The Bichler and Nitzan Archives
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Stocks are Up. Wages are Down. What does it Mean?
Get PDF[First of a two-paper series]
If you listen carefully, you can hear Jeff Bezos getting richer. There’s the sound again. Another billion in Bezos’ coffers. Let’s put some numbers to this sound of money. Since 2017, Bezos’ net worth has grown by about $4 million per hour — roughly 500,000 times the US minimum wage. This accumulation of wealth would be absurd during normal times. Today, as many workers lose their jobs to a brutal pandemic, it’s obscene. While Bezos is the pinnacle of capitalist excess, his wealth is part of a larger story. Over the last 40 years, stock prices have surged while wages have stagnated. What does this trend mean?
In this post, I take a deep dive into the stock market. I’ll first tell you what the stock market is not. It’s not an indicator of ‘productive capacity’. Nor is it ‘fictitious capital’. So what is it? The stock market, argue Jonathan Nitzan and Shimshon Bichler, is how capitalists quantify their power. To understand what Nitzan and Bichler are talking about, we’ll unmask the ritual that defines our social order — the ritual of capitalization. Read on to take the red pill and lift the veil of capitalist ideology.
[The second paper in the series, 'How the History of Class Struggle is Written on the Stock Market' (October 5, 2020), is here: http://bnarchives.yorku.ca/658/
Death Anxiety and the Political Economy of Power
Get PDFReflections on the work of Ernest Becker and Terror Management Theory and how they might relate to CasP analyses of concepts and modes of power
How the History of Class Struggle is Written on the Stock Market
Get PDF[Second of a two-paper series]
Class struggle, Bichler and Nitzan observe, is a part of all hierarchical societies. But capitalism is the first social order to quantify this struggle. It does so through prices, which Bichler and Nitzan propose indicate power. Stock prices, Bichler and Nitzan argue, indicate the power of owners to earn income. If we’re interested in class struggle, we want to compare this capitalist power to the power of workers. Here’s a simple way to do so. We compare the price of stocks to the price of wage labor. Bichler and Nitzan call this ratio the ‘power index’.
My goal here is to test Bichler and Nitzan’s thesis. Does the power index quantify US class struggle? Although a simple ratio of two prices, the power index, Bichler and Nitzan claim, tells us about class conflict at large. When the power index falls, workers are winning the struggle. When the power index rises, capitalists are winning.
Is Bichler and Nitzan’s claim true? In this post, I look at the evidence. I test how three different indicators of class struggle relate to the power index. Here’s what I find. When workers strike more, win a living minimum wage, and get government to progressively tax the rich, the stock market declines relative to wages. My conclusion is that Bichler and Nitzan are onto something. The history of class struggle does seem to be written on the stock market.
[The first paper, 'Stocks are Up. Wages are Down. What Does it Mean?' (September 4,, 2020), is here: http://bnarchives.yorku.ca/657/
Disobedient Things: The Deepwater Horizon Oil Spill and Accounting for Disaster
Get PDFAnalysis of the Deepwater Horizon disaster and the accumulative decline of BP demonstrate both the analytical efficacy of the capital-as-power approach to value theory, and the irreducible role of objects in the process of accumulation. Rather than productivity per se, accumulation depends on (1) control of productivity, and (2) the evaluation of control. Capital-as-power focuses on capitalization as an expression of the evaluation by owners of their own power. In this article, I argue that the power of owners translated into capital values is power over both the human and non-human components of systems of production. Power is actualized through entities defined as cultural and political, as well as economic. Capitalization translates into the commensurable financial units of capital the irreducible social order—including objects—that bears on accumulation. The decline of BP’s capital valuation in the wake of the disaster expressed the market’s falling confidence in the expertise, experience and equipment that comprised the company’s productive capacity
Reconsidering Systemic Fear and the Stock Market: A Reply to Baines and Hager
Get PDFA recent New Political Economy article by Baines and Hager (2020) critiqued Shimshon Bichler and Jonathan Nitzan’s capital-as-power (CasP) model of the stock market (Bichler & Nitzan, 2016). Bichler and Nitzan’s model of the stock market seeks to explain how financial crises are tied to the (upper) limits of redistributing income through power. Bichler and Nitzan use American financial data to show that “U.S.-based capitalists” have risen to a great height of power, relative to the underlying population. This height also produces a “forward-looking” fear about the ability to accumulate even more (Bichler & Nitzan, 2016).
