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Reply to @sushi_goat: How does reducing hours of labor work?

September 28, 2012 11 comments

Tweep @sushi_goat asked me a series of questions regarding reducing hours of labor yesterday. I made a stab at it, but I want to give a fuller answer here.

My argument on the impact of a shorter work week on “the economy” is based on Postone’s and Kurz’s analysis of superfluous labor. In his magnificent book, “Time labor and Social Domination”, Postone showed that superfluous labor is a necessary result of late capitalism and includes labor time that is necessary from the standpoint of the capitalist mode of production but superfluous from a higher mode of production. To call labor superfluous therefore does not imply that it appears empirically in this form within the capitalist mode of production itself. Within the capitalist mode of production this superfluous labor appears to be necessary.

In his own groundbreaking essay, “The Apotheosis of Money“, Kurz further defined this category from the standpoint of a theory of capitalist circulation as a whole. While he enumerated how this form appears in the form of many particular and obvious types of labor time, his real contribution was to nail down its implications for the capitalist mode of production. What Kurz showed is that this superfluous labor time consists in the production of values that do not reenter the capitalist reproduction process. To give an example: the production of an ear of corn is the production of a value; but if the corn is not consumed by a worker productively employed in the capitalist production process, it cannot reenter capitalist self-valorization. The corn could be eaten by a soldier, but the soldier as living labor does not replace the ear of corn in the capitalist production process, thus the value is consumed unproductively.

Unfortunately, what Postone has not done (yet?) nor Kurz before his death is extend this analysis to the category of Marx’s organic composition of capital. If this had been done, I think it would have yielded very important results regarding the significance of their ideas.

First we begin with three important formulas in Marx’s theory:

1. c:v, or the organic composition of capital. This is the ratio of constant capital (c) necessary to set in motion a given quantity of living labor (v). In Marx’s theory, this ratio is always increasing.

2. s/v, or the ratio of newly produced surplus value (s) to the mass of living labor expended in its production (v).

3. s/(c+v), or Marx’s formula for profit, expressed as the ratio of newly produced surplus value (s) to the mass of constant capital used up in production (c) and the mass of living labor expended in this production (v).

For the purpose of analysis, I assume the total labor time of society can be divided into a mass of productively expended labor time (Vp) plus a mass of unproductively expended labor time (Vu). In other words, let the mass of the total labor time of society be represented by V, this total labor time can be further divided into productively employed labor time (Vp) and Postone’s and Kurz’s unproductively employed labor time (Vu)

On this basis the total labor time of society can be represented by the equation

4. V = Vp+Vu

Again on this assumption, the organic composition of capital (C:V), can be further defined as:

5. C:(Vp+Vu)

The problem here is that in Marx theory the organic composition of capital can only refer to capital’s self-expansion, which implies all labor is employed productively. So, the formula, C:(Vp+Vu), must be understood only as the prospective (or fictitious) organic composition of capital. Which is to say, this formula applies only to how the organic composition must appear, consistent with capitalist relations of production.

In this formula, however, it appears the expenditure of unproductive labor time reduces the organic composition of capital — as several writers have asserted, most notably Chris Harman, who argued:

“There is a vicious circle. Reactions by individual firms and states to the falling rate of profit have the effect of further reducing the resources available for productive accumulation. [47]

“But the effect of unproductive expenditures is not only to lower the rate of profit. It can also reduce upward pressure on the organic composition of capital. This was an insight used by Michael Kidron to explain the “positive” impact of massive arms spending on the system in the post-war decades. He saw it, like luxury consumption by the ruling class and its hangers-on, as having a beneficial side-effect for those running the system – at least for a time.

“Labour which is “wasted”, he argued, cannot add to the pressure for accumulation to be ever more capital intensive. Value which would otherwise go into raising the ratio of means of production to workers is siphoned out of the system. Accumulation is slower, but it continues at a steady pace, like the tortoise racing the hare in Aesop’s fable. Profit rates are weighed down by the waste, but do not face a sudden thrust into the depths from a rapid acceleration of the capital-labour ratio.”

In fact, this was complete nonsense. The organic composition of capital is not affected by the growth of superfluous labor time. So-called “economic growth” appears to stagnate not because superfluous labor makes capital less productive, but because the increase in the productive capacity of labor requires increasing quantities of unproductive labor time.

