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Making austerity work in Britain for Dummies (Anti-statist version)
!Quelle Surprise! Like Greece and Spain before it, the UK finds austerity can only result in more austerity:
U.K. Tories to Press Ahead With $16 Billion of Welfare Cuts
The Conservative Party will press ahead with plans to cut 10 billion pounds ($16 billion) from the welfare budget and reduce spending by most other departments as it extends Britain’s austerity program into a seventh year.
The cuts to the benefits budget will go ahead as long as they meet safeguards sought by Work and Pensions Secretary Iain Duncan Smith, who has clashed with Chancellor of the Exchequer George Osborne on the issue since the party came to office in 2010. Duncan Smith and Osborne published a letter today saying the differences had been resolved.
“We are both satisfied that this is possible and we will work together to find savings of this scale,” the ministers said, according to excerpts released by Osborne’s office.
Osborne will address activists at the Conservatives’ annual conference in Birmingham, central England, later today, seeking to assure voters that his party will spread the pain of austerity across society. He’ll accuse the opposition Labour Party of focusing too much of that effort on the rich.
“There’s unfairness if people listening to this show are about to go out to work and they look across the street at their next door neighbour with blinds pulled down, living off a life on benefits,” Osborne said in an interview with BBC Radio 5 today. “Is it fair that a young person straight from school who has never worked can find themselves getting housing benefit to live in a flat when people who are working, perhaps listening to this program, are still living with their parents” because they can’t afford to move out, he asked.
…
Osborne is seeking to extend spending reductions across government departments as a 2010 effort to rid Britain of its budget deficit by 2015 is pushed back a further two years. Britain spends more than 200 billion pounds a year on welfare, accounting for 30 percent of total government spending. The Treasury said in March that welfare cuts of 10 billion pounds are needed by the fiscal year that runs through March 2017 on top of the 18 billion pounds of savings already announced.
See this is the problem with austerity — the more you cut, the more you must cut. Folks, if the fascist state is subsidizing capitalism by accumulating debt, cutting fascist state deficits only weakens capitalism.Since the fascist state is propping up profits through its accumulation of debt, if this debt accumulation is reduced, it sets off a vicious cycle which can only end in each round of cuts making necessary the next round of cuts.
Inflation, the negative rate of profit, and the Fascist State (Part six)
I need to digress for a moment to set everything I have discussed so far regarding inflation in the context of the world market. As will become clear, it is difficult, if not impossible to discuss inflation without taking into account the relation between the two. Inflation, as I have argued, can be understood as the chronic secular rise of prices for commodities, yet, it can also be understood as the chronic fall in the general level of consumption in an economy over a period of time. These two expressions of inflation do not simply exist as poles of a definition of inflation, but first and foremost as poles of the actually existing relation of production within the world market — a chronic, secular rise in prices of commodities on the one hand, and a chronic fall in the general level of consumption — of wages — on the other.
Inflation and the faux political battle over Austerity
One way to begin this is to look at the current faux political struggle unfolding in Washington over deficit spending by the Fascist State, since this faux struggle touches on one of the most glaring expressions of the imbalances within the world market. So, let’s examine the argument of the advocates of Austerity from the standpoint of Marx’s labor theory of value:
According to these sober persons, the United States must pay its debts. Since it must pay its debts — for instance, the US owes China $3 trillion — it must contain spending to a level consistent with this goal. Of course, the statement that the United States owes China $3 trillion is a non-sequitur in relation to domestic spending and taxes, since the US doesn’t pay China with revenues raised through taxes. It creates the money out of nothing. If China is concerned about getting its money, a faceless bureaucrat at the Treasury simply goes to a computer terminal and enters a 3 followed by 12 zeroes into an account designated by China. Now the PRC has its $3 trillion and we need not talk about Austerity. They get what we promised them: $3 trillion, and nothing more.
As the economist advocates of Modern Monetary Theory argue, this process is no different than what occurs when you withdraw cash from your savings account at the bank or transfer cash from your savings account to your checking account. US treasuries are simply China’s own savings account.
Now, what does China do with the $3 trillion? They have absolutely no domestic use for it, since the yuan serves as the domestic currency, not dollars. The PRC could use the money to import wage commodities to raise the material standard. But if they had any intention of doing this, the $3 trillion would not have been loaned to the United States in the first place. The PRC could also use the money to import capital commodities to increase the rate of domestic economic growth. However, even if they used the money this way. it would only result in more exports and even greater trade surpluses denominated in dollars. We have to assume that China has absolutely no use for the dollars — that the dollars are excess capital, which, since the PRC has no use for it, ends up being lent to the United States. And, since the United States can create as many dollars as they want, they have no use for it either.
The $3 trillion is valueless. And, if it is valueless, this implies all the crap they sold us is valueless as well. China sold us all this crap knowing we were giving them valueless dollars in return. We must assume they exchanged these commodities for American ex nihilo dollars because it couldn’t be sold otherwise. Since the crap was valueless unless they sold it to us for equally valueless dollars, the terms of the trade were met. Crap for crap; superfluous commodities, which, therefore, are not commodities at all, since they have no value, exchanged for a quantity of ex nihilo money that also has no value.
But, by the same token, the savings from austerity sought by the Austerians to repay China must also be valueless, since it consists entirely of these same ex nihilo dollars. Which implies that current expenditures by the Fascist State are also valueless, since the money spent domestically is the same as that to be paid to China. The money isn’t valueless because we owe it to China, it was valueless already — just as China’s crap is valueless unless it is sold. Whether it is used to repay China or spent on National Health Care, the money is completely valueless. Which means, not only is all that crap in China valueless, national health care is valueless as well. You cannot buy something with nothing unless that something is also nothing, i.e., has the same value as your means of purchasing it.
On the other hand, health care is definitely something, but so are socks made in China and sold at WalMart. By saying a thing exchanged for nothing must be nothing as well clearly has nothing to do with whether it is useful or necessary. The socks are useful, and so is an annual checkup. But, when exchanged for valueless dollars, they must also be valueless. It is not a question of whether these valueless dollars will go to pay China or to pay for health care.
