On Stocks

 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.