Last week we looked briefly at the origin of the term ‘sabotage’ and found that it was more associated with the working class than it was with elite power – those who largely shape and reshape the terrain of social reproduction.  In this formulation, workers sabotage while businessmen build useful industry for the community.  In this view, there is no question of how ‘workers’ appear on the scene of word history intent on working for other people rather than themselves and their families.  This is the poverty of liberal history.   In some sense, the old term ‘sabotage’ is similar to the modern term ‘terror’.  Originally associated with the murderous policies of the French revolutionary state, in the 20th century, terror no longer applies to the state in mainstream ‘common sense’ political analysis.   Now, terror is always the work of the weak – or the politically deranged – no historical explanation of grievances necessary.  Sub-state actors commit terror, states go to war for the ‘national interest’.  Business is now read in the same way.  It’s in the national interest.

Yet last week we saw how the recalcitrant Thorstein Veblen applied the concept of sabotage primarily to business rather than workers.  This week, we want to consider how the capital as power approach builds on Veblen’s application of sabotage to business.  To do so, we have to briefly consider Veblen’s conceptual split between business and industry.

For Veblen, the industrial system represents a matrix of interdependent points, each reliant to a greater or lesser degree on other points or branches in the industrial system.  As the industrial process matures (becomes more complex or networked in contemporary language), Veblen claimed, there results a tendency towards standardization, itself a concomitant of the fact that mass industry requires planning and co-ordination.  Without this uniformity of co-ordination and planned synchronization of industrial activity, the industrial system could not develop with any degree of sophistication.  In other words, a break or major factor difference in any one branch of the industrial process threatens the entire system, or a great part of it, with collapse. Left to its own devices, however, the industrial system, Veblen argued, would be extremely productive and has the capacity to flood the world market with a diversity of goods and services.  The livelihood of the community then, is best served by an uninterrupted and balanced functioning of the industrial process.  But when we think of industry we shouldn’t just have in mind industrial machine production.  Industry can be simply conceptualized as human potential or capacity – what is possible to achieve in any given age.

This creativity and potential is the necessary base upon which the business enterprise is erected.  While the industrial process is materially and structurally prior, it is not in the ascendancy.  Business enterprise, with its motives, methods and aims has come to drive the industrial or creative process in pursuit of ever-expanding pecuniary gains – gains determined primarily by the expected or future earning capacity of each individual firm (adjusted for ‘risk’ for sure). The businessmen in control of each individual firm have this goal in common, though they find themselves in competition to redistribute a limited yearly income to their business empire or corporation.  The competition for market share and profits combined with the growing complexity and interconnectedness of the industrial system and compound human knowledge forces each business enterprise to seek out differential advantages.  For Veblen, this process manifests itself chiefly through the strategic control of industry and this involves sabotage as a going business concern.   In other words, profit cannot exist without sabotage.  From this perspective, it is not that firms produce for the sake of production, which would be in the interests of the community, but rather, for the sake of profit.  The production of material goods and services will be supplied to the community only insofar as the businessman can calculate the vendibility of his product and realize a reasonable rate of profit.  This power is rooted in ownership – the legal right to exclude others from use of certain ideas and material artefacts.  As Veblen put it:

By virtue of this legal right of sabotage which inheres as a natural right in the ownership of industrially useful things, the owners are able to dictate satisfactory terms; so that they come in for the usufruct of the community’s industrial knowledge and practice, with such deductions as are necessary to enforce their terms and such concessions as will induce the underlying population to go on with the work (1923: 67).

The relationship between the two can be stated thus: business needs industry, industry does not need business.  Business profit, rooted in ownership, requires sabotage.

With these two conceptualizations in mind we can now start to consider how the capital as power framework thinks about sabotage (the relevant reference here is Chapter 12 of Capital as Power).  Veblen never had a detailed theory of sabotage but the capital as power approach tries to make a conceptual distinction between two different forms of sabotage. The first is what could be called universal or general sabotage – the idea that all business firms must actively direct, control and limit human creativity and potential.  It does so not for human betterment but for business gain, two opposed metrics.  We will consider copious examples in the weeks to come.   But to provide one here, consider two very different firms: a telecommunications company and a home construction firm.  Both companies have the capacity to do many things.  The telecommunications firm likely has the ability to provide open internet access to the communities where it operates.  The home construction firm certainly has the ability to build homes for the community.  But neither company will unleash their full capacity to do so because to do so would be too ruinous to their profit margins.  They both must, as a strategic necessity, restrict the capacity of the workers they control.  Internet access will only be provided to paying customers despite the fact that it can be provided at cost for all who want to get connected.  Homes will be built for paying customers, not for the homeless, the jobless or those in need of shelter or a dwelling.  This does not mean that the home construction firm somehow loses the ability to make homes when there are no customers to sell to.  It merely means that there are no profitable paying customers – who are likely creditworthy enough to get a capitalized loan from a bank.  Both have to restrict capacity pure and simple in order to make a profit.  A free run of production or in our case, allowing workers to provide internet services to the people or builders homes for the homeless would be antithetical to businesses concerns.  ‘Free is not a business model’ (a rep of eBay China quoted in Nitzan and Bichler 2009: 233).  This, Veblen, argued, was the true meaning behind private property:

Without the power of discretionary idleness, without the right to keep the work out of the hands of the workmen and the product out of the market, investment and business enterprise would cease.  This is the larger meaning of the Security of Property (1923: 67).

So to be clear, the first form of sabotage is one that all businesses have to engage in to remain profitable – the ability to restrict, limit and exclude.   This closely follows Marx’s observation that demand must be backed by the ability to pay under capitalism or simply put, capitalists are concerned with profit, not the community.  The second form of sabotage, if not general or universal, is particular or differential sabotage (Nitzan and Bichler 2009: first mentioned on 246).  What this means is that individual firms engage in different types of sabotage to gain an advantage over their rivals.  Again, examples abound, but to provide one here, consider the new Microsoft Surface tablet introduced to compete with Apple’s iPad.  Microsoft was late to the cloud storage game but later developed SkyDrive – its own version of iCloud or perhaps the more popular Dropbox.  Dropbox has about 200 million users worldwide and their service allows users to store their data on a cloud server so that they can access their files from any device (tablet, computer, phone) they own.  With Surface, Microsoft has sabotaged their new competitor Dropbox – among a host of other software and app providers.  While Surface users can download Dropbox as an application, it cannot sync files with the user’s Dropbox account rendering it near useless for Surface users.  This is differential sabotage in broad daylight.  There is little secret that Microsoft would prefer everyone to move from Dropbox to SkyDrive and force users to shop at its company store – a move it largely copied from Apple’s own company store model.  There is no technological reason why the Surface tablet cannot support Dropbox on its hard drive.  The only reason for this sabotage is Microsoft’s profit margin.  So one of the greatest saboteurs in human history – Bill Gates – provided customers do not become exceedingly irate at the control Microsoft exerts over how they use their newly purchased devices – will enrich himself further by creating a noose-like monopoly over newly minted Surface users. The company store is always open and it’s the only store.

So in the capital as power framework, there are two forms of sabotage: universal and differential.  Next week we’ll take a deeper look at the historical relationship between ownership and sabotage with a view to examining business sabotage in more depths as the weeks go by.  As we shall come to see, ownership, capitalism and sabotage are born together: the triplets of modernity.  But there will be a fourth born: racism.