Work and Wealth
IV.

1.

Everybody knows that business life does not only take place on the marketswhere enterprising employers profitably turn the commodities they have had produced into money. The most impressive branches of capitalist activity are to be found on the floors of the stock exchanges, where television viewers can watch brokers producing zigzag curves, or in those fantastic computers that move multibillion sums around the globe in a matter of seconds. In any case, the fastest money and the biggest fortunes are made in spheres where money owners, or their agents, are entirely among themselves and their pieces of paper, on which nothing but highly speculative promises are quoted.

Detached as all this may be from simple commodity production and circulation, it nevertheless is not unconnected with those sectors of the capitalist economy that are called “real” by contrast. When a bank collapses due to bad speculation or, conversely, a share price rises to unforeseen heights, everybody expects material effects on industry and trade, even if no one has any idea what they will be. Conversely, “full employment,” which these days is taken to mean any single-digit unemployment rate, can bring down a whole national stock index, perhaps because it is feared that full employment will lead to higher wages, higher wages to more inflation, more inflation to higher interest rates, and higher interest rates to falling share prices — irregardless of how right or wrong each of these four “paths” actually is. Mass layoffs can in turn trigger upward jumps in share prices if a broker takes them for a sign of more ruthlessness in raising profits and doesn’t care to distinguish between the taking of a measure and its success, and so on and so forth.

So it is generally accepted that the autonomous world of speculation on interest-bearing notes and such has something to do with the world of work. It is also commonly recognized that this is a strange relation of unfathomable nature and often marked by surprisingly open cynicism. Less widely known, perhaps, is how the credit system completes the capitalist regime of property over work.

2.

Every businessman comes up against limits in his business. For the purpose of investing disposable funds in order to compete successfully, his capital always proves too small. The fact that it grows is no help, for once it is invested, it is tied up for the time being, out of reach for making any “flexible reactions” to current business conditions; it is not available for some possibly indispensable rationalization of production if competition dictates it. Moreover, investments that promise sweeping success normally cost much more than can be put aside from incoming returns. So it is not just that businessmen always like to earn more and are willing to “venture more” to do so; rather, because of their property’s limited size in comparison to the competition, their property is never the optimal competitive condition it should be.

Credit — other capitalists’ acknowledgment of one’s future business returns as current ability to pay — helps to overcome this barrier. This is how businessmen engaged in production and trade provide each other with “liquidity” that they have yet to earn by accepting, in lieu of real payment, promises to pay at a later date for a small fee, thus procuring a certain independence from the time-consuming drudgery of selling. And for financing investments, there are money owners standing ready with loan capital, likewise for a certain fee. Thus the trust of others in future competitive success frees up current, investable funds that can be used to compete for such success. In this way, credit increases the employers’ capacity to marshal profitable labor by freeing them from their dependence on past business success and profits already earned. And because this is done for the sake of succeeding in competition, no firm can get around making use of the services credit provides. In the world of business, credit is ubiquitous.

Of course, because they have gotten their business rolling by using others’ property, there is an increase in the claims to the profits that manufacturers have to realize on the market. After all, the deferred payment has to be redeemed, the borrowed capital has to be increased in the proportion fixed by the interest rate. The capitalist method of calculation, according to which it doesn’t matter at all that labor creates new property, but only that capital increases itself, becomes the content of business here. The fact that businessmen measure their profits in relation to the total of advanced capital now becomes the creditor’s claim and legally documented right to a previously fixed rate of growth of the loaned sum of money. This claim has to be financed out of the businessman’s profits, regardless of how much, how fast, or whether they grow at all. The success that a company seeks to ensure, promote, and expand by deferring payment or borrowing money thus turns into a legally guaranteed “constraint” on its business — and the struggle between debtors and creditors over the rate of interest turns into a never-ending conflict in the business world.

