En route with my daughter to the Purim Carnival, I stopped at my friends Greg and Manu‘s house. Manu’s mother Toshi is visiting from India, and we got to talking about corruption scandals there. Specifically, what people do with money they’ve gotten illegally. Toshi called it “black money”—a phrase I hadn’t heard before. Turns out, it’s a fairly common term. Here’s one definition:
Proceeds, usually received in cash, from underground economic activity. Black money is earned through illegal activity and, as such, is not taxed. Recipients of black money must hide it, spend it only in the underground economy, or attempt to give it the appearance of legitimacy through illegal money laundering.
Talking about the kind of hoarding people engage in when they have black money—think of the wads of cash you see in Mafia movies—it occurred to me that corruption stands the Marxist theory of capitalism on its head. Or at least two parts of it.
But before I explain how, caveat lector: What follows is the speculation of an amateur. I’ve done no research on corruption, and the Marx I know is the Marx I teach. That is to say, beyond the incidental mention or allusion, I’ve never written about Marx or Marxism, and beyond some secondary reading, I’ve not done any research on Marx or Marxism.
So why do people hoard black money? For the obvious reason that they can’t deposit it in a bank, invest it, or use it for any kind of legal or illegal transaction that would bring it to the attention of the government.
This makes the person who deals in black money similar to a miser, and for Marx, the miser in a capitalist economy is an irrational actor. The proper way to make and accumulate money under capitalism is to put the money one has into circulation. In its simplest form, someone uses money M to buy commodity C and then sells commodity C at a higher price to someone else (Marx’s famous M—C—M′ circuit). As Marx writes in chapter 4 of Capital, Volume One, “It is this movement that converts it [the original money one had and then advances] into capital.”
Movement, or circulation, is the key to profit in capitalism. Where the process of satisfying one’s wants or desires has a discrete terminus—ending with the consumption or use of the desired object—the increase of profit, which depends on circulation, does not. “The circulation of money as capital is, on the contrary, an end in itself, for the expansion of value takes place only within this constantly renewed movement.”
The miser, by contrast, operates under the delusion—though it’s only a delusion under capitalism—that the best way to increase his wealth is by taking his money out of circulation, hoarding it in a mattress or under the floor. Like the capitalist, he’s engaged in an endless quest for more money. And while he’s often represented in literature as mad—possessed by some malignant daemon, driven by some unfathomable end—Marx makes the point that his madness is purely situational, a failure to match his ends with his means. Unlike the capitalist, who shares the same goal of increasing his money, the miser simply doesn’t understand that best way to make money in a capitalist economy is to spend it.
This boundless greed after riches, this passionate chase after exchange-value, is common to the capitalist and the miser; but while the miser is merely a capitalist gone mad, the capitalist is a rational miser. The never-ending augmentation of exchange value, which the miser strives after, by seeking to save his money from circulation, is attained by the more acute capitalist, by constantly throwing it afresh into circulation.
In corruption rings, men and women are as rational as any capitalist, but they’re forced to act with all the madness of a miser. That is, like the capitalist, they correctly estimate their situation, but their situation, unlike that of the capitalist, requires that they hoard. Even if they were to launder their money, which would put their sums into a kind of circulation, that circulation would not do what circulation does under capitalism: it might make their illicit funds clean, but it wouldn’t increase those funds.
There’s a second way in which corruption turns the Marxist theory of capitalism on its head. In his early “humanist” writings, specifically the Economic and Philosophical Manuscripts, Marx was obsessed with the ways in which money and its pursuit distorted men and women. We pursue money in order to possess something, but ultimately money possesses us. It turns our weaknesses into strengths, our assets into liabilities. It makes us into what we are not, and makes what we are not into who we are.
The extent of the power of money is the extent of my power. Money’s properties are my properties and essential powers—the properties and powers of its possessor. Thus, what I am and am capable of is by no means determined by my individuality. I am ugly, but I can buy for myself the most beautiful of women. Therefore I am not ugly, for the effect of ugliness—its deterrent power—is nullified by money….I am stupid, but money is the real mind of all things and how then should its possessor be stupid? Besides, he can buy talented people for himself, and is he who has power over talented people not more talented than the talented? Do not I, who thanks to money am capable of all that the human heart longs for, possess all human capacities? Does not my money therefore transform all my incapacities into their contrary?
Marx called this power of money to turn “fidelity into infidelity, love into hate, hate into love, virtue into vice, vice into virtue, servant into master, master into servant, idiocy into intelligence and intelligence into idiocy” the “fraternization of impossibilities.”
Money, in other words, constituted a profound form, or instrument, of untruth. It was the ultimate deceiver, the greatest liar, for it had the capacity to transform that which is into that which isn’t and vice versa.
In the case of corruption, however, money is the great instrument of truth, at least potentially. It is the most tangible sign of some ill-gotten gain, of some illicit or criminal activity. That is why its possessor must go to such lengths to hide it by hoarding or laundering it.
The possessor of black money has something for which he cannot account, at least not legally. If he deposits it in a bank, the government will ask how he came by it, and that is a question he cannot—or does not want to—answer. The law of equivalence in monetary exchange—the rule that for every dollar I possess someone has to have given up one dollar—ensures that the truth will out (a phrase, perhaps not coincidentally, deriving from a play obsessed with money and its equivalences). The equivalences that money engineers, which Marx saw as so much mystification, become in corruption scandals the sources of demystification. The M—C—M′ circuit, which Marx treats as a sign of an almost ontological disorder, a cosmic diremption, becomes, in the case of corruption, the sign, the guideposts, by which order is restored.
Skeptics will point out that Marx is talking about capitalism, not corruption (though it’s clear in his early writings that he sees capitalism as a mode of corruption, at least in the literal sense of the term). But as Manu pointed out, corruption and neoliberalism—the ur form of capitalism—often go hand in hand. While corruption certainly preceded neoliberalism, it’s also part of the everyday life of neoliberalism.
In fact, one can posit an interesting relationship between neoliberalism and corruption. On the one hand, prior to the onset of neoliberal regimes, corruption is often used to justify the push toward privatization and marketization, on the assumption that the free market would not allow for the kinds of shenanigans that a state-run economy encourages and fosters. (Just think how the classic films about corruption—On the Waterfront, Serpico, Chinatown—color our view of institutions like labor unions and the state; one wonders if such films, particularly the later ones, didn’t ultimately have something to do with the conservative turn of the 1970s.) On the other hand, the loss of state-provided resources that neoliberalism entails often push men and women to make up for that loss through corruption. That, it certainly seems, is what’s happening throughout so much of the world where the state has been downsized.
As Manu also pointed out—this, I think, is an especially acute insight—the hoarding practices of corruption mimic an earlier mode of capitalism, mercantilism, where accumulation and wealth are achieved not through circulation but through stockpiling. I’m not sure where we want to go with that, but it does suggest something I’ve mused on before: neoliberalism doesn’t represent a great leap forward so much as a great leap backward.
So, some questions for you readers:
- Are there Marxist theories of or writings about corruption? What are the best ones?
- What kind of theorizations have there been about the relationship between neoliberalism and corruption? Am I right—remember, I’m just a piker on these matters—that there’s relationship between the two, or at least that there’s been an uptick with the shift to neoliberalism?
- This seems like the kind of thing David Graeber would have a lot of smart things to say about. Has he? (Haven’t read Debt or most of his other writings.)