Karl Marx (1818-1883) (Photo credit: Wikipedia)
First I’ll readily admit that I know very little about Japanese history, Capitalistic, Imperial, or otherwise. I do however know something about production, life, and society. So let’s have a look at this article shall we, the source document is in green.
Quantifying Capitalist Development in Imperial Japan (by Mr Charrington)
[...]
Capital as the Dominant Social Relation
I admit it, to me that sentence makes no sense. Capital is dominant in relation to what/who/when/why? Probably doesn’t matter anyway, so let’s move on.
Historical materialism, as discussed by Anwar Shaikh, proposes that humans are conditioned by the production process in which they exist. Therefore, humans are shaped by the social relations of such a production process. In the capitalist mode of production, the dominant social relation is capital itself, emerging from the antagonistic and exploitative relationship between the bourgeoisie and the proletariat. It is the journey of an economy to promote capital to the most dominant social relation that is the process of capitalist development. In Japan, this process occurred in the years after the Meiji Restoration of 1868, culminating in the emergence of fully-formed capitalism by the end of World War One.
I guess that means that if you get paid to work from 9-5 you learn to get up in the morning and get to work on time. Other than that a definition of the proletariat would be useful, most of the time (at least) in Marx, it means people who have jobs that require the intelligence of an ox or slightly more. In our society, perhaps that legendary burger-flipper but, that might have too much intellectual input. Everything else is the bourgeoisie, that’s one of the many catastrophic failures in Marx.
The Process of Capitalist Development
In the following formulae, (P = production), (M = initial money-capital), (M’ = profit in money-capital), (C = commodity), and (C’ = value added commodity). The theoretical path to the development of capitalism is fundamentally based around the method of profit accumulation; i.e. the process of turning M into M’. In each method, capital increases its influence as a social relation, and it is when the three methods fuse together that capital becomes the dominant social relation, and hence when capitalism appears fully-developed.
In the first place nobody who conflates money with capital is competent to walk down the street with or without gum in his mouth.
Money is a medium of exchange, it can be scrip, or gold, or conch shells, or wampum, or anything else agreeable to both parties. Roman soldiers were often paid in salt, which was worth its weight in gold.
Capital is wealth on the other hand, and comprises far more than money. It includes all things that go into life, money perhaps, but also land, inquiring minds, skills, available labor, education, a pleasant climate, or time, or knowledge,. Money is (and always has been) the easiest to find. Adam Smith reminds us, “Labour was the first price, the original purchase – money that was paid for all things. It was not by gold or by silver, but by labour, that all wealth of the world was originally purchased.” In other words we build on the shoulder of our forebears. No iPhone without the telegraph. And here we reach the first crux of the matter. If you want a bigger piece of the pie; make the pie bigger.
Stage I – This method is most commonly observed in the Industrial Revolution in Great Britain around the turn of the 19th century. It involves the qualitative transformation of a commodity and its sale in the following process:
(M – C … P … C’ – M’)
Here, the capitalist takes commodity C and adds value through the production process P to create C’. He can then sell C’ for a profit, to the value of M’ minus M. This process occurred in Japan soon after the Meiji Restoration, mostly due to the availability of international capital (i.e. M) accumulated by Japanese capitalists, who then spurred the Japanese ‘industrial revolution’. These capitalists mainly took the form of heavy industrialists and technological mechanics, including arms producers.
It might be useful if the author knew how to write an equation, if I understand his scribble, what he’s trying to say is
M’=C’-C-P-M
Or something. In the first place it becomes pretty obvious why conflating money with capital is ridiculous here. Let’s say we’re going to mine iron ore, since that was one of the bases in the industrial revolution, Here’s what you need
Raw material
- What’s iron ore look like?
- Is it all the same?
- If not, why not, and does it matter?
- How do I get my hands on it?
- Do I have to pay for it or can I just pick it up?
That’s good enough for now, and of course Adam in the Garden of Eden (and his little dog Spot) knew all those answers, right?
Processing the ore
- What do I have to do to make metallic Iron?
- Do I need equipment?
- How do I make charcoal, or can I use coal?
- What kind of coal and how do I get it?
Marketing
- Who is going to find my little factory and buy my iron?
