Joyti De-Laurey and the capitalist myth of deferred consumption

international | anti-capitalism | opinion/analysis Thursday May 13, 2004 15:53 by Anarcho

Why the theft of over £4 million by a PA from the bank accounts of three financial high-flyers exposes the con at heart of capitalist economics.

While most workers supplement their wages by taking the odd piece of company property, PA Joyti De-Laurey took it to another level. She stole over £4m from the bank accounts of three financial high-flyers.

What is significant about the event is that her bosses did not notice the money was missing. Richard Adams in the Guardian ("Give that woman a medal", April 22) correctly noted that she "has single-handedly put forward the best case for higher income taxes" for a long time. For "if these people don't notice a few million quid leaving their current account, then they could live with a 50% top rate of income tax. If they don't need the money, then the government could also 'borrow' it to build a school or something. The trio weren't anywhere near the top 100 'rich list' published last weekend, which boasted that the UK's wealthiest were 30% more wealthy this year." It was "much better for the economy that the £4m was in circulation" rather than "just lying dormant in their accounts, doing nothing."

Joyti's actions also expose a con at the heart of capitalism, that capital deserves its share because of "waiting", because the capitalist has "deferred consumption." To have capital available, it is argued, someone has to be willing to wait, to postpone consumption. That is a real cost, and one that people will pay only if rewarded for it. As economist Alfred Marshall put it, "if we admit it [a commodity] is the product of labour alone, and not of labour and waiting, we can no doubt be compelled by an inexorable logic to admit that there is no justification of interest, the reward for waiting" In capitalist ideology, if the capitalist "earns" hundred times more in interest than the wage of the coal miner, the capitalist "suffers" hundred times more discomfort living in his palace than the coal miner does working in dangerous conditions!

This, on the face of it, is ludicrous. Does the mine owner really sacrifice more than a miner, a rich stockholder more than a worker working in their firm? Surely it is far easier for a rich person to "wait" than for someone on an average income. As left-wing economist Joan Robinson pointed out, "'waiting' only means owning wealth." Interest is not the reward for "waiting," it is a reward for being rich.

Capitalist economists originally used the notion of "abstinence" (a term invented by Nassau Senior) to account for (and justify) interest. Just as Senior's "theory" was seized upon to defend capitalism, so was "waiting" after it was introduced in 1887. Both described exactly the same thing yet "waiting" became the preferred term simply because it had a less apologetic ring to it. For Marshall, "abstinence" was "liable to be misunderstood." As he noted, the "greatest accumulators of wealth are very rich persons, some [!] of whom live in luxury." So he opted for the term "waiting" because there was "advantage" in its use, particularly because socialists had long been pointing out the obvious fact that there are just too many wealthy people around who received interest and dividends without ever having abstained from anything. The lesson is obvious, in capitalist economics if reality conflicts with your theory, do not reconsider the theory, change its name!

Clearly this trio hardly abstained from anything. They did not even notice their millions had gone, confirming Proudhon's argument that the loaning of capital "does not involve an actual sacrifice on the part of the capitalist" and so he "does not deprive himself. . . of the capital which he lends. He lends it, on the contrary, precisely because the loan is not a deprivation to him . . ., because he neither intends nor is able to make it valuable to him personally, -- because, if he should keep it in his own hands, this capital, sterile by nature, would remain sterile."

The capitalist loans to those who will fertilise it by applying labour on it. Without the worker no interest or profits or rent would be possible and so property is theft. Capitalism is based on exploitation, the inequalities of economic power and hierarchy and oppression in the workplace producing the income of the rich. As Joan Robinson pointed out, the pro-capitalist theories of who abstains are wrong, "since saving is mainly out of profits, and real wages tend to be lower the higher the rate of profit, the abstinence associated with saving is mainly done by the workers, who do not receive any share in the 'reward.'"

Reliance on a "waiting" theory of why returns of capital exist represents a reluctance by economists to confront the sources of value creation in the economy or to analyse the social relations between workers and bosses on the shop floor. To do so would be to bring into question the whole nature of capitalism and any claims it was based upon freedom.

If Joyti is guilty of theft for her actions, then so are her trio of "victims." Their obscene incomes are the product of the legalised theft at the heart of capitalism. Profits, interest and rent are all the unpaid labour of those who produce our wealth. Joyti was just doing to the bankers what they have been doing to us for years. Her only mistake was thinking that theft is property when, in fact, property is theft.