There has been a strong convergence of Marxist and capitalist states within the context of economic globalization since the later decades of the 20th Century. That convergence is not merely related to the reliance on markets with instrumental interventions in these markets in the characteristically distinct ways of capitalist and Marxist states. More importantly, convergence centers around the critical problem posed by the concept of capital for both systems--and the secondary effects of the fundamental ordering premises of capital for both Marxist and capitalist states. That critical problem--the issue of labor and its consequences for the political ordering of society, remains at the heart of the contradictions of both systems. This is not to suggest that capital is either bad or irrelevant--only that the premise, accepted by both capitalist and Marxist, of the central role of capital in ordering economic and political life, has strong ramifications for the concepts of democracy and the relationship of the state to its workers. This post teases out in a very preliminary way, some of these consequences and conundrums.
Both capitalism and Marxism from their origins as theoretical constructs in the 18th and 19th centuries have traditionally focused on capital. Yet at the heart of the contradictions of both is the issue of labor. Capitalism speaks to the division of labor and its routinization of production, reducing laborers to the simplest state. The solution to this problem for Adam Smith is state intervention in the form of education. Education does not change the incentives toward routinization of labor, but it provides a means through which individual laborers might escape the worst consequences of systems that rely on division of labor to increase efficiency and capture value by recapturing that value by effectively ceasing to sell labor or increasing the value of the labor sold. Since then the offer of capitalist society have been a form of mass political power and the promise of upward class mobility if labor effectively utilized the education provided. Capitalism then, embedded itself in free markets (upward mobility) and democracy (the promise of political power as a check on capital). That embedding is then naturalized within the cultural expectations of state and society and deepened through the language of capital in law and economics as the foundation for speaking to issues of economic activity. This last point is easy enough to point to--corporations are incarnated, that is they are made visible, only through the language of accounting and finance, both of which are premised on the centrality of capital to the operation of enterprise forms. Enterprises generate revenue for investors, they purchase debt, labor and the commodities necessary for the production of those goods and services which contribute to revenue. That production is then tied to the providers of capital who are deemed to invest in the enterprise in ways that are impossible for those who are deemed merely to sell components of production to the firm. Law recognizes these distinctions by relegating debt and labor to contract and by focusing the central regulatory role of law on the relationship between capital (investors) and their agents. Thus enterprises are conceived on the basis of the premise that they reflect not merely an aggregation of capital, but from that aggregation, its principal form and function is tied to tracing that aggregation through revenue generating operations to distribution or wealth creation--for investors. For everyone else the role of the enterprise is incidental. This is reinforced in the rules for disclosure of corporate activities under U.S. and other securities laws and in the construction and operation of capital markets that trade on these bundles of contributions that generate rights to firm income, assets and control. It is the essence of the rule of shareholder or enterprise wealth maximization that has so impeded efforts to produce regimes of stakeholder welfare maximization in international law.
Marx also took a similar view as Adam Smith on the contradictions of the division of labor. But where Smith opened the possibility of amelioration through upward mobility and mass power, Marx believed that labor would irrespective of ameliorative measures, always be abstracted and reduced to commodity, to a living means of production. So commodified, labor could achieve no better state than as an abstract object—a means to capital accumulation. But this process-based commodification of labor was, for Marx, unsustainable. There is a reflection of this in some of Castro’s writings about the global economic system, with Little understanding of the way in which Cuba’s own political economy reproduced this relationship in its own way. See discussion in, Larry Catá Backer, “Odious Debt Wears Two Faces: Systemic Illegitimacy, Problems and Opportunities in Traditional Odious Debt Conceptions in Globalized Economic Regimes,” Duke Journal Of Law & Contemporary Problems 70:1-46 (2007). If left to its own devices, capitalism would collapse for lack of consumers. Leninist states sought to move the process along through the techniques of hyper-socialism; state capitalism for a good cause. Central to the solution was to substitute for democracy and free markets (upward mobility and political power with educational leveling) political education through the leadership of a vanguard party the dictatorship of which would divert the profits of production to labor in ways that overcome the problems of routinization and the hierarchies within the division of labor.
The move toward labor cooperatives in places like Cuba, and elsewhere in the West, represents an important nod in the direction of labor empowerment. (e.g., Posted Conference Paper: "The Problem of Labor and the Construction of Socialism in Cuba"). But the implementation of the concept continues the long tradition, in both capitalism and Leninist Marxism, to understand economics through the privileges of capital. In the West that privilege is exercised through investors and other holders of capital; in Cuba the state substitutes itself. That imbalance is foundational to the economic reforms in Cuba: corporations remain available only to the state. Control of capital remains a state function. The generation of capital is to some great extent diverted from labor to the state. Wealth generation is understood in fundamentally capitalist terms—enterprises are understood solely in terms of their financial condition—that is on the ebbs and flows of the values of commodities (including labor) for the production of revenues. And capital is understood by reference to that relationship between rights to control, income and assets over the enterprise by those who are deemed to have a primary financial interest in it (equity and debt). The interests of labor is not measured in the same way as that of capital, nor is it understood in relation to rights to income, assets or control, though to some extent it is capable of such characterization. Cuban economic organization, thus, reflects the same basic premises of economic organization as accepted by the most traditionally capitalist states, but in Cuba’s case inuring to the instrumentalities of the state—for the benefit of the people to be sure, but that is the rhetorical stance of Western states as well. That is the problem in Cuba that the cooperatives point to but don’t solve. In other states, labor cooperatives have proven ineffective in a world grounded in the privileging of capital as a foundation for ordering economic transactions and measuring their effects. Successful cooperatives, like their corporate counterparts, are structured to emphasize capital rather than labor, with perhaps the exception of agricultural cooperatives that are structured more like joint ventures. Cooperatives highlight a problem that the very organization of Leninist political economy may find difficult to overcome.