to close tax loopholes that allow such high levels of Canadian investment in such countries as Barbados.

Judy Wasylycia-Leis, the NDP finance critic, said the Liberal government "has to start taking seriously its commitment to shut down tax havens, because they result in higher taxes for Canadians."

However, Finance Minister Ralph Goodale recently said that a "consensus among all countries" would be needed to shoot down tax havens.

The International Monetary Fund defines offshore financial centres as jurisdictions that have a large number of foreign-controlled financial institutions where most transactions are initiated abroad; have assets and liabilities that are out of proportion to its economy and low or zero taxation; and have loose financial regulations and banking secrecy.

Francois Lavoie, author of the Statistics Canada study, said it is based on investments reported by firms but added he "cannot comment if these are legitimate investments or not."

They mostly are investments in financial assets but, depending on how the investment is structured, that could include investments in ships or buildings, he said.

Canada Steamship Lines, formerly owned by Prime Minister Paul Martin, who has now transferred ownership to his sons, has registered ships offshore.

An IMF background paper notes that international companies route activities through low- tax offshore OFCs to minimize their total tax bill ... moving onshore profits to low-tax regimes.

More than one-fifth of all Canadian direct investment abroad in 2003, or more than 20 cents of every dollar, went into offshore financial centres, double the proportion 13 years earlier, the report said.

In contrast, the share of direct Canadian investment going to the United States, Canada's main economic partner, shrunk over that time, it said. Direct investment mainly serves to finance the creation of new enterprises or the acquisition of existing ones.
© National Post 2005

It's the Labour Theory of Value, stupid

In Libertarian Dialectics and in other comments I have made on my blogs I have challenged what I call the price, distribution, production economic model of the Austrian School of Economics, Von Mises and Hayek, and their heirs at the Chicago School of Economics, Friedman et al. It is also called neo-classical economics, what could also be called liberal economics.

This is why I refer to the majority of right wing Libertarians, as liberaltarians, those who embrace the supply side economics of these schools. These characters are masques of capitalism as Marx once described their subjective function.

They reject out of hand the Labour Theory of Value, based on a flawed critique of Capital by the Eugen von Böhm-Bawerk, Austrian Minister of Finance, 1889-1904, professor and leader, along with Carl Menger and Friedrich von Weiser, of the Austrian school of economists. Böhm-Bawerk, had a special interest in the theory of capital and interest. Author of several books, including his 1896 work, Karl Marx and the Close of His System, a classic attack on Marxist economics.

The German Marxist economist Rudolf Hilferding, challenged the Austrian school’s dismissal of Capital and of Marx, in his critique of Böhm-Bawerk, In his preface to his critique Hilferding writes:

“The publication of the third volume of Capital has made hardly any impression upon bourgeois economic science. We have seen nothing of the "jubilant hue and cry" anticipated by Sombart. [1] No struggle of intellects has taken place; there was no contest in majorem scientiae gloriam. For in the theoretical field bourgeois economics no longer engages in blithe and joyous fights. As spokesman for the bourgeoisie, it enters the lists only where the bourgeoisie has practical interests to defend. In the economico-political struggles of the day it faithfully reflects the conflict of interests of the dominant cliques, but it shuns the attempt to consider the totality of social relationships, for it rightly feels that any such consideration would be incompatible with its continued existence as bourgeois economics.

The only exception is the psychological school of political economy. The adherents of this school resemble the classical economists and the Marxists in that they endeavor to apprehend economic phenomena from a unitary outlook. Opposing Marxism with a circumscribed theory, their criticism is systematic in character, and their critical attitude is forced upon them because they have started from totally different premises. As early as 1884, in his Capital and Interest, Böhm-Bawerk joined issue with the first volume of Capital, and soon after the publication of the third volume of that work he issued a detailed criticism the substance of which was reproduced in the second edition of his Capital and Interest [German edition 1900]. [2] He believes he has proved the untenability of economic Marxism, and confidently announces that "the beginning of the end of the labor theory of value" has been inaugurated by the publication of the third volume of Capital.”

Hilferding refers to the Austrian School as the ‘psychological” school, which is the correct appellation for the heirs of Böhm-Bawerk; Von Mises, Hayek, Freidman, Rothbard, Rand etc. By merging Randism with Austrian Economics, the Libertarian Right moved beyond Benjamin Tucker, who had accepted the Labour Theory of Value, as had Kropotkin in their Proudhonist fashion. While paying lip service to Tucker as an American Anarchist and father of American Libertarianism, they reject his acceptance of the Labour Theory of Value and instead embrace the anti-Prussian State Socialism straw dog of the Austrian School of Economics.

