Why Diamonds and De Beers?, or The Need for Accumulation Studies

Cochrane, David Troy Working Paper Why Diamonds and De Beers?, or The Need for Accumulation Studies Working Papers on Capital as Power, No. 2016/02 Provided in Cooperation with: The Bichler & Nitzan Archives Suggested Citation: Cochrane, David Troy (2016) : Why Diamonds and De Beers?, or The Need for Accumulation Studies, Working Papers on Capital as Power, No. 2016/02, Forum on Capital As Power - Toward a New Cosmology of Capitalism, s.l., http://bnarchives.yorku.ca/475/ This Version is available at: https://hdl.handle.net/10419/157874 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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Cochrane ! 1! Why diamonds and De Beers?, or The Need for Accumulation Studies Preface. I successfully defended my dissertation1 in December. This served as the introductory presentation for the defence. In it, I explain what I tried to do with the dissertation, the methods I used, and the larger project I hope it is initiating. Specifically, I suggest there is a need for accumulation studies as a field of research and analysis. The dissertation was a case study within this not-yet-existent field. Hopefully, this text serves to clarify my approach and, ideally, will generate greater interest in such research. Introduction. There are two general sets of reasons I wrote my dissertation on diamonds and De Beers. The first set we might think of as both personal and contingent. These are related to my intellectual interests and the reasons I have pursued academia for so many years. Flowing into and out of those interests are all the happenstance, unexpected events that bring us to the particularities of research and analysis. The second set of reasons are analytical. They constitute the foundational and structuring purposes of what I hoped to achieve with the dissertation. The first reason, a personal reason, is my abiding desire to understand how business !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1 Available at http://bnarchives.yorku.ca/469/ Why diamonds and De Beers? Cochrane ! 2! operates. As an undergrad, critical of capitalism tout court and writ large, I went into economics hoping to gain this understanding and the language for a knowledgeable critique. Two degrees later, all I had learned about business was why economic theory is so useful to it as an obfuscating, ideological veneer. The next event was a contingent one: a call for abstracts for a conference about ‘Love.’ My department, Social & Political Thought, has a conference every year called Strategies of Critique. It is an excellent conference and I wanted to participate. However, as a political economist, what could I say about love? Somewhere in my brainstorming came the idea of diamonds as the symbol of romance & marriage. Already studying theories of capital with Professor Jonathan Nitzan, I was curious about the accumulation of De Beers. When the abstract was accepted, I began some cursory research and became hooked on the topic. The next event came at a later conference where I presented again on De Beers. After that presentation a colleague — Tim DiMuzio — asked if this was the subject of my dissertation. I answered in the negative, saying it was too slight. He disagreed and encouraged me to consider the matter. On initial discussions with Professor Nitzan, he concurred with my original assessment. However, some further research and further discussion with Professor Nitzan convinced us both that De Beers would be a suitable object of study for me to pursue my broader interests. This leads to the final event: research providing a glimpse of the complexity of the Why diamonds and De Beers? Cochrane ! 3! story of diamonds and De Beers’ accumulation. De Beers’ accumulation was dependent on what I’ve referred to as the ‘global diamond assemblage,’ which included the complex intertwining of an untold number of heterogeneous elements: from The American Dream to the geometry of light diffraction to family ownership to high speed manufacturing to nostalgia to multiple government agencies in different countries and on and on and on. That incredible complexity made the topic interesting and suitable for dissembling to suit my analytical purposes. The first of those purposes was to understand this global diamond assemblage better. This is the entity that I argue was — in all its complexity —responsible for the value of De Beers. The features and transformations of the global diamond assemblage contained the elements translated into De Beers’ valuation and accumulation. Therefore, it also contained what I described as De Beers’ ‘matters of concern.’ This term comes from actor-network-theory – ANT – and is intended to distinguish mutable and immutable entities, the latter being described as ‘matters of fact.’ On the one hand, matters of fact were fixed and not responsive to efforts to change. Matters of concern, on the other hand, could be the objects of intervention for De Beers. For example, the Sun’s placement in the North when in Kimberley, South Africa and in the South when in London, England was not likely to be altered by De Beers, no matter how hard it might try. However, De Beers could ensure that the windows of its sorting rooms faced in the opposite direction, since sorting is best facilitated by non-direct sunlight. Why diamonds and De Beers? Cochrane ! 4! Then, I wanted to understand how we get from these points of qualitative intervention and transformation to the quantities of accumulation. For example, De Beers’ advertising sought to educate the American masses on the four axes of diamond qualities, now known as the 4Cs, which resulted in greater demand across the range of diamond qualities available, allowing jewellers to sell stones of a given size — at a given price — that previously would have been unwanted as a jewel and shifted into the industrial category at a much, much lower price. Through all of this, I was involved in an exercise of what I’m calling ‘accumulation studies.’ The field is intended to simultaneously grapple with the qualities and quantities of accumulation, a problem that has slipped through the cracks of disciplinarity, as highlighted by the capital as power — or CasP — approach. The Role of CasP. CasP, with its challenge of the two dominant theories of value — the neoclassical and the Marxist — identifies capitalization as the central mechanism of capitalism. As such, De Beers’ capitalization was my immediate object of interest. However, CasP does not theoretically restrict what is being translated into the quantities of capital. At this point, I took a lesson from ANT, which states that objectivity is achieved not by creating a distance from the object of analysis, but by moving closer to the object. Moving closer to De Beers, one keeps finding — unsurprisingly — diamonds. So, the question became, Why diamonds and De Beers? Cochrane ! 