Guglielmo Carchedi’s bad advice for activists

Keynesian economic policies don’t work, but fighting for these policies will?

Guglielmo Carchedi’s essay on the so-called Marxist multiplier has me bugging. He is handing out bad advice to activists in the social movements and telling them this bad advice is based on Marx’s labor theory of value. The bad advice can be summed up concisely: Keynesian policies do not work and cannot work, but the fight for these policies (as opposed to neoliberal policies) can help end capitalism:

From the Marxist perspective, the struggle for the improvement of labour’s lot and the sedimentation and accumulation of labour’s antagonistic consciousness and power through this struggle should be two sides of the same coin. This is their real importance. They cannot end the slump but they can surely improve labour’s conditions and, given the proper perspective, foster the end of capitalism.

Frankly, Carchedi’s advice is the Marxist academy’s equivalent of medical malpractice. (For the record, Michael Robert’s has his own take on the discussion raised by Carchedi’s essay.)

Marx’s Inconvenient Truth for Marxism and the Left

In 2003, Michael Lebowitz asked an interesting question: What Keeps Capitalism Going? What explains the persistence of an exploitative relationship in which the working class must sell their labor power to the capitalists who own the means of production. This latter group — the capitalists — have no concern for the workers, Lebowitz explains; they have only two interests in the outcome of this exchange: profits and more profits. The purchase of the worker’s labor power allows the capitalist to direct the workers in the act of production for the purpose of producing more capital; and this new capital goes back into the process of producing even more capital. According to Lebowitz this was what Marx was trying to tell us in books like Capital:

This was the central message that Marx was attempting to communicate to workers. What is capital? It  is the workers’ own product which has been turned against them, a product in the form of tools, machinery—indeed, all the products of human activity (mental and manual).

When I read this passage, I wondered why Lebowitz considers the capitalist exploitation of the worker to be the central message Marx wanted to communicate to the working class? In the 19th Century almost everyone knew labor was the source of the wealth capital produced — even bourgeois economists admitted it. The capitalist and worker engaged in constant conflict over both the division of the working day and, more importantly, over its length. Is Lebowitz suggesting working people are now too dense to understand how their companies make money? But I thought, okay, so let’s see where he is taking us with this revelation.

A critical examination of Kevin Carson’s Mutualism (Final Part)

“Well, what point of view would you expect to come out of this?” Noam Chomsky

In his mutualist economic work, Studies in Mutualist Political Economy, Carson asks us to consider two questions:

“1) if the “historical process” of primitive accumulation involved the use of force, how essential was force to that process; and if force was essential to the process, does it not follow that past force, as reflected in the present distribution of property, underlies the illusion of “free contract”; 2) how is it possible for employers to consistently pay a price for labor-power less than its product, if labor is free to bargain for the best possible deal? (Recourse to vague ideas of “social power” or “market power,” without an explicit examination of their nature, is not a satisfactory explanation.)”

With these questions, Kevin is actually throwing dust in our eyes to blind us; this is clearly some kind of literacy test for dumb Marxists:

Taking the second question first, in Marx’s actual theory the worker is never paid “less than her product”, since the only “product” in her possession is her labor power. There is no reason to explain how she is compelled to receive less than the value of this commodity; there is no need to appeal to vague nonsense phrases like “social power” or “market power” to explain profit — but then again, at no point in Marx’s theory does Maurice Dobbs or Benjamin Tucker make an appearance inform the parties how the law of value is supposed to function. In Marx’ model, competition between and among the capitalists and workers does not give rise to the value of labor power — this competition plays no role whatsoever in deciding how labor power will be priced. Rather, only after labor power becomes a commodity, and, thereby, acquires a value, does the universal competition between and among capitalist and workers arise. Competition does not explain wages, wages explain competition.

As is normal for a free market, the worker is entirely free to shop her labor power for the best deal; so, she always receives the full value for it. And, as Carson should already realize, there is not one act in this process but two as in any such exchange — an exchange of money for a commodity and its actual use — neither of which is, in any fashion, given by the other.

First, we have the exchange of wages for the labor power — an act, as Carson informs us, that is entirely innocent of all exploitative features, and not in any fashion to be regarded as threatening. As in any other commodity exchange we have to assume the capitalist and worker agree on a set price for this commodity, each with an eye to maximizing their gain by the transaction. The worker has to consider all the elements that go into the value of her labor power directly and indirectly — food, clothing, shelter, medical care, a Facebook page of her own, etc.; the capitalist approaches the transaction as he would any other business investment, with an eye to a return on his investment in the particular commodity negotiating the terms of its own purchase across the table from him. The question is: How much is the capitalist willing to offer for this labor power?  While Carson has no difficulty understanding how a plot of virgin land containing a seam of coal might acquire a value in the market, with labor power, how it comes to acquire a value quite different than what it can produce seems altogether a mystery to him. However, as in the case of coal and land, the capitalist values this object as he does any other: by what he might gain by employing it as capital.