Ayn Rand’s so called “Objectivism” is NOT, it is subjectivism and her work in philosophy is subjectivist psychology, as Von Mises is in economics. They and their followers embrace the Böhm-Bawerk dismissal of the Labour Theory of Value. As Hilferding says in his chapter on the Austrian Schools Subjectivist Outlook:

“The phenomenon of variations in the price of production has shown us that the phenomena of capitalist society can never be understood if the commodity or capital be considered in isolation. It is the social relationship which these occupy, and changes in that relationship, which control and elucidate the movements of individual capitals, themselves no more than portions of the total social capital. But the representative of the psychological school of political economy fails to see this social nexus, and he therefore necessarily misunderstands a theory which definitely aims at disclosing the social determinism of economic phenomena, a theory whose starting point therefore is society and not the individual. In apprehending and expounding this theory he is ever influenced by his own individualistic mentality, and he thus arrives at contradictions which he ascribes to the theory, while they are in truth ascribable solely to his interpretations of the theory.

This confusion may be traced in all the stages of Böhm-Bawerk's polemic. Even the fundamental concept of the Marxist system, the concept of value-creating labor, is apprehended in a purely subjective manner. To him "labor" is identical with "trouble" or "effort" ["Mühe"].To make this individual feeling of distaste the cause of value naturally leads us to see in value a purely psychological fact, and to deduce the value of commodities from our evaluation of the labor they have cost. As is well known, this is the foundation which Adam Smith adopts for his theory of value, for he is ever inclined to abandon the objective standpoint for a subjective. Smith writes: "Equal quantities of labor must at all times and places be of equal value to the laborer. In his ordinary state of health, strength, and spirits; in the ordinary degree of his skill and dexterity, he must always lay down the same portion of his ease, his liberty, and his happiness." [1] If labor regarded as "trouble" be the basis of our personal estimate of value, then the "value of the labor" is a constituent, or a "determinant" as Böhm-Bawerk puts it, of the value of commodities. But it need not be the only one, for a number of other factors which influence the subjective estimates made by individuals take their places beside labor and have an equal right to be regarded as determinants of value. If, therefore, we identify the value of commodities with the personal estimate of the value of these commodities made by this or that individual, it seems quite arbitrary to select labor as the sole basis for such an estimate.

From the subjectivist standpoint, therefore, the standpoint from which Böhm-Bawerk levels his criticism, the labor theory of value appears untenable from the very outset. And it is because he adopts this standpoint that Böhm-Bawerk is unable to perceive that Marx's concept of labor is totally opposed to his own. Already in A Contribution to the Critique of Political Economy Marx had emphasized his opposition to Adam Smith's subjectivist outlook by writing "[Smith] fails to see the objective equalization of different kinds of labor which the social process forcibly carries out, mistaking it for the subjective equality of the labors of individuals." [2] In truth, Marx is entirely unconcerned with the individual motivation of the estimate of value. In capitalist society it would be absurd to make "trouble" the measure of value, for speaking generally the owners of the products have taken no trouble at all, whereas the trouble has been taken by those who have produced but do not own them. With Marx, in fact, every individual relationship is excluded from the conception of value-creating labor; labor is regarded, not as something which arouses feelings of pleasure or its opposite, but as an objective magnitude, inherent in the commodities, and determined by the degree of development of social productivity. Whereas for Böhm-Bawerk, labor seems merely one of the determinants in personal estimates of value, in Marx's view labor is the basis and connective tissue of human society, and in Marx's view the degree of productivity of labor and the method of organization of labor determine the character of social life. Since labor, viewed in its social function as the total labor of society of which each individual labor forms merely an aliquot part, is made the principle of value, economic phenomena are subordinated to objective laws independent of the individual will and controlled by social relationships. Beneath the husk of economic categories we discover social relationships, relationships of production, wherein commodities play the part of intermediaries, the social relationships being reproduced by these intermediate processes, or undergoing a gradual transformation until they demand a new type of inter-mediation.

Thus the law of value becomes a law of motion for a definite type of social organization based upon the production of commodities, for in the last resort all change in social structure can be referred to changes in the relationships of production, that is to say to changes in the evolution of productive power and in the organization of [productive] labor. We are thereby led, in the most striking contrast to the outlook of the psychological school, to regard political economy as a part of sociology, and sociology itself as a historical science. Böhm-Bawerk has never become aware of this contrast of outlooks. The question whether the "subjectivist method" or the "objectivist method" is the sound method in economics he decides in a controversy with Sombart by saying that each method must supplement the other—whereas in truth we are not concerned at all with two different methods, but with contrasted and mutually exclusive outlooks upon the whole of social life. Thus it happens that Böhm-Bawerk, unfailingly carrying on the controversy from his subjectivist and psychological standpoint, discovers contradictions in the Marxist theory which seem to him to be contradictions solely because of his own subjectivist interpretation of the theory.”

