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Marxist Academic Error 101: “A term is undefined and has no properties”

As part of my continuing occupation of the Marxist Academy, I have been looking at various Marxist theories of the crisis of neoliberalism. This is the final part of my critique of Andrew Kliman’s “Neoliberalism, Financialization, and the Underlying Crisis of Capitalist Production” (PDF).


As can be seen in the chart above, most bourgeois economists look at fascist state economic data and conclude we are experiencing nothing like the sort of economic event that occurred in the Great Depression. The Great Depression was just that — a depression — while what we are experiencing is perhaps a more severe than normal recession generated in the aftermath of a financial crisis. For the bourgeois economist this description of the situation may or may not be entirely satisfactory.

For anyone attempting to understand the fascist state economic data using Marx’s theory of the capitalist mode of production it is less than worthless — it can turn Marx’s theory into a useless glob of shit that describes nothing — least of all what is occurring within the capitalist mode of production.

My overall assessment of Kliman’s hypothesis of the present crisis

First, Kliman is unquestionably right to state the “new New Deal” proposed by Dumenil and Levy will not fix this crisis. He is right on this because we currently are experiencing a depression, not simply a “crisis”. Depressions cannot be fixed with fascist state financial gimmickry and Ponzi schemes.

Second, all rate of profit data being published by Marxist academics — including Kliman’s data — are taken out of context of the world market rate of profit. The US rate of profit cannot be treated in isolation from the world market since what is going on in this depression is not limited to the US. Moreover, we are witnessing a “perfection” (to use a term borrowed for Marx) of the capitalist mode of production bound up with the world market, in which world market prices and world market values are what counts to our analysis. To continue to bow down to the false idol of the fucking nation-state and treat each nation as an isolated potato in a larger sack is really quite anachronistic. You Marxists academics need to get your head out of your collective ass and stop avoiding this issue.

Third, Kliman needs to offer an explanation for why a depression occurred when the US rate of profit was not falling. He needs to explicitly state why a depression rooted in the falling rate of profit occurs in a situation where the US rate of profit does not appear to be falling. He will not find this answer simply by looking at US data, no matter how inconvenient he finds it to actually do some fucking work for a change.

Fourth, Kliman is correct to point out the analytical obstacle is explaining the absence of an expansion of the US “economy” coming off the 1971-1980 depression. This is particularly true since my data shows such an expansion clearly took place — whether or not it was reflected in the change in nominal GDP as reported by the fascist state.

Fifth, this indicates Kliman needs to get rid of his allegiance to the MELT theory of money immediately and replace it with Marx’s theory of money. (Seriously Andrew. Shit-can that stupid theory, because it ain’t working for you.) Kliman’s argument there was insufficient destruction of capital values in the last depression is a conclusion he reaches because he is employing the MELT theory of money and has rejected Marx’s theory in his analysis. Had Kliman used the latter in his analysis, it would have been obvious there was massive destruction of capital values during that depression and a robust expansion following it. Kliman will eventually have to dump the anti-Marxian MELT theory of money — until he does this his break with Sraffians and Keynesian-Marxists will remain incomplete.

Sixth, Kliman’s argument on how the fascist state has retarded the destruction of capital values is unsatisfactory not simply because it offers dubious reasons for this intervention, but because it requires us to believe the law of value can be affected by fascist state Ponzi schemes and financial gimmickry. This argument collapses under even the briefest examination, since value is determined by the socially necessary labor time of production of commodities and cannot be retroactively changed by fascist state economic policy.

Seventh, properly understood, Kliman’s argument that the fascist state has “attempted to retard and prevent the destruction of capital” is an argument that there is a growing divergence between value and price in the US economy. This is only possible if the dollar is a worthless token of money and dollar prices are meaningless as a measure of value without a reference to a commodity money standard. Kliman’s argument , once it is corrected to reflect Marx’s theory of money, explains deindustrialization, financialization, and, the accumulation of private and public debt

Finally, Kliman needs to investigate Postone’s argument on superfluous labor in Marx’s theory of labor time and Michael Roberts’ argument on productive and unproductive sectors. Both seem to offer an explanation for why the apparent stagnation of the capitalist mode of production from the late 20th Century to now may in fact conceal altogether other material economic processes at work. The current crisis is one created by the systematic expansion of unproductive labor time within the economy by the fascist state.

How Marxist pollute Marx’s labor theory of value with bourgeois nonsense

The willingness of Marxist academics’ to uncritically import bourgeois categories into Marx’s analytical framework is bizarre. Let me give an example. Kliman states:

My main thesis is that U.S. corporations’ rates of profit declined after the mid-1950s and continued to fall or failed to rebound after the recessions of the mid-1970s and early 1980s; that no new boom followed these recessions because, in contrast to what occurred in the Great Depression and World War II, the amount of capital-value that was destroyed was insufficient to restore profitability and a healthy rate of investment; that the persistent fall in profitability led to sluggish investment, slow economic growth, and a long-term explosion of debt; that the buildup of debt has led to repeated bubbles and the bursting of these bubbles; and that the latest crisis and economic slump are the consequences of the bursting of a gigantic bubble in the housing and stock markets.