The real question is why all of these useful goods continue to circulate in the form of commodities despite the valuelessness of the money? If we removed the valueless money from the equation entirely and allowed the goods to move as society demanded, nothing will have changed. Which is to say, if the goods were free, from the standpoint of value, nothing has changed. The fact that money serves as an intermediary in exchange here has no impact on the value of the things. Rather money is announcing, “These things for which I am exchanged have no value themselves. They, like me, are valueless in an economic sense, and, therefore, are no longer actually commodities.”
The absurdity of ex nihilo money
The absurdity is apparent: Money in this case only expresses that, from the standpoint of the law of value, there is no need for money. But this monetary expression takes the form of a valueless money. The sheer stupidity that money expresses its own superfluousness is already given in ex nihilo money. At the same time, this absurdity can only arise because, as a practical matter, the superfluousness of money appears absurd itself. Or, what is the same thing, a society founded on exchange of commodities has nevertheless come to be dominated by directly social production. This directly social production, for which exchange of commodities is entirely absurd, must nonetheless appear in the form of exchange – fictitious exchange. To accomplish this fictitious exchange requires a money form that is itself fictitious — ex nihilo money.
Although the exchanges taking place are fictitious, and use a currency that is entirely fictitious, the need for these fictions are real. The premise of all these fictions is that completely social conditions of production are nevertheless split up among the members of society. On the one hand, this division presupposes exchange of commodities, yet, on the other hand, this commodity exchange is entirely superfluous to the production of these commodities. The conflict between the conditions governing exchange and those governing production must be resolved; and they are, by fictions. But this “resolution” of the conflict between the conditions of exchange and the conditions of production can only intensify the antagonism between the two, and develop it to its most extreme limit.
Every nation attempts to resolve the conflict between the conditions of production and the conditions of exchange by issuing its own ex nihilo money. However, the limit of any nation to issue ex nihilo money rests on its ability to export more than it imports. According to Paul Krugman (2010) a nation can issue ex nihilo money only if it can run an export surplus and accepts a depreciation of its money. Moreover, in a flexible exchange rate system the export surplus becomes possible because issuing the ex nihilo money itself creates a tendency toward this depreciation of its currency. Thus, in a flexible exchange rate system, creating money ex nihilo produces a tendency toward export surpluses by depreciating the purchasing power of the ex nihilo money. The creation of fictitious money depresses the ability of the community to consume what it produces; it reduces the ratio of domestic consumption to domestic production — increased export is realized through the relative impoverishment of the community.
Since, in Krugman’s 2010 model every nation seeks a trade surplus by impoverishing itself — i.e., by reducing the portion of domestic production that is consumed domestically — who is consuming all of this now excess crap? Krugman’s 2010 model implies either the existence of a designated importer nation, or, the planet ends up with massive quantities of unsold excess commodities. What role does this designated importer play? If every other nation is running a trade surplus, the designated importer must run a trade deficit equal to the total surplus commodities produced by all the other nations. i.e., equal to the sum of excess capital in the form of excess commodities.
If the designated importer nation is running a chronic and growing export deficit, how does it pay for these imports? This designated importer has a fictitious currency every other nation must accumulate as payment for its exports. By law, only the State can create ex nihilo money. The responsibility of creating sufficient quantities of fictional money falls to it. The creation of ex nihilo money, however, is nothing more than the creation of fictitious profits — to the penny. If this creation is accomplished by issuing public debt, this public debt amounts to the fictional profits of private capitals. By increasing the public debt the owner of the world reserve currency can print money and buy all the crap. On the other hand, there is a tendency for the excess capital of the world market to be denominated in the world reserve currency.
However, since we are dealing with an actual material conflict between the conditions of production and the conditions of exchange under condition of absolute over-accumulation of capital, this conflict doesn’t disappear. It now appears as poles of international trade in the form of many net exporters on one side, who are accumulating fictitious dollar assets, and a net importer on the other side, who is accumulating a growing public debt; thus, the excess capital of the world market is increasingly denominated in the world reserve currency. This division of the world market into many net exporters and a single net importer has consequences for ex nihilo money creation itself: The capacity to grow export surpluses by creating ex nihilo money does indeed increase, but this increased capacity is only true for the designated importer nation. The export surplus nations actually end up with less capacity to create ex nihilo money, even as the designated importer nation gains in this capacity. Eventually, the export surplus nations must absolutely constrict their respective money supplies to contain inflation — producing, as a consequence, a growing surplus population of starving laborers. Although this conclusion is obvious, Krugman has not a hint of it in his 2010 paper.
Ex nihilo money, labor time, and the World Market
The problem is that directly social production abolishes the law of value, while exchange takes place only on the basis of this law. Under the capitalist mode of production, production is only undertaken with the eye to profit, i.e., to realization of surplus value. Yet, under conditions of absolute over-accumulation of capital, no additional surplus value can be realized, i.e., the profit rate is zero, if not negative. If the fiction of profits could not be maintained, production would cease entirely. To maintain this fiction, you need fictitious money.
To put this another way, under conditions of over-accumulation, directly social production limits the total labor time of the community to socially necessary labor time. And, what is the measure of this socially necessary labor time? Here is the somewhat surprising answer:
Socially Necessary Labor Time = Value = Wages.
Under conditions of over-accumulation of capital, the absolute limit of total socially necessary labor time is the value of the wages of the working class. Any value created in addition to this necessary limit — i.e., surplus value — cannot be realized as profit — it is wasted (or, superfluous) labor time. Profits realized under this regime must, by definition, be fictitious; hence the fiction of ex nihilo money.
If the production of surplus value no longer takes place, profit can be “realized” through exchange only on condition there is a continuous and pervasive unequal exchange of values within the world market. If labor power cannot be exploited to create surplus value, it must be constantly and artificially devalued — that is, purchased at a price below its actual value. This artificial (purely monetary) devaluation of labor power is a natural consequence of Fascist State ex nihilo money expenditures. This purely monetary devaluation of labor power goes hand in hand with a purely monetary devaluation of the fixed and circulating constant capital.
However, although labor power and the fixed and circulating constant capital are artificially devalued, this does not, by any means, imply a fall in the prices of these commodities — rather the situation is precisely the reverse. Under the conditions I am describing, the purely monetary devaluation is expressed inversely as rising ex nihilo prices for these commodities. They become dearer in ex nihilo money terms as their prices are held well over their actual values; in turn, society is compelled by generally rising prices denominated in the world reserve currency to consume fewer of these commodities.
