Home > political-economy > The Golden Grimace (Part Four: The merciless debasement of the worker)

The Golden Grimace (Part Four: The merciless debasement of the worker)

If we compare the chart from the Great Depression of the 1930s to the chart from the Great Stagflation of the 1970s, a number of questions immediately come to mind, not the least of which is why does the dollar measure of GDP and the gold measure of one and the same GDP diverge?

The Great Depression of the 1930s

The Great Stagflation of the 1970s

If your answer to this question is, “Because the dollar was debased from gold and replaced with a symbol (or token) of money – with a mere piece of paper, even dancing electrons – in 1933”, you have overlooked precisely the thing you should be explaining; namely, why gold money had to be replaced by paper money in the first place, and, therefore, why GDP came to be expressed by these two contradictory measures.

Paper money has always coexisted with gold or some other metal based money. Paper tokens served as the representative of metal money in transactions whenever the transportation and use of metal money was inconvenient to the exchange of goods. It was, however, only a substitute for metal money and served only limited functions as a substitute for gold where the metal money was not actually needed in its own metal bodily form – for instance, only gold could settle accounts between nations, and only gold can be used to store value (hoarding).

Even in transactions where money need not be present in its metal form, however, the paper which served as its substitute had value based on the fact that it represented this metal, and only to the extent it represented this metal. So, for instance, Confederate money, during our own Civil War, became worthless because it was printed in large quantities beyond what could be redeemed for the face value of the paper in gold.

If we only focus on what happened to the Confederate paper money, however, we miss an important point: what was happening from the standpoint of the citizens of Confederate society. As holders of Confederate paper money, they saw prices continually rising for everything; while as holders of gold, prices were stable, perhaps even falling. Much like what we see in the two charts above, reality looked very different depending on whether you held paper or gold.

When money was debased from gold in 1933, these two contradictory views of reality each became conferred on a different portion of society. The United States was now divided between the holders of gold, on the one hand, and those who used the debased paper currency, on the other.

Wherever money is required for daily transactions – for instance, to be paid out as wages, or to purchase normal daily goods – it is the debased paper currency that is in use. In this sector of the economy the paper money plays only the symbolic or token functions of money to make routine transactions possible.

The paper money itself is worthless, and only serves as a symbol of a social relation, implied by money: namely, the utter dependence of its owner on the transaction performed.  In the case of wages, it symbolizes the utter enslavement of the worker by forces over which she has no control and which rule over her absolutely.  Her acceptance of the money for her labor power announces the depths of depravity to which she has sunk – her absolute reduction to the category of a sub-human, inferior even to the status of household pet – a draft animal, with the right to vote.

We flatter her.

Better to describe her as a mere container for what is really important, and, unfortunately, necessarily attached to her – her labor power. Since this container requires so much food, water and shelter in order that its precious contents – her humanity – be present for work each week to be consumed, we might substitute for this container, a Chinese container, or an Indian, Brazilian, or Mexican container – each of which require that much less care and feeding.

The inflation of the prices of goods as against their value when measured in ounces of gold, as seen in the charts above, is, therefore, the relentless intensification of the enslavement of the worker, the ruthless application of financial violence of the most extreme sort by the most inhumane and predatory gang of sociopaths ever to dominate society in the entirety of human history.

The absolute debasement of the worker is the necessary condition for the debasement of money.

If we compare the chart from the Great Depression of the 1930s to the chart from the Great Stagflation of the 1970s, a number of questions immediately come to mind, not the least of which is why does the dollar measure of GDP and the gold measure of one and the same GDP diverge?

The Great Depression of the 1930s

The Great Stagflation of the 1970s

If your answer to this question is, “Because the dollar was debased from gold and replaced with a symbol (or token) of money – with mere piece of paper, even dancing electrons – in 1933”, you have overlooked precisely the thing you should be explaining; namely,  why gold money had to be replaced by paper money in the first place.

Paper money has always coexisted with gold or some other metal based money. It served as the representative of this money in transaction whenever the use of metal money was inconvenient to the exchange of goods. It was, however, only a substitute for metal money and served only such limited functions as a substitute where metal money was not needed in its own metal bodily form; for instance, to settle accounts between nations, or when money was used as a store of value (hoarding).

Even in transaction where money need not be present in its metal form, the paper which served as its substitute had value based on the fact that it represented this metal, and only to the extent it represented this metal. So, for instance, Confederate money, during our own Civil War, became worthless because it was printed in large quantities beyond what could be redeemed for the face value of the paper in gold.

If we only focus on what happened to the Confederate paper money, however, we miss an important point: what was happening from the standpoint of Confederate society. As holders of Confederate paper money, they saw prices continually rising for everything; while as holders of gold, prices were stable, perhaps even falling!

When money was debased from gold in 1933, the two aspects of this double reality each became conferred on a different portion of society. The United States was divided between the holders of gold, on the one hand, and those who used the debased paper currency, on the other.

Paper money versus Gold

Wherever money is required in daily transactions – for instance, to be paid out as wages, or to purchase normal daily goods – it is the debased paper currency that is in use. In this sector of the economy money plays only a symbolic or token role. What it symbolizes is the utter dependence of its owner on the transaction performed – her utter enslavement by forces over which she has no control and which rule over her absolutely. The paper money itself is worthless, and only serves as a symbol of a social relation whereby its use announces the depths to which the worker has sunk – her absolute, and no longer merely transitory, reduction to the category of a sub-human, inferior even to the status of household pet – a draft animal with the right to vote.

The inflation of the prices of good as against their value when measured in ounces of gold, as seen in the charts above, is, therefore, the relentless intensification of this enslavement, the ruthless application of financial violence of the most extreme sort by the most inhumane and predatory gang of sociopaths ever to dominate society in the entirety of human history.

By contrast, wherever money takes the form of gold – for instance, as a hoard in the safe boxes of the Plutocracy – it plays no role whatsoever in the daily transactions of the economy, and, therefore, expresses the degree to which its owner is independent from these transactions and the conditions of slavery attached to them. As a measure of the wealth of the society, the value of gold is expressed in the quantity of the total output of society for which it can be exchanged.

Hence, during the 1930s and 1970s depressions, as the dollar prices of  goods rose relative to their value expressed in gold, the potential wealth controlled by the owners of gold (commonly called their paper wealth), as measured by paper money, rose at a stupefying pace. They could, potentially at least, buy far more of the social product than before each of the episodes.

However, for domestic purposes after 1933, when money was debased from gold, this potential buying power was of no consequence, since gold was not the money of such transactions. If the owner did not have paper money, legally at least he could claim ownership of nothing except by way of mutual agreement between individuals. Gold was not money, and transactions in gold were no longer routine.

We can, for instance, see this problem from the opposite direction if we consider that a racist business-person might reject paper money from an African-American because he doesn’t like doing business with black people. To be able to reject legally valid money, for any reason, from any person, at any time, for a good that is otherwise available generally for money, calls into question the very social validity of the money itself.

For money to be money, its ability function as money must be subject to no limitations, and this is no longer that case for gold.

What the permanent debasement of money from gold announced to the world, as evidenced in the charts above, is that money itself is superfluous to society, and serves only to express the absolute debasement of the worker herself.

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