Carson argues, but never demonstrates, why this labor power should have its price determined by anything other than the same laws that determined the prices of any object. Yes, as Carson states, unlike the worker, coal does not require coaxing to give up its heat; but, by the same token, coal cannot be coaxed to pull itself out of the ground by flights of fancy of a better life in a furnace. A Mexican peasant, however, might be encouraged by such visions to leave her small plot of land to pick lettuce in one of the many agricultural factories in the United States. Even if we assume this job is unpleasant and avoided by Americans, we can easily imagine that purely economic interest might encourage the Mexican peasant to uproot herself from her small plot and make a remarkably dangerous journey to the United States in search of better economic opportunities. All we have to assume in this case is that the peasant obtains a material advantage over her present circumstances as a small-holder in Mexico by voluntarily selling herself into wage slavery in America. As Engels argued against Duhring, no force is necessary for this purely economic transaction; yet, the peasant voluntarily abandons her independent means of labor to become a wage slave precisely because she can improve her economic circumstances by doing so. Having separated herself from her independent means of labor to cross into the United States, the worker finds her labor power is now entirely useless to her, and, for this reason, is without any value at all unless she can find a buyer who has a use for it. But, it is useful to the capitalist only insofar as he can employ it as capital and produce a profit over the wage he has paid for it.

What is significant about this transaction, however, is this: until the transaction actually takes place, the labor power has not produced anything — it is merely a potential investment by the capitalist who hopes to employ it afterward to create a profit. For the moment, this is only a hope on the part of the capitalist. Whether this hope is realized is of no concern to the worker, who wants only to be paid the full value of her labor power in its present pristine form, unsoiled by the act of labor. So, when Benjamin Tucker sticks his nose into this private transaction to warn both sides that labor power is entitled to its full product, both sides tell him to go to hell, since, they agree, the labor power has not produced anything, and is itself the “product” being discussed. Asking Mr. Tucker to leave the room so they can finalize their agreement, they proceed to agree on a price. The first act of the transaction is complete — the labor power was purchased at it value, and all parties are satisfied with the deal. At no point was it necessary for either party to call in the State to sign onto the agreement “in letters of blood and fire.”

Only now do we get to the second act: the exploitation of this labor power by the capitalist. Carson wants the worker to be paid the full value produced by the actual consumption of the labor power; but, as we can now see, when the labor power is actually being exploited, it is no longer the property of the worker — it belongs to the capitalist who purchased it. The exchange of money for the commodity was only the first step and has been completed. It is now the property of the capitalist — although it still physically stands before him in the body of the worker. The labor power is not put to work until the capitalist has closed the deal to the satisfaction of both parties. Carson is entirely correct to say that the value of the labor power is its product, but this value is determined by the use to which its owner will now put it. Carson wants to skip over this observation, or treat it as inconsequential to the discussion; but it is, in fact, the heart of the matter. When the laborer puts her own labor power to use as an individual producer, its usefulness for her is directly realized in the product her labor can produce. If we could speak of value (wage) in this context (which, of course, would be silly) the “natural wage” of this labor would indeed be its product. This does not change one iota if we now assume the labor power is employed, not by the direct producer, but by the capitalist: the same condition holds: the usefulness of the labor power for the capitalist is directly realized in the product it produces.

Is there anything in this latter act of exploitation that requires State intervention? Is there anything in the latter act that requires unequal exchange in the former? Is there any reason why just this sort of exchange cannot happen completely as described in the absence of the State? Carson should answer these questions carefully, because he has made the argument that just such a transaction is benign, and is entirely consistent with his vision of a petty bourgeois market socialism. As a libertarian, he also believes a property owner has the right to employ his property as he sees fit without State interference or subsidy. The only difference between Carson and Marx in this above described scenario is that Marx states this is all that is required for exploitation, while Carson swears it to be the basis for market socialism.

***

Turning to the first question, an answer to which Carson demanded, we can now understand how Engels could argue that, in theory, the entirety of the premises of capitalism could arise by purely economic means without any appeal to the process of primitive accumulation Marx graphically describes in both the German Ideology and Capital. Indeed, in the very text cited by Carson with regard to Marx description of primitive accumulation, Marx himself refers to it as an artificial (i.e., not natural) means of abbreviating the transition from feudal to capitalist relations of production:

The system of protection was an artificial means of manufacturing manufacturers, of expropriating independent labourers, of capitalizing the national means of production and subsistence, of forcibly abbreviating the transition from the mediaeval to the modern mode of production.

