{"id":640,"date":"2019-10-27T13:42:36","date_gmt":"2019-10-27T13:42:36","guid":{"rendered":"http:\/\/jabardakhal.in\/english\/?p=640"},"modified":"2019-10-27T14:14:30","modified_gmt":"2019-10-27T14:14:30","slug":"chapter-02-neoliberalism-the-temporal-mode-of-production","status":"publish","type":"post","link":"https:\/\/jabardakhal.in\/english\/chapter-02-neoliberalism-the-temporal-mode-of-production\/","title":{"rendered":"Chapter 02. Neoliberalism: The Temporal Mode of Production"},"content":{"rendered":"\n

Neoliberalism:\nNo reformist solution to its crisis<\/strong><\/p>\n\n\n\n

02.\nNeoliberalism: The Temporal Mode of Production<\/strong><\/p>\n\n\n\n

It\nis in general consensus that \u2018neoliberalism\u2019 is a package of economic policies\nset out globally that proceed and promote free trade, privatization and public\ndisinvestment, tax exemption and special facilities for corporates along with\nrampant violation of labour laws, abolition of trade union rights, and most\nimportantly, austerity measures by reducing government expenditure in\nemployment generation and social services. In a bit, it can be expressed as a\nnew social order, a rule, by the rich and for the rich [1-5]<\/strong>. Also it is deemed that such policies\nwere adopted by the dominant nations followed by their hegemony implanted on\nthe rest of the countries. However, it will be shown in the current chapter of\nthis series that the so-called \u2018neoliberalism\u2019 is not mere special policies; rather,\nit is a qualitatively new phase of capitalism emerged in the course of history.\nPolitically, the nation states have observed a transition from the so-called \u2018welfare<\/em>\u2019 to the \u2018neoliberal<\/em>\u2019 one on the basis of a fundamental change in the mode of\ncapitalist production; and the very \u2018policies<\/em>\u2019\nare not mere choices of the governments but political compulsion of the\nbourgeois \u2018state\u2019 in this new episode. The aim of this chapter is particularly\nto elaborate the newly emerged mode of production that capitalism is presently\nexhibiting in the era of \u2018neoliberalism<\/em>\u2019;\nand we term such new trend of economy as the \u2018temporal mode of production\u2019<\/em>. <\/p>\n\n\n\n

The fundamental\nchange in the mode of production<\/strong><\/p>\n\n\n\n

It\nis almost an axiom that Capitalism is an economic system that produces enormous\nnumbers of commodities but in cheaper cost. However, if we look into the current\nfacts and figures carefully, unlike the previous days, neoliberal capitalism\nshows a new trend toward producing costly but less-lasting commodities,\ncomparatively in smaller numbers but with newer applicative quality again and\nagain. We will term this new trend as the \u2018temporal\nmode of production<\/em>\u2019; in contrast, we may refer to the former phase of\ncapitalism as the \u2018ensemble mode of production<\/em>\u2019. This can be understood\nin the analogy with a most common statistical example of throwing ten dice\nrepetitively for ten times instead of to throw a hundred dice at a time, with\nan expectation of getting the same result.<\/p>\n\n\n\n

Such\ntrend of producing costly commodities in lesser numbers has indeed emerged with\nthe individual enterprises\u2019 aim of restraining overproduction without\ncompromising their profit levels. This may be elaborated by the following\nhypothetical illustration. Suppose, a total amount of $1000 is distributed in\nthe hands of 10 persons as follows: 8 among them have $50 each and the\nremaining 2 have $300 each. Now, a company who produces 12 products costing $50\neach (net price $600) must have at least 2 overproductions costing $100 in\ntotal (since there are maximum 10 purchasers, not 12); however, another company\nwho produces only 2 products costing $300 each (net price same as $600) may\nhave 0 overproduction (since there are 2 persons each having purchasing power\nof $300). <\/p>\n\n\n\n

This\napparently seems to obtain a methodology for discharge of an individual\ncapitalist from the ICU of overproduction. However, the irony remains in the\nfact that to solve the problem of overproduction in this way is possible for\nsome of the individual capitalists only, but not and never for the entire\ncapitalist system. In fact, how such trend has trapped the entire capitalist\nsystem into an economic black hole will be shown later in this series of\narticles. <\/p>\n\n\n\n

