CAPITAL AS POWER
A Study of Order and Creorder
Jonathan Nitzan & Shimshon Bichler
RIPE Series in Global Political Economy | Routledge | May 2009
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Table of Contents
List of illustrations xxiii
Acknowledgements xxv
1 Why write a book about capital? 1
Capitalism without capital 1
This book is not about economics 2
How and why 3
What’s wrong with capital theory? 5
Toward a new theory of capital 7
A brief synopsis 10
Part I: dilemmas of political economy 10
Part II: the enigma of capital 12
Part III: capitalization 13
Lineages 14
Part IV: bringing power back in 15
Part V: accumulation of power 17
The capitalist creorder and humane society 19
PART I
Dilemmas of political economy 23
2 The dual worlds 25
The bifurcations 25
Politics versus economics 27
The liberal view 27
The Marxist perspective 28
Capitalism from below, capitalism from above 29
Real and nominal 30
The classical dichotomy 30
The Marxist mismatch 31
Quantitative equivalence? 32
3 Power 34
The pre-capitalist backdrop 34
The new cosmology 36
The new science of capitalism 38
Separating economics from politics? 40
Enter power 42
4 Deflections of power 45
Liberal withdrawal and concessions 46
Neo-Marxism 47
The three fractures 49
Neo-Marxian economics: monopoly capital 50
Kalecki’s degree of monopoly 50
From surplus value to economic surplus 51
Realization and institutionalized waste 51
The limits of neo-Marxian economics 52
The culturalists: from criticism to postism 53
Statism 55
The techno-bureaucratic state 55
The autonomous state 57
The capitalist state 58
The state imperative 59
The flat approach 59
The hierarchical approach 60
Political Marxism 61
The capitalist totality 63
PART II
The enigma of capital 65
5 Neoclassical parables 67
The material basis of capital 68
The production function 69
The two assumptions 69
Where does profit come from? 70
The birth of ‘economics’ 71
Marginal productivity theory in historical context 72
The end of equilibrium 72
Public management 74
The best investment I ever made 76
Some very unsettling questions 77
The quantity of capital 77
Circularity 78
Reswitching 78
The Cambridge Controversy 79
Resuscitating capital 80
The measure of our ignorance 82
The victory of faith 83
6 The Marxist entanglement I: values and prices 84
Content and form 85
The labour theory of value 86
Three challenges 87
Socially necessary abstract labour 87
Production 89
Transformation 89
The road ahead 89
The second transformation 90
Why only labour? 91
Excluding power 91
Omitting capitalization 92
What does the labour theory of value theorize? 92
Testing the labour theory of value 94
The price of what? 95
Absence of value 96
Recap 97
The first transformation 97
Inconsistency, redundancy, impossibility 99
The dual system 99
The complicating detour 100
Joint production 101
Capitalism sans values? 102
The transformation so far 104
New solutions, new interpretations 104
Changing the assumptions 105
Complexity 105
Changing the definitions 106
Recounting costs 106
Prices as values 107
7 The Marxist entanglement II: who is productive, who is not? 110
Productive and unproductive labour 110
Production versus circulation 112
Financial intermediation, advertising and insurance 112
Disaggregates in the aggregate 113
Objective exchange values? 114
Eating the cake and having it too 114
Capitalist answers, pre-capitalist questions 115
The product itself and the amount of wealth 116
The transformation of nature 116
Human needs 117
Non-capitalist production 118
Reproducing the social order 118
Social services 119
What is non-capitalist? 120
A qualitative value theory? 121
The retreat 121
Marx’s science 122
Quality without quantity? 124
8 Accumulation of what? 125
What gets accumulated? 126
Separating quantity from price 126
Quantifying utility 128
Let the price tell all 128
Finding equilibrium 130
Quantity without equilibrium 133
Hedonic regression 136
Quantifying labour values 138
Concrete versus abstract labour 138
A world of unskilled automatons? 140
Reducing skilled to unskilled labour 141
A clean slate 144
PART III
Capitalization 145
9 Capitalization: a brief anthropology 147
Utility, abstract labour, or the nomos? 147
The unit of capitalist order 150
The pattern of capitalist order 153
Formulae 153
First steps 155
Coming of age 155
The capitalization of every thing 158
Human beings 158
Organizations, institutions, processes 161
The future of humanity 164
Capitalization and the qualitative–quantitative nomos of capitalism 166
10 Capitalization: fiction, mirror or distortion? 167
From fiction to distortion: Marx’s view 167
From mirror to distortion: the neoclassical view 170
Microsoft vs General Motors 172
Tobin’s Q: adding intangibles 174
Boom and bust: adding irrationality 177
The gods must be crazy 180
11 Capitalization: elementary particles 183
Earnings 185
Hype 188
Decomposition 188
Movers and shakers of hype 189
Random noise 192
Flocks of experts and the inefficiency of markets 193
Let there be hype 195
The discount rate 196
The normal and the risky 198
Probability and statistics 199
Averting risk: the Bernoullian grip 201
