The Golden Grimace (Part Nine: Gold, the dollar, and superfluous work)
The price-form, however, is not only compatible with the possibility of a quantitative incongruity between magnitude of value and price, i.e., between the former and its expression in money, but it may also conceal a qualitative inconsistency, so much so, that, although money is nothing but the value-form of commodities, price ceases altogether to express value.
The relationship between the two measures of GDP is this:
The debasing of the dollar allowed a quantitative disparity to emerge between the prices of commodities and their values. This divergence of price from value not only emerged in the price of individual commodities, but also in the sum of all the prices of all commodities taken together. Because fiat dollars cannot measure the values of commodities, value no longer determines prices.
At first glance, this might not seem surprising since the value of commodities is something invisible to us – we do not and cannot know the value of anything we buy or sell. The value of a commodity is only expressed over a period of time through the apparently random fluctuations of the price of the commodity. It is something only apparent to us in the movement of these prices.
So what’s the big deal?
The big deal is this: what was once true for any specific price of a commodity (that any price paid for it might not actually coincide with the value of the commodity) is now absolutely true even for the average of the fluctuations in the price of any specific commodity. And this is also true for all commodities taken together – no commodity’s prices ever reflects its value, and the aggregate prices of all commodities no longer reflect their aggregate value as well.
In other words, the dollar measure of GDP does not, in any way, reflect the value created by economic activity in the U.S. economy.
But, the value of a thing is only the expression of the socially necessary labor time required for its production expressed in some quantity of gold (or, another metal) money. So, to say this another way, in our society the actual work done in the economy is no longer determined by the socially necessary labor time required for the production of commodities. When the quantitative disparity emerged between the prices of commodities and their values, a disparity also emerged between the amount of work we do and the amount of work that was socially necessary to maintain our current standard of living.
Work was now determined by the fiat dollars rushing into the economy.
This absolute quantitative incongruity between price and value has profound implications for our present crisis. The value of a commodity is only a measure of the labor productively employed on it taken as an average of all the individual labor times employed on all the commodities of its type for which society has a need. If more labor is employed in producing the good than is on average necessary, or, if more of the good is produced than is necessary (supply and demand), these disparities would have been signaled by a fall in its price.
This no longer occurs.
The chart below displays the total output of United States GDP from 1929 to 2009 as measured in dollars. As such it measures only the growing total aggregate of dollar transactions – of the exchange of useful things for dollars, and the circulation of these useful things – over time. These use values are not, and cannot be, measured by dollars as values, because, as we have stated, the aggregate measure shows only the dollar demand for the goods and not their socially necessary labor times, neither individually nor as an aggregate.
The chart, therefore, measures the sum of the social labor process – the sum of use values in circulation to satisfy human need – but only insofar as this human need takes the form of money demand. It is a measure of the ever increasing raw productive power of social labor expended on disparate things of great value to us – things like food, houses, schools, medical care for disabled veterans of the genocides in Iraq and Afghanistan, and research into cancer cure. It also measures destructive things of no value to us whatsoever – cluster bombs, depleted uranium shells and wars in Iraq and Afghanistan.
As a measure of dollar denominated activity, it even includes bizarre things of altogether contradictory value – such as all the economic activity that led to the BP Gulf of Mexico oil disaster AND the dollar cost to clean it up. Both the money spent creating the disaster and the money spent cleaning it up after are registered on the above chart as GDP! Every transaction is represented in aggregate, with no indication as to how much society benefited from it or was impoverished and damaged by it.
This next chart measures that same aggregate output in terms of the dollar price of a billion ounces of gold. This chart does measure the aggregate socially necessary labor of the total social product in circulation over time – the amount of labor actually productively employed over the period.
The chart does not, and cannot be a measurement of the value of the individual use values within this circulation, but only the measure of all of them in aggregate. Even if we knew the dollar price of any object in this aggregate, we could not extrapolate from this dollar price to how much socially necessary labor time it embodies, because the dollar price of the good conveys no information about that labor time. (Remember, Washington can create as much money out of thin air as it needs to purchase anything it wants.) We also cannot know how much time we actually spent at work when this value was produced, because there is no definite relationship between the amount of work we do and the value we produce.