It is this subjectivity, misrepresented as being classical liberal invidualism that underlies the Right Wing Libertarians economic reason de’ etre of reducing capitalism to the economics of prices/distribution/production. It is also their misinterpretation of the market place of capitalism that makes them idealize some sort of laissez-faire utopia without the state. They fail to understand that there is a difference between government and the state.

The state is the judiciary and military power of the old aristocracy adapted by capitalism for its own functioning. Governance, government, is the function of associations of producers and always has been. Even Kropotkin realized this with his analysis of the State, and saw the free association of producers existing in the city state economies independent of any particular feudalist state; in fact it was their crushing that led to the creation of the modern capitalist state. But these associations still governed the market place, by workers control.

“On the other hand the State has also been confused with Government. Since there can be no State without government, it has sometimes been said that what one must aim at is the absence of government and not the abolition of the State. However, it seems to me that State and government are two concepts of a different order. The State idea means something quite different from the idea of government. It not only includes the existence of a power situated above society, but also of a territorial concentration as well as the concentration in the hands of a few of many functions in the life of societies. It implies some new relationships between members of society which did not exist before the formation of the State. A whole mechanism of legislation and of policing has to be developed in order to subject some classes to the domination of others.” The State: Its Historic Role, Peter Kropotkin

Under modern capitalism right wing libertarian “psychological economics” ends up not with a nation of “hewers of wood and drawers of water”, one which produces, but a nation of Fuller brush Salesmen, multilevel marketers and pyramid ponzi schemers. That is the ultimate ideal of supply side economics which sees America evolving into service/distributive based capitalism.

Who is John Galt? Who Cares!

He is not the Scottish author, rather he is a character in the Ayn Rand Novel Atlas Shrugged who declares Rand’s idealist principles of individualism within modern capitalism:
JOHN GALT'S OATH
”The world will change when you are ready to pronounce this oath:
I swear by my life and my love of it that I will never live for the sake of another man,
nor ask another man to live for the sake of mine.”

The Austrian School of ‘psychological’ subjectivist economics, or the ‘what’s in it for me’ school of political economy, deliberately obfusticates the differences between themselves and the Marxist school of political economy, because they have thrown out the Labour Theory of Value, while caring only about the arithmetic of distribution, the supply and demand of the current existing capitalist system. Even in their most radical form of the free marketers or anarcho-capitalists like Bryan Caplan, they still view the world through the eyes of Ayn Rand and her capitalist heroes in Atlas Shrugged and The Fountainhead.

In her work The Fountainhead, which was also made into a movie, her capitalist hero is an architect who builds a monument to himself and escapes society by hiding from it. This is Rand’s individualist politics, the cruel but beautiful isolation of the individual. By embracing capitalisms alienation Rand makes this alienation her banner of individualism. It’s lonely at the top is the sine que non of this ideology.

Toohey's values are totally wrong, from Rand's point of view, but his analysis is almost always correct. "Every loneliness is a pinnacle," he says, like a true Randian individualist [277], and he is one of the few people able to recognize Roark's lonely genius for what it is. Toohey analyzes, in Randian fashion, the indebtedness of the many to the genius of the few, and the inspiration given to the collectivist spirit by the envy that results from that indebtedness [281-82].

The Literary Achievement of The Fountainhead By Stephen Cox

In the end, despite their protests to the contrary, the so called anarcho-capitalists heroes are Enron, WorldCom, and Martha Stewart, while their ideal of themselves is the freebooter pirate like Robert Anton Wilson’s caricature of them; Hagbard Celine in his Illuminatus Trilogy.

In order to avoid seriously confronting their differences with Marxism, Böhm-Bawerk and all his followers since have set up the straw dog of State Socialism, as their definition of Socialism, in particular Bismarck’s Prussian State Socialism which they were familiar with. Even after the successful Bolshevik revolution they still define socialism as any form of state intervention in the economy. In this case they failed to historically understand that Keynesianism was the natural outcome of Fordist capitalisms changing nature once confronted with workers revolution. In their steady state economics of capitalism workers revolution plays no part. They can only define capitalism as a market place separate from the state while capitalism has moved into an epoch of State Capitalism as Marxist Humanist Raya Dunavevskaya describes it.

