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Inflation, the negative rate of profit, and the Fascist State (Part seven)

May 5, 2011 Leave a comment

In part one of this series, I showed how inflation affects not only consumption but also production. In the former, inflation expresses itself in the fall of the consumption power of the mass of society. In the latter, inflation expresses itself as a fall in the actual realized rate of profit — a negative rate of profit arising not from a material change in the composition of capital, but from a depreciation in the purchasing power of money. The two of these effects are achieved by one and the same cause. The two effects do not simply exist side by side, but influence each other: in the circulation of capital, excess money-demand effectively reduces the portion of the output of productively employed capital that is realized in sales. With an inflation rate of ten percent, a capital with value of $100 now can be realized only if $110 is offered for it. On the other hand, a capital with the actual value of $110, is effectively purchased for $100.

The problem here is that between the production of the commodity and its realization in a sale the purchasing power of the money has depreciated. The problem can be better understood if we divide value and price and examine each separately. If we assume a capital with the value of $100, represents 10 hours of socially necessary labor time, we can make the following observation: The capitalist takes his capital with a value of $100 or ten hours of labor time and produces a quantity of commodities with a new total value of $110, representing 11 hours of socially necessary labor time. However, during this same period, the purchasing power of money has changed so that 1 hour of labor time no longer has a price of $10, but has a new price of $11. His capital now has the value of 11 hours of labor time with an implied expected price of $121 (11 times 11 = 121), yet he only realizes $110, or 10 hours of labor time under the new price conditions.

From the point of view of value, the capitalist has taken his capital with a value of 10 hours of socially necessary labor and produced a capital with a value of 11 hours of socially necessary labor. Yet, of this 11 hours of value he only realizes 10 hours, i.e., he realizes no more than his original investment. From the point of view of price, the capitalist has taken his capital with a money-price of $100 and produced a capital with a money-price of $110. He expects no more than $110 and is satisfied with this, despite the fact that this $110 in sales only has a value of 10 hours of socially necessary labor time.

The riddle of the divergence of prices from values

The riddle of this perverse situation can only be solved if we assume that a change occurred in the relationship between values and prices during the exchange of money and commodities — that the realization of the value of capital produced suffered from a defect such that a portion of the value this capital was lost in the act of exchange itself. This defect, as we showed in part three, is already inherent in the value/price mechanism itself. The value/price mechanism contains in itself a contradiction between the actual labor time expended on the production of a commodity and the socially necessary labor time required for its production; a contradiction between the value of the commodity itself and the expression of the value in the form of the price of the commodity; and, a contradiction between the price of the commodity denominated in units of the money and the socially necessary labor time required for the production of the object that serves as the money.

These contradictions exists only in latent form until crises bring them to the surface in a sudden divergence between prices and values of commodities. During periods of over-production of commodities — or, more accurately, over-accumulation of capital — these crises are expressed in the sudden collapse in the prices of commodities below their value, or socially necessary labor times. The divergence between prices and values of commodities only express the fact that for a more or less lengthy period of time wealth can no longer accumulate in its capitalistic form; and, as a result, the socially necessary labor time of society must contract to some point where the production of surplus value no longer takes place. Precisely because the circulation of capital requires not just the production of surplus value in the form of commodities, but also its realization in a separate act of sale of these commodities, the possibility exists for an interruption of the process of realization for a longer or shorter period of time until balance between production and consumption is restored — that is, until conditions exist for the total social capital to once again function as capital; for the process of self-expansion of the total social capital to resume.

If, for whatever reason, conditions are not established for the total social capital to resume functioning as capital — for the process of self-expansion of the total social capital to begin again — production itself must cease. The interruption of exchange — which, I note for the record, begins not with too much money-demand for too few commodities, but precisely the reverse — creates a sudden fall in the rate of profit to zero. If this occurs not as an intermittent breakdown, but as a permanent feature of capitalist production — which is to say, if the over-accumulation of capital is not momentary, but a now permanent feature of the mode of production — capital has encountered its absolute limit as a mode of production. From this point forward the production of wealth can no longer take its capitalistic form — can no longer take the form of surplus value and of profit.

Over-accumulation of capital and civil society

Moreover, since the production of surplus value is the absolute condition for the purchase and sale of labor power, the sudden interruption of its production affects not just the capitalist class, but the class of laborers as well — it appears in the form of a social catastrophe threatening the existence of the whole of existing society, and all the classes composing existing society without regard to their respective place in the social division of labor. Each member of society encounters the exact same circumstance: she cannot sell her commodity, whether this commodity is an ordinary one — shoes, groceries, etc. — or the quintessential capitalist commodity, labor power. The premise of all productive activity in society is that this activity can only be undertaken if it yields a profit; if, in other words, the existing socially necessary labor time expended by society realizes, in addition to this value, additional socially necessary labor time above that consumed during its production.

Marx argues in Capital Volume 3 that capitalist production presupposes a tendency toward the absolute development of the productive forces of society, irrespective of the consequences implied by this development for capital itself. What does Marx mean by this? As a mode of production, capital shares with all previous modes of production the feature of being founded on natural scarcity, on the insufficiency of means to satisfy human need. Yet, at the same time, it implies a tendency for the productive capacity of society to develop more rapidly than consumption power of society — a tendency for more commodities to be thrown on the market at any given time than society can consume under the given conditions of exchange. What society can consume at any given moment is not determined simply by the amount of commodities available to be consumed, but by class conflict between the mass of owners of capital and the mass of laborers; a conflict which presupposes the reduction of the consumption power of the mass of laborers to some definite limit consistent with the realization of profits.

That this conflict, absent a successful attempt on the part of the mass of society to end the monopoly over the means of production by an insignificant handful of predators, must be settled in favor of capital and, therefore, that production is constantly kneecapped by  completely artificial limits on consumption, is already given by capitalist relations of production themselves — relations which nowhere figure in the description of capital by simple-minded economists, who instead ascribe this barrier to the gold standard, etc.

This contradiction — that the productive power of society tends toward its absolute development, yet the consumption power is constantly constrained by the need to produce commodities at a profit — implies that at a certain point in capital’s development production and consumption come into absolute conflict — a conflict which, on the one hand, cannot be resolved by simply increasing this productive power still further, nor by limiting consumption still more severely. It can only be overcome by such means as overthrow capitalist relations entirely, or, alternately, destroy both the productive and consumption power of society together in one and the same act of exchange.

Exchange and disaccumulation, or, the destruction of value through exchange

I have made the assumption that both the productive power of society and the consumption power of society are destroyed by one and the same act of exchange. Based on this assertion, I define inflation not simply as the increase in money-demand over the supply of commodities, but the actual destruction of the productive power of society and consumption power of society during the act of exchange. Or, what is the same thing, by the progressive reduction of the total social capital circulating within society, i.e., the reduction of the quantity of the existing total social capital which continues to function as capital within society, through exchange.

I have also made the assumption that this same act of exchange also expresses,

  1. the contradiction between the actual labor time expended on production of commodities and the socially necessary labor time required for production of these commodities — inflation, therefore, expresses itself as a declining portion of the total labor time expended by society that is socially necessary, or, alternately, the constant increase in the total labor time of society in relation to the social necessity for productively expended labor time;
  2. the contradiction between values of commodities and the expression of these values in the prices of commodities — inflation, therefore, is expressed as a decline in the value of commodities as a proportion of the prices of commodities, or, alternately, the constant increase in the prices of commodities in relation to their values; and,
  3. the contradiction between the prices of commodities denominated in units of the legally defined money and the price of the commodity that historically served as the money — inflation, therefore, is expressed in the constant depreciation of the exchange ratio of the money token against the commodity historically serving as the standard of price, or, alternately, as the rising price of the commodity historically serving as the standard of prices denominated in the money token, i.e., a secular rise in the price of gold.*

The conditions of this act of exchange, which destroys both the productive power of society and its consumption power — and which, on this basis, progressively reduces the quantity of the existing total social capital which continues to circulates as capital and function as capital on this basis — is fulfilled only by exchange of that portion of the newly created social capital representing surplus value with ex nihilo money, and the unproductive consumption of this newly created value by the Fascist State. Moreover, this unproductive consumption of the newly created surplus value is only fulfilled if it is entirely unproductive in all of its forms, i.e., whether this unproductive consumption takes the form of the unproductive consumption of commodities, of labor power, or, of the fixed and circulating capital.