Moreover, Marx in describing primitive accumulation notes that, side by side with primitive accumulation, the disintegration of the old society is already preceding apace:

The economic structure of capitalist society has grown out of the economic structure of feudal society. The dissolution of the latter set free the elements of the former.

The immediate producer, the labourer, could only dispose of his own person after he had ceased to be attached to the soil and ceased to be the slave, serf, or bondsman of another. To become a free seller of labour power, who carries his commodity wherever he finds a market, he must further have escaped from the regime of the guilds, their rules for apprentices and journeymen, and the impediments of their labour regulations. Hence, the historical movement which changes the producers into wage-workers, appears, on the one hand, as their emancipation from serfdom and from the fetters of the guilds, and this side alone exists for our bourgeois historians. But, on the other hand, these new freedmen became sellers of themselves only after they had been robbed of all their own means of production, and of all the guarantees of existence afforded by the old feudal arrangements. And the history of this, their expropriation, is written in the annals of mankind in letters of blood and fire.

The industrial capitalists, these new potentates, had on their part not only to displace the guild masters of handicrafts, but also the feudal lords, the possessors of the sources of wealth. In this respect, their conquest of social power appears as the fruit of a victorious struggle both against feudal lordship and its revolting prerogatives, and against the guilds and the fetters they laid on the free development of production and the free exploitation of man by man. The chevaliers d’industrie, however, only succeeded in supplanting the chevaliers of the sword by making use of events of which they themselves were wholly innocent. They have risen by means as vile as those by which the Roman freedman once on a time made himself the master of his patronus.

There is, Marx notes, a two-sided process taking place — not simply the primitive accumulation occurring under the influence of emerging capitalist relations, but also a disintegration of the old feudal relations of production which sets the elements of these new forces free. Carson makes the argument that employment of these artificial means, even if they were limited only to that ugly period of human history, nevertheless taints the relations of productions down to the present day:

As for the fact that the pre-existing economic means must have been gotten by someone’s labor, once again, so what? Who said that force created production? One might as well say that the pre-existence of a host organism negates the principle of parasitism. And Engels himself admitted that the economic means might be in the hands of the ruling class as a result of past force. If the means of production under their control may indeed be the result of forcible robbery, what becomes of Engels assertion of these pre-existing means as a telling point against the force theory? In any case, it is quite consistent to posit a process in a series of stages, in which the progressive accumulation of capital, and the increasing exploitation of labor, are a mutually reinforcing synergistic trend, with force as still the primary cause of exploitation. In every case, the accumulated economic means that make heightened exploitation possible are the result of past robbery. As the Hindu theologian said of turtles, it’s force all the way down.

Carson makes a powerful argument here that an event precipitating a historical process expresses itself in the relations established long after the event has passed into history. Capitalist relations of production, even if they were not today influenced by continuous State intervention to maintain the system of exploitation, owe their existence to the ugly use of violence at the earliest moments of its emergence. However, as we have seen in this chicken-versus-egg farce of an argument, Capital is only the final stage of an historical process whereby the direct laborer is separated from the objective means of production — a separation that in no way begins with force, but with the material gain of the ancient family group when it replaced communal ownership with individual property relations under the encouragement of the earliest instances of commodity exchange between neighboring family groups. Rather than force all the way down, it has been just as Engels stated: material gain all the way down.

***

Thus, Marx provides us with the critical key to understanding what neither the Anarcho-Capitalist and Marxist critics of the Fascist State can explain, nor can be explained by the liberal and conservative apologists of Capital: not the use of force in exploitation, but consent within the democratic republic founded on universal suffrage to this exploitation, and particularly the role this universal suffrage plays in emergence of the Fascist State. Anyone trying to understand the argument of Marx and Engels by reading Maurice Dobbs or Paul Sweezy has already led himself into a theoretical cul-de-sac. Marx and Engels never assume the laborer is paid less than her product; rather, they assume precisely the opposite: the worker gains materially by entering into wage slavery with an utterly rapacious, vile, detestable parasite on the body human. This material gain need only be just significantly better than that which could be realized if the Mexican migrant instead remained on her small-holding.

What really has to be explained by any theory of historical development is why the numerically vastly superior mass of laborers, despite this Fascist State role, and despite the obvious consequences of this role, nevertheless voluntarily reproduce the relationship through their suffrage. To use one of Carson’s own analogies as the basis for furthering my argument:

Engels still did not show that exploitation was inherent in a given level of productive forces, without the use of coercion. He needed to show, not that parasitism depends on the preexistence of a host organism (duh!), but that it cannot be carried out without force. Every increase in economic productivity has created opportunities for robbery through a statist class system; but the same productive technology was always usable in non-exploitative ways. The fact that a given kind of class parasitism presupposes a certain form of productive technology, does not alter the fact that that form of technology has potentially both libertarian and exploitative applications, depending on the nature of the society which adopts it.

