Diamonds and the Accumulation of De Beers, 1935-55

445 Pages·2016·2.54 MB·English

by  D. T. Cochrane

What’s Love Got to Do with It? Diamonds and the Accumulation of De Beers, 1935-55

David Troy Cochrane

A Dissertation Submitted to
the Faculty of Graduate Studies
in Partial Fulfillment of the Requirements
for the Degree of
Doctor of Philosophy

Graduate Program in Social & Political Thought
York University
Toronto, Ontario

December 2015
©David Troy Cochrane 2015
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!ABSTRACT
What is accumulation? Visibly, accumulation is a quantitative process, demarcated in financial
quantities. However, what is the meaning of those quantities? This question has been the subject
of great debate within political economic thought. A new theory of accumulation, capital as
power (CasP), argues that the financial quantities of accumulation express the distribution of
power among the owners of capital over the qualitatively diverse, complex and mutating social
order. With this dissertation, I explore the relationship between the quantities and qualities of
accumulation by examining the De Beers diamond cartel, focusing on the period 1935-55. What
does it mean to say ‘capital is power’ in the specific setting of the global diamond assemblage?
Research and analysis led me to focus on four important relationships that De Beers had to
establish, maintain and transform in its struggle for differential accumulation: with diamonds
themselves; with potential and actual diamond buyers; with governments; and, with families,
especially the Oppenheimer family that controlled De Beers for over 80 years.
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!ACKNOWLEDGEMENTS
My amazing partner, Shelley Boulton, deserves more praise than I can give for putting up
with this PhD. Together with our children, Tigerlily and Daisy, she reminded me that life doesn’t
begin and end with my scholarly work. I could enjoy this project only because they occasionally
freed me of its seemingly endless demands. Time spent with my family was a respite that helped
me survive this degree. They cannot be thanked enough.
Next, I have to give special thanks to my supervisor, Jonathan Nitzan. It was his work
with Shimshon Bichler that brought me to York. For a disillusioned economics major, Nitzan
and Bichler’s theory of capital as power offered a critical opening for my desire to understand
business. I feel fortunate to have encountered an exciting, new intellectual framework like capital
as power so early in its development and I hope to continue to participate in developing the
theory and its analytical practices.
My engagement with capital as power depended on more than just Professor Nitzan.
There were thoughtful, inquisitive fellow travellers similarly disillusioned with political
economy, seeking a different approach to understanding the capitalist social order. Discussions
with Sandy Hager, Joseph Baines, Jong-chul Kim, James McMahon and Joe Francis helped to
develop my perspective on capitalist power. Jordan Brennan and Sean Starrs were frequent
interlocutors offering my nascent ideas vociferous debate. The presenters and attendees at the
Forum on Capital as Power conferences also deserve thanks for the numerous intriguing ideas
and provocative criticisms they offered.
I have to acknowledge the importance of three other conferences influential for this
project. The first was the 2008 Great Lakes Radical Political Economy Conference, where I
received a positive, though critical, reception to my first presentation on capital as power. In
particular, Daniel Moure, who was familiar with capital as power and happened to give one of
the most cogent presentations I had ever heard, complimented my presentation. Considering he
was someone I had only just met, his affirmation was very meaningful and I continue to value
our conversations, even if he is half a world away. The second important conference was the
Strategies of Critique organized annually by my department. In 2009, the topic was ‘Love.’ As a
political economist, I was unsure what I could possibly present on. But, the idea of love led me
to diamonds, which led me to De Beers. The third pivotal conference was the 2009 Rethinking
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Marxism conference, where I presented on De Beers for the second time. After my presentation,
Tim Di Muzio encouraged me – against my resistance – to make it my dissertation topic.
The other members of my committee, Professors Mark Peacock and J.J. McMurtry,
deserve thanks for helping oversee this project. Their open-mindedness to novel approaches to
political economy, combined with their bases of knowledge, helped me to see many aspects of
this dissertation in new ways. Additionally, I’d like to give thanks to two of the professors for