So when creditors and debtors make themselves dependent on each other’s success by combining their respective property for the sake of its profitable employment, their relationship does not become a complementary one. Instead, credit adds a new competition to the competition between producers, one which affects a bit more than the division of profit:

— The borrower gears his business towards the goal of proving his company’s success through punctual debt service. In other words, his aim is to remain creditworthy in order to get hold of the property of others as a means for his profit in a continuous, preferably more easy and reliable way. The firm turns into an instrument for operating with other capitalists’ money for its own advantage.

— The lender conversely accumulates his property by means of someone else’s business activity. He makes himself dependent on the success of his debtor, and for that reason insists with all due ruthlessness that the latter service his claims before all others. The creditor demands that the debtor subordinate his business calculations to his obligations to pay interest and repay principal, at the same time requiring collateral assets for the purpose of ensuring a lastingly profitable course of business; otherwise, the creditor would just be left with a ruined debtor’s residual assets to minimize his losses.

This new competition alters a crucial detail in the purpose of capitalist commodity production, a purpose which consists in accumulating invested money. The accumulation of property is no longer the simple aim for which an employer demands that his factors of production give their all; rather the granting of credit anticipates the success of this endeavor as a matter of practice. It does this not just by making solid prospects for success a condition for loans, but in the material form of treating profits yet to be made as disposable property. Promises to pay turn into means of payment: the borrower has means of business at his disposal that the business has yet to produce; the lender has claims that he enters into his books as growing monetary assets. That the workforce in their credit-financed workplaces will produce profitably saleable commodities, and that the sales will go through successfully, so that the invested capital will yield a profit and the creditor’s interest claims will be serviced reliably — all this is taken for granted as fait accompli and precondition for the real business at hand. The latter takes place between debtor and creditor and consists in both parties bringing about the accumulation of their money among themselves — one by entrusting his money to someone else, the other by being able to use someone else’s money. Labor is awarded the honorable task of redeeming what the parties to the credit deal have already settled among themselves as an established fact.

With credit, not only does money capital appear in an independent form as a business player, but productive business activity also makes itself independent of its own material side. The claim on profits that money capitalists’ demands for interest assert against commodity producers competes with the latter’s pursuit of profit, because both parties have the same interest in business earnings. Both regard commodity production as the means to redeem in real money their common expectation of good business, which they have already credited to themselves as elements of their capitalist assets. Should the business fail, the very same property claims created by the credit transaction are what come into conflict.^[16]

In sum, the business between lenders and borrowers creates the means that enable employers to make ever increasing competitive efforts, whose extent is not limited by past accumulated profits but is as great as the willingness of money capitalists to bet on future yields. For that reason, however, the capability to perform great capitalist feats in the competition over commodity markets is at the same time a compelling impetus to perform them. For it is precisely because the provision of necessary means of business detaches itself from actual business success that the wealth made available itself then depends on sufficient returns, and that the binding measure for the competitive efforts of commodity producers then lies in their obligations toward the world of finance.

This has consequences.

3.

The limits set by the total purchasing power of society are of no concern to an individual employer; the limits he has to deal with in practice are those that lie in the size of his assets relative to those of his competitors. Of course, the money he earns “on the market” must first have been earned by his customers. And since the capitalist business world has monopolized the command over work in society, it is no secret where and how that happens: wealth is produced in order to be realized through sale as an abstract quantity — as an excluding power of disposal, quantified in monetary units — in the hands of property owners. By paying for necessary work out of their sales proceeds, these property owners put money income in the hands of their employees. By these payments and by making payments to each other, too, they transform produced values into earned money. In addition, there are all sorts of functional services that employers deem to be worth part of their income — i.e., part of the profit contained in the value of commodities realized by sale — and that thereby create further money incomes; the state nationalizes what it sees fit, thereby spawning civil service salaries as well as its own demand for goods, all of which employers can also use to make money. This is all done on the basis of the equation between produced commodity value and acquired money. Nothing and nobody other than the labor commanded by capitalist producers generates property that has its economically effective form in money. In this respect, each employer contributes to the creation of the purchasing power that he then competes for when selling his commodities and nobody besides people like him creates it. Nevertheless, he is as indifferent to the service he thereby renders all his colleagues as he is to the general limit thereby set on the sale of commodities as a whole.

