V. Debasement and prices
There is a syndrome known to afflict people who have undergone surgery to relieve terrible bouts of seizures called split brain. The wiki explains how this affliction expresses itself:
Split-brain is a lay term to describe the result when the corpus callosum connecting the two hemispheres of the brain is severed to some degree. The surgical operation to produce this condition is called corpus callosotomy and is usually used as a last resort to treat intractable epilepsy. Initially, partial callosotomies are performed; if this operation does not succeed, a complete callosotomy is performed to mitigate the risk of accidental physical injury by reducing the severity and violence of epileptic seizures. Prior to callosotomies, epilepsy is treated through pharmaceutical means.
A patient with a split brain, when shown an image in his or her left visual field (the left half of what both eyes take in, see optic tract), will be unable to vocally name what he or she has seen. This is because the speech-control center is in the left side of the brain in most people, and the image from the left visual field is sent only to the right side of the brain (those with the speech control center in the right side will experience similar symptoms when an image is presented in the right visual field). Since communication between the two sides of the brain is inhibited, the patient cannot name what the right side of the brain is seeing. The person can, however, pick up and show recognition of an object (one within the left overall visual field) with their left hand, since that hand is controlled by the right side of the brain.
The same effect occurs for visual pairs and reasoning. For example, a patient with split brain is shown a picture of a chicken and a snowy field in separate visual fields and asked to choose from a list of words the best association with the pictures. The patient would choose a chicken foot to associate with the chicken and a shovel to associate with the snow; however, when asked to reason why the patient chose the shovel, the response would relate to the chicken.
The split brain syndrome is an altogether apt analogy for what happened when the dollar was debased from gold.
Think of it this way: dollar prices reside in the vociferous left brain of the economy. It is here that goods are hawked and sellers jostle and compete against each other to make sales. It is the garish world of malls and television advertisers where prices are prominently displayed and everything is always on sale. The prices of goods are announced on tags and banners hoping to lure the passersby. The aggregate of these prices is the dollar expression of everything we consume.
By contrast, locked up in the mute right brain of the economy is the world of socially necessary labor time. It is here that all the information about how much effort was actually required to produce all those goods reside. And, it is the place where all the information about demand for those goods reside. Locked up in the mute right brain of the economy, in other words, is the aggregate quantity of hours of work to produce all of the stuff we consume — 42 inch high definition wide screen plasma televisions, houses, refrigerators, kitty litter and 787 Dreamliners — everything.
When you walk into the local Best Buy and want to buy a new Sony 42 inch high definition wide screen plasma television, you have no way of knowing how much socially necessary labor time actually went into the production of the thing. The signs in the store can tell a lot about the television, but there is nothing on the television to divulge how much time and human effort was required to produce it. All of that information is located, so to speak, in the right brain of the economy where production takes place, and the right brain of the economy is mute. Not even the staff of Best Buy could provide that information, and even if they could it wouldn’t matter to you, since you don’t care how much time and effort it takes to produce the television and you couldn’t care less about how many of the things were produced — you only want one of them, and you want the staff at Best Buy to tell you how much you have to pay to get one.
All that matters to you is its price.
Before 1971, however, all of the above information would have been contained in the price of the television. The mute right brain of the economy would have been able to communicate with the noisy talkative left brain of the economy because gold, the economic corpus callosum of the two hemispheres, served to translate socially necessary labor time into prices.
Gold because it is a mostly useless shiny metal — otherwise suited only to serve as a paper weight or a door stop — had few uses to society except to serve as a money commodity. But, for all its uselessness as a product of labor, as money it was able to express an altogether hidden relationship between all products of human labor. It denominated all the work required to produce them, and all the demand for them in some definite unit of itself and, therefore, served as the standard for all price.
Before 1971, the price of a 42 inch high definition wide screen plasma television and all the other prices in the economy, when taken in aggregate (and perhaps only in aggregate), would have told you precisely how much of the work being performed in the economy was socially necessary. The aggregate of prices — GDP — would have risen when socially necessary labor time was increasing; and it would fall when socially necessary labor time was decreasing. These prices could not tell you why socially necessary labor time was fluctuating up or down, only that it was.
Whenever hours of work exceeded what was socially necessary all hell broke loose.
If it is the economist’s delusion that markets are ruled by an invisible hand, nevertheless, it also was a decidedly visible fact that this hand did not exactly ring a bell to warn businesses when production of goods was no longer profitable. Instead, things moved along quite merrily until the economy was suddenly seized by a massive dislocation as sales evaporated, credit dried up, factories were shuttered, and millions were thrown into the streets. The collapse of prices told us only after the fact that too much work had been performed, and they told us this in the most violent and rude fashion possible: one day factories were being built, workers hired, machinery humming, hundreds of billions of dollars worth of goods were being produced, inventories were being accumulated, and store shelves stocked. The next day, when businesses tried to find a buyer for all the stuff produced, suddenly and without warning there were none to be found. All this activity was for naught, and businesses, desperate to offload the excess product, slashed prices to recover as much of their costs as possible.
It was all a bit untidy, as would be expected when, for the first time in human history, mankind actually began running out of productive work to do.
When gold was severed from the dollar the economic corpus callosum connecting the two hemispheres of the economy was severed as well. Price no longer expressed in money form the socially necessary work being performed in the economy, and socially necessary work no longer determined prices. The real economy was left holding a shovel, while the dollar economy held a chicken foot.
And, economists were left to offer chickenshit reasons why wage slavery would never end.