By Lambert Strether of Corrente
In this very informal post I’ll take a look at David Harvey’s The Enigma of Capital, because I want to see if Harvey’s conceptual toolkit can give an account of the statistical and conceptual Bermuda Triangle of what’s happening with our shipping and the supply chain generally. (Here is a review of Enigma in the London Review of Books.) My favorite meme these days has for quite some time been the “This Is Fine” dog:
Although I suppose a “This Is Fine” bear would be more appropriate, for reason’s we’ll get to.
Back to shipping: I started following shipping in Water Cooler partly because it’s fun, but more because shipping is about stuff, and tracking stuff seemed like a far more attractive way of getting a handle on “the economy” than economics statistics, let alone whatever books the Wall Streeters were talking on any given day. And don’t get me started on Larry Summers. So what I noticed was decline, and not downward blips followed by rebounds, but decline, for months and then a year. Decline in rail, even when you back out coal and grain, and decline in demand for freignt cars. Decline in trucking, and decline in the demand for trucks. Air freight wobbly. No Christmas bounce at the Pacific ports. And now we have the Hanjin debacle — all that capital tied up in stranded ships, though granted only $12 billion or so — and the universal admission that somehow “we” invested w-a-a-a-a-a-y too much money in big ships and boats, implying (I suppose) that we need to ship a lot less stuff than we thought, at least across the oceans. Meanwhile, and in seeming contradiction not only to a slow collapse of global trade, but to the opposition to “trade deals,” warehousing is one of the few real estate bright spots, and supply chain management is an exciting field. It’s disproportionately full of sociopaths, and therefore growing and dynamic! And the economics statistics seem to say nothing is wrong. Consumers are the engine of the economy and they are confident. But at the end of the day, people need stuff; life is lived in the material world, even if you think you live it on your device. It’s an enigma! So what I’m seeing is a contradiction: Less stuff is moving, but the numbers say “this is fine.” Am I right, here? So in what follows, I’m going to assume that numbers don’t matter, but stuff does.
Harvey is an oft-cited author of books in the humanities and social sciences, a professor at CUNY and a — dread word — Marxist. (My understanding is that an appreciable number of Wall Streeters read both Marx and Lenin because they’re not mushy, like liberals.) In any case, a long and more or less approving essay on Harvey should put to rest the idea occasionally propounded by partisan enforcers that Naked Capitalism has a dog in the 2016 presidential campaign fight.) First, since we do, after all, live in a capitalist society, I’ll give Harvey’s definition of capital, and then his definition of crisis, which focuses on blockaged that prevent the circulation of capital. Then I’ll see if any of the causes that Harvey posits for blockages can give an account of the Bermuda Triangle of shipping.
Here is Harvey’s definition of capital (from The Enigma of Capital, pp 40-41:
Capital is not a thing but a process in which money is perpetually sent in search of more money. Capitalists – those who set this process in motion – take on many different personae. Finance capitalists look to make more money by lending to others in return for interest. Merchant capitalists buy cheap and sell dear. Landlords collect rent because the land and properties they own are scarce resources. Rentiers make money from royalties and intellectual property rights. Asset traders swap titles (to stocks and shares for example), debts and contracts (including insurance) for a profit. Even the state can act like a capitalist, as, for example, when it uses tax revenues to invest in infrastructures that stimulate growth and generate even more tax revenues.
But the form of capital circulation that has come to dominate from the mid-eighteenth century onwards is that of industrial or production capital. In this case the capitalist starts the day with a certain amount of money, and, having selected a technology and organisational form, goes into the market place and buys the requisite amounts of labour power and means of production (raw materials, physical plant, intermediate products, machinery, energy and the like). The labour power is combined with the means of production through an active labour process conducted under the supervision of the capitalist. The result is a commodity that is sold by its owner, the capitalist, in the market place for a profit.
