Chris Dillow: The dubious logic of commodification

Chris Dillow writes about The dubious logic of commodification.

To understand what’s going on here, we need a Marxian notion — that of commodification. This is the process of turning objects and relationships which are outside the realm of market transactions into commodities which can be exchanged at a profit. It is is one of the major ways in which capitalism expands — by creating, in the words of the Communist Manifesto, “no other nexus between man and man than naked self-interest”, than callous “cash payment”.

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Much of this state-aided commodification is a response to capitalist stagnation. Much of capitalism is no longer innovative enough to create profitable opportunities endogenously: fund management, in particular, is such a rip-off that it cannot offer people value for money. Capitalism thus needs state help to expand the realm in which profitable activities can take place.

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This is why the liberal project of capturing the state through reform is doomed to failure. Any attempt by the state to divert funds to the workers will be met with an ideological offensive from the Capitalists. Profitability depends on government assistance. The declining rate of return for profit means that there is no leeway to placate the masses as was done in the immediate post-war period.