The Dividends of Market Fetishism: CNBC, Profit, and Class
Amrohini Sahay
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In the almost three years since the collapse of the U.S. stock market bubble and declining stock prices, the corporate media representations of the stock market have of course shifted away from their most euphoric manifestations of what social democratic commentator Thomas Frank described in his One Market Under God as the triumph of "market populism"—the attempt to identify the financial interests of the ruling elite with that of ordinary working Americans by proposing the market as the engine of "economic democracy". Not only could every American—as we were told—buy shares and hence profit from their daily escalating prices but the buying of shares put an end to class difference between owners and workers. According to the market consciousness, for example, by investing in pension funds workers effectively become "owners" of the means of production. For market populism, the market is in effect the agency of the socialization of wealth—without the need for any social revolution.
In the wake of the bursting of the bubble, the evangelical fervor and feverish rhetoric of the market propagandizing of the 1990s has, not surprisingly, become more muted. The change of tone on CNBC, the 24 hour American television channel for investing and financial news and commentary, is symptomatic. Gone, for instance, are the ubiquitous images of the late 90s of uniformly bullish investment analysts and media reporters, the celebrations of hero CEOs and of twenty something dot.com entrepreneurs as a purported "new class" of post-elite wealthy ("evidence" of the essential democracy of the free market), as are the commercials for on-line brokerages featuring the average day trader as the savviest of investors, beating the Street through the force of sheer common knowledge. Similarly, the parade of economists and venture capitalists hyping the New Economy as having achieved the end of the business cycle have seamlessly vanished along with the fantasmatic projections of endlessly rising stock values capable of making every ordinary American wealthy beyond their dreams.
After the crash and particularly following the corporate accounting and insider trading scandals which wiped out the retirement savings of millions of small investors while the CEO's and big investors cashed out, CNBC's media analysis and financial commentary has taken on a sober tone (if one which adroitly evades its own participation in puffing up the bubble). Images of the savvy small investor freed by the internet from the stultified advice of the big brokerage firms are now replaced by ads which allegorically feature the small investor as the well-intentioned-but-inept middle-American, who has to, in the advertisement for one on-line brokerage, "learn before [he] can earn". Bearish hedge fund managers now share equal time on Kudlow and Cramer amidst "stock jock" James Cramer's overplayed outrage at the corrupt CEO's who were yesterday's financial geniuses. Even best-selling self-help author Suze Orman's personal financial advice has taken on an increasingly cautionary tone—warning the average investor of the dangers of placing risk before stability in the current financial climate and at least implicitly implying that one's economic position might not after all be a result simply of one's own psychological inability and "courage" to cash in and get rich.
Watching CNBC now, viewers thus get a decidedly modified representation of the market, one more in tune with the uncertain economic mood of the times and yet still one as much concerned with mystifying the operations of the market and the class relations of which it is a part as was its earlier mode of pure market-hype. At the same time as they bemoan the decline in stock prices and acknowledge the devastating economic consequences for average Americans, the financial analysts, reporters, economists and fund managers remain ever faithful to the market, awaiting its recovery and its ability to lead the economy to new highs and become once more the miraculous and supposedly democratic money-making machine of the bubble days. Indeed, if the market has suffered it is not because (as in every bubble) stock values were systematically artificially inflated above their real values as part of a massive swindling of an ignorant public, but rather because of purely "contingent" factors: a few corrupt CEO's, the effects of Sept.11, the imminent war with Iraq (or instead, in libertarian economist and CEO Lawrence Kudlow's right wing propaganda for the Bush agenda, the lack of immediate war with Iraq), the actions of the Fed with regard to interest rates, or—more simply—the "lack of faith" in the infallibility of the market demonstrated by its critics.
