Competition of Capitalists

Competition of Capitalists
Chapter I
The elementary determinations of capitalist business: Social production for private profit

§ 1 What the industrial capitalist does

1. Accumulation of money as the purpose of production — Wage costs as a barrier to profitability, work performance as the means for it

Those who run businesses are said to have certain tasks, expected to achieve this and that, and sometimes accused of neglecting their duties. However, the members of this profession don’t perform any of the positive or negative functions attributed to them unless they do their job. And that is to increase the wealth at their disposal — regardless of whether a nation’s public credits them with creating jobs or blames them for destroying jobs, whether public opinion says they are protecting the environment or damaging it, contributing to growth or jeopardizing it…

The industrial capitalist goes about increasing his property by procuring the elements of a production process — i.e., buying raw materials and machinery and paying wage-workers — then organizing the process of production in an expedient way and finally selling the products. These operations have been carried out properly when the owner of the company obtains a surplus over his costs. The portion of the proceeds that replaces his costs serves to maintain the business; continuing it causes his property to constantly yield a profit, making it the source of his income. He uses this surplus, which, like the capital he has advanced, is a sum of money, to pay for his livelihood, which for him just like for everyone else means buying goods for the purpose of consuming them. At the same time, the industrialist’s calculation aimed at maximizing profit involves a fundamental antagonism to the income of the wage-earners whose services he makes use of, beyond all notions of a fair wage. This income figures in the accounts of the capitalist enterprise as that quantity that the world of democratic expertise knows as wage costs, and sets against the profitability of production without batting an eye.

Managing the company consists in all kinds of measures for creating and increasing profitability, which, being the purpose of the business, becomes the decisive attribute of all its aspects and components. Considering every element of the production process from the point of view of how it contributes to making a profit on the basis of its costs reveals to the industrial capitalist the practical constraints of his trade, what he is compelled to obey in order to ensure his company’s success.

The one both elementary and comprehensive practical constraint confronting a company has found its way into Western culture in the form of a popular saying. The phrase “Time is money” alludes to the economic fact that the yield of an advance of capital for its owner depends on the time for the invested sum of money plus profit to flow back and be used again. The turnover rate of his capital determines how often his assets perform their profit-making function within a certain period of time. Shortening production time as well as circulation time thus increases the profitability of capital. When it comes to circulation time, the industrialist is dependent on the ‘solvent’ or ‘effective’ demand for his products, and aims to get his goods shipped to his customers quickly. Transforming goods into money provides him with the liquidity he needs to avoid interruptions in the production process. The components of the production process differ according to the duration of their use and thus with regard to the time when they have to be replaced. In the interests of continuity of production, the businessman always requires “liquid funds” to renew production elements that have been used up. Some elements need replacing after only several turnovers, which makes them “fixed (or capital) assets.” By contrast, “current assets” or “circulating or working capital” is what the capitalist calls those parts of his firm that he must constantly replace by new purchases. Finally, he analyzes all his assets, which exist side by side in the form of factors of production, goods to be sold, and money, in terms of procuring required liquidity and avoiding unnecessary liquidity. He strives to speed up the transition from one form to the other, which he accomplishes in the production sphere by shortening production time.

That is why an expedient handling of that “factor of production” labor is not limited to complying with the necessity that takes the form of the constraint to pay workers in time so they they keep production going. Remunerating his staff gives the industrialist the right and the freedom to arrange the “jobs he creates” in accordance with the purpose of the enterprise: the more work being done, the faster his capital will turn over, with the production time being shortened by longer working hours, on the one hand, and by less time required per commodity, on the other.

As the turnover rate of his entire capital increases, the surpluses arising from it thus increase to the extent that the industrial capitalist requires his workforce to perform. His handling of the wage-workers he employs follows the imperative of his business calculation, according to which all costs have to pay off, in a special way: it is through the use of the workforce that he makes the business profitable. And the form of payment — tying workers’ wages to working hours and performance — is the instrument of a calculation that makes profit the measure not only of the wage-earners’ income, but also of their service. In the course of planning his business, the industrialist adds a second antagonism to the one existing between the productive accumulation of money and the workers’ livelihood: his business succeeds at the expense of his workers’ life and vitality. Because his surpluses grow to the degree that he increases the job performance of his staff, the company’s profit and the share of wage costs tell him what the “labor productivity” is that makes or breaks his entire enterprise.

Additional remarks

This equating of the productivity of labor with its effect on the company balance sheet says less about the lack of theoretical discernment than about the function imposed on labor in capitalism. For as much as the cost and profit calculation is based on the performance that a workforce is capable of and made to deliver, it is not a matter of workers producing a maximum number of products with a minimum expenditure of time and energy. The business interest that demands and promotes the productive force of labor is by no means served when a lot is made with little work. The standpoint of profitability subjects work to a standard that is foreign to its productivity. Taken on its own, work is productive when a society uses an expedient division of labor and technical equipment based on a scientific mastery of nature to bring about maximum development and satisfaction of needs with minimum wear and tear on workers’ vitality and nerves, while giving those who do the work maximum free time. What the capitalistic calculation does, however, is link various amounts of money instead. Satisfying needs is replaced by the proceeds from selling produced goods. On the other side, a sensible division of labor is replaced by the wage that companies use to put together a factory staff and subject it to their command, i.e., the expenditure of work is replaced by the expenditure of money for work. And technological mastery of nature is replaced by the expenditure of money for acquiring technological achievements and for applying them to dictate the production process in the factory. The decisive criterion for success here is the greatest possible surplus of financial return over necessary advance. That is why the capitalist industrialist has his people work productively as long and as intensively as possible; work acts as a source of money to the same extent as salable things are created. The industrialist makes work act as a source of money for himself, as a source of profit, by putting paid work and purchased technical equipment in a relation to each other that suits his purpose where he has a say, in his factory. As if it were the most natural thing to do, he separates work from what it does. On the one side, there is “labor” as a company-owned “factor,” which consists in and contributes nothing but energy- and nerve-sapping activity under the company’s command and following its technological dictates. On the other side, there is everything that makes this activity materially productive, that is, makes it real work: all the means of production and forces of production are classed, not with labor as its set of instruments, but with the company they belong to as its doing: with the “factor” capital as its very own contribution to the result of production. Accordingly, work is paid for as if it were in fact totally unproductive in itself: the way it is paid for, the staff have to work so long and so intensively, as if the working day had barely enough hours to bring about the equivalent of what a worker needs for his livelihood. At the same time — this being the other side of the separation between work and its substance, its means, and its productivity — work is made conditional (otherwise it does not take place at all) on being so productive, in combination with the “factor” capital, at the workplaces set up by the company, that it delivers several times its own cost as profit for the company. This it does in the form of salable goods into which has gone highly productive work, that is, very little paid work per unit. So all productivity is down to the company; work gets paid precisely for “animating” the company-owned social productive force separated from the work itself, a force that is realized in machinery and in predetermined operating processes; and for making it achieve an altogether profitable operating result. This purpose shows in the way the work is done: in line with a production process programmed for maximum output and automated as far as possible, whatever human activity is still needed is broken down into precisely fitting individual steps for high performance density. The result is the opposite of what would be the essential achievement of a kind of work that was productive by its own criteria: it is intense wear and tear on workers’ energy and nerves all through an extended working day.

This company practice sheds light on the source of the profit that a capitalist enterprise is all about. If you ask them, both main actors and experts will claim that profit comes from the surcharge to a company’s expenses that a venturesome owner is entitled to and that “the market” always has to offer for reasons that are of no interest. In practice, however, every industrialist starts out from the fact that what he earns first of all has to be produced in his shop under his direction. And that is where the difference is produced, the difference between a wage that is completely abstracted from any productive force of labor, involving nothing more than the continuous possibility of working in the service of the company, the reproduction of labor-power, on the one hand, and, on the other hand, the monetary result of deploying the productive forces of work that society has achieved and that the industrialist has bought for himself. He makes the work he pays for his source of income by degrading it to an unproductive stopgap in his productively equipped company.

2. Extra-economic preconditions for business, which bases its economic necessity and power on what political force achieves

That a capitalist is out to enrich himself; that he pursues this interest at other people’s expense — such judgments about the industrialist’s social character are quite acceptable. They have never been refuted either. Instead, they enjoy a thoroughly relativized interpretation, which emerged as the clear winner in the dispute over the proper assessment of this profession in the history of capitalism. The first justification is to cite a fact that it would be silly to deny: in the “market economy” as we know it, practically everything depends on what capitalists do. Secondly, this deep insight does not serve as a follow-up to the criticism that they are enriching themselves, but as a good reason for casting a rosy light on what they do. What is claimed in a thousand variations on an invariable message is that the services arising from capitalists’ drive to enrich themselves are indispensable — favorites being, of all things, the abundance of goods and the jobs that we have businessmen and nobody else to thank for. By taking this positive turn to approving the business of accumulating money, the bourgeois mind not only shows respect for those capable people who invest their assets in a company and master the constraints involved. Its esteem also extends to the relation of production, which, so seemingly unalterable, is simply a work of force.

In order to subject social production to the business acumen of capitalists, which in fact makes the creation and distribution of wealth the dependent variable of profitability, it was first necessary to establish private property. The state has made exclusive possession of all means of consumption and production the law of the land. And by putting money into effect as the binding measure for private property, it pins its society down to acquiring this abstract wealth. As the means by which citizens have to gain access to material wealth, it becomes the purpose of all economic activity as such. Money not only separates every need from the objects that could satisfy it — which earns money the compliment that it allows everyone to exchange goods. It also divorces work from its means, which are at the disposal of their rightful owners and constitute their capital. Standing opposite them is a social class, in the form of workers, whose members take on the role of purchasable “production factor” labor.

Historically, political power had to be reformed into the modern bourgeois polity, which has long been considered the only true kind of state to have. This achievement cannot be overestimated in terms of its economic substance. The state applied the necessary brutality to destroy the traditional mode of production, bring about a new separation of social classes, and subordinate all work and life to the private power of money. Since then, the success of a particular class, i.e., the one whose source of revenue is capital, has become identical with the common good. It is served by the class released into the freedom of wage labor, because this service is the objectively necessary and legally protected means of subsistence. Since wage labor has replaced slavery and feudal subjugation with highly civilized forms of “employment,” the role of force as the midwife of capital tends to be easily forgotten by the historically-aware elite. Nevertheless, the state, whose power is so little appreciated as the first productive force of capitalist business, is enlisted all the more — as a “regulatory framework” — when it comes to the progress and cycles of business.

