Home > political-economy, shorter work time > VI. Prices and superfluous labor

VI. Prices and superfluous labor

A depression erupts when further investment by businesses becomes unprofitable; this lack of profitability results solely from the fact that labor is so productive that consumption is the overriding limiting barrier to further investment. Once this “insuperable” limit was encountered, money was withdrawn from circulation by the owners of gold who could find no profitable use for it. In response to this, government devalued the national currency against gold and then altogether debased it.

The debasement of the national currency severed the connection between gold and the national currency; and, therefore, between value and price; and between socially necessary labor time and labor time actually expended. On the one hand, there is gold: the expression of the value contained in the output produced. On the other hand, there are dollars: the denomination in the prices of that same output of the labor time actually expended.

But, it should not be imagined that currency was debased from gold, price from value, and the actual expenditure of labor time from socially necessary labor time because investment was no longer profitable. First, money already presupposes a division into currency and gold; and the separation between price and value; and, between labor time in its socially necessary and actual forms. The value of a good is not the actual labor time expended on it, but only the average quantum of labor time that is socially necessary for its production as an individual item, and as a member of a class of such items. Moreover, we do not measure the quantity of this value directly, but only indirectly through the exchange of the good with gold. And this exchange ratio doesn’t take the form of some definite quantity of gold, but that of a price denominated in a currency whose purchasing power is dependent on its exchange ratio with gold.

Second, the relation between currency and gold, value and price, and labor time in its socially necessary and actual forms is determined by the ongoing conflict between capital and labor. Profits are determined, on the one hand, by the constant extension of hours of work beyond what is socially necessary, and, on the other hand, by constant efforts to reduce the value of labor power itself. Capital constantly strives to expand the portion of the labor day beyond that required for the subsistence of the worker, and, in doing so, inevitably runs into an intractable contradiction of its own making. Thus consumption became an insuperable limit on investment, price and value were forcibly pulled apart, and currency was debased from gold.

Since the depression, which has its genesis in the constant extension of hours of work beyond that which is socially necessary, nevertheless only becomes visible after the fact, and through the sudden and unpredictable collapse in demand for goods; and, because it is precisely in the final demand price for goods that all of the costs of production, and, therefore, the value of these goods and also all profit, interest and rent, must be realized, the depression is defined by the idiot economist as a fall in demand for goods, and the deflation of their prices; rather than what it really is: namely, an expression of the need to reduce hours of work.

We have to emphatically repeat in no uncertain terms — for reasons that are now evident — that debasement of the national currency does not and cannot alter circumstances once the productivity of labor has reached a certain point.  The depression is a material event which cannot be papered over with credit, finessed by printing dollars, nor cured with government fiscal or monetary policies of any sort. It requires the reduction of hours of work and nothing short of this will resolve it. Continued effort to avoid this reduction must lead to an unimaginable social catastrophe. The trajectory of this catastrophe is given in the very means adopted by capital to avoid reducing hours of work.

To put all of this in plain English: The Great Depression, and the two depressions since then resulted from too much work, not too little. The “rigidity” cited by the wiki entry on devaluation forced investment to stay within the bounds of the limited consumption of the wages paid to working families. Removing the dollar from the gold standard eliminated the “rigidity” by allowing prices to inflate without regard to the real economic value being produced in the economy, and hours of work to expand without regard to the limits of social necessity.

But — and this is the fucking point — it did not fix the problem; it only made it worse! Now, the amount of currency in circulation was free to increase for whatever political goal Washington set. Prices were freed to rise to achieve this goal. And, the symptoms arising from too many hours of work could be muted, as superfluous work expanded solely to satisfy the drive for ever greater profits.

When the dollar was fixed to a definite quantity of gold, prices could only reflect the socially necessary labor time expended by society, and investment was limited by the consumption of society — and, in first place, by the wages of working families. Once, the dollar was allowed to float against gold, gold was removed as the standard of price, prices were freed to reflect not simply the work required to feed, house and clothe society, but also the entire category of superfluous expenditures, including, but not limited to, unprecedented military buildups, nail salons, speculation on housing and land prices, etc.

From this point forward, as long as someone held dollars, any and every expenditure of those dollars, no matter how silly, unproductive, or even destructive this expenditure was, nevertheless ended up as economic growth as measured by dollar denominated GDP. It didn’t matter if was silly. It didn’t matter if it was unproductive. It didn’t matter if it was destructive. As long as it increased the pointless consumption of the superfluous output of industry, and so made it possible to realize profits on that output, Washington encouraged it, facilitated it, and made its expansion a matter of over-riding concern.

The expansion of purely superfluous labor became the touchstone of mainstream political economy.

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