Primitive Accumulation or Capital Accumulation 21st Century Style
First, I have never written a diary at dkos. So if I do not do this correctly, please do not flame me too harshly. I do not know why there is above the fold and below the fold and what is a "permalink"? But I am going to give it a go anyway.
To preface this I am an anthropologist, I teach anthropology to college students. One of the things that anthropologists do is attempt to analyze events on a rather long time scale, from the appearance of the first Homo sapiens sapiens around 200,000 thousand years ago to the present. This post does not go that far back, but the long term time scale is part of the issue.
Another prefacing issue is the realization that after reading a lot of dkos diaries and comments I have come to realize that there are a lot of people here with a lot of knowledge and can comment cogently on issues. Thus part of the purpose of this is to elicit responses that will clarify things for me. Thus the argument I make in the diary is also an attempt to get feedback that will help clarify what I teach to my students.
Primitive Accumulation
Primitive accumulation is a concept that comes from Marx’s analysis of capitalism and its origins. Primitive accumulation refers to the process that some people engaged in to get control over the basic factors of production, land, labor and capital. The classic example is the enclosure movement in England in which large landowners forced peasants off their land on order to use the land for sheep. Why sheep? The first real industrial production machine was the loom, when mechanized looms became available the demand for fiber, in this case wool, increased. If anyone wonders why the Brits try to put sheep everywhere they go, say the Falkland Islands, Australia, New Zealand even Papua New Guinea, it is a habit acquired from this period when the Brits went looking for good food all over the world. The colonization of India is part of this for both the good food, curry, and cotton, another fiber to use in industrialized looms. So here we have land.
Labor? How do you get control of labor? Well, the Brits again are a good example, they tried indigenous labor in the areas they colonized but the indigenous labor either died or ran away. So, how to get labor that would at least not run away? Slaves or indentured labor from one place removed to another place where they do not know the local population and are too scared to run away (or are on an island and cannot run away). The classic example again is the Brits who moved Indians (from India) all over the world as labor to produce what they wanted from colonies all over the world from Fiji to the Caribbean Islands.
Capital? Well we have the British East India Company, a corporation for all intents and purposes, chartered by the Brit government to go and exploit other places for cool stuff that they did not have in Britland. Some of that cool stuff: tea, coffee, sugar (a big one) copra (comes from coconuts) fiber (cotton, land for sheep) among others (stuff to make good food). Rich people bought into the British East India Company for the purpose of making investments that would yield returns.
Now, a lot of what was required to do all of this getting of land and labor met resistance. Who paid the cost of overcoming that resistance? The British government. . It takes soldiers and costs money to send troops to do this and that.
Meanwhile the steam looms are hungry for more fiber. The capitalists who invested in the industrial looms want more fiber and more sales which means more cloth sold. The Brits impose taxes on their colonies that require people to work for Brit money so they can buy what the Brits produce. Hey, a world market for cloth! Cool. All with the assistance of the Brit government colonial officials.
Ok, you get the idea. Primitive accumulation is the control over land, labor and capital for the purpose of creating profit which can be turned into more capital investment into more production requiring more control over land and labor.
So what is this 21st Century Stuff?
Marx, Ricardo, Adam Smith, the founders of modern economics, none of them could have dreamed up the current situation. The reason that the pantheon could not have dreamed up the current situation was that they were working from a nation based point of view. The idea that a large country, like the USA, could have gotten into a situation where it sells its debt to a country like China which produced most of what Americans bought was not something they could have even conceived of. They would have long ago advocated that the USA impose measures to protect its manufacturing, period. But they were limited, and wrong, because here we are.
So, primitive or capital accumulation is about getting control over land, labor and capital for the purpose of investing in something that will produce a higher return in the future. Colonization is no longer an option. Further, the entities we are discussing are no longer governments but large international banks who have been able too make irresponsible loans which they tried to hedge by buying credit default swaps with other large international entities like AIG Financial Products division which did not have the money to make good on those swaps.
Now, first, the CEOs of the banks that bought the collateralized debt obligations (CDOs) knew what they were doing, they were not stupid, it is not a case of ‘what were you thinking" it is a case of venality. They were after returns that ensured themselves bonuses and the profitable execution of stock options.
These large financial institutions have driven the value of many assets very low by over valuing them and then not being able to collect on their hedges, or not being able to pay off on the hedges made by others.
Now they oppose nationalization, which would lead to a reevaluation of these assets. So we, the taxpayer, the government, pay to keep them going on a short term basis until the assets come back.
This is happening while some go about the business of buying the now lower priced assets so they can hold them until the value goes up, and thus make a huge profit.
Is it possible that some of the people who chose to create insolvent institutions knew exactly what they were doing, in essence, to drive down the price of assets so they could buy them later at bit discounts and thus profit, in essence, accumulate capital, when the assets become more valuable?
This is not a ponzi scheme, this is looting the government, the taxpayer, who pays for the short term support of these institutions, while some buy the assets at the now low prices, and then will benefit when the assets become valuable later.
Further, the control over capital. When congress in its not so infinite wisdom passed the laws that led to 401ks and got a lot of us stuck in these supposedly, choose to invest in the market, things created a conveyor belt of money to Wall Street.
Ok, tell me how I am wrong. Please. If not, please tell me how this can be avoided in the future.