§ 2 The market

1. Not an economic system, but the circulation of capital

In “our” social order, capital — private monetary wealth that increases by being invested in a company — is not merely one income source among others, but one that sets the standards in all economic concerns as a politically brought about constraint. The traditional name for such a social order used to be capitalism. This name was not only associated with the idea of a socially valid purpose organizing all work and prosperity, all industriousness and needs. The experience that serving money and profit involves considerable sacrifice for most people was also always present and meant whenever the “system” was labeled with an “-ism” to name the prevailing interest. This was put to an end by wise language regulators, to whom every citizen expressing disappointment was out to criticize the system and turn to communism. They decided this social order is a market economy.

This name is surely well-intentioned. It avidly avoids saying what the system is all about. Instead it cautiously mentions how things are done under civilized bourgeois conditions. In our economic system, we adhere to a method for determining what makes economic sense. We also think of this method as a kind of agency, which is called market. We respect its findings, unlike those infamous bunglers of history who replaced the market by the state with its plan.

The shortcomings of this new name cannot be overlooked, however. While one can appreciate the motive for it — to provide a comparison of systems that has been settled — such praise of the market is pretty feeble. After all, the agency that has been chosen is being credited with a service that can be had quite differently. The eagerness of its advocates to compare, to highlight the better method for running an economy, simply doesn’t lead to any distinction in the matter at hand. That is why those convinced of the market’s superiority have always underlined the market economy’s merits by some additional useful remarks. They like to mention non-economic benefits, such as “individual freedom,” and energetically invite admiration for the immense wealth that comes about where freedom of the market prevails. Another boon is that the market’s price mechanism provides for the distribution of goods and factors of production, i.e., is responsible for coordination in a world based on the division of labor.

There is nothing credible about these arguments except for the intention behind them. To appreciate wealth as such, and then the fact that it is distributed, one certainly has to disregard the specific way the specific kind of wealth is distributed in a market economy. At least one must definitely overlook the well-known fact that the distribution of earthly goods follows a socially appropriate course, i.e., creates an interesting hierarchy from very poor to filthy rich, without every individual being terribly pleased about it. It is hard to praise such achievements of trading when one can keep observing that the notorious “market mechanism” somehow reduces the initiative of real live individuals to the size of their wallets, as common parlance has it. Those who accept such teachings must also forget that it is not by merrily exchanging goods that wealth is increased. Finally, it is not too convincing to celebrate the market as being the answer to problems resulting from the various trades having been specialized for some reason or other. After all, “allocation” through the market is brought about both by and for private property owners, and the “production factors” do not end up where a technical or other kind of need is seen for them, but where they are paid for. Sometimes they also just stay unused where they are.

The fine functions attributed to the market — the arena for the circulation of commodities, that is, products of capital that have a price — all turn out to be products of the intention not to talk about capitalism when bestowing honor on the arch-capitalist operation of exchanging commodities for money. When market-economy apologists start worrying about the success of their favorite economy, by the way, they become bold “realists.” They forget all about their “equilibrium models” and “theories of pricing” along with their ideas about the market being such an advantageous instrument — and simply side with the business that is making use of the market.

2. Competition over achieving profitable prices

The purpose of all this buying and selling has nothing to do with what researchers report, because commodities are not marketed due to a shortage of goods, but in order to realize ample returns measured in money. That is why the level of the market price is important — namely, in relation to the production cost of the commodity. The industrial capitalist puts his business to the decisive test when he offers commodities; solvent demand will show him whether he is producing profitably. With the part of his assets that are up for sale in the form of commodities, he enters into a comparison with other suppliers who, like him, are laying claim to society’s money for profitable payment of their products. The success of his calculation proves to be dependent on the course of the competition that is being waged with the market price over the volume of commodities sold.

At first, competition takes place within the distinct spheres of production. Identical or similar products with use-values aimed at the same needs are compared by customers simply according to the amount on the price tag. This price comparison forces all suppliers to charge at most the same sales price as their competitors, if only to shorten the turnaround time. Their profit, which is calculated as the difference between market price and unit cost multiplied by the number of commodities sold, is thus dependent on their individual productivity in relation to the level of production costs of the entire branch of industry. A capitalist can only withstand this constraint of the market — without harming his profit, the purpose of the enterprise — if his unit costs allow him to charge the market price that the other competitors in his sphere are creating their profitability with. On the other hand, competition also takes place between spheres. The volume of commodities that a branch of business can sell is limited by the solvent need of other spheres or of consumers. The demand that a capitalist encounters is contingent, on the one hand, on the quantitatively circumscribed need for the use-values produced by his branch of industry and, on the other hand, on the money that is available for that need — whereby material need by no means has to coincide with “buying power,” which is decisive. Competition within a sphere is dependent, in both its course and its result, on the relation between the quantity of its products offered at market price and society’s demand. Companies see from their sales that their profit is contingent on the distribution of capital over the various industries, which each make use of the ability to pay of all the others for converting their goods into money against each other. In this way, “the market” makes private business, with its own calculations, face up against the social conditions of its success. Concerned as he is with increasing the private power of his money, every capitalist has goods produced for the market, for the purpose of sale. On the other hand, it is therefore the notorious relationship between supply and demand that actually decides in practice whether and to what extent his production is profitable. The “market,” which is rightly also taken as a synonym for competition because it is not a place but rather this very process, hands down the verdict ex post on that performance of capitalist companies that matters to them. The exchange of goods for money that takes place or fails to take place determines whether a business actually is a business — and decides on the costs incurred and effort expended on it. This way of judging the social necessity of the use of labor and means of labor can truly not be confused with planning. And if it is high or low prices that spell out the usefulness of goods of every kind in capitalism, then this doesn’t so much bring to light the “instrumental rationality” that capitalism is supposed to have and that aesthetes hold against it, as it reveals the banal arithmetic parameters against which every sensible approach is found guilty of being out of touch with reality.

3. Supply and demand: On the free play of these forces and what it is about

Companies that sell their goods at a price that pays off are called competitive. This company “attribute,” which has become the epitome of capitalist success, at the same time underlines its owner’s or manager’s competence, albeit without paying much attention to what he has actually done. In any case, no one who calls a company “competitive” means to say that someone has subjected a part of society’s production, along with the labor dependent on it for satisfying needs, to his need for money. The emphasis lies instead on giving an industrialist recognition for having succeeded in investing in a sphere whose products either promote the cost accounting of other capitalists or wring the necessary demand from consumer budgets; for having managed to get his products produced “at a good price” compared to the rest of the industry; in short, for having organized and calculated the costs of his production so as to stand up to the “challenge,” the “pressure of the market.”

Market-economy experts are hardly troubled by the striking contrast between their praising the freedom of the market and simultaneously invoking the constraints emanating from the market. When they don’t find a market with its business opportunities, they call for it and for freedom along with it. When they notice that the market is placing limits on business, they justify and demand all the measures that capitalists — have to! — take to succeed with their business purpose against the competition. By doing so, they are also saying goodbye to the legend that the market is their method of choice when it comes to “running an economy.” They simply side with the returns that an industrialist has to generate if he wants to keep being one and that he acquires in the exchange of goods and money. When his products fail to squeeze a surplus out of the market, seasoned theoreticians and practitioners of the most superior of all systems do not condemn the market that declares products, factories, and labor to be uneconomical and redundant. Instead, they rebuke the companies and their living and dead inventory because they aren’t making any money.

With this respect for the market, they are adopting the simple point of view of practical necessities that do not follow from having judiciously chosen the so helpful market, but are consequences of the capitalist regime.

  • If it is up to the market to decide, through the realization of profitable prices, whether a product finds its way to where there is a need for it, then money is not the mediator between two innocent ‘forces’ called supply and demand, but the purpose of and reason for the exchange.
  • If it is the payment of profitable prices that decides whether production is “economically viable,” then economic rationality is directed not to the production of useful goods, but to molding society into a market so that it can bring about the accumulation of capital.
  • If there is competition on the market and “for markets,” then the sphere of exchange is not only the means of capitalists, but also the part of their business where they restrict each other. They contest each other’s profit on the basis of their particular production conditions. This is how they start subjecting themselves to the general standard of capital accumulation, the “-ism,” which they either meet or fail to meet.
  • The comparison between companies that is decided every day in the circulation of goods and money and put into numbers on company balance sheets keeps pointing capitalists toward planning their production processes in line with the market. Since they emphatically reject a planned economy, they decide to meticulously organize the production of profit.
  • This practice has nothing to do with establishing a social division of labor, or recognizing a traditional division of production. The only convention that exists and counts between the key players of the economy is respect for money as the “real community” of the market economy. It is through money and only through money that they relate to each other. And it is according to the conditions for making money they impose on each other that they decide — without consulting their competitors at all — what, when, and how much to produce. What is distributed and divided up this way are capital investments.

4. The “job market”

The fact that it is not individuality but capital that is set free in free competition doesn’t hit capitalists too hard; their personal fate just turns out to be a risk now and then. It’s harder for those who populate the "job market" (although again this is not a place of course, but rather a branch of capitalist accounting):

  • firstly, because what they do in capitalist firms is dictated by the profitable design of the workplace. It is not customary in capitalist firms to bargain over an exchange between certain portions of work and matching sums of money, because once the worker takes up his position, what he gets for his work is fixed or it isn’t. In either case, the way the work is to be done results from the company’s cost accounting.
  • secondly, because there is sometimes no demand for them to do anything and they hang around in the form of supply. What did you want to say? Strangely enough, it is this phenomenon — and not the other, normal case of employment — that leads to and fills reports about the “job market.” As if market observers realized that there was something a bit wrong with the market dealing in labor, they suddenly call those who supply labor “job seekers” in order to do justice to the specific plight of this species of trader. Actually, the peculiar fact that it is so hard to distinguish between suppliers and demanders when it comes to the commodity “labor” is only a clear indication that this market does not even exist.
  • Thirdly, because they have nothing to offer except themselves as labor power, whose use or nonuse is again decided by the money they have to be available for in order to earn anything. Designating a lot of poor people as free wage-workers and introducing a profitable price for their commodity, labor-power, has led to a great deal of irrelevant speculation about fair wages, but otherwise only given a whole class of bourgeois society the status of a commodity. That the articles traded on the “job market” stay just that is guaranteed by the price paid for them. The money systematically fulfills its function as a means of circulation — as an element of the circuit of capital, it passes into the wage-earners’ bank accounts, disappearing from them again to maintain the workers’ labor power.

§ 3 The bourgeois state
Within its borders

1. A monopoly of force for free competition

In fully developed capitalist societies, concern for good business is expressed with mantra-like regularity in the assertion or demand that the market should be spared as much as possible from government interference. The somewhat one-sided slogan, “market instead of state” — which sounds pretty unreal especially out of the mouths of politicians busy making economic-policy decisions — testifies to quite an entitlement mentality. Industrialists intent on competing, with their point of view of applying their capital profitably, perceive the public authority’s actions primarily as a restriction of their freedom to make lucrative calculations. They never go so far as to demand the state be abolished, but, due to their assigned “responsibility” for the course of “the economy,” they claim the right not to be obstructed by the state once it has given them the concession for increasing their property. Of course, the habit of demanding that the state take the “freedom of the market” seriously and apply itself to promoting business does not exactly promote an understanding of the indispensable, everyday services of the state for the competition of private property owners.