In the capitalist mode of production Vp+Vu can only appear as V — which is to say as abstract homogenous labor in general. It cannot, under any circumstances appear as discrete quantities of qualitatively differentiated labors Vp and Vu. On the other hand, only productive labor can produce surplus value; unproductive labor as Kurz argues, does not produce surplus value but only mediates its distribution. This has implications for my analysis.

Since, Vp+Vu can only appears as V, it would appear that a reduction of labor hours imposed on capital must result in a proportional reduction of both productive and unproductive labor. For instance, it would appear reducing hours of labor from 40 to 24 would have an equal impact both on General Motors and Federal employment. In fact, this cannot happen: General Motors as a productive capital produces surplus value that is distributed as the profit of GM and state expenditures. Given this, the effect of reducing hours of labor must have a greater impact on the state, or a defense contractor, than it has on productively employed capital.

Why? If we plug our substitute for V into Marx’s formula for surplus value, it might become clearer:

The formula 2. s/v becomes:

6. s/(Vp+Vu)

In this case, only Vp produces the surplus value shared between both sectors Vp+Vu.

And the formula for profit s/v+c becomes

7. s/c+(Vp+Vu)

Since the aim of capital is self-expansion, and, therefore, of the production of surplus value, this has implications for the impact a reduction of hours has on the mode of production. Labor time Vu produces no surplus value, although it will mediate the distribution of the surplus value produced by Vp. The reduction of total hours of labor will not have a proportional impact on the two mass of labor time, Vp and Vu, but a disproportional impact — reducing the relative proportion of labor time, Vu against Vp.

This is because, 1. a reduction of labor time Vp, reduces the mass of surplus value, and therefore, the mass of s in the formula for profit, s/c+v; while, 2. the reduction of labor time Vu, has no impact on the mass of surplus value, and, therefore, no impact on the mass of s in the formula for profit, s/c+v. On the other hand, the increase in the mass of labor time expended productively (Vp) will increase the mass of surplus value s, while the increase in the mass of unproductively expended labor time (Vu) will not.

The distribution of the mass of profit produced by productively employed capitals is, in part, settled by competition between the class of owners of capital. Under conditions of a general and comprehensive reduction of hours of labor, productively employed capital can increase their profits by reducing the expenditure of labor in unproductive forms, such as the state sector. While the state is incapable of increasing itself, by increasing its unproductive consumption of the surplus value produce by productively employed capital, i.e., by raising taxes or borrowing.

In the first place, a general and comprehensive reduction of hours of work — e.g., from 40 to 24 hours — must result in a reduction first of the state sector. In the second place, it must result in massive shift of the employment of labor from unproductive capitals (e.g., finance) to productive capitals. The losers in such a reduction would be first the state, second those capitals producing for the state (defense contractors) and financing it (Wall St.). By contrast, the productive employment of capital becomes more profitable, although the actual quantity of surplus value produced is smaller. Although less actual surplus value is produced, less also has to be shared with a mass of unproductive capitals and the bloated state.

This must increase demand for the productive employment of labor power, along with an increase in the wages. The rise in wages would in turn force productively employed capitals to further rationalize expenditures of labor through methods that improve the productivity of labor. Although employment is rising, along with wages, the actual improvement of the productivity of labor compels the further reduction of hours. In this way, there is both a rapid increase in the material living standards of the mass of society and more disposable time.

Reducing hours of labor not only means free disposable time for the mass of society, it pays for itself by compelling capital to revolutionize the labor process and increase the efficient employment of existing labor power. In Capital somewhere, Marx argues the capitalist class is, historically speaking, only the stewards of the total capital, who used their position to the disadvantage of the mass of society. This might not have been obvious in his day, but with the professional class of managers who have since arisen and now shuttle between Washington and Wall Street, and the resulting division of ownership from effective control of capital, it is clear this is all that class ever was. Paris Hilton’s family has long since retired to the vocation of coupon-clipping, while her functions have been assumed by these parasites.