Gold can only measure the amount of work we HAD to do to produce the value; and, the dollar only measures the amount of work we actually did. When the dollar was on the gold standard these two measures were one and the same. But, now that this relationship is broken we have to perform an extra step: Only by dividing the annual dollar denominated GDP by the price of an ounce of gold for that year can we arrive at some idea of how much of the work we were doing was actually necessary.
The two charts above begin in 1929, before the dollar was debased from gold and are presented in absolute values. However, if we convert them to percentages, using 1929 as the base year, we can align them to see what happened when the dollar was debased. As you can see from the chart below, there is a fairly sharp divergence between the two measures of GDP after the dollar was debased by gold in 1933. This period is shown in the chart below.
The chart shows the sudden sharp divergence of the prices of transactions in the US economy as measured in dollars (the green area) from these same transactions as recorded in the price of billions of ounces of gold (the yellow area). The dollar was not simply debased from gold, it was also devalued against gold – reduced from $20.67 per ounce to $35 per ounce. This was an overnight 41 percent reduction in the value of the wages of working families – a brutal material assault on their standard of living carried out by that puppet of Wall Street, President Franklin Delano Roosevelt.
The fact that Roosevelt went on to be reelected three times after this monstrous economic calamity – and, to this day, enjoys almost universal adoration – does not, in any way, change this material fact. Recovery from the depression began only after Washington engineered a massive collapse in the real wages of working people.
This assault was, simultaneously, a sharp divergence of the actual labor time of working people from the socially necessary labor time required for the production of commodities. In every year after the debasement of the dollar, actual labor time exceeded its socially necessary requirement by 40 percent – meaning the country was increasingly awash not only in worthless dollars, but also a superfluity of work – unnecessary, superfluous labor that was the material precondition for the military buildup leading to the catastrophe of World War II.
The two measures of GDP, therefore, record the emergence of labor in its purely superfluous form – in the form of labor that neither results in any increase in the material wealth of society, nor in the means to create that material wealth.
If we extend this chart to 1980, we can see that this newly emerged superfluous labor expands even further to absorb a greater portion of actual labor time:
Superfluous labor expanded dramatically between World War II and 1970 – growing from 40 percent of all work performed to more than 50 percent of all work performed. However, the Great Stagflation of the 1970s imposed such an unimaginably harsh reduction on the living standards of working families that by 1980 superfluous labor expanded to include more than 95 percent of all work performed. No more than five percent of the work day was necessary!
WORK ITSELF HAD BECOME ENTIRELY UNNECESSARY!
Let us repeat that, because you obviously did not hear what we said:
BY 1980, WORK ITSELF HAD BECOME ENTIRELY UNNECESSARY!
In the ten years since 2000, even this insignificant level of necessary work was cut in half – dropping to no more than 2 percent of all work performed. At the same time, economic activity, as measured in dollars, exploded in bubble after bubble, These bubbles were no more than the desperate actions of Washington and the gang of sociopaths residing on Wall Street trying desperately to maintain some semblance of economic activity through an explosion of debt, financial instruments, and every sort of sordid Ponzi scheme to maintain their grip on the social power they wield over you, and which is embodied in your own self-enslavement to them.
Below, we show the divergence between the labor process measured in dollars, and that same labor process measured by socially necessary labor time, as the percentage of the total labor day embodying socially necessary labor time. This is the actual percentage of the present labor day required to satisfy human need.
Based on what we have presented here in this series, that chart indicates that no more than 2-3 percent of the current labor day is required to satisfy the total needs of society.
It also indicates that if the self-expansion of capital falters, for whatever reason, as now seems to be happening , economic activity will disappear in a massive catastrophic implosion.
Work is dead, folks. You’re all gonna have to get a life!