The state’s first service is to establish its monopoly on the use of force. Politicians, who “reject force as a political means,” rely on the coercion within the authority of the state apparatus — or on respect for its means of coercion — just as capitalists know they depend on order, a need that they certainly share with the other actors on the market. Strangely enough, the considerable force required in a society that likes to compliment itself on being “free” has earned the capitalist mode of production the reputation of being pleasantly distinct from tyranny, from the “rule of force,” whether in a historical or in a modern form. When monopolization of force by the political sovereign is confused with the absence of force in this way, this in fact shows that the freedom afforded by the market can only be enjoyed if the state exerts constant and uncontested force, and that this use of force is so badly needed that it is recognized not as subjugation but as a service. The state continually prohibits the force that competing private individuals pursuing their interests have to expect from their peers — so that the sovereign’s ban on force acquires the character of protection. The state and its force thus spare individuals the use of force for asserting their interests against others — in this respect the monopoly on force is tantamount to empowerment. Both effects of the state’s monopoly on force are familiar to everyone in bourgeois society. The requirements and prohibitions of prevailing law demonstrate to prosperity-seeking market visitors that they are citizens: subjects of a state that allows them to do some things and forbids them to do others so they can operate freely.

It is necessary that the state prohibit its citizens from using force. Not because of human nature, but because of the nature of the freedom it grants them. After all, the decision to operate a “market economy” that was reached through some historical turmoil did not consist only in abolishing the “relationships of personal dependency” that every democrat hates. With the freedom to earn money, everyone enters into an “impersonal” dependency on private property, which he needs, uses, and seeks to increase; and comes into conflict with other private property owners who are doing the same thing. Every economic activity, from big business through ordinary work to the smallest pleasure, is based on the use of private possessions. It is according to their property, which determines their calculations, that the masters and walkers-on of the market enter into the relations that, as economists marvel, bring about not only the production of all kinds of wealth but also a distribution of money — the only kind of wealth that really counts — that measures and represents the power of disposal over useful goods that is inherent in property. This power is the only reason for the variety of goods and services that the market economy is so proud of: they are produced and provided in order to be sold, to be transformed into money — the power of property separate from the products with which it arises And money is needed by the valued market participants if they are to get hold of the consumer goods that are plentiful but separated from them by the barrier of others having the power of disposal until they pay for them. Thus, supplying society in general becomes a constant conflict between property owners over money; more precisely, over acquiring other people’s money. And that is why, in order to acquire money, the overwhelming majority, intent on their own benefit, and of their own free will, enter into a special kind of service, namely, for property owners who put employees and dependent service providers to work to increase their property and who pay them in accordance with this purpose. Money acts in the hands of these property owners as a means for commanding other people’s labor, appropriating the products of this labor, and competing for their profitable sale. Thus, money “mediates” the relation between the power of disposal of employers over the activity and livelihood of the bulk of society, on the one hand, and the productive readiness of calculating free individuals to serve capitalists’ enrichment, on the other hand. And this relation already in principle settles what the toils of producing wealth will be as well as the barriers for participating in it.

All of this is reason enough for those taking part in the market economy to require regulatory supervision of their gainful activities, and for the public authority to attend to its citizens’ business dealings intensively and across the board. After all, the very first precondition for this economic practice, the exclusive power of disposal that is inherent in property, would be invalid — in fact it would be out of the question as the principle of a society’s work and way of living — if there were no omnipresent higher force to guarantee free use of this power and regulate the conflicts of interest and relations of force such use entails. To be sure, money and its use as capital were not invented by any state power; but it is only possible for the private power of property in the physical form of money to “rule the world” because a political rule subjecting all its citizens to its laws wants it to be this way and bindingly lays down what — which material or what kind of concrete token — is to be valid as money. It is in this form that the state grants its citizens the use of force against and over each other that it otherwise denies them. It spares the class of property owners that commands the productive work of society from using force by empowering them to use the private power of money.

That is exactly what the state’s second service consists in: on the strength of its monopoly on force, it establishes, beside and separate from itself, the relation of domination between the class of employers and the masses employed to enrich them. It establishes this relation as the private matter of those who have enough money to put others to work for their property, and of the many others who for want of property need such work for money. In this way, by establishing the capitalists’ power of command as the natural consequence of the state’s general guarantee of the private power of money, the state takes away from the capitalists’ power the character of being a relation of domination, giving it the status of a legally regulated state of affairs in which conflicting complementary interests and calculations collide and private agreements have to be made. The state thus partitions off its own relation of force vis-à-vis its subjects just as fundamentally from the relation of economic use in general, in particular from the command over work, the payment of remuneration, i.e., from the exploitation of the needy masses that capitalist industrialists practice. It thus makes its rule lose its character of subjecting its subjects to an overriding material interest detrimental to their self-interests, to an obligation to work and to continually reproduced poverty. It devotes its monopoly on force to properly containing all the conflicts of interest that the various private owners have to settle with each other, especially the conflicts between the owners of capital and those without money in their respective gainful activities. Capital’s power of disposal over the working masses therefore has nothing to do with domination or force, because the force monopolist reserves all command for itself and imposes rules on the gainful activities of capitalists, too. And for the same reason, namely, because it acts as the protector of these rules and of the citizens bound to them, its command definitely has nothing to do with domination in the sense of physical exploitation, much less with oppression. What it grants and guarantees is nothing more than everyone’s participation in universal, free competition for money: this is how it subjects the country and its people to the regime of capital.

2. Freedom and equality: The protection of person and property

Vis-à-vis its citizens, the bourgeois state with its monopoly on force presents itself as a real master of restraint. Above all else, it shows its respect for the freedom of those it governs; its promise of general freedom of action completely hides its own sovereign power to act that is implicit in such generosity. Likewise, it refrains from any discrimination when it comes to permitting everyone to develop freely; as a guarantor power placing every free will under its benevolent proviso, it is not interested in the diverse differences between its citizens that determine their daily lives. For the bourgeois state, the members of its polity are firstly and on principle all equal.[1]

The state obliges its citizens to show the same respect, for their peers, when it grants them general freedom of action in its egalitarian way and “without distinction of person.” The principle of all the rules and conditions that it imposes on their competition — when it comes to making money and in general — is the same abstraction that it bases its dealings with its subjects on. For the state and for the standardization of all social relations, of all relations between citizens, it is essential that — irrespective of all material means and interests, regardless of all frictions and dependencies involved in monetary transactions, beyond all differences when it comes to outlays and returns — all acts of will come about voluntarily, free of coercion, without force except for the force the state provides itself. A constitutional state places this abstraction, a human being as a legal person, under its protection. Whatever it is that competitors have at their disposal — needs, abilities, physical strength, lifetime, health, possessions — the only thing that matters for the state is, accordingly, that every person has it as his disposal willfully and consciously. This circumstance is what deserves unconditional respect, as an exclusive right. The entire material livelihood of human beings counts for the state in just one regard, as the material that an individual has free disposal over; as his property, it is under the state’s protection.

It is only on the basis of this abstraction that all those material relations of work, service, and use are allowed to take place, and also supposed to take place — relations that citizens enter into with and against each other using their respective means in their competition to make money. Provided they respect each other’s free decisions, they are allowed to go at each other using all the means that are recognized as their property. When a capitalist pays employees and puts them to work in his factory to enrich himself; when wage-workers let an employer have command over them for a set time in exchange for money; when competitive battles are waged “in the marketplace”; whatever people do: from the state’s point of view and in accordance with its legal code, they are “interacting” as legal entities who, thanks to its license and under its egalitarian and freedom-based supervision, have themselves and their rightful property at their disposal and make deals that, if they are to take effect, have to fulfill no more and no less than the legal requirements of being voluntary and recognizing the other party as a holder of rights of disposal. In this sense, the state, with the legal institution of the contract, intervenes in all social relations as a supervisory third party; the sense being that it sees these relations in principle as potential collisions between the spheres of freedom it grants its citizens. That is why it issues rules for a peaceful coexistence of contracting parties according to the criterion of mutual respect as legal entities, rejects what it deems incompatible with this abstraction, and backs all approved contracts with its authority as the force monopolist. No matter what the actual substance of these agreements, to the guardian of all contracts, it is always the same thing: the exchange of rights of disposal that the parties consider equivalent.

3. A constitutional state for all classes of citizens

As stated above, a bourgeois state recognizes and treats its citizens as legal persons who basically all want the same thing in their social intercourse, namely, to exercise their free will without anyone dictating their purposes to them; and who all make use of the same means, namely, what rightly belongs to them. By doing so, the state sets in motion the universe of competition for money, thereby bringing into force the capitalist mode of production without previously thinking up any of it or stipulating any functions, let alone assigning them to various functionaries as their life’s work — free persons see to this themselves in accordance with their property. They develop their own personal path in life on their own responsibility, thereby realizing just so many not especially individual “social identities” according to the objective laws of acquiring money through paid work –— most people by performing it, and only very few, but the important ones, through the monetary proceeds they realize on the market. Social critics have repeatedly decried the causal connection between source of income and the corresponding, so stereotypically different life-paths as dividing society into opposing classes; there have been phases when a considerable number of people working for their employers’ business success and ending up on the lower ranks of the job and social hierarchies responded to the appeal to them as a working class to stop putting up with their low status; as for the business elite, they quite affirmatively consider themselves first-class anyway. But such class distinctions do not throw the constitutional state off when it comes to the way it makes distinctions in its citizens, namely, in each one, between being a “citoyen,” a free and equal legal entity, and being a “bourgeois,” a practicing competitor who can, and must, see how far he gets with his individual means for making money and having success. Of course, the lawgiver is not unaware of all the situations that its citizens work their way into. As the monopolist of societal force, it remains responsible for all class-specific necessities, conflicts of interest, and demands. The consequences that arise from applying the particular available means in gainful activities for persons and for the use of their property are always acknowledged legally by the state, from its standpoint as the general order-enforcing power, in the form of regulations that hold in general, without any regard for whose needs the commands and prohibitions actually relate to. The regular repertoire of bourgeois legislation knows neither privileges for certain groups of persons nor discrimination against individuals or collectives; when this principle is violated, the constitutional state finds arbitrariness and corruption. Critics of social criticism deny the class character of competitive capitalist society using the clever argument that it is always free individuals with their personal life choices who sort themselves into the careers the market economy holds ready for its players. And the constitutional state has long since borne them out: that is exactly how it relates to the members of its class society, applies its order to the universal competition for money — and quite in passing and quite fundamentally rules out any alternative to it. After all, the bourgeois freedom of action that the constitutional state grants and guarantees is negated by even the idea of a free, collective, decision-making process that arrives at a sensible consensus on a social division of labor and satisfaction of needs. As a moral idea it is fine and dandy to overcome the materialism of money, but as a practical goal, the freedom-upholding constitutional state sees it as identical to a command economy, a prohibited encroachment of state power on the protected private sphere of personally responsible citizens. The egalitarian constitutional state is there for everyone, for all classes and special collectives; that is how it protects the existence of class society, which is unfailingly and without any alternative reproduced by the competition of free citizens under state guardianship.[2]

4. The economic means of state power

The bourgeois state rules with money. It pays for the services it needs and the goods it consumes. Quite in keeping with the market economy, it uses the private power of money to procure and have made whatever satisfies its very special consumption requirements — thereby furnishing practical proof of the civilian nature of its rule. It doesn’t take anything by force, but buys it instead. It gets the money it spends from its citizens, of course. So it does in fact help itself to the property that it otherwise guarantees and respects as its subjects’ sphere of material freedom; it makes those it has irrevocably declared to be free persons serve its rule. However, it does so according to fixed, universally valid rules, in accordance with the gainful activities its citizens are pursuing; in relation to their competitive efforts and successes, which it permits and protects; that is, in connection with the service that it performs for their material interests. So when the bourgeois state makes use of its competitive actors’ private pursuit of gain for itself and its need for force, it is reinforcing the semblance that its rule is actually nothing more than a service, which it is not selling but for which it is taking money to cover the costs.

