Salvation Isreal writes:
Accumulation Of Capital In a Geographical Dimension




The Essence of Internationality in Capitalism

“Capitalism is inherently international,” argued K. Marx and thus, workers of the world should unite. The rigid distinction between the empirical and the theoretical drove many of the old orthodox economists away from anticipation of the future. What was told in Communist Manifesto was not clearly being observed during those years but it is observed explicitly and dramatically today. Capital is and must be –to survive- international, hence from that time Manifesto was declared on the earth is experiencing the transformation from the national to the transnational within capitalistic mode of production and consumption. The core question is why the capital feels the need for this formation and howcome this becomes the essential reality.

Some early Marxists suggest different approaches to the questions of internationality of capital. First, units of capital, with its two distinctive principles (centralization and concentration) need spatial fixes for its three core processes: production, realization, and reproduction. It has to move over space because from a moment on, the nation state becomes insufficient to support these three acts. One may ask the question why capitalism shall lack the strength to maintain all these three processes within national boundaries. The answer is “Total Social Surplus produced in a country cannot actually be realized within that nation”, argues Rosa Luxemburg, because surplus gained after production can neither be consumed by the laborers (then we wouldn’t call it surplus anyway) and nor by the capitalists (since they cannot consume that much. Hence, the only solution for realization of production is realizing the surplus on the pre-capitalist (3rd world) nations.

Another fact is the crisis tendency within the capitalistic mode of production. Unfortunately, the solution offered by the capital for this is postponing this tendency to the future by moving over space, which actually means internationalization of capital. The needs for new markets, which are believed to solve the overproduction crisis, are thus realized in overseas with the guidance of destructive technological innovations. Here, I merely cannot pass it without a quote from Manifesto in which this tendency is explicitly explained:

“And how does the bourgeoisie get over these crises? On the one hand, by enforced destruction of a mass of productive forces; on the other, by the conquest of new markets, and by the more thorough exploitation of the old ones. That is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented.”

The theories of geographical dimension of capital, which once argued that the essence of internationality of capital was a necessity, turned into empirical studies of today. Among these empirical studies, Rudolf Hilferding’s is significant. The term “Finance Capital” was used by Hilferding, the first Marxist who put a theory on monopoly after empirical changes observed between 1890 and 1910. The term “Finance Capital” refers to a type of affiliation between Money and Industrial (Productive Capital). After 1900, the surplus gained by the firms could not balance the demand for expansion. Hence for the firms, who needed capital for their crucial plan “expansion”, new sources of capital emerged; stock markets, bonds etc. With such ease in lending and borrowing through banking system, Finance Capital became the core component of capital for expansion. The expansion over space essentially must have occurred internationally, soon it did not fail to respond and it is brutally happening today. Capital that is in the need for cheap raw material, new markets for realizing surplus and new re-investment outlets, moves over space moreover over nations. This is what I call realization of capital’s essential reality.

Changes in Capital’s Geographical Forms

Capital, with its different forms and faces, is everywhere like the air, we breathe and the water we drink. It accumulates within every blank it finds and if it can find one, never fails to create one. From the time Manifesto was declared on, there has been fabulous changes in capital’s forms leading to changes in capitalistic mode of consumption as well. What I like to mention here is actually the changes in the way capital acts over space and this is called “Geographical Forms of Capital” in Marxian literature.

I already argued that economic orthodoxy lacked the anticipation of the future about the geographical forms of capital. For these clever elites, capital was a national phenomena and global capitalism must be considered as the interaction of national actors. Today we can simply disprove these arguments by underlining investment decisions of the Corporates. Unlike the orthodoxy assumes, the Corporates do not invest because of the trade barriers but mainly there are some different sorts of decision-making algorithms. Today, also states’ calculations of national output became difficult by using ancient calculations and theories of classical economics since the only flowing thing is not commodity and the internationality is not only of trade but also of various elements including Finance Capital about which I have talked before.