whom I was a teaching assistant. Professor Sharada Srinivasan encouraged my eclectic
interpretations and offered much needed support and cajoling. Professor John Dwyer offered a
model both for dynamic teaching and for philosophical curiosity.
I have been fortunate to make and keep some amazing friendships with people who have
shown genuine interest in my research (and feigned some also, I’m sure). Certain friends will
always be more important at certain times. But, their overall importance cannot be quantified or
ranked, so, in order of when we met, as best as I can remember, thank you: Shawn Fulton, Scott
Fulton, Laine Gable, Sarah Garden, Pete Garden, Colin Hall, Kendra Kemble, Jenn Hannotte, Jo-
Anne McArthur, Adam Evans, karen emily suurtamm, Karen Hawley, Steph Kimball, Gordie
Wornoff, Zac Vance, Linsey McGoey, Jeff Monaghan, Andréa Schmidt, Pete Vance, Kelly
Fritsch, Eliot Che, Angela Mooney, Manon Gagnon, Lee Knuttila, Alessandra Renzi, Alison
Porter and Jill Hannotte. Unfortunately, undoubtedly there are numerous others who deserve
recognition, but whose importance I have failed to recall. I’m nervously certain that after this
entire thing is finalized I will conjure up an overlooked friend from the past. If you are one of
those people who deserved to be mentioned, I apologize, although I cannot help but wonder what
you’re doing surveying the acknowledgements of a PhD dissertation.
Missing from the list above are a few friends who have provided concrete material
support for this dissertation in the form of research assistance, housing, copy editing, feedback or
something else of tangible consequence for the project. They may consider their assistance a
little thing, but its role in this work is irreducibly important. Thank you karen emily suurtamm,
Etienne ‘You’ll always be Steve to me’ Turpin, Jeff Monaghan, Aaron Gordon, Laura Kane,
Andréa Schmidt and Anna Feigenbaum.
Two groups of friends outside those listed above also deserve to be mentioned. The first
are the people I got to know through the online photography site Flickr. Their shared passion for
photography gave me an outlet for a creative pursuit that did not fit into my graduate studies.
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Online communities are real communities and this one deserves to be acknowledged here. The
second group of friends are the newly developing ones at West Toronto Crossfit. I want to
mention by name my coaches Jeff MacWilliams and Zeyna Shah, plus my frequent lifting
partner, Ben Wilkinson. Without them, the final year of writing this dissertation would have been
immeasurably more difficult.
Last, but not least, thanks goes to my extended family. I grew up in the same small town
that both of my parents grew up in. I was surrounded by aunts and uncles and cousins. I didn’t
realize, at the time, what a special thing that was. But, now, as an adult, on the rare occasions
when we get together, the timelessness of our bond becomes apparent. There are few people I
feel more comfortable with than these people whom chance made me related to. The same is
true, only more so, for my brothers, Cory and Ryan Cochrane. The three of us are very different
people. I suspect they’ve considered me a big weirdo for our entire lives. Like all brothers, we
fought. But, I know that they, together with their amazing wives and children, Christa, Holly,
Kenzie, Kaida, Vaya and Hayes, will always throw open their doors for me and my family. As
we get older, the time apart becomes longer. Yet, we’re always welcome. It is heartening to
know that their homes are our homes too, at least for three days at a time!
Among all my amazing family members special mention must be given to my Auntie
Reenie Barnett. Without her support half of the research for this dissertation would have been
impossible. She has also encouraged me at every step to continue to pursue academia.
As well, I want to take a moment to remember my grandparents, Errol and Lily
Cochrane, and Dudley and Irene Barnett. I was lucky enough to have all four grandparents in my
life into my 20s. The influence of their quite different personalities shaped me a great deal. In
various ways, the best parts of myself, I owe to them.
Finally, my parents, Kirk and Cathy Cochrane, get the clean-up position in these
acknowledgements. They fostered in me an intense curiosity, which is perhaps the most
important ingredient to any academic undertakings. Beyond that, my Mom made sure I
understood that there can be different answers to the same question. She helped me recognize
that there is always more than one way to look at the world. My Dad made sure that I never got
away with unsupported declarations and challenged me throughout my intellectual development.
For all these people, thanks are not enough, but I offer it anyway. Thank you.
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!TABLE OF CONTENTS

