The 1% and the Rest of Us

by Tim Di Muzio

  Just as Hobbes’s mechanical representation of political power inaugurated modern political thought, William Petty’s quest for mathematical representations of national wealth provided the foundations of modern political economy. His attempt to turn the value of social phenomena (as well as human beings) into numbers was presented as a genuine effort at advancing knowledge and impartiality. In fact, it served the interests of the ruling elite and was amply adopted as an instrument of domination. And this has been true for all measures of economic performance, from that time to the present (ibid.: 23).

  In its beginnings, political economy was not the discourse of paupers, just as it was not the discourse of subsistence farming. It was the discourse of a colonising power – both within countries and without. It was an emergent discourse of the 1% and its functionaries, who were developing tools to quantify qualitative social phenomena for the purpose of accumulation and – especially at this time, if not in the present – geopolitical war to accumulate more wealth and power. These origins already suggest to us that any progressive alternative to the capitalist mode of power will have to have, of necessity, its own system of quantification beneficial to society as a whole rather than to a tiny fraction of it.

  The physiocrats From the shores of the agricultural revolution and expropriation in England and its emerging colonial empire, we move on to France to meet the physiocrats – a school of political economy inspired by the work of François Quesnay (1694–1774). Adam Smith’s theory of wealth was directly inspired by the physiocrats, and they left a lasting impact on political economy – particularly with their conceptual distinction between productive and unproductive labour.8 But, once again, we will not encounter a theory of wealth disconnected from power, political interests or social classes. We must place Quesnay and his followers, like Petty, within the matrix of a battle over the accumulation of money. As we shall see below, Quesnay’s political economy was largely at the service of a new class of landowners who had the misfortune of joining an increasingly bankrupt royal and noble 1%.

  Quesnay was born to a relatively privileged – if somewhat humble – position and studied medicine and surgery. Eventually he moved to Paris, where he worked for King Louis XV as his physician. He was made a noble by the king and given apartments in the Palace of Versailles. Quesnay, like the other physiocrats, was also an estate-holder – a key source of his wealth. Now with an estate of his own, Quesnay turned his mind to economic questions and, together with other interested elites, would discuss the economic matters of the kingdom (Ware 1931). By 1758, 31 years before the tumult of the French Revolution, he published his Tableau Économique or ‘Economic Table’. The table purported to show that the prime source of wealth was productive agriculture, whereas all other economic activity was merely the consumption of it. Today, the table is celebrated as the first great analytical and systematic attempt to theorise the entire social reproduction of an economy. But once again, Quesnay’s theoretical endeavour was connected to the class power of large estate owners.

  At the time of Quesnay’s writing, the kingdom of France was overwhelmingly a rural economy, with the 1% of estate-holders deriving their incomes from custom or from the kingly ordained right to tax peasants on their estates. Years of war and courtly extravagance had almost bankrupted the royal treasury and many of the nobility. A number of bureaucrats working for the king in parlement (more or less a council to the king) took advantage of the situation and bought up bankrupt estates. However, unlike the nobility who did not have a zeal for improving their lands, this new class looked to England’s capitalist landlords and farmers to imagine how they too could make their newly acquired land yield more profit (ibid.: 609).

  Since the physiocrats were not vested in merchant trade but in land, it is hardly surprising that they found the primary source of all wealth to be productive labour on the land. Or, more specifically, Quesnay and his physiocrats:

  saw that there is but one source on which men can draw for all their material needs – land; and that there is but one means by which land can be made to yield to their desires – labor. All real wealth, they therefore saw, all that constitutes or can constitute any part of the wealth of society as a whole, or of the wealth of nations, is the result or product of the application of labor to land.9

  From this assessment, the physiocrats sought to advance their particular class interest as the general interest of the people of France. To do so they advocated free trade of grain within France and free export of grain from France, as well as a single tax on the agricultural surplus. Their goal was twofold: 1) to get out from under the heavy burden of taxes placed on the land; and 2) to achieve the highest possible price for agricultural goods (ibid.: 612). Free trade combined with a series of bad harvests escalated the price of bread. While landowners made larger profits, people starved. Those with energy rioted. As one observer noted:

  The fiscal program of the Economists [physiocrats] tends to relieve the rich and burden the poor; the execution of their agricultural programs benefits only the great proprietors and the majority of the inhabitants of the country gain only an increase of misery; the realization of their commercial program results in want or in the high cost of living from which all the consumers suffer cruelly (Weulersse cited in ibid.: 617).

