ORIGINAL FRENCH ARTICLE: Paul Jorion. « Il faut mettre un terme à l’hégémonie des détenteurs de capitaux »
by Laurent Etre
Translated Wednesday 20 April 2011, by Derek Hansonand reviewed by
When he predicted, as early as 2005, the coming of the U.S. subprime crisis, Paul Jorion found it difficult to make himself heard. Today, he is frequently sought out by the mainstream media, on the lookout for "tips" on the short-term evolution of the system. But the anthropologist and sociologist intends first to deliver his "diagnosis. "
Paul Jorion does not aim to produce a new and mobilizing utopia, but seeks to awaken the consciences of those who believe that capitalism can "reform" itself in a sustainable fashion. Considering it possible to free production from the yoke of finance, without putting into question the market economy as such, he called in 2007, in a forum published in Le Monde, for the creation of an economic constitution. Having himself worked twenty years in finance, he knows all the ins and outs and the perversity of the system. One might imagine that this perspective might limit the scope of his criticism. But we can also, conversely, imagine that this experience contributes to the acuity of his remarks, resolutely hostile to speculation.
Huma: Let’s begin with the title of your latest book, "Capitalism in its death throes" . You argue that capitalism is taking his "last breath". But one has rather the impression that the system has started right up again,
making the working class pay for their crisis. Just look at the profits of the Cac 40 , which rose 85% in 2010, as compared to 2009 ...
You just mentioned the Cac 40, where profits explode. This mainly reflects a panic in the system. This is absolutely not proof of good health. I call it "emptying the cash register just prior to final closure." The idea that capitalism is starting up again, that’s what we have hammered into us on the 8pm news. Well, we must look beyond appearances. Having myself worked in finance for twenty years, I know that, deep in the system, the degradation continues. The looting is accelerating, because those who take advantage of the system are determined to leave the cash-boxes empty.
Huma: But the looting you’re talking about, isn’t it just the very principle of capitalism? Do you think this system has already targeted the general interest?
Paul Jorion: There was still a period of moderation, the post-war decades . For a time, productive capitalism was relatively separate from finance capitalism. But over the past 25 years, finance has taken over; it has gradually taken hold of the controls within the system. And today, most financial transactions are speculative, having no relation to the real economy. To such an extent that the CEO of Goldman Sachs can not even tell the difference between purely predatory finance and the part that does something for the economy.
Huma: In your book, you define capitalism as a system of distribution of surplus (the newly created wealth), in which investors, owners of capital, have hegemony. So you call for a new system of sharing, favoring employees. But should we not go further? After all, does the value of capital advanced by the investor come from anything, in the end, other than labor?
Paul Jorion: No, this value does not necessarily come from earlier work. The world was first divided by violence, by those who, as Rousseau says, have monopolized the earth and what it carries or contains, saying: "This is mine!" and daring others to try to take it back. Things that have been thus confiscated from the whole community can have an intrinsic price, the minerals that the land contains, for example. My definition of capitalism is different from that of Marx; for me, capital is a resource missing from where it is necessary, either for production in companies, or for household consumption, and Capitalism is a system that is characterized by - and suffers from - this defect, that lack of resources where they are needed. Everyone is forced to seek the necessary resources from those in whose hands capital is concentrated. And this is due to the system of private ownership that took the form it has today already in the Middle Ages and the Renaissance. If the presence of the capitalist seems necessary, it is because we evolve within a certain regime of ownership, where the corporate executive who can provide the work does not have immediate access to the resources he needs to finance the production, and thus the hiring of employees.
Huma: So are you in favor of nationalization in some key sectors of the economy, starting with the banks?
Paul Jorion: This approach seems logical when one ignores the fact that a certain capitalist aristocracy has taken power also within the state apparatus, following the recipes of neo-liberal theorists like von Hayek. As we saw during the crisis, the aristocracy does not hesitate to dip into the state treasury for money to bail out the banking sector when it is in difficulty. The senior officials have become interchangeable agents, able to move from one day to the next, from head of a ministry to that of a bank. To nationalize without changing this power structure would have no impact. The sums of money would continue to be allocated in the same way.
Huma: But then, what must we do? How do you upset the balance of power between shareholders, company directors and employees?
Paul Jorion: We must of course start by raising wages, but also change the system for the distribution of surplus. Mr Trichet said that is important not to raise wages. Why does he say that? Because the increase would be reflected in consumer prices. Indeed, in the current system, if a company increases wages, it simply reflects the additional cost in the price of goods. There is a taboo: not for a second does one envisage decreasing the return on capital or salaries of business leaders, to finance higher wages. In my opinion, it is not even a question of bad faith. I think the bankers, financiers, all proponents of the present system believe that dividends, bonuses and salary levels of executives are untouchable. For all these people, return on capital, wealth distribution, are not possible objects of negotiation, but manifestations of a natural order.