Further,\nit is to be noted that along with the subjective motive of reducing\noverproduction in such way, the objective basis for the transformation of\ncapitalism from its \u2018ensemble<\/em>\u2019 mode\nto the \u2018temporal<\/em>\u2019 one was developed\non the platform of an already existing and growing consumer section for costly commodities.\nThis was an obvious result of the wage\/salary hike of working class in the\norganized trade sector and the middle classes due to the very presence of\nSocialist camp in the post World War-2 era. On the other hand, such neo-elite\nclasses of consumers are also being created in the neoliberal regime, in addition,\nby the \u2018state machinery\u2019 in a hegemonic way of increasing salary together with\nreducing jobs. That is why the pre-capitalist philosophy of \u2018sacrifice\u2019 which transformed\ninto \u2018consumerism\u2019 in the capitalist societies in its previous phases has now\nbeen reborn in the form of a global campaign for \u2018austerity\u2019. <\/p>\n\n\n\n

Although\nwe can distinguishably identify Neoliberalism as this newest phase of\ncapitalism defined by such trend of \u2018temporal\nmode of production<\/em>\u2019, where capitalism of the previous days that used to\nproduce enormous numbers of replicas of cheaper commodities at-a-time has\ntransformed into a system with a novel trend of producing relatively smaller\nnumbers of costly commodities with continuous updating, it can be observed a country\nor an economic region to coexist in  a\nmixed state of \u2018ensemble<\/em>\u2019 and \u2018temporal<\/em>\u2019 modes of production, however,\nthe latter exhibiting expansion and the former dying out.<\/p>\n\n\n\n

It\nis worthy to mention that it is difficult to obtain any direct empirical data to\nprovide an epistemic support to the current ontological model of neoliberalism that\nanalyzes it as the \u2018temporal<\/em>\u2019 mode of\nproduction. However, in order to comprehend the current economic situation, we\nhave to extract the essence from the bulk of information provided in the studies\nof mainstream economy. For this purpose, the relevant data of some major capitalist\ncountries such as the USA, UK, Germany, France and Japan are analyzed in\ndetail. Such data are compared correspondingly with China, which,\ncontroversially in the leadership of Communist Party (CPC), has been the\nlargest growing economy within this neoliberal regime. This may help us to\nstudy the CPC position in the dialectical route of transitional phase, if so as\nthey claim, from capitalism to socialism; and to find out whether, or if so\nthen to with which degree, the capitalism is dying out and socialism is being\nbuilt up. The state-of-the-art of India being a developing country with\nsignificant global interest toward its gigantic market is also studied in this\ncontext of neoliberalism.<\/p>\n\n\n\n

A study on\nconventional overproduction<\/strong> <\/p>\n\n\n\n

It\nis usually considered that capitalist overproduction means an excess of the\nhuge numbers of commodities produced that are not sold since such \u2018number\u2019 of\nthe units production is large compared to the \u2018numbers of purchasers\u2019. Marx\nfound such \u2018overproduction\u2019 to be the fundamental origin of economic crises\nsuffered by capitalism. This, in its empirical form, has actually been observed\nby world capitalism until the third quarter of 20th<\/sup> century.\nHowever, in a seemingly contradictory manner, since 1960\u2019s a continuous decline\nhas been observed in the conventional \u2018overproduction\u2019 compared to capital\ninvestment in all of the dominant nations such as the USA, UK, Germany, France,\nJapan and China. This can be seen from Fig.1, where the inventories as a\npercentage of gross capital formation (GCF) of these countries since past five\ndecades are plotted. The figure evidently shows a sheer trend of the\ninventories per investment to fall from its value of 4-5% in the 1960\u2019s to 1-2%\nor less in the 2000\u2019s for all of the advanced capitalist countries like US, UK,\nGermany, France and Japan. A similar declining trend is also seen in the\nemerging economy of China however its value (5 times as given in the plot) is\nmuch higher (>20% in 1960\u2019s to <5% in 2000\u2019s).  <\/p>\n\n\n\n

\"\"<\/figure><\/div>\n\n\n\n

(Fig.1. Data Source: World Bank) <\/strong><\/p>\n\n\n\n

It\nis a clear indication of the reduction of conventional capitalist\noverproduction. Is it that capitalism has overcome its natural trend of overproduction\ncrisis? Or is it something else? Such unorthodox characteristics of inventories\nto reduce continuously must be read critically. <\/p>\n\n\n\n

