In the aftermath of the financial crisis, a Bank of England investigation into the impact of quantitative easing on uk wealth distribution estimated that the poorest decile of households had seen an increase in real wealth of around £3,000 between 2008 and 2014, compared to £350,000 for the wealthiest 10 per cent.footnote1 Although this would seem to confirm the view that qe had benefited the rich, the Bank of England came to the opposite conclusion. ‘Quantitative Easing “Reduced uk Wealth Inequality” Says boe’, trumpeted the Financial Times headline on the study, reporting that there had been a slight decline in the uk’s Gini coefficient. Proportionately, the poorest decile’s £3,000 represented a larger percentage of their initial average wealth than the £350,000 received by the wealthiest. But in what sense is it ‘better’ to receive a bigger proportion of a smaller amount? Over six years, that £3,000 is less than £10 a week, which adds very little to a person’s well-being, let alone their political and economic power. The wealthiest decile got over £1,000 a week under the Bank’s qe regime. Over six years, that would be enough to buy a studio apartment in mid-town Manhattan.
There was, the Bank of England researchers conceded, ‘a communication challenge for policy makers’ in explaining to the public how qe worked and helping them to understand ‘all the less direct ways in which they have benefited.’ They are right, of course, about the communication challenge. But what is at stake in teaching the public to think in terms of percentage rates of gain, as opposed to absolute amounts, when doing so apparently masks the immense wealth that flows to the already affluent? For the most part, financial and economic commentary repeatedly emphasizes rates of change, to the exclusion of overall mass amounts. Improvements in economic performance—gdp, productivity, consumer sentiment—are nearly always measured in terms of rates of growth. Among the few absolute numbers that seem to move the markets are job creation and the trade balance. Exclusive concentration on rates rather than the mass introduces a systematic bias into economic analysis. All too often, as with the Bank of England report, this bias benefits the dominant classes. The mass of wealth and power they control has been increasing monstrously relative to everyone else, despite low rates of growth. Increases for the least well-off are as much a reflection of their initial poverty as a measure of real benefit. If the bottom decile has close to zero wealth, then a tiny increment could generate a 100 per cent gain.
Though the issue of rate versus mass is a simple and obvious point, it is remarkable how often people forget about it or simply get it wrong. Consider, for example, the matter of faltering growth rates in China. Prior to the pandemic, that country contributed over a third of the global growth after 2008—more than North America, Europe and Japan combined.footnote2 It is widely held that the prc in effect saved world capitalism from a major depression by its expansionist policies after the Financial Crisis, so a slackening in Chinese growth rates would appear to threaten global recession. To be sure, the double-digit growth rates that were the norm during the 1990s could not be sustained, but the thought that China’s growth rates might descend to the dismal levels of Europe or Japan sent fearful shivers through global stock markets.footnote2 Why were the Chinese authorities relatively unconcerned? A Financial Times commentator provided the answer:
A bigger but slower-growing economy creates more additional demand than a smaller economy that is expanding more rapidly. Last year, China’s economy expanded by about $1.2tn, or twice what it did when it was growing at double-digit rates more than a decade ago. That in turn creates enough urban employment (10 million or more new jobs a year) to ease official concerns about their greatest fear—‘social instability’ and any loosening of their ever tighter grip on China’s body politic.footnote3
If the policy objective is to create 10 million jobs a year, it may be easier to do so with a slower rate of growth in a huge economy, like China’s today, rather than a faster rate in a smaller one.
The question of rate versus mass arises in many fields of analysis. Take, for example, how we think about climate change. The most recent reading from Mauna Loa for atmospheric concentrations of co2 puts the absolute figure at 423 parts per million. A time series constructed by the us National Oceanic and Atmospheric Administration shows that at no point over the past 800,000 years did this concentration exceed 300ppm, until 1960. Thereafter it accelerated to break the 400ppm level in 2016.footnote4 Conversation on what to do about climate change still focuses almost exclusively on stabilizing, and then gradually reducing, the rates of emission. But it is the already-existing mass of greenhouse gasses in the atmosphere that is breaking up the Greenland ice sheet, melting Antarctica, submerging coastlands and diminishing the Himalayan snowpack enough to threaten the whole Indian sub-continent with chronic water shortages, risking the possibility that further swathes of the planet may shortly be unfit for human habitation. If the astonishing heat wave that hit the Pacific Northwest this summer was a prelude to a hotter future, it was also an echo of the record temperatures in Europe in 2003, which killed some 30,000 people. Fetishizing the rate rather than the mass is not a good response here, either. In what follows, I explore the ways in which the relationship between rate and mass in contemporary capitalism might be conceptualized, starting with the insights of Marx himself, who saw capital as a social relation—value—in perpetual motion.
Mainstream commentators are not alone in missing the import of mass. There is a long history of Marxist economists doing so, too—not least in work on the tendency for the rate of profit to fall. Extensive empirical documentation for this tendency exists, and the theory has provided a useful framework for understanding the crisis tendencies of capital. Marx himself, however, proposed a more nuanced view, in which the increasing mass plays a significant role. He begins the section on the falling rate of profit in his 1864–65 Economic Manuscript with a clear and crisp explanation. The competitive search for technological advantage tends to remove labour—the source of value and surplus value (profit) in Marx’s theory—from production. A reduced labour input means, all else remaining equal, less surplus value is produced, which translates into a falling rate of profit. Ricardo and Smith were right to think that the capitalist mode of production was doomed to fail in the long run, but wrong to attribute the fall in the profit rate to (Malthusian) scarcities in nature, rising land rents and rising wages, which would subject industrial capital to an increasing squeeze on profit. Instead, Marx held that ‘the progressive tendency for the general rate of profit to fall is simply thus the expression, peculiar to the capitalist mode of production, of the progressive development of the social productivity of labour’.footnote5