Santa Claus and the Contradictions of Bourgeois Ideology

By Carlos Garrido

Republished from Midwestern Marx.

A comrade recently pointed my attention to a comedy skit by Foil Arms and Hog called “Santa is Captured by the Russians,” where for two minutes Mr. Clauss is interrogated by the Soviet police. Below are some excerpts from the conversation: 

​Santa:  I think there has been some sort of a mistake. You see I have a very busy night tonight.
Soviet Police 1: He was found attempting to hide in a chimney.
Soviet Police 2: Chimney? What were you doing in Russian airspace?
Santa: I've already told you…
(Santa gets slapped): Ho, ho, ho... That was naughty.
Soviet Police: We found a list of names.
Santa: Ah my list.
Soviet Police: These are American spies?
Santa: No, no…
Soviet Police: There was also a second list.
Santa: Oh you don't want to be on that list.
Soviet Police: You plan to kill these people.
Santa: No, no, they just get a bad present… It used to be a bag of coal… but the whole climate change thing...
Soviet Police: We intercepted a communication from one of his assets.
“Dear Santa, I have been a good girl. I would like a Silvanian Family Cosy Cottage Starter Home.”
Soviet Police: This is clearly code.
Santa: No it's not code.
Soviet Police: Then who is Santa?
Santa: That's me.
Soviet Police: You said your name was Father Christmas.
Santa: Yes, I'm known by very many names.
Soviet Police: So you are spy?... How do you know my children's names?... What are you doing in Russia?
Santa: Presents, I deliver presents.
Soviet Police: Presents? For who?
Santa: Well, to all the children in the world.
Soviet Police: All the children in the world? In return for what?
Santa: Well, nothing.
Soviet Police: Nothing? So...You are communist?
Santa: Da (Yes)… Why do you think I wear red comrade?
Soviet Police: Signals to officer outside “Comrade, two vodka, one cookies and milk.”

This captures wonderfully the gap between reality and the values and narratives enunciated by the liberal capitalist world. Father Christmas is said to be this selfless gift-bringer, someone who enjoys seeing the smile on kids’ faces as they receive – assuming they weren’t naughty – their new toys. Santa Claus gives, in the traditional narrative, to all kids, irrespective of class (but especially the poor), race, nationality, and sex. He gives these gifts, most importantly, for free. He does not give in exchange for money. His purpose, telos, is not profit. He gives gifts to meet the playful needs of children. His goal is social good, not capital accumulation. He gives so that kids can play, so that they may fulfill what it means to be a kid. He does not give so that parents’ pockets are hollowed, and his North Pole bank account inflated.

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Santa Claus’s logic is completely antithetical to the capitalist system. A system premised on producing for the sake of capital accumulation and not social and common good is in contradiction with Father Christmas’s telos. Both the real St. Nicholas (270 – 342 AD) and the Santa Claus we consume in popular culture gift-give without any attempt at obtaining recognition. Unlike the charities in the capitalist West, Santa’s giving does not afford him major tax deductions, and neither does it boost his ‘humanitarian philanthropist profile’ through large, broadcasted events. Saint Nicholas’s giving was not some big spectacle, quite the opposite. He climbs in through the chimney when everyone is sleeping to leave gifts and go. He stands on the side of the poor and does his part in attempting to bring about social justice.

While this is the dominant narrative we operate with, the reality of our commodified Christmas, and of Santa Claus as the personified agent of such commodification, is directly opposed to the narrative itself. As Valerie Panne notes, modern capitalist Christmas has turned Santa Claus into a “decorative marketing tool…for hysterical shopping.” Santa’s commodified image – first used by Coca-Cola in the 1930s – has become instrumental in helping the capitalists realize profit. He has become an instrument used to, as Marx notes in volumes two and three of Capital, “cut the turn over time of capital… The shorter the period of turnover, the smaller this idle portion of capital as compared with the whole, and the larger, therefore, the appropriated surplus-value, provided other conditions remain the same.”

Here we see a clear gap in the enunciated values and the reality of capitalist society. At the ideological level, that is, at the level of how we collectively think about the story and figure of Santa Claus, we find heartwarming values of empathy, selfless giving, and community. However, this ideological level is rooted in the reality of a Santa Claus used to promote conspicuous consumption (as Thorstein Veblen notes), the commodification of family time, traditions, and relations, and the accumulation of capital in the hands of the few.

The ideological reflection of the real world provides an upside-down, topsy-turvy image of itself. This is the essence of bourgeois ideology qua false consciousness. It is a social order that necessitates the general acceptance of an inverted understanding of itself. We come to erroneously understand the “capitalist” Santa through the narratives of the “communist” Santa. Reality is turned on its head. But this is not, as Vanessa Wills notes, a problem of “epistemic hygiene”. The root of the ‘error’ is not in our minds, that is, in our reflection of the objective phenomena at hand. As I’ve argued previously, “it is much deeper than this; the inversion or ‘mistake’ is in the world itself… This world reflects itself through an upside-down appearance, and it must necessarily do so to continuously reproduce itself.” As Marx and Engels noted long ago,

If in all ideology men and their relations appear upside-down as in a camera obscura, this phenomenon arises just as much from their historical life-process as the inversion of objects on the retina does from their physical life-process.

To understand the gap between how Santa Claus (or Christmas) is understood and how it actually functions in modern capitalist society it is insufficient to see the problem simply as one of subjective ‘misunderstandings’ held by individuals, classes, or whole peoples. One must investigate the political economy which grounds, that is, which reflects that erroneous image of itself. The gap between the actual “capitalist” Santa and the ideological “communist” Santa is objective, it is required by the existing material relations of social production and reproduction. Capitalist ideology must disguise the cut-throat values of bourgeois individualism with the universalist values of Santa’s socialistic humanism.

But this is nothing new. Santa Claus is just another particular instant of a universal bourgeois phenomenon. The capitalist class has never been able to fully realize, to make actual, the values it enunciates with its appearance in the arena of universal history as a dominant force. Its universal appeals to liberty, equality, fraternity, etc. have always been limited within the confines of their class. As Marx had already noted in 1843, “the practical application of the right of liberty is the right of private property;” “the necessary condition for whose existence,” he and Engels write in 1848, “is the non-existence of any property for the immense majority of society.” The phrasing of ‘all men’ used to formulate rights under capitalism is always with the understanding, as Marx notes, of “man as a bourgeois,” it is “the rights of the egotistic man, separated from his fellow men and from the community.” Its values, and their reflection in their judicature, always present their narrow class interests embellished by abstract language used to appeal to the masses and obtain their consenting approval for a form of social life which they’re in an objectively antagonistic relation with.

The ideologues of the bourgeoisie always provide the masses with a “bad check,” as Dr. Martin Luther King Jr. would say. But eventually, as King notes, the masses will come in to cash that check somehow. They’ll notice that within the confines of the existing order, the prosperity that checked promised is unrealizable. Capitalism has never, and will never, fulfill the universal values it pronounces as it breaks out of the bonds of feudal absolutism. Only socialism can.

