Political Economy of Flexible Accumulation: Part Three – Finance Capital


The flexible accumulation strategies of companies like Amazon and Apple don’t solve the overall problem of capital accumulation – a superabundance of capital chasing opportunities for valorization. They are only a temporary fix to the reduction of the rate of profit in manufacturing, as technology reduces the socially-necessary labor time involved in the production of commodities.

The specific nature of these strategies is not an inevitable result of fundamental laws of capitalism, which could have taken many other forms of development, but depends on contingent historical and geopolitical factors that created the conditions for distributed production and accelerated consumption, together with the opening up of low wage areas of the world to capital. The end result, however, has been the consolidation of the centrality of finance capital in the circulation process.

From the end of the 1970s, writes Canadian Marxist Gary Teeple, the post-Fordist, computer based “new economy” “created the basis for a massive increase in productivity and consequently a relative decline in demand for labour. Increased productivity, in turn, lowered the cost or cheapened the world’s supply of goods and services and created an ever-greater impetus for global chains of production and distribution.” [Teeple and McBride, eds, Relations of Global Power: Neoliberal Order and Disorder, Toronto 2011:233]

The preconditions for corporations in the developed nations to outsource production to developing countries included technological and logistical advances like shipping containerization, control of inventory with barcoding, deskilling of labor processes, the proliferation of electronics component production in Japan, Korea and Taiwan, and the availability of a large disciplined semiskilled labor force in China. However the decisive factor was the ability of financial capital to freely cross borders, achieved by a sustained campaign by US capitalism to deregulate capital flows dating back to 1945, which consolidated its strategic role in world capitalism and restructured foreign companies to do business in dollars and along American lines.

“By the 1980s and 1990s the greater mobility of financial capital across sectors, space, and time … greatly intensified domestic and international competition at the same time as it brought a much greater degree of financial volatility. … The networks of transnational production as well as finance that characterized [globalization] more than ever linked other capitalist states and economies to American capitalism’s central place in global capitalism. This was seen in the extent to which other countries’ exports depended on access to the US consumer market, and in the increasingly integrated production networks that emanated from US [multinational corporations’] foreign direct investment, on the one hand, and the flow of global investment into the US itself on the other.” [Leo Panitch and Sam Gindin, The Making of Global Empire: The Political Economy of American Empire, Verso 2012:20, 311]

Financial capital and the development of new financial instruments such as complex derivatives functioned in this scenario to smooth out and accelerate capital flows between the developing countries and metropolitan markets, eventually driving the integration of global economies. At the same time it made them vulnerable to possible interruptions of the flow of capital in the form of a crisis.

Panitch and Gindin comment: “The development of derivative markets provided risk insurance in a complex global economy without which the internationalization of capital via trade and FDI would otherwise have been significantly restricted. … By the 1980s and 1990s the greater mobility of financial capital across sectors, space, and time (especially via derivatives—that is, financial capital’s quality as general or ‘abstract’ capital) —greatly intensified domestic and international competition at the same time as it brought a much greater degree of financial volatility. … [This] was accepted because financial markets had become so crucial to the domestic and global expansion of capitalism in general.” [2012:14, 20]

Because of the centrality of finance to capitalist production and accumulation, financial capitalists are able to cream off and concentrate the surplus value generated by the system, shifting power away from production. Derivatives and bond funds soon became the target of hedge funds and venture capitalists seeking higher profits through the exponential expansion of debt. Their insistence on austerity to repay bond loans has collapsed the economies of Puerto Rico and Greece, and looks likely to soon bankrupt Europe.

These structural changes in capitalism are permanent: this is what the left has to grasp and confront. But the extension of global capitalism has also globalized resistance: in China, for example, strikes and worker protests have increased noticeably over the 1,400 strikes recorded in 2014. In the US, although unions face declining membership and hostile laws, strikes and battles over factory recognition continue.

Significantly, workers involved in the supply chain in shipping, transport and warehousing have begun to challenge the employment agencies that supply labor to large corporations like Walmart. Their essentiality to the process of realization of surplus value gives them more leverage than they realize. Moreover, struggles of the lowpaid are merging with the Black Lives Matter fight: the Fight for 15 campaign called for boycotts and protests against shopping on the day after Thanksgiving, but the largest demonstration targeting Black Friday shopping was in Chicago protesting the police shooting of Laquan McDonald. Many elite stores in the high-end North Michigan Avenue were shut down, including Nieman Marcus and the Apple Store.

The anti-Wall Street message of the Occupy movement continues to resonate in the 2016 US presidential elections, with the leading Democratic candidates calling for strengthening of regulations on the financial industry. While none of their measures will reverse the structural changes in capitalism that have led to the dominance of big finance, they anticipate the mobilization of the public against the monopolization and commodification of all human needs.

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Filed under Fight for 15, finance capital, marxism, political economy, Uncategorized

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