Overall with few exceptions, such as Murray Rothbard, the Libertarian Right and its Austrian and Randian allies care not one wit for class struggle, since to them it can only lead to state socialism. And here is the rub, to be a radical subjectivist you must understand that the subjects of capitalism are the workers who produce it. As Marx said, both the workers and the capitalists are the subjects and objects of capitalism.

Production does not simply produce man as a commodity, the human commodity, man in the role of commodity; it produces him in keeping with this role as a mentally and physically dehumanized being. — Immorality, deformity, and dulling of the workers and the capitalists. — Its product is the self-conscious and self-acting commodity ... the human commodity.

Karl Marx, Economic and Philosophical Manuscripts of 1844

Capitalism is a system, one that goes beyond its subjects, which is why it must be overcome since the result of its existence is alienation of the subjects who create it through the commodity fetishism it demands of us not as subjects but as ‘consumers’.

The Libertarian Right, the Austrian School and the Randites philosophical economics are restricted to understanding the subject as commodity fetish, they can never go beyond this. In effect their economics and the economics of the commodity fetish is well captured in the phrase; “Those with the most toys wins.”

As I.I. Rubin the Russian Economist writes in his introduction to Essays on Marx's Theory of Value

There is a tight conceptual relationship between Marx's economic theory and his sociological theory, the theory of historical materialism. Years ago Hilferding pointed out that the theory of historical materialism and the labor theory of value have the same starting point, specifically labor as the basic element of human society, an element whose development ultimately determines the entire development of society.[1]

The working activity of people is constantly in a process of change, sometimes faster, sometimes slower, and in different historical periods it has a different character. The process of change and development of the working activity of people involves changes of two types: first, there are changes in means of production and technical methods by which man affects nature, in other words, there are changes in society's productive forces; secondly, corresponding to these changes there are changes in the entire pattern of production relations among people, the participants in the social process of production. Economic formations or types of economy (for example, ancient slave economy, feudal, or capitalist economy) differ according to the character of the production relations among people. Theoretical political economy deals with a definite social-economic formation, specifically with commodity-capitalist economy.

The capitalist economy represents a union of the material-technological process and its social forms, i.e. the totality of production relations among people. The concrete activities of people in the material-technical production process presuppose concrete production relations among them, and vice versa. The ultimate goal of science is to understand the capitalist economy as a whole, as a specific system of productive forces and production relations among people. But to approach this ultimate goal, science must first of all separate, by means of abstraction, two different aspects of the capitalist economy: the technical and the social-economic, the material-technical process of production and its social form, the material productive forces and the social production relations. Each of these two aspects of the economic process is the subject of a separate science. The science of social engineering-still in embryonic state-must make the subject of its analysis the productive forces of society as they interact with the production relations. On the other hand, theoretical political economy deals with production relations specific to the capitalist economy as they interact with the productive forces of society. Each of these two sciences, dealing only with one aspect of the whole process of production, presupposes the presence of the other aspect of the production process in the form of an assumption which underlies its research. In other words, even though political economy deals with production relations, it always presupposes their unbreakable connection with the material-technical process of production, and in its research assumes a concrete stage and process of change of the material-productive forces.

Marx's theory of historical materialism and his economic theory revolve around one and the same basic problem: the relationship between productive forces and production relations. The subject of both sciences is the same: the changes of production relations which depend on the development of productive forces. The adjustment of production relations to changes of productive forces-a process which takes the form of increasing contradictions between the production relations and the productive forces, and the form of social cataclysms caused by these contradictions-is the basic theme of the theory of historical materialism.[2] By applying this general methodological approach to commodity-capitalist society we obtain Marx's economic theory. This theory analyzes the production relations of capitalist society, the process of their change as caused by changes of productive forces, and the growth of contradictions which are generally expressed in crises.

Political economy does not analyze the material-technical aspect of the capitalist process of production, but its social form, i.e., the totality of production relations which make up the "economic structure" of capitalism. Production technology (or productive forces) is included in the field of research of Marx's economic theory only as an assumption, as a starting point, which is taken into consideration only in so far as it is indispensable for the explanation of the genuine subject of our analysis, namely production relations. Marx's consistently applied distinction between the material-technical process of production and its social forms puts in our hands the key for understanding his economic system. This distinction at the same time defines the method of political economy as a social and historical science. In the variegated and diversified chaos of economic life which represents a combination of social relations and technical methods, this distinction also directs our attention precisely to those social relations among people in the process of production, to those production relations, for which the production technology serves as an assumption or basis. Political economy is not a science of the relations of things to things, as was thought by vulgar economists, nor of the relations of people to things, as was asserted by the theory of marginal utility, but of the relations of people to people in the process of production.