ABSTRACT .................................................................................................................................... ii!
ACKNOWLEDGEMENTS ........................................................................................................... iii!
TABLE OF CONTENTS ............................................................................................................... vi!
List of Figures ................................................................................................................................ ix!
List of Tables .................................................................................................................................. x!
List of Images ................................................................................................................................ xi!
Chapter 1: Introduction ................................................................................................................... 1!
I. The Introduction’s Introduction ............................................................................................... 1!
II. Some Qualities of Diamonds and De Beers ......................................................................... 17!
i. The Pre-South African History of Diamonds .................................................................... 18!
ii. The Pre-De Beers South African History of Diamonds ................................................... 21!
iii. The Early History of De Beers ........................................................................................ 24!
iv. The Production of Gems .................................................................................................. 28!
v. Conclusion to the Qualitative Introduction ....................................................................... 31!
III. The Quantities of Accumulation and Profit ........................................................................ 32!
i. Quantifying the Diamond Assemblage .............................................................................. 42!
ii. Conclusion to the Quantitative Introduction ..................................................................... 60!
IV. Introduction’s Conclusion .................................................................................................. 61!
Chapter 2: Power and Price Construction in CasP ........................................................................ 65!
I. Introduction ........................................................................................................................... 65!
II. Constructing Prices .............................................................................................................. 67!
III. Theorizing Power: Hobbes and Machiavelli ....................................................................... 73!
IV. Theorizing Power: Political Economy ................................................................................ 78!
V. The Theoretical Foundations of the State-Capital Distinction ............................................. 83!
VI. State of Capital / Capitalist Mode of Power ....................................................................... 86!
VII. Accumulating Power ......................................................................................................... 89!
VIII. Conclusion ....................................................................................................................... 99!
Chapter 3: The Role of Diamonds in Accumulation I: What Diamond Is .................................. 101!
I. Introduction ......................................................................................................................... 101!
II. Commodities: Use, Exchange, Desire and Knowledge ...................................................... 105!
III. Materiality ......................................................................................................................... 111!
IV. Properties: What a Diamond Is ......................................................................................... 119!
V. Proto-Conclusion ............................................................................................................... 129!
Chapter 4: The Role of Diamonds in Accumulation II: What Diamond Can Do ....................... 132!
I. Introduction ......................................................................................................................... 132!
II. Capacities: What a Diamond Can Do ................................................................................ 135!
i. Expressive Capacities ...................................................................................................... 139!
ii. Material Capacities ......................................................................................................... 145!
III. Classification: Putting Diamonds in their Place ............................................................... 150!
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IV. Conclusion ........................................................................................................................ 157!
Chapter 5: Researching Diamond Knowledge among the Masses ............................................. 160!
I. Introduction ......................................................................................................................... 160!
II. Theorizing Advertising ...................................................................................................... 163!
III. Researching the Actual and Possible Diamond Market .................................................... 172!
i. Trade Survey .................................................................................................................... 173!
ii. Consumer Survey ............................................................................................................ 177!
IV. Constructing the Diamond Market ................................................................................... 187!
V. Conclusion ......................................................................................................................... 198!
Chapter 6: Advertising Diamonds as a ‘Mundane Objects’ ....................................................... 202!
I. Introduction ......................................................................................................................... 202!
II. Differential Advertising ..................................................................................................... 206!
i. Differential Appearance ................................................................................................... 212!
ii. Differential Content ........................................................................................................ 214!
iii. Differential Outlets ........................................................................................................ 217!
iv. Differential Objects ........................................................................................................ 221!
III. Advertising to Transform the Diamond Assemblage ....................................................... 223!
i. Relations with the Generations ........................................................................................ 225!
ii. The Diamond Knowledge of the Masses ........................................................................ 231!