However, it should not be understood by this that generally rising prices cause declining consumption of commodities; nor, does this imply that either or both result from the huge quantities of ex nihilo money created by the state. Rather, each of these is called forth by the growing conflict between the conditions of production and the conditions of exchange under circumstance of chronic or absolute over-accumulation of capital. Over-accumulation of capital means precisely over-accumulation of commodities — of fixed and circulating constant capital, and, of variable capital, i.e., labor power. Moreover, we have to assume that this over-accumulation of capital exists not simply in one or a few nations, but universally throughout the world market. Hence, export of capital no longer serves to resolve the contradictions inherent to capital.
Those who are following my reasoning so far immediately recognize the logical contradiction in the above paragraphs: I have made the absurd assumption that commodities sell at prices below their values and, simultaneously, above their values. On the surface, it would appear that these two paradoxical assumptions could not exist, or, if they did exist, would bring social production to a halt entirely. As a practical matter, however, these two assumptions, although occurring side by side during the circulation of commodities, nevertheless only occur serially in any given example and in two different directions: the capitalist purchases labor power where the average wage is priced below its value, and sells wage commodities where prices of these commodities are above their values. Which is to say, the world reserve currency, despite massive ex nihilo creation that should force its exchange rate against other currencies down precipitously, actually exchanges against these other currencies at a higher rate than would otherwise be expected — it enjoys what economists refer to as an “exorbitant privilege”.
As a result, there is a tendency for production to move toward the least developed regions of the world market, where labor power can be purchased for a fraction of its value, while the resultant output is sold in the most developed consumer markets. Capital denominated in the world reserve currency, since this currency can be exchanged for any local currency, can simultaneously purchase labor power in those places where wages are below their values, and sell the produced commodities in those places where prices are above their values. Productive employment of capital in the home market of the world reserve currency holder grows increasingly unprofitable and commodities produced there suffer from uncompetitive world market prices. Capital, therefore, takes flight to the less developed regions of the world market. This event is accompanied by loud public pronouncements by politicians and the business community on the liberating effects of free trade; and by angry denunciations on the part of those capitals who, because of their size or circumstances, cannot shift their capital to take advantage of this process and are driven to ruin or speculation.
This has implications for the development of the world market, which, rather than slowing because of the general over-accumulation of capital within the world market, now increases at an astonishing rate and geometrically: Capital denominated in the world reserve currency can not only take advantage of the price disequilibrium between labor power and wage goods, it can further exploit the “exorbitant privilege” of the world reserve currency. This must accelerate the export of capital to less developed regions of the world market to take advantage of extremely favorable terms on which labor power can be exploited in the local currency, and, simultaneously, lead to the expansion of the portion of the total social capital denominated in dollars at the expense of the portion denominated in other currencies.
The problem I spoke of in an earlier post in this series — that wages are too high, and yet too low — resolves itself naturally into accelerated export of productively employed capital to those places where labor power can be had for a fraction of its value, to produce goods destined for markets where commodities are priced many times their actual value. This arbitrage, which can only continue so long as new sources of ever cheaper labor power can be found, must be expressed in a growing volume of Fascist State ex nihilo money creation, which, moreover, must not simply increase, but increase geometrically.
Class War in Madison? Not so fast… (Final thoughts)
The argument i have tried to make in the previous parts of this series ( one, two, three and four) is simple: What is taking place in the battle in Wisconsin, and the battle against austerity generally has nothing to do with Capital directly, but instead is concerned with the massive population of working people rendered completely redundant by the progress of Capital’s development, and a huge mass of capital that must stand idle as a result of this progress. The specific problem at hand is that under existing social conditions this idle capital and redundant population can only be employed if the capital is wasted, consumed unproductively and absorbed by a population of working people whose daily labor creates nothing, satisfies no human need — not even their own.
This catastrophe expresses itself, first, in the monstrously bloated body of the State that grows to such proportion that it chokes off the employment of the productive capacity of society; and, second, that the State, however bizarrely swollen — as can be seen in the US accounting for 48% of global defense expenditures — is still not bloated enough; that it has not, despite the glaring obscenity of such wasteful spending in the face of growing poverty, grown to the proportion necessary to ensure the continuing purchase and sale of labor power, i.e., to ensure employment of capital for the extraction of surplus value.
The first aspect of this crisis, however, can only be resolved by the further expansion of the State — on pain of a growing class conflict and to suppress this conflict — and not through austerity. So it is not surprising that politicians, acting under the slogan “Jobs, Jobs, Jobs”, blindly offer every manner of silly and contradictory policies to effect this expansion: tax increases and tax reductions; new public debt issues and urgent calls to balance the budget; committees formed composed of senior politicians and academics, corporate CEOs, and wealthy contributors to discuss “investment” in public education, infrastructure and new technologies said to offer society the opportunity to “win the future”, and, at the same time, efforts to dismantle existing State public services, and protections for workers and the environment. In short, a relentless effort by the capitalists to dump the entire burden of the crisis onto the shoulders of working women and men; and, an equally vigorous struggle by working people to avoid this burden.
The second aspect of this crisis places a material demand on the State to increase its burden on society. For all the bleating of politicians about how the country must increase its competitiveness the State grows, but it grows in a way that does not add to the productive capacity of society in any fashion. The nation must become poorer not richer as a result of this growth, less productive, less competitive, more dependent on imports from nations where the continuing employment of oxen in agriculture is not uncommon, and where — owing to the low productivity of labor — daily wages are a fraction of the American average hourly wage.
The method employed by the State to increase its size and overcome the rising antagonism between production and consumption, no matter whether the method adopted is the issuance of new public debt — as advocated by Keynesians like Paul Krugman — or the wholesale creation of new money directly through State expenditures — as advocated by Modern Monetary Theorists like Billy Mitchell — is depreciation of money; a depreciation that is only possible because the State previously debased money from the gold standard.
No other object in society touches on commodities more intimately than the ratio by which these commodities exchange for money itself. Absent crises, Capital presents itself in the form of the ceaseless, uninterrupted, and expanding dense network of interrelated transactions whereby money and commodities are exchanged — and within which any particular commodity may pass through many such transactions before falling out of circulation and being consumed.
However, what concerns every member of society is that she receives some definite amount of money in return for her commodity. If she is a worker, she seeks only an agreed upon wage; if she is a capitalist, she seeks only a return of her capital plus an average rate of profit in the form of some definite quantity of money. With its authority to determine what serves as money, the State can “purchase” the labor power of a worker, or the commodity of the capitalist by exchanging these commodities for money created out of thin air.