Today there are different fragments of capital with different forms and interests. Three important moments, which I have talked about at the very beginning of my essay (production, realization and reproduction) lies beneath this differential fragments of capital. This differentiation occurs within the context of globalization. Since the Manifesto was declared, these three moments have experienced great changes. Commodity produced, was already being exchanged throughout the history. However, with the capitalistic mode of production, for the first time world has experienced the crisis of overproduction. This could only be solved abroad by realizing the surplus in the satellites (the nations that are economically and technologically dependent). Thus, trade has gained more importance within the globalization process. However, this was never an end but actually a beginning of internationalization of different fragments of capital.

To schematize; first of all Commodity Capital ( C ) involving labor power and means of production gets into the production circle, and becomes Production Capital ( P ). Later on, the outcome (the commodities produced either for consumption or production) again becomes a Commodity Capital
( C’ ). This capital, when realized, turns into Money Capital ( M ) which is used to reinvest, thus, used to circulate in the same circle repeatedly (C-P-C’-M-C’’-P’-C’’’……). The moments (production, realization and reproduction) occurs between C-C’ / C’-M’ / M’-C’’. What matters for my study about these moments of processes is, how much their form and level became or are becoming internationalized and in a sense becoming globalized. These moments have four types of combination, related to their level of globalization.

1. National Circuit of (Production, Realization and Reproduction, all local)

2. Investment Constraint Circuit (P, RP local, R international)

3. Market Constraint Circuit (P, R local/RP international)

4. Global Circuit (all international)

In the past, one geographical form is still national and shows the behavior of primitive accumulation. In the second one, the process of realization (C’-M’) is international was for the firm (which is the most advanced form among the geographical forms of these circuits). The third, which is also called Imports Substitution Industry demands. Protectionism for development, thus, until today’s neo-liberal policies it is a hard job for him to survive.

This is simply the evolution of geographical expansion, expansion of production, realization and reproduction (re-investment). Since these three acts are becoming globalized day by day, I had tried to examine how these fundamental changes occurred over the geographical dimension.

Accumulation not only as an economical but also as a social process

Up to now, we have seen the essence of internationality of capital and its geographical, spatial fix within the context of globalization. Another attention arousing subject is the accumulation as a social process as depicted in the subtitle. Marx, in Capital VOL. 1, clarifies the relation of accumulation and social process. For example, the Bloody Legislation in Britain for capitalistic mode of production was a necessary condition. Since a capitalist would feel the need for people (wage-laborers), who produce only for their own means of subsistence but also for the home-market, the expropriation was inevitable. Thus, accumulation as a social process created to distinct class; laborers that are dispossessed from their means of production (lands, workshops etc.) and the capitalist who owns the means of production. Not only with its class conflicts but also with its contra tendencies, capital accumulation becomes a way of life. A tendency of working class consciousness on one hand and a contra tendency wage competition on the other is created within the social process and this competitiveness becomes the manner of today’s life style. Competitive Accumulation of Capital capitalizes mankind with its own rules and depicts them as the so-called “human nature”. Bearing in mind that nature is actually not “natural” the sense that human nature is shaped by social relations; neither the former nor the latter can be the fact of mankind alone. Here Marx argues, in Manifesto that ideas change with the social relations of the time.

“Does it require deep intuition to comprehend that man's ideas, views, and conception, in one word, man's consciousness, changes with every change in the conditions of his material existence, in his social relations and in his social life?”

This is why constantly revolutionizing the instruments is crucial for the bourgeois to survive. Otherwise, there could easily be formed conscious classes that would threaten the capitalist. Accumulation needs transformation every time, be it at its primitive or advanced capital accumulation. Thus, as a social process, accumulation of capital is always the crucial fact of relations. Another point is that this transformation of accumulation as a social process unlikely done by an invisible hand. This is sustained through different regulations or deregulation (since deregulation itself is a regulation.)

Transformation of regulation for a better accumulation

Steady Market Accumulation requires regulatory actors such as states, institutions, laws; though liberals disagree the need for them. The mode of regulation charges and develops within the changes in capitalism. Different regimes of accumulation needs different modes of regulations and the mode of regulation mainly is interested in two questions:

1- Price-fixing market (Realization of surplus)

2- Production of surplus

Before 1929’s Great Depression, dominant ideology was of classicals, who believed in such an invisible hand that will solve problems of realization of surplus by ‘Everything will be fixed by supply-demand.’ After the Great Depression, a new kind of regulation has occurred with Fordism. Fordism not only occurred as a mass production method for the standardized commodity, but also played a regulatory role for geographical accumulation. Fordism with Taylorism and Keynesianism put its stamp on the regulation of accumulation after 30s and became mature after WWII.

