[OPE-L:7231] individual capitalist behavior [was: Marx on solving human problems]

From: gerald_a_levy (gerald_a_levy@msn.com)
Date: Tue May 21 2002 - 10:06:53 EDT

Re [7229]:
Hi again Jurriaan.

> I still think we do not fully agree about the importance of use-value in political economy, even although you now qualify your previous comments and make a more credible case. My point is that your view of capitalists being "indifferent" to (1) the particular use-value that a commodity fulfills and (2) the relative indifference to the particular commodity being produced, is wrong. This could apply only to speculators. Functioning capitalists can never be indifferent to these things, because they impact directly and immediately on sales and profits. You reply to this by saying that okay, they may be concerned with it, but only from the point of view of their private own profit motive. This still ignores however that the commodities must sell in the first place, and that in order to make a profit in the first place, the entrepreneur cannot be indifferent to the particular commodity being produced, he must choose something specific that will sell and will make a profit, and not just any old thing. I belabour this point a little, because I think the implications of it have often been ignored by Marxist theoreticians, generating a far too simplistic, caricatured view of capitalist behaviour. Likewise, the idea that capitalists are generally indifferent to the social consequences of their business decisions must also be qualified, precisely because those social consequences can also impact on profits and sales, and because capitalists are also social actors in a given society. We can agree that realising private profit is the "bottom line", but capitalist behaviour is motivated by much more than that, including factors which are not purely economic. This is especially true today, when some corporations have a turnover greater than the GDP of whole countries. <

You raise a number of issues above, but they all basically concern 
individual capitalist behavior.

A)  When you write that "this could only apply to speculators", I think 
you are wrong  unless you are using the term "speculators" in a very 
broad way.  It applies, I think,  to all capitalists who have *money capital* 
that they are "free" to invest in corporations  on the stock market or in 
privately-held corporations.   What I mean by 'free' in this  context is that 
because of their already existing pattern of investment in constant
fixed capital, a lot of the capital that they have does not take the 
money-form but is bound to a specific material form and this represents 
a "barrier to exit" for  individual capitalists.   My proposition is very simple: 
without the barriers just  described, capital tends to migrate to wherever it 
anticipates the highest individual rate of profit (or rate of return on investment, 
RRI, if you prefer.).  In these decisions  about where to invest money capital, 
use-value considerations are entirely secondary  in the sense that while they 
are, of course, not going to invest money capital in firms and branches of 
production where they don't think that the commodity output will be sold, they 
are indifferent to the specific use-value otherwise.  Thus, it matters  not a whit 
from the standpoint of all 'non-perverse' capitalists whether they invest 
money-capital in firms producing cereal, bombs, jewelry, housing for the poor, 
or opera; what matters is, most fundamentally, the anticipated RRI.

B) It is, of course, true that A) represents an abstraction.   I think that for Marx
it was a consequence of the assumption  in _Capital_ that economic agents wore 
"character masks"  and were thus the mere bearers of economic relations.
>From that perspective,  capitalists are _only_ concerned with the imperative of
capital accumulation ("Accumulate, accumulate ....").   I think that this is a 
reasonable assumption from the standpoint of the level of abstraction of "capital
in general".    

C)  When we depart from the study of capital in general to discuss *class
differentiation* then this assumption becomes problematic.  While true for
capitalist behavior in general,  when one moves to an examination of 
specific 'micro' *case studies*,  *industry studies*,  and *class analyses*, then 
it may no longer be valid for some of the following reasons which appear 
from the standpoint of capital in general to be 'perverse':

