Gary Langer, in “Capitalism, a Classical Model,” does just that, taking the simplest of models and building upon it to see what is “true” (1). He works through a simple model that is self-reproducing, the application of labor to corn to make more corn, a surplus over the amount. This surplus is what allows more growth to happen in the next period if your economy does not hit up against restraints, but those are not seen in the simple system.
The question with the surplus is what happens to the surplus at the end of the year. How is it divided. In our system we assume ownership of everything and the only thing to own is corn. How do you divide it? If the original supplier takes all the surplus and the worker is stuck with their subsistence due to the iron law of wages, everything is profit. But the amount of that profit then is defined by the production process so that you have profit but it will not become more profit on the same level of inputs unless you change how the agents in model go about making the new corn. Better technology allows increased profit, to the point where the level of technology in the production process is what determines the rate of profit (3). This surplus is all that is left over, no matter how big, so it is the shape of the pie to be fought over between the different agents in the model, those who do the owning and those who do the working.
Langer then moves from the basic outlines of his simple model. He remarks that there are stories that we tell ourselves about why certain tings happen, why profit is created and who does the hard work. He calls this ideological construction “Mystification” because it spreads a foggy mist (4) over the simple relationship between the workers and the owners in the simple capitalist relationship. Langer claims that the goal should be to see the world as it is without these mystifications (6).
The argument is further extended, noting that the rate of growth is limited by the rate of profit, since it is the surplus in its entirety that can be plowed back into production as a long as you have idle hands around. Any creation of consumables outside the simple corn production cycle lowers the amount of growth possible.
Langer continues by laying out the idea of the “Widow’s Cruse,” a thought experiment where we see that profit is not diminished by consumption. In this framework, the growth of the system based on the rate of growth of population is knocked out of alignment. If the owning class consumes luxuries and does not reinvest, then the growth of the system slows and thus wages shrink, meaning that there is always some cream at the top to skim off for the owning class since the working class must do more with less (7).
The author also works through some the implications of the system where the agents are conscious people. This system generates class differences and thus various levels of antagonism, so out of the profits and wages must come an overseer, managerial class to keep discipline among the workers to generate that surplus (8). This class interest also means that the owning class works together. In Langer’s model this means that the owners diversify their holdings so that they are protected from ill effects (8). This diversified ownership means that the owning class becomes not wholly interested in their individual holdings but their class and the continued replication of the system, an ownership that grants them power they are not afraid to yield to maintain their place in the system and the system itself (9).
This sense of class consciousness is where I want to transition to this idea of class consciousness as it arises as an implication from the simple model. I am supposed to be writing a reaction paper and it is hard when I have been taking in so much information about the coming and current crisis I cannot focus. It is interesting that we are looking at classical models right now. I have also been making my way through the Wealth of Nations concurrently to this class and it had me thinking about the absence of the state in Capital and in Smith. The classical model was based on the best knowledge of the time and in my recollection, it shows up more in terms of factory inspectors and mints and not as fully fledged economic actors. But now, we sit here and wait for the state to act but these models are about the conflict of the three great classes from Land Labor and Capital. Marx is more political in the Manifesto where the state is the organizing committee of the whole bourgeoise. The state itself is an edifice that interacts with these three interrelations but sits on top of and around as it sets the rules and sanctions for the relationships. It is also a huge source, with the media as an institution creating the mystification, the formal creation of ideology that says that the current order is the best and only natural order.
It is not though. The most recent headline I saw forecasting the decline in activity was a 30% unemployment with a 50% drop in activity. Why is it dropping? It is because labor is dropping out of the process. Capital without labor is dead, living like a nightmare on the minds of the living. If you do not have L in your production function, K does nothing. This matters now because we can see how integral the working class is to the economy. The hope is that it reinforces the class positions and multiple roles people have in the economy as workers and consumers and we can move past this crisis with a world that is built more for the working class of the world, who is the vast majority of the people. It takes a crisis sometimes to clear the mist.
Cited
Langer, Gary. “Capitalism: A Classical Model,” July 7, 2006
