I don't intend to go into the politics and economics of the situation in the Ukraine other than to point out the fact that the threats coming from the U.S. president against the Russian government seem to center on economic sanctions against the friends, associates, colleagues -- well, let's use the correct term: cronies -- of the Russian president, Vladimir Putin. In other words, the Russian Mafia/Oligarchy. The New York Times reports that Obama's spies are hard at work to discover Putin's own fortune. What this circus amounts to then is the government of the nation with the world's largest collection of parasitic crony capitalists attacking its rival nation's crony capitalists. Russian Billionaires, take cover!
What this begs, however, is a question that no one seems to be asking: to wit, how did these billionaires come to be billionaires in the first place in Russia's transition from Soviet "Communism" to Reaganite "Capitalism?" Or, more importantly, what this implies theoretically and philosophically about the very nature of capitalism itself. It indeed takes us to the heart of the origins of capitalism, what is referred to as "primitive accumulation" of capital, which is what this article is all about.
First we have to backtrack with a short discussion of economics. I assert that, despite popular opinion, economics is indeed a science in the sense that its elements can be measured and independently verified. The problem with economic's bad reputation is that the vast majority of economists are of the same ilk as biological "Creationists" and atmospheric climate-change deniers. What they fail to take into account are the very dynamics that make capitalism what it is (usually in the form of ignoring obvious class divisions or making a fetish of the marketplace instead of focusing on what is fundamental in any economy, i.e. production).
Definitions are important. A simple but scientifically accurate definition of capital: vast accumulations of wealth (value) that today come in various forms, real estate, industrial and other corporate wealth, high finance, etc. Capital-ISM then is the system of producing goods and services based upon the relationship between those who own and manage capital and the rest of us, who do the work that is responsible for the increase in value in the first place; that is, the relationship between capital and labor. It is a relationship that is hierarchic and despotic; that is, inherently undemocratic. A simple yet accurate definition of socialism (the antithesis to capitalism), then, would be not state ownership of the means of production (as we saw in the former Soviet Union), but economic democracy, that is, direct ownership and control by those who produce the value. Note: it was not Karl Marx, but rather Adam Smith, who demonstrated that new value added to land and natural resources can only come from living human labor.
Anyone who has ever had a job knows that the boss is the boss (be it the actual owner or his/her designates). You do not get to vote on what you do. You do what you are told, or you are shown the door (only union organization has mitigated this phenomenon to a degree). There are others waiting to take your place if you don't like it. You do not get to decide what is produced (be it goods or services), how it is produced, or under what conditions (e.g. safety). But most importantly, you are paid for your creative effort as little as your owner/boss can get away with, and the rest of the value you create goes into his or her pocket (the pockets of heirs, stock holders, bankers, etc., i.e. capitalism's parasites). This is what Karl Marx called surplus value (and what capitalists call profit), and it is the reason for the reality that we have always been aware of but are coming to see in greater relief more and more every day: the rich getting richer and the poor getting poorer. One example: the geometric increase in the proportion of CEO salary in relation to worker salary (according to the Washington Post, "The ratio of CEO pay to average worker pay is 273-1, down from a high of 383-1 in 2000, but up from 20-1 in 1965." In other words, the average worker has to put in about six weeks of eight-hour days to earn what your typical CEO earns in one hour.
Forget all the crap that has been that has been shoved down your throat since you came off your mother's breast (or the bottle) about the wonders of capitalism: the miracle of free enterprise, the invisible hand that makes everything just, the value of competition, capitalists taking all the risk, capitalists creating jobs -- as if without capitalists we would all stop working to produce what we need to survive and thrive. Forget about free markets: there haven't been free markets since Jesus threw the money changers out of the Temple. The deck (the economy) is stacked in favor of capital; capital essentially owns government and uses it to maintain its stranglehold on the rest of us -- economically and militarily. And this was true long before the US Supreme Court made corporations into people.
So now let's go back to "primitive accumulation." How did there come to be such huge fortunes, such accumulated wealth in the first place; in other words, how did the feudal economy become a capitalist economy?
Here are the contrasting explanations from Adam Smith and Karl Marx:
"In the midst of all the exactions of government, capital has been silently and gradually accumulated by the private frugality and good conduct of individuals, by their universal, continual, and uninterrupted effort to better their own condition. It is this effort, protected by law and allowed by liberty to exert itself in the manner that is most advantageous, which has maintained the progress of England towards opulence and improvement in almost all former times.
"It is the highest impertinence and presumption, therefore, in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expense. They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expense, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will."
Adam Smith, Wealth of Nations, Book II, Chapter II
(cited in Toronto Globe and Mail, April 5, 2008)