Thus, the ratio between the sum of money in circulation and the sum of commodities in circulation is upset in proportion to the injection of the new ex nihilo pecuniam; while, on the other hand, a portion of the existing capital and labor power in circulation is consumed without being replaced. The total sum of commodities in circulation are reduced, and the prices of the remaining commodities increase. In this way, both the existing capital and labor power are devalued simultaneously and together in proportion as the expenditures of the State increase.
Yet, despite this devaluation of the existing capital and labor power by the State, it should not be forgotten that devaluation must take place on any account. It is not the State that forces this devaluation on Capital, but Capital which forces it on itself. The antagonism between the conditions of production and those of consumption are such that without this devaluation Capital would altogether collapse in on itself.
The fact stands as follows: the problem posed by the antagonism between the conditions under which society produces and consumes cannot be resolved in any way other than a general reduction of hours of work. Absent this general reduction of hours of work it becomes necessary for the State to increase its expenditures of wholly superfluous employment of both capital and labor power — to devalue both through inflation in order to overcome the contradictions inherent in the capitalist mode of production itself.
We who favor a stateless society should be absolutely clear on these points and never back down from them:
First, the State does not grow to care for the sick, feed the hungry, or add to and repair the roads, bridges and communications of society. It grows DESPITE these pressing social needs. Only by wasting productive resources on an ever increasing scale can any economic activity take place on the existing basis — the State indeed grows, but so do all of these nagging social ills.
Second, thirty million are unemployed not because there is no work to be done, but because it is not profitable to do those things that need to be done given the overly long hours work mandated by law. Factories are shuttered not because there is no need for their products, but because satisfying those needs intensifies the problem of recovering the capital laid out in their production plus an average rate of profit. The further expansion of the State addresses these problems only by intensifying them — by bringing into still greater antagonism the contradiction between production and consumption.
Should the thirty million unemployed find jobs it is only on the basis that their addition to the labor force comes directly or indirectly at the expense of the wages of the already employed 130 million, such that this larger labor force of 160 million now enjoy no more wages (or even less wages) than the 130 million did before — that the total wages formerly shared by the 130 million is now shared by 160 million, so that each suffers a proportional drop in their material standard of living.
There is no route out of this crisis through State economic policy: not through senseless battles to defend the coddled unions in the public sector, nor by stupid progressive slogans to tax the rich. The struggle against austerity cannot be won by defending the public unions, nor by silly attempts hold the line on public budget cuts or increase State expenditures. Only by reducing hours of work can we extricate ourselves from the deepening crisis of Capital and the relentless expansion of the repressive, aggressive and parasitic State.
Class War in Madison? Not so fast… (Part four)
In part one, two and three, I have made several observations which can be summarized this way:
First, the argument that the event unfolding in Wisconsin, Ohio and other states are a battle over public union rights is disproved once we realize that these public unions are not and never were unions. The public unions are organs of the State, no different than the unions of the old Soviet Union, or the People’s Republic of China — organs for the management of public labor, entirely composed of a portion of the working class who, under this miserable mode of production, live on the surplus labor of the productively employed portion of that class. Although we may violently disagree with Walker and his political thugs, we still must acknowledge that the fight to defend the unions is essentially, and for all practical purposes, nothing more than a fight to defend the State itself and its parasitic domination of society.
Second, by the same token, without in any way standing with capitalists like the Koch Brothers, the argument that, in their hostility to the burden of the State, the Koch Brothers’ libertarian attitudes differ significantly from working class dissatisfaction with the burden of the State is belied by the very slogan raised by supporters of the working class themselves, “Make the Rich Pay”. Although the Left makes the argument that the hostility of capitalists like the Koch Brothers to the State is unique to the capitalist class, in the very slogans they raise the Left actually acknowledge this same hostility to the State among the working class. Neither of the two classes want to bear this burden; particularly in times of economic distress every member of society seeks to minimize the tax bite of the State. This reaction from the mass of the working class was entirely predictable, and explains the reluctance of writers like Felix Dzerzhinsky to wage the battle over austerity on the flimsy basis of defense of the public unions.
I now turn to the question of how this fight must resolve itself, and why, as events are proving in both the United Kingdom and Ireland, the austerity currently being pursued by Walker cannot work.
While the battle over the burden of the State on society assumes the form of a conflict between the classes over how this burden should be distributed, it would be wrong to say the events in Wisconsin arise from the conflict among members of society over the division of this burden between the two classes; rather, the truth is precisely the opposite: the conflict between the two classes produces a tendency toward the expansion of the State. We should not mistake the two: what is expressed in the austerity battle is not the conflict between the two classes, but their common hostility to the burden of the State; but, this ever expanding State is itself only the general social expression of the irreconcilable conflict between the two classes. The State is at once both the constantly expanding expression of the conflict between the two classes and a burden on them that each tries to cast off.
These two aspects of the relation between the State and society do not simply exist side by side, but influence each other: on the one hand, the growing conflict between the two classes presupposes the growing fascist character of the State — what Marx refers to as the employment of “democratic-republican institutions .. as a means, not of doing away with two extremes, capital and wage labor, but of weakening their antagonism and transforming it into harmony.” This implies the constant expansion of the State. On the other hand, this growing domination increases the burden of the State on society, and, therefore, the conflict between the two classes over the division of this burden; as well as the more or less constant struggle by each class to cast that burden off entirely.
At the same time, since the expansion of the State is the increasingly necessary condition for the relation between the two classes — the increasingly necessary condition for the purchase and sale of labor-power, without which neither class can exist; and which implies the further reproduction of all the fundamental contradictions within Capital on an increasing scale — the expansion of the State presupposes the further immiseration of the mass of workers and the further centralization and concentration of capital into fewer hands. Any given expansion of the State, therefore, is always insufficient, and merely intensifies the inherent tendency toward the law of the falling rate of profit even as it works to counter this tendency; producing still more pressure for the further expansion of the State and of the World Market. Each new expansion of the State and of the World Market merely compels the further expansion of both.