The values embedded in the narrative surrounding Santa Claus, Father Christmas, Saint Nicholas, or whatever else you want to call him, will never be actual within capitalist society. Only socialism can universalize the form of selfless relationality we have come to associate with Santa. 


Carlos L. Garrido is a Cuban American philosophy instructor at Southern Illinois University, Carbondale. He is the director of the Midwestern Marx Institute and the author of The Purity Fetish and the Crisis of Western Marxism (2023), Marxism and the Dialectical Materialist Worldview (2022), and the forthcoming Hegel, Marxism, and Dialectics (2024). 

Ethical Consumption in the Socialist Imaginary

By Juan Gonzalez Valdivieso

Since its advent in the 1990s, globalization has transformed the world. One of its many notable effects was the further siloing of consumers from the labor that produced their goods and services. Increasingly complex global supply chains alongside deceptive advertising make it nearly impossible to uncover every step in a product’s production and distribution. Of course, strategic clarification of these processes would come to represent its own form of advertising, as the professed “social and environmental values of consumer products” became reliable selling points in and of themselves. This was mainly due to an increase in consumer consciousness — spurred by globalization’s poster child, the internet — that begged for opportunities to consume “ethically.”

Though such “ethical consumption” marked an improvement over previous consumptive practices, a socialist lens reveals its limitations. As socialists understand, capitalist production relies on the exploitation of workers by capital owners, meaning that no level of consciousness or self-awareness on the part of traditional companies can shed their fundamentally unethical character. Even in instances where a worker’s experience with their employer is satisfactory — as can happen when receiving a high salary or wage, robust benefits, or other perks — the company’s simultaneous profiteering is more than just a harmless manifestation of mutual benefit. The very act of turning a profit beyond that which would sufficiently refinance operating costs is one of theft, particularly of the value that the worker has produced via their labor. This surplus value is not returned to the worker nor does it serve operational ends. It instead comprises the millionaire salaries of executives and further grows the capital to which the company can now claim legal rights. In other words, as socialists often argue, there is no ethical consumption under capitalism. However, when considering the ethics of capitalist consumption, the analysis cannot stop there.

It is not so much ethical consumption but rather ethical purity which is impossible under capitalism. Moreover, beneath such a threshold of ethical purity, there lie two spectra upon which one’s capitalist consumption can and should still be measured: that of ethics and, more importantly, that of the consumer. 

The spectrum of ethics — henceforth referred to as the ethical spectrum — is that which the deliberately advertised “social and environmental values of consumer products” implies. In other words, a hierarchy of ethics in consumption does exist just shy of ethical purity. And, most pressingly, that hierarchy is primarily highlighted by the aspects of a good or service’s production and distribution that can be observed, analyzed, and understood. Of course, such aspects are most often only made publicly available for observation, analysis, and understanding at the behest of their corporate manufacturers but they are empirical points of ethical reference nonetheless. Take the purchase of a shirt, for example. When a consumer purchases a shirt, the ethical spectrum offers a host of consumptive options based on the available social and environmental factors at hand, ones which, for the sake of argument, will be boiled down here into three outstanding choices.

The first choice, which will be the optimal form of ethical consumption in this scenario, is one in which it is known to the consumer that the shirt is both the product of union labor and produced in an environmentally conscious way, be that through the use of reusable materials, renewable energy, waste minimization, etc. The second choice, which will be the middle-of-the-road, intermediate form of ethical consumption in this scenario, is one in which the shirt is still the product of union labor but environmental considerations are not present, meaning labor exploitation is minimized through the presence of unionized production but the sustainable nature of the product is lacking. The third and final choice, which will be the worst and least preferable form of ethical consumption in this scenario, is one in which the production of the shirt lacks both union labor and environmental considerations, making it an ethically lackluster product regarding its accommodations for both labor exploitation and sustainability. It is in determining which of the three choices one should pursue, if any at all, that the second spectrum — that of the consumer — becomes relevant.

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The spectrum of the consumer — henceforth referred to as the consumer spectrum — is one which makes an even deeper distinction between consumptive practices than that of the ethical spectrum, as it precedes the question of ethics with the question of ability. To consider consumption under capitalism as an exercise of solely ethical dimensions is to neglect the vital reality underlying such a society: inequality is rampant, poverty is ever-worsening, and the material conditions of the masses only become more dire by the day. As such, it is often the case that for many consumers, ethical considerations are an aspect of capitalist consumption in which they simply do not have the socioeconomic capacity to engage. After all, who is to blame a working-class family for neglecting the exploitative or unsustainable aspects of a good or service they’ve consumed when their socioeconomic conditions may not even allow them to ensure their most basic needs?

The consumer spectrum acknowledges this disparity and ensures that the degree of ethical consideration a consumer engages in is proportional to their socioeconomic standing, one best represented by the consumer’s income. However, conditions beyond those of financial earnings can determine whether disposable income in particular will fluctuate over time, a trend that would then require the consumer’s ethical considerations to similarly shift. These outstanding conditions can take on many forms, incorporating factors such as working conditions — a greater likelihood of on-the-job injuries could decrease disposable income prospects due to evermore frequent medical bills — immigration status — undocumented workers have less access to social safety nets and unemployment benefits than their documented counterparts — and living conditions — crumbling infrastructure could gradually increase the financial burden of maintenance faced by tenants, decreasing their disposable income over time. As such, the consumer spectrum adjusts the ethical considerations incumbent upon a consumer based both on their income and on the potential for their disposable income to fluctuate. In turn, the consumer spectrum ensures two important outcomes.

On the one hand, it makes sure that socioeconomically disadvantaged individuals are not burdened with the task of considering ethics when making consumptive decisions to survive. On the other, it holds socioeconomically advantaged individuals to a higher standard of ethical consumption, one in which they would be remiss to not undergo the kind of ethical considerations previously outlined in the shirt exercise. Admittedly, the former assurance has become more widely accepted in discourse regarding working-class consumption. The latter, on the other hand, risks not achieving the same, as the maxim that there is no ethical consumption under capitalism can serve as low-hanging fruit for socioeconomically advantaged individuals to conveniently justify knowingly unethical consumption. The consumer spectrum seeks to account for such co-optation and counter it head-on.

This layout of consumptive spectra can be useful on the individual level of consumption. For those with the appropriate socioeconomic bandwidth, it offers bountiful considerations that can inform the consumption of a given good or service. However, the utility of the model is perhaps best understood on the macro level. Beyond the pressure that socialists must continue to exert on the existing system — uprooting the power of capital owners and corporations in the process — these spectra provide greater nuance to the socialist perspective on individual accountability and action. Through the ethics and consumer spectra, we can better envision the untapped potential of individualized proactivity in creating a less exploitative and more sustainable society, while also accommodating the diversity of lived experiences and forms of exploitation endured under the current economic system.

