The Cerberus of Surplus Capital

“It is the nature of a new idea to confound current consensus.”

William H. Whyte, Jr.

In the previous post, we looked at the most daunting socioeconomic issue facing us today: the decline of labor value. Looking beyond a simple statistic like the unemployment rate, we can see the inescapable reality that technology, and the myriad systemic offshoots enabled by technology, will continue to reduce the economic value of human skill and effort. This is not to say that work is unimportant or unneeded, even economically speaking. Jobs will always be necessary, lots of them. It is just that the monetary value of labor as a component of the overall economic pie will continue to shrink, both in the US and globally. And similarly, the actual amount of labor needed to sustain reasonable economic growth will also decline. In short, it should not be controversial that decade after decade of labor-saving technology has resulted in – surprise, surprise – a reduced need for labor.

In a vacuum, this reduced need for labor is fantastic. If less work is needed to produce the same amount of stuff, then we could all be kicking back on the couch after putting in a couple leisurely morning hours at the job, waiting for the robot bartender/butler to wheel in an afternoon mojito. A growing economy that needs less labor input is the dream support structure for all manner of social betterment: shorter work weeks, more time with family and friends, more space for individual entrepreneurial activity, more resources freed up for charitable activity, more time for people to pursue education, artistic expression, travel, etc.

But in our culture, an American culture that venerates work above all else, the decline of labor value is a disaster. As Hannah Arendt observes, “What we are confronted with is the prospect of a society of laborers without labor, that is, without the only activity left to them. Surely, nothing could be worse.” We have spent the better part of two and a half centuries pushing all of our moral chips into the pot, betting on work as the best and only true way to build people, communities, and the nation. And now that this bet is coming up a loser, we are panicked.

Politically, we are painted into a corner. Both of the major parties still see Full Employment as the only road to salvation, albeit in different ways (the trickle-down path vs. the bubbling spring from below). But as economic reality continues to preclude these hopes for labor rejuvenation, each side must become more strident and extreme in its demonization of the opponent, as that is the only way to preserve some measure of credibility amidst the continuing slow-motion wreckage.

So what has to happen, many say, is a meeting in the common-sense middle. We need more cooperation and less extremism, so that we can find common ground and move forward. We just require some true stateswomen and statesmen, people who will reach across the aisle to unify us on some shared idea of a better future.

Sounds great, but the problem is that both sides of our current political system still exist on the same spectrum regarding labor, one that espouses Full Employment as the linchpin of national improvement. Any meeting in the middle is still going to involve an antiquated and dead-end understanding of economic production, labor value, and modern money. Even if we see a major shift towards bipartisan cooperation and legislative boldness (an unlikely development, but we’ll grant the point for argument’s sake), our mainstream politicians will still be trying to force everything through the funnel of full employment, which basically involves improving our citizens to meet the needs of business. But the business world has already spoken on the subject, and the decline of labor value itself is its declaration. Any legislative activism vis-à-vis the labor market (tax breaks for reshoring jobs, raising minimum wages, scale-tipping for labor union formation, tax holidays for repatriating overseas profits) is basically trying to force business to artificially overvalue labor again, just to preserve our national tunnel vision on the moral and economic worth of work.

From this perspective, it is not surprising that our national leaders in Washington are so ineffective at creating real change to help regular people, especially when it comes to jobs, wages, and basic economic security. Both sides are working off obsolete talking points and stale ideas, tropes that are more suited to the age of the gold standard and lifelong pensions. What is needed is not a meeting in the middle of this arid, scratchy ground. An entirely new set of ideas is necessary, one that acknowledges the realities of work, money, government, business, and overall economic health.

Power and Change

The problem with fomenting real change is, of course, that those in power will not want it. The current system works quite well for a small segment at the top, and those who reap the rewards of the status quo are not about to hand over the keys to those who would dismantle their advantage.

But so what?, the struggling change agent says. We just need to preach the message and fight the good fight, and the gathering winds of popular unrest will turn the tide against the powerful. The activist inclination, especially on the progressive side, is to believe that, because our present injustices are politically created, they can also be politically undone. But this is not the case. The complex, interlocked substructure of power is not just, or even primarily, political. The ascension of a small segment of controlling elites is the result of decades of development in many areas: technological change, the evolution of finance, changes in corporate governance and organization, trends in legal thought about property and ownership, consolidation of mass communication, etc. All of these long-term, algorithmic currents of change cannot be undone by winning a few elections and passing some landmark legislation. They run too deep.

In short, while the gross inequalities of our present situation feel villainous, they are not. They are structural and, like most important public things, economic. Today’s lopsided constellation of the haves and the have-little-or-nothings is a by-product of the victory of technology itself over the “production problem” of capitalism. When the ratios of labor, production, and profit cross a certain threshold, where businesses do not need to reinvest all profits back into themselves in order to grow, the result is surplus capital, which then goes in search of new ways to multiply (see James Livingston’s “Against Thrift” for the full discussion).

Surplus capital, in search of outlet, reaches for a few different dinner trays. Most obviously, it goes for speculation, fueling all manner of bubble with the breath of irrational exuberance. As Livingston notes, the production problem was solved in 1919 in the US, and surplus capital has been inflating stock and resource markets ever since. But surplus capital also allows the business sector to hedge its bets on the vagaries of competition, and it does this by purchasing governments, so that laws and regulations can be written to favor the already-flush. And to justify and explain the purchase of government, surplus capital captures old mass communication organs, as well as creating new ones.

Think of it this way: the Cerberus of surplus capital (speculative finance, the purchase of government, and the capture of public discourse) is not evidence of evil, despite my hellish canine metaphor. Rather, it is simply the way that post-scarcity capitalism manifests itself after the production problem has been solved. The situation is structural, and cannot just be undone, because the underlying relationships between technology, labor, production, and profit will not revert to some older state of reality. All of the factors that have been creating surplus capital for the last 100 years are still in place, and they are not going anywhere.

So we have an economic system that will continue to produce surplus capital, and that capital will continue to create huge power imbalances between the few and the many. And the whole thing is virtually impregnable, because of the wholesale purchase of government, the bloating of the financial sector, and the control of media.

So what to do? There are really only two approaches: redistribution after the fact, or predistribution before the fact. Redistribution will always prove impossible in the long run, because of the self-recreating nature of structural power, detailed above. So predistribution is the only option. And while it sounds like a nice, neat counterpart to redistribution, it is anything but. Predistribution is a complex beast, as it includes a package of unorthodox ideas with a seemingly-impossible task: dismantling the scaffolding of unequal structural power, while being palatable to that very structure itself. In short, we’re looking for a way to get the powerful to willingly choose the form of their own semi-destruction, a socioeconomic Stay-Puft Marshmallow Man.