Carson employs the case of a parasite to argue against an alleged fallacy beneath Engels’ position that force presupposes material relations of production and does not create them. Carson explains that the existence of the host body does not, of itself, presuppose the parasitic infection. This is a good analogy since medicine has for the last 80 years actually introduced deadly live organisms into the human body under controlled circumstances precisely to inoculate humans from illnesses spread by these organisms. While the existence of the human body does not imply the existence of a parasite, the mere existence of the parasite in the human body does not imply an illness. In the case of inoculation it actually implies resistance to the illness caused by the parasite. You cannot argue that one condition necessarily implies the other — that coexistence of the use of force with exploitation implies the latter is dependent on the former, or vice versa. The two occur side by side throughout history, and, moreover, both influence and reinforce each other, and, at other times, altogether appear at loggerheads. Indeed history is replete with the use of force precisely aimed to overthrow existing modes of exploitation, and against the states that enforced these modes — our own Paris Commune is just one such instance.

The logical insufficiency of Carson’s force argument in this case is revealed when we inquire into how the most democratic of all republics — the United States — nevertheless appears most completely in the grip of monopoly interests. The State, in Carson’s argument, is constantly intervening in the market to enforce conditions of unequal exchange. Carson argues the intent of this intervention is to produce a material gain for monopoly:

Of course the use of force is aimed at the benefit of the user–who ever denied it? Who in his right mind would claim that exploitation is motivated by pure E-vill, rather than material gain? And since, by definition, means are always subordinate to ends, the ends are always more fundamental.

This reasoning appears to present no difficulty in certain previous incarnations of the State — the slave, for instance, did not enjoy universal suffrage — but, it’s actual practical failure as an explanation is revealed when it comes to explaining the democratic republic as the very instrument for enforcing the ruthless exploitation of the mass of society by a numerically small group of parasites. Having dispatched the materialist view of history, Carson should at least be required to offer an opinion on why a State based on universal suffrage, clearly dominated by a proletarian majority, might come to enforce circumstances where this proletarian majority are systematically robbed of their “natural wage” through unequal exchange with their own consent? What we have to explain is not, “pure E-vill” but, rather a complete lack of material gain to the majority of voters under the existing political relations of society.

Once you introduce the idea that capitalist exploitation is based on unequal exchange, you must now explain why the democratic republic continuously enforces this unequal exchange despite a obvious lack of material gain for the proletarian majority, and even at their expense. The easiest way to explain this, of course, is by identifying an obvious defect in existing political relations themselves — that, somehow, democracy is also infected with the parasite — that, in the words of Noam Chomsky, this consent is in some fashion manufactured, as he describes in a 1992 interview:

QUESTION: You write in Manufacturing Consent [(Pantheon, 1988)] that it’s the primary function of the mass media in the United States to mobilize public support for the special interests that dominate the government and the private sector. What are those interests?

CHOMSKY: Well, if you want to understand the way any society works, ours or any other, the first place to look is who is in a position to make the decisions that determine the way the society functions. Societies differ, but in ours, the major decisions over what happens in the society — decisions over investment and production and distribution and so on — are in the hands of a relatively concentrated network of major corporations and conglomerates and investment firms. They are also the ones who staff the major executive positions in the government. They’re the ones who own the media and they’re the ones who have to be in a position to make the decisions. They have an overwhelmingly dominant role in the way life happens. You know, what’s done in the society. Within the economic system, by law and in principle, they dominate. The control over resources and the need to satisfy their interests imposes very sharp constraints on the political system and on the ideological system.

QUESTION: When we talk about manufacturing of consent, whose consent is being manufactured?

CHOMSKY: To start with, there are two different groups, we can get into more detail, but at the first level of approximation, there’s two targets for propaganda. One is what’s sometimes called the political class. There’s maybe twenty percent of the population which is relatively educated, more or less articulate, plays some kind of role in decision-making. They’re supposed to sort of participate in social life — either as managers, or cultural managers like teachers and writers and so on. They’re supposed to vote, they’re supposed to play some role in the way economic and political and cultural life goes on. Now their consent is crucial. So that’s one group that has to be deeply indoctrinated. Then there’s maybe eighty percent of the population whose main function is to follow orders and not think, and not to pay attention to anything — and they’re the ones who usually pay the costs.

Innumerable variants of this silly thesis are employed by Libertarians, Anarchists and Marxists to explain how a Fascist State so clearly operating at the expense of the mass of society nevertheless enjoys their continued support or, at least, their apathy in the face of its ravages and predation. Marx’s theory, on the other hand, predicts precisely political support for the existing mode of exploitation, since he never assumes existing political relations are founded on anything other than the law of value, equal exchange, and material advantage accruing to both exploiter and exploited. It is the operation of the law of value itself, which encourages the small-holder to convert herself into a wage slave, that also ensures its continued existence, despite the obstacles Capital places in its own way, through the continuous intervention of the Fascist State.