Thus, the notion of ethical consumption under capitalism should not simply culminate in an indisputable law of impossibility. Rather, it should be understood as a range of activity that can be engaged in — just shy of ethical purity — based on the ethical considerations at hand and, more pressingly, those which directly pertain to the socioeconomic capacities of the consumer. Only in considering this reality can we better understand the role of individual consumption in the broader socialist project of radical change and revolutionary transformation.

Juan Gonzalez Valdivieso is a Colombian Marxist. In his writing, he seeks to interrogate the nuances of socialist thought and praxis.

Five Points About the Climate Crisis

[Pictured: Deforesting in Tasmania, Australia. Photo by Matt Palmer]

By Jerome Small

Republished from Red Flag.

This article is based on a speech given by Jerome Small, Victorian Socialists Northern Metro candidate in the upcoming state election, at the 30 July United Climate Rally in Melbourne.

Point number one is acknowledging whose land we’re on: the First Nations people, the Wurundjeri people and the entire Kulin nations, and the Aboriginal people around this state and around this country.  More than 200 years ago, these First People had a social system imposed on them that turned land into a commodity, that turned human beings into a commodity, that turned everything in the world into a commodity to be bought and sold for a profit.

That social system decided very quickly that it was more profitable to run sheep on this part of the world than to let human beings live on it as they had always done. And the genocide ensued. That social system continues to decide that it’s more profitable to rip coal and gas from the ground than to let Aboriginal people live on their country. That dispossession continues to this day.

So it should be both an inspiration and an education for all of us that, despite everything that that social system has visited on First Nations people, they are still here and still fighting for justice. That should be a reminder to all of us that sometimes the very survival of people depends on resistance, depends on fighting, depends on organising.

That social system is still with us, of course, and still turning the planet and everything on it into a commodity, regardless of the consequences. Which gets to my second point—that capitalism has brought us to a dire situation.

We’ve heard about wildfires in countries, like the UK and Poland, that are not accustomed to seeing wildfires, due to the massive heatwave in Europe. We know a bit about this from the Australian bushfire summer of 2019-20. It’s not hard to find accounts of firefighters attempting to fight flames 70 metres tall. Next time you’re in the city, find a fifteen-storey building. That’s 70 metres, give or take. It’s terrifying. We’re talking about flames that high—in some cases twice as high, up to 150 metres.

That’s not the scariest thing, though. The scariest thing isn’t the 33 people who died from the flames that summer, or the 400 people who died from the smoke, or the 1 billion animals that died from the fire and the smoke and the after-effects. The scariest thing isn’t that 7 percent of New South Wales, an area bigger than several European countries, burned in that year.

The scariest thing is that, according to the Bureau of Meteorology and the CSIRO, that year of 2019—the hottest year ever recorded in Australia—will be the average temperature of a year in Australia once we get 1.5 degrees of global warming. All those flames, all that death, all that ash—they’re saying will be our average temperature.

And Labor is looking at 1.5 degrees out its rear vision mirror as it zooms past, on its planet-incinerating 43 percent target. This gets to my third point: Labor and fossil fuels.

It’s hard to picture the scale of the fossil fuel export projects that Labor is prepared to approve.

I went to the Latrobe Valley last week. As you enter the town of Morwell, you can see on your right-hand side a massive pit 100 metres deep and the size of the Melbourne CBD, all the way from Docklands through to the MCG. It was an open-cut coal mine that for 60 years fed Australia’s highest emitting power station, Hazelwood. The best estimate I’ve seen is that all of the coal fed into that power station produced 400 million tonnes of CO2. A huge contribution to global heating.

But the Scarborough gas project in Western Australia, which Labor is prepared to sign off on, will release 1.4 billion tonnes of CO2— three and a half times the amount that came from that enormous pit next to Morwell in the Latrobe Valley. Then there’s the Beetaloo project, which is a similar size—and that’s just the first of the massive gas fracking projects that Labor is prepared to endorse in the Northern Territory. Add Narrabri in NSW. Add Beach Energy down in the Otway Basin in Victoria. Thank you, Daniel Andrews, for your contribution to runaway heating.

That tells us everything we need to know about where we’re headed under Labor. They have no intention of interfering with a social system that turns everything into a commodity to be bought and sold for profit, regardless of consequences.

This gets me to the fourth point—what have we got going for us, in the face of all this? In my opinion, quite a bit.

We’ve got the huge majority of humanity who do not make billion-dollar profits from cooking the planet.

We’ve got many people in the Latrobe Valley. There’s a stereotype that the coal regions are wall to wall coal-loving blue-collar workers. That’s bullshit, and it’s an insult to say it. You go to the Latrobe Valley and, just like any other part of the country or the world, there’s a significant argument taking place. There are people in that community—and in those power stations, in fact—making arguments about the need to get out of fossil fuels as soon as possible. That’s something that we have going for us.

We’ve got the potential for mass movements like what the climate strikers showed us in 2019 around the world: some of the biggest protests that have happened in this town for a hell of a long time. We’ve got that going for us.

We’ve got civil disobedience going for us. Whether it’s Extinction Rebellion, whether it’s Blockade IMARC, whether it’s Blockade Australia, we’re going to need a shit ton more of that.

We’ve got the truth going for us—but the truth is never going to be enough. We need organisation to turn all of that into a mass movement.

One thing that we also need, if our movement is going to succeed, is radical politics. That is my final point. That’s something that a lot of people here from different perspectives share. And that’s something that the Victorian Socialists are very much building in the few months ahead in the election campaign.

Yes, we’ll be talking about reversing privatisations. Yes, we’ll be talking about zero-emissions electricity grids by 2030 and a zero-carbon economy by 2035—because I think that’s the only thing that we can be talking about if we’re serious about stopping the temperature rising far past 2019.

We’ll also be talking about a vision of a society that is not a social system that turns everything into a commodity to be bought and sold for a profit, even as the bodies pile high.

We’ll be talking about a vision of a society founded on solidarity and cooperation, which comes out of the struggles of today, and which doesn’t rely on billion-dollar corporations running our energy system and running the world. A society that says to those corporations: Do not pass go, do not collect $11.7 billion from the federal government this year. Your time is up. You’re done. Get out of the way.

You can take your 43 percent greenwashing target, you can take your coal and gas, and you can go to hell with them because we’re taking our world back. We’ll be talking about ordinary people making history over the next few months. And organising to do just that.

Imperial Roots of the Global Food System: A Review of Chris Otter's 'Diet For A Large Planet'

By Amy Leather

Republished from Climate & Capitalism.

Why do we eat what we do? This is the question Chris Otter seeks to answer in Diet for a Large Planet. It is very timely. In recent years there has been growing anger and horror at a food system that delivers both unhealthy and environmentally destructive diets. Food has become deeply politicized.

In 2019 the medical journal The Lancet published what it called a “planetary health diet.” Their conclusion was that “the world’s diets must change dramatically” to save the planet and ourselves. They argued that a Great Food Transformation is required — a move away from what is often called the Western Diet, high in red meat, refined grains, saturated fat and sugar, to a more plant based diet.