Political economy, which deals with the production 'relations among people in the commodity-capitalist society, presupposes a concrete social form of economy, a concrete economic formation of society. We cannot correctly understand a single statement in Marx's Capital if we overlook the fact that we are dealing with events which take place in a particular society. "In the study of economic categories, as in the case of every historical and social science, it must be borne in mind that as in reality so in our mind the subject, in this case modern bourgeois society, is given and that the categories are therefore but forms of expression, manifestations of existence, and frequently but one-sided aspects of this subject, this definite society." ". . .In the employment of the theoretical method [of Political Economy], the subject, society, must constantly be kept in mind as the premise from which we start." [3] Starting from a concrete sociological assumption, namely from the concrete social structure of an economy, Political Economy must first of all give us the characteristics of this social form of economy and the production relations which are specific to it. Marx gives us these general characteristics in his "theory of commodity fetishism," which could more accurately be called a general theory of production relations of the commodity capitalist economy.

Between these two Libertarianisms, there can never be a rapprochement, as those on the right reject the Labour Theory of Value and those of us on the Left (including some mutualists and some free-marketeers) accept the Labour Theory of Value.

Compared to the Labour Theory of Value, all other economics are simply the arithmetic of the market and the calculations of supply and demand distribution of currently existing capitalism. They offer no historical understanding of how we got here or where we are going, they only offer us the steady state of capitalism as it is, as it was, as it ever will be.

This is the contradiction of the free trade argument, since no trade in goods is truly free, each nation of producers restricts access to trade in its own capitalist interests, but in a world of commodity producers (off shore overseas, out of sight out of mind) and a world of commodity consumers (North Americans) then Free Trade is the right wing liberaltarian ideal. With that in mind all we can look forward to sweat shops in space ala Outland, with the lone sheriff being the Randian hero, if John Galt liberaltarians get their way.

The real Libertarian calls for smashing capitalism and its State. For ending the market domination of society and for the free association of producers.

Deconstructing Hayek

I came across this article on the web by Sean Johnson Andrews critical of the Regulation School of Economics that also handily dismisses the Austrian School of Economics so favored by Neo-Conservatives and Right Wing Libertarians.

[Author’s aside: I found it while researching material for Libertarian Anti-Imperialism, ah the joys of research based writing, it takes you off in all directions at once. And serendipitous synergies occur as happened in this case.[1] ]

Andrews study is about cultural production under capitalism, especially media concentration, and the whole article is an excellent read as are his other writings ( I have included a link to his article on blog freedom as a comment to my Blog Freedom or Cyberwar). He asks if bourgeois political economy which wants be taken seriously as a science but what kind of science and what kind of economics? He does an excellent job challenging the neo-classical school of the economics including its most radical wing the Austrian School of Economics from a libertarian dialectical position.

I have excerpted some of his critique from this long article, the whole of which is well worth the read. I have excerpted a small section of his very long article dealing with neo-classical economics of the Austrian and Chicago Schools of Economics as well as the new Regulation School of Economics.

Excerpts From: A Conversation among Bourdieu, Regulationist Economics and Cultural Studies and the way they can help objectify this and other conjunctures

The Science of Culture and the Culture of Science:

From Culture and Political Economy (Spring 2003)

Sean Johnson Andrews

Sean Johnson Andrews Blog on Media

Where, if anywhere, ideology leaves off and science begins has been the Sphinx’s Riddle of much of modern sociological thought and the ruthless weapon of its enemies. Clifford Geertz, The Interpretation of Cultures, 1973

At the present time, scientific effort mirrors an economy filled with contradictions. The economy is in large measure dominated by monopolies, and yet on the world scale it is disorganized and chaotic, richer than ever yet unable to eliminate human wretchedness. Science, too, shows a double contradiction. Max Horkheimer, “Notes on Science and the Crisis,” c.1930

The] neoclassical consensus succeeded in replacing the labor theory of value with one grounded in subjective utility and placed the ideas of ‘marginal product’ and ‘final demand’ at the center while elbowing into the wings the concepts of total demand. With these new ideas [. . .] the economy came to be thought of less in terms of material production and reproduction and more as a logic of human action. (79)

To make matters worse, this is the model of economics that is most strongly believed as rational and verifiable by a great many capitalist subjects.

