Wednesday, September 27, 2017

Who is the modern bourgeoisie? Pt. I: Financialization

Marx, in his classic formulation of class struggle, divided society "into two great hostile camps, into two great classes directly facing each other: Bourgeoisie and Proletariat." These classes, he argued, play the two essential roles in the system of economic production known as capitalism. One class - the bourgeoisie - controls almost everything involved in economic production. The other class - the proletariat - controls the one part of production that the bourgeoisie doesn't: their own ability to work. Under capitalism, the bourgeoisie leverages its control of the means of production to exercise control over the entire economy. And inevitably, they use it to create a system of exploitation that works to their own benefit.

Popular and technical use of "proletariat" and "bourgeoisie" has of course significantly evolved since Marx's time, but instead of examining etymology, I would like to ask two different questions. First: does something like Marx's formulation of "the bourgeoisie" exist today? And if so, who are the modern bourgeoisie?

There are no consensus answers to these questions - but in the vast body of literature grappling with them, there are three typical concerns that emerge over and over again:
First, public investment in stocks is thought to have complicated Marx's assumptions about who controls the means of production; 
Second, imperialism is thought to have complicated Marx's class analysis by further dividing society into "first world" exploiters and the exploited "third world"; and 
Third, Marx's class analysis is not intersectional; it fails to account for various forms of identitarian oppression that are equally relevant to the structure and operation of our political economy.
I will, in this series of posts, address each of these points in turn, starting with the first.


Though economists have made this same point in greater detail, the challenge of financialization to Marxist theory was most famously (and succinctly) laid out by Camus:
We know that the economic evolution of the contemporary world refutes a number of the postulates of Marx...with the introduction of companies in which stock could be held, capital, instead of becoming concentrated, has given rise to a new category of smallholders...
Hypothetically, this "category of smallholders" would have to include the nearly half of all Americans who, through various financial vehicles, own stock in the means of production. This diffusion of ownership seems to stand in sharp contrast with the economy of Marx's time, in which it was "not uncommon to find...various branches of production controlled by one brain" (Schulz). It also poses a significant challenge to Marxist theory: if anyone, no matter how poor or powerless, can be the bourgeoisie by owning a health savings account or a threadbare 401(k), Marx's theory of power and exploitation has become utterly trivial.

Despite what Camus seems to think, however, Marx was well aware of the complications the stock market introduces into his class analysis. Marx's response was to argue that "the joint-stock company represented a partial separation of ownership and control" (Stephens); he described it as "a new swindle" in which "the functioning capitalist" is "working with borrowed capital" for his own enrichment. By 1904, Heymann had already outlined how the bourgeoisie does this: is possible with a comparatively small capital to dominate immense spheres of production. Indeed, if holding 50 per cent of the capital is always sufficient to control a company, the head of the concern needs only one million...
Lenin adds:
As a matter of fact, experience shows that it is sufficient to own 40 per cent of the shares of a company in order to direct its affairs, since in practice a certain number of small, scattered shareholds find it impossible to attend general meetings, etc...The "democratisation" of the ownership of, in fact, one of the ways of increasing the power of the financial oligarchy.
What matters then, is not the superficial legal title to ownership - it's actual control of the means of production. This control is determined by an (often deliberately) elaborate and opaque complex of laws and corporate governance rules, but it inevitably tends towards the same outcome: the enrichment of "the functioning capitalist" at the expense of proletarian workers and shareholders. Make this distinction between control and management, and the size of your bourgeoisie contracts dramatically. How dramatically? Wolff's 2013 breakdown paints an indirect picture:

The wealthiest 1% owns as much stock as everyone else in the US. So while widespread public investment has certainly greased the wheel of capital, it has not necessarily democratized control of the economy.