The conclusion arrived at by Marx’s theory should be sobering for critical communist theory — the worker does not merely sell herself into slavery willingly, she also assures, through her political activity, that the conditions for her enslavement are maintained despite her exploitation. This conclusion cannot be ignored or jury-rigged out of existence by means of silly arguments based on alleged “social power”, unequal exchange, or manufactured consent. They must be faced squarely by critical communism. In this task, Carson’s mutualist synthesis of the dominant streams of critical communist theory is an utter failure.

A critical examination of Kevin Carson’s Mutualism (Part Five)

“…an ingredient in someone’s soup.” –Rod Serling

According to Carson the arguments of the Anarcho-Capitalist and Marxist variants of critical communist theory identify a movement of large-scale, organized capital to obtain its profits through state intervention into the economy, although the regulations entailed in this project are usually sold to the public as progressive restraints on big business, which creates, “a system of industrial serfdom in which politically connected capitalist interests exploit workers and consumers through the agency of the state.”

It should have been obvious to Carson at the outset that this argument by Anarcho-Capitalism and Marxism was always suspect, since it is just a simplistic inversion of the argument of “mainline ‘conservatives’ and ‘liberals'” that the Fascist State acts to restrain “the power of big business” by means of “Progressive and New Deal programs forced on corporate interests from outside, and against their will.” It doesn’t take any particular genius to see that the social class most advantaged by existing political relations might find it in their interest to portray these relations, not as advantages, but as limitations or constraints on their social power.  That, this realization should be seen as an analytical accomplishment in the 21st Century is not just curious on its face, it is a commentary on the pathetic state of critical communist theory.

The simplistic mirror imaged world view of the conservative and liberal pundits is mirrored again in the simplistic conclusions of its Anarcho-Capitalist and Marxist critics, and the superficial analysis of the critical camp as a whole is itself merely the mirror image of the superficial analysis of the mainstream camp. The common conclusion of both critics and the mainstream is that the State is the autonomous author of political-economy, and economic players merely act out a script that emerged full blown from the central plan of society’s general manager. All agree — to one extent or another — that the role of the Fascist State has nothing at all to do with the relation between capitalists and the wage laborers as antagonistic poles of Capital and absolutely dependent for their existence as opposing classes on this relation. On this basis, Carson argues there is no antithesis between property and labor as such — that wage labor can coexist with property, if the State, which dominates both in the interest of monopoly, is abolished.

Kevin Carson’s attempt to synthesize the arguments of Anarcho-Capitalism and Marxism was always a fool’s errand. He produces a mash up of a critique of Capital from the viewpoint of the capitalist and from the viewpoint of the laborer, when what was really called for from him is a critique of capitalist labor itself — of the relation between these two classes and the implications this relationship has on the emergence and development of the Fascist State. We are led to believe that the relation between property and wage labor is entirely innocuous save for Fascist State intervention. Thus, Carson makes the assertion that wage labor can exist in a non-exploitative society without ever investigating the nature of wage labor itself as a historical social form. He essentially treats the worker as a self-owned commodity and applies to the labor market the same analysis he applies to the market in shoes.

Is this possible? Marx, who before he even begins to consider the commodity in circulation, and before he considers it as an essential element of the capitalist mode of production, takes the time to consider the commodity in its own right as an object. He begins by noting that every commodity has a two-fold character — that, for the producer, it satisfies no need for her and exists for her only as an object to be exchanged, a social use value. Without these two together, it is not a commodity:

A thing can be a use value, without having value. This is the case whenever its utility to man is not due to labour. Such are air, virgin soil, natural meadows, &c. A thing can be useful, and the product of human labour, without being a commodity. Whoever directly satisfies his wants with the produce of his own labour, creates, indeed, use values, but not commodities. In order to produce the latter, he must not only produce use values, but use values for others, social use values. (And not only for others, without more. The mediaeval peasant produced quit-rent-corn for his feudal lord and tithe-corn for his parson. But neither the quit-rent-corn nor the tithe-corn became commodities by reason of the fact that they had been produced for others. To become a commodity a product must be transferred to another, whom it will serve as a use value, by means of an exchange.) Lastly nothing can have value, without being an object of utility. If the thing is useless, so is the labour contained in it; the labour does not count as labour, and therefore creates no value.