This is not in fact a new argument. Otter’s title deliberately echoes Diet for a Small Planet, first published 50 years ago, in which Frances Moore Lappe blamed a diet rich in meat and refined carbohydrates for environmental and health problems.

But when looking at today’s food systems most commentators tend to focus on the post war period, and in particular the role of the US in driving a model of industrialized food production and agriculture. This is a model epitomized by the ascendancy of processed foods, the growth of the fast food giants and supermarkets, and the scale and dominance of agribusiness.

However, Otter argues that “in order to understand the deeper history of today’s global food situation, it is necessary to explore post-1800 Britain.” He argues that “Britain laid the foundations for contemporary food systems. It was the nineteenth century’s dominant world power, controlling immense global resources, and creating long distance food chains to supply vast quantities of meat, wheat and sugar.” This is a good starting point. Locating our current food systems in a wider political and historical context, very much bound up with the development of capitalism and colonialism.

What stands out in the book is just how early the internationalization of food production developed for Britain. Britain was sourcing foods from round the globe in vast quantities from the mid 1800s, importing grain, meat and dairy products.

Otter shows this with a vast array of statistics. He outlines how “the volume of British food imports rose almost eightfold between 1850-52 and 1910-12, by which time they represented around two fifths of all British imports by value. Over four fifths of bread consumed in Britain came from imported grain by 1909.”

Initially Ireland had contributed much of Britain’s imports of grain, meat, butter and livestock but Britain soon became the world’s richest single consumer market for food and raw materials. In 1860 Britain received 49% of total Asian, African, and Latin American food exports. In 1930 with just under 3% of the world’s population Britain imported 99% of world’s exports of ham and bacon, 63% of its butter, 62% of its eggs, 59% of its beef, 46% of cheese, and 28% of its wheat and wheat flour.

Otter looks in detail at how Britain came to import so much meat, grain and sugar. For example, during the 1800s farmers in Britain had experimented with selective breeding to produce the cows and other animals ideal for meat production, such as short horn cows and Herefords. It soon became more profitable to ship these types of livestock out to new areas of the globe, such as the United States and Argentina, to be bred and reared on their huge pastures and their meat imported back to Britain.

Such outsourcing, as Otter calls it, meant a vast infrastructure was built in these areas. As he outlines “there were nearly 70 million cattle in the US by the early 1930s. This heavily capitalized industry with its vast ranches and industrialized meat packing, operated on a much larger scale than Britain’s.” It’s not hard to see how this paved the way for the great acceleration of meat production after 1945 in the US.

There was a massive increase in the amount of wheat bread consumed in Britain between 1771-1879, and by 1911 wheat bread provided around half the working class calorie intake.

Otter outlines how Britain had been self-sufficient in wheat until about 1850. However, at that point wheat production started to become unprofitable and so grain began to be drawn from different and shifting areas of the globe, including Australia, India, Argentina and North America. By 1909 over 80% of British bread was made with imported grain.

Alongside meat and bread, sugar also became central to the British diet. In a short period of time it went from being a luxury to an essential. Otter makes the point that it became a cheap “fuel food” for the working class in Britain. By the late eighteenth century Britain consumed nearly half of all the sugar reaching Europe, and British consumption levels were over ten times higher than those in the rest of Europe. In 1750, the average Britain received 72 calories daily from sugar, by 1909-13 this figure was 395. Sugar still provides 12-15% of Britain’s calories.

Such cheap calories were a consequence of colonialism and slavery. Portuguese, Spanish, French and British colonial systems created a sugar industry linking Europe to the Caribbean and parts of South America. For Britain Barbados became particularly lucrative, with sugar becoming the island’s most important export by 1650. Jamaica was colonized from 1664, and by 1805, it was the world’s largest sugar exporter. By the 1830s Britain was using some two million overseas acres for sugar production.

Alongside exploring the internationalization of food production, Otter also shows how mass production techniques and food processing are not just a postwar invention. For example, the mass production of bread began in the 1870s. Traditional milling methods in Hungary and the US were replaced by roller milling and then introduced into Britain. It is fascinating to note that factory made American cheese was already cheaper than British cheddar in the 1860s — and arrived in Britain in increasing quantities. Mass production techniques meant that Britain was producing some 300,000 tons of biscuits by 1939 while sweets we know today such as fruit pastilles and fruit gums have been industrially produced since the late 1800s.

However, Otter seems to argue that this internationalization of food production or outsourcing was a consequence of what he terms a “large planet philosophy.” He defines this as “the premise that the entire earth was a potential source of material wealth and capital investments.”

The implication throughout the book is that the idea of sourcing food from across the globe was the driving force behind the developments rather than the dynamics of capitalism. Here the book is at its weakest. While Otter references Marxism in his introduction as a framework he will draw on, there is virtually no discussion of how the development of capitalism turned food into a commodity. There is nothing about how the competitive accumulation and the drive for profit at the heart of capitalism impacted on food production, including its expansion across the globe.

As Martin Empson points out in Land and Labour, “Marx understood how the development of industrial capitalism in one part of the world had the effect of shaping the agricultural economies of the rest of the world.”

In Capital, Marx writes that, “large scale industry, in all countries where it has taken root, spurs on rapid increases in emigration and the colonization of foreign lands, which are thereby converted into settlements for growing raw material of the mother country…. A new and international division of labour springs up, one suited to the requirements of the main industrial countries, and it converts one part of the globe into a chiefly agricultural field of production for supplying the other part, which remains a pre-eminently industrial field.”

Diet for a Large Planet often reads almost as a summary of political thought and as though food production was shaped by a battle of ideas. Of course there were competing ideas, for example over free trade, a requirement that underpinned cheap food imports. But these reflected real class interests, as well as divisions within the ruling class themselves. The battle over the Corn Laws of 1815 exemplified this — with the established landowning class wanting to keep grain prices high while the rising class of industrialist capitalists wanted cheaper grain, so they could pay their workers less.

Without such a framework of understanding the dynamic of capitalism, the drive for profit at the heart of it and how different class forces asserted themselves, the central arguments the book seeks to make are weakened.

While Otter makes some interesting points about food, power and racism, he downplays the centrality of slavery to the development of capitalism. And although he explores the Irish and Bengal famines he doesn’t emphasize the fact that food was exported from these countries during those famines.

The book contains a wealth of detail and a vast array of facts and figures, covering everything from imports to the size of working class kitchens, from animal slaughter techniques to historical records of calorific intake and tooth decay, from the working of grain elevators to the specifics of the sugar extraction process and beet production, and much more. This makes the book a useful resource, but at times I felt that the detail drowned out the big picture and obscured explanation and analysis.

Overall, Diet for a Large Planet is a useful, and at times thought provoking, contribution to the discussion of food systems, but I finished it with unanswered questions.

