The Dubious Logic of Commodification
✑ CHRIS DILLOW` ╱ ± 4 minutes
To understand the Tory's proposal to raise the pension age to 75, we need a Marxian notion – that of commodification. It's aimed at solving the crisis of capitalist profitability and stagnation. Will it work? Not necessarily.
Raising the pension age is an act of commodification in two different senses.
To understand the Tory's proposal to raise the pension age to 75, we need a Marxian notion – that of commodification. It's aimed at solving the crisis of capitalist profitability and stagnation. Will it work? Not necessarily.
From: Stumbling and Mumbling (Chris Dillow), August 18, 2019. ╱ About the author
Chris Dillow was born in Leicester in 1963. He went to Wyggeston Boys School (a grammar), Corpus Christi College, Oxford, and the University of Manchester. He then drifted into the City for a few years before joining the Investors Chronicle, though he strenuously denies accusations that he's a journalist. Chris lives alone in Belsize Park, and blogs at Stumbling and Mumbling. On twitter: @CJFDillow.
The
proposal
to raise the
pension
age to 75 reminds us of an under-appreciated fact – that there is, at least
sometimes, a conflict between human flourishing and economic rationality on
the one hand and the logic of capitalist accumulation on the other.
We can immediately dispense with the claim that working longer is good for our mental and physical health. If this is the case, it is a reason for banning age discrimination and encouraging lifelong learning so that older people’s skills don’t become obsolete - in short, for giving people the real choice of how long to work. “Forcing people to be free” used to be a very unconservative idea*.
To understand what’s going on here, we need a Marxian notion – that of commodification . This is the process of turning objects and relationships which are outside the realm of market transactions into commodities which can be exchanged at a profit. It is is one of the major ways in which capitalism expands – by creating, in the words of the Communist Manifesto, “no other nexus between man and man than naked self-interest, than callous “cash payment”.
Raising the pension age is an act of commodification in two different senses.
One is that, in compelling the older poor to work longer, it forces people to provide more of that essential commodity, labour-power. This would help bid down wages which might, under certain conditions, increase profits.
The second is that if we can only get our pension later we will have to save more via private pensions. This increases the profits of fund managers.
From this perspective, raising the pension age is a key element of neoliberalism: Colin Leys has described commodification as “the essence of our time.” For example, privatization and the subcontracting of public services help convert state functions into commodities, thereby expanding the realm of activities in which capitalists can make profits. The implicit subsidy to banks helps increase financialization. Restrictive copyright laws help to make money-making commodities out of basic elements of music. Companies such as Facebook are making a commodity of data. And student loans are a three-fold commodification process: in imposing debt bondage onto young people they increase future labour supply; they shift universities closer to the market sector; and they create a loan book which can be privatized and so (perhaps) offer a new source of profits for capitalists.
Much of this state-aided commodification is a response to capitalist stagnation. Much of capitalism is no longer innovative enough to create profitable opportunities endogenously: fund management, in particular, is such a rip-off that it cannot offer people value for money. Capitalism thus needs state help to expand the realm in which profitable activities can take place.
Surprisingly few on the left are aware of this process: of course, there’s hostility to outsourcing and suchlike, but this tends to be piecemeal reactions to particular events, with little realization of the bigger picture. A laudable exception to this is James Meadway , which has explicitly advocated policies such as cancelling student debt or the introduction of universal basic services (pdf) as means of decommodification.
Paradoxically, such a stance has some economic logic, especially in the case of resisting increases in the pension age. For one thing, the state is much better at managing long-run investment risk than individuals. For another, anything that makes people save more – such as a postponement in the state pension age – would tend to depress aggregate demand and profitability. And for a third, downward pressure on wages is not good for profits if consumer spending falls as well – something which Michal Kalecki pointed out in 1935** but which still isn’t sufficiently appreciated.
State-assisted commodification, therefore, is not necessarily a solution to the crisis of capitalist profitability (pdf) and stagnation.
* The idea that a state pension is unaffordable is also obvious horseshit. If it’s expensive for the state to provide an income in old age, it’s expensive for the private sector to do so too.
** In his essay, The Mechanism of the Business Upswing, which is behind a paywall – as if to prove my point.
We can immediately dispense with the claim that working longer is good for our mental and physical health. If this is the case, it is a reason for banning age discrimination and encouraging lifelong learning so that older people’s skills don’t become obsolete - in short, for giving people the real choice of how long to work. “Forcing people to be free” used to be a very unconservative idea*.
To understand what’s going on here, we need a Marxian notion – that of commodification . This is the process of turning objects and relationships which are outside the realm of market transactions into commodities which can be exchanged at a profit. It is is one of the major ways in which capitalism expands – by creating, in the words of the Communist Manifesto, “no other nexus between man and man than naked self-interest, than callous “cash payment”.
Raising the pension age is an act of commodification in two different senses.
One is that, in compelling the older poor to work longer, it forces people to provide more of that essential commodity, labour-power. This would help bid down wages which might, under certain conditions, increase profits.
The second is that if we can only get our pension later we will have to save more via private pensions. This increases the profits of fund managers.
From this perspective, raising the pension age is a key element of neoliberalism: Colin Leys has described commodification as “the essence of our time.” For example, privatization and the subcontracting of public services help convert state functions into commodities, thereby expanding the realm of activities in which capitalists can make profits. The implicit subsidy to banks helps increase financialization. Restrictive copyright laws help to make money-making commodities out of basic elements of music. Companies such as Facebook are making a commodity of data. And student loans are a three-fold commodification process: in imposing debt bondage onto young people they increase future labour supply; they shift universities closer to the market sector; and they create a loan book which can be privatized and so (perhaps) offer a new source of profits for capitalists.
Much of this state-aided commodification is a response to capitalist stagnation. Much of capitalism is no longer innovative enough to create profitable opportunities endogenously: fund management, in particular, is such a rip-off that it cannot offer people value for money. Capitalism thus needs state help to expand the realm in which profitable activities can take place.
Surprisingly few on the left are aware of this process: of course, there’s hostility to outsourcing and suchlike, but this tends to be piecemeal reactions to particular events, with little realization of the bigger picture. A laudable exception to this is James Meadway , which has explicitly advocated policies such as cancelling student debt or the introduction of universal basic services (pdf) as means of decommodification.
Paradoxically, such a stance has some economic logic, especially in the case of resisting increases in the pension age. For one thing, the state is much better at managing long-run investment risk than individuals. For another, anything that makes people save more – such as a postponement in the state pension age – would tend to depress aggregate demand and profitability. And for a third, downward pressure on wages is not good for profits if consumer spending falls as well – something which Michal Kalecki pointed out in 1935** but which still isn’t sufficiently appreciated.
State-assisted commodification, therefore, is not necessarily a solution to the crisis of capitalist profitability (pdf) and stagnation.
* The idea that a state pension is unaffordable is also obvious horseshit. If it’s expensive for the state to provide an income in old age, it’s expensive for the private sector to do so too.
** In his essay, The Mechanism of the Business Upswing, which is behind a paywall – as if to prove my point.
| Top image: Ian Duncan Smith and the commodification of pensioners. From: SE. |
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