Over the last couple days, I've started and stopped a number of posts, but due to our current
pandemic (COVID-19), I kept falling behind. I’ll work some of them in later if
I can. But for now, let’s focus on something a little more evergreen: the stock
market.
I'll be honest, my notes for this post were just the words “Crash
Good.” I do plan on justifying that at least somewhat, but I felt it would be
best to be upfront about it. Another qualifying parenthetical: I own stocks and
they are/were valuable enough to provide me a strong personal interest in
having the market be high.
I went on at length about the nature of capital in my
previous post, and it’s relevant again here. My borderline antipathy towards
the market has to do with the fundamental nature of stocks and corporations.
Simply put, a corporation is a machine that makes money, it is the essential
tool of extracting capital. Each stock entitles the owner to a tiny piece of
the machine, and an equivalent share in the profits. If the machine is good at extraction,
the pieces are valuable as a source of capital. Great, except for the fact that
for capital to be extracted, it has to come from somewhere. For corporations,
that value comes from the workers. (Yes, I am aware that this is a grotesquely oversimplified view of the market, but let's focus on the forest, not the trees.)
I don’t think I was always a Marxist. But it’s hard to say.
Most of the time, your beliefs change so slowly as to be imperceptible. If
there was a moment, though, or a single fact that made it clear, it was when I
understood the degree to which capitalism requires continuous growth. On a long
enough timeline (shorter now), we’ll inevitably run out of places to grow, and
— like bacteria in a petri dish — will end up eating each other to
survive just a little longer.
Whatever replaces “capitalism” must be zero growth —
a stable system. It can have money and commerce, sure, but it must be able to
survive without growth. There is a way, but it comes right up against the stock
market: zero growth means zero net profits.
Back to the capital created by workers, the profit of a
corporation is ‘excess’ value created by the employees. Now, for worker-owned
businesses, this is not a problem, as the value is (presumably) evenly
distributed amongst the employees. The more common scenario, however, is that
the created capital is disbursed to the owners of the company via stock, while
the workers are paid whatever small monies must be paid in order to retain
them. Each dollar of wage is a dollar that does not go into the stock.
The problem with this is obvious, and the results of which
we’ve seen firsthand. Wages have stagnated, while the rich get richer. The stock
market reflects (or reflected..) this, and as the workers lose power,
influence, and share in capital, the stock grows accordingly.
If wages rose, say by an increased minimum wage or by worker
ownership of a significant percentage of stock, the market would correct itself
accordingly. The market’s fall would be a good thing, since it would
mean that the profits were more widely shared, instead of being concentrated
within sociopaths like Bezos and Bloomberg. Average quality-of-life would raise,
in exchange for a reduction in profits.
Now, the current crash isn’t quite like that. Instead, we
have a precipitating event that is causing a dramatic drop in profits (forced
closures due to quarantine, etc). While this is less ideal, it counter-intuitively
still represents an opportunity for improved quality-of-life for our poor beleaguered
workers, albeit an indirect one. Assuming that wages do not fall, their percent
of the total available capital increases as the corporations lose value. What
this looks like in practice is falling prices, deflation. The stable wage becoming
more valuable, not less. We’ve been used to inflation for a long, long, while
now, which benefits only the people at the top, those who own the means of
production.
So yes, it’s good that the market goes down. For all of our
sakes, I’d hope it goes down farther. While the natural inclination of capital
is to cut wages proportionally, this is something that is not at all
guaranteed, and can, in theory, be easily stymied by worker organization. For
without the workers, the corporations have nothing.