Accumulation versus Distribution.

datePosted on 17:42, March 9th, 2012 by Pablo

The bottom line of any political economy resolves around the question of accumulation versus distribution. Productive activity that generates surpluses (profits) can be accumulated by those who control the means of production (workers or capitalists), or can be distributed throughout the larger community in which production is located. In capitalist system decisions about accumulation and distribution are done by capitalists. Workers organizations fight or bargain for better distribution of profits. Capitalists would prefer to accumulate for their own consumption. Because production is essential for the material standards of everyone, in democracies capitalists and workers negotiate the proper ratio of profits saved to profits distributed. Once distribution has occurred (via wages, benefits and the like) the saved part of profit is re-invested or “taken” by capitalists (owners) for personal use. Both sides adopt minimax negotiating strategies by making maximum claims on the preferred ratio, then settling for a mutually acceptable minimum. By doing so neither wages or profit-taking rise too recklessly or out of proportion to productive gains or inflation, as that would lead to inefficiencies and potential social unrest.

Or so the system is supposed to work. Depending on relative political balances and the specific location of a given productive sector in the capitalist world cycle at any specific moment, workers or capitalists may have structural and political advantages to play in their favor. Workers will attempt to maximize distribution in the form of job security and wage and benefit gains; capitalists will attempt to maximize accumulation by rolling back worker’s redistributive gains.

For the last twenty-five years logics of accumulation and profit-taking have dominated macroeconomic thought. Workers have steadily seen their distributive gains eliminated. As the process has deepened capitalists have pushed not only to reduce the material aspects of the distributive process. Sensing a favorable economic and political environment in places like New Zealand, they are launching attacks on the rights to collectively organize in defense of distributive stakes or goals. Capitalists well understand that for people to have economic rights they must have political rights.  The right to organize collectively is a political right. Reduce that right and previously held economic rights are more easily curtailed or eliminated. The more the concept of economic rights based on distribution is pushed towards a minimalist definition (encapsulated in the saying “you are lucky to have a job”), the more workers will limit their distributive demands in the quest for basic subsistence. The more that they do so the more working class internal competition will further push down the overall wage bill and increase job insecurity. The process of “casualisation” is the result of that trend, with “labor flexibilisation” being the managerial jargon used to describe employment precariousness.

Today in New Zealand the scales are tipped in favor of accumulation over distribution. The political and economic elite (including many in the Labour Party leadership) overtly side with the logics of accumulation argued by capitalists. They accept the reasoning that in the current global economic moment distribution to workers is contrary to future growth. Thus they accept that not only worker’s distributive demands but their political rights must be curtailed in order for economic benefit to occur. Of course, that benefit accrues to capitalists rather than workers, and if the low rates of re-investment in many productive sectors is anything to go by, profit-taking out of accumulated surpluses have been very good for capitalists indeed.

None of this is particularly new or surprising, even if recent labor conflicts had led to commentary about an impending class war in New Zealand, among other places. What is happening today is just the logical conclusion of a process of market-driven accumulation that began in the 1980s and which is reaching deep into the foundations of modern political economies today. The purpose is to forever privilege accumulation over distribution, and to ensure the political conditions in which workers can no longer challenge that logic or have a say in fixing the “equilibrium” ratio of accumulation to distribution.

Such a system has long been noticed and understood by the materialist school of class conflict. It is called the Asiatic Mode of Production, which relies on super-exploitation of human labor for accumulation gains. Given that New Zealand’s original market ideologues borrowed some of their policy prescriptions from the Chicago School of monetarist economics (later conceptually distorted in the word neoliberalism) as widely applied by capitalist authoritarians in the 1970s and 1980s, it seems  that their heirs have borrowed from the Chinese or Singaporean models, which are also heavily reliant on authoritarian political and social controls. This shift in preferred macroeconomic models makes perfect sense when we consider the move, shared by both major parties, to focus NZ’s diplomatic and trade relations on Asia and the Middle East, where democratic “niceties” are in short supply and where capitalists are largely unencumbered by human rights, much less labor rights or worker’s substantive rights to a share of the benefits of production.