What makes this a crisis of the State, i.e., something more than a mere economic crisis, is that it presupposes certain definite economic conditions which, on the one hand, cannot be resolved simply by austerity, i.e., reducing the total wages of the working class, as might be sought by capitalists like the Koch Brothers; nor, on the other hand, can it be resolved simply by reducing or taxing the excessive profits of capital, as is demanded in the sophomoric slogan, “Make the Rich Pay”. Only by imposing such conditions as reduce both the mass of wages and the mass of profits together and simultaneously — that is, by the devaluation of both variable and constant capital — through the expansion of purely wasteful State expenditures — by the still greater accumulation of absolutely superfluous labor; of labor-power that neither serves to produce new value, nor, on this basis, as self-expanding value, as capital — is the resolution of the crisis possible.
If those who want a stateless society are to offer a way out of this nightmare, it can be done only on the basis of a clear-headed understanding of the unfolding process. We cannot simply base our advice to working men and women on stupid progressive slogans. And, this is the subject of the final part of this series.
To be continued
Class War in Madison? Not so fast… (Part three)
I stated earlier that I think the Koch Brothers are being framed for the events in Wisconsin, but I don’t want you to get me wrong here: the Koch Brothers will get no defense from me — nor would they need or want one. They are libertarians who really do want to get rid of the welfare state — or at least the parts they find offensive to their property rights; but show me an election where the libertarians have garnered more than two percent in any national election contest.
Still, I do not offer the argument that the Koch Brothers are innocent of this attempt to break the unions and impose austerity on working people. And, why would I offer that argument in any case? Isn’t it obvious already that the capitalists in their battle against the laborers always seek to reduce wages to the lowest possible sum? What do we add by jumping up and down like imbeciles wagging our fingers in their faces declaring, “You want to starve us!” like a bunch of naive progressives who believe the antagonism between capital and labor can be overcome at the negotiating table? The point isn’t that the capitalist always and everywhere wants to maximize profits by reducing the wages of the working class to the barest minimum, but that it is precisely this effort that constitutes the historical mission of that class — they are compelled by this insatiable hunger for profit to develop the productive capacities of society!
So I am amused by the meaningless statement by Felix Dzerzhinsky, in his post, Two, Three, Many Wisconsins on the Kasama website that, “we need to put the demand to make the rich pay at front-and-center…” It is a naive slogan almost universally reflected in the posts of Left-leaning writers who invariably point to the same shopworn examples of efforts by Capital to reduce their taxes:
Today’s “debt crisis” is the culmination of the long-term “starve the beast” strategy from an organized corporate-conservative movement. By cutting taxes for the wealthy they have starved the government, created massive debt (guess where the interest payments go) gutted the infrastructure, and put our country on the road to third-world status. This conservative movement has an agenda, and is not interested in working out “bipartisan” compromised.
All of this is incontestably true, but how does this effort on the part of Capital lead to the slogan, “Make the rich pay”? This sophomoric progressive slogan has nothing to do with communism. Pay with what? Every dime the rich have they have extracted from the labor of the working class. They “pay” for nothing — not even for the labor power of their wage slaves. That this demand, which is nothing more than the silly delusion of the progressive wing of the Democratic Party, should be uttered by a communist is not just silly, it is incomprehensible.
Even for those with only cursory knowledge of Marx’s writings it is obvious that, in his theory, the entire cost of the State are nothing more than proceeds of the unpaid labor of one portion of the working class paid out as wages or subsistence income to another portion. That the capitalist class should want to shift these costs directly to the productively employed working class — to reduce their consumption by an amount proportionate to these costs, and therefore allow the wages of one worker to suffice for two — doesn’t require a degree in Hegelian philosophy. It only requires commonsense.
The capitalist class would be more than pleased to see the costs of the imperialist adventures in Iraq and Afghanistan, the countless military bases encircling the globe, and the ever increasing burden of debt service, deducted directly from the wages of the working class, and to not be forced to see their plunder of working people shared with the vile, parasitic organs of the State. My argument has nothing to do with entirely predictable attitudes of the Koch Brothers. I don’t think the Koch Brothers family agenda is the only force behind Walker’s provocation, and, the drive for austerity in general, as many on the Left imagine.
As the slogan, “Make the rich pay”, implies, the working class has no more desire to absorb the cost of the State than does the capitalist class.
Thus, we are left with no other conclusion but that both Capital and Labor — each class driven by its own empirical needs — are trying to throw off the burden of the State. That, in a society founded on class conflict, this general attempt by society to throw off the cost of this parasitic and wholly unproductive organ takes the form of a conflict between classes on how to divide this burden, should be no mystery to communists.
So long as fascist State economic policy assures an expansion of economic activity, the conflict between the two classes exists only in its latent form — the State issues lucrative contracts to capital; and, directly and indirectly prompts ever greater employment of redundant, superfluous labor-power. The two classes settle, into a more or less uneasy coalition made possible by the fact that each finds the essential condition for its existence — the purchase and sale of labor-power — relatively stable and expanding.
It is only when State economic policy runs into difficulty, when, for a shorter or longer period, the State is incapable of realizing general economic expansion, and when, therefore, the purchase and sale of labor-power is threatened on a more or less universal basis, that the contradiction inherent in the capitalist relations is again brought to the fore, and society descends into open class conflict.
During this period, when the economic crisis has assumed its sharpest form, the burden of the previous accumulation of superfluous labor, and of the costs associated with this superfluous labor, become intolerable and must be cast off. The mode of this casting off is already given in the contradiction inherent in capitalist relations themselves, as each class attempts, by all the means available to it, to push off onto its opposite the burden of the crisis.
The class conflict resulting, which must threaten the existence of the State itself, cannot be resolved simply by passing the burden from one class to the other, but only by the further expansion of unnecessary labor, and by expansion of the State — if this cannot be accomplished, or can only be accomplished in part, the crisis must lead to an unwinding of a part, or even all, of the accumulated superfluous labor, and the abrupt devaluation of both existing capital and labor-power — the form of resolution I turn to in the next part of this series.
To be continued
Class War in Madison? Not so fast… (Part two)
Call me unnecessarily skeptical about these things, but when I run into a narrative that fits neatly into my assumptions I immediately begin to question my assumptions.
The cartoonish battle unfolding in Madison just does not hold up to scrutiny: we have unions that are not unions and only exist because the state of Wisconsin granted them the right to organize the labor force. These unions have no protection under the law and were expressly excluded from the Wagner and Taft-Hartley slave labor acts.
