The title of this note is from today’s “It’s the Economy” feature by Adam Davidson in the print version of the Sunday Times magazine.
In the online version that title is replaced with the less provocative “What Does Wall Street Do For You?” –a title which is actually more accurate, as Davidson’s main contention is that we CAN’T do without Wall Street because of what it does for us.
Davidson ends his column by admitting that there is no way regulation can rein in Wall Street’s crimes and excesses, yet he still believes its virtues outweigh its vices.
Certainly with a government run by and for the ruling class, he’s right on the limits of regulation. But that’s another, and less fundamental point.
For Davidson mentions in passing one function of capital — in fact it’s central function — which if analyzed correctly shows that we can and MUST do without Wall Street.
Davidson notes the role of Wall Street in what we Marxists call the sphere of circulation, i.e. as a channel to redistribute money from those that have it to those that don’t. Davidson portrays this as benefiting the middle class and even the poor who otherwise couldn’t make purchases they need and want. Naturally he says nothing about the role of expanded credit in propping up a system that would otherwise have long ago fallen from the weight of its falling profit rates and the resulting collapse of its markets (see Mandel’s “Late Capitalism” on the role of credit in postponing and exacerbating inevitable crises).
But what’s more important is how credit, thanks to the financial institutions through which it flows, performs the redistributive function Davidson correctly notes –although it does so not primarily from rich to poor, but rather from workers to capitalists, and then among the capitalists in a newly socialized form.
That is, the capital flowing through the system originates in surplus value extracted from the workers. Once so extracted, banks and other institutions gather that capital in pools far bigger than the capital of any of the individual capitalists from which it originated. And in so doing banks make available funds for investments far greater than would be possible if a capitalist could draw only upon his own accumulated wealth.
Capital, in other words, is objectively socialized: socialized in its technical function, but only objectively because it is still privately owned. (This is parallel to the objective socialization of manufacturing and services within corporations.) For a description of this feature of credit, see:
Capital, Vol. 3, Chapter 27. The Role of Credit in Capitalist Production
Why does this matter for workers, especially those who have rallied to the call to “Occupy Wall Street”? Because this objective socialization presents the possibility of such an occupation in the most literal sense, that is, of seizing those banks and other corporations whose technical functions are carried out in a socialized manner and, by taking them out of the hands of private owners, putting the accumulated riches stolen from us at the service of society as a whole, a society which for the first time can vote freely on what to do with these riches.
We can be sure, of course, that once having a democratic say over such expenditures that workers will vote to fund essential needs such as food, housing, education, child care, culture, etc., and not war and luxuries for the idle few.
PS: I must note in passing that the analysis of credit and banks above is at odds with that of David Graeber in his book “Debt: The First 5,000 Years.” Or more precisely, not at odds but rather irrelevant to Graeber’s schema. Graeber says nothing about the origin of the bankers’ wealth in the surplus value produced by workers, focusing only on various debts owed. Nor does he say anything about the possibility of seizing the banks. In fact, the implication of his one concrete suggestion, to declare a “Jubilee” and cancel debt, is that after such a cancellation the system will go on exactly as before, with new debts slowly accumulating until once again somewhere down the road it becomes time for another Jubilee.
Given Graeber’s prominence in the Occupy movement (earned in great part by his selfless and courageous activism), these lacunae in his analyses are especially unfortunate — and go a long way in explaining the reliance upon similarly short-sighted “solutions” among many Occupiers, who call for withdrawing money from the banks and putting them in credit unions or “alternative” banks — while leaving the great capitalist financial institutions alone.
> The article above was written by Andrew Pollack.