I recently read this post Anarchism’s Promise for Anti-Capitalist Resistance, on GonzoTimes and have some ideas for a response which I will prepare in due time. I want to throw some notes out there to get any feedback people might have.
Let’s begin with the public debt crisis:
People think the US is on a path to insolvency, i.e., to an inability to pay its obligations. This is wrong. In fact, the US has not paid its obligations since 1971.
But, from Washington’s point of view, this is not insolvency; it is a growing stream of surplus value whose source are the exports of every other nation. The question is not one of insolvency but of the capacity to absorb this mounting surplus value in a manner consistent with its production.
The debt crisis is merely a problem of Washington going through the fiction of “borrowing” this surplus value, rather than “purchasing” it outright.
“Purchasing” it is placed in quotes here because the means of purchasing, the money, is created out of nothing — it is a fiction. The “insolvency” of the US is simply its unwillingness to entertain getting rid of the fiction of federal public debt. However, the fiction of federal public debt consists entirely of its role in disguising the process of creating money out of nothing. By pretending to borrow money, the US is actually creating money out of nothing through issuance of fictional debt instruments. These debt instruments are themselves created out of nothing — there is self-evidently nothing with which to repay them, except more debt.
The discussion of insolvency cannot begin with the discussion of public debt, but presupposes a mass of surplus value which cannot be realized without this increased debt. The growth of public debt presupposes a growing mass of surplus value which cannot be realized — of goods that cannot be sold — except on condition of new debt issuance. But, this new debt issuance is nothing more than the thinly disguised creation of money out of nothing.
If, on top of the consumer debt crisis, which began in 2008, we now reach a point where the issuance of public debt is also constrained, this has global implications. We are talking about a sudden uncovering of the absolute over-abundance of capital world wide; a condition which implies further deepening of the current depression.
The authority to issue of new debt constitutionally lies with Congress, actual creation is accomplished by the Executive. During the Civil War, Congress authorized the creation of Greenbacks — a purely fictional expansion of the money supply to fight the war. This authority was withdrawn at the end of the war(?) And, the greenbacks were withdrawn from circulation over several years. The logic of the situation appears to require resurrection of this authority and granting the Executive unlimited money creating power. This same act, however, would abolish constitutional government and the Republic. Short of this, Congress could authorize creation of a given amount of new money by the Executive. This would lead to abolition of limited government as well — but a fig leaf would remain. Annually, the Executive branch would hand out its shopping list, Congress would roll its own bribes into this and authorize it.
If this seem like the farfetched speculation of a damaged mind, I need only state this is the Modern Monetary Theory policy prescription. MMT assumes the only limit on government expenditures is the existence of resources (unsold commodities) that can be purchased with ex nihilo money. If the entirety of the surplus value created world wide is superfluous — cannot function as capital — all of this can be so “purchased”.
Here is the rub: In Marx’s model, this purchase must in no way increase the absolute value of the total social wages. While the distribution of total social wages may change over time, the total value of the social wages must fall. Which is to say, the portion of the total social labor day devoted to creating surplus value must constantly increase. It also means the rates of creation of new fictional money must constantly increase; and, therefore, prices must constantly increase. All of this is expressed in a constantly expanding Fascist State.
In Marx’s model, the only basis on which this entire process can be brought to a standstill is by enforcing a reduction in hours of labor.
A movement to reduce hour of labor is the sole avenue to anti-politics, a politics of resistance, a politics that stands outside the State. If the Fascist State is entirely composed of surplus labor time, and increases with it, limitations on hours of labor is necessary. Moreover, until hours are limited until freely associated productive activity replaces labor as the MAIN source of wealth, communism (a stateless society) is not possible.
Until all or most of necessary labor is replaced by free voluntary associated productive activity, value producing labor cannot be abolished. The condition for the abolition of labor and of the Fascist State are identical: abolition of all labor in excess of socially necessary labor time.
This is what Marx calls a communist movement of society: the act of the individual as an individual reclaiming her productive capacities. The individual is reclaiming these capacities from value producing activity. And, exercising them in association with the rest of society.
The answer to ex nihilo money, Modern Monetary Theory, and the ceaseless expansion of the Fascist State is a movement to cut hours of labor. This movement must be a global movement; a movement of individuals as individuals; a movement against ALL classes in present day society.
