“Circulation” I: Back to the Future?

Clover’s idea of splitting history into periods of circulation, industry or production, and circulation again since the 1970s is borrowed from Giovanni Arrighi’s The Long Twentieth Century. In this work, and hence in Clover’s, Marx’s “general formula for capital,” M-C-M´ is divided into M-C for industry or production and C-M´ for a financial phase to designate as what Arrighi, inspired by Henri Pirenne, sees as recurring cycles of finance, industry, finance since the Middle Ages.

Arrighi’s historical work, for all its brilliance, is rooted in the “Commercialization Model” pioneered by Pirenne and criticized by Brenner and Wood for its analysis that capitalism arises on the basis of expanded trade and commerce. In the commercialization view, M-C-M´ applies equally to the circulation of capital in virtually all economic systems.

At least in that form, it is a complete circuit of capital. But with Arrighi’s and Clover’s, splitting the simple formula M-C-M´ for capital circulation into distinct epochs of economic development, circulation as Marx defines it would cease. In M-C by itself there is no realization of value, no expansion, not even a merchant’s mark-up.

Furthermore, in Marx M-C-M´ is a more or less time-bound process of exchange, not one in which each half settles in for an epoch, whether it was circulation in the medieval merchant’s practice of “buying in order to sell dearer,” as Marx put it, or the dynamic system of self-expansion that is the capitalist mode of production — much less back to a future era of circulation.

The simple general formula M-C-M´ is surely an overstressed foundation on which to construct so ambitious an architecture of seven centuries of economic history.

Even putting aside the problems with the use or misuse of M-C-M´, are we in fact in or entering an era of “circulation” or financial domination in which production is secondary? Insofar as Clover tends to equate the rise of the financial sector, or financialization as an era, with that of the new period of circulation, the answer is no.

To be sure, there is massive debt throughout the world and that, along with stumbling profit rates, has diverted income toward finance and speculation and away from production; but viewed in terms of worldwide economic flows (circulation), trade in goods is still far greater than that even in services let alone financial flows.

According to a 2014 study by the McKinsey Global Institute, in 2012 world trade in goods was worth $17.5 trillion, equaling 80 percent of global economic flows, while that in services was a mere $4.2 trillion. Financial flows, which include in-and-out-bound foreign direct investment (FDI), all equity and bond flows, and cross-border lending and deposits, amounted to just $3.9 trillion or about 15 percent of world economic flows. (The UN put “finance and insurance” together at 11.4 percent of commercial service exports of developed economies in 2013 and much less for developing economies.)

From 1980 to 2004 financial flows remained a small percentage of total global economic flows, rising briefly from 2004 to 2007, and only coming anywhere near those of goods in one year, 2007, at the height of real estate and financial speculation just prior to the Great Recession, before tumbling downward. Financialization as a dominant regime of capital, it seems, was a very short-lived epoch.

Nor have finances, which are always a necessary aspect of capitalism, grown faster than goods or other services on a world scale in recent years. Global trade in goods grew by an average of 11 percent a year from 2002 to 2012, and that in services by 10 percent, while financial flows grew by just 6 percent a year on average.

It should be borne in mind, too, that while FDI is counted as part of financial flows in the McKinsey report, according to the UN only about 20 percent of accumulated global inward FDI stock is in “finance.” That’s a larger share for finance, but hardly the era of “finanzkapital.”

In terms of the US economy, at the high point of production in the 1960s profits from financial corporations equaled about 15 to 16 percent of total corporate profits, rising to about 20 percent by the late 1980s, and then briefly to a high of 25 percent in 2007 just before the Great Recession. Since then they have fallen to about 20 to 22 percent.

While the level of profits from finance has clearly risen over time as a result of rising debt and turbulent profit rates, those from nonfinancial corporations still account for 75 to 80 percent of total profits. That’s growth, yes, but not dominance or a new phase of circulation detached from production.

Furthermore, Clover’s example that “U.S. auto makers increasingly derive profits not from production but from financing consumer purchases through in-house credit arms” is out of date. General Motors divested its credit arm in 2006 and Chrysler its in 2010 to reduce debt and concentrate on automobile production. Only Ford retains its credit outfit.

General Electric did the same to refocus on manufacturing, all as part of the general movement by US capital away from conglomeration and toward production in their main product lines via the mergers and acquisitions that accelerated in the mid-1990s. And in contrast to what Clover implies, as seen above there is production even of material commodities at higher levels than ever before throughout the West, including in the US economy, despite the large shift of manufacturing production to the economic South and East.