Huma: In your book you mention the separation of income and work as an interesting avenue of investigation. Isn’t such an idea in contradiction with the need to strengthen, in the short term, the weight of employees with respect to capitalists? Isn’t this dissociation likely to result in increased exploitation of those who continue to work? You acknowledge yourself that a universal allowance dissociated from labor assumes setting aside a quantity of riches created in the process of production ...
Paul Jorion: I do not say we need a dissociation. I say we have reached a situation where a dissociation between income and labor has become reality, with automation and computerization of a growing number of tasks. The question is whether we take this into account or not. In the 50s, we said that the employee replaced by a robot could relax, enjoy his free time. We imagined that the wealth created by the robot would benefit the employee being replaced. But what happened? When the employee is replaced by a machine, he is laid off and goes on unemployment. Do we give him a portion of the value produced by the robot? Not at all. So where does the money go? Aside from a slight decrease in the price of goods produced, it is essentially confiscated by the shareholder and company director. From there, my thesis is that if you stay in such a society, where workers tend to be replaced by machines without the benefit of productivity thus created, we must then find a way to give them an income that permits them to continue consuming. It is in this context that the question of a universal allowance is posed. But this is not a model of society. It’s just an analysis.
Huma: You say in your book that work "is becoming scarce". Is not it rather that it changes form, partly as a result of the information revolution, and otherwise under the effect of increased exploitation, which atomizes the working class? Is not that rather the CDI  that is especially scarce, more than work as such?
Paul Jorion: Currently, the system uses relocation of industry to put pressure on wages and working conditions. But we already see the end of the process. Outsourcing in China is less profitable than some years ago. For in China, by hosting the occidental companies, they have created an internal market and have increased wages. So of course, large groups begin to relocate in Vietnam or Indonesia. But inevitably there will come a day when they have exhausted all possibilities. Besides, we already hear talk of relocation, even if the phenomenon is still marginal. I focus my thoughts in this horizon. Intellectual tasks are also increasingly carried out by software. Of course, there will always be those who create robots and software, and researchers who permit medicine to advance, ... But all these people will never represent more than 1% of the population.
Huma: Let’s accept your thesis of rarification of labor. In this case, shouldn’t the priority in the short term be to lead a fight for the right of individuals to change jobs, to become more qualified? Isn’t the challenge today, finally, to create another division of labor, with the idea of everyone working less, but better? This also means leading the debate about the purposes of production, from the perspective of those who produce the wealth and not from the point of view of those who raise profits and constantly invent new needs?
Paul Jorion: You must blow up the capitalist system itself, put an end to the hegemony of owners of capital over corporate executives and employees. Therefore, we must first consider that wages correspond to the essential contribution in the production of goods. Then you have to ban stock options, which create a situation in which the remuneration of company executives depends on bets concerning price fluctuations. We must also question the role of managers. Much of their work is a work of supervision. Why is it that supervision necessary today? Because we can not leave the initiative to the workers themselves, the current distribution of profits fueling resentment among workers. Let’s eliminate the source of resentment, and then there will be less supervision required. The executives will then be able to devote themselves to creative work. In this sense, they have as much to gain as employees from the elimination of the role of the investor. Finally, we must ask ourselves about the profits of merchants. Is it normal that they go as far as to double the price of goods in order to insure their margin? In my opinion, there will always be a need for a market. But the distribution of goods does not give carte blanche to merchants. In addition, we should reflect on the power of objects. We understand well what private property means from the perspective of one who possesses an object, but are we well aware that objects, more and more, possess us? You feel helpless and soon even panic when you lose your "iPhone" or any other communication tool present in our daily life ... The system that will replace capitalism should also reflect this aspect of life.
Huma: In your book, you criticize the historical attempts to exit from capitalism, what has been called "real socialism". What, then, is your path?
My role is not to produce new utopias, but simply to promote awareness of the need for a new system. Nothing is possible if we do not start by freeing ourselves from the alienation of the evening newscast, which entraps us, for example, in the idea that we are "job seekers". Myself, I want to help free people from this conception. Learn to consider ourselves as "providers" of jobs. And from there, to demand to benefit from productivity gains achieved by technological advances, when they can free us from drudgery. It is in this realization that lies the key to a new balance of power, which would include in its agenda the outright prohibition of speculative financial transactions which have not always existed and the advance of which we can trace through the nineteenth century, where the left is often content to think of new taxes on transactions.
1998 to 2007. Working in the banking sector in the United States, as a specialist of price formation.
2005 to 2009. Research associate in an interdisciplinary program on "Human complex systems" at the University of California, Los Angeles (UCLA).
2004. Writes The Crisis of American capitalism, work in which he announced the subprime crisis to come. The book does not find a publisher.
2005. The Journal of the Anti-utilitarian in the social sciences (Mauss), led by sociologist Alain Caillé, specialist on donations, publishes the introduction to the manuscript.
2007. Outbreak of the subprime crisis United States. The book is finally published by Editions La Découverte, but renamed Towards the crisis of American capitalism?
2011. Release of Capitalism in its death throes, Éditions Fayard.