Predictably enough, then, if one listens to the media pundits, the recently proposed massive tax cut on corporate dividends by the Bush administration appears not as what it is—an enormous privatization of socially produced wealth by transferring it to the (already) wealthy. (Of the proposed $674 billion dollars in tax cuts half the amount would go toward the abolition of taxation on dividends and would primarily benefit the top 1 percent of the population who are already—at least—millionaires). Like the other neoliberal policies aimed at making the rich even richer, the tax cut appears, in the fog of market "logic", as a "necessary sacrifice" to the altar of the market which is supposed to jump-start the economy by raising the price of stocks, and, in the process, create jobs for the growing mass of unemployed workers.
The "logic" behind the market logic is telling. As the argument goes, at a time of rising unemployment, eventually the direct economic boost to dividend receiving investors will lead to rising share values, and hence to more corporate investment, and thus to the creation of American jobs. The reality that every report of the slashing of jobs by corporations (whether as a result of raising worker productivity or simply moving these jobs to countries in which labor is cheaper) also leads to higher profit expectations and higher share values does not of course appear in the least contradictory to the market logic. Neither does the fact that far from leading toward economic democracy, the dramatic rise in public participation in the stock market has coincided with the trend toward ever-greater economic inequality (with the top 1% of households now owning approximately 40%, and the top 10% owning 70%, of total wealth. Edward N. Wolff, "Recent Trends in Wealth Ownership, 1983-98", Jerome Levy Economics Institute, April 2000). On the contrary, such contradictory realities of class in America are smoothly eclipsed by the endlessly reiterated cliché that has always been the mainstay of the market populism: that "what is good for Wall Street is good for Main Street". Indeed, so vehemently is this cliché cultivated in the news programs and stock reports on CNBC, that even to hint at any opposition to the redirecting of funds towards the investors and speculators on Wall Street (rather than, for instance, channeling them to states to assist in paying for Medicaid, education, and other social programs aimed at meeting the needs of people) is to be dismissed by charges of a "politics of envy". The pro-business deification of Wall Street as the bedrock of economic democracy continues unabated.
Still, in putting forward such fetishized representations of the market, CNBC,like corporate media in general, is not doing anything intellectually or politically "new" so much as both reproducing and relying on that mode of ideological mystification of class that is as old as capitalism itself, what Marx calls "commodity fetishism". For the bourgeois economists who are the authoritative voices of CNBC, as much as for workers, commodity fetishism functions as the everyday false consciousness of the fundamental social relations of capitalism, a false consciousness which finds its support in the appearance that the market—the arena of "buying and selling" of commodities—is the means by which "value" is produced (and hence also the means by which it can be "redistributed").
To be clear, far from providing any unbiased "news reporting", the purpose of such business media venues as CNBC is to reinforce the reigning ideological consciousness which mystifies the economic reality of capitalism as a system of production based on the economic division of two classes—the owning and the working class—whereby the owning class systematically appropriates the wealth produced by workers in its own class interests. It is in fact only by means of such ideological mystification that the ruling class is able to explain away the reality that economic inequality is produced not at the level of the market but at the level of the root production relations of capitalism. If economic inequality is an effect of relations of production—and not simply of the relations of exchange—it can only be "resolved" through revolutionizing (overturning) these class relations. Commodity fetishism hides this reality from workers and, in doing so, allows class—the exploitation of the producers by the owners—to continue. The Marxist critique of commodity fetishism is thus essential to the fight against a society based on exploitation and the struggle for a society of economic equality.
As Marx explains in Capital, at its core commodity fetishism is the (false) appearance that "value" is created not by the labor of workers (in the relations of production) but by the interaction of commodities among themselves, that is, in the exchange relations of the market. As Marx demonstrates, the mystical effects of commodity fetishism arise necessarily in a mode of production in which the product of labor assumes the form of a commodity, a process whereby what are in fact social relations among people appear instead as social relations among things (the appearance for instance that "buying low and selling high" is the source of value, or that money generates more money). It is as an effect of this form of production that relations between commodities (the products of labor) acquire a seeming autonomy and objectivity apart from their producers. Thus, similar to religion, in which "the productions of the human brain appear as independent beings endowed with life, and entering into relation both with one another and the human race", so "it is in the world of commodities with the products of men's hands" (Capital: Vol. 1, 72).
