Home > Occupy the Marxist Academy, political-economy > Robert Kurz: The Road to Devaluation Shock and the Collapse of Capitalism (3)

Robert Kurz: The Road to Devaluation Shock and the Collapse of Capitalism (3)


3. A society suffocating under the manufacture of overwork

If you are a regular reader of this blog, you are familiar with one of my favorite quotes by that buffoon of fascist state economic policy, Larry Summers, who, in response to a question posed by a reporter on reducing hours of labor as a solution to the horrific unemployment that emerged in the aftermath of the so-called financial crisis, gave this response:

“I think we got the Recovery Act right,” Larry Summers, the president’s chief economic adviser, said in an interview. “The primary  objective of our policy is having more work done, more product produced and more people earning more income. It may be desirable  to have a given amount of work shared among more people. But that’s not as desirable as expanding the total amount of work.”

Rather than reducing legally mandated hours of work by even one hour, and thereby reducing the need for wasteful and expensive fiscal stimulus by the fascist state at a cost of hundreds of billions of dollars in new public debt, Summers declared the incoming Obama administration was committed to creating more work, compelling more production and inducing more wage slavery, even if this commitment plunged society into bankruptcy. No matter what the cost, unemployment would only be met by an attempt to expand wage slavery still further.

Not one member of the Marxist academy made an attempt to explain why this obviously insane policy was nevertheless considered to be a necessary one by Washington.

As Kurz argues in Part 2 of his essay, once productive capital becomes dependent on interest yielding capital, this dependence requires the continuous expansion of the mode of production. As this dependence increases, it becomes the over-riding concern of the mode of production as a whole (expressed in the form of fascist state economic policy) that promises given by productive capital to interest yielding capital in the form of claims to future profits be realized, and the realization of these claims, in turn, is only possible if there is uninterrupted “economic growth”.

If “the economy” does not expand continuously, the chain of fictitious claims to future profits must collapse, and with it, the mode of production itself.

Kurz showed how this development expresses a profound alteration deep within the mode of production that is rarely, if ever, understood or even recognized by Marxists academics, much less the simpletons of bourgeois economics: the expansion of surplus value producing labor comes to increasingly rely on the ever accelerating expansion of superfluous, unproductive labor — labor that creates no surplus value, but exists only as a function of capitalist relations of production.

Side by side with the increasing dependence of industrial capital on finance capital, in which the future profits of productive capitals are mortgaged to interest yielding capital to finance the valorization process, and which, as a result of this mortgaging, now requires the continuous expansion of the mode of production, the limits of this uninterrupted expansion also makes itself felt as a material limit on the productive expansion of social labor itself and the expansion, beyond this material limit, of unproductive labor. The expansion of labor time in society increasingly takes the form of a growing tertiary or services sector that is entirely superfluous not just from the standpoint of human needs, but also from the standpoint of the mode of production itself.

In a very densely argued Part 3 of his essay, possibly the most important section of his essay for our purposes, Kurz attempts to nail down the concept of productive labor and its opposite, unproductive labor. He is not without precedent in this effort, since it has bedeviled Marxist analysis at least since the 1960s, undertaken by numerous scholars who have never been able to satisfactorily define the invisible dividing line between the one and the other.

Part of the reason for this cul-de-sac in Marxist analysis is obvious: In Marx’s theory, by definition, value and surplus value cannot be directly measured, but only indirectly deduced in the form of a ratio by which one commodity is exchanged for another, and, in the final analysis, in an exchange of the commodity for money. Which is to say, the capacity of a given expenditure of human labor to create value and surplus value must be deduced from the prices of the commodities produced by this expenditure, and the profits realized by their sale. Moreover, to be productive in the full capitalistic sense requires not simply the production of a commodity having value; it also requires the production of surplus values that return to the process of capitalist valorization on an expanded basis — surplus values must be consumed within the context of a new round of capitalist self-expansion.

Moreover, the problem with simply equating prices to values and profits to surplus values is that, also in Marx’s theory, objects sold in the market can have a price without having any value at all, and, as I mentioned earlier, commodities with value can appear in the market for sale, but go unsold. Because the relation between the value of a commodity and its market price is not determined by individual transaction, but only by the average of all transactions — this also implies that certain capitals can generate profits without ever producing a single jot of surplus value.

To take an example used by Kurz, a capital that produces surplus value incurs an overhead costs from the operation of its human resource department. It can, however, outsource the functions associated with payrolls and benefits to another company like SAP and thus reduce its overhead cost. In turn, companies like SAP can make a profit delivering these sorts of services to surplus value producing capitals. Says Kurz, it would appear this shift of overhead costs to an outsourcer turns a loss making activity of a productive capital into a surplus value producing activity of the outsourcer company. Kurz explains why this is not so:

“But things are different on the plane of the total capital, which obviously does not immediately appear on the balance sheets of the so-called economic subjects, but which can, however, be theoretically and analytically reconstructed. First, it is necessary to point out that the unproductive “overhead expenses” reappear on the plane of the total capital, that is, the operational outsourcing by particular enterprises and the resulting regrouping within production as a whole reappears in the balance sheets. The unproductive “overhead costs” can be reduced, for the reasons adduced above, by outsourcing them to autonomous enterprises, but, on the plane of society as a whole, they are always a subtraction from the total surplus value.”

Although it appears the outsourcer has produced an additional quantity of surplus value, it is, in fact, only sharing in the surplus value created by productive capitals — just as interest yielding capital only shares in this same surplus value. Since it is entirely possible to have capital that generate profits without producing surplus value, Kurz argues the division line between productive and unproductive labor can only be defined, not by whether a profit is made on a capital engaged in a particular sphere of activity, still less on whether this activity itself produces a commodity containing value, but from the standpoint of the circulation of capital within society as a whole. Which is to say, it is not enough to identify activities where value is actually produced, we have to, in addition, consider how these values are ultimately consumed — what Kurz called productive consumption.

