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economic justice | labor

Where do the moneylenders get their money?

Accepting that labor creates all wealth alone will not open the road to our emancipation. Understanding how it creates it is paramount.
The May 21st issue of Business Week has a special report on what it calls, "The Poverty Business." In actuality it would be better titled, "The Money Lending Business," because this is what it is really about. The piece follows in the wake of the collapse of the sub-prime mortgage industry, the sub-prime being the poor, those with bad or no credit; in reality, the millions of working people already raped by the system, from war veterans to the disabled.

The focus this time is other commodities necessary for our survival---transportation and education. The motive for capitalist production is profit, an integral part of its realization being the circulation of commodities. But millions of people do not receive enough in wages to buy what is the dominant means of transportation in US society, the auto. Public transportation, potentially a far more efficient and environment friendly means of getting around is not profitable in the main, so it is out. And education in capitalist society (and we are in the belly of the beast here) is not a means for advancing the collective good but of increasing the wages of the individual; it too, is a commodity to be bought and sold.

The present stage of capitalist production is one dominated by the moneylender. The moneylenders have huge institutions where their capital is stored and through which it is used to increase itself, to increase the wealth of its owner. Banks, holding companies, Private Equity firms, these are all such institutions and they compete with each other for that role.

Business Week, a journal of big capital, is focusing this time on some of their smaller colleagues, moneylenders that cater to the working poor much like the sub-prime moneylenders that borrowed money from the bigger guys then lent it again to people who needed homes. It gives an example of Roxanne Tsosie, a Native American woman in Albuquerque, New Mexico who needed a car for her new job that paid $15,000 a year. Like the sub-prime guys, a lower layer of moneylenders has sprung up catering to the poor and low waged people that the big guys neglected because the risk wouldn't be worth it. But an executive in a firm that did tax returns for low-income workers makes it clear, "We focused on the low hanging fruit," he boasts.

Ms Tsosie went to a used car dealership that specializes in selling cars to poor people in need and lending them the money to buy them. Ms Tsosie bought a 1999 Saturn with 103,000 miles and was no doubt happy that she would be able to get to work and buy the things she needed for her and her family. Having little money, she borrowed the purchase price from the dealer, $7,922, at 24.9% interest. The dealer had informed her that the payments would be $150 a month but she later found that the payments were bi-monthly. She forked over $900 before it was evident she couldn't cope and the dealer kept the $900 and got the car back. He eventually returned the $900 with an apology, but as Business Week points out, "He promised to return the money (and later does). In most transactions of course, there's no reporter on the scene asking questions."

There are countless other victims. The payday moneylenders that workers find necessary because they are not paid enough to buy their necessities and a few other items that make life tolerable, hover on the sidelines ready to charge exorbitant interest on loans. Payday lenders hanging around military establishments have charged as much as 800% to those who the government claims to love so much because they are so "loyal" and put their lives on the line for the nation. The practice has so embarrassed the politicians of big business given the loss of life in Iraq, that they have moved to curb the excesses putting a cap on interests rates.

We are all victims of the moneylenders; from the small business owner to better paid workers, we are all ripped off, living an insecure existence in a cycle of debt; never being really free of them. As more and more people are driven into poverty and the wealth gap increases, it also means more crime and drug abuse and that is also a hindrance to profit making. Prisons have been looked upon and to a degree have been a somewhat lucrative way of dealing with this problem, but this is turning out to be a nightmare as the US has some 2 million workers in prisons, bested only by China. But most worrying of all to the capitalist class is increased politicization of workers, something the prisons were supposed to deter but often increase.

One of they ways they divert attention from themselves and the system itself is through ideological propaganda. One victim in Business Week's report lost her $20,000 a year job and decided to go to culinary school to improve her situation. Three years later the woman has a degree but was unable to find a job as a chef that paid more than $8.50 an hour; not enough to handle the $43,000 student loan debt that is "accruing interest at 18%." according to BW. She owes Sallie May, the once public and now private mortgage company $553 a month, and has gone back to answering phones for $13.00 an hour.

The effect of the ideological warfare waged against us by big business through their control of the media, the education system and all forms of mass communication is clearly seen in the above woman's response to her situation: "I can't see a way out of the mess I inadvertently created," she tells Business Week. She blames herself for a situation she finds herself in, but it is a situation over which she had little control and certainly is not responsible for in any real sense.