This fetishism of commodities arises in the production relations of capitalism, as Marx clarifies, as a result of "the peculiar social character of the labor that produces [commodities]" (72), that is, of labor which produces products for the purposes not of immediate use but for exchange. While social production for use (to fulfill the needs of the producers) is a transhistorical process, valid for all epochs and stages of production, by contrast, production under capitalism takes place for the purpose of exchange by private producers who work independently of each other and meet their needs only through entering into exchange relations with other producers. It is then in this context that "articles of utility become commodities [i.e. objects to be exchanged], only because they are the products of the labor of private individuals. . . who carry on their work independently of each other" (72-3). This logic of private production in capitalism thus necessarily entails that labor—which is in actuality a general human social activity—does not immediately appear as such (as social labor) but rather as a purely private activity.
What then is the effect of this process on the "commonsense" understandings of those who live under the capitalist mode of social production? As Marx explains, "Since the producers do not come into social contact with each other until they exchange their products, the specific social character of each producer's labor" (73) remains invisible to them. That is, the fact that all the different kinds of labors are forms of social labor, of the abstract human capacity to labor "appears only within this exchange" (73). And thus "the labor of the private individual manifests itself as an element of the total labor of society [i.e. as something social] only through the relations which the act of exchange establishes between the products, and, through their mediation, between the producers" (73). It is, then, because labor appears as social only through the mediation of the act of exchange, that the act of exchange between the products of labor (and not the social relations under which production takes place) appears as the defining moment of social life. It is within the capitalist mode of production and exchange that to the people who live in it "the social relations between their private labours" appear not as "direct social relations between persons in their work, but rather as material relations between persons and social relations between things" (73). Thus what are in reality social relations between people are experienced by them in a mystified form—as social relations between things (the "impersonal forces" of the market, for instance)—which determine the relations among people.
It is this inverted appearance of the social reality whereby the relations of exchange appear as central, which has a fundamental effect in shaping how people in capitalist societies understand the class relations under which they work and live. Under the rule of commodity production the way things appear is that the economic value of commodities is produced not by the socially necessary amount of labor it takes to produce them, but rather that commodities determine their "own" value through their exchange relationships with each other (the "laws" of supply and demand enshrined in bourgeois political economy). The idea that value is innate in "things" and not in the labor that produces those things, conceals the reality that all value is produced by human labor—that in order to be transformed into exchange values on the market, labor has first to produce the objects of exchange, and, consequently, all the commodities which function as components of exchange value, of social wealth, whether they take the form of capital, profit, wages, interest or "dividends", are the products of labor.
Yet the market relations of exchange of the products of labor conceal not only the fact that all value is produced by human labor; they also conceal the real nature of how labor is exploited under capitalism, the nature of the specific class relations of exploitation existing between the capitalist class—those who live by privately owning the means of production, the accumulated social labor of society—and the working class—those who own only their own labor power which they have to sell to the capitalist class for wages in order simply to survive. While it appears that wages are a part of an "equal exchange" (of wages for labor) between capitalists and workers, what Marx's labor theory of value shows is that what workers in fact sell to the capitalist is not simply a fixed amount of their labor equivalent to their wages but their labor power, their capacity to labor and produce value. It is the difference between their wages and the actual value produced by their labor power in a given workday that is the source of the "surplus value" accumulated by capitalists in the form of "profits". What commodity fetishism masks is the source of "profits" under capitalism. In doing so, it blocks recognition of the fact that what workers confront as the power determining their lives (whether they are employed or not, whether they have health care, or can afford the basic necessities of life) is not as it "appears" to be, the power of an "autonomous" and independent, uncontrollable force ("the market"), but, in actuality, their own class domination by the owners of wealth, wealth that they themselves have collectively produced and which has been systematically stolen—alienated—from them.