Even the much-diminished US manufacturing workforce now produces four times what it did in the 1960s and twice what it did in the early 1980s at the beginning of the neoliberal era. Clover’s effort to build a theoretical basis for a separate era of circulation under the capitalist mode of production simply doesn’t hold up theoretically or empirically.

“Circulation” II: Production as Motion

At the same time, there is more than a little legerdemain in Clover’s multiple and flexible uses of the term “circulation.” For example, his argument that the growing workforce in transportation, warehousing, firms like UPS, and logistics generally belong in the realm of circulation, á la C-M´, as opposed to production because they move things, is misleading.

The confounding of the circuits of capital analyzed by Marx with the spatial movement of materials and commodities through contemporary supply chains, logistics in the process of production, conflates use value with exchange value on the one hand, while simply playing with words on the other.

Although time-bound by the forces of competition, the production process is not something that occurs in a single time or place. The production of goods obviously proceeds through supply chains that run from raw materials, to capital goods, through intermediate parts, work in progress, and finally to the finished product. Each step in this process involves the movement of material use values, whether near or far, as inputs to production.

Capital circulates through this production process, not as a separate sphere even at the level of global supply chains, but as an essential aspect of production. The circulation of capital is integral to this production process. Since commodities must change location both during production and to reach the market, Marx wrote in the Grundrisse, “Economically considered, the spatial condition, the bringing the product to the market belongs to the production process itself.”

Motion is the natural state of commodities within and between each phase of production all the way to final sale and realization of surplus value. Furthermore, the trains, trucks, containers, forklifts, warehouses, ports, terminals, etc. that these workers activate to create surplus value are pieces of constant capital, just like the assembly-line machinery in an auto plant. As Toscano asks, “Isn’t a contemporary port more like a factory (in essence and appearance) than like a market?”

The same could be said of a contemporary warehouse or distribution center, the numbers of which in the United States have grown by 150 percent since the late 1990s. Indeed, Marx was clear that even movable elements of constant capital such as “a locomotive, a ship,” and today a truck, are fixed constant capital in the production process in the sense that their value is fixed like that of a stationary machine.

At the same time, much of the physical capital involved in the movement of materials is stationary as are many of the workers, such as the 843,000 working in US warehouses. As David Harvey put it, “The spatial mobility of commodities depends upon the creation of a transport network that is immobile in space.”

Most of the workers in these transportation-related jobs, whether stationary or mobile, as Marx argues in volume II of Capital, produce surplus value. They are part of production, and there are a lot more of them than twenty or so years ago. And of course, most of these workers who do the moving of capital goods, raw materials, intermediate parts, and finished goods wouldn’t have these growing numbers of jobs if there were nothing to move other than digitalized financial assets.

The “Surplus Population”

Clover uses the equally well-known quote from Marx on the increase in “surplus population” or reserve army of labor and pauperization as the “absolute general law of capitalist accumulation” to back up his own argument that this surplus population “is re-centered by economic reorganization from the sphere of production into that of circulation.”

This presumably means that the “surplus population” or reserve army of labor is reduced to a legion of consumers, though “not in the popular sense,” as Clover notes, since they lack a wage to spend. Indeed, it is hard to imagine a population less suited to the realm of capitalist “circulation” — which, after all, requires the spending of money on a significant scale.

Looting, which often occurs during riots, can hardly replace consumption in the system, nor does it do much damage to the system, as it virtually never affects major concentrations of capital significantly. In any case, the reserve army of labor exists outside the circulation of capital until part of it is drawn into production of one sort or another.

Clover of course is right about the fact of the growth of the reserve army of labor or “surplus population” over the last two or three decades and particularly since the Great Recession. Nevertheless, the quote from Capital employed by Clover and others about the role of increased productivity in creating a “surplus population” is not the endpoint of Marx’s analysis of the dynamics of employment, unemployment, and accumulation under capitalism.

In the contradictory process of self-expanding capital accumulation (to return to Brenner, Wood, and most Marxist economists, historians, etc.), the reserve army of labor serves as a necessary prerequisite to expanded production — even if much of it remains unemployed for long periods and some of it permanently.

As Marx put it:

But if a surplus population of workers is a necessary product of accumulation or of the development of wealth on a capitalist basis, this surplus population also becomes, conversely, the lever of capitalist accumulation, indeed it becomes a condition for the existence of the capitalist mode of production.

Thus even as the agonizingly slow recovery since 2009 proceeds, production creeps upward, the unemployment rate falls even at its highest U-6 measure (not only people without work seeking full-time employment, but also marginally attached workers and those working part-time for economic reasons) for all groups, and the workforce grows by drawing on the reserve army.