The practice of deferring payment and lending money, which has become an established, separate branch of business, intervenes most effectively in this fundamental relation between capitalist production and the purchasing power of society. Constantly and at every turn, credit suspends the dependence of commodity sellers on the money of society, on the solvency of existing needs. For that very reason, credit also asserts this dependence periodically by restricting all business activity.

a) Finance capitalists^[17] put into practice the capitalist delusion that property possesses the ability to accrue entirely on its own — without a “detour” via the materiality of goods and material work, both of which have of course already been degraded in capitalist commodity production to mere stepping stones on the way to the accumulation of money. Backed by their right to interest on the money they lend out, they heedlessly disregard the dependence of their business on the profit their debtors actually make, taking the liberty of regarding and treating accepted promises to pay and bonds of indebtedness themselves as value-bearing assets. They do not take them as mere claims on money they have lent out, as claims to be repaid plus interest, to be precise, but as another form of perfectly disposable financial assets with built-in growth that can be transformed into money at any time and for that reason are as good as money. Furthermore, since speculation on the earnings potential of the credited commodity-producing business is emancipated from the actual course and outcome of this business, earnings from credit can themselves become the object of a credit deal that supplies one party with additional money and the other with a new security that is virtually the same as money, and so on…. In this way, a whole lot of financial claims arise which have money value that can be realized at any time within the world of finance, although in substance they merely document title to wealth actually created elsewhere, and are therefore nothing but outstanding claims or —conversely — debts. On the basis of profits not yet made, money that is not available, along with the claim on its accumulation, is treated as disposable wealth.

Of course, not everybody can bring off such a transformation from promised payment to regular property. For that you really need finance capitalists, who have the money of society in their hands and for that reason can redeem at any time the claims they accept, thus vouching in practice for their value. In fact, these sorts of capitalists manage the trick of “creating” money without labor, a feat they accomplish with the power of their money merely by accepting claims for money as tradable assets. To be sure, these claims ultimately remain nothing but outstanding accounts that have yet to be settled, referring to wealth that has to be created by real labor — even moneylenders would have trouble living off the figures in which they quote their so-called “expected” interest rates and the like. Even in the world of finance, private property is not a matter of fiddling around with figures, but an exclusive and socially binding form of wealth produced for just this purpose. Nevertheless, when the authoritative, i.e., finance, capitalists accept financial claims and debts as valid claims on real wealth, they turn the latter into securities that are equivalent to money, in principle indistinguishable from the economic power conferred by property earned in the commodity trade. This isn’t surprising, because, after all, property created through labor in the productive sphere only realizes its true purpose, that of conferring an abstract power of disposal over goods of every kind, once it has detached itself from its object produced by labor — the commodity. The only difference is that in the sale of commodities this abstraction really takes place, whereas the “creation of money” by credit takes this abstraction for granted as a prerequisite for its business.

b) This difference is in no way irrelevant within and for the credit business. Nobody pays closer attention to the solidity of securities, to the soundness of promised profits, than do the money owners who buy and sell such “products” from and to each other. Nobody knows better in practice just how much a claim to money and its redemption in money are two different things, between which there are even various degrees of “business risk.” But after taking all that into account, finance capitalists insist with all the power of their money on the fiction that the two sides are identical, that acknowledged promises to pay money are as good as money paid, and that all money is a legal title to accumulate more. They obstinately proceed on the assumption that what they are speculating on is already wealth, and that all business activity financed by credit is good for nothing other than making this claim come true, a claim that has long been settled, turned into money and used as money capital. They handle their money claims like settled outcomes, for which the necessary conditions are to come about as a matter of course and entirely automatically.