For this reason, I think the most fanatical opponent to reducing hours of labor will be the state itself, and, in second place, the managers of the capitalist firms directly dependent on the state. Reducing hours of labor cannot be thought of as a political demand; it is, rather, a textbook example of what Kurz called antipolitics.

The key thing to understand here is that with Postone and Kurz we get two entirely antithetical forms of labor time that result in two contradictory definitions of value.

Marxists have yet to integrate Postone’s and Kurz arguments into an updated analysis of capital in the tradition of Marx reflecting post-war capitalism, although both arguments rest directly on Marx’s own analysis. It makes it difficult, if not impossible, therefore, to convince Marxists of the significance of a demand for reduction in hours of labor.

This provides with a practical route to what Kurz called the internal breach in the capitalist mode of production itself:

Where and how to begin, within the existing capitalist form of socialization which rules over all reproduction, with the intention of finding in the latter, so to speak, an internal breach and to break free of it, to take the first step, to point out a formulable beginning for social emancipation?

Clearly, this crisis presents us with a mass of unemployed workers, who are having great difficulty finding work in the advanced countries, side-by-side with a regime of austerity that only promises to intensify unemployment. If this breach can be exploited by a concerted call on the Left for a reduction in hours of labor, the stage may be set for a series of events carrying all of society beyond this historical phase.

The Democrats’ meltdown moment — what will progressives do?

December 10, 2010 Leave a comment

Permit me to offer a prediction. Despite the temper tantrum in the House yesterday, it will pass something similar to the agreement made between President Obama and the Party of Wall Street.

Let’s look at the ugly reality in cold hard terms: The House Democrats are split, the Senate Democrats are incapable of passing any legislation that does not have the support, or at least acquiescence, of several Republicans, and the President is moving to make a separate accommodation with the GOP — because he has to. Add to this: passing something now that is capable of also passing the Senate is the only option House Democrats have to put their stamp on this legislation, since, come January, they will have no leverage and Senate Democrats will be even weaker and more disorganized.

Do I have all of this right?

That leaves progressives out in the cold, in the middle of what is likely to be a harsh winter for the 99ers, the public unions, and just about everyone without a private island in the Caribbean.

If progressives refused to see the writing on the Wall Street during the health insurance reform debate, a sober assessment of their prospects now is absolutely necessary: You were always the enemy!

Nobody in Washington wanted Obama’s supporters to come rolling into Washington, hopped up on that “hopey-changey stuff”, to dismantle the unholy intersection between Washington policy and Wall Street bankster mafia interests.

As the organizers of the December 16 rally state, the Obama administration and the Democrat mainstream:

… has advanced repeated assaults on the New Deal safety net (including the previously sacrosanct Social Security trust fund), jettisoned any hope for substantive health care reform, attacked civil rights and environmental protections, and expanded a massive bailout further enriching an already bloated financial services and insurance industry. It has continued the occupation of Iraq and expanded the war in Afghanistan as well as our government’s covert and overt wars in South Asia and around the globe.

Along the way, the Obama administration, which referred to its left detractors as “f***ing retarded” individuals that required “drug testing,” stepped up the prosecution of federal war crime whistleblowers, and unleashed the FBI on those protesting the escalation of an insane war.

Obama’s recent announcement of a federal worker pay freeze is cynical, mean-spirited “deficit-reduction theater”. Slashing Bush’s plutocratic tax cuts would have made a much more significant contribution to deficit reduction but all signs are that the “progressive” president will cave to Republican demands for the preservation of George W. Bush’s tax breaks for the wealthy Few. Instead Obama’s tax cut plan would raise taxes for the poorest people in our country.

The election of Obama has not galvanized protest movements. To the contrary, it has depressed and undermined them, with the White House playing an active role in the discouragement and suppression of dissent – with disastrous consequences. The almost complete absence of protest from the left has emboldened the most right-wing elements inside and outside of the Obama administration to pursue and act on an ever more extreme agenda.

You went to Washington to dismantle an empire, and ended up fighting for deliberately crafted Trojan Horse wedge issues like whether gays qualified to expand it, or whether foreign born youth could join in its bloody imposition. You went to Washington to dismantle the unholy intersection, but were offered entertaining sound bites ridiculing Sarah Palin until you found yourself politically kettled and isolated.