This seems relatively anodyne, no? If we focus on shipping, I think we focus on “industrial or production capital” (making and moving stuff). So far as I can tell, the crisis has nothing to do with merchants, landlords, or rentiers; although merchants as owners of the goods, landlords as the owners of warehouses and port facilities, and rentiers are involved in trade credit, but none of them seem to be doing anything other than what they normally do; none of them caused Hanjin to go belly-up. So, crisis (pp. 40-41):
Continuity of flow in the circulation of capital is very important. The process cannot be interrupted without incurring losses. There are also strong incentives to accelerate the speed of circulation. Those who can move faster through the various phases of capital circulation accrue higher profits than their competitors. Speed-up nearly always pays off in higher profits. Innovations which help speed things up are much sought after. Our computers, for instance, are becoming faster and faster. threatens the loss or devaluation of the capital deployed
Clearly, for Hanjin, continuity of flow has been completely interrupted. More subtly, the entire process is being slowly interrupted as less and less stuff — hence capital invested in stuff — is circulating; rather like a case of hypertension, one of those conditions one does not die with, but from, as blocked circulation culminates in a heart attack: A crisis. In capitalism, a crisis looks like this (p. 215):
At times of crisis, the irrationality of capitalism becomes plain for all to see. Surplus capital and surplus labour exist side by side with seemingly no way to put them back together in the midst of immense human suffering and unmet needs. In midsummer of 2009, one third of the capital equipment in the United States stood idle, while some 17 per cent of the workforce were either unemployed, enforced parttimers or ‘discouraged’ workers. What could be more irrational than that?
And today in “the economy,” after eight years of “recovery,” there’s a ginormous amount of capital sloshing about with no place to go, and a rotten labor force participation rate with many people having dropped out of the labor force entirely. And the same goes for shipping in particular: Ginormous amounts invested in ships, with no goods to fill them, and a 9% unemployment rate for water transportation workers. That’s not a 2008-style systemic crisis, but it’s a crisis according to Harvey’s definition.
So, what can interrupt capital’s continuity of flow? Harvey identifies six potential types of blockage (p. 47):
Examination of the flow of capital through production reveals six potential barriers to accumulation that have to be negotiated for capital to be reproduced: 1) insufficient initial money capital; 2) scarcities of, or political difficulties with, labour supply; 3) inadequate means of production, including so-called ‘natural limits’; 4) inappropriate technologies and organisational forms; 5) resistance or inefficiencies in the labour process; and 6) lack of demand backed by money to pay in the market. .
If these six points are not exhaustive, I’d very much like to hear from readers why, though I do notice Harvey leaves out a “capital strike,” and lack of “animal spirits” by capitalists.
Before looking at these potential blockages in the realm of shipping, I want to call attention to Harvey’s methodological, non-dogmatic flexibility, which I find congenial. Harvey writes:
When viewed as a whole, we see a series of potential blockage points to the circulation of capital, any one of which has the potentiality to be the source of a crisis. There is, therefore, as many Marxist economists like to assert. There is, for example, no point in trying to cram all of this fluidity and complexity into some unitary theory of, say, a falling rate of profit. In fact profit rates can fall because of the inability to overcome any one of the blockages identified here.
Let’s take a brief look at Harvey’s six potential blockages, and see if any of them give an account of our crisis in shipping. (In shipping right now, we have surplus capital, and surplus labor, and no way to put them together. That’s a crisis. Now, I don’t know whether idle containers with goods for the holiday season create “immense human suffering and unmet needs,” but they create suffering for whoever put their business at risk in purchasing goods that might not be delivered, and they will create suffering for those whose employment in retail depends on the goods having been distributed.)
Can the crisis in shipping be attributed to a shortage of (p. 49) initial money capital needed to start a fresh round of accumulation? Highly unlikely. Initial money capital, among other things, is Marx’s famous “primitive accumulation” (accounting control fraud, asset stripping, reneging on pension obligations). It’s also privatizing services and property once considered common. Plenty of all that going on!
Can the crisis in shipping be attributed to (pp. 58-61) difficulties with labour supply? Again, unlikely. High unemployment means we have an “industrial reserve army” sufficient for competition between workers to keep wages low, were the workers not also divided by, well, identity politics. We also have creative forms of precarious employment continually being invented. It is true that the Pacific Coast longshoreman’s unions are militant, but that doesn’t account for declines in trucking or rail.
Can the crisis in shipping be attributed to (pp. 68-71) inadequate means of production? Clearly not. We have more ships than we know what to do with, splendid facilities in Asia and on the Pacific Coast, a widened Panama Canal, and new infrastructure on the Atlantic Coast, including lots of warehouses in Pennsylvania.
Can the crisis in shipping be attributed to (p. 69, pp. 86-88) inappropriate technologies and organisational forms? Highly unlikely. Everything I read about shipping and supply chain management — remember, sociopaths are gravitating to the field! — testifies to how dynamic moving stuff is, these days, both technologically and institutionally.
