One of Marx's first political writings dealt with timber. His article "Debates on the Law on the Thefts of Wood", which he wrote as editor of the Rheinische Zeitung in 1842, defended the right of peasants to scavenge wood from what had once been common land. Wood was the main source of fuel for heating homes and cooking food. For a discussion of this topic, as well as the development of Marx's overall thinking on nature and the environment, see John Bellamy Foster's fascinating book Marx's Ecology: Materialism and nature, 2000, Monthly Review Press. "What was at issue," Bellamy writes, "was the dissolution of the final rights of the peasants in relation to what had been the common land -- rights that had existed from time immemorial but which were being eliminated by the growth of industrialization and the system of private property." (66)
So the trajectory looks something like this: Common land; enclosure or privatization of forest land by the large (family) landowners; the industrialization of timber production and ownership by timber corporations; the ownership by hedge funds and pension funds. Memo to self: for a future project, map the alienation of human from nature onto property relations and see what turns up.
For more on "speculative capital" as I use the term, see a paper I did for the 2002 Global Studies Association meeting. Briefly, the idea is that capital can play different roles or take different forms. "Productive capital" is capital applied to actual production -- tied up in raw materials or machinery or advanced as wages. Inasmuch as this capital is used in industrial processes (and we could include industrialized agriculture here), it is "industrial capital." "Finance capital", following from Lenin (which is fair I think, as Marxist economics is the context in which I am looking at these forms) is the merger of "bank capital" with "industrial capital" under the control of the banks. This capital was still directed towards production. "Speculative capital" is a subset of finance capital, or develops from it, and is capital involved in the trading of financial instruments; derivatives in the broadest sense of the term -- instruments derived from underlying titles or goods or commodities or assets. Typically speculative capital is used in the management of risk.
In this sense, Harvard's large endowment is not speculative capital per se. In its ownership of large tracts of forest the university functions more like a rentier, holding the asset and selling timber rights back to the timber corporations from which it bought the land. It gives an institutional face to the land ownership. When money managers securitize the woods though, e.g. by setting up timber funds that investors can subscribe to, or real estate investment trusts (REITs) that then sell shares on the open market, then this can properly be seen as the functioning of speculative capital. The underlying asset (the forest) has been converted into shares that can then be traded among investors. Inasmuch as the forest generates income, these shares are titles to future income streams -- what Marx called "fictitious capital".
Another WSJ article on 11/4/05, "REITs Spread to Timber Industry As Paper Market Struggles, Firms Adopt New Structure In Bid to Boost Share Prices" by Chelsea Deweese describes how these REITs work:
With growth in the paper market sluggish and the timber market battered by cutthroat competition, timber companies have been looking for ways to boost their share prices and stand out with investors. For the companies, a big advantage to becoming a REIT is that they no longer have to pay corporate income tax on earnings from land holdings.
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Integrated forest-product companies once tried to do it all: own land, harvest trees and produce paper and other wood products. Today, under pressure from shareholders who want them to maximize the value of their timberland, companies are being forced to restructure.
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REITs typically pay out hefty dividends, because they are required to pass 90% of their earnings to shareholders. And because earnings from timberland REITs are considered capital gains, their dividends are taxed at a lower rate -- a maximum of 15%, compared with up to 35% for other REITs, whose earnings don't all qualify as capital gains.
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Timber REITs have performed so well that some non-REIT timber companies have faced investor pressure to do more to keep up, analysts say. Mr. Chercover says some companies are lobbying Congress for changes in the law so their timber operations would be "taxed on a level playing field with the REITs." [the connections in the economy compel other players to keep up or fail - jd]
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But the growth of timber REITs has some on Wall Street worried. These REITs make money buying and selling timberland real estate to property developers. If the housing market cools and land sales decline, timber REITs may see their earnings suffer. In addition, a real-estate downturn could chill demand for wood for building houses, which also could hurt timber REITs.
"We are in a very strong market for wood, but that's not going to last forever," says Richard Schneider, an analyst at UBS Warburg.
Ben Inker, director of asset allocation at investment firm Grantham, Mayo, van Otterloo in Boston, says the REIT structure isn't ideal for all timber companies. Once a company converts, he says, it may feel pressure from shareholders to produce steady revenue, which could force it to cut down trees even if demand for wood dries up.
The article also notes that in the case of Plum Creek raised enough money through the REIT to begin trading in timber real estate, in addition to exploiting the natural resources.
Speculative capital represents an abstraction from the act of production. There is the production itself, then the loans, bonds, etc. that finance of production, and then the various levels of abstraction of speculative capital: the shares that represent titles to production or income streams, the mutual funds or exchange-traded funds that represent no particular company, but an industry or the economy as a whole, the instruments that represent the price movement of those shares, and finally, modern-day derivatives that link together distant and distinct markets and commodities together.
This degree of distancing (can it also be called alienation?) of capital mirrors the trajectory of property.
Finally, speculation is rooted in the management of risk, of which the first and main source is Nature -- storms at sea, weather-related crop failure, floods or drought or hurricanes. From the trade in tulip futures in Holland in the 1600s to the trade in weather derivatives at the Chicago Mercantile Exchange today, speculative capital has had an intimate relationship to Nature. Memo to self -- another project.
Abstraction, insulation, securitization, protect -- the language of alienation.
jd
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