It’s not that they are deceiving themselves here, but that they’re making the most demanding claim imaginable, a claim whose satisfaction is not completely free of certain contradictions.

c) The credit created by finance capitalists generates genuine purchasing power — both for the concerns of banks and for the industrialists to whom they lend. The latter use it to make investments, i.e., to pay suppliers and pay out wages to the yet-to-be-downsized workforce, thereby pushing ahead with their competition for market shares heedless of the actual reflux of the money advanced. In so doing, they all expand their production, not only without any regard for the limits of the effective demand they supply, as always, but far beyond those limits. Their sole criterion consists in the market shares remaining to be captured as well as the advances and interest claims of their creditors. These latter claims are boundless for the simple reason that they are after all based on the very liberation of the employment of capital from the bounds of produced wealth. This is why industrialists spurred on by credit are not the least bit bothered by the fact that their correspondingly large-scale competitive activity increasingly constricts the purchasing power of society at a rather crucial point: their enormous “labor-saving progress” diminishes the income they put in the hands of their employees. They thereby complete the separation of production from social needs, which is the basis of their business anyway. After having subjected all needs to the criterion of profitably exploitable purchasing power, they then go and emancipate themselves from the criterion of existing purchasing power.

d) After all, effective demand in society does not increase just because credit allows creditworthy businessmen to make payments whenever they need to. The monetary claims that pile up in bank ledgers are not at all intended for the purpose of buying commodities from capitalist suppliers. It may well be that loan managers who become rich dealing in credit need far more and far fancier goods than average, if only to underline the credibility of the promises to pay they represent, and speculative profits can also be used to build absolutely real bank palaces, but this is not the point. The definitive economic purpose of the claims to money managed and accumulated by the credit trade is not to realize the commodity value of the masses of profitably produced goods, but to share in their realized value. Self-accumulating debts do not augment the purchasing power that commodity producers compete to profitably utilize; rather, they augment the claims made on producers’ profits.

These claims not only take the form of loans to be repaid plus interest. Stock trading, for instance, replaces the direct tribute of interest payments with a general relation between a company’s fate and the value of its shares, a relation mediated by dividend payments. This is the foundation for credit operations that turn the trend in a company’s share price, or even in a weighted collection of various shares, into a further object of promised returns that themselves become tradable securities; such speculation also takes place on the average national business trend, and so on. Manufacturers have to vouch for the entire speculation with their actually realized and profitably invested profits. They have to deliver the business trend anticipated by speculation, because the corresponding “securities” — from stock shares to the most ingenious derivatives — have already become property used as the equivalent of money. This is how finance capitalists obligate the entire business community they credit to validate the fiction that forms the basis of their credit business, namely that debts and wealth, credit and money, promises to pay and property are all the same. Although this amounts to the admission that securities dealers on their own can only accumulate their securities without really being able to vouch for their money value, it is precisely for this reason that finance capitalists insist so uncompromisingly on the functionality of all business activities for the quality of their monetary claims. They promote themselves along with their securities to the role of economic basis, while demoting the production of commodities along with the realization of their value to the rank of corroborating evidence for the recoverability of their debts. “Real” business takes place in order to provide finance capitalists with the guarantees of success they deem necessary for their speculative property.

e) By performing this service for the world of finance, capitalist employers run up against “limits to growth” that have up to now not been set by their employees nor ever set by nature and its “resources.” The profits they compete for must meet a standard in terms of rate and volume that is set by their creditors’ claims and the credit spiral that arises from them. This standard necessitates that they determine the extent to which they expand production solely in accordance with their debts. And that inevitably causes production to collide with the limits of purchasing power in society — which they repeatedly trim down every time they rationalize production. The result is that sales stagnate across the board; markets become glutted. Of course, this result of their competition is something that each individual producer regards as a sign of its own impending defeat in the struggle for market shares. Consequently, they need to borrow capital more urgently than ever, above all to cope with the timely servicing of their debts. However, the lords of finance capital can’t help noticing that their debtors’ competitive difficulties periodically assume epidemic proportions. They see their loans increasingly going “bad”; they have used their financial might to treat their rights to yet-to-be-earned earnings as currently employable, money-valued property and this threatens to turn out badly for them in more and more cases. In this way, the financial sector views its own troubles with its balance sheets as a sign that not only the one or the other producer has run into difficulties in competition, but that profits as a whole leave a great deal to be desired, because they no longer guarantee the value of the growing claims on interest and earnings trends.