This is exactly the view, and therefore always an extremely skeptical one, taken especially by those of its citizens who, as industrialists, like to make money directly or indirectly out of their state’s solvent demand, who literally profit from the order it establishes, and who always have the most left after the tax authority has taken its share. When these citizens speak out in their capacity as taxpayers, they see themselves not as the subservient economic basis of state power, but as its crucial financiers. And as such, they are constantly finding occasions to be dissatisfied with both the assessment and the use of their taxes, because they know one undeniable good reason for being dissatisfied: they have the license to increase their capital and practically everything, including the state’s tax revenue, depends on their corresponding business success; so they see harm in every sum that is effectively taken away from them and does not immediately flow back.

The guardian of the common good shows great understanding for its key taxpayers’ openly partisan dissatisfaction. After all, as far as the economic sources of its power are concerned, it relies on the self-interest that it allows its citizens and that industrialists make productive. It does not have to order work to be done for it: all the members of its class society work for themselves, for their money income as private individuals, trying to attain as much as possible according to their means. Capitalists put others to work to maximize their profit, no matter how big it already is. The result of these general self-interested gainful activities is thus an increasing mass of societal monetary assets: abstract wealth usable for any conceivable purpose, from which the sovereign can take its share and buy everything it needs that is also profitable for industrial capitalists to produce. The productive power of capitalistically applied private wealth is therefore of general interest to the state authority and a central concern of its own; so it also sees every deduction from that wealth as a problem. Accordingly, it determines its appropriation of this wealth through taxation as a necessary but at the same time dysfunctional burden, as additional costs that must definitely be kept as small as possible. The proper assessment and use of this appropriated wealth is forever the main point of contention between state and taxpayers — and, in a democracy, the favorite subject in the struggle for power and public opinion between government and opposition…

Beyond its borders

1. Sovereignty beyond the state’s borders: Territorializing business

A state power has a particular domain it exercises authority over; it is one of many such states. For those in the business world, this has the immediate consequence that the scope of their activities, which cannot do without sovereign legal protection, is confined to a limited territory, i.e., to the material and human resources available there and the ability to pay that can be tapped there, and determined by the particular interests and competences of the political power ruling over it. Businessmen draw a clear and unequivocal conclusion from that: the specific circumstances under which they pursue their profession of increasing money have to prove to be positive conditions for that purpose. To them, national borders mean that the limited area for capitalistic money-making is exclusively theirs, their home market, where foreign competitors have no place. Industrialists by no means accept the prevailing institutional, material, or other kinds of business conditions as natural givens of their home country, or fate: they call on the government to fulfill their never-fully-satisfiable demand to tailor the country and its people to their business needs. If the state goes and places spatial boundaries on the conduct of capitalist business due to its own geographic limits, then it’s up to it to make that an exclusive privilege and a set of advantages for this business.

The first demand, that the territorially limited sphere of business be exclusive, is automatically fulfilled by the sovereignty of the national state power. Equality before the law, one of the principles for how it deals with thinking human beings, includes one inequality that is just as much a principle: the status of being a legal person with legally protected property falls all by itself only to the inhabitants recognized as a sovereign’s own citizens and — fundamentally and first of all — not to subjects of other ones. Citizens are legal assets of the force monopolist in charge of them; it will not let this be challenged. Conversely, it will not touch the human “property” of foreign sovereigns; there has to be that much discrimination when freedom and equality are at stake. Foreign capitalists are thus per se excluded from the normal course of business as competitors. From the standpoint of the constitutional state, it is up to its competing capitalists to give this formal privilege material substance; this falls under their freedom of action, but not only. The freedom the state guarantees its industrialists includes the assurance that the territorial limits of this guarantee will have no detrimental effect on the freedom granted. That is why it is a fundamental task of bourgeois state power to arrange its country and people in such a way that they prove their worth as a capital location regardless of — in fact in — their limitedness.

2. On the independence of the people

For the bourgeois constitutional state, discriminating against foreign competitors and creating particularly advantageous competitive conditions are not privileges it is granting solely to its economic elite. Excluding foreigners is a completely class-neutral matter from the outset anyway: the highest power indiscriminately preempts all its citizens as its exclusive assets, guaranteeing protection and thereby setting them off from the rest of humanity as its people. And, along with the particular competitive conditions in its country and the rules tailored to them, the lawgiver also places under its protection many a typical national adaptation of the lower ranks, from the customs of neighborly coexistence to popular forms of piety.

For the great majority of a country’s inhabitants privileged in this way, the only practical consequence of the first service, the exclusion of foreigners from the nation’s gainful activities, is that — in principle and for the time being — class peers from abroad are kept out of the competition over being used, which does not make this competition any better or any less contradictory. For them, the homeland protected and maintained under the rule of law consists essentially in situations arranged for capitalist use and the — certainly quite changeable — habits of coping into which the natives are born, the code of prevailing customs and similar fine things, which call for small-minded forbearance rather than making life easier. For the guardian of public order, however, much of this is of interest as a contribution to its class society’s ability and readiness to perform, as well as to its people’s national identity, and is among the public goods it is also in charge of. In their thus constituted homeland, free citizens get to adapt themselves according to their taste. And the mere fact that this homeland coincides with the territory the state power is responsible for — or with subdivisions of national territory — provides free citizens with points of view for identifying with their rule, whose force they are dependent on and committed to as competitors anyway.

Thus, the freedom of action that the constitutional state grants its citizens is not realized simply by their participating in capitalist gainful activities on their own responsibility. This everyday competitive struggle takes on the character of an exclusive reciprocal relation of obligation between the domestic authority and citizens in their living conditions that are marked by lots of special features. The state’s highest duty is to preserve the first, indispensable condition for its effectiveness as the power protecting the people and their homeland: its uncontested, and incontestable sovereignty over the country and its people, without competition either within or beyond its borders. What it is protecting is a nationally exclusive freedom of its citizens, i.e., as a privilege of the collective of citizens vis-à-vis the rest of the world — including the people’s independence from every authority other than their own supreme power. The sovereignty with which bourgeois rule regulates the lives of its citizens becomes the first and crucial service that it owes its subjects.

3. Military

As a sovereign and in the interests of its people’s independence, the bourgeois state must guarantee its sole responsibility for its territory by itself. It does not want to make and cannot make its force monopoly over its country and people dependent on what other rulers might decide. It therefore has no choice but to force its peers to respect its sovereignty. So every single state sees a need to present itself to others with a force apparatus sui generis: an apparatus that is intended, and must be able, to render other sovereigns’ means of force ineffective and enforce one’s will against them. The state establishes a military, without regard to any particular dangers. Instead, before attending to any — and even before seeing itself in any — concrete danger, it measures its need on itself: on the size of the country and its people that its sovereignty extends over, on the mass of wealth that the nation’s market economy can skim off the country and its people, on the scope of cross-border interests that the nation is developing, and on the right to success and respect that it lays claim to from all the other states. All that is summarized and made absolute as “the nation’s honor." Accordingly, every state itself defines the level of ambition for undertaking the task of autonomously securing its sovereign existence. This in turn gives rise to the various danger scenarios that it must specifically be prepared to deal with; which also means that a sovereign’s need for force on principle increases with the nation’s successes.

To satisfy this need for force, the state draws on its country and people quite differently than it does for the civilian services its rule provides. The capitalistically reproduced wealth of the nation has to supply money and use-values for a potential for destruction that meets the nation’s ambitions. This benefits a lot of industrialists, but also costs a lot, putting a strain on the source of the state’s economic power, the accumulation of property. As free legal persons, citizens now meet another side of their government: a command authority that makes it their duty both to kill, i.e., to definitively abandon the respect for others’ will to survive that is otherwise mandatory in bourgeois life, and to be willing to give their own lives if necessary. Faced with this prospect, ordinary citizens come to greatly appreciate as peacetime the phases when their ultimate service is not demanded; governments demand gratitude for that. Citizens are wrong here, while governments are positively mocking them, for it is in peacetime that states arm themselves and create the conflicts they maintain a military to “resolve”; their demand for obedience to the point of killing and dying “upon request” is constantly present. An ultimate willingness to serve and sacrifice oneself counts among the costs of the freedom that the constitutional state grants its people and guarantees to the end.

§ 4 Commercial credit

With its sovereign power, the state guarantees and regulates the command of capital over labor and the market as the sphere of the capitalists’ competition for society’s ability to pay. In the sphere of production, this legitimizes the capitalist’s freedom to make his capital profitable through low-priced purchase and effective employment of labor-power, but in the sphere of circulation it is competition that is set free, whose course decides on the realization of profitable prices and thus on the intended performance of the companies.

1. Continuity and effectiveness of productive money accumulation as a liquidity problem and its solution

The speed and continuity of capital turnover, and thus the amount and certainty of the return on invested assets, depend on the market and therefore on conditions that the industrialist does not have in his own hands. The need to renew, i.e., buy, the various elements of his production process on schedule makes it necessary to have the goods, manufactured with the consumed means of production and paid labor, sold on time and at the calculated price, that is, to continuously win the competition for the targeted ability to pay and get the required money from the market.3 The period of time allowed for that must be as short as possible, ideally approaching zero, because otherwise business assets will lie around in the form of finished goods rather than being available in the form of means of production and wage labor to be used as capital again. Thus, the fact that the industrial capitalist’s assets must repeatedly take the form of money to act as a source of money comes in conflict with their purpose of permanently acting at their full size as a source of money.

