Accumulation of Advantage and Elimination of Scarcity—A Critique of the Neoclassical Approach

ABSTRACT

Neoclassical economics has been built on the assumption of the limitless human needs and the limited natural resources. The essay aims at challenging this thesis by presenting how scarcity is the result of the surplus production. It introduces the notions of initial advantage, cumulative advantage and class surplus. It highlights that the way of producing surplus has undergone a basic change when capitalism has become the ruling mode of production: the production of surplus has become subordinated to the objective laws of the market competition instead of the subjective needs of the holders of advantage. This has allowed an enormous increase of the production of surplus expropriated by the propertied class, which is other than the working class. As a result, nowadays enough class surplus is produced to eliminate scarcity overall. The necessity of this elimination is emphasised by the fact that accumulation of advantages based on surplus production that coincides with the production of scarcity and accumulation of disadvantages perpetually rushes to crisis and has devastating impacts both on the society and the nature.

KEYWORDS:

• Accumulation
• advantage
• competition
• scarcity
• surplus

Disclosure Statement

No potential conflict of interest was reported by the author.

Notes on Contributor

Annamaria Artner is a senior research fellow at the Centre for Economic and Regional Studies, Institute of World Economics, Hungarian Academy of Sciences, and college professor at the King Sigismund University Budapest. Her main study fields in the last decades covered the consequences of capital accumulation, causes of crises, global labour market, employment policies, social impacts of globalisation, globalisation-critical movements, competitiveness at macro- and micro-levels, problems of the development of different countries of the European Union with special regard to Ireland and Greece, crisis management in different regions and countries, outward foreign direct investment, and labour market of China.

ORCID

Annamaria Artner http://orcid.org/0000-0002-3979-4624

Notes

1 During the centuries’ old existence of the Inca Empire that emerged through the union of numerous independent tribes and through the mutual organisation of production (e.g. canalisation), nobody was constrained to starvation in Peru (Bernal 1963, 63). Poor peasantry had been attached to their village communities for quite a long time in Europe—to the common use of lands—since their existence depended on that. However, wealthy peasants disapproved of collective rights (e.g. mowing, grazing and gleaning). In France

[t]he land use of the peasantry in the 18th century was precapitalistic as a whole. The approach of collective ownership of small farmers was for a long time—even in the 19th century—contradictory to the bourgeois approach which believed that the owner can unconditionally dispose of his goods without any limits. (Soboul [1982] 1989, 43–44)

2 Then draught animals and finally machines that substituted hand tools. However, landed property has a vital role on the score of “cumulative advantages.” That is the reason why an entire economic school could develop through Henry George (see Giacalone and Cobb [2001] and Pullen [2013]), a nineteenth century American political economist, that interpreted land (the Earth and generally natural assets) as a common good, and thus it argues for the introduction of the land-value tax. However, Georgists ignore cumulative advantage, i.e., that possessing land ownership also enabled the accumulation of other means of production in private hands, and this accumulation was also made possible by the appropriation of the work of others, based on the initial advantage of land ownership. The fact that George “understands nothing about the nature of surplus value” was also highlighted by Marx (1881, in his letter to Sorge), also remarking that in America, where vast free lands were available, capitalism and the enslavement of the working class developed more rapidly than in any other country (Marx 1881).

3 As an indication, the word “hieroglyph” means priests’ writing.

4 The wealth accumulated or spent in the towns originated from the product surplus of the agriculture that was controlled by the towns. Since the volume of this surplus was rather small, it could provide a living for relatively few people, and the beneficiaries started to form a limited class. The successors of the early organisers striving to perfect agricultural techniques distanced themselves from the process of production. Then they were only interested in preserving most of the produced goods for themselves. They did not contribute their own skills to creating wealth, they simply became exploiters. They demanded more and more for their own pleasures, for constructing and serving luxurious temples and tombs. But this started to cause the poverty and even the actual slavery of peasants and craftspeople of the town (Bernal 1963, 84). These circumstances also caused social revolutions, e.g. in the Sumerian town of Lagas in 2400 BC (85).

5 The ancestors of the Thurn und Taxis German family were letter-carriers, postmasters in the Middle Ages. The wealth of the family started to increase spectacularly from that moment “when they started to unseal letters in secret and on the basis of the found information managed to begin partly their own business and partly made themselves useful for high Churchmen as well as for laymen” (Engelmann and Wallraff 1977, 44). The fortune of the Waldenburg-Zeil house that nowadays composes of 10 thousand hectares and numerous enterprises, originates from the twelfth to thirteenth centuries. It started to grow thanks to the repression of the peasants’ and workers’ uprising of 1522–1526 when Georg von Waldburg (whose name is born by today’s head of the family as well), the head of the mercenary troops sponsored by the Fuggers, served his purpose (decapitations, eye pokes) so well that from gratitude he was made baron by the emperor while collecting diligently the ransoms (118–119).

6 As Rousseau says, “[T]heir surplus enforces the rich to deprive the poor from their necessities” (quoted in Rozsnyai 2009, 26), “it is that we find our advantage in the misfortunes of our fellow-creatures, and that the loss of one man almost always constitutes the prosperity of another” (Rousseau 1754, Appendix).

7 Szalai (2010) shows the role of generated consumption in the maintenance of capitalist production (and power) and its crises. In capitalism “the continuous arousing of consumer desires is primarily a mean of compulsion to work as well as a constant process of creating demands,” but at the same time part of society is not capable of fulfilling its minimum needs (Szalai 2010, 154–155).

8 The luxury of the Sun King, Louis XIV, is widely known just as the megalomania of the Esterházy family. “The greed of the Chinese Mandarin, the old Roman aristocrat or the modern peasant can stand up to any comparison” (Weber [1905] 2005, 21).

9 An example for that is the “dying” of the French Ancien Régime at the end of the eighteenth century when the general crisis was answered with strong reaction by the aristocracy: they were trying not only to monopolise the key posts of the state, the church and the army, but also to strengthen the feudal system in order to increase deprivation.

Landlords managed to get the third of the community-owned goods by means of the edict which referred to the “triage” (“trisection”). They also managed to renew rights which had been long forgotten by restoring lists that contained different rights, and they demanded their strict compliance. . . . Most of the court and rural nobility . . . saw the only way out in the growing enforcement of their privileges. (Soboul [1982] 1989, 21)

10 See, https://www.cia.gov/library/publications/the-world-factbook/fields/211.html#XX.

11 The long-term decrease of the wage/GDP rate is a statistical fact, just as the increase of un- and underemployment on the one hand and the increase of the intensity of work on the other as well.

With the growth of the total capital, its variable constituent or the labour incorporated in it, also does increase, but in a constantly diminishing proportion. . . . The whole form of the movement of modern industry depends, therefore, upon the constant transformation of a part of the labouring population into unemployed or half-employed hands. (Marx [1867] 1887, 437–438)

12 In 2012 there were more than 633 thousand homeless people in the USA, almost 100,000 of them were permanently homeless (NCH [2009] estimates the total number of homeless about 3.5 million in 2009), while 183 million flats were uninhabited (more than 2.7 times in 1965), and those houses which could not be sold, were bulldozed by the banks (Corkery 2009; French 2011).