Null Space and Null Existence Under the Spectacle

By Mike Templeton

Exit any stretch of interstate and you will immediately be confronted with the mass of business which defines contemporary American existence. From the multi-lane interchange that draws you off the interstate highway to the seemingly endless retail and restaurant chains, life is one continuous stretch of consumer destinations. Gas stations are full-service outlets selling roller food, beer and wine, lottery tickets, trinkets, ball caps, etc. The gas pumps now have video screens so you can watch sports update videos and some kind of corporate version of the news while you pump gas. From this point onward it is nothing but consumption. Consumer existence is human existence.

The full-service gas stations are generally the first places you encounter upon exiting the highway. BP, Speedway, Pilot—it really does not matter which specific brand you choose they all offer the same things. There are hotdog rollers with taquitos and three or four forms of processed meat tubes. Gourmet coffee and “cappuccino” machines that pour frothy French Vanilla and Caramel flavored hot drinks loaded with high-fructose corn syrup are available at stations with glossy images of crafted Starbuck’s-style drinks. There are generally two walls of coolers stocked with every known soft drink. They have a section for a dozen or so brands of beer ranging from the common American corporate brands to the so-called craft brews (all of which are owned and brewed by the corporate American brands). Row upon row of food-substances the origins of which are unknown and unknowable. Then you move to the microwavable food stations. Many of these service stations have now partnered with fast food chains so some sort of drive-through fare is also available. The entire panoply of consumer choice and consumer life are contained under these multi-purpose service stations designed to make your stop from the interstate as seamless and convenient as possible. Of course, the most important commodity on offer is gasoline: the blood that is the life of contemporary life.

Surrounding these service stations, stretching for miles in any direction, are fast food and restaurant chains of all types and varieties. The obvious McDonald’s, Taco Bell, Wendy’s, etc. are punctuated by the more elaborate fare found in Outback, Cracker Barrell, and Chilie’s. Food of every known kind can be obtained either in drive through or take out, or in the form of an actual dine-in experience with wait staff. Along with food, these thoroughfares will feature Target, Walmart, Home Depot, etc. Each of these big-box retail stores will anchor an entire strip of other retail stores such as Staples and Home Goods. Within these plazas there are also stores with shorter lives: Chinese and Indian take-out, used video game stores, Hallmark stores, Christian bookstores, etc. None of these last long, and each is replaced with something equally transient. Not only is the merchandise consumable and disposable, so are the retail outlets which provide the merchandise.

Nearly any exit off an American interstate will look like what I describe above. Each will be identical. The only changes will be local versions of the same thing—White Castle in the north turns into Krystal in the south. The local fare will reflect the regional identities to the extent that regional identities are easily identifiable across all regions. This is to say that a restaurant in Tennessee will offer something unique to the state of Tennessee only insofar as anyone from outside the region would be able to understand the image. “Hillbilly” will be packaged and marketed so that people from Maine, Minnesota, and California are not in any way mystified by the image of Tennessee. All big-box retail stores are the same in every state and region. Stand in a Target in Ohio and you are standing in the same Target as the one in Nevada. You are effectively in the same place since the place itself is as interchangeable and exchangeable as everything in the store.

Beyond the retail strip and restaurant chains, housing developments stretch off into the distances. Farmland may well still exist, but the developments of new housing will invariably stretch along or through the rural landscape. Each subdivision differs only in the most superficial ways. These are houses which are built in precisely the same way as all mass-produced commodities. Within each subdivision, all individual structures will be virtually identical, differing only in superficial details. These housing developments are arranged so as to create the illusion of a neighborhood. Streets arranged in rows or semi-circles all of which join a central street which is connected to the main artery of retail and commercial sprawl. The neighborhoods are generally named after local features such as trees and geological forms none of which can be seen since all of these things were removed to make way for the retail, restaurant, and housing complexes and sprawls which now occupy the terrain.

Some areas off the interstates are devoted primarily to commercial development. These consist mostly of information processing industries, transportation of goods and services, and corporate headquarters for companies which may still be in the business of manufacturing goods, but the actual manufacturing takes place miles away, often in different countries altogether. Shipping companies occupy large areas in order to facilitate the transfer and movement of consumer goods. Office parks occupy massive geographical areas with enormous parking lots. Surrounding all of the commercial plots are carefully landscaped grounds complete with circulating lakes and manicured greenspaces. The natural environment which once defined these areas, the rural landscapes and natural terrain were completely cleared and replaced by these artificial landscapes which give rise to an industry of landscaping and lawncare all to itself.

The images described above have overtaken the American landscape. Various regions of the country will differ according to the climate, but the basic layout of consumer life, commercial development, and suburban development will remain constant. There is no place that is significantly different than any other place. Place itself is interchangeable and exchangeable so that individual places no longer exist except insofar as places have been commodified and branded. Neighborhoods exist because land developers have named them as neighborhoods. Regional identities exist to the extent that they are marketable brands of regional identities. Individual places are unrecognizable, and the space between individual places exists only to be overcome with the greatest speed and convenience. Even the fundamental identity of the rural world and rural culture has been effaced by the encroachment of consumer life and suburban development. The only remnant of rural life is the brand of rural life found in Cracker Barrell where one can buy “farm-style” breakfast plates stuffed with every example of breakfast food imaginable. These feed people who sit in cars and work in offices and only walk as far as the front doors of their newly constructed pre-fab homes to their cars.

Although all of this development takes place within the domain of civic authority, the actual force of authority are the capitalist ventures which own the land and the points of consumption. This is to say that all actual power and authority remains squarely within the realm of capitalist ownership. Civil law and the concept of a civic arena are subordinate to the private ventures which fuel these forms of consumer developments and the consumer culture which drives the private ventures. It is a reciprocal system to the extent that individual demand drives corporate development and corporate development creates the space and conditions for consumer demand. This is a purely spectacular world, one which is driven by forms of authority which far exceed the civic domain. The cultural conditions of contemporary American terrain are defined by the capitalist drives which fuel consumer culture, and this finds its most extreme expression in landscape I have described above. As Debord explains:

At the core of these conditions we naturally find an authoritarian decision-making process that abstractly develops any environment into an environment of abstraction. The same architecture appears everywhere just as soon as industrialization begins. (The Society of the Spectacle, 122-123)

American geography has become an environment of abstraction. The Real—any idea of the Real—which may have once existed has been plowed under and replaced by abstract forms of geography designed entirely to facilitate a culture of pure consumption, a culture which produces nothing but consumption and waste. The lives of individuals who live in these regions are defined in terms of consumption and waste. All commodities lose value the moment they are purchased and must endlessly be renewed with new versions of the same thing. This is culture abstracted from material life and rendered entirely in the form of consumption.