Finance capitalists don’t quit their business on account of this trouble, but instead translate the increasingly critical general business situation back into merely particular cases of business failure. Faced with more and more candidates for insolvency, they must sort out their debtors all the more uncompromisingly. They separate the bad ones, whom they ruin by withdrawing credit — even if a few of their own outstanding loans have to be written off in the process, they cover their losses as best they can out of their debtors’ remaining assets — from the other candidates, who they bet on to gain from the crisis, and to whom they are accordingly generous in providing credit. However, in doing so, they generalize the crisis situation, for every business they ruin by withdrawing credit brings about insolvency somewhere else. On the other hand, loans that are continually prolonged and increased end up ruining the bank itself, damaging all its creditors and debtors in the process.

So at just this critically intensified point in competition, commodity producers and finance capitalists are shown to depend on one another and feed as one class on wealth in the form of commodities to the extent that the paying public turns them into money, or rather, into more money than their production has cost. Once again, the entire business world has invested more in their competitive battles than could be profitable altogether. Now, competition rages over how the now unavoidable “slimming down” of capital and credit is to be spread around.

4.

In the first instance, the only sense in which this affects labor is that it blithely abstracts from work’s necessary services for capitalist property. While commodity-producing capitalists rationalize work away and chalk up their gains to labor costs they no longer need to pay, finance capital acts from the outset as if it were its very own source of accumulation.^[18]

Some friends of the working class take this fiction so seriously that they accuse finance capitalists of failing to make their due contribution to “employment” despite the enormous sums they move around every day, denouncing them for accumulating their money merely for the sake of speculation instead of investments to “create jobs.” Such complaints are fairly perverse, because in the name of the workers, they totally ignore the extortionate character of workers’ “situation” in which “employment” — in plain English: work according to capitalist criteria — is a necessity. Besides, “employment” is never a capitalist concern; even for good old commodity producers, who give lots of people work, employees are always a means to an end they share with all speculators, and whose realization necessitates orchestrating layoffs and intensifying work to the point that only the desperate would really wish for that kind of “employment.”

Moreover, the complaint is a bit unfair. Whatever jobs employers may create, they create them only with the inexhaustible means of that trade that turns hoped-for profits into disposable financial resources for procuring the required “factors of production.” It is by using loan capital that commodity producers engage in their ambitious competition for the lowest unit labor costs — to be sure, this “secures” only those positions that are still required at any given time, and those only as long as they make the company and its credit obligations profitable, but other kinds of positions are not to be had from capitalist employers anyway. It is to the financial industry that industrialists owe any sales possibilities they may discover for pursuing their fundamentally insatiable interest in having as much of this kind of streamlined and compressed labor under their command as possible — at the expense of their competitors, of course, which does not necessarily increase the total number of “employed.” For it is the financial industry that offers them the freedom to act independently of market developments, enabling them to really turn the market into their battlefield.

Not only does the credit trade make commodity producers conditional offers to step up their profit production, offers that nobody who wants to stay in business can refuse, it also forces them to make increasingly extensive use of ever more sparingly employed labor, i.e., ever more productively employed labor, as a condition of their creditworthiness. Even though the credit trade does not bother distinguishing between the real wealth of society and property in it, not to mention caring about the connection between property-creating labor and the money it costs and yields, it makes clear enough to its debtors that its self-accumulating assets consist in legal claims that the rest of the capitalists consequently have to satisfy, only to be ignored at the price of their own ruin. What credit managers push through in the most effective way possible is wage labor carried out in its most profitable form, labor that is both productive enough and takes place on a large enough scale to secure the profitability of not only the company itself, but also a mountain of credits, of securities that speculate on the growth of one company or several companies, or even on the trend of an index for the growth of selected firms…. Credit managers simply take all this for granted, and let every company that fails to meet their standards go under for lack of credit.