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.
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.
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.
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.
Capital is production run amok — production for the sake of production; the Fascist State — which in its fully developed form only exists in the American State — is consumption for the sake of Capital, i.e., consumption for the sake of production run amok. Since it produces nothing, the expenditure of the Fascist State is composed entirely of the surplus produced by the mass of capital set in motion.
This expenditure must come from that portion of the surplus produced by capitals which does not go into either the expansion of variable capital (wages) or the expansion of constant capital (machinery, raw materials, etc.) It comes in various forms — wages paid out to a portion of the working class, subsistence income, subsidies, payments for goods and services provided by private capitals, etc. The Fascist State pays for these expenditures by issuing newly created ex nihilo pecuniam.
Fascist State expenditure, therefore, only destroys the productive capacity of society to the extent this additional surplus value does not enter into expanded capitalist production. i.e., to the extent capital is not exported, or is exported in insufficient quantities.
According to Marx:
The contradiction of the capitalist mode of production, however, lies precisely in its tendency towards an absolute development of the productive forces, which continually come into conflict with the specific conditions of production in which capital moves, and alone can move.
The conflict expresses itself in the fact that production halts, and must always halt, before want is satisfied — that Capital is incompatible with abundance. Capital is a mode of production founded on scarcity and cannot be otherwise. On the one hand, a mass of society is rendered superfluous to productive activity by the development of the productivity of labor. On the other hand, an abundance of means of labor and necessities threatens the conditions under which surplus value is realized, triggering a longer or shorter period during which production ceases.
This internal contradiction seeks to resolve itself through expansion of the outlying field of production [by export of capital]. But the more productiveness develops, the more it finds itself at variance with the narrow basis on which the conditions of consumption rest. It is no contradiction at all on this self-contradictory basis that there should be an excess of capital simultaneously with a growing surplus of population. For while a combination of these two would, indeed, increase the mass of produced surplus-value, it would at the same time intensify the contradiction between the conditions under which this surplus-value is produced and those under which it is realised.
The absolute over-accumulation of capital is that point in the development of Capital where the realization and conversion of surplus value into new capital no longer takes place under any conditions. The periodic explosions seen earlier in Capital’s development has become a permanent feature of the mode of production.
The emergence of the Fascist State — which Marxists have, for the most part, never grasped properly — marks its beginning with the emergence of this permanent feature of the capitalist mode of production, as a social necessity arising from the inherent tendency of Capital toward the absolute development of the productive forces of society by absorbing into itself the ever increasing mass of surplus value, which grows daily, even more rapidly than Capital can expand into the outlying field of production within the World Market.
The rate of surplus value constantly increases owing to the laws of Capital’s own development — this implies an ever greater quantity of commodities (of capital in the form of commodities) thrown onto the World Market, and the constantly diminishing application of labor to the production of these commodities; the increase in the scale of productive activity; the centralization of capital into fewer hands; the accelerated pauperization of the mass of remaining property owners; the increasing gulf between the producers and the condition of production; and an always accelerating tempo of accumulation.
But this ever accelerating tempo of accumulation runs into the absolute barrier of Capital’s own conditions of existence — that Capital rests on the limited consumption power of the mass of laborers; that only the threat of starvation can compel an individual to so absolutely debase herself as to sell herself into slavery daily, and that, therefore, Capital ultimately rests on maintaining the mass of society within certain definite narrow limits of existence, i.e., the daily average wage.
The growth and development of the Fascist State is, therefore, subject to certain conditions, the most important of which is that the consumption of the mass of society must never expand beyond that point where the sale of labor power is threatened, i.e., must never exceed the average of the daily wage. Consumption must indeed increase, but this increased consumption must impoverish society on an ever increasing scale — the productive capacity of society must be routinely and systematically destroyed.