Consumer capital is all there is, and virtually all of life is subsumed by consumer capital. Basic needs are provided through a diffuse network of supply which is so far removed from the sources of food, fuel, electricity, and water that all of these things appear to simply appear ex nihilo. The massive waste generated by this world is also removed and landfilled in regions largely cut-off from the lives and businesses which generate the waste. Once dumped, it no longer exists. The super-highway interstate system makes all of this possible. A vast system of interstates connects the entire country via a network of space which provides nothing but the means to move past it. The space of the interstate system is nothing but space to be overcome. The sole reason for its being is to pass it behind. The interstate system and the worlds which develop along their length and breadth are heterotopias, abstract spaces on which abstract lives are lived in relation to a world which grows ever more abstract. What is the highway but a space of abstraction in which “(t)he undifferentiated daily flow is punctuated only by the statistical, foreseen, and foreseeable series of accidents, about which THEY keep us all the better informed as we never see them with our own eyes—accidents which are never experienced as events, as deaths, but as a passing disruption whose every trace is erased within the hour” (This is Not a Program, 152). As the highway effaces all difference through its endless uniformity and totalizing program of mathematical planning and control, everything else becomes undifferentiated to the point that what marks one “thing” apart from another is lost. Accidents and real deaths are experienced only as transitory moments in which the ceaseless flow becomes momentarily interrupted. And as all space becomes continuous in a seamless flow of undifferentiated space, space itself is lost. Designed to facilitate the movement over distances, “the pure space of the highway captures the abstraction of all place more than all distance” (152). This “all place” is also the multiple “places” in which everyday life is now lived in the abstraction of space. Suburban sprawl is pure abstraction laid out in accordance with the abstraction of the highway.

The places which emerge at every exit and on-ramp off and onto the highway are completely interchangeable and exchangeable places. They are nothing but forms of abstract space. The housing developments are abstractions based on a flimsy reference to what once occupied actual places. Where there were farms, expanses of woodland, and even small towns, there are now abstractions of those places that bear metonymical links with what once marked those places as real. The woodland that was clear-cut and plowed under is replaced with a pre-fab development of completely indistinguishable housing units arranged in some geometric pattern and then named after a species of tree which once grew in the woodland. It may be named after a native American tribe wiped out centuries ago, and now the local school system takes its name. The lost Lakota Indians become Lakota High School and the people who live in this abstract no-place can find a point of identification with the linguistic representation of an idea no one knows anything about and suture that linguistic representation to a life which unfolds amid absolutely nothing but things to be consumed. Words and individual identities are evacuated of all meaning and re-filled with exchangeable meanings that can be traded along the interstate corridor of abstraction. Consumption is life, and life takes place in the abstract space of pure nullity.

All of life is “presided over in unmediated fashion by the requirements of consumption” (Debord, 123). What of the culture of this world? What emerges within this landscape of nullity is a new form of peasantry, one which is conditioned entirely by the logic of consumer society. Unlike the old peasantry in which natural ignorance was a function of an isolated world, the new peasantry is conditioned to their ignorance by a cultural logic which denies anything exterior to consumer culture. In this landscape of consumerism,

Natural ignorance has given way to the organized spectacle of error. The “new towns” [subdivisions] of technological pseudo-peasantry are the clearest indications, inscribed on the land, of the break with historical time on which they are founded: their motto might well be: “On this spot nothing will ever happen—and nothing ever has.” (124)

An organized spectacle of error is the inevitable result of a population who derive all knowledge of the world from the spectacle of the image and the mediation of the commodity. Nothing can be known except insofar as it is represented in a consumable form that is exchangeable with any other commodity. Therefore, knowledge itself is a commodity, and if it is not commodified knowledge, it is not knowledge. The break with historical time comes about, at least in part, from the ex nihilo fashion in which these communities spring up around consumer culture and consumer culture springs up around these communities. The process is one of expressive causality. One aspect of consumer life does not precede the other. The entire landscape and culture of the American landscape now simply appears on the horizon complete with everything I described above and much more. Any history of the regions which may have preceded the creation of the consumer landscape is denuded with the very land on which the spaces are built. Since this historical narrative is completely negated, any narrative of the existence of these regions is created from within the same cultural logic by which they come into being. Nothing ever happened here because everything happens exactly the same way every minute of every day. Nothing will ever happen here because everything that could happens is a reproduction of everything else that has ever happened. The term peasantry is perfect since what we see in the people whose lives are defined by these regions and the forms of culture which define these regions consists of a population which lives in total ignorance of what is beyond the society of the spectacle.

We are left with a geography of homogeneity and a population which mistakes this homogenous nullification of life for life itself. There are no spaces to be; only spaces to have…

Michael Templeton is an independent scholar, writer, and musician. He completed his Ph.D. in literary studies at Miami University of Ohio in 2005. He has published scholarly studies and written cultural analysis, creative non-fiction, and poetry published in small independent publications. He currently works as a freelance writer providing articles for a non-profit called the Urban Appalachian Community Coalition. He is also the lead guitar player for the IdleAires, a communications service and information dissemination apparatus operating as a Rock n' Roll trio. I live in Cincinnati, Ohio with my wife who is an artist.

Works Cited

Debord, Guy. The Society of the Spectacle. Tr. Donald Nicholson-Smith. New York: Zone           Books,1995.

The Invisible Committee. This is Not a Program. Tr. Joshua David Jordan. Cambridge:

Semiotext(e). 2011.

Firm Level Price Determination: A Comparison of Theories (Perfect Competition, Imperfect Competition, and the Theory of Real Competition)

By Ezra Pugh

“The best of all monopoly profits is a peaceful life,” (John Hicks, 1935).

“The division of labor within society brings into contact independent producers of commodities, who acknowledge no authority other than that of competition…the ‘war of all against all,’”      (Karl Marx, 1867)

George Stigler defines the term competition as “the absence of monopoly power in a market,” (Stigler 1957, 14). This could seem a curiously narrow definition to the businessperson or the worker. But this notion has been ubiquitous in the teaching of economics for decades. It originates, of course, from the Neo-Classical theory of perfect competition. Abstraction is necessary to any theoretical investigation. Assumptions must be made for the purpose of conducting analysis. But in flattening the meaning of a term like competition in such a way, is there a risk that some essential insights may be lost?

Perfect Competition

Perfect competition is the foundational parable of orthodox economics. A perfectly competitive market is an abstract ideal with a number of specific attributes:

•          There is a very large number of firms, such that no single firm can affect the overall market for its product.

•          There is a very large number of buyers for the industry’s product.

•          Each firm produces exactly the same undifferentiated product.

•          Firms, and their consumers, have perfect knowledge of all relevant economic information related to their industry and its product.

•          Firms have unrestricted power of entry and exit in their industry.

•          Firms are entitled to a ‘normal rate’ of profit, which is included in its operations costs.

• ·         Marginal costs drop at first then eventually increase with each unit sold. As a result, average cost is also upward sloping.

From its perspective, a firm in perfect competition is just a speck, dwarfed by the size of the market it competes in. The market can absorb whatever the firm can produce, provided it is sold at market price. The firm’s perceived demand curve is horizontal, or perfectly elastic. As a result, the demand curve is identical to its supply curve. The overall demand curve of the market, however, is downward sloping.