Quite frankly, you were played.

If you are going to stop being played, you’re going to need some issue to address this crisis that does not end up being a compromise between giving the unemployed 300 dollars a week in return for a second private island for billionaires.

I urge you, once again, to stand for real change — reducing hours of work to 32 hours to start — so we can bring the unemployed back into the economy and rescue millions of youth from their endless confinement to the purgatory of having never held a job and no prospects for one.

When you go to the December 16 rally — and, we think you should — you should be raising the single issue that will get Wall Street’s attention:

32 Hours of Work and no more!

Tax cuts for the rich?: the endless debate

December 9, 2010 1 comment

There is an ongoing argument between the Left and the Right which can be summed up thus:

Tax Cuts Do Not Work

and, its opposite:

Tax Increases Do Not Work

Tony Wikrent makes a powerful argument for the Left in his post, The Obama tax deal with Republicans is insane:

The central premise of U.S. economic policy since the election of Ronald Reagan in 1980 has been that the people in the private sector who know how to invest – the rich – do a much better job allocating society’s financial resources than the federal government. In fact, Reagan told us in his first inaugural address, “government is the problem.”

In order to get as much of society’s financial resources into the hands of the rich – the people in the private sector who supposedly would do a better job investing it – Reagan, the Republican Party, and American conservatives in general developed a simple-minded faith in tax cuts, especially in reducing taxes on the highest incomes.

What are the results of this thirty year experiment low taxes? The Reagan / Republican / conservative theory DOES NOT WORK. For the first time in American history, we now have a generation that has less education and worse economic prospects than their parents did thirty years ago.

In all the hub-bub and brou-hah-hah of the tax debate the past few days, weeks, and months, hardly anyone has put forward the clear and unambiguous information that

TAX

CUTS

DO

NOT

WORK.

The definition of “work” is, of course, subtly redefined by each side in the debate, as would be expected, since the object of the debate is to obscure rather than enlighten. By the same token, measurement of “work” requires some consistent standard, but this is an ideological debate, not a scientific one, so each side also has its own set of measures by which it judges “work”.

However, both sides agree that they are talking about The Economy, which is to say, both sides are talking about capital – a distinct set of social and material relations among the members of society that are established between these members through their activity. So, in some sense, by “work” we can deduce each side is asking the question:

“Which policy makes capital work better as capital: tax cuts or tax increases?”

As with any argument of this sort, the answer is undefined. Under certain circumstances, tax cuts will make capital work better as capital. And, there are certain circumstances where tax cuts will make capital work less well as capital. There are also circumstances where tax increases will make capital work better as capital, as well as the reverse.

Finally, there is a circumstance where neither cuts nor increases will have an effect on capital. We are in that circumstance now.

Since capital is a very complex social organism with its own historical trajectory there is no hard and fast rule on what will be most conducive to its operation at any given time. It is not possible, for instance, to draw any hard or fast rule about the usefulness of tax cuts for the very wealthy by examining the economic policy of the Reagan or Clinton Presidencies. The Reagan Presidency began just as the nation was emerging from the severe depression of the 1970s, while the Clinton Presidency covered the peak period of that same expansion.

The Bush II Presidency began just as the peak expansion came to an end, resulting in a depression that, so far, has lasted from 2001 to the present. By the time Barack Obama took office, not only was the world market firmly gripped by this depression, but the very mechanisms of economic management — fiscal and monetary policy — had broken down in the ruin of the Great Financial Crisis.

The GFC is a rather unprecedented set of circumstances precisely because the entire structure of modern society now rests on the capacity of the State to counter the capitalist breakdown by managing the continuous expansion of superfluous labor. This superfluous labor is most familiar and obvious to us when it takes the form of Minsky’s Ponzi debt growth, but that is only its monetary expression.

Suppose, we zeroed out taxes for the entire top five percent of society, federal, state, and local (we might argue, as the Right do,  that they already perform an incalculable service to society by employing the bottom 95 percent), would this make capital work better as capital? I would argue, “No.” Capital would continue to operate pretty much as it does. Likewise, were we to zero out the taxes of the bottom 95 percent (we might argue, as the Left do,  that those who make more should pay more), and levy taxes solely against the top five percent, capital working as capital would be unchanged.