The modern Asiatic model is as ruthlessly efficient as its predecessors, but is also based on a downwards redefinition of the concepts of economic and political rights that is generally considered anathema to democratic values (which in the labor market are enshrined in International Labor Organization conventions, now under siege in NZ and elsewhere). It would seem that in this particular market-driven moment, authoritarian capitalist reasoning prevails, accumulation is the sine qua non of macroeconomic policy, and the notion of egalitarianism as the basis for stable social order reflected in a fair ratio of accumulation to distribution has been abandoned in favor of the all-mightly profit-taking “bottom line.”

That is the state of play in New Zealand today.

5 Responses to “Accumulation versus Distribution.”

  1. Draco T Bastard on March 10th, 2012 at 16:26

    It is called the Asiatic Mode of Production, which relies on super-exploration of human labor for accumulation gains.

    I assume you mean super-exploitation.

  2. Pablo on March 10th, 2012 at 16:35

    Thanks Draco. The auto-correct function is the bane of my existence these days. I have made the “correct” correction.

  3. DeepRed on March 11th, 2012 at 16:10

    I believe it has overlap with “Asian values“, the belief that one-party rule is necessary for economic prosperity. In particular, Malaysia under Dr Mahathir and Singapore under Lee Kuan Yew were its most ardent practitioners.

  4. Andrew Sheldon on April 14th, 2012 at 11:54

    First premise assumes your (govts) right to extort wealth…can you justify that please? Capitalists actually cannot hope to consume all the money they make, so they reinvest. The issue is not the fact that they possess more wealth; the issue is whether it was attained justly. i.e. Its a justice issue, not a distribution issue. Unconditional love just shifts responsibility; and consequently results in opposite effect, i.e. less wealth being produced.
    Workers join unions to extort ‘concessions’ over and above market rates. The low wages you discuss are not caused by ‘unfeeling business’ but the market conditions, i.e. there is an over-supply of labour thanks to developing countries shifting from statist regimes (which you support) to markets…so your solution is the problem. Now, you can reflect on poor job prospects in NZ (actually relatively good), but low wages here are keeping people employed in China. As a humanitarian, would you not welcome that? Of course, factory jobs are not pretty, but that’s what raises purchasing power to keep more in jobs…so a little selective in your focus. I actually concede that ‘landed’ capitalists have an unfair advantage.
    In this context, minimum wages will cause unemployment and $90K wharfies are unrealistic. You seem to believe people have economic rights; yet neglect that I’m forced to pay taxation. Not saying I want a free lunch. You have a property ‘entitlement’, an arbitrary provision that can be taken. The right to ‘organise’ is a poltical right, but that right should stop at extortion, whether unions use thuggery, or ‘evolve’ to use ‘declarations’ of family hardship.
    You are right, NZ system is a collectivist system as you suggest, but your premises are authoritarian as well. China was authoritarian and still is; it still has arbitrary, centralised rule…just more market for pragmatic reasons. Its all moral relativism.

  5. Pablo on April 14th, 2012 at 12:54

    Andrew:

    I have written too much elsewhere about comparative labor relations, working class collective action and the characteristics of the capitalist state to reprise my views here. But your claim that workers join unions to “extort ‘concessions’ over and above market rates” is so wrong as to be laughable.

    Workers organize first to defend the employment relationship, or job security, from arbitrary and capricious employers. They then defend working conditions. Only once those are stabilized and ensured via collective bargaining do workers focus on wage gains. These are always measured against firm profitability and the cost of living because workers understand that firms must make profits in order to distribute a small portion to workers in the form of wages (which ensures workplace harmony that is essential for maximizing productivity). These are the three pillars of “reasonable” capitalist exploitation in market democracies: job security, fair and safe working conditions, and a decent wage that allows workers the belief that their prospects and those of their children are improving.

    There is no extortion involved, although closed shops in strategic sectors can distort the wage bill if political conditions and law allow it (which is seldom the case).

    The capitalist state taxes in order to ensure the flow of public goods, which are non-fungible, to the the working and marginalized classes who otherwise would express their dissatisfaction in the streets rather than by voting for bourgeois parties–and Labour in NZ and Labor in OZ are both clearly that. Capitalists consent to a “reasonable” rate of taxation because they understand that it helps provide the material grounds upon which future investment is made. The specific rate for firms is determined by contextual factors that are both structural and demographic, of which the local labor market is just one part.

    More importantly, the bottom line is this: the social peace in which capitalists enjoy the fruits of other people’s labor comes at a price, which is why your belief that governments “extort” wealth is so short-sighted it is impossible to take seriously.

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