Vi kumt di kats ibern vaser? [How does a cat cross over the water?] — Old Yiddish saying

The First Question: What’s the Matter with Massachusetts or [your jurisdiction here]?

In 2014, the Boston Globe asked: “If Massachusetts were a country, how rich would it be?” The answer: “[It] would rank among the richest nations on the planet . . . behind [only] Norway, Qatar, and Switzerland.”

For the past eight years, I must have retailed this snippet of information from the Globe to over a thousand elected officials, legislative staffers, and political activists. My point was to stress that, despite decades of handwringing about budgets, deficits, and deteriorating public services, our state has had the resources to do almost anything its people wanted. The obstacle? The increasing concentration of those resources in the hands of the wealthiest individuals and institutions.

At the outset of that period, my little narrative found immediate resonance due to the near-universal awareness of the concept of “the one percent and the ninety-nine percent.” The centrality of that problem had been elevated, from the street protests of Occupy to the pages of the New York Times and the halls of academe, by the Great Recession of 2009. For decades after the Second World War, the left had been trying to question the image of the U.S. as a triumphal land of the middle class, the final apotheosis of the Democratic Revolution, even the “end of history”. Suddenly, in the new century, audiences from union halls to community meetings were eager to answer the question, “Who are the One Percent and the 99%?” and demanding that something be done.

The slogan carried us in Massachusetts to a $15-an-hour minimum wage, a universal paid family and medical leave program, and a higher income tax on millionaires. However, sometime after the advent of Donald Trump the left abandoned this slogan, concentrating instead on problems and solutions that are thought to be more pressing or at least more amenable to change. Two relevant examples of this are the calls to reduce the racial wealth gap, and increase the use of “renewable” energy. These are righteous causes and proposals, to be sure, yet the way they are framed is intra-systemic and thus avoids confronting the structural significance of our current crises. Simply put, reducing the wealth gap between different sectors of the 99% or converting some new energy expansion to renewables leaves undiminished the increasing overall wealth gap or the spiraling demand for energy use.

This dramatic refocusing of attention away from “We are the 99%” has been a tremendous conceptual setback, and one that occurred in an extremely short timeframe. Let’s return to where I started, to our mythical nation of Massachusetts, which is a useful, if especially stark, stand-in for the U.S., for the “developed” nations, even for the world. By national or world standards, Massachusetts has the material wealth to easily risk the changes that would reverse excessive inequality, stabilize, even restore, a decaying eco-system, and offer remunerative and rewarding work to all. Instead, even after passing a “millionaire’s tax” this year, we still have a somewhat regressive tax system; that is, one that, instead of containing, never mind correcting, inequality, actually makes it a bit worse each year. Wage floors have nearly doubled yet are woefully behind skyrocketing rents. And despite some ambitious goals for the reduction of carbon emissions, use of electricity in our state is expected to double by 2030. The good news is “we can do this thing”; the bad news is we think we can’t . . . or we won’t.

And what goes for Massachusetts and the U.S. goes for the world when our point of view for comparison is not geographies but historical time. Worldwide levels of material wealth are far beyond the dreams of our grandparents yet we persist in seeing our economic situation as one of scarcity and imminent collapse.

The Second Question: Who Are the One Percent?

In his 1789 pamphlet, the Abbe Sieyes declared: “What is the Third Estate? ALL!”

Three recent thinkers – Moishe Postone, Thomas Piketty, and David Schweickart – have contributed to rethinking the role of class in the critique of capital in ways that reconnect to that Age of the Democratic Revolution and arguably to Karl Marx’s most trenchant insights.

Postone, in particular, emphasizes Marx’s growing skepticism about his contemporary working class as either the primary source of wealth or the central protagonist of social transformation. For him, Marx sees technology and time as forces in production that, already in 1858, had reduced the worker to a cog in the machine. Likewise, in the Grundrisse, Marx saw the “social individual,” any member of the Third Estate who kicks against the traces of social domination (feudal or capitalist), as an active participant in the collective work of emancipation – much as the peasant jacqueries along the Oise, sub-proletarian women storming the Bastille, Black slaves in revolt on St. Domingue, and even renegade One-Percenters (like the Marquis de Lafayette) were for the Revolution of 1789.