Can anyone define the term “bubble”? “Economic slump”? Or, “economic growth”? What is an “economy” anyways? I am pretty sure I have never read that term in any of Marx’s writings. What is gross domestic product (GDP)? Has anyone ever taken that bourgeois category apart and subjected it to critical analysis a la Marx? For instance, in calculating GDP bourgeois economists simply subtract imports from exports to arrive at the concept of “net exports”. Is this right? What is “stimulus”? Kliman includes this term in his discussion, but he does nothing to define it. Is “stimulus” an injection of value or an injection of something else by the fascist state into the “economy”?

The odd thing about these terms is that Kliman uses almost all of them in his statement of his “main thesis” regarding the present crisis. His “main thesis”, therefore, consists of a collection of terms that occur nowhere in Marx’s theory and are not mapped to that theory. I see “corporate rate of profit”, “rebound”, “recession”, “boom”, “sluggish investment”, “debt”, “bubbles”, “economic slump” in his thesis.

Mind you, if we were to remove these terms from Kliman’s thesis — there would be no thesis at all:

My main thesis is that [some undefined term] declined after the mid-1950s and continued to fall or failed to rebound after [some undefined term] of the mid-1970s and early 1980s; that no new [some undefined term] followed these [some undefined term] because, in contrast to what occurred in the Great Depression and World War II, the amount of capital-value that was destroyed was [some undefined term] to restore profitability and a healthy rate of [some undefined term]; that the persistent fall in profitability led to sluggish [some undefined term], slow [some undefined term], and a long-term explosion of [some undefined term]; that the buildup of [some undefined term] has led to repeated [some undefined term] and the bursting of these [some undefined term]; and that the latest crisis and [some undefined term] are the consequences of the bursting of a gigantic [some undefined term] in the housing and stock markets.

Kliman’s thesis is entirely composed of categories alien to Marx’s historical materialist theory of capital, whose definition we think we know. We have a commonsense definition of the term “economy”, for instance, but what is it in terms of Marx’s categories? Is the fascist state part of “the economy”? How is “the economy” measured? Is “the economy” an activity or a thing? What is “economic growth”? If the fascist state is a part of the economy, how does it stimulate “economic growth” within the framework of Marx’s law of value?

Just try to conceptually map the terms “economic growth” and “government stimulation” to some set of concepts within the law of value. It ain’t happening. Because there is no concept or group of concepts that correlate with these terms — these categories are FICTIONS. They are the inventions of a pseudo-science created to describe what the fascist state is doing to you through its economic policy measures. Kliman begins by telling us he is going to explain why “economic growth” slowed after the “recessions” of the 1970s and 80s. But he does this without defining the terms “economic growth” and “recession”.

The National Bureau of Economic Research — a capitalist thinktank — defines a recession using various indicators. It is this definition that is being employed when bourgeois economists tell us whether we are “in a recession”. Common usage assumes a recession is just a mild depression — but is it? Are these two animals even of the same genus? Many, if not most, of the recessions we have experienced since the Great Depression have been engineered by the Federal Reserve. Is a depression something engineered by central banks or does it arise from the laws of the capitalist mode of production itself? Was the Great Depression engineered by the Federal Reserve in 1929?

Here is a New York Times piece on the Federal Reserve that at one point describes how the recession of 1979 was engineered by the Federal Reserve. The writers state:

In 1979 Paul A. Volcker became chairman of the Fed and tamed inflation by raising interest rates and inducing a sharp  recession. The more general lesson was simple: Move monetary policy further from the hands of politicians by delegating it to  credible technocrats.

So, in at least one instance, a recession was used to manage the “economy” — that is, to cripple democratic political control over the social process of production — and was not directly related to capitalist laws of motion. On one level this makes each recession comprehensible only by investigating the particular circumstances surrounding it as an economic event. On another, it then becomes a necessary to explain, within Marx’s law of value, the material determinants governing fascist state management of the “economy”.

Yet, Kliman wants to explain events leading to the current “recession” without investigating the term “recession” itself.

Wages versus Marx’s value of labor power

This problem again crops up when Kliman criticizes Dumenil, Levy, Foster and Magdoff’ for their very narrow definition of worker subsistence. In his 2010 paper, “A Crisis of Capitalism (not neoliberalism, “financialized capitalism,” or low wages)” (PDF) Kliman disagrees with the empirical findings of these writers, stating, contrary to their data, “Workers’ real pay has increased and their share of national income has been stable.”

In particular he cites the argument advanced by Foster and Magdoff:

It was the reality of economic stagnation beginning in the 1970s … that led to the emergence of ‘the new financialized capitalist regime,’ … whereby demand in the economy was stimulated primarily ‘thanks to asset-bubbles.’ … But such a financialized growth pattern was unable to produce rapid economic advance for any length of time, and was unsustainable….