It is only in the false consciousness of commodity fetishism that the stock market appears as the engine of value production and the means to economic democracy—and not simply as another means by which class inequality is perpetuated under capitalism. The "appearance" of the market obscures the fact that what is bought and sold and gambled on in the market by individual owners of shares is ultimately a part of the collective social product of workers. (That, to take an example, "dividends" are merely a "redistribution" of the total economic value produced by workers but privately owned by capitalists in the form of realized profits).
Market fetishism hides the reality that what those workers who invest in the stock market receive are in fact a small percentage of the proceeds from their own class exploitation in the relations of production, proceeds which are fueled by an appropriation of an ever greater amount of the value of their own labor achieved through stagnant or falling wages, layoffs, or by increasing the productivity of their labor, all of which lead to increasing class inequality at the level of production. It veils the fact that while the stock market functions for what Marx terms the "financial aristocracy"—a "parasite in the guise of company promoters, speculators and merely nominal directors" engaged in "a whole system of swindling and cheating with respect to the promotion of companies, issue of shares and share dealings" (Capital: Vol. 3, 438)—as a means to amass massive profit from the labor of others, for workers it amounts to (at best) individual access to a share of what they have already collectively "given" to the capitalist class in the form of alienated surplus labor. At worst, it is just another means whereby a section of the capitalist class defrauds workers of the value of their collective labor. What, for instance, does the nominal ownership of shares in pension funds and mutual funds by small investors actually represent? As the recent corporate fraud scandals have unequivocally demonstrated—the so-called "democratization" of investing signals not the "end" of class difference between an owning and working class but simply a new avenue for the financial aristocracy to manipulate and accumulate value to which they would ordinarily not have access. The idea that the market will lead to an equitable "redistribution" of wealth is nothing but an ideological fantasy. It is manufactured to seduce workers into conforming to the dictates of capital by misrecognizing an agency that functions to reproduce class inequality, capital and wage labor, as a means to overcome it. But class inequality can be overcome—contrary to both market populism as well as social democracy—neither by the "free market" nor by "regulations" (which simply lessen the effects of exploitation). It must be abolished by transforming it at its root: in the class relations of production.
To oppose the market populism promulgated by CNBC and other corporate means for reproducing the everyday false consciousness of capitalism, it is necessary to get beneath the surface appearances of the world-as-experienced, the world of market fetishism, and to grasp the essential relations which explain the appearance. These relations, however, contrary to the dominant regime of empiricism, are not self-evident or "spontaneously" available to "commonsense" but, like all essential questions, require scientific investigation and analysis. It is only as a result of such a materialist scientific investigation that Marx himself was able to penetrate beyond the surfaces of commodity fetishism and to show by means of his labor theory of value that the source of all value is labor, that all value is produced solely by human labor power (in its application to nature), and that all the forms of appearance of economic value are in fact products of labor: they are forms of congealed surplus labor appropriated from the direct producers by the ruling class in order to perpetuate their rule.
And yet, to get below the surface appearances by way of materialist critique is not, as Marx also argues, by itself enough.
The belated scientific discovery that the products of labor, in so far as they are values, are merely the material expressions of the human labor expended to produce them, marks an epoch in the history of mankind's development, but by no means banishes the semblance of objectivity possessed by the social characteristics of labor. . . .The religious reflections of the real world can, in any case, vanish only when the practical relations of everyday life between man and man, and man and nature, generally present themselves to him in a transparent and rational form. The veil is not removed from the countenance of the social life-process, i.e., the process of material production, until it becomes production by freely associated men, and stands under their conscious and planned control (Capital Vol. 1, 74, 79, 80).
Materialist scientific theory, in short, needs to be understood not "contemplatively"—as a matter of "interpretation" only as in bourgeois speculative philosophy—but as a guide to social transformation. The critique of commodity fetishism is a necessary means to the development of class consciousness regarding the root source of inequality—so that a system based on production solely to increase the profits of the ruling class can be overthrown and a new society of economic equality and democracy based on conscious and planned production to meet the collective needs of the producers can be founded.