<nettime> Intermodal Value Flows in the Macroeconomy

[Dmytri Kleiner <dk@trick.ca>]

> >   IMPORTANT: Stammtisch will not be a Cafe Buchhandlung today, but
> >   rather at Cafe Kotti in Kruetzberg to be closer to the May 1st
> >   festivities

Intermodal Value Flows in the Macroeconomy

It's May 1st today, I'm sure that I could, rather than test your 
patience with yet more wonkish macroeconomic explorations, publish a 
more exiting and popular article today, celebrating the history of May 
Day, but I wont. I want to follow this macroeconomic line of thought 
through.

As I've argued previously, the history of May 1st demonstrates that 
that reform and revolution are hardly in conflict, and often go hand in 
hand. From the very beginning May Day has been coloured by the whole 
spectrum of the methods of class strugle, from demonstration of labour 
solidarity and effective organized campaigns that dramatically improved 
the working conditions of the world's workers, to demonstrations of 
uncontrollable rage and revolutionary uprisings that drew uncompromising 
lines in the sand resisting the endless encroachment of capitalism into 
our private and public lives, resisting the misery and alienation this 
creates.

Also, Telekommunisten was founded on May 1st, 2006, so it's also always 
an anniversary for us, this year is our 6th birthday.

In my last article I begin sketching out what I'm calling an intermodal 
macroeconomic model, hoping to understand what an revolutionary social 
transformation would look like from the economic perspective.

In this model, we have two economies, each representing a given Mode of 
Production, capitalism and communism.

We often say we live in a Capitalist society, but yet this does not 
mean that all forms of producing and sharing that occur within our 
society are Capitalist. This is more than evident when looking at social 
relations in family and personal life, in intentional communities of 
various kinds, within co-ops and other non-capitalist organizations, the 
charity and profit sectors, and, of course, the emerging world of 
peer-production including free software, free culture, etc. It's quite 
clear there is a lot more going on than just Capitalism.

When we say we live in a Capitalist society what we mean is that 
Capitalism is the dominant mode of production, and as such, it is able 
to apply the greatest amount of wealth towards it's own expansion and 
the enforcement of it's interests. As a result, our private and public 
institutions, including our law making and financial institutions are 
set up according to the interest of this dominant mode.

We can not change our society, neither the public or private 
institutions that make it up, nor the laws and financial constraints 
that are imposed without first building the capacity to overcome the 
capacity of those who resist such change.

Only when the commons based economy exceeds the market based economy 
can we achieve a society that is organized around the interests of 
creating wealth for the many instead of creating profit for the few.

Starting with the Kaleckian model, Y = Cw + Cp + I that introduces 
classes on the consumption side, by dividing consumption into 
consumption of workers (Cw) and consumption of capital (Cp), Kalecki is 
able to isolate profit as P = Cp + I. Reasoning that Cw = W, In other 
words, reasoning that worker's spend whatever they earn. This assumption 
is of course true within capitalism. However, if we understand that 
Capitalism itself, while dominant, exists among several other modes 
occurring simultaneously, we need to take this into a different 
direction.

If the commons-based economy must become the dominant economic mode, 
then instead of understanding the level of profit within the capitalist 
sector, we need look at relative growth between the capitalist and 
communist sector, in other words between the sectors that produce for 
private profit and the sectors that produce for public wealth, the 
predatory sector and the co-operative sector.

To do so, me move Kalecki's class division to the investment side, 
since with capitalism, workers spend everything they earn, but in the 
more complex social context that capitalism exists within worker's also 
invest. So our starting point becomes Y = C + Ip + Iw. With Ip 
representing Capital's capacity to invest, and Iw representing workers' 
capacity to invest, as result as both classes have the capacity to 
invest in production.

We now divide C, not on classes, but on mode, creating Cm and Cc, 
market based consumption that returns profit to it's investors 
privately, and Cc, commons based consumption that does not capture 
profit privately, and returns wealth to society collectively. This gives 
us Y = Cm + Cc + Iw + Ip.

This now allows to us divide these two sectors as Capitalism, Ym = Cm + 
Ip and Yp and Communism, Yc = Cc + Iw.

So, from a macroeconomic view, you could say that the revolutionary 
aspiration of May 1 is to make Yc > Ym, and thereby overcome the 
dominance of Capital on our society.

In order to understand how this might be possible, we need to look at 
the flows of value between the two modes.

We can not assume that workers will only invest in the commons and 
consume from it, nor can we assume that Capital will only consume and 
invest inversely.

We started to include this last week by drawing on the way import and 
export between nations is included in macroeconomic identities, adding 
"net imports" to the model, so to expand what we have above with N, Ym = 
Cm + Ip + Nm and Yc = Cc + Ow + Nc. Nm and Nc representing the net 
relative imports of each mode. Being net imports, Nm + Nc would equal 
zero as these would balance out by definition.

If, in balance, workers consumed the products of capitalist controlled 
production more than capitalists consumed the products of workers 
controlled production, then they would have a trade deficit with the 
capitalist sector and thus have relative reduced economic power as a 
result, capital would increase it's dominance, conversely, if worker's 
could create a intermodal trade surplus with capital, then then would 
decrease, and perhaps eventually overcome the dominance of capital.

Likewise, investment can also flow between the sectors, for instance 
workers buy shares on the stock market, and capitalists may, for 
instance, finance the development of free software.

It's hard to identify such intermodal capital flows as investment, 
since from a class perspective they don't directly reproduce the wealth 
that was used, as returns aren't recaptured according to the relative 
mode, thus such investment is not directly "valorized."

Production in capitalism is driven by exchange value, a capitalist 
commodity can not properly be considered produced until it consumed in 
such a way that creates more capital. As Capitalism is not directly 
concerned with producing things because they are useful, but because it 
is profitable. When the commodity is just given away the "productivity" 
of the producers who made it is calculated as zero, since zero capital 
was recaptured.

Therefore, I propose to call such capital flows "Sustentation," where 
value creation within one mode is sustained by inflows from another. 
Individual capitalists may benefit from such sustentation, and often do, 
such as the capital cost reduction that free software provides to 
business that use it. However despite the benefit to some specific 
businesses, such flows represent a drainage of capital from the point of 
view of the class as whole, as this expenditure is not directly 
valorized, and even replaces potential valorized consumption, such as 
expenditures on commercial software made unneeded by using free 
software.

Likewise, workers' using their retained earnings to buy stocks can be 
be understood as a similar sustentation. This drains wealth from the 
commons-based economy as to sustain capital finance, even though 
individual workers may privately benefit, by essentially becoming tiny 
capitalists.

We can add net sustentation to the model as follows. Ym = Cm + Ip + Nm 
+ Sm and Yc = Cc + Iw + Nc + Sc.

Excluding taxation, which is not intermodal, so activity in both modes 
is subject to the same government, we have a complete macroeconomic 
picture of class struggle and can start discussing how venture 
communism, counterpolitics and insurectionist finance can be employed in 
the struggle.

But, that will need to wait until next week.

In the mean time you can join us at Cafe Kotti at 8pm or so: 
http://bit.ly/K04wqf

A shareable version of this text is available here: 
http://www.dmytri.info/intermodel-value-flows/


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