A key element in explaining this whole dynamic is to be found in the falling ratio of wages and salaries as a percentage of national income in the United States. Stagnation in the 1970s led capital to launch an accelerated class war against workers to raise profits by pushing labor costs down. … Chart 3 shows a sharp decline in the share of wages and salaries in GDP [gross domestic product] between the late 1960s and the present. [Foster and Magdoff 2008]

Kliman attributes the conflict between his empirical findings and those of the four above mentioned writers to their selective use of data. Kliman counters that Foster and Magdoff selectively cite wages and salaries and ignore the broader category of “total compensation”:

What is left out when one restricts one’s attention to wages and salaries alone? First, many employers pay health and retirement benefits, and employers pay Social Security and Medicare taxes. All this is part of employees’ “total compensation.” Since the U.S. population is getting older and living longer after retirement, and since health-care costs are rising especially quickly, these additional components of total compensation have increased twice as fast as wage
and salary income since 1970. In effect, workers are drawing less of their total compensation now, and saving more of it for when they’re older.

Second, the government pays people, especially the working class, a lot of “social benefits”: Social Security and Medicare benefits, veterans’ benefits, welfare assistance, unemployment insurance benefits, etc. As the population has gotten older and as more people have come under the Social Security system, these social benefits have also increased as a share of GDP. Net social benefits (the benefits minus the tax contributions that partly pay for them) have increased almost four times as fast as wage and salary income.

According to Kliman, an aging population and rising healthcare costs means compensation in these forms is rising faster than wages and salaries. Kliman’s argument may or may not be true in this regard but he offers no evidence the category “total compensation” belongs with wages. For instance, are food stamps, unemployment and other federal programs part of “total compensation”? If so, how do you map a fascist program designed to temporarily maintain one worker on the edge of poverty with the surplus squeezed from another who is being overworked? Moreover, since the whole of government is an ever-increasing uncompensated diversion from social production to where do you map this theft? In the end, it appears, all of the categories of “total compensation” — “Social Security and Medicare benefits, veterans’ benefits, welfare assistance, unemployment insurance benefits, etc.” — are added to the value of labor power by Kliman without critical analysis.

(I know this is a problem from personal experience: My father collected a military pension for decades before his first social security check. And I have two sisters and a brother who are presently collecting military pensions.)

It is not as simple a matter of uncritically importing this into the value of labor power in our analysis as Kliman would have us believe. It’s very much bound up with our conception of what constitutes socially necessary labor time under the capitalist mode of production and especially after this mode has been replaced.

Marx’s theory of money and the Marxist/neoclassical theory of money

However, by far the most egregious example of Kliman’s failure in his argument consists of a category that appears both in Marx’s theory and in bourgeois economics: money. Kliman has brazenly imported, without any critical analysis at all, the wholly bourgeois neoclassical theory of money into Marxism via his monetary expression of labor time theory of money (MELT). He has done this without any apparent complaint from other Marxist academics, who routinely commit this same outrage themselves. The US dollar and all other currencies are only money in the neoclassical sense where value is, by definition, equated with price.

In neoclassical theory, if you want to know the value of a head of lettuce, the neoclassical economist asserts, you need do no more than look at its price tag. If you want to know the value of an aircraft carrier, fully outfitted with crew and materiale, the same examination is called for. That the lettuce can satisfy human need while the aircraft carrier satisfies no human need never enters the discussion of value.

The neoclassical definition of value is summarized by the Wikipedia this way:

In neoclassical economics, the value of an object or service is often seen as nothing but the price it would bring in an open and competitive market. This is determined primarily by the demand for the object relative to supply. Many neoclassical economic theories equate the value of a commodity with its price, whether the market is competitive or not. As such, everything is seen as a commodity and if there is no market to set a price then there is no economic value.

Kliman has to explain how his MELT theory of money differs from this bourgeois definition of value. While the rate of profit can map to any of a number of data points at the fascist state economic bureaus; and while the use of GDP in Marxist analysis can be the subject of controversy; and even while we might debate what parts of “total compensation” actually should be included in the value of labor power; Marx was insistent his entire career that MONEY HAS TO BE A COMMODITY.

In all of the research I have read on the subject, not a single Marxist academic has ever produced a single statement by Marx or Engels to the contrary. In fact, all statements made by the two on this subject reiterates this basic categorical assumption. Between them, their careers span some 100 years without any statement the least sympathetic to the idea money can be a state issued fiction. I think in an series of empirical studies criticizing Dumenil, Levy, Foster, Magdoff and Husson for their alleged non-Marxian approach to analytical categories, Kliman might have at least made sure his own employment of those categories did not suffer these silly flaws.


Kliman’s effort still remains the most interesting of the treatments of this crisis I have read so far, but he needs to fix this problem. His approach to money is seriously crippling with his basically correct approach to the present depression and the 2008 financial crisis it caused.

But, then again, what the fuck do I know — I’m just a dumb blogger.


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