Postone thereby exposes a fallacy in the labor movements who supposedly followed Marx’s teachings, or at least shared his hostility to exploitation, when they displaced the emancipation of all by the even temporary elevation of the proletariat. Postone sees this tendency as historically necessary, or at a minimum unavoidable, but it creates two equally pernicious illusions: first, that all other social forces (the peasantry, the middle classes) are potential antagonists, and hence suspect as allies; and second, that the working class itself is free of the same conservative tendencies as small landowners, artisans, or shopkeepers. After all, most of collective bargaining is a petty-bourgeois type of negotiation, well-grounded in guild traditions and classical economic practice.

These insights emerge from Postone’s emphasis on Marx critiquing, not accepting, the labor theory of value he inherited from his predecessors Adam Smith and David Ricardo. Rather than being the humanist basis of the economy as it was to the thinkers of the Enlightenment, Marx sees the capitalist process of value production as increasingly de-humanizing as it replaces the worker with automation in an endless pursuit of growth and profit. Historically, the wealth of nations is less and less the work of individuals’ labor, and more and more the output of a technology, which, even if privately owned, is really the inherited estate of all humanity.

Thus, through a reading of Marx’s critique of political economy that emphasizes the broad human stake in the ownership of wealth and a universal demand for emancipation from dehumanized labor processes, Postone broadens the protagonist of social justice back out to the full Third Estate, the Abbe Sieyes’ “All!” Meanwhile, Postone eschews to even give human form to the foil of the working class, the capitalist, because for him, that foil is Capital itself, the process that serves to augment investment. This indeterminate sense of the capital investor allows Postone to explain the continuity between market capitalism, monopoly capitalism, and state capitalism (even the Russian Communist system), because the investor, whether individual, institution or state, is of secondary importance to the process of Capital which they must serve in order to advance. Thus, humanity does not need to be emancipated from a “who” (the boss, the corporation, Wall Street, or the Party), but from imprisonment on a temporal treadmill of production for endless growth.

While such breadth of vision is theoretically justified, the world has in the main returned to a more traditional, that is, property-based, capitalist economic model of accumulation, even in nominally “communist” China. So let us turn to Piketty and Schweickart for more pointed observations about the identity and power of the One Percent.

In After Capitalism, David Schweickart sets out to define what exactly makes an economy capitalist. His deceptively simple answer is the investor. Capitalism is the investors’ casino, primarily mediated through the stock market, and one that differs notably from all other casinos because it is a positive-sum game; here the players (the investors), not the house (society?), usually win, while those without the adequate capital to play this game, the 99%, can risk their small stakes in casinos or lotteries where the house usually wins. This distinction is crucial to Schweickart, because just as Postone critiques the inheritors of Marx for broadening the significance of the working class beyond its actual role, Schweickart criticizes them for broadening the capitalist class too loosely. Entrepreneurs and managers end up, because they are so much more visible, standing in for the investor when one invokes “the capitalist.” Schweickart takes pains to distinguish the investor, the “capitalist,” from these more active protagonists in the production process, circumscribing capitalism to a system that produces for the gain of the investor alone (of course, there are entrepreneurs and managers who are investors – “venture capitalists” and CEOs with massive stock options – but that’s because those who can are quick to join the real, that is, the positive-sum game). All economies need managers, and, in Schweickart’s conception of a successor system based on democratic market socialism, entrepreneurs will also remain necessary. But capitalism exists solely to augment returns for the investor, whose position appears more and more parasitical despite its essential role in economic production.

Schweickart’s review of the dramatis personae reveals the persistence of the aristocratic principle supposedly overthrown by the Democratic (or “bourgeois”) Revolution. Just as the Third Estate, whether merchants, artisans or peasants, existed to serve a One Percent of hereditary nobles, our 99% of entrepreneurs, managers, professionals and workers are increasingly serving a One Percent of hereditary investors. The tableau is sobering, yet simple to grasp.