This contradiction presents itself to capitalist industrialists as a liquidity problem: as the danger of being pressed for money while continuously using their money investment, as the danger of a delay in using it profitably, i.e., as fast as possible. In order for their capital to constantly perform, to its full extent, the service they are keen on and entitled to, they treat each other — regardless of the competition between them — as partners needing to cope with a business problem they all have in common. And they solve this problem in common, too: they grant each other credit in the form of a trade bill, a commercial bill of exchange.

Such a bill of exchange is a piece of paper documenting a claim for a certain amount of money to be paid by a certain time. The claim results from a capitalist supplying goods to another capitalist whose continuity of production threatens to fail due to a lack of money for making purchases, in return for a promise of payment, in a one-sided act of trust. The seller agrees to this solution to the buyer’s problem because by accepting the payment promise he is solving his complementary turnover problem — he wants to sell as fast as possible in order to be able to make purchases himself. As a buyer he will now not have to seek deferment in the same way as his debtor, but will have something substantial in his hand, his claim for money. He gives the payment term he has granted a life of its own, it becomes an objective thing — the bill — that is separate from the relationship of trust, and utilizes this objectification of his customer’s obligation to him as a substitute for money vis-à-vis his own supplier: as a means of payment for purchasing the goods he needs.[4] Here, and from now on, this paper token of money not yet earned, only promised, acts and circulates between capitalists as "commercial money," separate from and independent of that commercial transaction in which the act of trust documented on the bill originated. However, this does not happen indiscriminately, there is a condition: when bills are used as payment to a supplier, it has become customary for the one passing a bill along to vouch personally for the original debt with his signature.[5]

The whole thing has the appearance of being a technique that capitalists use to deal with the various functions that their capital has to fulfill. But it is more than a clever device.

2. Trust in competitors’ continuous business success as a source of required liquidity, i.e., as a means of achieving anticipated business success

The bill of exchange, the elementary form of commercial credit, does not merely document a contractual relationship between two merchants’ wills, a period of time the seller allows for payment and a promise to pay from the buyer. The bill removes what such an agreement accomplishes — surrender of a piece of property in return for a mere statement of intent from the recipient — from the relationship of trust between the two parties, making the order to pay by a later date an independent means of purchase that merchants can continue to use as if it were as good as the specified sum of money itself. A bill of exchange transforms the payment obligation into a veritable means of payment that acts as money. The bill debtor does not function as a person the creditor is placing his trust in, but as the representative of a business transaction that can be relied upon as such, objectively, in accordance with its intrinsic purpose, beyond the original bilateral business relationship. It is not the individual doing capitalist business, but the logic of his source of income that is the basis for his personal commitment becoming an independent security that can be used for purchases separately from him. This assumes not only the capitalist nature of the debtor’s business, for whose uninterrupted continuation he has made his promise to pay. Taking it entirely for granted, the bill of exchange already documents the proper success of this business in advance. It shows only the deadline by which the business is to be completed successfully, with a sufficient monetary return, and ignores the actual business activities for which the bill debtor is buying the necessary means that he cannot even pay for yet. And the bill’s quality of being a reusable means of payment involves an abstraction even from this deadline — the paper actually represents, currently, as often as the bill is passed on, the sum of money that is to be delivered only after the deadline, at the due date. The debt relationship documented in the bill of exchange reduces the business financed with it to a mere question of time; and even this is ignored by the bill in its capacity as a means of payment. It does not merely anticipate the business success in theory; it makes this anticipation real. Of course this is not unconditional; earned money must be paid at maturity. But until then, obligation is equivalent to fulfillment of obligation, and promise to promised sum. And this equivalence does its job — unless something gets in the way — as often as the bill is passed on. Money not yet earned buys means of business that bring about the anticipated business success, i.e., earn the money that was lacking to buy them.

So with the technique of the bill of exchange, merchants have introduced a small functionalist marvel into the capitalist world: at times when a capitalist’s total assets lack the liquidity needed to function as capital, the assets functioning as capital create the needed liquidity among like-minded merchants. Through the solvency created in this way functioning as part of the money-yielding total assets, as capital, the sum of money that was lacking arises; this sum redeems the solvency through whose capitalist use it has been created. At the same time, this “derivation” of money from its functioning in the circuit of capital assets has the fine feature of appearing all the more successful and reliable to the business world the more frequently the bill changes hands and receives the signature of yet another user who becomes liable as a debtor. In practice, clever businesspeople treat the emancipation of the bill of exchange as a means of payment from the original debt obligation only on the one hand as the economic nature of the thing, treating the promise as equivalent to its time-limited but objective fulfillment. On the other hand, this equivalence remains for them not merely a provisional, but a relative matter, which gains objectivity through frequent repetition. Their practice makes the document more and more “near (or quasi-) money” (as insiders call it)!

Additional remarks

It is quite remarkable that capitalist businesspeople are prepared to take the intention for the deed when it comes to money — which after all embodies the wealth that they are after and is the point of modern economic life altogether — and treat IOUs documenting a lack of money as valuable, money-like securities. Such a substitute for money sheds light on the thing it is replacing: the value of money itself resides in the power it grants over other people’s property. That which money gives a physical form and a quantitative measure to is nothing but a social relation, namely, the ability to access and take hold of goods in someone else's possession. On the other hand, substituting that property relation objectified in money by a mere written agreement only works because of, and with a view to, the use of the sum in question as capital, that is, as an element in the much more specific social relation of money accumulation. As far as that relation is concerned, it is clear at this point that what is acting as the source of money is the use of a money-shaped power of disposal to purchase means of production and to command labor-power. It is the success of this social relation, of the regime money has bought over part of society’s production process — that is, its success in terms of the prevailing social reality and, on this basis, the anticipated business success that is taken for granted in individual cases — that gives the promise of the capitalist debtor and the trust of his supplier and other capitalist creditors the capacity to qualify the bill of exchange to be a substitute for money.

3. Productive force, and risk, of creditors and debtors trusting in the business of the whole business fraternity

As it becomes common capitalist practice to do business using bills of exchange, i.e., capitalists habitually paying each other with “commercial money,”[6] they create a new relationship of productive dependence on each other. They no longer meet only as competitors “in the marketplace,” competing for solvent need for their product, or as buyers and sellers fighting over a profitable price. Alongside and in addition to this day-to-day struggle for business success at the expense of their peers, they have a positive connection as creditors and debtors. They are interested in the business success of their capitalist customers and dependent on the successful outcome of a series of business ventures not at all defined beforehand, ultimately on the general success of the competing business world in enriching itself. Going beyond the individual and personal, solely in their capacity as capitalist industrialists — and regardless of their professional conflicts of interest — they empower each other to continuously apply their total assets as a source of income. With commercial credit, they turn their own enrichment into a means and at the same time the implicit purpose of the general capitalistic production of profit, into a part of the increase of the capitalist class’s total capital, which thereby keeps active at its full size without any interruption.

This productive collectivism of capitalists has its limit and its price, for both the collective and the individual industrialist.

The limit is the expiration date of the trust in others’ business success, which trust is objectified and takes effect in the bill of exchange. The fact that the bill takes this success for granted, reducing it to a mere question of time, also means that the agreed payment term must be strictly adhered to. And the fact that the use of the bill as a means of payment anticipates that the payment obligation will be met: this fact goes hand in hand with a mistrust among risk-conscious competitors, who therefore like to see the circulating payment order acquire extra security through a large number of liable users, although this at the same time increases the number of those potentially affected by a default.

Paying with a bill of exchange gives the individual capitalist freedom in using his assets. But it also forces him to make his bill-financed business succeed and earn a sufficient sum of money on time. The starting point was the realization of the produced goods — their sale for money — being a limit to the continuous accumulation of money, and this limit being overcome by an emancipation from the need for valid money to be present. But now the convenient payment instrument he and his peers invented makes earning this money absolutely imperative. After all, the necessity of fulfilling the accepted payment obligation no longer just puts an individual business success, or even its continuity, on the line, it jeopardizes the actual viability of the business being, and needing to be, continuously conducted. The capitalist faces the task of subordinating his private interest in earning money, his entire business operations set up for that purpose, to the necessity of fulfilling his payment obligations on time. The collective relation he has fit his business into determines his business purpose: from now on, he is producing goods and selling them in order to be able to pay. This adds to his everyday tasks: with due diligence, he must coordinate his payment obligations and the corresponding deadlines with the incoming payments he is expecting from cash sales and the timely realization of claims against his customers paying with bills of exchange. He must take appropriate countermeasures to bridge impending liquidity gaps. In this liquidity management, he also neatly differentiates his remaining assets according to degrees of liquidity, which tell him how much will be liquid when, or which time periods or possibly which outlays will allow them to be made liquid…

While this is an objective pressure to succeed for the individual industrialist as a debtor, it is a permanent risk for the totality of competitors handling others’ payment obligations as a means of payment. The convenience of bridging their own financing gaps with debts accepted from others makes the clever merchants, each in turn, dependent on the business success of others who they are at the same time competing with — even more fiercely thanks to this financial instrument. The failure of others harms oneself: losers do not quietly disappear as competitors for solvency, but rather, as insolvent debtors, tear a hole in the chain of payment transactions they owe money in. And to the extent that doings and dealings are handled through commercial credit relations, the damage that the losers cause to others disturbs the interwoven financing strands altogether.

Neither objective pressure, on the one hand, nor risk, on the other, makes capitalist industrialists back away from their achievement. In their own best interests, they take one appropriate step after the other on their predetermined path from money-making individual to character mask of their source of income. Accordingly, as the crucial social class in the country, they see no reason to settle among themselves and bear the individual burdens and risks their collective benefit involves. The government had better stay out of their business dealings — but it better stand by to take care of their problems. Also the ones involving the credit they grant each other of course.

§ 5 State support of competition that makes use of credit: legal protection for property endangered by the use of payment promises as money

Capitalist producers perceive the delayed profitable turnover of their assets due to the necessities of commodity circulation as a liquidity problem. They solve it by the instrument of commercial credit: using payment orders as means of payment. Despite the contradiction, they perfect their business, which they conduct in competition against each other, by a procedure that not only presupposes a positive relationship between them, a reliance on others’ business success, but even treats the competition’s trustingly anticipated business proceeds literally as a fact, albeit only for a limited time and with their simultaneously mistrusting each other. To insure against the precarious side of the mutual dependency they are entering into, they call on the institution they otherwise don’t want to be bothered by in their gainful activities. The trust they place in their competing class comrades’ successful business activities needs the lawgiver to create corresponding laws, that is, to furnish the merchants’ calculating solidarity with the proper amount of general force, to be made use of by the lawyers no capitalist company can do without.