The same social alchemy is true of economic capital and, like the capital in the scientific field, capital in the economic or symbolic field, legitimated by a hierarchy of producers, is more than just a mode of exchange: it is also a mode of domination.

Regulationist economics is concerned with “the study of the transformation of social relations as it creates new forms that are organized into structures and themselves reproduce a determinant structure, the mode of production”(16). This characterization of the economy seems similar to the Polanyian idea of embeddedness, which he describe in detail in The Great Transformation. In short, embeddedness is a way of giving primacy to one social formation over another. Polanyi insists that before the development of modern market capitalism in the 19th century, “the human economy was always embedded in society”(xxiii) and, more importantly,

The idea of a [disembedded] self-adjusting market implied a stark utopia. Such an institution could not exist for any time without annihilating the human and natural substance of society; it would have physically destroyed man and transformed his surroundings into a wilderness. Inevitably, society took measures to protect itself, but whatever measures it took impaired the self-regulation of the market, disorganized industrial life, and thus endangered society in yet another way. (3-4)

This is understanding of the relations between the economy, society and the state is, indeed, similar to the Regulationist view, but they tend to posit the agency with the market instead of with society. The concept of a Regime of Accumulation, central to the school, is not concerned with the effect of capitalism on society per se, but rather on the way that society can be best transformed to accommodate capitalism. It could be said that, in relation to Polanyi, they recognize that there are times when the relation between the two is unique. The concepts of a the predominantly extensive and intensive regimes of accumulation indicate this understanding. The former is the regime of accumulation which Polanyi might call “disembedded;” it is “that in which relative surplus value is obtained by transforming the organization of labor; the traditional way of life may persist or be destroyed, but it is not radically recomposed by the logic of utilitarian funcitonalism”(Aglietta, 71). This is the type of accumulation regime, according to Aglietta, which existed in late nineteenth-century America.

The crisis of worldwide depression and the rise of fascism that ensued when this accumulation regime could no longer continue is what Polanyi has witnessed when he says, in 1944, “nineteenth-century civilization has collapsed.” But whereas Polanyi thinks this is primarily the social result of an economic phenomenon, Aglietta describes it as a social phenomenon with economic consequences: “The Great Depression [. . .] was a major crisis of accumulation because the transformation of the labor process itself set up obstacles to valorization. What was at stake in the crisis was the transformation of the conditions of existence on the working class”(95).

What this understanding of capitalism points to is the “progressive, historical role of capitalism”(Lenin, 47) which Aglietta describes as only being fully possible in an intensive regime of accumulation, or some other “set of mechanisms for social mediation that guide the accumulation of capital in the direction of social progress”(Aglietta, 412). The description of he gives of this concept is important because it points to the place where Bourdieu’s understanding of habitus becomes relevant to the Regulationist description of capitalism:

The predominantly intensive regime of accumulation creates a new mode of life for the wage-earning class by establishing a logic that operates on the totality of time and space occupied or traversed by its individuals in daily life. A social consumption norm is formed, which no longer depends in any way on communal life [. . . .] This norm is stratified according to principles that closely correspond to the stratification of social groups within the wage-earning class. The intensive regime of accumulation accomplishes an integration of the two departments of production that makes possible a far more regular pace of accumulation and a far more rapid increase in the rate of surplus value.(71)

Packed into this quote are several ideas that become more fully articulated concepts in the hands of later Regulationist theorists. So, the “mode of life” which Aglietta mentions above, becomes a mode of regulation and the “logic that operates on the totality of time and space” is similar to Alain Lipietz’s description of a schema of reproduction (32-33).

Aglietta describes the major problem of capitalism in terms that are similar to Althusser and the conception of “capital” as quite similar to eponymous idea in Bourdieu: “we conceive of capital not as an eminent entity but as the development of the wage relation. Every major crisis of accumulation is a crisis of the present conditions of reproduction of this relation”(Aglietta, 169). The idea of a “schema reproduction” is something which is meant to stem this crisis in the production relation or the “reproduction of the material conditions of production”(Althusser, Lenin, 127). The schema of reproduction accounts for the relationship of labor, the relationship between departments of production, and the patterns of distribution and consumption which all together form “the skeleton of a regime of accumulation or a mathematical diagram of its social coherence”(Lipietz, 32). This system of relations is not necessarily planned or settled upon before it is implemented, it is just the schema that was “found” to work. And the schema works in so far as there is a “mode of regulation” that is appropriate: “If any schema is to be realized and to reproduce itself for any length of time, there must be institutional forms, procedures and habits which either coerce or persuade private agents to conform to its schemas”(33). Thus the “mode of regulation” is almost identical to the habitus.