Capitalist society teaches that we are all equal and that what we need is out there if we want it. We are in control of our own destiny. If we accept this view of society, and many people do in one way or another; what happens when we can't pay the rent, can't feed the kids, can't find a job? We blame ourselves. If I were smarter or prettier; not such a fool. I must be a failure otherwise I would have the things they tell me I should have. I would be able to get a job, get an education or buy my children something nice for Christmas; I would have a car. "I always make the wrong choices."

This is the result of accepting their ideology, of accepting their view of the world. We begin to blame ourselves, hate ourselves; we internalize the anger. Sure we make individual choices, but as someone once said, we make choices but these choices are more often than not made within circumstances not of our own choosing. A young American soldier shoots a teenager in Baghdad who comes too close. He made that choice, but he did not choose to create the circumstances in which he made it, and most likely would never have done so. The crisis in families and personal relations has its roots in this objective situation and not in the failure of the individual or the so-called breakdown of morals.

After reading the Business Week article, the reader might draw the conclusion that the victim could have not borrowed the money. This is true, but what were the consequences and what were the options?
The question workers have to ask ourselves is: where does the money that they lend us come from? What is capital we must ask? Where does it come from? How did the bank and then the car dealer come upon this money?

Marx explained that capital is "accumulated labor." Labor creates all wealth. How does it create wealth? It creates wealth through the process of production, in the exchange that takes place between the worker and the capitalist, between different classes; one class that owns capital and the other that has nothing to sell but their ability to work.

Marx asks, "What is it that takes place between capitalist and wage laborer (worker)? He answers his own question: The laborer receives means of subsistence (in the form of wages) in exchange for his labor power; but the capitalist receives, in exchange for his means of subsistence, labor, the productive activity of the worker, the creative force by which the worker not only replaces what he consumes, but* also gives to the accumulated labor a greater value than it previously possessed."

The increased value of the capital expanded is the aim of the capitalist and it is his property, not the property of the worker whose labor power produced it.

Capital is, among other things, accumulated labor, but accumulated labor is not always capital. If we look at it this way, economists or not, we know we create wealth; it comes from somewhere. Society exists through our activity with nature that produces the necessities of life and more. All of the products of our creation as accumulated labor, as values and the product of past work; this social product can be used to the betterment of society. We could have free transportation. Everyone could have food, housing, an education etc. The use of this past labor could be determined in a collective way based on the needs of society. In this case, this accumulated labor is not capital. It is accumulated labor serving living labor for the benefit of all.

But in the capitalist mode of production, the class that creates wealth does not own it. The accumulated labor is used not to serve living labor, not for the benefit of society as a whole, but as a means of preserving and multiplying its value, of multiplying itself for its owner, the capitalist. Presently, the rate of exploitation and the level of productivity of labor are such that the world is awash with wealth, with capital.

"The liquidity lapping over all parts of the world has enabled the dramatic expansion of lending to the working poor", writes Business Week. But it is not only the working poor. There is so much wealth, so much capital that the capitalist class doesn't know what to do with it. Some of it is being used for new production in places like China and other parts of Asia, but much of it is being lent back to us. It is the great supply of capital that is making credit so cheap and fueling growth. It is credit that is allowing US workers to continue to consume at the rate we do. The wealth in the last analysis is contained within the commodity and is realized through its sale, something credit facilitates, thus, we live in a 24-hour marketplace.

Money lent is a commodity and is lent at a price. Moneylenders lend it to other capitalists, and they lend it to the poor at usually higher rates.

The important issue for us as workers, as non-capitalists, is to break from their thinking, to reject their reality, which is not how things are, but an illusion in order to obscure the theft. There was surplus in slave and feudal economies that was stolen by the ruling class; no one today would deny that these systems were exploitive. In that regard, capitalists are no different, they simply have a different method.

So when we borrow money from them we are paying for the use of the product of our own collective labor. It's ours. All efforts to eradicate poverty or change society for the better, even partial revolutions that make major social changes, will never solve these problems until those who produce wealth own it and decide collectively how it will be used.

"Mutual dissimulation, hypocrisy and sanctimoniousness are carried to extreme lengths, so that on the man without credit is pronounced not only the simple judgment that he is poor, but in addition a pejorative moral judgment that he possesses no trust, no recognition, and therefore is a social pariah, a bad man, and in addition to his privation, the poor man undergoes this humiliation and the humiliating necessity of having to ask the rich man for credit."
Marx: Comments on James Mill 1844

(1) The Poverty Business: Business Week, 5-21-07:  http://www.businessweek.com
(2) John T Hewitt: Jackson Hewitt Tax Service Inc.
(*) By consumption Marx means the use, by the worker through the labor process, of the raw material supplied by the capitalist.

Richard Mellor
AFSCME 444 retired

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