Fascist State expenditures consist entirely of removing the surplus product of labor from circulation, consuming it unproductively, and replacing this surplus product in circulation with a valueless ex nihilo money that formally completes the act of exchange, but that in reality abrogates it. The total mass of capital circulating within society is thereby reduced by this exchange, while the total money-demand in society is simultaneously increased.

The chief symptoms of inflation, therefore, is (1.) the unproductive consumption of the existing total capital by the Fascist State, no matter what form this unproductive consumption takes; (2.) the constant secular increase in Fascist State expenditures, no matter how these expenditures are financed, but which is no more than the continuous exchange of every form of commodity (i.e., of capital in the form of commodities) for newly created valueless ex nihilo money; and, finally, (3.) the constant expansion of the total labor time of society beyond that duration required by the satisfaction of human needs. In tandem with the improvement in the productivity of labor, society is compelled to expend an ever greater amount of effort just to feed, house and clothe itself. In tandem with the reduction in the value of commodities, the prices of commodities soar still higher. In tandem with relentless expansion of Fascist State expenditures, the actual provision of necessary public services — education, health care, provision for the disabled and those no longer able to work, public infrastructure and communications — sink into decay and obsolescence.

The terminal trajectory of capitalist social relations is expressed precisely in the fact that at a certain stage of development the total social capital can no longer function as capital, can no longer realize the constantly increasing quantity of surplus value produced in the form of profits, that, to the contrary, this surplus value must be unproductively consumed in its entirety by the Fascist State and replaced by purely fictitious profits denominated in a purely fictitious money.

*****

*NOTE: I need clarify from Part Three that this third contradiction implies gold tends to exchange with other commodities at some exchange ratio below its relative value, despite its rising nominal price. As is obvious, if commodities are priced above their values, the purchasing power of gold — the physical body of exchange value — is exchanged below its value. This situation, which once occurred only during periods of general capitalist expansion, is now a permanent feature of exchange. It is, however, expressed through the intermediary of the money token by commodities being priced above their values, while gold is priced below its value. An existing quantity of money token can buy fewer commodities, but more gold, than otherwise expected. This inevitably leads to charges by gold-bugs that the price of gold is being deliberately suppressed, but I think it is actually a natural consequence of over-accumulation of capital — a condition normally seen at the apex of an expansion. Commodities in general are devalued, but this devaluation is expressed most thoroughly in the devaluation of the former money commodity which serves little other function in society but to express value.

Inflation, the negative rate of profit, and the Fascist State (Part six)

April 26, 2011 Leave a comment

I need to digress for a moment to set everything I have discussed so far regarding inflation in the context of the world market. As will become clear, it is difficult, if not impossible to discuss inflation without taking into account the relation between the two. Inflation, as I have argued, can be understood as the chronic secular rise of prices for commodities, yet, it can also be understood as the chronic fall in the general level of consumption in an economy over a period of time. These two expressions of inflation do not simply exist as poles of a definition of inflation, but first and foremost as poles of the actually existing relation of production within the world market — a chronic, secular rise in prices of commodities on the one hand, and a chronic fall in the general level of consumption — of wages — on the other.

Inflation and the faux political battle over Austerity

One way to begin this is to look at the current faux political struggle unfolding in Washington over deficit spending by the Fascist State, since this faux struggle touches on one of the most glaring expressions of the imbalances within the world market. So, let’s examine the argument of the advocates of Austerity from the standpoint of Marx’s labor theory of value:

According to these sober persons, the United States must pay its debts. Since it must pay its debts — for instance, the US owes China $3 trillion — it must contain spending to a level consistent with this goal. Of course, the statement that the United States owes China $3 trillion is a non-sequitur in relation to domestic spending and taxes, since the US doesn’t pay China with revenues raised through taxes. It creates the money out of nothing. If China is concerned about getting its money, a faceless bureaucrat at the Treasury simply goes to a computer terminal and enters a 3 followed by 12 zeroes into an account designated by China. Now the PRC has its $3 trillion and we need not talk about Austerity. They get what we promised them: $3 trillion, and nothing more.

As the economist advocates of Modern Monetary Theory argue, this process is no different than what occurs when you withdraw cash from your savings account at the bank or transfer cash from your savings account to your checking account. US treasuries are simply China’s own savings account.

Now, what does China do with the $3 trillion? They have absolutely no domestic use for it, since the yuan serves as the domestic currency, not dollars. The PRC could use the money to import wage commodities to raise the material standard. But if they had any intention of doing this, the $3 trillion would not have been loaned to the United States in the first place. The PRC could also use the money to import capital commodities to increase the rate of domestic economic growth. However, even if they used the money this way. it would only result in more exports and even greater trade surpluses denominated in dollars. We have to assume that China has absolutely no use for the dollars — that the dollars are excess capital, which, since the PRC has no use for it, ends up being lent to the United States. And, since the United States can create as many dollars as they want, they have no use for it either.

The $3 trillion is valueless. And, if it is valueless, this implies all the crap they sold us is valueless as well. China sold us all this crap knowing we were giving them valueless dollars in return. We must assume they exchanged these commodities for American ex nihilo dollars because it couldn’t be sold otherwise. Since the crap was valueless unless they sold it to us for equally valueless dollars, the terms of the trade were met. Crap for crap; superfluous commodities, which, therefore, are not commodities at all, since they have no value, exchanged for a quantity of ex nihilo money that also has no value.

But, by the same token, the savings from austerity sought by the Austerians to repay China must also be valueless, since it consists entirely of these same ex nihilo dollars. Which implies that current expenditures by the Fascist State are also valueless, since the money spent domestically is the same as that to be paid to China. The money isn’t valueless because we owe it to China, it was valueless already — just as China’s crap is valueless unless it is sold. Whether it is used to repay China or spent on National Health Care, the money is completely valueless. Which means, not only is all that crap in China valueless, national health care is valueless as well. You cannot buy something with nothing unless that something is also nothing, i.e., has the same value as your means of purchasing it.

On the other hand, health care is definitely something, but so are socks made in China and sold at WalMart. By saying a thing exchanged for nothing must be nothing as well clearly has nothing to do with whether it is useful or necessary. The socks are useful, and so is an annual checkup. But, when exchanged for valueless dollars, they must also be valueless. It is not a question of whether these valueless dollars will go to pay China or to pay for health care.

The real question is why all of these useful goods continue to circulate in the form of commodities despite the valuelessness of the money? If we removed the valueless money from the equation entirely and allowed the goods to move as society demanded, nothing will have changed. Which is to say, if the goods were free, from the standpoint of value, nothing has changed. The fact that money serves as an intermediary in exchange here has no impact on the value of the things. Rather money is announcing, “These things for which I am exchanged have no value themselves. They, like me, are valueless in an economic sense, and, therefore, are no longer actually commodities.”