Understand what is going on here in Marx’s analysis: the commodity has no usefulness to the individual producer, but it must have a usefulness for others. This appears altogether benign in relation to object like a sack of potatoes or shoes (although, as I will show, even here Marx argues it is surprisingly malignant) but, in relation to the human capacity to labor, it implies her productive capacities are entirely useless to her. Her own body is not her self, but a detachable object that exists only to be exchanged for money. Before he even begins to consider this object in the context of the capitalist mode of production, and its vital role in this mode, Marx has already demonstrated how for the laborer her own qualities as a human being no longer exists for her except as means. And, to be absolutely clear on this point, throughout all of Capital, labor power is the only commodity Marx is discussing — even when he uses quantities of coats and tons of iron as his practical examples. In his dry sarcastic academic style Marx is painstakingly describing precisely what it means to reduce a human being to a commodity.

He is discussing the capitalist mode of production and he is only speaking of the inherent qualities of the commodity that is specific to this mode of production — qualities it shares with other commodities, but which have quite unique results when applied to this one in particular. The pathetic abortion that passes for Marxism has no inkling of this fact. And, Carson, because he uncritically accepts the assumptions of the Marxist and Anarcho-Capitalist analyses of the capitalist mode of production, never ventures into an analysis of labor power on his own. As a result he offers nothing new in this regard, and fails to address the critical objection raised by Marx to the very idea that human capacities can simply be treated as another commodity for sale. Instead we get from Carson only that the value of this commodity consists in what it can be compelled to produce:

“[T]he natural wage of labor in a free market is its full product…”

The only thing differentiating one set of human capacities from another are not the uniquely human  desires and wants of the individuals concerned, nor how these unique desires and wants are expressed in their activities, but the impersonal exchange value contained in each as expressed in so many ounces of gold. Thus, human beings can be compared to each other as one might compare linen and coats. This corrosive force, introduced into our very concept of what it means to be a human being by the capitalist mode of production and exchange, is never examined by Carson — as it is never examined by the Anarcho-Capitalist or the Marxist, nor by mainstream political-economy — but generally accepted among both apologists and critics of capitalist society as a fact.

This brings us to the refutation of Eugen Duhring by Frederick Engels — and to Carson’s objection to the views expressed by Engels in this debate:

Engels, to render the Marxian theory consistent (and to deflect the strategic threat from the market socialists mentioned above), was forced to retreat on the role of force in primitive accumulation. (And if we take his word on the importance of Marx’s input and approval during his writing of Anti-Dühring, Marx himself was guilty of similar backpedalling). In Anti-Dühring, Engels vehemently denied that force was necessary at any stage of the process; indeed, that it did little even to further the process significantly.

Every socialist worker [like every British schoolboy?]… knows quite well that force only protects exploitation, but does not cause it; that the relation between capital and wage labour is the basis of his exploitation, and that this arose by purely economic causes and not at all by means of force [emphasis added].

This raises the question of to what extent the legal system is presupposed in even “purely economic” relations, and whether more than one “purely economic” state of affairs is possible, depending on the degree of such state involvement. For example, are combination laws, laws of settlement, and laws on the issuance of credit without specie backing essential to the process of free exchange itself, or only to the capitalist character of such exchange?

Engels stated the case in even more absolute terms later on, denying that force was necessary (or even especially helpful, apparently) at any stage of the process.

…even if we exclude all possibility of robbery, force and fraud, even if we assume that all private property was originally based on the owner’s own labour, and that throughout the whole subsequent process there was only exchange of equal values for equal values, the progressive development of production and exchange nevertheless brings us of necessity to the present capitalist mode of production, to the monpolization of the means of production and the means of subsistence in the hands of a numerically small class, to the degradation into propertyless proletarians of the other class, constituting the immense majority, to the periodic alternation of speculative production booms and commercial crises and to the whole of the present anarchy of production. The whole process can be explained by purely economic causes; at no point whatever are robbery, force, the state or political interference of any kind necessary.

You can see Carson’s brain smoking here. How can exploitation occur when obviously the value of wages must be equal to the value of its product — yet, as a practical matter it does not? Indeed these are Engels words, and, moreover, they are fully consistent with the conclusions reached by Marx in his analysis — indeed Marx himself contributed an entire section to Engels polemic against Duhring. But, even if Marx had not made such a contribution, Engels words stand on their own as an exemplary piece of historical materialist argument. So let’s parse Engels argument.

Is Engels denying the role of force in history? Obviously not. He explicitly states force has been employed to enforce existing social relations throughout history, and that the capitalist mode of production was no exception to this role. So, although differing on a lot of fundamentals with Kevin Carson, Marx and Engels did not differ much with him on the historical record of the State; which is what makes the points on which they differ both significant, yet entirely beside the point: Kevin Carson believes exploitation cannot happen without the State; however, Marx and Engels are discussing an altogether different subject!

