Swindle Inc? (15 December 2008) by Humphrey McQueen
With the exposure of the $US50bn scam by NASDAQ chairman Bernie Madoff, another joint has fallen off the walking corpse that is real existing capitalism. This latest blow to confidence is astounding for its simplicity. Madoff paid dividends out of new investments. He could do so because of irrational confidence in his kind.
Faith in the goodness of stock-traders persists. That scourge of corporate boards, Stephen Mayne, assured investors that there isn’t another Madoff out there. Isn’t that what Mayne would have said about Madoff before his arrest? Its more likely that there’s little but Madoffs out there. The more of them who are exposed, the more their edifice trembles, and the more desperate they become to find a Greater Fool to sell out to.
To understand why Madoff is no rotten apple in a spotless barrel, we have to recognise the distinction between the exploitation of workers as the essence of capitalism and the swindling of everybody as an inevitable consequence of that exploitation.
In theory, capitalists need never swindle their wage-slaves. The owners of productive property can exploit their workers if they pay them the full cost of the commodity that they bring to market, that is, their capacity to add value, (labour-power). By disciplining the workers, the owners can get them to produce other commodities of greater value than he price of their labour-power. The difference is known as surplus value.
Viewed in one way, this exchange is fair. The workers get the costs of reproducing themselves for sale. From another perspective, this situation proves why there can never be a fair day’s pay. The capitalists take the surplus value although they do not contribute to its production. (For another account of this fact of working life, see the item headed “The Great Money-Trick” on this site.)
The surplus value is of no use to capitalists unless they can sell the commodities in which it is embodied. But to sell is to incur all manner of expenses from the wholesaler, the retailer, the banker, the marketeer, the accountant, the lawyer – not to mention the candlestick-maker. Each of these firms has to meet its expenses and then some. All those costs have to be taken from the surplus value. Even if all the intermediaries were honourable men, their fees might leave next-to-nothing for the original capitalist.
That gentleperson is tempted to overcome that problem by swindling his employees out of some of the wages needed to meet the full costs of their reproducing their labour power. Building contractors do this every hour of every day; Gillard keeps her attack dog in the ABCC to protect such thieves.
But the struggle between classes is not the only area where the tussle for a share of surplus value results in swindling. Capitalists fight their agents over he size of their returns. All parties soon learn that if they don’t grab more than they are entitled to, they won’t end up with enough to pay their bills. Hence, they pad their fees. Lawyers, for instance, charge for quarter-hours they did not work.
The competition for a portion of the results of the exploiting of wage-slaves generates a thousand-and-one schemes. Out of this brew comes an outlook which encourages ever wilder scams from people like Madoff who make no contribution to the realisation of the surplus value. Instead, they offer to increase the horde of money that has resulted from that cycle of investment, production and sale. “I can make you money out of money” is their catch-cry.
“Don’t put yourself to all that trouble of disciplining workers and keeping an eye on your friends as they cheat you. Trust me with your cash.”
And they did, to the tune of $US50bn.
Exploitation of wage-slaves need not involve swindles but it cannot be made profitable without some. How unfair that the beneficiaries need not be the exploiter of labour-power. So the money goes round.