The bourgeois lawgiver is committed to constructively supporting the antagonistic property and business relations that determine its society’s life process. In keeping with this task, it discovers in the merchants’ achievement of commercial credit a distinct need for sovereign regulation. The fact that capitalists circulate payment orders as means of payment among themselves oversteps the conflicts of interest of “quid pro quo,” of buying and selling, which already demand of the lawgiver a comprehensive contract law along with courts of law. Commercial credit goes qualitatively beyond the debt relationship between a supplier granting a payment term for his invoice and a buyer promising to pay at a later date. Such a debt relationship presupposes that the debtor has firstly the honest intention to pay at maturity and secondly the ability to do so, so it is an uncertain thing and is therefore transformed by the state from a free relation between wills into a legally protected obligation. In a bill-of-exchange transaction something even trickier happens on this basis. All kinds of “third parties,” who have nothing at all to do with the original debt relationship between a buyer who is momentarily illiquid and a seller keen on the immediate sale of goods, use the creditor’s timed payment order to the debtor as a means of payment, accept it as such, pass it on as such, handle it as if it were a sum of money. As guarantor of property and having the power to define money, which is property in its universally usable form, the state is confronted with productive capitalists circulating a documented (securitized) relation between wills of other parties as an equivalent for real values. According to the strict standards of its legal property system, this makes the very first principal element of this system and the elementary interaction of the market economy — the exchange of goods for money, payment — not exactly a game of chance, but no longer clearly the definitive act, the final equating of material property and abstract equivalent, i.e., what buying and selling is all about. At the same time, as the protector of the capitalist use of monetary assets, the state is faced with the fact that its capitalist producers do not merely like this questionable practice and occasionally use it, but treat it as a firm, now indispensable component of their business dealings. It is therefore out of the question for the state to restrict, much less prohibit, bill transactions, but it cannot simply accept them without consequences either. As the protector of property, which has its circulatable form in the money the state defines, and as protector of the use of capital according to its owners’ appropriate need to use credit, the bourgeois state faces the challenge of using the authority of its monopoly on force to make rightful this risky, both businesslike and mistrustful trust that capitalist competitors have in the success of their identical but not common cause. So the state grants this trust, by law, the status of being a proper operating condition for its society’s market-economy life process.

The legal position matching the contradictory economic position is formulated and decreed in all main respects by the lawgiver in a special bill-of-exchange law. In this law, quite in keeping with the way the debt relationship separates from its starting point and becomes independent in the course of capitalist business, the lawgiver gives the contractual validity of the bill of exchange the “attribute” unconditional. In legalese, it classifies the bill of exchange among the “unconditional legal transactions" that experts define, without any false fear of tautologies, as follows: "unconditional legal transaction: a legal transaction that — in order to avoid uncertainty about the future legal position in the interests of the general public or the business rivalcannot be effectively tied to a condition.”[7] They explain it in a strictly functionalist way by a negation: "Issuing a bill of exchange is … unconditional because conditional bills of exchange are unsuitable for circulation.”[8] What the state as force monopolist achieves with this law, as indicated by the argument that the bill would otherwise be unable to circulate, is to make absolute the claim for payment that the participants in the bill transaction have already made independent of its genesis. Accordingly, the validity of the bill debt is removed from the private wills that created the debt; the debt is explicitly asserted against the course of the original transaction along with all further transactions that are mediated by the bill and that vouch for its stability, being asserted in equal measure against the bill debtor, the bill issuer, and all endorsers, as the case may be.[9] Any obligor, as a joint debtor, must without further ado hand over property in monetary form when it can be demanded by the bill holder;[10] and that means no holding back — the provisions of the general law of obligations, by which a debtor as a matter of principle is liable for his payment promises to the full extent of his assets, apply more stringently to a bill debt[11] — and there is no alternative. The lawgiver makes it punishable as fraud to feign a commercial transaction when establishing a bill of exchange, and at the same time prohibits “drawing and redrawing,” i.e., the finance technique of redeeming bills merely by renewing them with higher interest, as if they were long-term instruments. This is its response to all sorts of “excesses” that were typical of freely contracted bills that were then presented to the state and placed before its courts in case of dispute. In general, such provisions, along with all manner of meticulous requirements regarding form and time-limits,[12] all serve to unambiguously lay down legally that this written promise to pay as such — a mere contract, albeit only for a limited time, but for that time — actually has the quality of being money.

This is how a bourgeois state power approves the “derivation” of “commercial money” from its function for capitalist business life, makes this derivation socially valid, and at the same time combines its placet with the legal guarantee of the qualitative difference between debt and payment, which merchants themselves never forget. It recognizes that the accumulation of money must not be limited by the particular amount of money already earned; it decrees that the emancipation of commerce from money earned may only be based on a commodity transaction, i.e., must always be subordinate to a production-based accumulation of money; and it makes the content of the promise of money an unconditional dictate separate from the success of the underlying transaction. With this combination, the state makes business success a practical obligation, stipulating that production financed with debt has to exist for the purpose of attesting the money quality of the bill of exchange and justifying the anticipation of continual business success. It is this state-certified subordination of money — the thing whose accumulation is at stake — to its function for the continuous accumulation of money that the state thereby makes the new basis of business.

Of course, by doing so the state does not get rid of the contradiction the business world is engaging in; it does not even substantially reduce the risk taken by capitalist competitors with their trustful bill commitments, much less relieve them of it. What it contributes with its law is the force to go with the trust, the state-guaranteed right of enforcement to go with the calculating private obligation. So after making the antagonism of competition maintainable, it does the same with the contradiction of a positive business relation among competitors, a dependency that even though voluntarily entered into is ultimately irreversible. With this dual service of bourgeois state power, the competition and credit system is basically complete.

§ 6 Necessarily ‘false consciousness’ about money, profit, property, market, and state; both ordinary and scientific

1. Basic pattern of how people acknowledge that source of income, capital: they invoke achievements that have nothing to do with, but endorse, its purpose

Whether as an explicit compliment or with a more cautious “at least”: the capitalist mode of production is credited with all sorts of positive services as its essential achievement. Above all, the efficient supply of goods: there is nothing that cannot be bought; needs are not merely satisfied but served with an overabundance, often enough being created by the offer of goods in the first place. Obviously, you have to earn money to take part in the abundance of products, but that too is accomplished by the market economy, which is its next good deed. It offers jobs whose main characteristic is not they require work but that they pay money. And the system’s third boon: the money earned by members of the Market Economy Foundation at their jobs — in factories and firms, in the civil service, or wherever — is also provided by the industrialists: the latter earn it “in the marketplace” and use their takings to pay wages; to finance the state directly or indirectly, especially its social benefits; to treat the national community to football stadiums and museums that justly bear the names of their patrons, etc. Praise of the mode of production and its key players is not confined to material things either. Maybe not every single business deal, but the nature of a profit-oriented economy as a whole basically ensures efficiency. Performance is demanded but also fostered, and rewarded by the “incentive” of constantly having to earn money. The results in countless individual cases may not meet the ideal of the meritocracy principle, the happy correspondence of effort and reward, of earning what one deserves. But that does not alter the fact that the system of competition is committed to precisely this ideal; and in the big picture, (almost) everything really balances out in the end somehow. The exertion required for asserting oneself as a competitor in a market economy is not a bad thing, but rather a crucial educative gift of capitalism to human nature. People would remain below their potential, if not go completely to seed, without being prodded by fears of loss or prospects of profit.

The benefits attributed sometimes more to the economic system, sometimes explicitly to its capitalist bosses, by all kinds of public voices and when necessary by the eloquent representatives of the industrialists themselves, obviously have nothing to do the banal purpose that industrialists pursue in a market economy, and nothing to do with the actual constraints that follow from their activities and are put into effect by the state with the force of its laws across the board. It is almost embarrassing to point this out, but capitalist industrialists, whatever they may expect of it for their private lives and otherwise plan to do, are professionally interested in money; namely, the money to be made from using their assets as a productive source of money. Their raison d’être in society is quite simply to enrich themselves. Supplying society with goods the way they do is a means to this end; it doesn’t happen if the producer isn’t making a surplus of money. The wages industrialists pay may serve their employees for all kinds of things, but wage payment is intended for nothing more than to provide an effective command over free people who depend on paid work for their livelihood. The job that wages are paid for, with all its technical features, is nothing but a means for employing paid workers to enrich their bosses. That’s why the relation between a job and its pay is such that the buying power of the mass of paid workers excludes them from the wealth produced at their workplaces. By competing against each other “in the marketplace,” capitalists compel each other, and therefore their workforce, to be efficient, which is no general virtue, but rather the euphemistic name for social relations of force with a clear economic content: capitalists make their money in competition with their peers and at the expense of their workers. When businesspeople put their trust in, and give credit to, each other, it is only under the condition, which is truly not human nature, that their partners stake their business existence on it. And when they finance the public power out of their surpluses, they make it clear at every opportunity that they regret whatever contribution they make to the common good as being a counterproductive misappropriation of their revenues; even though they of all people would have nothing in their hands at all, not to mention being able to use it as means of making money, without a state power that subjects society across the board to its regime that aims to protect property and the personalization of property, the free legal person. So it is pretty clear that what is popularly known as “human nature” is not brought into bloom through the grace of free competition, but rather produced by sovereign force.

Apart from the last point perhaps, all this is well known. But it’s no use: in the self-perception of industrialists and in the minds of a society tied down to making money, there is a perfect match between the real purposes of capital production and their distorted justification. And there is one, extremely bad reason for this: equating the banal purpose professionally pursued by capitalist industrialists with all sorts of useful services for the rest of society and for the common good itself, as if that were the real truth of making money with capital, is based on and explained by the factual dependence of society’s life and survival on capitalist business. Private property owners in actual fact hold sway over society’s production process and the available labor power and productive forces pressed into service for it. Everything human beings use to reproduce themselves materially is subsumed in actual fact under the requirements of private capitalist enrichment by means of a lot of sovereign force, and this subsumption is what is being put in idealizing terms and appreciated morally when capitalists’ indispensable services for the general public are enumerated. Conversely, this idealism bears witness to nothing more than the totality of the economic regime of profiteering over the society.