We also have two-bit players in the oil industry, who, despite resounding rejection in an election contest, have managed to rise to the position of the cutting edge of the capitalist onslaught against labor — setting the agenda of the fascist State.
Excuse me, but, as a jury member, I am not buying the circumstantial evidence.
I often like to surf Marxist sites and tweak their noses by crapping on their archaic analysis of the world around them. Despite years of painful self-examination these Marxists insist on donning the blinders worn by generations of predecessors regarding the State.
In a recent foray, I visited the Kasama site to see how they were covering the events in Madison and was greeted with pretty much the same insipid analysis as that presented by labor historian and author Peter Rachleff in the first section of this piece. One writer, Felix Dzerzhinsky, has called for, “Two, three, many Wisconsins”; a play on Che Guevara’s call for revolutionaries to emulate Vietnam in its resistance to American imperial aggression in the 1960s. Of the prospect for a successful outcome in Wisconsin, Dzerzhinsky dutifully writes:
All of this could change for the better or worse tomorrow. Everything depends on the ability of workers to maximize the disruption of business as usual in the state: keep the Capitol shut down, keep as many schools as possible closed and teachers and sympathetic students at the Capitol or in the streets, etc. The rest of the country is watching, and the activists among us are wondering if we’ll be able to reproduce this level of constructive anger in response to the attacks that we face.
Predictable Marxist pap, but what is interesting about Felix’s analysis — why I am fascinated by it — and what escapes most of the idiots on the Left, with their knee-jerk support for the Potemkin village unions currently battling Walker’s assault, is that Felix alone seems to have an inkling that defense of these worthless company unions was precisely the wrong place to begin the fight against austerity.
Why has Wisconsin risen up? I’m happy to report that they were able to start in a place where I suggested we not start: with a militant defense of the rights of public-sector workers. Economic hard times, I wrote, mean that this is a bad place to start, because so much of the public resents public-sector workers who have benefits that they do not have. Better to defend public-sector workers only in the context of a broader fight against service cuts, I said, and then we need to put the demand to make the rich pay at front-and-center, lest we lose too many people to capital’s mystifications about taxes. I still think a lot of this holds true going forward, but I also think I underestimated the catalytic potential of public-sector workers. After all, their unions are still the big battalions of the fight to defend public services. And perhaps more crucially, no matter where you are, everyone knows a teacher. Everyone knows a city trash collector or state worker. Everyone knows a firefighter; they were exempt from Walker’s direct attack, but they know the meaning of solidarity, and are aware that their own bargaining positions will be weakened if other unions are weakened, so they showed up at the Capitol in some strength. And yes, everyone knows a cop: they were also exempt from Walker’s attacks, but reports indicate that plenty of them showed up to support the other unions as well — out of uniform, of course, but thereby marking the first time you were ever grateful to see a plainclothes policeman at a demonstration.
Despite his insight regarding the danger of letting the battle against austerity turn into a battle for the defense of the public unions, Felix welcomes this disastrous turn of events. The reason why this is a disaster still holds, he acknowledges, but, blinded by the apparent numerical strength of these fictitious unions, and their enthusiasm, he gets swept up in the unfolding events.
Moreover, it never seems to occur to Felix that this was the entire motive of Walker’s unnecessary, and wholly gratuitous, attempt to remove the bargaining rights that, as I have already shown, the public unions never really had in the first place. The attack on bargaining rights was an ambush; a deliberate provocation designed to bring the unions into the streets. Walker wanted to goad the public unions into a fight they could not win so he could paint them as the face of the public sector. The public unions are to serve as the black welfare queen of the 21st Century — the racist stereotype of the single mother introduced by the Reagan administration — and which stereotype was confirmed by President William Clinton when he signed the Personal Responsibility and Work Opportunity Act into law — with the strategic placement of smiling black women on either side of him.
The union leaders — instead of warning their members, and admitting the reality of the unions’ cardboard existence — led them into a fight in which they are outclassed and have already lost.
Is it possible to recover from this disaster? Frankly, it doesn’t look good.
According to Kasama, “The 97-union South Central Federation of Labor voted Monday night to prepare for a general strike that would take place if Gov. Scott Walker succeeds in enacting his budget repair bill, which would strip most bargaining rights from most public employee unions.” Only about 15% of workers in Wisconsin are covered by unions — a percentage that is higher than the average for the United States, but down from the more than 20% union membership rate in 1989. Moreover, a spokesman for the Federation was unclear on how many of its 385,000 members would actually take action, nor did he give an estimate of how many of the more than 2.2 million non-union labor force could be expected to join.
Finally the spokesman provided little information on what strike action would take place or its target:
“It doesn’t mean that everyone is going to stop working on a particular moment or day,” Aniel said. “It means that we are preparing so that the decisions are made in a very significantly different way so that it protects the people of Wisconsin.”
But some services would be shut down, he said. The labor group would still have to determine which services would be shut down, he added.
“If it was decided the governor’s mansion really wasn’t that important and it wasn’t that important to heat it or give it electricity or to guard it, then those things wouldn’t happen,” Aniel said.
Two or three more disasters like this? We can only hope not.
To be continued
Class War in Madison? Not so fast… (Part one)
The battle lines seem familiar enough: on the one hand we have a coalition of the most regressive right wing forces who have set out to destroy unions and the rights of labor generally; and who appear intent on driving wages to levels commensurate with those of the age of robber barons. On the other hand, a coalition of unions who are bearing the brunt of this unrelenting assault, and who, inspired by events in Egypt, Tunisia and Libya are making a determined stand against it.
Labor historian and author Peter Rachleff provides us with an overview of the forces arrayed in this battle, which, at first glance, seems less like David and Goliath, and more like a collision of two massive powerful sumo wrestlers:
WITH THE Koch Brothers footing the bill for his campaign, Scott Walker assumed the governorship of Wisconsin on January 7, 2011. Walker’s first action as governor was obeisance to the corporate class that that put him in office: he gave $140 million in tax breaks to businesses, including WalMart, and then screamed “budget crisis!” This move allowed him to introduce his “budget repair bill,” which would require state workers to pay $5,000 to $7,000 a year towards their health insurance benefits and pensions.