The absurdity of ex nihilo money

The absurdity is apparent: Money in this case only expresses that, from the standpoint of the law of value, there is no need for money. But this monetary expression takes the form of a valueless money. The sheer stupidity that money expresses its own superfluousness is already given in ex nihilo money. At the same time, this absurdity can only arise because, as a practical matter, the superfluousness of money appears absurd itself. Or, what is the same thing, a society founded on exchange of commodities has nevertheless come to be dominated by directly social production. This directly social production, for which exchange of commodities is entirely absurd, must nonetheless appear in the form of exchange – fictitious exchange. To accomplish this fictitious exchange requires a money form that is itself fictitious — ex nihilo money.

Although the exchanges taking place are fictitious, and use a currency that is entirely fictitious, the need for these fictions are real. The premise of all these fictions is that completely social conditions of production are nevertheless split up among the members of society. On the one hand, this division presupposes exchange of commodities, yet, on the other hand, this commodity exchange is entirely superfluous to the production of these commodities. The conflict between the conditions governing exchange and those governing production must be resolved; and they are, by fictions. But this “resolution” of the conflict between the conditions of exchange and the conditions of production can only intensify the antagonism between the two, and develop it to its most extreme limit.

Every nation attempts to resolve the conflict between the conditions of production and the conditions of exchange by issuing its own ex nihilo money. However, the limit of any nation to issue ex nihilo money rests on its ability to export more than it imports. According to Paul Krugman (2010) a nation can issue ex nihilo money only if it can run an export surplus and accepts a depreciation of its money. Moreover, in a flexible exchange rate system the export surplus becomes possible because issuing the ex nihilo money itself creates a tendency toward this depreciation of its currency. Thus, in a flexible exchange rate system, creating money ex nihilo produces a tendency toward export surpluses by depreciating the purchasing power of the ex nihilo money. The creation of fictitious money depresses the ability of the community to consume what it produces; it reduces the ratio of domestic consumption to domestic production — increased export is realized through the relative impoverishment of the community.

Since, in Krugman’s 2010 model every nation seeks a trade surplus by impoverishing itself — i.e., by reducing the portion of domestic production that is consumed domestically — who is consuming all of this now excess crap? Krugman’s 2010 model implies either the existence of a designated importer nation, or, the planet ends up with massive quantities of unsold excess commodities. What role does this designated importer play? If every other nation is running a trade surplus, the designated importer must run a trade deficit equal to the total surplus commodities produced by all the other nations. i.e., equal to the sum of excess capital in the form of excess commodities.

If the designated importer nation is running a chronic and growing export deficit, how does it pay for these imports? This designated importer has a fictitious currency every other nation must accumulate as payment for its exports. By law, only the State can create ex nihilo money. The responsibility of creating sufficient quantities of fictional money falls to it. The creation of ex nihilo money, however, is nothing more than the creation of fictitious profits — to the penny. If this creation is accomplished by issuing public debt, this public debt amounts to the fictional profits of private capitals. By increasing the public debt the owner of the world reserve currency can print money and buy all the crap. On the other hand, there is a tendency for the excess capital of the world market to be denominated in the world reserve currency.

However, since we are dealing with an actual material conflict between the conditions of production and the conditions of exchange under condition of absolute over-accumulation of capital, this conflict doesn’t disappear. It now appears as poles of international trade in the form of many net exporters on one side, who are accumulating fictitious dollar assets, and a net importer on the other side, who is accumulating a growing public debt; thus, the excess capital of the world market is increasingly denominated in the world reserve currency. This division of the world market into many net exporters and a single net importer has consequences for ex nihilo money creation itself: The capacity to grow export surpluses by creating ex nihilo money does indeed increase, but this increased capacity is only true for the designated importer nation. The export surplus nations actually end up with less capacity to create ex nihilo money, even as the designated importer nation gains in this capacity. Eventually, the export surplus nations must absolutely constrict their respective money supplies to contain inflation — producing, as a consequence, a growing surplus population of starving laborers. Although this conclusion is obvious, Krugman has not a hint of it in his 2010 paper.

Ex nihilo money, labor time, and the World Market

The problem is that directly social production abolishes the law of value, while exchange takes place only on the basis of this law. Under the capitalist mode of production, production is only undertaken with the eye to profit, i.e., to realization of surplus value. Yet, under conditions of absolute over-accumulation of capital, no additional surplus value can be realized, i.e., the profit rate is zero, if not negative. If the fiction of profits could not be maintained, production would cease entirely. To maintain this fiction, you need fictitious money.

To put this another way, under conditions of over-accumulation, directly social production limits the total labor time of the community to socially necessary labor time. And, what is the measure of this socially necessary labor time? Here is the somewhat surprising answer:

Socially Necessary Labor Time = Value = Wages.

Under conditions of over-accumulation of capital, the absolute limit of total socially necessary labor time is the value of the wages of the working class. Any value created in addition to this necessary limit — i.e., surplus value — cannot be realized as profit — it is wasted (or, superfluous) labor time. Profits realized under this regime must, by definition, be fictitious; hence the fiction of ex nihilo money.

If the production of surplus value no longer takes place, profit can be “realized” through exchange only on condition there is a continuous and pervasive unequal exchange of values within the world market. If labor power cannot be exploited to create surplus value, it must be constantly and artificially devalued — that is, purchased at a price below its actual value. This artificial (purely monetary) devaluation of labor power is a natural consequence of Fascist State ex nihilo money expenditures. This purely monetary devaluation of labor power goes hand in hand with a purely monetary devaluation of the fixed and circulating constant capital.

However, although labor power and the fixed and circulating constant capital are artificially devalued, this does not, by any means, imply a fall in the prices of these commodities — rather the situation is precisely the reverse. Under the conditions I am describing, the purely monetary devaluation is expressed inversely as rising ex nihilo prices for these commodities. They become dearer in ex nihilo money terms as their prices are held well over their actual values; in turn, society is compelled by generally rising prices denominated in the world reserve currency to consume fewer of these commodities.

However, it should not be understood by this that generally rising prices cause declining consumption of commodities; nor, does this imply that either or both result from the huge quantities of ex nihilo money created by the state. Rather, each of these is called forth by the growing conflict between the conditions of production and the conditions of exchange under circumstance of chronic or absolute over-accumulation of capital. Over-accumulation of capital means precisely over-accumulation of commodities — of fixed and circulating constant capital, and, of variable capital, i.e., labor power. Moreover, we have to assume that this over-accumulation of capital exists not simply in one or a few nations, but universally throughout the world market. Hence, export of capital no longer serves to resolve the contradictions inherent to capital.

Those who are following my reasoning so far immediately recognize the logical contradiction in the above paragraphs: I have made the absurd assumption that commodities sell at prices below their values and, simultaneously, above their values. On the surface, it would appear that these two paradoxical assumptions could not exist, or, if they did exist, would bring social production to a halt entirely. As a practical matter, however, these two assumptions, although occurring side by side during the circulation of commodities, nevertheless only occur serially in any given example and in two different directions: the capitalist purchases labor power where the average wage is priced below its value, and sells wage commodities where prices of these commodities are above their values. Which is to say, the world reserve currency, despite massive ex nihilo creation that should force its exchange rate against other currencies down precipitously, actually exchanges against these other currencies at a higher rate than would otherwise be expected — it enjoys what economists refer to as an “exorbitant privilege”.

As a result, there is a tendency for production to move toward the least developed regions of the world market, where labor power can be purchased for a fraction of its value, while the resultant output is sold in the most developed consumer markets. Capital denominated in the world reserve currency, since this currency can be exchanged for any local currency, can simultaneously purchase labor power in those places where wages are below their values, and sell the produced commodities in those places where prices are above their values. Productive employment of capital in the home market of the world reserve currency holder grows increasingly unprofitable and commodities produced there suffer from uncompetitive world market prices. Capital, therefore, takes flight to the less developed regions of the world market. This event is accompanied by loud public pronouncements by politicians and the business community on the liberating effects of free trade; and by angry denunciations on the part of those capitals who, because of their size or circumstances, cannot shift their capital to take advantage of this process and are driven to ruin or speculation.