At the beginning of his two-volume historical analysis of Capital, Piketty also puts the investor in the central position. Piketty’s “Fundamental Force of Divergence” – that Rate of Return must be greater than Growth (which he tersely represents as R>G) – defines historical capitalism as an investor-driven mechanism perpetually increasing inequality. He then charts the rise and fall (and recent rise again) of the concentrated power and wealth of this small elite of rentiers in comparison with that of the 99%, and even governments and national GDPs. He also reveals a continuity between the aristocratic oligarchies of pre-modern society and the investor overlords of the Belle Epoque and the 21st Century. Only in the mid- 20th Century does he see a noteworthy deviation from the pattern. “During the decades that followed World War II, inherited wealth lost much of its importance, and for the first time in history, perhaps, work and study became the surest routes to the top.” For all prior human civilization – and increasingly again – what overwhelmingly determined success was the family into which you were born or married.

This emphasis on the investor class as the capitalist class needs a cautionary word. From latter-day Tsarism to most brands of fascism and ultra-nationalism, an alternative critique of capitalism has been used to upstage the appeal of the social democratic trend of history. This “theory” sees capitalism as the scene of a moral struggle between an honest, productive industrialism, on the one hand, and a corrupting conspiracy of speculators, stock-jobbers, and bankers, who produce nothing, yet try to monopolize the fruits of others’ entrepreneurship and labor. These supposed parasites are identified with various modern elites, but they are characterized first and foremost as the Jews. This conspiracy narrative can be thus likened to a sort of “theoretical anti-Semitism” – “theoretical” because it purports to explain economic reality.

Too often, the left inadvertently drifts toward the siren song of this “theory,” purged of overt anti-Semitism to be sure, in which “value producing” (usually understood as manufacturing) capital is being displaced and debased by “financialization” – hedge funds, derivatives, mergers and buyouts – that seek to profit without creating anything of use or even using any human labor. From this left perspective, as in the conspiracies of the far right, the problem to be remedied is not so much capitalism, but the corruption of capitalism. To avoid drifting toward this Manichean view of Capital that could come from too moralistic a view of investors as parasites, it is crucial to emphasize two points that indicate the structural nature of the investor. First, the breadth of forms the “investor of capital” itself can take – stretching back to feudal lords or Hanseatic mercantilists or ahead to consortiums, trusts and even national states – so long as the pursuit of R>G remains paramount. The second point, and the more important one, is the intense and ongoing commitment of the capital investor since 1789 to technologically dynamic production as the motor of the modern regime of R>G.

The Third Question: Who Is Served by Technology?

In 1858, Marx noted that: “The worker . . . is no longer the principal agent of the production process: he exists alongside it.  In this transformation, what appears as the mainstay of production and wealth is neither the immediate labor performed by the worker, nor the time that he works – but the appropriation by man of his own general productive force, his understanding of nature and the mastery of it.”

Marx’s contribution to the understanding of Capital was not the labor theory of value. Rather it was his critique of a labor theory of value that served Smith and Ricardo as both explanation and ideology. From Marx’s point of view, their theory was neither bourgeois nor socialist, but utopian. They saw the overthrow of the One Percent of the Ancien Regime, the aristocracy, by the “producers” – the Third Estate, including workers, entrepreneurs, and investor-capitalists – as launching the liberated pursuit of the Wealth of Nations. So far, Marx would agree, but he saw utopianism in their naïve faith in the “free agency” of workers, entrepreneurs and investors, and a related lack of awareness of the social interconnectedness of the industrial process.

In pre-modern times, Piketty’s “fundamental force of divergence,” R>G, was maintained by divine right of sword and cross, which in practice meant laying on the knout, a poor instrument for growth. Thus, growth was almost flat over the longue durée of the ancien regime. With the Age of Revolution, the system of production itself would reward those capital investors who underwrote methods – mainly automation – that reduced the socially necessary labor time it took to manufacture a given commodity. The new economic regime was technological dynamism.

Moishe Postone has done a masterful job honing our understanding of the insights Marx reached in the Grundrisse and Capital, namely how the role of technology in capitalism supersedes the labor theory of value of his “classical” predecessors. Smith and Ricardo were codifying a pre-modern role of labor in the creation of wealth just when it was being decisively displaced by technology. In “free” capitalism, the investor no longer received the surplus production of labor by divine right but must out-compete all potential investors by out-producing them.

The main contribution of Marx’s critique to the labor theory of value is his relentless focus on socially necessary labor time by which enhanced productivity within a window of measurable time provides the relative advantage that “earns” the surplus for the investor. The consequences of this shift to technological dynamism as the central engine of production are immense. On the one hand, there is an unprecedented growth of “the wealth of nations.” On the other, production is more and more a social “machine” structured by time and technology, bowing worker and investor alike to its discipline and rules.

