Why capital in 21st century needs a better definition?
By S A Hamed Hosseini
David Harvey in his short criticism of Thomas Piketty’s Capital in 21 Century, rightfully questions Piketty’s definition of ‘capital’ as one of his central difficulties:
“Capital is a process not a thing. It is a process of circulation in which money is used to make more money often, but not exclusively through the exploitation of labor power. Piketty defines capital as the stock of all assets held by private individuals, corporations and governments that can be traded in the market no matter whether these assets are being used or not. This includes land, real estate and intellectual property rights as well as my art and jewelry collection. How to determine the value of all of these things is a difficult technical problem that has no agreed upon solution.”
However, David Harvey’s definition capital remains very much influenced by its 19th century Marxian understanding of industrial capitalism. In 21st century, capital deserves a more comprehensive and a more representative definition than just a process in which money makes more money through production relations. I, therefore, propose the following definition:
Capital is a ‘social process‘ , through which surplus value is produced and controlled by ‘unsustainable’ and ‘un-sovereign’ ways of exploiting labor (both manual and intellectual), land (and other commons), nature (non-renewable sources of energy and the earth’s bio-capacity including climate), and societal cohesion/solidarity (from the level of household to the world community level).
Capital is a social process and not just an economic one, since it involves specific sociocultural and political modes of sociability as well as particular modes of livelihood. It is based on exploitation rather than ‘self-sustaining use’ of human and natural resources. Here, ‘exploitation’ is distinguished from ‘use’, since the former makes (1) the resources to lose their capacity to be sustainability reproduced over generations, and (2) the communities to lose their capacity to ‘determine’ the levels and ways of use democratically and autonomously.
Thus, a comprehensive analysis of capital and capitalist systems requires not only the theorization of the exploitation of labor, land and nature through the processes of production (the first dimension of exploitation), but also of financial speculations, enclosures and hoardings, that are determined undemocratically through the chaotic interplay between the uncertainty of market mechanisms and the plutocratic influences of financial monopolies or corporate powerhouses. The latter includes what David Harvey calls ‘capital strike’ used by monopolies to cause “artificial scarcity” and thereby increase the “rate of return” or what I would like to call in more general terms, ‘spurious surplus’, which has real impacts on real production processes. Despite acknowledging this fact, Harvey (unlike Piketty) unjustifiably excludes the latter process of producing spurious surplus from his definition of capital!:
Money, land, real estate and plant and equipment that are not being used productively are not capital. If the rate of return on the capital that is being used is high then this is because a part of capital is withdrawn from circulation and in effect goes on strike.
The withdrawal of capital from productive circulation is part of (and has become increasingly a significant component of) today’s capital. This is because, according to our new definition of capital, even ‘capital strikes’ are about creating and controlling surplus (no matter how spurious it is) and it prevents democratic determination and sustainable use of resources associated with the withdrawn capital.
Accordingly, ‘alternatives to capital’, from this point of view, consist of a broad range of approaches from reformist orientations to democratic social regulations of ‘capital’ (like post/Keynesian visions), to antipodal alternatives to the existence of capital (like anti-market, anti-trade initiatives).