Baines and Hager took the important step of examining the CasP model with financial data from four other countries–France, Germany, Great Britain and Japan. They argue that these countries follow some of the patterns of the United States, but not all. These differences in patterns matter because Baines and Hager are curious to know how the CasP model of the stock market can function as a general model of capital accumulation at an international level.
This paper will respond to the part of Baines and Hager’s paper where they analyze “systemic fear” in the stock markets of France, Germany, Great Britain and Japan. It argues that Baines and Hager were perhaps too quick to dismiss systemic fear as a concept to study national and regional differences in international political economy. This concept is still in its infancy and, with more consideration, there are opportunities to investigate the characteristics of systemic fear. By re-examining systemic fear in twelve countries, this paper will show the potential for the concept of systemic fear to support the study of capitalist crisis and national diversity in capitalist development
Financial Crisis, Inequality, and Capitalist Diversity: A Critique of the Capital as Power Model of the Stock Market
Get PDFThe relationship between inequality and financial instability has become a thriving topic of research in heterodox political economy. This article offers the first critical engagement with one framework within this wider literature: the Capital as Power (CasP) model of the stock market developed by Shimshon Bichler and Jonathan Nitzan. Specifically, we extend the CasP model to other advanced capitalist countries, including Germany, France, the United Kingdom, and Japan. Our findings affirm the core prediction of the CasP model, showing that unequal power relations reliably predict future stock market performance. Yet when it comes to the CasP model’s explanation of why power relations predict stock market returns, our findings are more ambiguous. We find little empirical support for the claims that capitalist power is dialectically intertwined with systemic fear, and that systemic fear and capitalised power are mediated through strategic sabotage. The main lesson of our analysis is that any model of the stock market must be attentive to the geographical unevenness and continued national diversity in capitalist development
Neoclassical Political Economy -- Skating on Thin Ice (Video Presentation)
Get PDFA critical examination of neoclassical political economy
Unflat Ontology: Essay on the Poverty of Democratic Materialism
Get PDFThe paper is dedicated to the problem of flat ontology in philosophy and its relation to the practice in economy. The author argues that flat economy is based on a marginal utility theory of value and presents hierarchical value chains with concentration of power-capital as if they were flat and all the actors involved were equal. This is the work of democratic materialism, with its idea of radical equality of human and non-human interactions. This perspective, according to the author, should be opposed by the reconstruction of power-capital relations in unflat ontologies of the value-creation process
Power -- Transcript and Video
No full textIn the book Walden, Henry David Thoreau famously wrote that “there are a thousand hacking at the branches of evil to one who is striking at the root.” And this is no accident. The structure of society, far from being easily interpretable, is purposely made opaque to us. Many veils are laid over the complex foundations of tyranny, many justifications which go unnoticed are marshalled to great success in confusing and distracting the people.
Philosophical ideas are the mental scaffolding that hold entire orders in place. The detours into philosophical analysis seen throughout political theory are not idle meanderings; they are the natural procession of political questions taken to their extent. This is why, early on in his Manifesto for a Democratic Civilization, Abdullah Ocalan says that “mighty social struggles are fought beneath the surface.” Enduring systems of thought and meaning silently underlie society’s functioning, giving it justification, forming its basic assumptions, and organizing the lives of the people that populate it under a paradigm.
This essay will discuss a great behemoth that lays just underneath the surface, often glimpsed, but rarely inspected in depth. It is what we actually discuss every time our conversations wander to the topics of suppression and revolt, conformity and autonomy, anarchism and authority. In these we are summarizing a much deeper structure, skirting an issue which subsumes all these common ideas. Let us lay out a theory of power
Still in the Danger Zone
Get PDFIn December 2017, we posted a RWERB entry, titled ‘Profit warning: there will be blood’. We warned that, although the Weapondollar-Petrodollar Coalition might no longer be in the Middle East driver’s seat, the oil and armament companies, the region’s oil-exporting autocracies and various non-state groups were all keen on seeing their oil incomes rise from record lows. And we ob-served that, in this context, ‘the prospects of a new energy conflict, whether premeditated or co-incidental, seem extremely high’. [. . .] We can only hope that the current round of Middle East hostilities won’t be proportional to the size of its current danger zone