From the point of view of capitalist producers, it is simply self-evident that their business activities are of the very highest order. In a country where all production is in their hands, there would be no progress at all without their tireless efforts to make maximum money. In a functioning market economy, nobody would get any basic goods without their competition over the public’s ability to pay. The propertyless masses would have no opportunity at all to earn a living without the capitalists’ means of production and their wage payments. Although this logic of “Nothing would happen without us!” presupposes sheer relations of force, the private power of money and the powerlessness of being without property, such premises play no part in a way of thinking that takes all monetary interests and their antagonisms for reality, which is not to be questioned but rather coped with using the given means.[13] The interest in living off one’s own firm is quite sufficient: it turns the conditions under which, and by means of which, capitalists earn their money into the standpoint that is to be theoretically adopted toward that if only because it is the only sensible one for them in practice. No matter what money is in terms of its economic nature, to the committed industrialist, it is his property in a form that makes it usable everywhere and any time, liquidity. The profit he makes with his business is the markup on his operating costs that he fights to obtain on the market, and, depending on how much it turns out to be, the bonus for his skill in having made operations efficient and correctly calculated the required profit. He really doesn’t need to know where the difference, between what he has paid for his production process and what he receives for his products, actually comes from. The wage labor that creates this difference interests the industrialist as a contribution to and deduction from the operating result, i.e., as a contradiction incarnate, but he handles it quite pragmatically. He simply has to keep an eye out for two things: an efficient employment of labor and the lowest possible wage costs. He regards the workers who get the necessary work done as free, equal, self-responsible applicants when it comes to hiring them. He values them as staff members he shares the operating result with as long as the company is doing well. When it is not, then he regrets the objective need to part company, and asks those affected to try and understand that this is unavoidable because competition simply has its hardships. For capitalists, the most important phase in the productive use of their assets is the market, where it is decided whether their product is turned into money and the claimed profit realized, the market being the permanent test of their ability to prevail over their peers. That is why their understanding of the matter consists in the slightly contradictory claim that what is happening there is a fair competition over efficiency according to entirely objective criteria, with the result always automatically proving them right, since otherwise much would suggest there has been anti-competitive manipulation. And as to the fact that the state power with its legal system has set up the world so that the private power of their money enables them to have a team of workers at their disposal and their business becomes a source of money for them: that is immediately understood by industrialists as the obligatory commitment of state policy to do no more and no less than what is necessary for making sure the world keeps functioning that way. In the light of this logic, which makes no distinction between reality, the interest in making use of it, and a demanding/affirmative attitude toward it, capitalists see themselves as custodians of the economy or even as the economy itself, equate their own benefit with that of the general public, and attribute the decisive role they play, not to the societal power relation objectified in money, but — as if it were absolutely self-evident — to themselves, that is, to the so crucial way they handle their monetary assets and business. It automatically follows that they are entitled to have the world at large assist them in doing their job and not make difficulties. For industrialists, it is simply part of normality — which is often enough ignored, of course, to the detriment of the general public — for workers to work as required for a modest wage, for the market to bring them in money, for enough money always to be available for their interests anyway, and for the government to clear away any kind of obstacle to business in general and theirs in particular.

They can count on the agreement, at least in principle, of “the general public” (in the form of those in authority along with a public opinion most realistically concerned for the common good). In no way do government leaders insist that it is the politically monopolized force they wield that nails society down to making money as their means for a living and creates the conditions that money owners active in industry make use of as instruments for their enrichment. Rather, starting out from the established conditions, they see themselves, and act, as the responsible custodians of reality, recognize their citizens’ interests in trying to make some honest money out of this reality as a natural right, adopt a fundamentally affirmative position toward the dependencies that follow, and make it their business to structure the requirements and consequences of these dependencies. A responsible fellow citizen with only two critical questions to ask of the prevailing conditions — how to cope with them, and how they might be improved so he can cope better — can in principle only approve of his politicians being concerned for the success of the whole show. Prevailing public opinion likes to go beyond such considerations. It does not leave it at wishing industrialists good luck in their quest for enrichment just because they hold the economy in their hands. Experts on human nature instead derive a deep insight from the way the market economy, which they acknowledge as a reality without any alternative, functions; i.e., from the fact that interests are only ever successfully asserted in business life at the expense of rivals. They have discovered that if competition and its tough demands control society’s life process so thoroughly, then, firstly, that must be a good thing: a challenge to people’s ability and willingness to perform through noble rivalry. All bothersome details of this performing aside, capitalism presents itself as a competitive society that rewards performance and is therefore both just and efficient. And, secondly, that must be due to the fact that competition “quite generally” is part of the nature of those who, in vile reality, have no other chance than to take part in the bourgeois struggle for survival. Which can be explained very nicely by evolution as nature’s general law of life, it being common knowledge that dinosaurs were condemned to extinction because they were unable to adapt to the bourgeois struggle for survival.

2. The ‘dark sides’ as a problem: poor/rich, distribution, scarcity/excessiveness

In the light of the affirmative realism that takes “things” as they “happen” to be, the fact that the vast majority in the market economy, the masses of those who do the required work for a wage, earn precious little money in striking contrast to the amount of wealth they create is one of the dark sides that must always be expected under such bright conditions. On this sensitive issue, market-economy experts have developed a small arsenal of ideologies that interpret the consequences of the prevailing production system in such a way that wage labor and capital aren’t even mentioned.

Indeed, the unmistakable scale of income not only fills some with wonder and awe in view of the abundance on one side, it also makes some people critical of the shortage on the other side and the ever-widening “divide” between poor and rich. The difference is regarded as quite deplorable, in many cases as too big, and its tendency to increase as unfair. When one generously disregards the antagonism by which a lot of rather poor people constantly work to produce the wealth that requires cost-saving employment of wage labor for increasing it, then such inconsequential complaints about unfair distribution are the appropriate substitute for critique. Especially since such laments emphatically underline one’s approval of fairness and proper laws and one’s liking for them: the “system” is fine, equality and freedom are a joy, the bothersome experiences with being poor or others being poor just don’t really fit in. Conversely, there are also fans of “differences” who speak up, insisting that equality can’t be about leveling everyone down. To them, the various degrees of success only go to show that one can make it. They also have the wise words to offer that a just system must honor the diversity of people. To them, the fact that poor and rich exist is no reason to oppose the difference so often pointed to and lamented. To back up their sense of justice, they make the silly observation that rich and poor used to exist, too; in fact, they’ve always existed. They are supported by thinkers who know how to do arithmetic and can demonstrate that a different “distribution” is actually incompatible with the use of wage labor by capitalist firms. They brilliantly announce that it wouldn’t be much use to any of the many low earners if the few rich people were to distribute their belongings among them. Each individual would hardly get anything and would no longer have the opportunity to do anything without financially strong employers. That’s how easy it is to recognize “a natural necessity" in a mode of production where the “division of labor” between the classes settles the distribution of everything else.

Any doubts that remain in the face of such clever interpretations are taken care of by the ideological rearguard from the camp of the democratically, socially, historically, and humanely minded, which grows with every passing day of capitalism. Looking at it in a (1) democratic light, wage-workers enjoy neither work nor wages but rather rights. Their human dignity is spelled out in writing, arbitrary use of their labor-power is not allowed. Whenever its legally regulated use has adverse effects, the hot question therefore arises of whether rights have been violated, or whether it’s not the law that has been applied but rather a privilege (Latin privilegium: law applying to one person). For the enlightened democrat knows that “lower-income” people are all in all — “still,” “usually,” (etc.) — disadvantaged. The (2) socially minded note that all the forms of economic restrictions wage-workers suffer from are — “at least!” — followed hard by state support. This is an achievement, because of course such a thing testifies to the goodness of political rule which, faced with all the — “unavoidable” — “social hardships,” seeks to avoid the worst. The worst is also conjured up by the (3) historically well-versed as all sorts of non-capitalist, precapitalist, or early-capitalist forms of misery. If something like that is actually still found today, then it is the exception and falls under the official definition of a “hardship case,” which keeps cropping up since some people are unfit for life through their own fault or not. Because they are officially recognized as such, these cases have nothing to do with the “system” — it is (4) humanely oriented — but are a problem for humanitarian efforts that the state itself directs. The persistent need for such “social commitment,” which not even capitalism can make obsolete, has been translated by the science of economics into its dogma of humans and nature: on one side there is human nature with its boundless and excessive needs, on the other the same thing again, namely, natural scarcity. That is the reason why everyone, who can buy everything, can still not buy everything! Capitalism – a need-driven invention for the purpose of distributing scarce goods: there is hardly any finer necessity.

3. Business administration: The market economy as an inventory of factors that a company plans with or puts to use, i.e., has to decide about in line with its “economic efficiency principle”

The fiction of a natural necessity that gives the capitalist enterprise its true production mission and that the capitalistic type of economy fits so well, as if resources and needs had been specially set up to match by an invisible hand, serves as the ideological prelude to a science that deals quite specifically and in detail with the profession of entrepreneurial money-making and is devoted to its all-round success. The field of business administration starts off the correspondingly targeted analysis of its object by conjuring up an order situation — namely, to satisfy fundamentally insatiable demand with fundamentally insufficient resources — that completely abstracts from money as the means, and profit as the goal. Indeed, it ignores the well-known nature of entrepreneurial activity altogether, avowedly not being interested in it for the moment. It invents such a problematic natural order of things in order to derive a solution, which it calls the “economic principle” and which basically formulates nothing but the invented problem itself as the law of its solution. The true, scientifically determined purpose of running a company, no matter when, where, and under what conditions, is supposedly to get maximum satisfaction of needs out of scarce resources. For this fictitious optimization task, business administration redefines the real goals and requirements of entrepreneurial actions, which everyone, and of course the science too, knows — that is, to use monetary assets in production so as to make a profit — as a tried and tested means: as one of various conceivable alternatives. It will accept planning, for example, as a possible method of providing for people’s metaphysiologically unbounded needs, albeit a bad one. For that is how this science wants to portray the capitalist pursuit of profit from the start, even before one knows any more than the triviality that it involves the egoism of a wealthy business owner: profit-seeking is supposed to be the optimal way — an incentive and a method at the same time — to put the “economic principle” into practice. That is the principle that, astonishingly enough, demands, in an absurdly abstract form, nothing other than precisely what industrialists do in their own way when trying to get maximum satisfaction of their boundless striving for profit from their notoriously “scarce resource,” money.

The triumphant realization of the principle, “Do a lot with a little,” is a ridiculous explanation of what capitalistic business management is all about. But as an ideological precept, the idea is great. Without any compromises or qualifications, it justifies the point of view that industrialists actually go at the world with. The fact that nature and work, products and needs, money and people are at the disposal of industrialists’ pursuit of profit maximization is presented as a stroke of economic luck: an optimum supplying of goods for mankind goes hand in hand with optimum profit-making by free-market companies.

In view of the good cause fulfilled by industrialists with their practical interest in maximizing their profits, business administration makes this interest the theoretical standpoint of its discipline. Providing scientifically sound instructions for business success is the specific service contributed to economic matters and their functioning by this “complementary science for managerial practice,” as it calls itself. So it formulates the maximization of profit as a matter of making proper use of all the human and material ‘instruments’ that industrialists handle for the sake of their business success, and that a practice-oriented business administration takes for granted. The scientific study of business evidently considers the crucial economic substance of the object of its concern to be having free disposal over all the things and interests that industrialists have to deal with. It reinterprets the practical necessities they execute as techniques for dealing with factors of production. And this science need not fear being proven wrong since — like the management practitioners themselves — it can rely entirely on the real power of property: the factors of production in a capitalist company are variables of its free disposal over them. On this basis, business administration examines the business practices of the world of capitalist enterprises, combining systematic empirical knowledge from managerial practice with a labored interpretation and presentation of it as a kind of recipe book for sure success at profit-making — as if outcompeting other capitalists were a question of special rules and methods of managing a company.