Despite the slow pace of the US recovery, the number of employed private sector production and nonsupervisory workers grew from 88,673,000 in September 2010 to 102,463,000 in September 2017.

In the neoliberal period that began in the late 1970s, the accelerating transition of capital from one industry to another, from goods production to that of “services” in the real economy, took the familiar form of the decline in manufacturing employment — the “shedding” of jobs mostly through productivity gains, rationalization or relocation on the one hand, and the increase in investment and employment in a number of so-called service industries on the other, made viable by the generally low wages in those industries.

Some of this was to meet the growing demands of social reproduction, done mostly in the private sector in the United States, some for the maintenance of capital’s ever-expanding fixed assets, some to clean up its mess, and some to move its materials and goods — all the consequences of actual accumulation, even at a slower pace.

The vehicle for the transition of labor from one sector to another, as Marx argued, is the turnover of the reserve army of labor. Simple population growth is not sufficient to fill these jobs, which can only be filled if there is a reserve army of able and available adults — some in recent years drawn from the global reserve army via immigration.

Reserve Army, Not a Permanent Layer

Although blacks and Latinos make up a disproportionate percentage of the reserve army, the surplus population is not a permanent body of individuals as Clover’s analysis implies. It is rather, as we saw above, the recurring potential basis for further expansion, without which capital cannot grow. Capital’s cyclical development of “periods of average activity, production at high pressure, crisis, and stagnation, depends upon the constant formation, the greater or lesser absorption, and the re-formation of the industrial reserve army or surplus population.”

This is clear in the figures for those who enter and leave the workforce. Between 2004 and 2014, 33,880,000 workers entered the US civilian labor force while 25,360,000 left. Thus, the labor force grew by 8.5 million workers, from 147,401,000 in 2004 to 155,922,000 in 2014 even in the wake of the Great Recession.

For males, whose labor-force participation rate has fallen significantly, 17,851,000 nevertheless entered the workforce, while 13,949,000 left. During the same period, 4,947,000 African Americans entered the workforce, while 2,712,000 left. Note that the ratio of entrants to leavers is higher for blacks than the average — obviously not because black workers are better-off, but because they are more likely to continue looking for work than whites, as they have fewer resources to fall back on, and therefore are categorized as unemployed rather than “not in the labor force.”

As of December 2017, the official unemployment rate for blacks was 6.6 percent and 3.7 percent for whites, while the ratio of employed workers to those “not in the labor force” was 1.6 percent for whites and 1.5 percent for blacks. What’s clear from this is that in the process of the formation of the reserve army or “surplus population” there is a large and constant turnover, as Marx indicates. It’s also clear that those African Americans and Latinos who leave the reserve army inevitably gravitate toward the lowest-paying jobs.

In looking at those employed in the growing “service” sectors of the economy cited above, something else becomes clear: these are mostly low-wage jobs that are disproportionately held by African-American and Latino workers. Thus, as workers of color lost jobs in better-paying manufacturing work and moved into unemployment or out of the labor force for a time, even a long time, some of them or others like them have moved to fill these growing low-wage, sometimes precarious, often dead-end jobs.

In this process capital has recreated the racial hierarchy of employment that had been somewhat modified during the epoch of post–World War II growth, high union membership, and civil rights gains. If the surplus population is racialized, so is the workforce.

Here is a fundamental point about social conflict and hierarchy that does not appear in Riot. Strike. Riot. Racism and the rage it produces among its victims is not in the first instance a matter of circulation or consumption versus production, but of the place of blacks and Latinos in the process of capital accumulation as a whole both historically and today.

As Marxist economist Howard Botwinick has shown in considerable analytical and empirical detail in Persistent Inequalities, contrary to neoclassical idealizations of wage equalization, uneven and hierarchical wages within the working class are the result of capitalist competition and the uneven process of accumulation itself.

These “persistent inequalities” created and reproduced in the process of competition and accumulation are the underlying basis of the racialized and gendered hierarchy of employment in the United States and elsewhere. While the roots of racial and gender inequality predate capitalism, capital accumulation nevertheless reproduces hierarchy and inequality in employment and incomes even within the working class, and hence in housing, education, and much else.

In The Production of Difference, David Roediger and Elizabeth Esch have shown historically and specifically how capital racialized this uneven employment hierarchy, sometimes with the collaboration of white labor, and how this hierarchy became internalized as “normal” among many white workers and managers alike.