The firm must accept the prevailing market selling price for its good. If it sets its price above the prevailing price, even by an iota, the firm will lose all of its sales to the myriad other sellers. If it sets its price below, it will not be able to make enough profit to survive. A firm in a perfectly competitive market is therefore known as a price-taker, as it is powerless in the face of market pressures. Consequently, “a perfectly competitive firm has only one major decision to make—namely, what quantity to produce,” (Greenlaw 2018, 189).

Being rational, the firm’s motivating goal is to generate profit. Its profit (r), is defined as total revenue (TR) minus total cost (TC). Total revenue is made up on the products price (P) multiplied by the quantity produced (Q) minus the average cost per unit (AC) multiplied by the quantity produced. This can be written as:

To maximize its profit, the firm must continue producing more output up until the point its marginal revenue equals its marginal cost – the point where an additional unit of output contributes no more profit. Marginal revenue (MR) and marginal cost (MC) are defined thus:

Because the market price the firm experiences does not change based on its output, the firm’s marginal revenue is a constant. Each additional unit sold adds the same value, which is equal to the price of the product. If marginal revenue is equal to price, and profit maximization occurs when marginal revenue equals marginal cost, the firm should produce up until the point where its marginal costs equals the price of its product.

The firm’s average cost is its total cost divided by quantity produced, and is assumed to initially fall then eventually be upward sloping. Because innumerable sellers all sell the same good, in the long run (which generally does not have a specific definition), all ‘economic’ profits—those which are above the assumed ‘normal’ profits—are eventually eroded completely away. If positive economic profits existed, more firms would enter the market, increasing supply and lowering price. If economic profits are negative, firms would leave the market, causing the opposite effect. As a result, in the long run perfect competition causes sellers to produce their goods at the lowest point on their average cost curve.

“When profit-maximizing firms in perfectly competitive markets combine with utility-maximizing consumers, something remarkable happens,” we are told, “the resulting quantities of outputs of goods and services demonstrate both productive and allocative efficiency,” (Greenlaw 2018, 206). Productive efficiency is attained because in the long run, firms produce at their absolute lowest cost. Allocative efficiency is achieved because the resulting goods’ price is equal to its marginal cost—precisely the value of the ‘social cost’ of producing it.

Imperfect Competition and Monopoly

But of course, this state of affairs does not resemble the world in which we live. This utopian optimality, we are told, is distorted and mutated by the anti-competitive behavior of firms and government. Due to that meddling, we live in a world of imperfect competition—monopoly, monopolistic competition, and oligopoly. Paradise lost. In monopoly, a firm is the lone provider of a good, in monopolistic competition many firms produce differentiated products, and in oligopoly a small cabal of firms control the marketplace and exert price pressure.

The culprit which creates each of these distorted market types is barriers to entry. Whether natural or legal, barriers to entry prevent firms who would otherwise enter a market from entering. The few firms which are active in the market have control of too large a slice. As a result, they can affect the market price based on how many units they produce. Instead of a horizontal perceived demand curve, the firms in imperfect competition face a downward sloping demand curve.

To maximize its profit, the imperfectly competitive firm still produces at the level where MR = MC. But because of its outsized effect on the market, P no longer equals MR. With each unit produced, the increased supply exerts downward pressure on the price, which effects the price of all other units produced by the same amount. If such a firm produces too much, it can hurt its own bottom line. Because it supplies as much as it wants and not what consumers want, a true monopoly will have perpetual positive economic profits at a level which depends on the elasticity of the product’s demand schedule. Monopolistic competition, however, will in the long run result in a total erosion of economic profit as firms enter the market, all producing at a point on the AC curve, albeit not at its minimum point. As a result, none of these markets is productively or allocatively efficient. The amount of goods produced is below what consumers would have wanted under perfectly competitive conditions, they are more expensive than they are socially worth, and firms inefficiently do not produce at their minimum average cost. Customers are robbed of potential utility. Such markets are sadly the norm, because, we are told, “firms have proved to be highly creative in inventing business practices that discourage competition,” (Greenlaw 2018, 220). This is a great state of affairs for the firms, however, because “once barriers are erected, once a barrier to entry is in place, a monopoly that does not need to fear competition can just produce the same old products in the same old way,” (Greenlaw 2018, 229). Managers can kick back and watch the profits roll in.

Historical Overview

Sketched out above is the dominant parable in economic thought and teaching. Interestingly, almost none of this resembles the real world. How did we get here? An outline is sketched below.

Adam Smith is generally credited with establishing economic thought, or Political Economy, as a distinct field of study. His work An Inquiry into the Nature and Causes of the Wealth of Nations (1776) is regarded as the first modern work of economics. A key figure in the Scottish Enlightenment, Smith was interested in observing economic phenomena, describing them, and discovering the hidden patterns within. David Ricardo furthered and built on Smith’s ideas, advancing theories on rent, trade, and value. Over the course of the three volumes of Capital (1867), Karl Marx extended this theoretical framework even further with sharpened historical and class analysis, building a signature value theory in the process. Along with others, these thinkers are referred to as the Classical economists.

But in the 1870’s there occurred what is known as the Marginalist Revolution. The Long Depression (1873-96) caused a crisis of confidence in the capitalist world. Interestingly, it was during this period that the most utopian theoretical depictions of capitalism were popularized. W.S. Jevons (1871), Carl Menger (1871), and Leon Walras (1874) independently and almost simultaneously developed this new theoretical paradigm. They perceived fundamental flaws in the theoretical framework and methodologies of the Classical economists and sought to “pick up the fragments of a shattered science and to start anew,” (Jevons 1879/1965, Preface lii). The Classicals believed that the ultimate source of an item’s value was the amount of labor embodied in it and that market prices were connected to costs—prices of production. The Marginalists vehemently disagreed. “Value,” wrote Jevons, “depends entirely upon utility” (Jevons 1871/1965, 1). Echoing this sentiment, Menger wrote “there is no necessary and direct connection between the value of a good and whether, or in what quantities, labour and other goods of higher order were applied to its production” (Menger 1871/2007, 146). Value then stemmed from a buyers utility gained from a good; that utility being an index of the good’s scarcity.

Jevons and Walras both used advanced mathematics to express their ideas. Adopting algebra and calculus, they could express complex ideas with greater accuracy than was possible previously. "Why should we persist in using everyday language to explain things in the cumbersome and incorrect way, as Ricardo has often done,” wrote Walras, “when these things can be stated far more succinctly, precisely, and clearly in the language of mathematics?" (Heilbroner 1997, 226). Walras pioneered what is known as general equilibrium theory—the notion that a complex balance of supply and demand can exist in and between markets.