The unknowable 202
The capital asset pricing model 203
Portfolio selection 204
CAPM 205
Circularity 207
Risk and power 208
The degree of confidence 208
Toward a political economy of risk 210
Summing up 211
Appendix to Chapter 11: strategists’ estimates of S&P earnings per share 212
PART IV
Bringing power back in 215
12 Accumulation and sabotage 217
The categories of power 217
Veblen’s world 219
Industry and business 219
The two languages 220
The immaterial equipment 222
The hand of power 223
The social hologram 223
The whole picture 223
Resonance and dissonance 225
Absentee ownership and strategic sabotage 227
The natural right of investment 227
Private ownership and institutionalized exclusion 228
The right to property 229
The absentee ownership of power 230
Strategic sabotage 231
The direction of industry 233
The pace of industry 235
Business as usual 236
Taking stock and looking ahead 239
Pricing for power 239
From price taking to price making 239
The markup and the target rate of return 241
Pricing and incapacitating 242
Is free competition free of power? 242
The capitalist norm 243
The normal rate of return and the natural rate of unemployment 243
Antecedents: return and sabotage in antiquity 244
Pecuniary power: ancient versus capitalist 245
The differential underpinnings of universal sabotage 246
In sum 248
Capital and the corporation 248
Capital as negation 248
The rise of the modern corporation 249
Productive wealth and corporate finance 253
Equity versus debt 253
Immaterial assets 253
Material assets 255
The maturity of capitalism 256
Fractions of capital 259
Severing accumulation from circulation 259
Where have all the fractions gone? 260
Toward fractions of power 261
13 The capitalist mode of power 263
Material and symbolic drives 264
The invisible technology 264
The two archetypes 265
Neolithic culture 265
Power civilization 266
The mega-machine 268
The mega-machine resurrected: capital 269
Owners and technocrats 272
State and capital 274
Metamorphosis 275
Reordering 275
Contradictory interdependency 276
Notions of space 278
Cosmic space 278
Social space 279
State as a mode of power 280
The feudal mode of power 282
The feudal state 282
The limits of feudal power 285
The capitalization of feudal power 286
Faubourg, bourg, bourgeoisie 287
The dual economy 287
Private and public 288
Liberty as differential power 288
War and inflation 289
War and credit 291
Bypassing power: private instruments 291
Absorbing power: state finance 292
The genesis of capital as power 294
The government bond 294
Primitive accumulation? 295
Government capitalized 297
The state of capital 299
Who are the regulators? 299
Sovereign owners? 300
Whose policy? 301
Whose interests? 301
What is to be done? 302
PART V
Accumulation of power 303
14 Differential accumulation and dominant capital 305
Creorder 305
Creating order 305
The power role of the market 306
How to measure accumulation? 307
‘Real’ benchmarking? 307
It’s all relative 309
Differential capitalization and differential accumulation 310
The capitalist creorder 310
The figurative identity 312
The universe of owners 313
Dominant capital 315
Aggregate concentration 316
Differential measures 319
Accumulation crisis or differential accumulation boom? 322
Historical paths 325
The boundaries of novelty 325
Spread, integration, oscillation 326
Regimes of differential accumulation 327
Some implications 331
15 Breadth 334
Green-field 335
Running ahead of the pack 335
Running with the pack 335
Mergers and acquisitions 338
A mystery of finance 338
The efficiency spin 339
From efficiency to power 341
Patterns of amalgamation 343
Merger waves 343
Tobin’s Q 343
From classical Marxism to monopoly capitalism 345
Differential advantage 346
Three transformations 347
Breaking the envelope 348
Globalization 350
Capital movements and the unholy trinity 351
Global production or global ownership? 352
Net or gross? 354
Capital flow and the creorder of global power 356
Foreign investment and differential accumulation 358
Appendix to Chapter 15: data on mergers and acquisitions 359
16 Depth 361
Depth: internal and external 362
Cost cutting 363
‘Productivity’ gains 364
Input prices 365
Stagflation 366
The historical backdrop 366
Neutrality? 368
Aggregates 368
Disaggregates 369
Redistribution 370
Winners and losers 370
Workers and capitalists 370
Small and large firms 372
Patterns 374
Accumulating through crisis 375
Business as usual 375
The imperative of crisis 375
Varieties of stagflation 376
The stagflation norm 377
The hazards of inflation 379
Capitalization risk 379
The politics of inflation 379
Stop-gap 380
Policy autonomy and the capitalist creorder 381
17 Differential accumulation: past and future 383
Amalgamation versus stagflation 384
The pattern of conflict 386
A new type of cycle 386
Oscillating regimes: a bird’s eye view 387
The role of the Middle East 389
Coalitions 392
Unrepeatable since time immemorial? 394
The retreat of breadth 394
The boundaries of differential accumulation 395
Out of bounds 396
Postscript, January 2009 397
References 401
Index 430
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