In relation to Bourdieu’s capital, which again, Aglietta describes as a development of the relation, capitalism can be conceived in terms of a certain formalization of an economic field. However, there is a highly stratified relation between the people able to accumulate capital and the people who only serve as, what could be called, relational support, for their accumulation. Workers, whose laboring capacity may reward them with symbolic capital within the field of economic relations, are not typically able to accumulate enough of the economic capital (which their work valorizes) to change their position in the field. Thus there has to be a strong relation of domination within the field which encourages a disposition for the worker to continue to play this relational support role when it is clearly more in the interest of the capitalist for him to do so.

For unlike other, more settled sciences, economics has had a difficult history in convincing other practitioners from other sciences that it has the same sort of quantitative verifiability of mathematics or physics. Its status as a social science makes its seem less authoritative among other scientists. On the other hand, its status as a social science having to do with the basic relations of humankind gives its authoritative practitioners a great deal of symbolic capital, even as many of them attempt to disconnect their theories from the messy assemblages of power and production that they are supposed to describe. Friedrich Hayek, whose most famous book Road to Serfdom, was published the same year as Polanyi’s The Great Transformation, went to far as to suggest that the term “society” should be stricken from “our poisoned language” (Hayek, 112-115), making a point of not using the term to describe “our extended moral order” lest he be branded a socialist.

This dimension of the authoritative position of economics is evident enough in common parlance. Nevertheless, an example of an attempt to move outside of the scientific field to accumulate symbolic capital is visible on George Mason University’s home page in iterations such as “Welcome Nobel Laureate Vernon Smith.” As Yves Gringas points out in a short article about the “Nobel prize by association,” she traces a particularly clear case of “social alchemy:” “this so-called ‘Nobel prize’ is an extraordinary case study in the successful transformation of economic capital into symbolic capital, a transformation which greatly inflates the symbolic power of the discipline of Economics in the public mind.”

In 1968, the Bank of Sweden, interested in conferring a greater legitimacy on the discipline of economics, decided to offer a prize to the most innovative and important thinkers in the field and to dedicate it to Alfred Nobel, which was strange since he wasn’t an economist. However, the organizers in charge of the creation of the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel “ had its their own reasons for choosing Nobel. As Gringas tells it:

First, despite the skepticism of some scientists towards the ‘scientificity’ of economics, the Bank managed to convince the Royal Swedish Academy of Sciences and the Nobel Foundation to administer their prize. Secondly, identical procedures for the selection and nomination of the prize were chosen to those of the real Nobel prizes. Of course, the prize money would come from the Bank of Sweden, not the Nobel Foundation, but all the rest would be done exactly as if it was in fact a Nobel prize, up to and including the ceremony of 10 December.

Furthermore, since the full name of the prize is too onerous for people (especially journalists) to say, it became common parlance to call the prize “The Nobel Prize in Economics.” This work of social alchemy meant to solve the problem of the “primitive accumulation of symbolic capital”(Gringas) regarding this prize and its related field.

Of course not everyone has been happy about this. In 1974, when Gunnar Myrdel shared the prize with Hayek in 1974, he reserved his speech to advocate for the abolition of the prize. If Hayek was supposed to be the best an brightest in the field, then he wanted nothing to do with it. Nevertheless, the prize continues, despite the abyssal divide between what are arguably, ideological points of difference within the field itself. Which brings us back to the early 1970s and the intervention which Michel Aglietta was, arguably, attempting to make.

Fordism –or as the theoretical component was better known, Keynesianism—was obviously in crisis since both of the “cyclical” tendencies—stagnation and inflation—were happening at once; Althusser and others on the “New Left” were inspired both by world events and the appearance of any sort of crisis tendency in the capitalist system; and, perhaps more importantly, Hayek had just won the “Nobel prize in Economics” and Milton Friedman and the Chicago school were hard at work turning Pinochet’s Chile into a neo-liberal paradise. Finally, on a monetary level, abandoning the gold standard and replacing it with the “black gold” standard of recycled petrodollars was developing an extension of the financial markets and giving unprecedented control of world capital over to a “stratified oligopoly” of private banks. It was an important moment for economic science because, again, “history has infinitely more imagination than we do.” It was a moment when the flaws of the dominant economic model—and the theories that were supposed to explain it—were showing through. It was a good time to revert to a subversion strategy and, as a graduate student, Aglietta was in the sort of position Bourdieu recommends to make the heretical invention. But instead of saying anything too revolutionary, what he actually did was to begin by make an originally strong set of economic concepts into a set of symbolically legitimate equations: he rewrote the basic arguments of Capital, starting with one that Adam Smith himself would find it hard to contest.