It is during this period that supply and demand curves and the modern theory of perfect competition are introduced. In order to make their highly abstract models functional and defined, economists had to make assumptions that did not necessarily fit with, and often outright contradicted economic reality. "The pure theory of economics, it must precede applied economics,” wrote Walras, “and this pure theory of economics is a science which resembles the physic-mathematical sciences in every respect," (Heilbroner, 224). Actual people and actual societies faded from the picture in favor of platonic ideals. This fundamental methodological shift opened up many new avenues of exploration for economists, but the descriptive and predictive usefulness of the new models was not necessarily clear. Perfect competition became the theoretical jumping off point for all ‘rigorous’ analysis, and Marshall (1890) systematized the theoretical structure into what would recognize as modern Neo-classical economics. Dobb notes, "at the purely formal level, there can be little doubt that the new context and methods, with their mathematical analogy if not mathematical form, resulted in enhanced precision and rigor of analysis…the cutting knives of economic discussion became sharper -- whether they were used to cut so deeply is another matter" (Dobb 1973, 176).

In the 1920s, unease with the dominance of perfect competition was growing. Sraffa (1925) aimed a potentially devastating critique at the then-dominant Marshallian partial equilibrium theory, demonstrating that the theoretical structure was not capable of dealing with non-constant returns (increasing or decreasing costs) adequately (Mongiovi 1996). The next year, Sraffa (1926) suggested a solution might be found using the lesser utilized monopoly theory as a starting point. Even in competitive markets, monopolistic tendencies could easily be observed because 1.) firms can exert some control over their own prices, and 2.) they frequently experience increasing returns (decreasing costs). Sraffa argued that these circumstances are not the exception, “rather they are normal and persistent features of the economic landscape, with 'permanent and even cumulative' consequences for market equilibria. When these influences are operative, each firm is to be viewed as having its own distinct market; prices are set so as to maximise profits on the supposition that the relevant demand curve is not perfectly elastic,” (Mongiovi 1996, 214). Building on these ideas, Robinson (1933) and Chamberlain (1933) independently, but simultaneously, developed the theory of imperfect competition that is taught today. Eventually abandoning Marshallian theory altogether, Sraffa’s publication of Production of Commodities by Means of Commodities (1960) is credited with establishing a distinctive Sraffian or Neo-Ricardian school.

Real Competition

In Capitalism: Competition, Conflict, Crises (2016), Anwar Shaikh erects a theoretical framework independent of perfect and imperfect competition. Formalizing insights developed by the Classical economists, a theory is built which is both analytically sound and corresponds to observed economic phenomena. The theory of real competition, as it is called, “is as different from so-called perfect competition as war is from ballet,” (Shaikh 2016, Ch. 7.I.). The classical economists stressed themes that were either diminished or omitted completely by Neo-classical economists, including conflict, class, and temporality. In Capital, Volume 1, Karl Marx writes that the economic realm is bellum omnium contra omnes, ‘war of all against all,’ (Marx 1867/1990, 477). All evidence of this is lost in the parables of perfect and imperfect competition. But in Capitalism, the theory of real competition “pits seller against seller, seller against buyer, and buyer against buyer. It pits capital against capital, capital against labor, and labor against labor,” (Shaikh 2016, Ch. 7.I.). Abstracting away from the essentiality of conflict to capitalist production and distribution makes Neo-Classical analysis not only unrealistic, but totally misleading.

But even on pure theoretical grounds there are issues with the theory of perfect competition. For one, there is a fundamental contradiction within the assumptions. Firms are assumed to have perfect knowledge of the market in which they are competing, yet their perceived demand curve is assumed to be flat. These two assumptions cannot hold at the same time. “If firms are assumed to be sensible in their expectations, then the theory of perfect competition collapses. More generally, even mildly informed firms would have to recognize that they face downward sloping demand curves under competitive conditions,” (Shaikh 2016, Ch. 8.I). If a firm in a perfectly competitive market has perfect knowledge, it would quite easily deduce that the market signals it is receiving are being received by every other firm, and those firms will react in a predictable manner. As a result, the firm would know that it does not face a flat, perfectly elastic demand curve, and would act in exactly the same manner as a monopolistic firm, with just the same results.

Another problematic assumption within the orthodox framework is that firms are entitled to a normal rate of profit, which is included within its cost structure. The action of competition completely erodes excess profits away but leaves normal profits intact. This, of course, is wildly unrealistic because “no capital is assured of any profit at all, let alone the “normal” rate of profit. Indeed, all capitals face losses at some point, and a certain number drown in red ink in every given interval. It is therefore completely illegitimate to count “normal profit” as part of operating costs,” (Shaikh 2016, Ch. 7.I.). The prospect of making a loss is the dark cloud that hangs over every business manager, driving them unceasingly into conflict with agents both inside and outside the firm. Abstracting away from this motive force fundamentally misdiagnoses the motivations of economic agents.

In the theory of perfect competition, a firm’s only decision is how much to produce. Likewise, in imperfect competition, pricing and quantity decisions are mechanically connected. But in the works of the Classicals and in the theory of real competition, firms are active price setting, cost cutting entities. Neo-Classical theory stresses that firms will flock to higher profit rates at a given price. But once firms have the power to set their own price, the picture becomes more complicated. In their endless search for higher rates of return, firms cut prices to attract more buyers and increase market-share. In the process, “the advantage in this perpetual jousting for market share goes to the firms with the lowest cost,” (Shaikh 2016, 7.II.). If firms have the power to cut their own prices, they have the power to starve out other firms—even ones that are potentially more profitable at initial prices. Neo-Classical theory stresses that firms will adopt whatever method yields the highest profit at a given price, but “when costs differ, there is always a set of prices at which the lower cost firm has the higher profit rate. This does not mean that [it] has to drive the price down to that level. It has only to get the message across to its competitor that the future has arrived,” (Shaikh 2016, 7.VII.). This is demonstrated in Table 1 below. Pricing wars, which are extremely common occurrences in the real economy, highlight the conflictual nature of economic relations—"these are the operative principles of warfare: attackers try to impose greater losses on the other side. We will see that such behavior is the norm in the business world. It follows that the highest profit that is sustainable in the face of price-cutting behavior is generally different from the price-passive profit assumed in theories of perfect and imperfect competition,” (Shaikh 2016, 7.II.). Only the theory of real competition deals with this common behavior adequately.

Conclusion

Contrary to Hicks’ assertion, a peaceful life is not included in a firm’s profit—no matter their degree of monopoly. There is perpetual conflict generated both inside and outside of the firm that must always be contended with. For real firms, “price is their weapon, advertising their propaganda, the local Chamber of Commerce their house of worship, and profit their supreme deity,” (Shaikh 2016, 7.II.). Abstraction is a necessary tool for analysis. But the specific method of abstraction used in the theories of perfect and imperfect competition does not serve to elucidate truths that would be otherwise unattainable. Neo-Classical economics was formulated during a crisis of capitalism to create a utopian vision in order to justify capitalist social relations. Capitalist relations have been shown to be the most powerful and productive in history, but that does not justify obscuring their fundamentally destructive and chaotic elements. Competition is not merely the absence of monopoly power—it is the struggle of all against all.

References

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