So all things considered, to complain in the name of the workers that finance capitalists are not committed enough to employment is to trivialize what it is that finance capitalists really do. After all, financial institutions and their loans promote above all else the contradiction that less and less labor has to make more and more capital profitable according to more and more demanding criteria. They promote the competitive concerns of commodity-producing capitalists to any desired extent and demand success; and, by providing the means for increasing the productivity of labor, they also impose the standard for the profitability to be achieved. In this way, they dictate both the standard that labor must meet to be worth its wages, and the extent to which workers must be made redundant. Their demands are so high, if only for the sake of the security of their speculations, that they are met by less and less labor — in two senses:

Labor can only be profitable enough if the fraction of wages in the produced commodity value tends toward zero — with all the well-known consequences mentioned in the last section: consequences for the ease of work, for the relation between the wealth workers produce and the wages that are to cover their vital necessities, and for the number of workers “released” from the opportunity to earn a living by working for others in a world where this has been made a necessity. The achievements of credit add another consequence to the list: it finances not only the “technical progress” that allows employers to economize on jobs and their holders, but also the intensive use of labor at newly created workplaces — until it turns out that they generally fail to function as a means of competition because altogether much too much work is being done compared to what can be profitably sold. The agency that brings about this practical insight is once again the credit trade; it decides on the creditworthiness of competing companies and forces them to “reduce employment” accordingly or face ruin, thus revealing that all jobs are based on nothing but its speculation, and that there are times and phases when this speculation simply doesn’t work out so well. The result is a jump in the unemployment rate, which takes an even greater toll on the capitalistically useable purchasing power of society, thus proving even more of the work done up to now to be superfluous. That’s why “recessions” have the well-known unpleasant habit of “deepening.” The eventually inevitable upturn then takes place on the basis of a “downsized” business world and, of course, with the most effective production techniques. So at last, companies grow and make creditworthy profits, while the legion of the unemployed decreases only in drips and drabs, if at all. Thus the result of the last business crisis remains: less labor is needed to make as much capital profitable as possible.

In this manner, capital’s growing power to accrue by itself in the form of anticipated business success, and to make capitalistically commanded work functional for the credibility of this self-accumulation, also gives rise to the “phenomenon,” so peculiar to the market economy, of an “industrial reserve army” made up of workers without any prospects of being employed.^[19] The periodically revised excess of credit-financed business activities is matched by an excess population whose superfluousness results solely from the uselessness of so many people for work that meets the standard of sufficient profitability. Otherwise, these people wouldn’t be faced with any obstacle to providing a decent living for themselves; even the means of production would still be there after having been shut down during the most recent business crisis.

Those who find themselves in the ranks of the excess population, and all others who realize they might be joining them any time, are thus forced to worry about finding work. This is an extremely disgusting concern, actually, because those forced to have it have no expedient means for addressing it. The matter becomes downright hopeless when advocates of the workers’ cause address this situation by calling for “jobs,” making a demand out of the necessity that capitalists have created — and will hardly be the ones to abolish. It is not in order to trash capitalist business as an unsuitable means for making a livelihood that they complain about the nasty experience that this business, in the course of exploiting the productive power of work, also brings it to a halt on a massive scale, but rather to push it on people as their own best interest. They demand a capitalistic use of labor because, and only because, capitalists, who want the exact same thing, impose the most demanding conditions on the satisfaction of this demand for the sake of harvesting their economic effects.^[20] The call for work no longer includes a reminder that workers themselves might have a few conditions to place on their being used for the benefit of others — or if it does, it is only to reject them. “For the sake of jobs,” demands of this kind are simply obsolete.

Notes