Fordism, includes social wage, capital control, limited international product and fixed exchange rates because the production style was standardized and massive, so it could not work out with fluctuations in demand curves. After Fordism, world has seen the post modernity of its evolutionary process. Rapid increase in mass production, the great productivity changed the way people lived. There came out enormous buildings for the institutionalized hierarchical management idea of Taylorism. Full employment, full-time and secure jobs (in the core sectors) became the tools of the regulation. Urbanization rose rapidly with fast urban population growth. Standard housing with specific city planning for the most efficient way of production (considering even the cost of time traveling between the houses and factory) became important. These were all for the macroeconomic stability since capital could only accumulate with these regulations.

Those Fordist days of accumulation, in my opinion, are just like a babysitter (state) taking care of an infant (capital). As we all grow up, so does capital. Capital became mature enough during the mid60s but the economic stability and limitations for international production was now not saving the capital but oppressing him. Bretton Woods Regime, which was the crucial regulation for Post-WWII period became a heavy weight on States’ Treasury. Finance capital was artificially space-bound by fixed exchange rates and by controlled capital flows. However, no one can chain neither liberty of capital nor its freedom to invest in flexibility. Eventually, Bretton Woods Regime declined, hence the US hegemony, which was established during Fordism with Marshall Plan and Bretton Woods Agreement destructed. The reasons of the decline in US hegemony may be summarized in two basic arguments; one is the breakdown of Bretton Woods Agreement and the other is the developing economic agents in international commodity trade such as Germany and Japan. This exchange rate system of Bretton Woods Agreement and the international monetary system collapsed. We, once again, face a transformation of regulation for a new form of accumulation. A regulation that would break the rigidity of Fordism and that would break the chains of social welfare system. The following days of accumulation neither would be space-bound nor be bound to the strict social welfare policies of the nations. This was called the “Flexible Accumulation”. What distinguished this phase from the other modes of regulation was the belief that this was not a regulation but a de-regulation (laissez-faire).

The last 30 years of the Earth has faced the destructive and reproductive side of the regulation of accumulation. Unlike it was argued, most of the countries were not free to choose Neo-liberalism but they were mandated through different but also the same regulatory mechanisms. The significant part of the so-called regulation is that how come this happens to be the invisible hand when we have visible hands that push 3rd world into the darkest dungeons of Neo-liberalism such as IMF, WTO and WB. These three agents are for what, if not for regulating the international accumulation of capital? I will let the question float like the exchange rate in this liberal chaos.

The most fundamental changes in regulating mechanisms of the recent phase do have the common adjectives “flexible and mobile”. Flexible labor process with flexible labor markets, which actually means: “To have a job is not a right but a pride with what capital awards us.” Thus, the intra-class conflict between wage-laborers became dominant within global capitalism since capital has gained great weapons such as threatening to invest somewhere else. The competition between nations to develop their national economies transformed into a competition to become more attractive to TNCs, the most globalized circuit of capital. The fact that TNCs have this power to influence the nation states’ policies, they began to lead the recent transformation of regulation of accumulation. The formation from social welfare state to neo-liberal state, from national state to supranational state and from regulated cross-border movements to free (!) and unregulated mobility at any kind of capital and commodity.

Today’s tendencies of capital accumulation are still conflicting as it was depicted in Manifesto. Homogenization of Labor Processes, Cultures, and Modes of Consumption on one hand continues with Differentiation (Uneven Development) between the West and the East on the other hand. WTO, which can actually be assumed as WIO (World Investment Organization) is no more a trade organization, because trade has already globalized; what needs care for today’s accumulation is investment since there is still national sentiments against FDIs and other types of foreign investment. However, I sincerely argue that emotions cannot confront FDIs, TNCs and the regulatory mechanisms of recent accumulation such as WTO and IMF. If it could, then it would do this job before we see the world today, being destroyed and our lives being stolen."