This has implications for the development of the world market, which, rather than slowing because of the general over-accumulation of capital within the world market, now increases at an astonishing rate and geometrically: Capital denominated in the world reserve currency can not only take advantage of the price disequilibrium between labor power and wage goods, it can further exploit the “exorbitant privilege” of the world reserve currency. This must accelerate the export of capital to less developed regions of the world market to take advantage of extremely favorable terms on which labor power can be exploited in the local currency, and, simultaneously, lead to the expansion of the portion of the total social capital denominated in dollars at the expense of the portion denominated in other currencies.

The problem I spoke of in an earlier post in this series — that wages are too high, and yet too low — resolves itself naturally into accelerated export of productively employed capital to those places where labor power can be had for a fraction of its value, to produce goods destined for markets where commodities are priced many times their actual value. This arbitrage, which can only continue so long as new sources of ever cheaper labor power can be found, must be expressed in a growing volume of Fascist State ex nihilo money creation, which, moreover, must not simply increase, but increase geometrically.

Capital, Absolute Over-Accumulation and the Fascist State (Part five)

March 27, 2011 Leave a comment

I want to summarize a bit at this point, because I received a comment from one person that my writing style made his head hurt. If, I have made this unnecessarily difficult to understand I apologize for that. In part, this arises from the fact that I am grappling with this material as I write these posts. Writing is the way I best absorb what I am reading.

***

First, in relation to absolute over-accumulation:

Over-accumulation is sometimes popularly referred to as over-production (although this latter term sometimes means different things to different people). According to Marx, over-accumulation of Capital produces a fall in the rate of profit and the crowding out of a portion of the active capital — some portion of the total social capital has to lie idle. In other words, the entire system experiences a severe crisis. General over-production leads to a mass of commodities that cannot be sold and which only reduce the value of the remaining portion. Prices fall, businesses go bankrupt, millions are unemployed, and factories are shuttered. The portion of the total social capital which is forced to lie idle can not function as capital — it cannot be used to exploit labor power to create surplus value, or can only exploit it on condition it accepts a lower rate of profit or even a loss. Which actual capitals are forced to lie idle is decided by competition over how to share losses among the total social capital. Each capital tries to minimize its own loss and pass the burden of losses on to the rest of the class.

Says Marx:

A portion of the old capital has to lie unused under all circumstances; it has to give up its characteristic quality as capital, so far as acting as such and producing value is concerned. The competitive struggle would decide what part of it would be particularly affected. So long as things go well, competition effects an operating fraternity of the capitalist class, as we have seen in the case of the equalisation of the general rate of profit, so that each shares in the common loot in proportion to the size of his respective investment. But as soon as it no longer is a question of sharing profits, but of sharing losses, everyone tries to reduce his own share to a minimum and to shove it off upon another. The class, as such, must inevitably lose. How much the individual capitalist must bear of the loss, i.e., to what extent he must share in it at all, is decided by strength and cunning, and competition then becomes a fight among hostile brothers. The antagonism between each individual capitalist’s interests and those of the capitalist class as a whole, then comes to the surface, just as previously the identity of these interests operated in practice through competition.

Under conditions of absolute over-accumulation, however, the problem is not simply that one or another capital must lie idle — i.e., no longer function as capital — the total social capital can no longer function as capital. Even the very biggest capitals can no longer realize profits from the production of surplus value. Conditions are such that the production of surplus value no longer leads to the increase in the mass of social capital and the mass of employed labor power, but to the absolute fall in both the mass of social capital and employed labor power. Capital as a mode of production, i.e., as an economic system, has suffered an absolute breakdown from which it cannot recover.

Second, in relation to absolute over-accumulation and the Fascist State:

The Fascist State arises out of conditions of absolute over-accumulation as a political response to the Great Depression of the 1930s. So far as I can tell, the emergence of the Fascist State in the 1930s was not itself a given in the process I am describing. Rather, it is a political development resulting from the unwillingness or inability of society to reduce hours of labor in response to the Great Depression. Because it legally determines what serves as money, the Fascist State can “purchase” the surplus value produced by the total social capital that would otherwise be unsellable and pay for this consumption with entirely worthless ex nihilo pecuniam. The Great Depression could be managed by the use of the state’s power to create money. It also became generally obvious to the ruling elites of the leading industrialized countries that the increase in the mass of surplus value produced by the total social capital could be utilized by the Fascist State to increase its military power — and this opportunity the industrialized countries immediately exploited first by preparing for total war in the run up to World War II.

For the United States, which as a result of World War II was the last nation standing with its productive capacity completely intact and in fact greatly increased, the ability to absorb an unlimited amount of unsellable surplus output produced not just domestically but throughout the World Market resulted in the accelerated expansion of its unprecedented political, military, and economic power in relation to all other nations. It also resulted in the fact that the accelerating concentration and centralization of capital, which must accompany absolute over-accumulation, proceeds under conditions which gives a competitive advantage to American capital, and forces the capitals of other nations to absorb the losses. The flow of completely worthless American ex nihilo pecuniam into the World Market, generated by massive trade deficits and massive public spending deficits, are, in reality, not an “unsustainable burden” on the U.S. economy, as economists like to pretend, but amounts to the continuous extraction of surplus value from entire nations — who are converted into additional sources of surplus value through this process — and from the World Market generally. The American Empire is, therefore, the realization of the Fascist State — its perfection — as was only dreamed of by failed attempts like Hitler’s Germany and Mussolini’s Italy.

***

The result of the first process is a catastrophic breakdown of exchange, and a has implications for both production and consumption. Taxes aside, the Fascist State pays out its obligations not by the equal exchange of values, but by offering worthless ex nihilo pecuniam in exchange for the goods it consumes. It is true that taxes are already unequal exchange, but this form of unequal exchange was necessarily limited by the obvious impact of increased taxes on society. Taxes imposed on society result directly in the loss of individual consumption power — a loss which is both obvious and which have on occasion been the spur of rebellions throughout history. Moreover, absent tribute, the State was limited to imposing the burden of its parasitic existence on those territories over which it actually was sovereign.

With ex nihilo pecuniam, there are no such limits: the burden of Fascist State expenditures have no direct impact on society. Rather, society experiences this burden indirectly in constant and pervasive rising prices as the purchasing power of money depreciates — a burden the unscrupulous economist is only too willing to ascribe to a host of other causes — supply or demand shocks, rising labor costs, etc. (Offering an endless list of such “causes” for events so as to obscure THE cause is standard operating procedure for these paid apologists of the Fascist State.) As Keynes observed, within certain limits continuous pervasive inflation of prices, while just as effective as taxation in reducing the consumption power of the mass of society and increasing Fascist State expenditures, also traps the members of society in a false choice pitting the purchasing power of their wages against the possibility of being unemployed altogether:

Thus it is fortunate that the workers, though unconsciously, are instinctively more reasonable economists than the classical school, inasmuch as they resist reductions of money-wages, which are seldom or never of an all-round character, even though the existing real equivalent of these wages exceeds the marginal disutility of the existing employment; whereas they do not resist reductions of real wages, which are associated with increases in aggregate employment and leave relative money-wages unchanged, unless the reduction proceeds so far as to threaten a reduction of the real wage below the marginal disutility of the existing volume of employment. Every trade union will put up some resistance to a cut in money-wages, however small. But since no trade union would dream of striking on every occasion of a rise in the cost of living, they do not raise the obstacle to any increase in aggregate employment which is attributed to them by the classical school.

A kind of perverse “communism” emerged within the World Market as a whole in which the contribution to the common wealth of society is indeed detached from consumption but in a rather bizarre manner: Nations, like China, who produce very large quantities of commodities for export, receive nothing in return for this labor — their exports are essentially provided gratis to the Fascist State.