From\nthe conventional point of view, capitalism is taken for granted to produce huge\nnumbers of low-cost commodities, however, suffers from the fever of\noverproduction due to even more suppressed purchasing power of a large section\nof the people. Therefore, the Keynesian prescription was only to create such\nlarge numbers of consumers with a minimum level of purchasing power and\npurchasing condition for such huge numbers of cheaper commodities to be sold\n(although this led to governments attaining deficit financing). In fact, in\nsuch a view the \u2018overproduction\u2019 is considered to be a drainage problem of\ncapitalist economy and thus concentrated on the distribution engineering,\nthereby suppressing the symptoms instead of eradicating the disease.<\/p>\n\n\n\n

However, neither the problem is in its drainage system, nor the \u2018overproduction\u2019 means solely the excess of the large \u2018numbers of commodities\u2019 compared to the \u2018numbers of purchasers\u2019, as it is usually thought of. More than half a century back that the Keynesian model emerged, Marx showed that the problem of capitalism fundamentally subsists in its production system, not in its distribution mechanisms. The disease of the former is manifested in the latter as its symptom. In the capitalist economy, the conversion of money to commodity to more money, i.e. M—>C—>M+M\/<\/sup> ( M\/<\/sup> being an increment in the amount of M), is carried out by purchasing the constituent commodities (i.e. means of production + labour power) of smaller exchange value by the capitalist owners and selling the final product of larger exchange value. However, it is apparent that such an increase in the value of outputs compared to the inputs can only be possible during production. Marx discovered that this could be possible due to the fact that only live human labour power can employ an amount of labour in the production more than that much of the labour it has itself been produced of [6]<\/strong>. Metaphorically, it is just like the fact that, one who eats only some vegetables at night can cook a different amount of beef next day. Thus, M—>C—>M+M\/<\/sup> indicates that capitalism produces more at the expense of less, in the \u2018economic terms\u2019, and not in the \u2018material terms\u2019. For instance, in this case, one can eat a larger amount of cheaper vegetables and can cook smaller amount of costly beef; then he\/she is producing less (amount of beef) at the expense of more (amount of vegetables) in \u2018material terms\u2019; whereas, at the same time, he\/she is producing more (costly beef) at the expense of less (cheaper vegetables) in \u2018economic terms\u2019. Thus \u2018overproduction\u2019 is inherently defined in \u2018economic terms\u2019 and not in its \u2018material size content\u2019. It elucidates that once the production is done, in totality, the sellers have \u2018economically\u2019 more (M+M\/<\/sup>) than the purchasers (M) resulting in overproduction. This indeed is the meaning of \u2018overproduction\u2019, not in terms of the comparison between numbers of commodities and their purchasers, but in terms of their exchanging capacities which have already been differentiated during the production. However, such \u2018economic overproduction\u2019 appears to the capitalists as mere \u2018material overproduction\u2019, since empirically they get burdened with the unsold products in \u2018material form\u2019. The inventories, thus, can reduce in proportion to investment in a capitalist economy, if and only if, a larger fraction of the economy constitutes costly commodities in relatively smaller numbers.<\/p>\n\n\n\n

A study on the\ncurrencies in domestic circulation<\/strong> <\/p>\n\n\n\n

In\nthe context of verifying the claim of the current work, the distribution of\ndifferent denominations of currencies issued by the central banks of these\nnations into their domestic market is another relevant parameter. Such monetary\npolicy is always set out by the capitalist state so as to carry on the\nexchanges of commodities unrestrictedly and thus the distribution of\ndenominations must be at par with the weights of cost-distribution of different\ncommodities. This is carried out by the \u2018state\u2019, partially due to necessity of\nthe real condition of market and partially by superimposition, to drain out the\ncommodities from producers to consumers in order to run the economy. Thus, the\ngeneral trend of neoliberal capitalism to produce costly commodities can be\nexamined since the distribution of denomination, in both cases, represents the\nreal distribution of commodity-cost. <\/p>\n\n\n\n