iii. Relation between Meaning-making and Knowledge ..................................................... 239!
iv. Relations with the Jewellers .......................................................................................... 241!
v. War’s Transformations ................................................................................................... 247!
vi. Men’s Relations with Diamonds .................................................................................... 254!
IV. Conclusion ........................................................................................................................ 259!
Chapter 7: The Differential Governing of Diamonds ................................................................. 262!
I. Introduction ......................................................................................................................... 262!
II. Navigating De Beers Within the Capitalist Mode of Power .............................................. 270!
III. Mode of Power or Modes of Power? ................................................................................ 277!
IV. The Nationality of Capital ................................................................................................ 292!
V. Other Logics ....................................................................................................................... 296!
VI. The State of Sovereignty and Differential Accumulation ................................................ 304!
VII. Conclusion ....................................................................................................................... 311!
Chapter 8: The Intersections of Family and Diamonds .............................................................. 318!
I. Introduction ......................................................................................................................... 318!
II. Theorizing the Family and Accumulation .......................................................................... 328!
i. Family and Marxist Value Theory ................................................................................... 328!
ii. Family and Neoclassical Value Theory .......................................................................... 330!
iii. Family and Theories of Business History ...................................................................... 332!
iv. Family Among the Powerful. ......................................................................................... 336!
III. Diamonds and Family ....................................................................................................... 343!
i. Family and the Masses ..................................................................................................... 346!
ii. Family and the Traders ................................................................................................... 350!
iii. De Beers and the Oppenheimer Family ......................................................................... 356!
IV. Conclusion. ....................................................................................................................... 370!
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Chapter 9: Conclusion: Diamonds & De Beers Between Then & Now ..................................... 374!
I. Introduction ......................................................................................................................... 374!
II. Political Economy and the Constructions of Accounting .................................................. 379!
III. The Quantities of De Beers’ Accumulation: 1967-2001 .................................................. 382!
IV. The Qualities of De Beers’ Accumulation: 1967-2001 .................................................... 387!
V. De Beers: 2001 and Beyond ............................................................................................... 393!
VI. Beyond Diamonds and De Beers: Lessons and Questions ............................................... 397!
i. The Political Economy of Things .................................................................................... 398!
ii. The Political Economy of Purchase and Use .................................................................. 400!
iii. The Political Economy of the Elite ................................................................................ 404!
VII. Conclusion: The Need for Accumulation Studies ........................................................... 407!
Constructing a Profit Series ........................................................................................................ 413!
Bibliography ............................................................................................................................... 418!
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!List of Figures
Figure 1: Wartime Accumulation: De Beers v. US, UK and South Africa, 1889-1952 ................. 2!
Figure 2: Labouring for Profits: Diamond Workers and De Beers Profits, 1911-55 .................... 13!
Figure 3: Losing & Gaining Power: Differential Profits, De Beers vs. S&PComp, 1904-60 ...... 35!
Figure 4: From Profits to Accumulation, De Beers vs. S&PComp, 1904-73 ............................... 38!
Figure 5: Shared Dynamics, Changes in Profits and Capitalization, 1909-1952 .......................... 39!
Figure 6: Diamond Imports: Industrials v. Gems, 1929-55 .......................................................... 46!
Figure 7: Diamond, Copper and Steel Use, 1900-55 .................................................................... 47!
Figure 8: Diamond Production and Purchase, 1929-56 ................................................................ 48!
Figure 9: Catalyzing Tradition: Diamonds & Marriage, 1929-60 ................................................ 51!
Figure 10: Wartime Departure: Advertising and Mass Purchases, 1921-65 ................................ 54!
Figure 11: Producing & Controlling Diamonds: De Beers' Income Sources, 1904-52 ................ 58!
Figure 12: The Nodes of Power Over & Power To ...................................................................... 93!
Figure 13: Covering the Market, Diamond Retail Prices, 1939-65 ............................................ 233!
Figure 14: Import Volumes & Prices, Cut & Rough Diamonds, 1929-55 ................................. 235!
Figure 15: Conflicting Logics I: U.S. Corporate Profits Before and After Tax, 1929-2010 ...... 286!
Figure 16: Conflicting Logics II: U.S. Corporate Profits relative to GDI, 1929-60 ................... 288!
Figure 17: Gaining & Losing Power II: Differential Profits, De Beers vs. S&PComp, 1967-2001
............................................................................................................................................. 383!
Figure 18: The Slow Decline Resumes: De Beers v. U.S., 1967-2001 ...................................... 385!
Figure 19: Marriage Matters: The Accumulation of De Beers and U.S. Marriage Rate, 1967-2001
............................................................................................................................................. 391!
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!List of Tables
Table 1: Jewellery Stands Out: Correlation of yearly change in spending by the masses with
yearly change in advertising spending. ................................................................................. 55!
Table 2: Closing the Gaps, changes in advertised diamond retail prices, 1939-65 .................... 234!