The result of the second process is the World Historical defeat of the Proletarian Revolution — the challenge by the proletarian class majority of society to capitalist class rule and the almost constant contention between the two classes over which would control the state power. The absolute over-accumulation of capital, since it leads directly to the breakdown of the process of production and exchange, presented the proletarian majority of society with the opportunity to raise itself to political rulers of society. But, this required the reduction in hours of labor for the mass of society and a successful effort to bring the total process of production under conscious management.

Mind you, these required steps were not optional for the working class majority of society. Under conditions of absolute over-accumulation, the profit motive no longer serves as the impetus of productive activity; it no longer performs the function of setting the social capital in motion for the simple reason that, with the breakdown of exchange, the realization of the produced surplus value has broken down as well. The social capital could only be placed in motion under premises that are altogether incompatible with the capitalist mode of production. In Marx’s theoretical model, I believe, the failure to assume control of the production process and reduce hours of labor during the Great Depression was a catastrophic World Historical event from which the Proletariat as a class cannot recover.

The very emergence of the Fascist State in the form of an American Empire presupposes the concentration and centralization of capital into a global capital under the control of the American Fascist State, on the one hand, and, on the other hand, the division of the great mass of proletarians along every possible line and, in first place, their division into numerous inconsequential national working classes — split up into nation states. I think the consciousness of the class as a class, which cannot be anything but a political consciousness, is necessarily confined to the nation state and the contest over power within the nation state. But, it is just this nation state which is converted into a hollow shell with the emergence of the American Empire. Although formally a sovereign power and answerable to no other authority than its own self, the nation state is, in fact, stripped of all sovereignty by the growing influence of the World Market on its internal economic life. Even if, as Marxists continue to insist, the project of the proletariat remains the capture of state power, it is self-evident that exercising this state power as a class is now impossible. There is no way any single national proletariat, or group of national proletariats, can bring the social process of production under their control as the entire social process of production has completely escaped national control. The era of Proletarian Revolutions is over.

The communist movement of society begins on these premises.

Capital, Absolute Over-Accumulation and the Fascist State (Part four)

March 25, 2011 Leave a comment

In its fully developed form, the Fascist State is an American empire imposed by the United States on all other national states, in which each of these national states are no more than its local (national) subsidiary. The emergence of this Fascist State became the condition for the further development of the World Market bound up with Capital.

Over-accumulation of capital results from the fact that capital is founded on scarcity and can only exist on this premise. This fact leads us to the export of surplus capital into what Marx referred to as the outlying field of production within the world market, where it can be employed at a higher rate of profit. But, absolute over-accumulation in the complete meaning of this term, presupposes absolute over-accumulation not only in one or a few nations, but in all nations together. Thus, it also leads to the universal — and not merely national — competition between capitals, aimed  at concentration of the total global social capital and the elements of capital into fewer hands, and the global centralization of this social capital, along with the emergence of a global finance capital — the problem presented by the conversion of the mass of surplus value into a mass of profits within the World Market as a whole.

The question how the concentration and centralization of national capitals is to proceed is settled in the manner of such disputes between nations — i.e., by armed conflict in which one national state emerges victorious — a condition most notably expressed in the eruption of predatory total war between nation states during the Great Depression whose bloody power had been swollen by the sheer mass of social labor time that could be converted into unproductive military expenditures on a truly horrific scale. World War II was the systematic destruction not merely of armies on the battlefield, but of the industrial capacity of the belligerents and the civilian populations who could place that capacity in motion. From this point forward, when I speak of absolute over-accumulation I shall be referring to absolute over-accumulation within the World Market as a whole; and, when I speak of the Fascist State, I will be speaking of the American empire.

***

In the preceding section, I have suggested that under conditions of absolute  over-accumulation of capital, it becomes necessary for society to reduce total hours of labor, and thus bring its productive activity under its conscious control. If this is not done, or is done insufficiently, the Fascist State emerges as a symptom of the unwillingness or inability of society to realize the general reduction of total labor time. I have further argued that this unwillingness or inability to reduce total hours of labor leads to an expansion of total social labor time in relation to socially necessary labor time, i.e., to an increase in superfluous labor time. This expansion of total social labor time in proportion to necessary labor time leads to a general rise in prices of commodities even as the value of the commodities fall. Side by side with this general rise in prices, we see also the forcible withdrawal of gold standard money from circulation as money and its replacement by American ex nihilo pecuniam, along with the constant increase in the supply of this fictitious money.

It is not the increase in the supply of this fictitious money that leads to inflation, i.e., to a general rise in the prices of commodities, to the depreciation of the purchasing power of the money generally, but the increase in the proportion of total labor time to socially necessary labor time that leads to both the increase in the supply of money and the general increase in prices. If taxes are assumed to be zero, the growth of the Fascist State, of superfluous labor in the form of a grotesquely bloated and constantly expanding state, consists precisely in the issuance of ex nihilo pecuniam to pay for its expenditures. Its growth and the growth of the money supply are identical.

At the same time, the growth of the Fascist State is also the unproductive consumption of the superfluous portion of the surplus value produced by the total social capital, of the mass of surplus value that cannot be employed productively by the social capital as additional capital for the purpose of self-expansion. The expansion of the Fascist State is, therefore, also the expansion of fictitious profits, or profits “realized” on surplus value that no longer exists and has been consumed unproductively by the Fascist State.

But, socially necessary labor time is only that portion of the working day during which the mass of workers produce the value of their wages. The duration of labor time beyond this is surplus value, which, under condition of absolute over-accumulation, cannot be sold at a profit — actually realized according to the law of value — and, which, therefore, must be unproductively consumed (destroyed) entirely by the Fascist State. It is logically impossible to assume, as do the various statist ideologues, that an increase in Fascist State expenditures can lead to an increase in the wages of the working class, or an improvement in their conditions. The opposite is actually the case: the increase in Fascist State expenditures presupposes the increase in the mass of surplus value, in the mass of labor time expended by society beyond that labor time required for the production of the commodities consumed by the working class. This expansion only results in the further impoverishment of the great mass of society.

Thus the constant increase in Fascist State outlays, even for social services, result only in the deterioration of the mass of society; in their increasing impoverishment; in the actual decline in “real” wages; and in the general rise in both prices and unemployment. Yet, moderation of prices and unemployment during periods of expansion bring no more than the slightest moderation of this immiseration — the stagnation rather than outright decline of wages, and stagnant, desultory, job growth rather than outright increases in unemployment.

The absolute over-accumulation of Capital presupposes that all the contradictions of capitalist society comes to its surface in a rather spectacular fashion and on a global scale. A rampant speculative binge of remarkable proportions is unleashed as even the very largest capitals find it impossible to realize the surplus value extracted from the mass of employed labor power and thus are forced into speculative financial pyramid schemes. Competition between capitals explode, but no increase in the concentration and centralization of capital suffices to reduce the costs of production sufficiently to enable realization of the gains of this concentration and centralization — indeed, the problem of realization only becomes more difficult and profound as the concentration and centralization of capital proceeds at an accelerated rate. Wages are too high, but also too low — thus even as the reduction in the value of labor power accelerates by export into the least developed regions of the World Market where wages can be paid amounting to a fraction of the most developed regions, and by accelerated application of machinery, science and technology to still further reduce the expenditure of labor power and increase its surplus producing capacity, the successful reduction of the value of labor power only creates the necessity for its further reduction.