How about (p. 102) resistance or inefficiencies in the labour process?Harvey writes eloquently:
The human relations involved within the labour process are always complex affairs, no matter how rigid the disciplinary apparatus, how automated the technology and how repressive the conditions of labour appear to be. It was one of Marx’s most signal achievements to recognise that it is in fact the labourer – the person who actually The Enigma of Capital 102â•‡ does the work – that holds the real power within the labour process, even if it appears that the capitalist has all the legal rights and holds most of the political and institutional cards (through command over the state in particular). In the labour process, however, the capitalist is ultimately dependent upon the labourer. The worker produces capital in the form of commodities and so reproduces the capitalist. If the labourer refuses to work, downs tools, works to rule, or throws sand into the machine, then the capitalist is helpless. While the capitalist may organise the labour process, it is the worker who is the creative agent. Refusal to cooperate, as Marxists such as Mario Tronti who adopt the so-called ‘autonomista’ perspective have emphasised, is a crucial point of potential blockage where the labourer has the power to impose limits. When we think of class struggle, too often our imagination gravitates to the figure of the worker struggling against the exploitations of capital. But in the labour process (as is indeed the case elsewhere) the direction of struggle is really the other way round. It is capital that has to struggle mightily to render labour subservient at that very moment where labour is potentially all-powerful. This it does both directly through the tactics of organisation of social relations on the shop floor, in the fields, offices and institutions and throughout the transport and communications networks. If capital is to be produced, then these social relations must be shaped in collaborative and cooperative ways. This can sometimes be achieved by brute force, coercion and technical modes of regulation but more often than not it involves forms of social organisation that entail trust, loyalty and subtle forms of interdependency that acknowledge the potential powers of labour while shaping it to capital’s purpose. It is here that capital so frequently concedes to the labour movement certain powers, to say nothing of material advantages, provided of course that capital continues to be produced and reproduced.
Which is all very well, but I’m not seeing signs of that in the shipping industry. Leading us to…
Can the crisis in shipping be attributed to lack of demand backed by money to pay in the market? That sounds right, to me. After all, the very simplest reason for why stuff isn’t being shipped is that people don’t want it; “the dog won’t eat the dog food,” as the saying goes. Harvey (p. 107) writes eloquently — Marxist writers are often the most eloguent on the elegancies of capitalism — of how capitalism opens new product lines:
Since Marx’s day the elaboration of new product lines and product niches has been a life-saver for capitalist development at the same time as it has transformed daily life, even down to the modest incomeevels of so-called developing countries (witness the rapid proliferation of transistor radios and cell phones throughout the world in a few decades). The household technologies now commanded by the professional bourgeoisie and the upper and middle classes of the advanced capitalist countries (which now include, in addition to Europe and North America, much of east and south-east Asia) are simply astonishing. Product innovation and development, like everything else, has in itself become big business applicable not only to the improvement of existing products (like automobiles) but also wholly new sectors of industry (such as computers and electronics and their huge fields of application in government, pharmaceuticals, health care, corporate organisation, entertainment, and the like, as well as in household goods). Much of this depends, of course, on the tastes of consumers and their level of effective demand (matters to be considered shortly). But the astonishing penchant for creating wholly new product lines and the acceleration that has occurred in new product development since the 1950s or so has placed the development of consumerism and a rising effective demand at the centre of the sustainability of contemporary capitalism in ways that Marx, for one, would have found hard to recognise.
But that life-saving elaboration doesn’t seem to be happening right now; the best we seem to be able to come up with for a new product line is self-driving cars, which are vaporware and a bezzle, so far as I’m concerned. And apps. Meanwhile, the products we do have are increasingly crapified (as anecdote in suffficient volume to mutate into data at Naked Capitalism has shown). And with wages flat, the reality of credit revulsion, and kids these days up to their eyeballs in debt, it’s no wonder people don’t want more stuff. In fact, they want less stuff. This is fine.
Obviously, this is a superficial lightweight appreciation of Harvey’s work. However, we really are looking at a chronic crisis in shipping — and, in the case of Hanjin, an acute one, a seizure and a stoppage — and, at least in the sources I read, I haven’t seen anybody give an account of it. I think it’s reasonable that Harvey’s framework can give such an account, and I hope to dig deeper into it, from the perspective of blockages in the circulation of capital.
 I’m also going to bypass the credit system, to which Harvey devotes a lot of time, entirely, to keep the focus on stuff. I’m sure readers will tell me if that vitiates what follows.
 There don’t seem to be any derivatives derived from shipping.