But, the conclusion that the consumption of the mass of society must never expand beyond the point where the sale of labor power is threatened implies, under conditions of Capital’s own logic, that the absolute value of the mass of wages must fall, despite the Fascist State’s ever increasing direct and indirect employment of wage labor. And, the conclusion that the productive capacity of society must be routinely and systematically destroyed implies, for the same reason, that the mass of capital, although constantly increasing, nevertheless falls in absolute value. Thus, while always increasing in absolute mass, total capital — both variable and constant — is declining in absolute value. This results in a negative rate of profit, although, as we shall see, it appears to the economist otherwise: that the mass of profits increase — even appears to increase obscenely — as the mass of surplus value increases.
The capitalist only sets his capital into motion on condition that the surplus extracted from the worker can be realized. His capital is laid out and must return to him in its entirety plus an average rate of profit. If his sum of capital is $100 and the average rate of profit is 10%, he expects to recover $110 from his investment. If the sum of capital is $1000 and the average rate of profit is 5%, he expects to recover $1050 from his investment. He places a definite quantity of capital in motion and expects a definite quantity of capital to return to him. The profit expected by the capitalist is in absolute mass equal to the absolute mass of the surplus produced by the variable capital he sets in motion. If the variable capital set in motion by the capitalist equals $100 and the rate of surplus value equals 50 percent, the capitalist expects a mass of profit equal to $50.
The capitalist placed in motion a capital of $1,000, composed of $900 of constant capital, and $100 of variable capital. Having extracted from the worker an additional $50 in surplus value the capitalist must now sell his commodities and reconstitute his original sum of capital, $1,000 plus a profit of $50. Under the conditions we are now considering — absolute over-accumulation of capital — the entire sum of surplus value equal to $50 must be destroyed, but it must be destroyed in manner that still appears to allow the capitalist to “realize” the full $50 of surplus value in the form of profit.
This is accomplished as follows: In exchange for the $50 amounting to the value of his surplus product the capitalist receives $50 of ex nihilo pecuniam, which, as it requires no labor time to create at all, contains no value. He has his $50 and is completely satisfied with the exchange. But, the value of the commodities, rather than being reconverted into money capital, disappears from circulation and is destroyed.
Leaving aside the constant capital, we have three sums: variable capital (wages) amounting to $100, surplus value amounting to $50 that must be destroyed, and profit amounting to $50 that must be realized. For the economists, who long ago expelled value from their field of study, this destruction poses no problem. And, this is as it should be: since the economist only reflect the economic laws of Capital from the standpoint of bourgeois society, by expelling value from his consideration he has only done in theory what Capital is doing in reality, namely, abolishing itself within the limits of its historical form.
But, from our standpoint this exchange presents us with a problem that deserve further consideration: $100 has been laid out in the form of variable capital, and $150 has been realized. Yet, the total sum of expenditures was $200: $100 in variable capital, $50 in profit and $50 in Fascist State expenditures. Moreover, the actual mass of capital has shrunk by an amount proportional to the expenditures of the Fascist State.
The solution is obvious: The capitalist received in return for $50 of his surplus value no real value; the $50 of surplus value was consumed unproductively. In return for the real value produced by Capital of $50, nothing was realized. Fifty dollars of commodities were withdrawn from circulation by the Fascist State and replaced with ex nihilo pecuniam with a face value of $50. The conditions of realization were formally fulfilled in this transaction, yet actually abrogated: in return for $50 of value the Fascist State paid nothing.
The $50 of ex nihilo pecuniam paid to the capitalist has no value, and this he discovers when he is confronted with the rising cost of production due entirely to the depreciation of the purchasing power of his capital. This depreciation is calculated not simply on the value of the variable capital and profit, but on the whole of his capital. If, before his total capital was c = $900, v = $100, and s = $50, for a total value of $1050, he finds that his total capital has decreased in purchasing power by $50.
Thus, rather than having a reconstituted capital with a purchasing power of $1050, his capital has a purchasing power of only $1000, or 95.24% of its expected purchasing power. The depreciation of the purchasing power of his capital means he cannot produce the same mass of surplus value on the basis of the former conditions of production. He can purchase $100 of labor power, but this $100 of variable capital now has a value of only $95.24. With a rate of surplus value of 50%, his capital only creates a mass of surplus with a value of $47.62. Although the rate of surplus value is unchanged, the value of the mass of surplus value and the mass of profits has fallen — and this has occurred even though all the conditions of his activity has been formally fulfilled. He has no choice: to achieve the same mass of surplus value, and, therefore, the same mass of profit, he must increase the rate of surplus value.