The ferocity with which Capital attacks the value of wages increases in proportion as each successful assault on the value of wages necessarily creates a demand for the next wave of assaults. Governments are converted directly into an instrument for the creation of fictitious profit and speculative financial schemes. The Fascist State is an agent for increasing the rate of surplus value, for an increase in the mass of surplus value produced, and, therefore, for an increase in its own mass as consumer of the entirety of the surplus value produced and the creator of fictitious profits on an even greater scale. The magnitude of the insatiable lust for profit increases, and, simultaneously with this increase in magnitude, the effort by the state to satisfy this lust by reducing the tax rate on capital (which continues to exist only as a formality, a fig leaf to provide political cover for Washington’s absolute corruption); promoting increased export of capital; ripping up regulations or altogether ignoring them; deliberately exposing the mass of society to environmental disasters and the ever expanding despoiling of nature; the routine introduction of dangerous materials into the food chain; the promotion of dangerous products etc., all for the purpose of gaining an insignificant increase in the rate of surplus value.

The Fascist State is the world historical political defeat of the Proletariat in its struggle for power against the Bourgeoisie. It is the actual political-economy of this defeat in the form of a globally dominant parasitic mass that grows in proportion as the political defeat of the Proletariat becomes the very premise and condition of the Proletariat’s own political activity — to the extent, therefore, that its complete and final subjugation to Capital is the premise not merely of its productive activity, but of its political activity as well; that political activity itself offers only to increase its impoverishment — its absolute degradation and absolute immiseration — and the constant expansion of its own capacity for self-governance in the form of an alien power confronting it and ruthlessly dominating it. The very political power of the proletarian majority of society looms as a merciless tyrannical social power over it that is absolutely indifferent to it.

On what other basis can the emergence of the Fascist State in a society founded on universal suffrage be premised other than those under which the actual proletarian majority of society express their own divisions in the form of this Fascist State? And, under what conditions should we expect these divisions to be most pronounced other than universal competition within the proletarian majority of society; under which each member of this class is thrown into absolute competition with the rest of the class, where every member of the class is set in absolute competition against every other member, and, therefore, under such condition as the class more or less assumes the form of a mass of petty commodity sellers under the most extreme competition, i.e., under conditions of an absolute and growing excess population of laborers? Marx argues that over-accumulation of capital consists precisely of this absolute excess population of laborers along with an absolute excess of capital.

It follows that the question is not whether the working class is split into adherents of greater Fascist State deficit spending, or a reduction of Fascist State deficit spending — that they oppose each other as Democrat versus Republican, progressive versus Tea Party, liberal versus conservative, public employee versus private employee, black versus white, male versus female, undocumented versus citizen, employed versus unemployed, etc. All such distinctions between and among the various factions within the Proletariat are of no significance whatsoever — are merely incidental to the outcome of the process I have described. It is not a question of the political prejudices or particular circumstances of the various members of the working class, but of politics itself: that Fascist State, no matter its specific composition and periodic reshuffling, is indifferent to this class, hostile to its interests, and exists only to further degrade and impoverish it.

The Fascist State signifies that politics is dead! That the class struggle has been settled decisively in favor of the Bourgeoisie and against the Proletariat — a class struggle that ended with the world historical defeat of the Proletariat. That the struggle against present day society must henceforth go ahead on a different basis.

Capital, Absolute Over-Accumulation and the Fascist State (Part three)

March 22, 2011 Leave a comment

The constant expansion of the Fascist State presupposes the constant expansion of capital which can no longer function as capital, which can no longer employ labor power for purposes of the self-expansion of capital; which, in other words, seeks its self-expansion, not by augmenting the productive capacity of society but by exploiting the wholesale destruction of this productive capacity through fictitious profits.

Of superfluous labor, Moishe Postone writes:

It should be clear that “superfluous” is not an unhistorical category of judgment developed from a position purportedly outside of society. It is, rather, an immanent critical category that is rooted in the growing contradiction between the potential of the developed forces of production and their existent social form. From this point of view, one can distinguish labor time necessary for capitalism from that which would be necessary for society were it not for capitalism. As my discussion of Marx’s analysis has indicated, this distinction refers not only to the quantity of socially necessary labor but also to the nature of social necessity itself. That is, it points not only toward a possible large reduction in total labor time but also toward the possible overcoming of the abstract forms of social compulsion constituted by the value form of social mediation. Understood in these terms, “superfluous” is the historically generated, immediate opposite of “necessary,” a category of contradiction that expresses the growing historical possibility of distinguishing society from its capitalist form, and, hence, of separating out their previous necessary connection. The basic contradiction of capitalism, in its unfolding, allows for the judgment of the older form and the imagination of a newer one. My analysis of the dialectic of transformation and reconstitution has shown that, according to Marx, historical necessity cannot, in and of itself, give rise to freedom. The nature of capitalist development, however, is such that it can and does give rise to its immediate opposite—historical nonnecessity—which, in turn, allows for the determinate historical negation of capitalism. This possibility can only be realized, according to Marx, if people appropriate what had been constituted historically as capital.

Although Capital is founded on scarcity, it nevertheless has a tendency toward the absolute development of the productive forces — toward, in other words, realization of abundance. But, the development of the productive forces occurs wholly within the limits of scarcity — a limit against which Capital constantly strains yet is continually thrown back by its own inherent contradictions. The productive forces develop to a staggering extent — as can be seen in American agriculture where the labor of 0.6% of the population suffices to feed the remaining 99.4%, yet, hunger persists, and grows; prices continually inflate; and the war on the consumption power of society extends even to routinized crop destruction by using it for fuel.

Capital’s problem is not how to abolish hunger and want, but how to dispose of massive quantities of output without abolishing hunger and want. The productive forces have grown to such scale that truly insignificant quantities of labor can produce astounding quantities of output. The question posed to political-economy — to “economic policy makers” — is how to maintain profitability by destroying this abundance. Capital’s tendency to absolutely develop the productive forces comes down to a tendency toward absolute expansion of the Fascist State.

The law of the tendency toward a falling rate of profit not only presupposes export of capital, it presupposes export is absolutely insufficient. It presupposes the export of capital only intensifies the absolute over-accumulation of capital. Thus, alongside the export of capital, the Fascist State grows and must grow at an accelerated rate. Or, put in terms that might be understood by the Modern Monetary Theorist:

Reagan proved that deficits don’t matter.” –Dick Cheney

What matters isn’t the completely fictional accumulation of public debts but that ever increasing quantities of excess capital is destroyed. The expansion of the Fascist State and the destruction of capital is, for this reason, only two sides of the same process. It is the annihilation of value in the perverse form that socially necessary labor time shrinks, even as labor time grows absolutely. This requires not simply the destruction of new surplus value but also the devaluation of the existing variable and constant capital.

The perversity of the requirement: All of this destruction of value and surplus value must be profitable for Capital. Thus Capital in its necessary form must be replaced by Capital in its purely superfluous form. This, of course, is impossible: Capital is value, and value is socially necessary labor time alone. Hence, superfluous Capital is not Capital at all, but merely accumulated superfluous labor time operating as if it is necessary labor time. The logic of the Fascist State is, for this reason, I think, identical with the logic of Capital itself, but with a profoundly different aim. If, for whatever reason, society is unable or unwilling to reduce its hours of labor, the Fascist State is the necessary result. It is the necessity for a reduction of hours of labor expressed in the perverse form of an increasingly intolerable Fascist State.

Thus, the Fascist State is only a symptom of the absolute nature of the contradictions at the heart of capitalist relations of production under conditions of absolute over-accumulation, and as a consequence of a general failure on the part of society to liberate itself from labor — a consequence of society’s failure to reduce the social hours of labor, and thus bring its activity under its conscious control. It is the accumulation of entirely unnecessary labor, superfluous labor, performed by society, in the form of a grotesquely overgrown, and constantly expanding, State power.