- Can I make products out of it?
- How will they get to market? (Iron doesn’t walk too well).
And on, and on, and on. The (horridly oversimplified) questions all have to be answered. The answers and the solutions to them are part of your capital.
Let’s proceed
Stage II – The increase in available capital, i.e. the presence of M’ after Stage I, led to the appearance of the second profit method. Stage II involves acquiring a commodity and simply reselling it for a profit, as proposed in the following process:
(M – C – C – M’)
Here, the dual appearance of C is explained by the idea that the merchant does not actually alter the value of C, but generates M’ by the unquantifiable value of his service. This method of capital accumulation, to historical materialists, is considered somewhat parasitic, as there is no productive labour involved. In Japan, this method was mostly performed by merchants and white-collar workers, who began to fill the major Japanese cities in the early Taisho period. The development of this stage of capitalism is apparent in the changing material demand of the Japanese people: increases in urbanisation, cultural Westernisation, etc. It also suggests the increasing availability of surplus capital to the working class – as in, Marx’s working class – who began to be able to afford to sacrifice capital for convenience and service.
Here’s another common misconception, “…the merchant does not actually alter the value of C, but generates M’ by the unquantifiable value of his service.” First it’s very quantifiable. It’s this P²= P¹ +E +P³ where P²= sale price, P¹=Cost of goods sold, E=Expenses of selling goods, and P³=equals profit (if any). The value is in warehousing, transportation and convenience, amongst other factors.
Here’s an example: If you’ve enough gas in your car to go ten miles to buy more, would you rather pay a premium price eight miles away, or walk another 15 miles to get a better price? There’s no right or wrong answer for that, it depends on your situation, that’s how the market starts getting complex. And in most of the western world, the capital used for the initial industrialization came from the great mercantile houses, mostly the British ones.
Stage III – This increasing availability of capital influences the third method of profit-hunting. Stage III involves advancing a loan in return for profit in the following process:
(M – M’)
Here, the capitalist simply lends money-capital and effectively generates profit in proportion to either the time it takes to transform M into M’, or the difference in value between M and M’. This is the most parasitic of all the methods of capital accumulation, as there is no productive labour nor added value involved in the generation of profit – i.e. the capitalist relies entirely on the labour-value of others to generate M’. In Japan, this stage was apparent in physical form in Tokyo, which in the early 1920s, became a hub of banks, multinationals, and the Japanese home-grown Zaibatsu – a set of monopolistic corporations, known for swallowing businesses and markets, creating effective domestic, economic empires. It is upon the appearance of this final form of profit generation, and its subsequence maintenance of the first two methods, that the capitalist mode of production is fully developed.
It happens a lot earlier in the process than this fool thinks but whatever, it happened later in the early stages of industrialization when nobody really knew what they were doing. There’s not too much to say when somebody thinks all lending is parasitic. What it really is, is the loan of capital for a price. And it also includes selling stock in the venture, that is simply a method of accumulating capital by selling part of the venture. It’s fundamental to industrial enterprise simply because no one person is ever going to accumulate enough capital (money is semi-accurate here) to build even an early industrial enterprise out of his savings, which in truth is still a loan from him to himself, because he could do lots of things more fun with that capital, he chooses this in the hope of having more capital later.
And along that line, I certainly hope the author paid cash for his house and car rather than supporting parasites.
Article originally published at http://jpewinfield.wordpress.com/2013/05/14/quantifying-capitalist-development-in-imperial-japan/
Quantifying Capitalist Development in Imperial Japan (by Mr Charrington).
There’s a fair amount more, at the link. My opinion can be summed up by noting that his bibliography contains a work by V.I. Lenin.
In short, I call Bullsh*t, and pretentious bullsh*t, at that
Related articles
- Joan Robinson and the Labor Theory of Value (fixingtheeconomists.wordpress.com)
- Capital, Capitalists and Capitalism (Part II) (frontpagemag.com)
- Is Moral Capitalism Still Attainable? Steve Forbes Shares His Thoughts With Beck (theblaze.com)
- A Brief History of Political Correctness and Its Origins (atlasshrugs2000.typepad.com)
- Capitalists never liked capitalism (cafehayek.com)