5! what is contained in the relationship between diamonds and the value of De Beers? Consider first, the answer of the dominant value theories: productivity. For both Marxist and neoclassical value theory, the determinant of the nominal price of De Beers’ valuation would be productivity with some sort of distortion that caused it to fluctuate around its real value. However, the diamonds would not actually matter, since both theories bypass the qualitative heterogeneity of the actual to postulate a quantitative determinant, utility in the case of neoclassical theory and abstract labour in the case of Marxist theory. As such, the materiality of diamonds, and the particularities of diamonds’ relationships — to desire, to extraction, to jewellers, to governments, etc. — all fall away. In the language of ANT, the dominant theories treat the heterogeneous stuff of the actual like intermediaries, merely relaying forces initiated elsewhere. Conversely, with my analysis, I grant some of these entities the status of mediator. They affect qualitative transformations that are consequential for accumulation. I argue that this approach to the qualitative diversity of the world is commensurable with CasP, which makes no a priori categorizations on what is and is not translated into capital values. Where the dominant theories would eliminate diamonds, reducing them to productivity, CasP theorizes the relationship as one of power. However, just as CasP does not restrict the possible objects and subjects of that power, it does not articulate what that power relationship means, qualitatively. What are the qualities of power? Why diamonds and De Beers? Cochrane ! 6! What is the make-up of the processes quantified into capital values? How does the make-up change as capital values are redistributed? Power, as theorized by Professor Nitzan and his writing partner Shimshon Bichler, is ‘confidence in obedience.’ This is what is expressed by capital values, which are made meaningful by differential comparison to a benchmark of capital-in-general. Accumulation is achieved when a particular capital gains faster – or loses slower – than the benchmark. In this way, differential values are a map to power. In my interpretation of CasP, differential valuation constitutes the explanandum, that which is ‘to be explained.’ This directly answers a question about CasP raised by Bob Jessop: is differential accumulation the explanans — that which explains — or the explanandum? In this way, I offer a contribution to further developing the power theory of value. Returning to the ANT method, and moving closer to capitalization as an object, we find what I labelled assayers. These are the investors, fund managers, brokers, bankers, market makers, accountants, analysts, and others whose calculations and transactions quantify the qualities of power. The most dynamic component among the assayers are the buyers & sellers of shares whose decisions generate the second-to-second fluctuations in share valuation. Unfortunately, the activities of assayers are highly opaque. In part, this is a consequence of the productivist bias of political economy. If value was determined in systems of production and if financial markets were merely a distorted representation Why diamonds and De Beers? Cochrane ! 7! of that value, then assayers were simply intermediaries. We know little of how assayers make their decisions. How do they translate information into calculations? How are they making their decisions to buy-and-sell? Financial sociologists are starting to critically explore this process. However, for my specific purposes, I had no access to data on the actions of assayers responsible for the construction of the value of De Beers. In order to bypass the assayers, I moved the analysis from capitalization to profits. Nitzan and Bichler refer to expected profits as one of the elementary particles of capitalization. Actualized profit is also a standard input into the calculation of expected profits. However, what was ultimately important for my purposes was — as I found in my quantitative analysis — that the long-term dynamics of De Beers’ differential capitalization and differential profits were the same. The Qualities and Quantities of De Beers’ Accumulation. So, as I said, I began with consideration of the differential capitalization and differential profits of De Beers. Despite the relative simplicity of these objects — consisting of a series of numbers — actually compiling these figures and constructing these series was far from simple, especially for the profits. Nonetheless, these numbers express in commensurable terms all the otherwise incommensurable heterogeneous elements of the global diamond assemblage. The differential method compares De Beers’ profits and capitalization with a Why diamonds and De Beers? Cochrane ! 14! The division of labour: perhaps the longest standing concept taken for granted as a necessity of capital and accumulation. Are there corporations or corporate coalitions whose interests are differentially served by moving against the division of labour? What social transformations can they — or have they — aaffected? The nuclear family: one of the more contentiously claimed necessities of capitalism. Again, what differential interests are there in the maintenance, transformation or destruction of the nuclear family? Racial oppression: an undeniable fact under capitalism, but does capital and accumulation require it? Has it been entrenched in capitalist societies through the differential maintenance and leveraging by particular groupings of capital? Finally, and most controversially: growth. When accumulation is understood as a redistributionary process then it at least raises the possibility — desirable to some, undesirable to others — that capital as a mechanism could endure in a post-growth society. I argue that answering these questions will only occur through greater study of the qualities of accumulation. The power theory of value can gird such an analysis by providing analytical meaning to the quantities of accumulation. From these mappings of power redistribution we can discern the myriad and complex ways the differential struggle among capitalists has creordered our shared world.