To begin to understand the conditions that produced the sense of injustice or rage that drives both employed and unemployed victims of this inequality to riot, demonstrate, strike, sit-in, occupy, resist, and oppose in many ways, one needs to look at the accumulation process as a whole, not simply at the arena of consumption. Racism to be sure has a life of its own, a relative autonomy that asserts itself in every aspect of social existence, but it is nevertheless constantly reproduced and reinforced in the process of capital accumulation itself.

What, then, about Clover’s central thesis: is “riot” really becoming the major form of social struggle? There is no questioning the fact that conventional strike activity has fallen from the early 1980s to nearly all-time lows today and for some time in most of the developed capitalist countries, even among manufacturing workers, for reasons that have been analyzed and debated frequently, many of which have little to do with the decline in manufacturing employment per se.

But does it follow that this same period saw or will see the rise of the riot as the major form of social rebellion? In that respect, Clover’s determinism linking “circulation” and riot crumbles on the fact that the historic highpoint of modern, mostly African-American-based urban riots and rebellions in the United States, occurred from the mid to late 1960s, when production was still booming, unemployment was relatively low and falling (higher for blacks, but still falling), and many who rioted, from Watts to Detroit to Newark, were employed workers and union members.

It was emblematic of that period that in the aftermath of the 1967 Detroit riot, Detroit’s black radical Inner City Voice declared that despite having given “a beating to the behind of the white power structure . . . we are still working, still working too hard, getting paid too little, living in bad housing, sending our kids to substandard schools, paying too much for groceries, and treated like dogs by the police.”

“Still working,” but nevertheless living in bad housing, “treated like dogs by the police,” even while employed with an (inadequate) income. In “the long hot summer” of that year alone, there were riots in 159 US cities. While economic factors played a role in these uprisings, displacement from employment alone cannot explain these riots since employment was comparatively high and the high tide of “deindustrialization” lay in the future.

The indignities within employment and social circumstance in general were sufficient to produce the rage that underlies riots. Most were sparked by incidents of racism, usually by the police as they are today. Or, in the case of Martin Luther King Jr’s assassination in 1968, which led to riots in over one hundred cities that April, the same rage found its expression at the murder of black America’s most famous leader.

It was, and remains, the entire structure of racism in employment, income, housing, education, police violence, and, to be sure, unemployment, that underlies the rage leading to riots once the provocation is strong enough.

While Clover is right to see the uprisings of the 1960s as a transition from the “legal” (but also disruptive) phase of the black freedom movement to a new more explosive one, his attempt to classify the 1960s and early 1970s as the beginning of a transition to the era of circulation and, therefore, riots is not convincing.

It’s mistaken analytically because employment in production was still relatively high and growing and would remain so into the 1970s even in manufacturing and despite the 1974–75 slump, and empirically because the number of riots per year or decade fell after the 1960s for almost forty years. The course of riots did not run linearly or even unevenly on an upward arc, from Watts to Ferguson and Baltimore, as Clover asserts.

There was a long hiatus, internationally as well as in the United States, up to about 2005, after which things accelerated unevenly before taking off around 2010–11 with the Arab Spring. Even with the rising number of urban riots in the last several years, no period in the US (or any other developed country) has come even close to the number of urban uprisings of the 1960s — or for that matter the high and rising levels of strikes and rank-and-file union rebellions, many in the United States involving or led by black workers, of that same era of social upsurge.

If we were to draw a theory from the experience of the 1960s and early 1970s, it would probably be that worker, unemployed, student, racially oppressed, women, and most other social upsurges and struggles tend to rise and fall more or less simultaneously, even if unevenly.

The Anticlimax of Agency

In Clover’s analysis, the rise and convergence of riots, occupations, and other actions in the streets, squares, and highways are to culminate (inevitably?) in the commune — the society that transcends capitalism, the wage relationship, and consumption as a source of profit. Unlike the riots in the streets and squares, however, the commune, Clover says, is “not a place” like the Paris Commune, but a “social relation.”

One doesn’t have to be David Harvey to understand that, even in the internet age, human beings and their societies are spatially as well as temporally rooted even if their places multiply, expand globally, and their inhabitants migrate from one place to another. Place is integral to the human condition.

The problem here, however, is bigger than this idealized commune. Any change in social relations and economic systems requires human “agency.” If the employed core of the working class is no longer in the running for this position, what social force or forces are?

Clover is, of course, clear throughout that the racialized surplus population is the major candidate for change in the new era of circulation. The full answer, however, the culmination of 180 pages of often wordy if well-crafted discourse, is found in the following exceptionally succinct third of a paragraph:

The shape of the double riot is clear enough. One riot arises from youth discovering that the routes that once promised a minimally secure formal integration into the economy are now foreclosed. The other arises from racialized surplus populations and the violent state management thereof. The holders of empty promissory notes, and the holders of nothing at all.