We\nhave plotted in Fig.2 the distribution of smaller and higher denominations (in the\nso-called value terms) of the currency in circulation of the US, UK, euro zone,\nJapan and India from 2001 to 2015. In accordance with the issued denominations,\nthe higher ones are considered to be those greater than or equal to $100 in the\nUS, \u00a320 in UK, \u20ac50 in euro zone, \u00a55,000 in Japan and Rs.500 in India on the\nbasis of \u2018per capita household expenditure per day\u2019 which is approximately $100,\n\u00a335, \u20ac45, \u00a53,000, and Rs.120, respectively.  <\/p>\n\n\n\n

\"\"<\/figure><\/div>\n\n\n\n
\"\"<\/figure><\/div>\n\n\n\n

(Fig.2. Data Source: FRB, BoE, ECB, BoJ & RBI) <\/strong><\/p>\n\n\n\n

It\nis evident from the data plotted in the Fig.2 that currently the higher\ndenominations account for approximately 80%, 85%, 70%, 95% and 85% of the money\ncirculation (in value terms) in the domestic market of the USA, UK, euro zone,\nJapan and India, respectively. The plot depicts that it is has been the trend\nsince one and a half decade in the so-called advanced capitalist countries of\nthe world, whereas, in the developing nation like India, such higher\ndenominations which amounted only 25% in 2001 has increases up to almost 85% in\n2015. It is apparent that the amount of smaller denominations has elevated by\nnegligible margin whereas the larger denominations have increased significantly\nfor either of the nations during this period. It is to be mentioned that the\ndata for China\u2019s RMB is not available to us in detail, however, the trend is\nalmost the same, in fact, even more pronounced as can be seen from Table.1 [7]<\/strong>. The\n100 RMB was introduced by People\u2019s Bank of China in 1988 and within just a\ndecade it increased to constitute 75% of the M0<\/sub> money in circulation;\nit now engrosses a more than 80% of the currency value.   <\/p>\n\n\n\n

\"\"<\/figure><\/div>\n\n\n\n

(Table.1. Source: Smith R. et al, 2010)   <\/strong><\/p>\n\n\n\n

Indeed\nit is a trend of a continuous decline in the smaller denominations and a\ncorresponding rise of the larger ones as share of the currency values in\ncirculation that almost all the major economies have observed throughout the\nera of neoliberalism. This may be regarded as a remarkable indicator of the\nsignificant rise in the consumable cost as explained above; and such a trend of\nthe temporal mode of production<\/em> leads\nto an obvious future of the smaller denominations to die out whereas the larger\ndenominations of currencies toward transforming into much larger ones and\nfurther toward plastic money.<\/p>\n\n\n\n

About some of\nthe giants <\/strong><\/p>\n\n\n\n

The\ntransition from \u2018ensemble<\/em>\u2019 mode of\nproduction to the \u2018temporal<\/em>\u2019 one was\ninitiated by some of the giants of global capitalism. In fact, till date the\nglobal giants are leading in the temporal mode based production. For instance,\nToyota, which today is the largest automobile company of the world with a\nmarket value of almost $240 billion, had produced cars 10 % cheaper than that\nof Ford or General Motors when it emerged in the market in 1936. However, at\nthe end of 1980\u2019s, it launched a separate branch of luxury cars known as\n\u2018Lexus\u2019. Its advertising slogan, which, even in 70\u2019s, was that \u201cYou asked for it ! You got it !<\/em>\u201d,\nchanged to that \u201cGet the feeling !\u201d in 2001. It is also interesting to note\nthat, during the last 50 years of 20th<\/sup> century, it produced a total\nof 16 brands, however, only in the first decade of this century it has brought\nits 44 brands into the market. This clearly shows the trend of producing newer\nquality in each production season. Further, the less-lasting characteristic of\ntemporal production can be seen if one looks into the fact that it had to go\nfor 16 \u2018recalls\u2019 in the past ten years. Another example among the larger ones\nis the Microsoft, the 5th<\/sup> largest company of the world with a market\nvalue of almost $333 billion. It has brought into the market its 21 versions of\n\u2018Windows\u2019 in the last 20 years only. Nothing other is observed for Apple, which\nnow is the top company of the world with a market value $725 billion, who had\nlaunched only 10 models in the entire decade of 1970\u2019s, has brought into the\nmarket its 17 models only in the financial year of 2016. Even if one considers Walmart,\nwhich is best known for its cheaper FMCG products like food, household stuffs\netc., it is interesting to note that there are more than 3,500 \u2018Supercenters\u2019\nof Walmart in 49 of the 50 US states, whereas only about 400 \u2018Discount Stores\u2019\nin its 41 states. It is also remarkable that among all the 66 newcomers into\nthe top global-500 companies, each of the consumer goods\/services producing companies\nis a producer of luxury personal and leisure goods. It should also be noted\nthat majority of the basic productions like minerals, metals, energy etc are\ndominantly consumed by these giants and thus all such sectors has got\nsymbiotically aligned to the temporal mode of production.<\/p>\n\n\n\n