That the diminishing application of living labor to production results, and must result, in the extension of hours of superfluous labor in the form of the Fascist State explains why the rise of this state occurs simultaneously with the withdrawal of gold money from circulation as legal money in the United States in 1933, and the subsequent end of the dollar peg to a specific quantity of gold in 1971. The claim by economists like Ben Bernanke and Christina Romer that the Great Depression was caused by the restriction on the supply of money imposed by the gold standard is a crock, an admission that Capital, if it is to continue to dominate society under conditions of absolute over-accumulation, requires the decoupling of money from the commodity serving as measure of value and standard of price — that prices must no longer be constrained to express only the socially necessary labor time embodied in commodities generally, and, specifically, in labor power, the capitalist commodity par excellence, the commodity without which capital cannot become capital, cannot expand its value.

The subsequent explosion of the price of gold, and prices generally, gave evidence of the extent to which the magnitude of the existing quantity of capital in circulation denominated in the legally established gold standard dollar had diverged from its actual value — the extent to which the magnitude of this capital denominated in pre-1971 dollars had already diverged from its actual magnitude denominated in so many billions of ounces of gold. The replacement of money by ex nihilo pecuniam — by money created out of thin air — did not itself lead to inflation, to the depreciation of the purchasing power of money, but only expressed the growing divergence between the shrinking socially necessary labor time of society  and the ever expanding total labor time of society. This divergence presupposes the growing divergence between the value of commodities and their prices: even as the value of commodities shrink, the prices of these same commodities increase. The sum of prices must constantly increase in proportion as the sum of values fall. It is not the increase in the supply of money that leads to the increase in prices of commodities, but the increase in the total hours of social labor in proportion to the socially necessary labor time of society that requires both the increase in the supply of money and the increasing prices of commodities.

The stupidity of liberals and progressives, and the mass of Marxists theorists following them, is that they imagine the Fascist State by directly employing the labor power of society can overcome the inherent tendency toward the formation of a surplus population of workers. What they always overlook in their fascination with this fascist idea is that value is socially necessary labor time — the duration of labor time during which the worker reproduces the value of her own wages. The Fascist State, however, is composed of the surplus of labor time over this quantity of hours. It follows from this that even if the mass of unemployed is provided jobs by Fascist State spending, the new sum of wages including the increase in wages by this additional employment is, and must be, offset by the further contraction in the value of individual wages; that the new sum of wages amount to no more, or even less, than the value of the sum of wages before the unemployed are given public jobs. The average daily wage decreases in value as the mass of employed workers increase. The impoverishment of the individual worker is thereby accelerated; but in this case it is not owing to improvements in the productivity of labor, but owing to the sharing of the meager quantity of means of consumption — to which the workers are limited by Capital itself — among a larger number of hungry mouths.

A vicious circle is thus created: Capital creates surplus value by limiting the consumption of the worker. This surplus value, however, must then be unproductively consumed in its entirety by the Fascist State to maintain the conditions under which it was created, i.e., to maintain the limited consumption of the worker. The new value, having been consumed by the Fascist State, is replaced in circulation by ex nihilo pecuniam having no value whatsoever; and, which only devalues the existing employed variable and constant capital — or, what is the same thing, inflates the prices of the commodities composing both variable and constant capital. Finally, the purely monetary devaluation of the variable and constant capital increases the pressure on Capital to increase the rate of surplus value in order to maintain and increase the mass of surplus value, i.e., to further increase the productivity of labor by reducing still further the consumption of the mass of society.

This has political consequences to which I turn next.

“It must be broken”: Rethinking Marx, Liberty, the Individual and the State

January 26, 2011 2 comments

Afghanistan's War Wounded Come To Mirwais Hospital in Kandahar

We can now restate Marx’s theory in a way which will make it easily digestible by those who stand full square for a completely stateless society, as well as the various and sundry people who seem intent on getting him completely wrong in every possible variation — including the imbeciles who count themselves among his followers:

Marx came to the conclusion that capital was abolishing the need for labor and this abolition had profound, far-reaching, implications for the whole of society, and the social relations within which individuals carried on their activity.

Moishe Postone writes:

Until this historical stage of capitalism, according to Marx’s analysis, socially necessary labor time in its two determinations [necessary labor time and surplus labor time] defined and filled the time of the laboring masses, allowing nonlabor time for the few. With advanced industrial capitalist production, the productive potential developed becomes so enormous that a new historical category of “extra” time for the many emerges, allowing for a drastic reduction in both aspects of socially necessary labor time, and a transformation of the structure of labor and the relation of work to other aspects of social life. But this extra time emerges only as potential: as structured by the dialectic of transformation and reconstitution, it exists in the form of “superfluous” labor time. The term reflects the contradiction: as determined by the old relations of production it remains labor time; as judged in terms of the potential of the new forces of production it is, in its old determination, superfluous.

By concentrating property into fewer and fewer hands; ripping the mass of society out of its long historical practice of carrying on its activities in relative isolation employing crude instruments of production for a meager material standard of living that just barely ensured their survival; and, converting the mass of society into directly social laborers, capital was making it possible to apply the latest technological breakthroughs, advancing scientific knowledge, and economies of scale to the task of producing a basic minimal standard of living with as little labor as possible given the level of development of the productive capacities of the laborers themselves and the tools they employed.

No aspect of this process was being consciously undertaken by any member of society, any group of its members, nor even by the members of society as a whole. No one consciously declared their intention to abolish labor. Each person in society was only engaged in self-interested activity in pursuit of private ends: the proletarian, for whom the sale of her labor power was a matter of simple survival — a matter of life and death, the capitalist, for whom continuation as owner of property required the ever increasing surplus producing capacity of the capital under his control. No where in society was the abolition of labor the expressed aim of anyone engaged in this mean, brutal process.

Indeed, as mankind actually crosses the threshold, the event horizon, where it is no longer possible for the demand for productive labor to increase, despite the increasing social demand for new,  previously unimaginable, forms of material consumption, the members of society actually experience this incredible historical event as a loss — a terrifying regression to an earlier period of starvation and want — against which the whole of society blindly struggles, employing for this purpose all the instruments at its disposal, including the State, for the purpose of increasing the demand for labor where no productive employment of this additional labor exists, or can exist.

The human and material capacities of entire continents are laid to waste in an unceasing series of ever more barbaric wars; entire industries spring up overnight not for the creation of new means of production and consumption, but solely to destroy existing means; ever more terrible engines of self-extinction appear, and with them, a mass of proletarians whose sole purpose is to devise and create ever newer versions of these insane commodities. Alongside these industries, and essential to their existence, rises an entire industry of financial engineers, a class of public and private debtors, and the cancerous growth of fictitious capital and financial instruments.

Organizing, expanding and directing this obscenity, the State: that wholly superfluous organ of society, whose long bloody history of aggression, repression, and conquest, stands alone as the single greatest, longest running, continuing conspiracy against the rest of mankind, as well as its chief tormentor, torturer, and parasite in every age and in every epoch — a vile, filthy, parasitic collection of drones whose sole purpose in life has, always and everywhere, been to suck the life from society for its own enlargement — becomes, in the Orwellian world of Hobbesian chaos, the very instrument by which the members of society seek to stave off the results of their own activity.

In tandem with the ever diminishing material demand for productive labor, the social demand for labor in any and every form emerges as the rallying cry from every part of the society. In tandem as the State increases its invasive penetration into, and totalitarian control over, hitherto private and common activities, the Hobbesian chaos reigning within society intensifies, gains a more pervasive character, and further reduces each member of society more completely to an anonymous set of abstract data points which can be identified, sifted and measured by the high priests of economic policy — converted into the raw material of policy recommendations for potential State action over a shorter or longer period of time. The parameters of this potential State policy action itself becomes the focus of the mass of the members of society and subjected to the Hobbesian chaos of society as interests line up on each side of the debate and seek to gain control of the lever of State power. In turn, as this body of parasitic drones master the control of society and gains knowledge of how it can maximize the expansion of purely superfluous labor, its policy parameters narrow — not employment, but the “non-accelerating inflation rate of unemployment”; not free trade, but “free trade agreements”; not economic growth, but “low-inflation economic growth”. In this way, State economic policy is gradually converted into those policies which maximize not the expansion of superfluous labor in general, but the expansion of the State itself as a completely superfluous, cancerous growth on society.