a)  It may be that individual capitalists are wedded 'emotionally' and 'culturally'
to specific branches of production and firms.  For them, the use-value of
the commodity output may be vital.  This is frequently the case for petty
capitalists. Thus, there are 'family-owned' businesses which routinely lose
money year in and year out, but they are kept in business because it is a
family tradition and the owners may take 'pride' in what is being produced.
In the case of agricultural production, small capitalists may stay in business
again even when they are losing money and know that they could obtain 
more money if they sold their farms to  real estate developers.  Yet, they 
resist for cultural reasons.  I frequent some used bookstores where I know
I am about the only customer that they have seen for years, yet they
stay in business because the owner is emotionally attached to her/his
business.  All of this happens, but represents *transitory conditions* in the
sense that they will in general ultimately be forced out of business. If 
studying an individual capitalist's behavior, they might have relevance
but they have no *general* relevance to explaining capitalist behavior. 
Indeed, from the standpoint of large capital, such behavior is seen as
irrational and perverse.

b)  I agree with you that in specific instances capitalist behavior might
be motivated by non-economic goals.  E.g. *prestige* and individual 
*power*.  Thus, there are capitalists who buy professional sports teams
for reasons of prestige even when they recognize that they will lose 
money in so doing.  While, again, this happens it has no relevance for 
capital in general even though it might explain the behavior of  
individual, isolated capitalists.

c) the imperative for capitalists is to "accumulate, accumulate", but
the reality is that some capitalists "consume, consume".  Thus,
"lifestyles of the rich and famous".  This, on some level, *is* an 
important theoretical issue because it impacts directly on the ratio
of productive to unproductive consumption of surplus value in the 
economy.   Yet, it is also the case that the demand by individual 
capitalists for luxury goods directly benefits those capitalists who 
produce those luxury goods.  Thus, it is not as if by unproductively  
consuming surplus value they were having the same effect as hoarding 

d) Individual capitalist behavior, especially in the case of individually-
owned business, can be effected by the whims and personality of
the owner.  Here obviously, we are dealing with highly unusual and
contingent cases.  Nonetheless I can think of some examples: NY
Yankee owner George Steinbrenner once offered a multi-
million dollar  contract to pitcher Ken Holtzman because his son
(about 8-years-old at the time) said that he 'liked' him -- hardly
the action of a rational capitalist.  There are major corporations 
which have spent millions of dollars financing yacht racing not
because of the potential benefit in terms of advertising and public
relations but because the CEO liked sailing.  In an important strike
in US labor history,  the l940 strike against Ford Motor Company,
Henry Ford ended up offering the UAW a contract and settling the
strike after, following the deaths of some strikers, his wife told him
that if he didn't settle the strike she'd leave him (this is documented, 
if my memory is correct, in Keith Sward's _The Legend of Henry Ford_:
btw, I'm not suggesting that this was _the_ reason Ford settled the
strike, but it appears to be _a_ reason.)   Stuff like this happens
and indeed it may be important for individual unions and workers
in terms of knowing how best to develop an effective negotiating
strategy, but this has no relevance to the larger picture of individual
capitalist behavior in general.

e)  There are even 'perverse' investors who invest only in corporations
which are 'socially responsible'.   Indeed, there are mutual funds 
that are dedicated to this type of investment.  Indeed, there is even 
a *social movement*  that promotes this as a strategy.  And, of course,
there are investors who only invest their money in that way.  Despite
the claims of the directors of these funds, there is every reason to 
believe that the RRI on these funds will in general be lower than the
average RRI.  The reason for this, put simply, is that it 'pays' for
corporations *not*  to be socially responsible.  These investors are
'confused" from the standpoint of capital: they have forgotten to
'keep their eyes on the prize' (the highest RRI) and have focused
instead on the 'perverse' goal of what is deemed to be socially 
responsible.  Despite an international movement to promote 'socially
responsible investment', I think it is destined to only represent a
small percentage of total investment.  In any event, it's not a 
workable 'solution'  to the socially irresponsible behavior of 

I'm not sure I understand what specifically you meant in the last
sentence of your post that I clipped above.

In solidarity, Jerry

This archive was generated by hypermail 2b30 : Sun Jun 02 2002 - 00:00:07 EDT