So for everything from purchasing production factors, through “operations,” to “marketing” the products, this science develops laws, models, and resulting “alternative action plans.” Besides a tutorial on the basic arithmetic of business, which quickly settles the question of what profit is — revenue minus costs — business administration offers more or less complicated calculation methods, so that management’s decisions in everyday operations lead to optimal order quantities, batch sizes, and production lots. The science wants its methods to give reliability to the practical ideal of every industrialist hen making purchases, planning inventory, or calculating production lots according to changing order situations — he hopes his calculation of costs, order quantities, and time periods is in the right ballpark. To this end, it transforms a company’s business calculations into calculations following the pattern of its “economic principle.” On condition that the right assumptions are made, which then display their effects in the formulas as variables, optimal decisions are possible for every business situation. The fiction of a process technology for a company’s success is also applied by business administration to sales markets, of course. Precisely where capitalists have to compete directly against each other and it is unsurprisingly common for intention and result not necessarily to coincide, there is a demand for a calculable basis for formulating and implementing “strategic goals” so as to be able to plan a company’s success. So business administration comes up with “decision models under uncertainty,” which enriches the practical speculation on a company’s success with a methodological apparatus that is actually supposed to provide the risks with a degree of certainty. And so on.

Thus, the impetus to offer the key organizers of production in capitalism “planning and decision-making aids” for a company’s success, i.e., for profit-making, is good for a whole science that gets by without once explaining the capitalistic profit principle. Business administration not only certifies that capitalist business is the optimal method for supplying everybody’s needs; its scientifically founded insights, advice, and practical instructions also give good marks to capitalists for their self-image. Its methodological apparatus for company success is a mirror image of the delusions that capitalistic property-owners and their paid managers necessarily have about what they do and about the secret of the business success they manage: it is supposedly their skill and knowledge that determine whether or not the company beats the competition. Ideologies and technologies of exploitation and competition — that is business administration’s academic service to the capitalist system.[14]

Notes

[1] The state claims great credit for showing such respect for its people. After all, it has the means to act quite differently and does so whenever needed, but it does not subscribe to ‘deprivation of liberty’ or discriminatory treatment and does absolutely nothing without a legal basis that applies to all citizens equally “without distinction of person.” The public power’s commitment to show equal respect for its citizens’ freedom of decision and action also has a venerable tradition. The aspiring bourgeois class made some sacrifices, mostly having the commoners bleed, for its epoch-making struggle against a state power that divided up its people into differently serving estates and imposed all sorts of relations of personal dominance and subjugation between them. Finally, glorious revolutions established the principle that all citizens have equal status before the state and its laws and no one may be programmatically forced into special services or personal renunciations against his (properly understood) free will. Since then, state power has been limited to enacting and enforcing a general canon of rules that applies to everyone without distinction and concedes everyone the will to makes his own way as he sees fit.

[2] Leftists, with their ideals of democracy and human rights, make the diagnosis that wherever misery prevails and class interests collide, freedom, equality, and the “true democracy” based on them haven’t been realized yet. This is just as wrong as the notion of socialist fans of the constitution that a highly respectable basic law like the German one includes a license to overcome capitalism by peaceful means. The idea that relevant social differences and economic conflicts of interest are fundamentally incompatible with the bourgeois state’s principle of equality and the freedom of action it guarantees is well-intentioned, but not really applicable to the law-based constitutional state.

[3] Capitalists take it for granted that there will always be a need for their commodities, just as they conversely assume that the commodities they require for continuously maintaining their production will be available on the market, i.e., that all buying and selling is ultimately only a question of having enough money.

[4] Such a bill of exchange comes into the world, as already mentioned, from the outset only for the sake of its function as a means of circulation, as a debt instrument capable of circulating. The creditor of a claim for money arising from a commercial transaction — a seller has delivered goods and/or services to his customer but deferred the buyer’s payment — “draws” a bill (“draft”) on his debtor (the “drawee”): he produces a written payment order on his debtor in the form of a document containing information on the drawee and the drawer of the bill, the amount owed, the place and date of fulfillment of the payment order, and the drawer’s signature with which he vouches for the validity of his claim. Although it is not obligatory for the drawee to sign the bill, this is frequently demanded by the drawer in business practice because by signing, the drawee formally accepts his debt, thereby making the “draft” an “acceptance.” This document of a future receipt of money is then used by the drawer as a substitute for money to make purchases. From the standpoint of both the seller and the drawee, this changes the person of the counterparty — of the (primary) payer in one case and the beneficiary in the other case. The bill’s quality of being (substitute) money is solely embodied in the original document itself; whoever has it is the holder of the claim, and if it is lost so is the claim — just as with real money.

The acceptance of a bill of exchange as a means of purchase is further enhanced by the fact that the sum of money the bill promises usually exceeds the cash selling price of the goods, with the amount of the surcharge depending on the remaining term of the bill.

[5] By endorsing the back of the bill, the beneficiary transfers the right to payment to a third party, at the same time vouching for satisfaction of the contracted debt. The new beneficiary then uses the received payment promise as “commercial money” himself in the same way, and so on, until the bill falls out of circulation on maturity and has to be redeemed.

[6] Banks got involved in these payment transactions — at first in their capacity as custodians of liquidity and as payment offices for capitalist industrialists — with the offer to pay the beneficiary of a bill money that would be immediately universally usable, for a certain fee — the ‘discount’ — in exchange for taking over management of the payment promise up to the collection of the debt at maturity. The accepted bills eventually circulated between banks, which settled their mutual claims from their customers’ business transactions in this way. That had the effect that for such bills endorsed by one or more banks, the contradiction between their universality as a means of payment and the limited number of guarantors was relativized, insofar as a bank, by signing the bill, vouches for it with the entirety of its business relations. It is only through the banks interfering in the circulation of bills of exchange that paying with bills became widespread, but later also came to an end. Commercial credit between merchants was converted to a credit relationship between the bank and its customers, who handle their payment transactions with customers and suppliers through a current account maintained at the bank. The bank grants them a current account line of credit: an overdraft facility that companies avail themselves of as needed to bridge the time and value gap between incoming payments and payment obligations, thereby ensuring the continuity of their turnover separately from the circulation time and perils of the circulation of their goods. At the same time, the credit line places the bank in a position to grant their customers payment terms, which they in turn make use of with their suppliers. As collateral for the credit line, banks often require the transfer of customer receivables. With this form of commercial credit, the creation of debts and thus of all the beneficial effects on capital turnover lies entirely with the bank. It is free to decide how much credit of this kind to give its customers. The circulation of companies’ commercial debts is completely integrated into the account management within and between banks, i.e., the clearing or balancing, as the case may be, of business customers’ payment transactions handled through the banks.

[7] www.rechtslexikon.net

[8] Derleder, Knops, Bamberger (eds.), Handbuch zum deutschen und europäischen Bankrecht [Handbook of German and European Banking Law], Springer, 2009, p. 1337

[9] Experts refer to this as “material strictness of bills of exchange: the bill of exchange is an abstract commercial paper that documents claims while being detached from the underlying legal transaction. Objections arising from the underlying transaction (for example, defective or incomplete goods, warranty or damage claims) can no longer limit the obligors’ liability after the bill has been issued.” (Gabler, Wirtschaftslexikon)

[10] "The holder may take recourse against the endorsers, the issuer, and the other obligors upon expiry of the bill if the bill has not been paid.” (German Bills of Exchange Act, Art. 43 (1)) “(1) Anyone who has issued, accepted, or endorsed a bill of exchange or provided it with a statement of guarantee shall be jointly and severally liable to the holder. (2) The holder may make a claim on anyone individually or severally or all together without being bound by the order in which they have committed themselves.” (ibid., Art. 47)

[11] More stringently since a bill of exchange is almost as good as a writ of execution. In the words of (German) Wikipedia: “Summary bill-enforcement proceedings are a special form of procedure in the German law of civil procedure … a sub-form of proceedings restricted to documentary evidence. The purpose of summary bill-enforcement proceedings is to enable the beneficiary of a bill to obtain a writ of execution quickly without having to rely on regular civil procedure, which is often overburdened and therefore relatively slow.”

[12] For example, the lawgiver stipulates that a bill of exchange must be in writing and a bill-of-exchange certificate must contain certain components. Besides the designation of the document as "bill of exchange" and the amount, it must state, e.g., when, to whom, and where payment must be made (Articles 1 and 75, German Bills of Exchange Act); times are specified for presentation, etc. These provisions are combined under the title “formal strictness of bills of exchange.”

[13] In those times when the capitalist mode of production was being established, when the money-owning bourgeoisie was fighting politically for its free, all-encompassing command over society’s labor, the progressive Zeitgeist strove to present an explicit moral justification for the selfish pursuit of profit by rich industrialists. There was a need to theoretically legitimize their obviously sectional interests that were hostile to the customary living conditions of the majority of a country’s inhabitants. What was circulated was the idea that great property-owners were practicing self-denial by putting their money to productive use rather than blowing it all like the aristocrats ruling up to then. Abstinence was moral justification for the power of wealth to put poor people to work for its accumulation and to pay them accordingly. Capital’s theorists liked this moralism so much they turned it into a scientific argument: following the logic that the decisive cause of an effect lies in the absence of the opposite of the said cause, they dreamed up the abstinence theory of capital to explain profit-making. It is still alive and kicking in one of the central dogmas of economics, namely, that the productive force of capitalistically applied property (‘investment’) is identical with the aggregate societal restraint in consumption (‘saving’) — the formula I = S. Not that there’s much demand anymore for a moral justification of the capitalist elite's having the power of disposal over society’s work and wealth. The modern industrialist performs a recognized job; his profit is the product that the world expects of him; his income rewards him for his success. When this profession is criticized nowadays, it not because it embodies capitalistic business life, but because duties have supposedly been neglected when conducting it.

[14] It is due to the state that the competition of capitalists has produced its own science. Because national life is dependent on the success of companies, the state attaches great importance to higher education in business management. That is why the experience and tools of commercial practice eventually became material for an academic preparation for careers in management. Nowadays, the mistakes of this science constitute society’s knowledge about the importance of companies and industrialists for the economy. And this science has become one of the most popular university subjects — which is one way society demonstrates that the capitalists' standpoint is an undoubtedly good reference for thinking about economic reality.

That is a reason to take a closer look at the agenda and mistakes of this science. This is done in the book Kritik der Betriebswirtschaftslehre [Critique of business administration], GegenStandpunkt Verlag: Munich, 2018. Untranslated.

© GegenStandpunkt 2019