As was said before, by Caporaso and Levine, the labor theory of value, a foundational concept in Marx’s Capital, had been disproven. Caporaso and Levine themselves, in their textbook which purports to explain economic theories, are unable to explain LTV without providing a neo-classical excuse for it. In the section supposedly devoted to the theories of Adam Smith, Ricardo, etc., they do not describe labor theory of value in any detail, but instead revert to the statement, “the theory runs into a number of analytical difficulties, which convinced modern economists working in the classical tradition to build a materialist basis for exchange by employing a distinct starting point also present in the classical theories: price of production”(47). They then go on to explain the changes to they make to equations of inputs and outputs (10t iron + 250 bu wheat + 100 hr labor…): “when labor enters as an input, it is really so much wheat, which went to produce the labor, and enters as an input through its product, the laboring capacity of the worker”(50).

Leaving aside the problems of all the naked, sickly, wheat-fed laborers sleeping on the factory floors and the ethical implications of this revolutionary new crop of wheat that evidently plows, plants, grows and harvests, mills and bakes itself, what is important is that Caporaso and Levine, while trying to present an overall balanced look at political economy, are unable to even consider the possibility that the Labor Theory of Value has any theoretical validity. Instead, it makes much more sense to think of things in terms of some monetary equivalent, the amount of which, in one way or another, “indicates the utility that the seeker recognizes in the materiality of the object sold or on offer” (Nadel, 29).

In other words, even though there have been many theorists in the tradition of Regulationist Political Economy, the dominant groups in the field of economics—especially anyone outside of France—namely the proponents of the neo-classical general equilibrium model taught in every ECON 101 classroom, did not want to acknowledge the possibility of an alternative model for the Labor Theory of Value, even to refute it: to do so would also be to consecrate it and admit that there was a legitimate challenge to the powerful agents and apparatuses, the Departments of Economic theory, all of which have a vested interest in keeping the current model functioning. Not only in terms of the field, which is largely based on these assumptions, but also of the market dominated society in which it operates and for which it provides a placating explanation. As Aglietta says, “If this theory has exercised such a dictatorship over economic thought, it is because it supplies a reassuring vision of society and a justification for the profession of economist”(10).

This, of course, brings us full circle to the central dialectical problem of the need for a simultaneous understanding of the culture of science and a science of culture. The former is something which Cultural Studies has done vigorously but not rigorously. The basic assumption was that one could simply understand scientific or even merely disciplinary claims as ideological cultural productions.

The project of cultural studies is an important one and the cultural significance of economic science is one of the most important ideological investigations we could undertake. There was a time when this type of discussion being engaged. Despite what Murdock and Golding have to say about the problem of “examining the economic base,” Stuart Hall, Raymond Williams and others began to present a system of concepts which attempted to illuminate the dynamic nature and role of culture—starting primarily in its very material nature. As Williams says in Marxism and Literature:

The insertion of economic determinations into cultural studies is of course the special contribution of Marxism, and there are times when its simple insertion is an evident advance. But in the end it can never be a simple insertion, since what is required, beyond the limiting formulas, is restoration of the whole social material process, and specifically of cultural production as social and material.(138)

Williams goes on to begin the project he continues in The Sociology of Culture in which the most basic task “is analysis of the interrelationships within this complex unity: a task distinct from reduced sociology of institutions, formations, and communication relationships and yet, as a sociology, radically distinct also from the analysis of isolated forms”(139). This loose set of concepts—as well as the many others he presents to describe cultural (as normally in the creative and/or artistic sense)—is developed with an eye to make the realm of cultural production describable so that the investigator could then position that process within the production relations.

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[Author’s aside. This is why I currently run four blogs and over the past decade have had multiple web pages. This log is for longer features, which is supplemented by my site at modblog for news over views of the current crisis state of capitalism and the resistance of capitalisms subjects. It is why my bloglines site has numerous news, activist and alternative news/blogs linked up to supplement my writings, to give an alternative to what is called consensus reality or the ruling ideas or the ruling class. To give readers more research links. And I can blow off some steam at that blog with my Devils Dictionary Redux.

And I have added a new blog this week; Heresiology-for the little heretic in each of us. This is for my other interests in cultural studies, the occult, esoterica, science, crypto science, and all aspects of popular culture, as the saying goes; all the news that doesn’t fit in these other blogs.]