To do this, they document a number of then known  instances where pre-capitalist forms of private property emerges without State action directly out of communal ownership. Engels shows how, in documented cases, the commons themselves were dissolved through the emergence of commodity production. Private property emerges spontaneously, and without any action by the State — gradually the commons is converted into a community of small-holders because the members see a material advantage to the dissolution of the commons:

Private property by no means makes its appearance in history as the result of robbery or force. On the contrary. It already existed, though limited to certain objects, in the ancient primitive communities of all civilised peoples. It developed into the form of commodities within these communities, at first through barter with foreigners. The more the products of the community assumed the commodity form, that is, the less they were produced for their producers’ own use and the more for the purpose of exchange, and the more the original spontaneously evolved division of labour was superseded by exchange also within the community, the more did inequality develop in the property owned by the individual members of the community, the more deeply was the ancient common ownership of the land undermined, and the more rapidly did the commune develop towards its dissolution and transformation into a village of smallholding peasants. For thousands of years Oriental despotism and the changing rule of conquering nomad peoples were unable to injure these old communities; the gradual destruction of their primitive home industry by the competition of products of large-scale industry brought these communities nearer and nearer to dissolution. Force was as little involved in this process as in the dividing up, still taking place now, of the land held in common by the village communities [Gehöferschaften] on the Mosel and in the Hochwald; the peasants simply find it to their advantage that the private ownership of land should take the place of common ownership. Even the formation of a primitive aristocracy, as in the case of the Celts, the Germans and the Indian Punjab, took place on the basis of common ownership of the land, and at first was not based in any way on force, but on voluntariness and custom. Wherever private property evolved it was the result of altered relations of production and exchange, in the interest of increased production and in furtherance of intercourse—hence as a result of economic causes. Force plays no part in this at all. Indeed, it is clear that the institution of private property must already be in existence for a robber to be able to appropriate another person’s property, and that therefore force may be able to change the possession of, but cannot create, private property as such.

Engels is not here discussing hypothetical scenarios of exploitation; rather he is discussing actual evidence from documented research of contemporary scientists into historical and contemporary communities. Moreover, he was an acknowledged expert in his on right on the subject he is discussing. In this research, he notes, there is compelling evidence to support the hypothesis that pre-capitalist private property spontaneously emerged from communal ownership, disintegrating this ownership, not due to force and violence, but due to the material advantages it offered over communal ownership. To what in this argument can Carson possibly object? Is Engels distorting or fabricating the research of these scientists? Is he spinning this evidence in a way that throws the best light on his own hypothesis? Is he concealing other exculpatory evidence that proves these communities broke, not on their own volition, as Engels states, but due to the force and violence of previously undisclosed players? This is a pure and simple presentation of the historical record, which cannot be refuted simply by dismissing it out of hand — as Duhring does — but must be met with equally persuasive evidence to the contrary, or with evidence Engels is making an erroneous interpretation of the facts.

Nowhere does Carson offer any such evidence.

The separation of the laborer from the objective conditions of labor is by no means accomplished all in one leap as Carson would have us believe, but is a process lasting thousands of years, beginning with the dissolution of the early human communities founded on common ownership. The emergence of commodity production and exchange, and private property with it, directly out of the commonly held property of the community was the initial step by mankind on the long road leading to the complete separation of the laborer from the means of production — an act only finally completed with Capital, when the laborer herself is turned into a commodity. True, in its earliest moment of development, this separation is only rudimentary; however, in a community founded on common ownership of the means of production, all members had access to all of these commonly owned means. The separation of the producer from the means of production begins exactly with the division of this common property into private hands, when the individual’s access to the now privately held property of the community can only take place on the basis of exchange. The individual is now in possession of his own individual means of production, but he is, by the same token, severed from the greater portion of the total communal means of production which now are the property of other members of the community. On the one hand, with the disintegration of the community, the total communal means of production is now divided into privately held properties, and, on the other hand, the producers are themselves divided from the mass of total communal means. This world historical separation, of course, is simply the outcome of a process that begins with the producer’s own act of commodity exchange — an act which is nothing less than a separation of the individual act of labor from satisfaction of the needs of the producer.

Engels is not discussing exploitation; he is discussing how society itself, and our conception of ourselves as human beings, is being transformed by the way we go about our productive lives. A transformation that, as I will discuss in the final part of this series, culminates in the emergence of a completely unique circumstance: exploitation based entirely on equal exchange of value within the world market.

A critical examination of Kevin Carson’s Mutualism (Part Four)

Bodies of the Communards in the aftermath of the Paris Commune

“woeful work they have made with it…”

Kevin Carson asserts Marx held to the idea the abolition of the system of wage slavery could not occur until the productive forces it represents had reached their fullest possible development. According to Carson, Marx made the argument that an attempt to create a society free of exploitation before technical and productive prerequisites for it had been achieved would be unwise. This argument is vital for Carson, because he intends to assert on the basis of this alleged error by Marx that, absent State coercion, a market in wage labor would not spontaneously give rise to a system of wage slavery. According to Carson, State coercion is the necessary condition for exploitation of the worker to take place. Without this State coercion, the worker cannot be reduced to a wage slave simply by the act of selling his labor power. Quoting Benjamin Tucker, Carson states, “the natural wage of labor is its product.”