For the mass of capital set in motion the conditions allowing for the increase in the mass of surplus value produced, and the conditions allowing for the increase in the realization of this same mass as profit now stand wholly in contradiction to each other. In the former case, the production of surplus value requires the further reduction of social labor time in its necessary form; but, the realization of the surplus value requires the extension of social labor time in its superfluous form. The complete incompatibility of these requirements for the normal functioning of Capital under conditions of absolute over-accumulation is presented in all its glory.
In Capital , Volume 3, Chapter 15, Section III, Marx asks, “When would over-production of capital be absolute?” He is speaking here not merely of commodity overproduction, but of the over-accumulation of all the elements of Capital.
There would be absolute over-production of capital as soon as additional capital for purposes of capitalist production = 0. The purpose of capitalist production, however, is self-expansion of capital, i.e., appropriation of surplus-labour, production of surplus-value, of profit. As soon as capital would, therefore, have grown in such a ratio to the labouring population that neither the absolute working-time supplied by this population, nor the relative surplus working-time, could be expanded any further (this last would not be feasible at any rate in the case when the demand for labour were so strong that there were a tendency for wages to rise); at a point, therefore, when the increased capital produced just as much, or even less, surplus-value than it did before its increase, there would be absolute over-production of capital; i.e., the increased capital C + ΔC would produce no more, or even less, profit than capital C before its expansion by ΔC. In both cases there would be a steep and sudden fall in the general rate of profit, but this time due to a change in the composition of capital not caused by the development of the productive forces, but rather by a rise in the money-value of the variable capital (because of increased wages) and the corresponding reduction in the proportion of surplus-labour to necessary labour.
In other words, the capitalist succeeds in wresting additional surplus from the worker, but this surplus produces a contraction of profit. In theory, the mass of profit is equal to the mass of surplus value. But this surplus value has to be realized as profit; it has to be sold. If this is not accomplished, or is accomplished only in part or at a loss, Marx argues, surplus has been created, but it is not realized.
The result is the formation of a mass of forcibly idled capital and a mass of forcibly idled workers — a classical depression. Now, he explains, it is entirely possible to put these two masses together and produce more goods, but that would only further hurt profits. And, since the motive of capitalist production is profit, production halts at the point where the mass of profit cannot be increased.
It is important to state that this result is NOT a defect of Capital — absolutely NOT a defect. Yes, production halts before want is satisfied, but that isn’t the point: Capital is concerned only with maximizing profit — not human need. If you want to run a charity Gandhi, go run one! If, however, you want to maximize profits, you stop at the point where profit is maximized.
The mode of production develops the productive capacity of labor with an eye toward the production of surplus value (profit). This production of surplus value, however, is also the expenditure of labor beyond the time necessary to produce wages and capitalist consumption. Any additional capitalist investment beyond this point would, by definition, result in superfluous output that cannot increase profits.
In a closed system, where export of this excess capital is not possible, production would halt leaving both excess labor powers and idled capital. As a result, both the value of the sum of wages and of the excess capital would fall as competitive pressures increased within each class. This would lead to a further fall in the actual quantity of the labor powers and the mass of capital employed. Unable to expand into new markets, Capital would, instead, begin to implode in on itself.
The problem is simple: One worker can produce enough for two, three, or ten, but this can only be done profitably if those others have the wages to purchase what has been produced. The surplus produced must now be sold before the capital can be reinvested, and this further investment can only take place if it is profitable to do so. If, it is not profitable to expand production with the additional surplus, the production of surplus itself must contract.
With the absolute over-accumulation of capital, the conditions under which surplus is produced stands in absolute contradiction with the conditions under which this surplus is realized. Capital undertakes production only to make a profit, but the surplus necessary for this profit wipes out profit. The capitalist class as a whole is empirically confronted with the need to progressively reduce productive activity.
Want increases, but this want only compels further contraction of productive activity. The very increase in want itself presupposes the further contraction of productive activity — the inability of the mass of society to buy what has been produced. At the same time, absolute over-accumulation presupposes the accelerated concentration and centralization of capitals as smaller capitals are idled altogether. To operate profitably the scale of production must increase, but this is only possible for the very biggest capitals. Finally, even the biggest capitals are no longer profitable, and all productive activity grinds to a halt.