“… capitalism is only really possible if a sufficiently expanding part … of “employment” is capable of producing, within the context of commodity-money relations, a self-mediated identity of “productive consumption”, in which the production and consumption of value interact, so as to make the fetish-form and the fetish substance sufficiently coincide in amplitude.”

To put this another way: It is, for instance, fine that we agree a refrigerator is a commodity that contains real value, and that General Electric creates surplus value by producing this commodity, but, warns Kurz, if this refrigerator is then consumed by soldiers in a barracks in Afghanistan, rather than the household of a productive worker employed by General Electric or General Motors, whose labor goes back into the valorization process, the labor that produced the refrigerator is unproductive in the capitalist sense of that term. Which is to say, the labor may make life more comfortable for American soldiers engaged in murderous outrages across the Afghan countryside, but it does not reenter the process whereby capital as a whole expands itself — it is not productive labor from the standpoint of capital. On the basis of this reasoning, Kurz offers his definition of productive and unproductive labor in the capitalist mode of production:

“A definition of productive labor, with reference to the mediation process of capitalist reproduction as a whole, can only be presented in the last instance in terms of the theory of circulation. In other words: in terms of the theory of circulation, only that labor whose products (as well as its reproduction costs) return to the capital accumulation process is productive; that is, labor whose consumption is recovered again in expanded reproduction. Only this kind of consumption is “productive consumption”, not only directly but also with reference to reproduction. This occurs when consumption goods are consumed by workers who are in turn producers of capital, whose consumption is not a dead end, but which returns in the form of capital-producing energy, in a new cycle of surplus value production.

With the material limit of productive labor defined, Kurz argued Rosa Luxemburg had a valid point in her own argument that capital required third persons — persons outside the valorization process itself who nevertheless consume the products of this process. Luxemburg’s limitation in this regard, Kurz argued, was that she posed this problem as one of world market expansion into pre-capitalist or non-capitalist regions by imperialist or other means. By contrast, Kurz, in a magnificent intuitive leap, explained that capitalism is fully capable of creating a population of non-surplus-value producing (unproductive in the capitalist sense) persons within the system of wage slavery. Moreover, he argued, an increasing portion of the expenditure of labor power was, in fact, not capable of returning to the valorization process. Given this growing mass of unproductive labor time, Kurz argued, the total social capital must become unprofitable eventually, productive labor must eventually be buried beneath an ever expanding mass of unproductive labor.

What he is trying to show at this point is the necessity of this “productive consumption” not as a mere tautology, but to establish that this identity is the structural limit of capital, which,

“consist in the very fact that its dynamic creates an increasing number of unproductive sectors and “third persons”, whose revenues and consumption become a growing burden which the reproduction of capital will ultimately be unable to support.”

Capital was, in other words, producing an unproductive sector of completely superfluous labor expenditures that must become an intolerable and fatal burden to it.

“Ironically, it could be said that the ‘costs of doing business’ or the ‘overhead expenses’ of the marvelous market economy grow so disproportionately that the latter ultimately becomes unprofitable according to its own criteria.”

This capitalistically unproductive labor is the growing portion of the total mass of labor that cannot return to productive consumption. He then mentions several forms of labor that have difficulty in this regard: labors that simply mediate; products which cannot even assume the form of commodities; products which could only become commodities if they served a tiny minority; etc. But, having established the context for analyzing the problem, his articulation of examples is almost beside the point, since what Kurz has done is revive Rosa Luxemburg’s argument on an entirely new basis:

“… taken as a whole, the share of those unproductive workers (viewed from the perspective of surplus value production) who only represent social consumption, that is, “overhead costs”, is constantly increasing.”

Kurz, by borrowing Rosa Luxemburg’s argument on third persons, tries to show this category is not exclusively, or even primarily, external to the mode of production. Capital itself necessarily produces a growing non-capitalist (i.e., non-surplus value producing) sector; and this growing non-surplus producing sector would eventually be fatal for the mode of production as a whole.

“The costs of commercial, monetary, or legal transactions, the secondary costs of unproductive luxury consumption, administrative costs, costs relating to infrastructure and socio-ecological damage control, as well as the costs of the general conditions and logistics of the real production of surplus value, grow in such a way that the latter begins to suffocate.”

In the next part of this series, we will see how, in Kurz’s argument, the realization of fictitious claims on the future profits of productive capital by interest yielding capital — which gives rise to the ever increasing requirement for continuous economic expansion and the requirement for expansion of unproductive labor — ultimately comes to be expressed as the condition of existence of the total social capital as a whole, through the only means by which such a requirement can itself be expressed: the economic policies of the fascist state itself.


  1. September 7, 2012 at 11:47 am

    Seems as though the idea of the growth of the unproductive sector is parallel to the notion of diminishing returns to complexity found in various strands of human ecology/ecological economy. Is this a correct observation?

    • September 9, 2012 at 12:51 pm

      I am not familiar with the concept of diminishing return, but Kurz does argue it will get harder over time to create the number of unproductive jobs necessary now to sustain capitalism..

      • Kabo
        September 10, 2012 at 7:27 am

        The idea is that as the complexity needed to sustain society increases, the returns from further increases in complexity decreases, until a cutoff point is reached when returns from complexity drops below zero and society starts to cannibalize itself.

        The analogy would go like this: Complexity :: the unproductive sector; diminishing returns :: diminishing surplus value.

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