Uninformed, public-sector-bashing Walker supporters see this as an overdue come-down in public sector workers’ unfair advantages. But the scope of Walker’s bill is much broader than public sector wages, benefits and unions. It is a salvo in the broader Republican war against working people and all unions, proposing radical positions in the right’s plan to create a permanent under-class of non-unionized workers: 1) reduce public employee collective bargaining strictly to wages; 2) prohibit all public employee strikes (the National Guard is on stand-by in Madison); 3) eliminate automatic deductions for union dues; 4) limit collective bargaining contracts to one year; and finally, 5) require union members to vote each year to “re-certify” bargaining units.
Of course, the bill also proposes cuts in public education and public services. And right behind Walker’s “budget repair bill” is an additional bill to make Wisconsin a “right-to-work” state, which would severely limit the powers of private-sector unions. The one-two punch.
Giddy with the alignment of Republicans behind him in the House and Senate, Walker called a special session to demand immediate passage of his “budget repair bill.” Simultaneously, he sent a letter to every state worker, warning that there would be no extensions of current contracts beyond March 13–a decree which would eliminate collective bargaining. He declared all of this non-negotiable.
Look for the Union Label
The sheer breadth and depth of Walker’s comprehensive demands on the unions should be enough to alert us that, though formally appearing as equals on the plain of battle, the unions are far from equal to the forces Walker has deployed against them. Walker has essentially demanded that the unions cease to exist: constantly fight for their life as organizations by stripping off the routine automatic deductions that fund their operations; seek annual recertification from their members; and make it impossible for them to enforce any of their demands by threat of strike. Such demands as he made would be unthinkable had Walker confronted labor organizations capable of fighting back and both willing and determined to bring Wisconsin government to its knees to defend themselves and their members.
Simply placing these demands on the unions, Walker exposed them as coddled, dependent in-house organizations, that survive and operate only at the pleasure of the State. The demands are excessive not by reason of the comprehensiveness of the ultimatum, but because the comprehensiveness of the demands themselves demonstrate how little need there was for the demands in the first place. These organizations were never unions, they were in-house organs for the management of public employees by the State.
The Union-busting Kochtopus from Hell
If you want poster boys for the Right-wing conspiracy against working people, you need look no further than Charles and David Koch. Name an organization on the Right that wants to strip workers’ rights and turn the economy into a vassal-state of Capital, and more than likely you have named an organization receiving contributions from the Koch Brothers. They have been linked to astroturf organizations like Americans for Prosperity, Patients United Now, Citizens for a Sound Economy, and Citizens for the Environment.
According to the Wiki:
Charles and David Koch also have been involved and have provided funding to a number of other think tanks and advocacy organizations: They provided initial funding for the Cato Institute, they are key donors to the Federalist Society, and also support the Mercatus Center, the Institute for Humane Studies, the Institute for Justice, the Alexis de Tocqueville Institution, the Institute for Energy Research, the Foundation for Research on Economics and the Environment, Heritage Foundation, the Manhattan Institute, the George C. Marshall Institute, the Reason Foundation and the American Enterprise Institute.
With billions of dollars at their disposal and a family history of extreme Right-wing causes — including the founding by Papa Fred Koch of the John Birch Society — the family has long been opponents of the post-war statist agenda. In 1980, Charles Koch was candidate for president on the Libertarian Party ticket and has long advocated not only the abolition of Social Security, but also public education and even the Central Intelligence Agency. In the 2010 election cycle, according to the wiki, the Koch Brothers backed Scott Walker’s campaign and one of their related organizations, Americans for Prosperity, lobbied for Walker’s public union-busting plan.
Today, Charles and David Koch must feel a little like a young black man on trial: convicted of an as yet unknown crime before the trial has even started. On the Left, almost unanimously, they are being singled out as the chief instigator of the unrelenting assault on the company unions in the public sector. Somehow, against alleged widely held, long-standing, liberal society expectations, these minor bit players in the oil industry, who barely garnered one percent of the vote in the 1980 presidential election, have managed to change the terms of the debate in all of society against the public unions who compose half of all unionized workers in the country.
Frankly, I smell a frame-up.
To be continued
Student Protest in Ireland – Dublin 11/3/10
Cool student protest today in Dublin, Ireland against austerity
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Part 3 – Irish Students Protest (Outside the Da…, posted with vodpod
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Growth in Britain is slowing before austerity even hits…
This is too rich – so to speak.
The economy of Great Britain is already headed into the swamp, and the existing Keynesian-stimulating budget deficit is scheduled to be reduced. As a result, Britain should already be well under water when the full impact of Hurricane Austerity slams the economy.
The consensus forecast among economists is for the data to show the UK economy grew at 0.4 per cent in the third quarter, down from the 1.2 per cent rate registered in the second quarter.
However, the range of forecasts range from a quarterly contraction of 0.2 per cent to growth of 0.8 per cent highlighting the uncertainty surrounding the UK economy.
Data for July and August suggested that industrial production grew by around 0.5 per cent in the third quarter, just half that achieved in the second quarter. Meanwhile, the survey evidence indicates a relatively modest service sector expansion in the third quarter.
Howard Archer at Global Insight says the figures will show the pace of recovery witnessed in the UK economy in the second quarter will prove unsustainable, given signs that consumer spending is coming under pressure.
Furthermore, analysts argue that worryingly for the UK economy, this slowdown will have occurred before the full impact of the fiscal squeeze announced by Mr Osborne is felt.
Re: The People 
Kicking Capitalism Down the Road: Occupy Wall Street and Debt
The entire point of bourgeois misdirection in this crisis is to convince us that our choices are between debt or unemployment — that is between “growth” and “austerity”, and between taxes and reductions in our pensions, social security, and wages; that is, a choice between “kicking the can down the road”, or “taking our medicine now”.
It is important that the debate be framed this way, because these are the only two options consistent with existing relations of production. Since these choices are both consistent with existing capitalist relations of production, the fascist state does not care which option you choose. Just as Washington does not care whether Obama or Romney wins the next election, it does not care whether this crisis is resolved by debt or unemployment. You are free to make your choice based on what feels right to you — letting people go years without a job, or piling up the public debt.
Your choices are posed in this way because it is assumed you have already accepted the premise of these choices: It is assumed you have accepted the idea that this crisis can only addressed at your expense. You have, therefore, accepted the premise that you must either take the hit to your standard of living now, or in the future. Whether you take the hit now or in the future, you accept that this is the only way forward.