Global luxury\nmarket   <\/strong><\/p>\n\n\n\n

The\n\u2018temporal mode of production<\/em>\u2019 is\nfundamentally defined by the repetitive scheme of production, which, due to\nmaterial reason of its birth in the hands of capitalism at its stage of\nmonopoly (or oligopoly), got inherently associated with the costly commodities.\nIt has already been shown that majority of the giant monopolies or oligopolies\nare predominantly producing costly commodities and such costs are continuously\nincreasing due to updating over and over again. This is observed to be valid\nfor all kinds of consumables; however, such trend additionally induces a\ngrowing demand in the market for the so-called luxury products (goods and\nservices). Therefore it is necessary to study the economic trends of such luxury\nproducts in these countries, although, it is again very difficult to obtain precise\ndata on a specific type of commodities that belong to luxurious consumption.  <\/p>\n\n\n\n

As\ncan be seen from the data available (https:\/\/www.statista.com<\/a>),\nthe global personal luxury goods market valued at approximately $235b in 2013\nwhich increased to almost $275b in 2016 and estimated to be $1.3t in 2018. The\nfollowing figure depicts the overall tendencies of different luxury consumptions.\n<\/p>\n\n\n\n

\"\"<\/figure><\/div>\n\n\n\n

(Fig.2. Data Source: Bain & Company)<\/strong><\/p>\n\n\n\n

The\nUSA has been the largest market for such luxury products and in 2018 it was estimated\nto be valued at $80b. On the other hand, currently, Middle East is exhibiting a\nsignificant growth in the personal luxury goods industry at almost 20% while\nIndia at 6.6% with a revenue of $8.3b in 2019. <\/p>\n\n\n\n

Despite\nthe trends shown above, one can spontaneously doubt whether China belongs to\nthe same regime of producing so much of luxury products since they are best\nknown for their export of cheaper commodities. In fact, it will not be an\nexaggeration to say that China is indeed ill-reputed for its temporal mode of production<\/em>; it is often\nsaid that \u201cthe Chinese product will not last\u201d, although as shown by the above\nexamples that it is a global trend emerging from the top. The difference,\nhowever, for China is that a significant fraction of their products are still\ncheaper in general. That is why, being the largest developing economy, China is\nstill observing a transition in this regard (see the plots of inventories, the overproduction\ntrend is decreasing but still very high in value). However, China observes a\nrevenue of almost $42b in Luxury Goods market ranking second after the United\nStates. The following table shows the position of the top-5 countries in this\nregard. <\/p>\n\n\n\n

\"\"<\/figure><\/div>\n\n\n\n

(Table.2. Data Source: <\/strong>https:\/\/www.statista.com<\/strong><\/a>)<\/strong><\/p>\n\n\n\n

In\nthe last ten years, the \u2018global\u2019 luxury sales have increased by almost 70%,\nwhere China alone has observed a hike in luxury sales by 200%. Further, luxury\nsales within the domestic market of China is almost 7% of its global value;\nhowever, interestingly, such luxury sales is nationality-wise highest among the\nChinese people around the world (obviously majority from abroad), almost 30% of\nthe global value. This, in turn, indicates how a tremendous pressure of globalized\nneoliberal capitalism on a claimed to be socialist construction can influence\nits domestic economy and mode of production, and thus requires serious investigation in this regard.<\/p>\n\n\n\n

To\nbe continued \u2026 <\/strong><\/p>\n\n\n\n

(Chapter-03: The impact of \u2018temporal mode of production<\/em>\u2019 on the GDP and inflation: Transportation of Inflation)<\/strong><\/p>\n\n\n\n

Chapter-01: Introduction<\/strong><\/p>\n\n\n\n

\n
Neoliberalism: No reformist solution to its crisis (Chapter I)<\/a><\/blockquote>