The reason for my conclusion is that capital working as capital is no more than a tiny slice of the wealth in society — it is only that portion that is actually put into circulation as self-expanding value — that is, productively employed labor. The reason why government economic policy became so important to the economy was not to increase the productive employment of labor, but to manage and grow the massive expenditure of superfluous, or unproductive labor.

The severe damage to government management of the economy using fiscal tools like tax cuts or increases, which was caused by the Great Financial Crisis, has hurt the productive employment of labor (capital) only because the constant expansion of unproductive employment of labor is the fundamental condition for capital’s operation.

To put this another way: it take so little productive employment to produce everything we need, that only by employing the vast majority of people unproductively can they acquire the wages to buy it.

And tax policy won’t fix this.

Forget about unemployment coming down in your lifetime…

December 8, 2010 1 comment

Zero Hedge: Unemployment projections to 2015

Forget about unemployment coming down through fiscal and monetary stimulus in your lifetime. There isn’t enough money in the world to fix this problem.

Above is a chart created by the blog Zero Hedge with a chilling projection on when employment will return to pre-recession level.

The chart starts at the National Bureau of Economic Research’s officially designated date for the beginning of the recession in December 2007. The NBER asserts the recession ended 18 months later in June 2009 — when, as you can see on the chart, employment had not only not recovered, but was still falling unchecked.

In the dotted line on the chart Zero Hedge projects that the total number of people employed will reach the 2007 level again about five years from now. They also note, for the record that this total will not include all the new people who will come into the labor force during that period.

This means, even when employment reaches its pre-recession peak, an unemployed population equal to all the people who entered the labor force in the eight years between 2007 and 2015 will still be unemployed.

To put it another way: even if we get back to pre-recession levels by 2015, an additional 16 million people will have been added to the unemployment rolls.

Sixteen million additional unemployed is larger than the total number of jobs lost in this recession.

It gets worse: according to Spencer England at the blog Angry Bear, the average length of an expansion after a recession since 1950 has been 52 months. This means, based on the NBER’s call, we should be going into recession again sometime in 2013 — when employment will not have recovered even to its 2007 level.

Your congressperson and senator need to know these figures.

And, you need to know when they are going to sponsor legislation to reduce hours of work so it can be fixed.

Zero Hedge: Obama Need To Stimulate 232,400 Jobs A Month To Get Back To Pre-Depression Job Levels By End Of His Second Term

November 5, 2010 Leave a comment

The American social safety net is not prepared to have tens of millions of otherwise able-bodied citizens unemployed and without work for six years.

When Rand Paul and the rest of the Tea Party fiscal deficit chicken-hawks begin to contemplate these numbers, they will be presented with a gut-wrenching choice: End the Washington-Wall Street consensus forever and bring on the Keynesian Apocalypse, or betray their most fundamental principles and quietly line up for handouts from K Street lobbyists.

Our money says these empty suits fold.

From Zero Hedge:

When two months ago we looked at what the implied job creation rate must be for the US to get back to the same level of jobs as December 2007 when the original depression started (now that the recession is over) by the end of Obama’s now extremely improbable second term, we arrived at a number of 229,300 per month. Updating for the data two months later, after today’s NFP data, results in a breakeven growth rate of 232,400 per month. In other words, America now needs to create an additional 3,100 jobs per month compared to two month earlier, to merely revert to the state in employment last seen in December 2007, let alone create additional jobs. Keep in mind that unlike the economists in the government, we actually index the growth rate to adjust for the growth in the projected labor force which grows at 90,000 per month.

The chart below shows the actual and projected monthly change in NFPs (ex. census) to get to a breakeven by November 2016.

The Great Recession was merely a precursor, and not the main event…

September 1, 2010 Leave a comment

From Consumer Metrics Institute:

There probably hasn’t been two separate recessions in three years, simply one that has evolved in significant ways. But if this really is a “double dip” recession, then our data indicates that the “Great Recession” of 2008 was merely the precursor, and not the main event. It is this current dip that we should be really concerned about; the current contraction in consumer demand is about structural changes in consumer behavior, whereas the “first dip” was about short term loss of consumer confidence.

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