This is why there are so many people running around trying to stock up on guns, beans and gold — assuming the big hit is coming. It is just a matter of time, we are told — shit is going to get funky.
It is absolutely necessary that you never question this premise, and everything is aimed at preventing you from ever questioning this premise. This is not just the message coming from Washington and its servile agents in the media and economics profession; it is also the message delivered on the Left and the Right. On the Right, it is expressed in a demand to end the deficits no matter what the cost, on the Left it is expressed in a demand to end austerity no matter how this ends in more public debt.
It is not just that these contradictory demands appear as polar wings of politics, it is that the demands themselves must be posed as an unbridgeable contradiction. In fact, there is nothing that prevents the Left from adopting the Right’s demand against deficits as well as its own against austerity. And there is nothing that prevents the Right from adopting both a demand against deficits and a demand against austerity. But if this phony contradiction is not maintained, there is no Left or Right — and the point of politics is that there should always be a Left and a Right.
I think this is the revolutionary significance of the Occupy movement’s idea of addressing debt; it breaches this false contradiction. Occupy, which has already clearly taken on austerity, is now adding the question of debt to its argument. With a movement that opposes both austerity and debt, the phony opposition between Left and Right will be ended. Combining a demand against austerity with a demand against debt, announces working people will not pay for this crisis now or in the future. It throws down a gauntlet to Washington and Wall Street in the form of a demand that is not consistent with capitalism or the state.
The significance of these two modest demands against austerity and debt, when combined, are far greater than it may look on the surface. For instance read this quote from David Graeber:
How does this describe euro-austerity and the continuing argument that Greece “deserves” austerity now because of its past public profligacy? The fact is the public debt Greece accumulated in the past was just the inter-temporal shift of austerity and nothing more.
And not only private debt, but public debt more so, since Washington can, through its inflationary monetary policy, extend the impact of this austerity throughout the world market. Washington can, therefore, under the pretext of increasing its own debt, impose an austerity on every nation trading in dollars.
Debt, Inflation, Unemployment and Austerity
Consider the problem of debt and austerity from another perspective: In an austerity, unemployment rises, wages and pension are slashed. An increase in debt now is nothing more than the inter-temporal transfer of these same effects over some period of time going forward — wages and pensions are gradually slashed over time. This is accomplished through inflation, and can be made to appear as the result of “natural” forces rather than deliberate policy.
Employment growth slows and persistent high level of unemployment can last for a decade or more. What is accomplished all at once in an austerity regime is, with debt, accomplished over a period of time. All the effects of austerity are still felt by the mass of society, but the torture is extended sometimes a decade or longer.
The state must impose this austerity on behalf of capital because it nothing more than capital organized as the state, but the question is whether the population will accept it all at once, or whether it must be stretched out. This is politics — how much pain can the proles take, and it is a practical question. If people surround the government and demand it resign, this government can be replaced by one “committed to growth”, i.e., the accumulation of even more public debt.
Although this new government only promises to stretch austerity over a decade, instead of imposing it all at once, it is sold as compassion. Twenty five percent unemployment now, or ten percent over the next decade; slashing wages and pensions now, or inflating away their value and compelling people to work longer — make your choice, folks. In either case, the mass of society suffers the effect of unemployment and reduced subsistence through state policy.
Occupy is taking on precisely this policy in both of its possible manifestations. It is combating both an immediate imposition of an austerity regime and an inter-temporal imposition of this regime through debt.
We have to consider also the relationship between unemployment and wages: the reduction of wages is the aim and unemployment is the means. In a market where there is low unemployment, there is less competition among the working class — it has the opportunity to organize itself. Moreover, even where there is some unemployment this occurs against a backdrop where this unemployment is unevenly distributed — in specific sectors or regions of the world market the demand for labor power may even exceed the supply. The impact this has on profits is obvious, and the capitalist class responds to this with all the means at its disposal — introducing new machines, reducing wages, layoffs.
What Keynes explained to the capitalist class is that its typical response to this condition — slashing wages — is counterproductive. Since the Great Depression, profitability cannot be restored simply by slashing wages — as Greece and Spain is demonstrating graphically. What is gained by slashing wages, is lost when the working class goes into the market to purchase goods. The state, Keynes argued, can accomplish the task far more efficiently than capitalists in slashing wages. This is because the method employed — debt — has the effect of subsidizing profits even as the purchasing power of wages fall.
Of course, Kurz explains, this results in the accumulation of debt that cannot be paid off — but that is the can that must be “kicked down the road”. In the long run the debt cannot be paid off, but in the interim it can transfer the product of labor from wages to profits. And, as Keynes observed, in the long run you will be dead after having slaved your entire life away to service that debt.
It is not just private debt that transfers the product of labor from one class to the other, state debt has this very same effect. Your take home pay doesn’t change, but the prices of what this take home pay buys spirals out of sight. In the choice between austerity and debt, debt is actually the preferred option because the state doesn’t provoke people into the streets. As Keynes explained in his General Theory, unions will fight a cut in their wages, but not one imposed through debt and inflation.
I bet you could count the number of major demonstrations against inflation in the past forty years on a single hand — I know of no strikes produced by it. Nobody ever surrounded the congress to demand a reduction in inflation nor fought the police in the streets with firebombs because of it. As a matter of fact, the prima facie silliness of the euro-austerity regime in Spain, Greece, Ireland, Portugal etc., suggests the states and ruling classes of those nations are now trapped and cannot employ debt to meet their aims.
By taking on the issue of debt Occupy is in fact taking on one of the most powerful tools in the state’s arsenal for imposing austerity — debt. Occupy is showing that it is not just a matter of austerity versus debt, but also of austerity through debt. The debt campaign is big because it calls bullshit on both the Democrats and the GOP and can appeal to whatever healthy elements remain in the Tea Party.
*****
As a side note I also want to point out that not one Marxist critic of David Graeber was able to uncover this hidden connection between debt and austerity that Occupy has discovered purely through its practical activity alone. This includes that asshole over at Jacobin, Mike Beggs; that “humanist marxist” Andrew Kliman; Dean, Deseriis, and a host of other imbeciles. Nor does it appear in the writings of Marxists who feel an obligation to repair capitalism, such as Dumenil, Levy, Saad-Filho and that sorry lot.
What good is a goddamned theory if the people using it are idiots.
Oh yeah. And fuck Zizek too!