This process takes place in any case in a closed system and does not in any way depend on processes outside capital itself. And I don’t think any process outside Capital can reverse, slow or otherwise counter this process. Assuming a closed system it is inevitable. In an open system, where the export of capital is still possible, it takes longer — but even an open system is located in a closed one. (For this reason, protectionism only accelerates the decline of a capitalist economy.)
According to Marx’s theory, the mass of surplus value is a direct function of the rate of surplus value times the mass of the working population. If the rate should increase, and the population is held constant, the mass of surplus value increases; and, vice versa. The working population, however, labors for so many hours at a time and, this length of individual working time has bearing on the rate of surplus value. All else being held constant, if the hours are longer, the rate of surplus value increases. If the hours are shorter, the rate decreases.
The absolute contradiction between the conditions of production, and the conditions of realization, of surplus value resolve into this: X hours of surplus labor time is expended, but Y hours of surplus labor time can be realized in the form of profit. Where X is greater than Y. The difference between X and Y is labor time that cannot be realized as profit.
I think, in Marx’s model of absolute over-accumulation Y = 0. Which is to say, none of the expended surplus labor time can be realized as profit. (I am assuming I understand him correctly and that I am not just blowing smoke.) While the rate of surplus value continues to increase, the rate of profit has dropped to zero – thus capitalist production grinds to a halt.
But this point only represents two different quantities of labor time, X and Y, which, divided by the number of workers employed productively, gives us the normal working day. Over-accumulation of capital leads to the formation of a mass of unemployed workers, but this formation is just a proportional reduction of the sum of hours of work. It is the reduction of social hours of work, while individual hours of work continues as before – the reduction of work is shared unequally.
Some workers are idled altogether, another group can only find limited work, and still another can find work only at reduced wages. Yesterday, everyone was employed and at good wages — life was good. Today, everyone suffers from too little work and falling wages.
When work is plentiful, competition between workers is muted and unions grow. Some even imagine the political conquest of power. When work becomes scarce, the competitive divisions within the class grow more pronounced — each worker becomes a petty commodity seller. The consciousness of the class as a class dissolves to reveal a mass of squabbling wage slaves fighting over the table scraps of Capital. Each is compelled, under penalty of starvation, to employ every advantage — race, nationality, language, religion, gender — for survival.
These circumstances lead not as Marxists like Wolff imagine to new opportunities for the workers’ cause, but their further degradation. As a class they only have the “opportunity” for misery and the reproduction of their miserable existence as wage slaves — for the employment of their bodies and capacities as mere means of survival, a foul, detestable act which fills the air with the stench of the slave markets.
Hitler was carried to power on the shoulders of the unemployed, and Auschwitz was a smooth operation modeled on the factory floor.
The result of depression is not the opportunity for liberation of the working class, but emergence of a fascist State of the Hitler type. This Fascist State absorbs the mass of unemployed labor power and idle capital to produce an unprecedented outburst of global violence. With the Fascist State we see not simply war between nations, but the deliberate targeting of civilians and productive infrastructure. Entire cities are targeted not to undermine the enemies capacity to fight, but the capacity to produce. Civilian populations are targeted for extermination; industrial infrastructure, roads, communications far from the battle are leveled.
The absolute hostility of the Fascist State to productive activity is seen in the determination with which it destroys the productive capacity of its foes. Its nature is revealed: that it is parasitic; that it is inimical to the productive employment of human capacity; that it thrives on scarcity; that it is only the expression of hunger, scarcity and want organized as a definite body of parasites on society; that its sole activity is the manufacture of scarcity, hunger and want; and its sole purpose is to expand the scale of this activity.
In area after area, wherever the State extends is vile tentacles, it does so not to increase the productive capacity of society, but to destroy it. Education, health-care, agriculture, industry — this mass of vile pestilence knows nothing of these things save turning them into a means to waste labor, or worse, instruments for its own expansion. In their stead, it posits the empty activity of the bureaucrat, the financier, those whose work does not touch on any of these activities. Those who exist only to interfere with productive activity and to reduce it to just another mode of the State’s own existence.