  But misery for the many and high prices for bread did not phase Quesnay. In fact, like the early English political economists, the potential for hunger (due to high prices) was interpreted as beneficial:

  It is thus a great mistake to accustom the people to buying their wheat at too low a price; they become less laborious, they feed themselves with little difficulty and thus become parasitic and arrogant; it is difficult to find workmen and domestic servants, and people are very badly served in the abundant years (Quesnay cited in ibid.: 618).

  Once again we find that hunger is a better disciplinarian than the magistrate.

  Adam Smith By the time Adam Smith published his An Inquiry into the Nature and Causes of the Wealth of Nations (1776), some of the key concepts of political economy were already in circulation. Smith built on these concepts to provide a more systematic account that largely challenged the discourse of mercantilism. But once again, Smith is no neutral or objective figure but an intellectual node in a more dynamic and emergent capitalist mode of power. His political economy was certainly critical of merchant business practices, but he ended up telling a story of wealth creation centred on the harmony of self-interested individuals pursuing gain in the market. Like Petty and the physiocrats, his work is directed at governors.

  What is the engine of wealth creation for Smith? The simple answer is the division of labour, or the mere fact that many people work at different employments, thereby increasing productivity. Since individuals specialise in a given employment, they are compelled to exchange some of the products of their work on the market in order to receive the goods and services they do not produce for themselves. Smith was describing a society whose social reproduction was increasingly dependent on market exchanges. These new market relations of force, for Smith, were encouraged and protected by the constitutional framework inaugurated by the Glorious Revolution of 1688. Although there are debates about the significance of the revolution, it is generally thought to have subordinated the Crown to property-holders in parliament. From this point on, royal power could no longer be used arbitrarily; in legislative matters, parliament reigned supreme.

  Yet Smith largely takes the social relations of his era for granted. He knows full well that certain individuals belong to different ‘ranks’ or classes and he has to have some theory to explain why it is that some people work for others. In other words, he has to address the glaring fact that a small minority of people have property and the majority do not. In fact, he even argues that government is instituted to protect the 1% of property owners against the struggling poor:

  The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy to invade hi
s possessions. It is only under the shelter of the civil magistrate, that the owner of that valuable property, which is acquired by the labour of many years, or perhaps of many successive generations, can sleep a single night in security. He is at all times surrounded by unknown enemies, whom, though he never provoked, he can never appease, and from whose injustice he can be protected only by the powerful arm of the civil magistrate, continually held up to chastise it. The acquisition of valuable and extensive property, therefore, necessarily requires the establishment of civil government … Civil government, so far as it is instituted for the security of property, is, in reality, instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all (Smith 2005: 580, 583).

  To put this less politely: government is the organised power of the 1% of property owners who are entangled in a perpetual war with those who have no property at all. The problem with Smith’s work, as Marx recognised, is that it does not provide a convincing account of how this relationship emerged historically. This is where Smith’s conjectural history overlooks the entire history of expropriation in the English countryside. He says that originally all the products of labour belonged to the labourer. However, at some unspecified time, some individuals appropriated land to themselves and built up a ‘stock’ (ibid.: 59). According to Smith, this stock or capital ‘has been silently and gradually accumulated by the private frugality and good conduct of individuals, by their universal, continual, and uninterrupted effort to better their own condition’ (ibid.: 283). It follows, then, that the waged workers or non-property owners come from ancestors who did not conduct themselves well, were wasteful and reckless, and had little interest in bettering their own condition. Historically, this of course is nonsense, but in order for Smith to advance his harmonious political economy he cannot admit that the true origins of unequal property stem from the violent exertion of power and the royal grant or sale of lands. Doing so would bring his analysis of the political economy closer to the radical position of the Diggers during the English Civil War of the 1640s, or even to Karl Marx a century and a half later. We will discuss Marx in just a moment, but consider this passage from the leader of the Diggers, Gerrard Winstanley:

  those that buy and sell land, and are landlords, have got it either by oppression or murder or theft; and all landlords live in the breach of the seventh and eighth commandments, Thou shalt not steal nor kill. First by their oppression: they have by their subtle imaginary and covetous wit got the plain-hearted poor or younger brethren to work for them for small wages, and by their work have got a great increase; for the poor by their labour lifts up tyrants to rule over them; or else by their covetous wit they have outreached the plain-hearted in buying and selling, and thereby enriched themselves but impoverished others: or else by their subtle wit, having been a lifter up into places of trust, have enforced people to pay money for a public use, but have divided much of it into their private purses; and so have got it by oppression (Winstanley quoted in Hill 2006: 85).