It is precisely this State which, Marx argues, cannot on any account serve as the foundation of the new society. It cannot be salvaged, it cannot be reformed, it cannot be utilized to emancipate society in any fashion. It must be broken: discarded by society; and, with it, Labor itself, and all the remnants of the existing order. The abolition of Labor, and the age-old division of labor that has for so long chained humanity to a set of alien, inhuman relations, increasingly becomes bound up with the question of the abolition of the State, and the abolition of the State is increasingly dependent on the abolition of superfluous labor in every form.

The Value of Nothing: Rethinking Marx, Liberty, the Individual and the State

January 25, 2011 Leave a comment

In the first part of this series () I argued that Karl Marx’s Individual is the same Individual who appears in the writings of 18th and 19th Century thinkers. Moreover, Marx’s assumptions imply an environment of Hobbes’ war of all against all and an increasingly illiberal, repressive and aggressive, parasitic State.

In the second part of this series () I argued that Marx never believed that there would need to be a period of state socialism to achieve a stateless society. His model of a revolutionary reconstitution of society rested on the idea of a free voluntary cooperative association, which emerges directly out of capitalist society and, which would be the only form of social organization in this stateless community. Marx’s model of the emergence of this voluntary association assumed it occurred empirically, i.e., as an act of commonsense necessity to everyone.

In the third part of this series () I argued that Marx did far more than merely uncover the secret of the worker’s exploitation. Marx’s theory is not a theory of labor’s exploitation under the capitalist system but a theory of social decomposition and transformation of labor activity: ripping the producers from their property; casting them into the ranks of the Proletarians; molding their activity through centuries of despotic capitalist rule into directly social cooperative laborers employing means of production that could only be put into motion by their combined cooperative effort. The transformative process comes to an end when it is no longer profitable to employ labor power under any circumstances — an event which compels the proletarians to take control of their own productive capacities as individuals and organize their activity in free voluntary association.

In this part I will show why Brad is wrong when he states that Marx’s theory requires an unusually altruistic individual to realize the voluntary association. Marx’s theory does not in any way involve a society of unusually altruistic individuals, because it rests on the assumption that scarcity itself has been abolished.

Brad, in his post, “Marxism And Libertarian Exploitation Theory”, argues:

[Marx's] analysis does not take into account individual goals, which is a very human desire to maximize gains for one’s self and one’s own. Humans are cooperative, but we are cooperative individuals. Cooperation can be sustained in a system of mutual benefit, but humans typically have a difficult time sacrificing for the collective over the long haul. Anarcho-socialism relies on such mutual cooperation (and sacrifice) in the absence of a coercive entity, and thus relies on human nature to be compatible with such a system.

Is this assumption actually correct? Does Marx’s theory assume that the individual sacrifice for the collective over the long haul? Let’s begin by returning to Marx’s sketch of the circumstances surrounding the birth of a society founded directly on voluntary association.

In Marx’s model of the State, this parasitic entity appears to hover over society. This separation of the State from Civil Society is in some sense real and in another sense only apparent: as Brad Warbiany demonstrates, the best writers of the time saw in many State actions of the 18th and 19th Century the expression of some definite interest of specific groups in society — a trail of evidence that could probably be traced to the actual motives of specific individuals, as some have argued in the case of our own War on Terror. However, even with these observations it is far from correct to view the State as a mere instrument of any given interest within Civil Society — that it always expresses, for instance, the will of the capitalist class against the working class in some vulgar fashion. It is closer to the truth to understand that the State is the expression of the interests of Capital — a social relationship between and within the two classes, which is not, nor can it be, identical with the interests of either class, nor any particular faction of either class.

If some particular State action can be traced to the interests of one or the other class, and to one or another faction or groups of individuals within either class, it is necessary to point out that it represents those interests within the limits imposed on it by Capital itself. It is possible, therefore, for the State to both express the general interest of all social classes within the limits of capitalist relations, and, simultaneously, appear indifferent, hostile, and an increasingly intolerable burden to the whole of society. Thus, while bourgeois writers after Marx increasingly explain the actions of the State by reference to the interests of one or another faction of society — for the Nazis, it was Jews and communists; in our own time it has been black helicopter conspiracies, the Illuminati, or some other such nonsense — Marx’s theory explains those actions by referencing the general conditions prevalent under capitalist social relations.

I believe the above picture of the relation between the State and Civil Society has implications not only for the politics of capitalist society, it has implications for the manner in which the category Value expresses itself as well. Moishe Postone, in his painstaking reconstruction of Marx’s thinking on Labor as a Value creating activity, “Time, Labor, and Social Domination”, showed that Value — which Marx defined as the socially necessary labor time required to produce labor-power — was not only the basis for the exploitation of the worker in the form of surplus labor time — which, in his model, is the source of profit, interest and rent — but also the basis for a peculiar form of labor activity: superfluous labor time; the period of labor activity which is entirely superfluous to the productive employment of labor power either for the production of wage goods or capital goods.

Where does this superfluous labor time come from?

With the increasing productivity of social labor, an increasing share of the existing labor-power can no longer be profitably employed, i.e., employed by capitals for the purpose of creating surplus value. Capital begins to exhibit symptoms of relative breakdown: an entirely superfluous mass of proletarians who cannot find employment, a mass of machinery which can no longer be put to use by these proletarians, a mass of money-capital which cannot find profitable investment opportunities, and a mass of commodities which cannot be sold.

On the one hand, this so-called deficit in “aggregate demand”, Marx declares, is nothing more than the necessity for a general reduction in hours of work expressed in the form of the law of Value prevailing in capitalist society. On the other hand, since, the purchase and sale of labor power remains essential to Capital itself, and the basis for both the subsistence of the proletarians and the extraction of surplus value by capitals, the necessity for a general reduction in hours of work takes its opposite form: A general social demand from the two great classes in capitalist society for intervention by the State to increase “aggregate demand” by various measures — in other words, for action by the State for active economic policy intervention designed to ensure that the essential condition of Capital — the purchase and sale of labor-power — can continue uninterrupted.

This intervention, which is essentially fascistic, accompanies the rise of the Fascist State, and rests on the interests of both great classes in capitalist society insofar as they are considered only as poles of the relation, Capital, explains the astonishing growth of the State in the 20th Century, which expands from an estimated mere 3 percent of United States Gross Domestic Product to approximately 43 percent in 2010, with an accumulated debt that is greater than the total annual output of the United States’ economy — and currently increasing at the unprecedented rate of more than ten percent per year.

It is precisely in this unprecedentedly enlarged cancer on society that what Michael O. Powell, in his post, “Rethinking Marx”, calls the “high degree of capital to fund” voluntary association is already present in its latent form, as an constantly increasing mass of productive capacity being expended in the wholly unproductive — and from the standpoint of a voluntary association, wholly unnecessary — form of State expenditures. The conversion of the relative breakdown of Capital into its absolute form, which implies the collapse of active State intervention in the economy, frees the entirety of the productive capacity of society from both the dependence on profit as the motive force of productive activity, and the overwhelming mass of this capacity from its wasteful and superfluous employment by the State.

The members of society, who are by this collapse, compelled to create a voluntary cooperative association, find themselves awash in an abundance of productive capacity exceeding, by far, any measurable need for it. With the abolition of the State, the need for Labor itself disappears, taking with it the epoch of scarcity,the Law of Value, Class society, and all the ugly muck of ages.

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