For Marx, this social machine drives unprecedented levels of growth and progress, but it also contains the seeds of its own undoing. The more technology replaces human labor at the center of value and wealth creation, the harder it will become to additionally reduce socially necessary labor time. And the closer production comes to being fully automated, producing at a more and more uniform rate using technology that has been socially and historically created, raises the question of how a higher rate of return to a tiny group of private investors can continue to be justified.

Despite Marx’s compelling predictions regarding the limits of technologization of production for the survival of capitalism, three factors have greatly extended both the profit and legitimacy of the One Percent:

  • FIRST, the growth of monopoly in the capitalism of the late 19th and early 20th centuries revived, in a new form, the pre-modern control of surpluses via power rather than competition.
  • SECOND, the use of financialization to make profit on the movement of money rather than the production of commodities itself. This, too, revives, albeit in a very new form, the pre-modern mercantilist movement of commodities over space and time in order to “buy cheap, sell dear”.
  • THIRD, the unforeseen resilience of the process of technological dynamism itself, its continuing enhancement of productivity in real terms – that is, by the reduction of socially necessary labor time to produce commodities – up to the present day, mainly through the creation of new high-tech commodities like the automobile and the personal computer.

That final factor, the resilience of technological dynamism, has been crucial to the continued legitimacy of the privileged position of the investor class even as scarcity receded and ever larger blocs of society (through trade unionism and the welfare state) won a greater share of the overall prosperity. This extended vitality of technological dynamism legitimated the persistence of the One Percent into the post-WWII boom. A telling example is Sweden, where far-reaching social democratic reforms eliminated health disparities between the wealthiest children and the poorest while leaving the control of the economic heights in the hands of a seemingly tamed One Percent. Things started breaking down in the late 1970s, however, as high growth, which could lift both the private yachtsman’s Rate of Return and all other boats, flattened out. As a result, peaceful coexistence across the industrialized world began to unravel – even in Sweden. The information industry would give a new lease on life to technological dynamism, but with little commitment to shared prosperity.

Nevertheless, the vast technologization of economic production of the last two to three centuries has created a unique potential for solidarity and cooperation. First, and obviously, the achievement of the “wealth of nations” has created an abundance of material wealth overall. But of even greater significance, as Postone notes, “production . . . becomes ever more an objectification of the accumulated collective knowledge of the species, of humanity.” The shared patrimony of science and technology gradually displaces investor ownership as the source of our wealth, a de facto socialization of the economic process that only awaits its conscious codification in a new social contract. Meanwhile, as private investors continue to push automation beyond any imaginable limits (the New York Times recently reported on a Tesla factory that needed no workers at all), the “job creators” are revealed as the job destroyers.

Back in the 1950s already, the legendary Walter Reuther, “commander of the large battalions in American labor,” was given a tour of the latest automated Ford engine plant by its managers.  There, the most sophisticated machines of the day dominated the manufacturing process, guided by only a few workers.  “What do you think?” a manager wryly asks Reuther.  “I think it’s great!” Reuther replies.  The manager is nonplussed.  “You know,” he says, “none of these machines pay dues to the United Auto Workers.”  “And none of them buy Ford cars either,” Reuther replies, raising the question, still unanswered today, of when the reduction of human labor will benefit everyone.

The Fourth Question: What’s the Matter with Technology?

In 1954, Martin Heideggar wrote: “The revealing that rules in modern technology . . . puts to nature the unreasonable demand that it supply energy which can be extracted and stored as such . . . . Air is now set upon to yield nitrogen, the earth to yield ore, ore to yield uranium . . . the Rhine to [supply] its hydraulic pressure. . . . But the revealing never simply comes to an end. . . . Everywhere everything is ordered to stand by, to be immediately on hand. . . . We call it the Standing Reserve.”

Let us review: the key component of rate of return to the One Percent based on real growth, as opposed to profits from “monopolization” or “financialization,” is the increase in the rate of productivity, which is what occurs when automation reduces the average necessary labor it takes to produce this or that product – let’s say the proverbial “widgets” — over an abstract unit of time, whether an hour, a day, or a year. The logic of Capital drives that productivity growth because it allows technological innovators to derive a higher rate of return on their widgets than their competitors until the latter catch up technologically. When that happens, the advantage of the innovator disappears, because all widgets are produced at the same socially necessary labor time again. Paradoxically widgets are now worth less in capitalist terms than before. We are richer in widgets, but poorer in rate of return. So . . . onward to the next competitive edge!

This dynamic has always been crisis prone, upending the business cycle with over-production and underemployment, but its essential trajectory has been an intensifying pursuit of marginal advantages that is now leading to the collapse of a human-supporting eco-system. If each increment of productivity is gained by a further application of automation, each increment of automation represents and requires the further replacement of human energy by thermal energy drawn from what Heidegger aptly calls “the standing reserve” of coal, gas, rare minerals and heavy metals. With our new consciousness of environmental limits, we now proclaim a commitment to reducing our dependence on this standing reserve through a shift to “renewables.”  But something greater than our will to save our environment seems continually to subvert our best intentions.

What follows is a vein of narrative extracted from a couple years of disjointed coverage in the New York Times.  The Internet, Google, the Cloud, and so on, are hailed as new “green” technological regimes for all kinds of reasons (saving paper, saving travel).  Then the cover story: Google and the Cloud use massive power facilities to hold all that information, especially images and video, perpetually at hand, generating more carbon output than all of world air travel in a similar period.  Now the standing reserve of fuels are being used to maintain a standing reserve of digitalized information. 

Google, et al, don’t like this – it undercuts their image!  Two years later victory is declared: massive solar farms have replaced those carbon-chugging power stations.  The Cloud is held aloft by arrays of solar panels as far as the eye can see (but fortunately where few eyes would look – out west, between the Sierras and the Rockies).  There are some grumblers – about a vast displacement of farmland in Washington State or the blighting of natural landscapes, as well as a daunting drain on lithium reserves to keep making and maintaining those panels (is lithium the new oil? Ask Evo Morales or the residents of the Donbas . . .) – but it’s such a gain in emission reduction, how dare we complain?

Except then comes BitCoin.  BitCoin creates a new form of gold standard much like the old one: gold is a useful measure of value because it is so hard to prospect and mine; BitCoin attempts to mimic this representation of value by requiring a massive outlay of energy to prospect and mine it from the BlockChain.  People’s computers literally melt down from trying to obtain a single unit of currency.  Banks of prospecting computers are driven by power generators greater than those of many nations.  Again, we have cyber-carbon hogs, and we now also have vast solar farms to boot. 

While one story, no matter how grand in scale, is only a tiny chapter in the relentless technological pursuit of relative gains in value over set units of time, we can nevertheless see how each sub-plot starts proliferating its own narratives of the runaway consumption of resources, whether farmland, minerals, chemical synthetics, or just plain beauty (think of Heidegger’s dammed-up Rhine; or our turbine-cluttered seascapes). And the overall narrative, as chronicled in our “paper of record” the New York Times, is one verging on schizophrenia: eco-advanced Germany is still dependent on Russian fossil fuels for 65% of its energy; after a parade of hopeful emission reduction statistics, we are told that 2021 had the highest global carbon emissions in history; on one page we are told we need to reduce the price of oil and gas to save the economy (perhaps even our democracy), while on another, we are warned of an imminent collapse of the arctic ice shelves and all that that implies. The problem is clear: if we are not planning to abandon this logarithmic expansion of thermal energy use by returning to a system where R>G is generated by a laying on of the knout or outright usury (that is, by letting Capital, to quote the movie Pulp Fiction, “go Medieval on our ass”), R>G has to go.

The Answer to the Four Questions

To end growing inequality and the creation of an aristocracy of wealth, the One Percent; to return technology to its rightful owner, humanity; and to preserve a human-sustaining eco-system – R>G cannot remain our first principle of political economy. As the mercurial Bertrand de Jouvenel put it in 1965: “It is a serious fault of the utopian writers that they paid scant attention to the material basis upon which their good life was to be raised; it is an inexplicable fault of ours that we pay no attention to raising a good life upon our unprecedented material basis.” The pursuit of R>G through technological dynamism was the force that created our unprecedented material basis; it is now the chief obstacle to our quest for a good life.

Of course, we have yet to answer how a cat can cross over the water.Email