  Winstanley is far from admitting that the rich are rich because of ‘good conduct’ and ‘frugality’. A conquest did indeed occur in 1066, and the conquest did not stop operating when the initial war ended. The evidence is that the poor and oppressed have no property and no say in their own governance and are continually subject to masters for work, wages and survival. So whereas Adam Smith considers wage labour unproblematic, the Diggers do not. They interpret it as an unnatural species of slavery imposed upon them through forceful means. Smith’s is not the voice of the poor and oppressed but of the dispassionate scholar. His desire for harmony – what modern economists fetishise as ‘equilibrium’ – cannot admit violence, force or fraud in the making of a capitalist social order. Yet even in Smith there is recognition that immense wealth grows up alongside poverty and inequality. It was Karl Marx who perhaps most insightfully picked up on this contradiction to offer his own theory of surplus value.

  Karl Marx The political economy of power and wealth takes a radical turn with the work of Karl Marx (1818–83). Marx can be thought to have made two major breaks with the liberal or classical political economists who largely supported the emergence of capitalism. The first is that Marx historicised capitalism as a unique way of producing commodities geared to generating ever more money for owners. If capitalism has a historical beginning and definite laws, then it can be understood politically and can have a historical end if it is shown that it is not in the interests of the vast majority of humanity. To Marx, this ‘end’ was a saner, more equitable, democratic and planned political economy geared to human need and well-being rather than to the profit of the 1%. This was a political goal, not an inevitable one, despite Marx’s many assertions that capitalism had inexorable laws that gave it an expiry date. The second major break was Marx’s fervent belief that the working class of productive wage labourers was economically exploited by its capitalist employers. To advance or justify a new social order, Marx had to convincingly demonstrate that the workers were indeed exploited by their paymasters. Without this demonstration, there would be little need for a revolution in social property relations; we would be squarely in a liberal political economy where wealth is generated by non-exploited workers. Avoiding this liberal interpretation is what is at stake for Marx’s own radical political economy. To be sure, before Marx started to write Capital, he busied himself with a detailed examination of how all previous political economists approached the concept of surplus, or, perhaps more accurately, surplus value. There is no question in Marx, then, that the key problem of political economy is the source of surplus and its distribution. For Marx, surplus wealth is, and can only ever be, a social product. In the Communist Manifesto, Marx and Engels write: ‘Capital is a collective product, and only by the united action of many members, nay, in the last resort, only by the united action of all members of society, can it be set in motion’ (Marx and Engels 1848: 14). And unlike Smith, who could not see the full-scale turn to sustained industrial growth, Marx and Engels were writing at a time of tremendous, if uneven, growth and productivity:

  The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of nature’s forces to man, machinery, application of chemistry to industry and agriculture, steam navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalization or rivers, whole populations conjured out of the ground – what earlier century had even a presentiment that such productive forces slumbered in the lap of social labor? (ibid.: 7).

  Marx and Engels clearly identify social labour as one of the key factors in the emergence of capitalist productivity, and, unlike Smith, Marx provides a historical sketch of how the social property relations of capital emerged. We saw earlier how for Smith wage labourers just appeared on the scene – the result of the prodigality and questionable conduct of their ancestors and ultimately their failure to accumulate ‘stock’. The market also just appeared on the scene for Smith. It did not emerge because of the state, but in spite of it. Not so for Marx. Wage labour and the price-denominated market are creatures of state power in the service of capitalist landlords, merchants and industrialists. Marx calls the process by which people are forced into wage labour and market dependence ‘primitive accumulation’. Since the wealth of the 1% is contingent on the price system and the market dependence of the many, we would do well to consider some insightful passages from Marx on how this situation developed.

  In his section on primitive accumulation in Capital, Marx begins with the important – albeit commonsensical – recognition that people do not willingly expropriate themselves. This is simply to say that direct producers on the land do not – as a rule – give up their tenure on the land for nothing. In other words, they must be forced or incentivised out of this tenure in some way. Marx argues that this process lasted centuries in England and, after land was expropriated from Ca
tholic Church estates, was mainly carried out by the privately funded violence of landlords seeking to create pasture out of arable land. The reason for doing this was the accumulation of riches to be gained by grazing sheep and harvesting their wool to sell on the world market – a key source of wealth for the landlord 1%. However, Marx argues that a new process began after the Glorious Revolution of 1688: