– 11 Oct 2008

In a classic “The Nature and Logic of Capitalism”, the author, Robert L. Heilbroner, writes on the logic of capitalist development. Schumpeter’s words are worth noting.

“It is that the social formation of capitalism, like that of all others save only primitive society, is at bottom a system of class domi­nation and mass acquiescence. That which distinguishes capitalism from other social formations is not the fact of its hierarchical character but its unique form, in which the drive for power and domination becomes sublimated into the desire to accumulate capital, and in which the expres­sion of subordinate status is manifested through the ac­ceptance of market and property relations. The regimes of capital display a great variety of forms, from the enlightened countries of northern Europe to the repressive Union of South Africa, but all-even those that speak of them­selves as “socialist”-still maintain the institution of capi­tal as the dominating element in their social structures. However hedged about or surrounded by advanced politi­cal and ideological ways and views, the accumulation of capital remains the life force of these nations, the center not only of their economic but of their social and political life.

It follows, then, that at the deepest level the logic of capitalism must also express the imperatives of accumula­tion. The fundamental force that drives the system through history is its search for profit-a search on whose outcome hinges the historical fate of the social formation as a whole. This relentless and insatiable process, into whose genesis and ramifications we have inquired at length, therefore sets into motion the central tendencies of the system. The capitalist path takes different turnings at different periods of history, and the paths of capitalist nations by no means run along exactly parallel tracks; and yet in all its variations, the trajectory of capitalism is immediately recognizable as a movement guided by the imperious need for profit-indeed, as a movement incom­prehensible without an awareness of this central element of its nature.

As I said at the outset, the dynamics of this logic have been the main research objective of all the great econo­mists. The works of Smith and Mill and Marx and Keynes and Schumpeter describe the outcome of a grand drama of accumulation that all recognize as constitutive of, and inseparable from, the innermost principle of being of the system they are studying. That these scenarios reflect diff­ering empirical observations and conceptual perspectives is obvious enough. Less noticed is that the scenarios also embrace a common framework of basic assumptions. From Smith to Schumpeter the great works of political economy recognize that the vital accumulation process hinges on the ability of a capitalist class to extract profit from the system. All further understand that this ability depends on the legitimacy of property rights in the means of production. All also understand that these rights require a mutually supportive division of functions between the realm of business and that of the state-a division of functions that takes for granted the priority of accumula­tion as a necessary condition for a stable social order. These universally recognized preconditions for accumula­tion constitute a tacit delineation of what we have called the “regime” of capital-that is, the depiction of capital­ism as a social formation in which the accumulation of capital becomes the organizing basis for sociopolitical life.

In addition, all the major scenarios are dramas of social as well as material evolution. Growth and change lie at their hearts. In particular, the great economists emphasize that the accumulation process is an agency for social, not just economic, change and that one of its main effects is to alter, for better or worse, the fortunes of the social classes of the system.

Finally, all the great scenarios envisage the regime as having a bounded future. Its span of life cannot be pre­cisely predicted, but its eventual demise or supersession by another social order is universally foreseen. Adam Smith describes the system as reaching a plateau, when the ac­cumulation of riches will be “complete,” bringing about a deep and lengthy decline. John Stuart Mill expects the momentary arrival of a “stationary state,” when accumu­lation will cease and capitalism will become the staging ground for a kind of associationist socialism. Marx antici­pates a sequence of worsening crises produced by the in­ternal contradictions of accumulation-each crisis clear­ing away the obstacles of the moment but hastening the day when the system will no longer be able to manage its self-generated tensions. Keynes thought the future would require a “somewhat comprehensive socialization of in­vestment”; Schumpeter thought it would evolve into managerial socialism.

This broad theme unquestionably raises the crucial as­pect of the logic of capital, namely its capacity to survive in the face of the obstacles and difficulties that accumulation creates. Despite their general consensus with respect to the long-term future, however, the generalized narra­tives of the worldly philosophers have little to tell us about the present or the foreseeable future. Nothing like a time­table exists for the expected life span of the system-Schumpeter, who predicts the system’s passing, cautions that “in these things, a century is a ‘short run.'” There is no agreement on the proper measure of the vitality of the system. Perhaps most striking of all, a hundred years after Marx’s enunciation of a “law” of the falling tendency of the rate of profit, no conclusive evidence exists as to whether the rate of profit has shown a secular decline or not.

Thus an attempt to investigate the logic of the system in terms of its life expectancy yields no more than an anticipation of its eventual decline, an expectation of little use in understanding the present or the near-term future–indeed, an expectation that may cause grave mischief if plans are laid for the system’s quick demise without heed to the possibility that Schumpeter’s calculations with re­spect to the “short run” might prove to be correct.

There is, however, another aspect of the logic of the system, also present although less prominent in the work of the great economists. This is the effect of accumulation in bringing about structural changes within the system-­changes that alter the manner in which capital pursues its unchanging goal. This logic will not come directly to grips with the question of how long profits can be won, a matter that must ultimately be decided by the changing balance of class power-Marx’s “class struggle”; by the ebb and flow of technological opportunity; by the fortunes of war and conquest; and other such largely imponderable fac­tors.”


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