Production, circulation and the self-organising market

Georges Perec wrote a novel entitled La disparition in which the disappearance in question was as much a matter of form – formally, the novel was written without ever using a word with the most common vowel in French, the e, in it – as of substance.

Marx’s Capital doesn’t quite offer that stylistic coup de force, but one does notice that, in contrast with mainstream economists, one of the central figures is, if not missing, certainly de-centered – the market. Mostly, mainstream economists take it for granted that the market is the central fact of economic life, the place in which the price system does its work and the central economic agent, the sovereign consumer, does his. In a severe case of science envy, certain Marxists in the eighties and nineties fought to establish a ‘micro-foundation’ for Marxism that would reconstitute the sovereign consumer and, thereby, give the market back its central role. This, in my opinion, is an excellent case of missing the point.

For Marx, the market is analytically subordinate to the two great processes of capitalism, production and circulation. Production, of course, has always played the starring role in the Marxist narrative – for obvious political reasons. However, it is important to remember that the entire second book of Capital (albeit edited by Engels) is devoted to the sphere of circulation. Of course, leafing through the second book after the prophetic contact high one gets from the first book is a little bit of a downer – it is as if the book of Isaiah came with an appendix of equations. And not only that, but the text in which these equations float is much less full of those stabs into the dark underbelly of Mr. Moneybags that we all know and enjoy.

The idea that economics as a science must, like physics, ultimately rest on a lowest level of laws and smallest elements – particles in the later, individuals in the former – has been challenged even by icons of mainstream economics. Kenneth Arrow wrote an essay in the nineties that begins:

“It is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals. Our behavior in judging economic research, in peer review of papers and research, and in promotions, includes the criterion that in principle the behavior we explain and the policies we propose are explicable in terms of individuals, not of other social categories. I want to argue today that a close examina-tion of even the most standard economic analysis shows that social categories are in fact used in economic analysis all the time and that they appear to be absolute necessi-ties of the analysis, not just figures of speech that can be eliminated if need be. I further argue that the importance of technical in-formation in the economy is an especially significant case of an irreducibly social cate-gory in the explanatory apparatus of eco-nomics.” [Arrow, “Methodological Individualism and Social Knowledge”,1994]

Arrow goes on to consider the Austrians, and the kind of game theory he and Debreu used, in order to show that there are irreducible social entities embedded in these analyses. On Arrow’s account, the pius horror of the economist before the suggestion of a collective agent makes as much sense as the pius horror of the 17th century natural philospher before the notion of a vacuum [which, it was established by Aristotle, nature abhors].

Myself, I find that the history of capitalist culture over the past two hundred years clears up in remarkable ways once one takes production and circulation as one’s macro analystical fictions, and markets – which, according to liberal historians, are at the center of the story – being secondary. More than this, I think that circulation has not been enough incorporated into the Marxist story to create a materialist, so to speak, account of the dynamic of that culture.  In essence, I’d locate the motives and genesis of much of the modern technostructure of production as originally occuring as a problem or routine in circulation. When, for instance, we see land managers and clerks starting to apply accounting methods under the rule of the great landholders – something that happens in England as early as the 16th century – what we are seeing is the diffusion of a cost-benefit heuristic for a whole set of routines. We can call this the diffusion of a mentality, but we should be careful not to think of such things in terms of ESP – a matter of ideas transmitted from head to head – since, in fact, without a material medium, this mentality falls apart. New forms of production are also continually hiving off the circulation sphere.
Take, for instance, literature.
The history of 19th century literature has paid very little attention to a crucial event that occurred in the 1860s, when Gompert Bodenheim, a book printer, patented a machine to fabricate paper sacks. Before Bodenheim – and others who, in that period, were patenting carton machines and the like – packages were made on the premise, much as they are by butchers today, using sheets. The packaging revolution – a revolution in the circulation of commodities – not only was about the production of another commodity, but one that had a very promising affordance – it could cheaply be marked with symbols or text. Bags en masse, or cartons en masse, could become, and did quickly become, part of marketing. Going into a supermarket today may not seem like going into a library or a museum, but in fact it is the same synergy of text and image. We are, in other words, seeing literature – admittedly, of a very low kind. The effect of this on production has been incalculable. Certain brands studied by business historians – say, Campbell’s soup – are, according to those within the enterprise who direct it, as concerned with the packaging as the product. Thus, something Sombart and Simmel both wrote about around 1900 – the increasing determination of production by “fashion” or marketing – has come to pass in a number of branches of industry. This was not because the sovereign consumer, of course, demanded signs on his or her shopping bags or cartons, but because the agents of circulation discovered a means of converting commodities into money through the combination of marketing and packaging. Between the can of bean soup and the bean soup within it, what is the customer buying? The answer to this depends on whom you ask – the execs at Campbell soup or the Mom with the kids.

It isn’t that Marx disallows the market – on the contrary, he is acutely aware of what Smith called the “extension of the market”, which, for Marx, was as well the vector of revolution. It is that Marx does not hold to the idea of an autonomous, or self-organized market. To cover this up is to lose what he is saying.