It doesn’t matter what children learn, only that massive quantities of resources are consumed in this activity. It matters not whether the sick are treated, only that an ever increasing volume of superfluous activity can be expended on “health-care”. The best of all possible worlds: those areas where nothing is produced, yet vast resources are idled (ex. strategic petroleum reserves) or destroyed (ex. wars of aggression).
While Capital is production run amok — production for the sake of production — the State is consumption for the sake of Capital. What matters is not that children be housed, fed, educated, but that surplus value produced by Capital be consumed in its entirety. The expansion of the State is not determined by any need to satisfy wants, but to satisfy the conditions for the self-expansion of capital, but, the condition for the self-expansion of Capital is the extension of the hours of social labor beyond its necessary limit.
Hence, the tendency toward constant expansion of the Fascist State is a law.
If the State is now essential to realization of surplus labor, does politics tend to fluctuate around policies most conducive to this? And, if so, what would this look like? Since, we assume no one directly knows what is required for realization, what form does this take?
How would we know what policies are most conducive to the realization of surplus that has been extracted from the working class?
Since the extraction of surplus and realization are separated in both time and place, the possibility exists for the two to come into conflict. It is entirely possible for the conditions required for the extraction of surplus to be utterly at odds with those of its realization. This conflict, however, has to be resolved in a way that makes the normal operation of Capital possible. In this sense, the conditions required for extraction must negate those required for realization. And, the conditions under which this surplus is realized must entirely negate those required for its production.
In a closed system capitals have to be constantly producing surplus value; but, just as important, they must realize none of this surplus value. And, they must do this while, at the same time, they sell their goods at their production cost plus an average rate of profit. Finally, all of this must happen in a way that does not appear to violate common sense. For society as a whole it should appear entirely logical for the extracted surplus to be destroyed in its entirety — at a profit. Moreover, since profit is realized, Capital continues to accumulate, conserving both over-accumulation of capital and a surplus population.
The question then arises: if surplus is being entirely destroyed, what is the source of the profit realized by the capitalist?
Since the surplus has been destroyed, the profits must be fictitious. And. not merely fictitious, they have to devalue the existing capital. The secret to this entire process is Keynesian “ex nihilo pecuniam” — money created from nothing. This “money” fills the requirement of capital — the money laid out for production must be recovered plus an average rate of profit; and, it fills the requirement of realization that the surplus produced by the capital must be destroyed. i.e., consumed unproductively. The result is that the value of the sum of capital shrinks even as it grows in mass — i.e., the formation of a negative rate of profit.
(A negative rate of profit cannot be detected directly, since the entire point is to devalue capital even as it carries on normally. The entire point of debasing the dollar from gold was to accomplish what I just described — allow a negative rate of profit.)
Conclusion: The point around which politics revolves must be a negative rate of profit.
If I lost you somewhere along here: this negative rate of profit implies the constant expansion of the State. The State must constantly expand or the motive of Capital (profit) is extinguished, and production comes to an immediate halt. On the other hand, the expansion of the State is merely a measure of Capital’s actual self-abolition. Capital cannot go beyond itself, i.e., cannot go beyond its limited historical task. It does, however, abolish itself within these limits.
Both the struggle against austerity and the struggle against public debt must resolve into expansionary spending without deficits. What is now hidden — that Washington does not use your taxes to fund it expenditures, and that, therefore, there is no debt crisis — must become explicit. Washington will be forced to admit it creates money to fund it expenditures out of nothing. But, this admission can only be won by preventing DC from raising the debt ceiling. When this is done, it will be clear that there was nothing preventing Washington from ending unemployment immediately at any point. No reason to close schools, no reason to cut social security, no reason to avoid single payer health care, etc.; except to protect the profits of the banks and their monopoly on the creation of fictitious money.
That this outcome is even a remote probability is evidenced by PIMCO’s exit from US treasuries. The problem however, is that while Washington cannot pursue austerity, expansion of its spending will only accelerate devaluation of capital. The US will not only be unable to impose austerity domestically, it will have to create enough new money to saturate the world market. Washington must offset all the austerity of the states, plus all the reduction of all other countries in toto.