While Clover acknowledges the difficulties of bringing these two elements together, that isn’t the major problem. The major problem is that while both participants in the “double riot” may disrupt society for a time in one or more places and play a role in broader movements for social change, neither group has much social power, or indeed staying power, over the long haul. Their very separation from production underlines their relative social weakness.

Furthermore, youth are divided by class with different aspirations and possibilities even today. Are frustrated graduate students with diminishing prospects for university tenure, or those seeking their MBA, in the same position as the less-educated youths trapped at McDonald’s or worse?

More importantly, even together youths and those in the active reserve army are a minority of the broader proletariat, even of the racialized proletariat, and even insofar as young people as a generalization are part of the proletariat at all or share its experience.

Is Clover looking at revolution won or a commune realized by and for a minority? Is this a First World urban version of Regis Debray’s 1960s guerrilla “foco,” albeit writ large and minus the central discipline? What about the democratic majoritarian political vision of socialism from below, the political form of which was suggested to Marx by the place-specific Paris Commune?

What role, if any, is there in Clover’s vision for the far-larger number of 100 million or more employed private-sector production and nonsupervisory workers, whose hands are on the high- and low-tech levers of production, distribution, and social provision, most of whom are stuck in the reality of increasing work intensification, stagnant or falling wages, and pensionless futures?

What about the 7 million or so public-sector workers now under severe attack who are also part of the broader proletariat? These groups of working-class people, along with their partners and dependents, too, have had their promissory notes torn up. And they have both the numbers and vast potential power far in excess of the surplus population and un- or under-employed youths combined.

We might even ask, what about the white majority of the “surplus population”? Do they figure in somewhere or are they not in the picture (the “foco”) as well as “not in the labor force”?

Looking at the other side of the riot/commune equation, what about the capitalist class, its hangers-on, and their military protectors? Do the wealthy simply embark, military in tow, for their island tax havens to exchange Ponzi schemes? For all the picturesque language, there is neither strategy, agency, nor inevitability here. The commune awaits a social agent or agents with sufficient power to create it as well as a place for its material construction on earth to be realized.

In the final analysis Clover’s periodization doesn’t work; his bifurcated economy does not represent real capitalism; his uses of Marx’s circulation formula and the theoretical framework he attempts to build from this don’t stand up to scrutiny; and the determinism that informs the whole analysis fails to deliver the result it promises.

This is a shame, precisely because he is on to something in terms of seeing a general rise in resistance and disruptive oppositional activism, from Seattle to Occupy to Ferguson in the United States, the Arab Spring, and other forms of resistance around the world, and though they came after his book was published, the anti-Trump mobilizations following his election and beyond.

Riots and urban uprisings, of course, will be part of this renewal of activism and resistance, because both their causes and provocations will not go away without profound social change. The recent movements of opposition, however, are not based solely or even primarily on the “surplus population,” and there is no inevitability that riots will dominate the multiple forms of action we can already see as well as those that lie down the road.

One of these recent forms of struggle, one that Clover dismisses, is the turn of various movements in the United States precisely toward the strike, this time outside the realm of formal collective bargaining (and government statistics) often in its political form. The 2006 and 2016 mass strikes by immigrant workers; the March 8, 2017 women’s strike; the Latino truckers in the port of Los Angeles who have no collective-bargaining agreement, but who struck fifteen times in the last four years; the New York taxi drivers who struck briefly to protest Trump’s anti-Muslim travel ban as did Google employees (albeit soon joined by their ever-so-liberal CEO); and the uneven use of the strike for several years now by the Fight for $15 movement among fast-food workers, the Chicago Teachers Union, and the West Virginia teachers.

This is something new in US politics that deserved attention and analysis. To be sure, these examples are tentative and don’t match up to the mass strike Rosa Luxemburg analyzed or the general strike George Sorel advocated that Clover discusses in his fifth chapter. But might not these examples reverberate back into America’s ghettoes and barrios and today’s low-paid, and not-so-low-paid, high-pressure workplaces?

The era of economic turbulence underlying this that Clover points to is not about to go away. The enormous pressures on the workforce across almost all sectors, stemming from years of lean production methods, just-in-time logistics, and the more recent increase of surveillance aimed at total standardization and acceleration of work all point to the possibility (not inevitability) of a resurgence in workplace-initiated action, including the strike — and hopefully beyond.

After all, for the most part, “We are still working, still working too hard, getting paid too little. . .”