But, by raising the charge against Marx, Carson is, in fact, changing the entire nature of his argument. Instead of sticking strictly to a historical argument, he now switches to a hypothetical one. He is asking the question: “In theory, is it possible for free and non-exploitative social relations from replacing the State before all of the technical and productive prerequisites are in place?” He asserts, without offering any evidence, that Marx answers this question with a negative. So, I have to pause for moment to disprove Carson’s charge.

The first problem with this hypothetical question is that Carson never details, on the basis of Marx’s argument, the technical and productive prerequisites for a free and non-exploitative society — that is, he never describes what the phrase “fullest possible development” of wage slavery means. And, the reason for this failure is obvious: Marx assumed Capital had already created the basis for the voluntary association of labor, by creating modern industry, the world market and a mass of individuals in all the most developed nations who had all the attributes necessary to effect this association.

In the German Ideology, Marx explains that Capital has already rendered a great mass of society propertyless, and produced great wealth and culture, based on a great increase in productive power of labor. It had already developed the productive forces and brought about universal competition within society; which produced a global labor force of wage slaves, made each nation dependent on the revolutions of the others, and effectively created a perverse sort of global community founded on wage slavery.

Thus, in 1845, Marx argues, the premises for a voluntary association were already in existence. These developments, in Marx’s opinion, not only made a free and non-exploitative society possible, they made its eventual emergence inevitable. By buying into the argument of Benjamin Tucker with regards to Marx’s theory, Carson is forced to ignore Marx’s own writing on this question in the German Ideology — an error which, apparently, is not difficult for Carson, since, as we have seen, he already failed to find any reference to primitive accumulation in the very same text.

In that text, Marx writes:

Thus things have now come to such a pass that the individuals must appropriate the existing totality of productive forces, not only to achieve self-activity, but, also, merely to safeguard their very existence. This appropriation is first determined by the object to be appropriated, the productive forces, which have been developed to a totality and which only exist within a universal intercourse. From this aspect alone, therefore, this appropriation must have a universal character corresponding to the productive forces and the intercourse.

The appropriation of these forces is itself nothing more than the development of the individual capacities corresponding to the material instruments of production. The appropriation of a totality of instruments of production is, for this very reason, the development of a totality of capacities in the individuals themselves.

This appropriation is further determined by the persons appropriating. Only the proletarians of the present day, who are completely shut off from all self-activity, are in a position to achieve a complete and no longer restricted self-activity, which consists in the appropriation of a totality of productive forces and in the thus postulated development of a totality of capacities. All earlier revolutionary appropriations were restricted; individuals, whose self-activity was restricted by a crude instrument of production and a limited intercourse, appropriated this crude instrument of production, and hence merely achieved a new state of limitation. Their instrument of production became their property, but they themselves remained subordinate to the division of labour and their own instrument of production. In all expropriations up to now, a mass of individuals remained subservient to a single instrument of production; in the appropriation by the proletarians, a mass of instruments of production must be made subject to each individual, and property to all. Modern universal intercourse can be controlled by individuals, therefore, only when controlled by all.

This appropriation is further determined by the manner in which it must be effected. It can only be effected through a union, which by the character of the proletariat itself can again only be a universal one, and through a revolution, in which, on the one hand, the power of the earlier mode of production and intercourse and social organisation is overthrown, and, on the other hand, there develops the universal character and the energy of the proletariat, without which the revolution cannot be accomplished; and in which, further, the proletariat rids itself of everything that still clings to it from its previous position in society.

Again, not to put to fine a point on this, in 1845, Marx states explicitly that this voluntary association of labor results “from the premises now in existence.”

So, in complete contradiction to Kevin Carson’s assertion, and to the muddle-headed arguments of the Marxist, Marx himself argues in 1845 that all the conditions for a voluntary association of labor had already been achieved by society. On this basis, any charge made against him that the system of wage slavery had to reach “their fullest possible development,” is both an egregious distortion of the facts, and a lie. It follows from what I have said, that Marx greeted the Paris Commune — led, as it was, by Anarchists/Libertarians — as an authentic communist attempt to realize a voluntary association of labor and put an end to wage slavery.

Even if we consider Carson’s assertion that

Just social and economic relations are compatible with any level of technology; technical progress can be achieved and new technology integrated into production in any society, thorough free work and voluntary cooperation.

we only arrive at the conclusion that in all epochs men and women have struggled to put an end to the exploitation of their labor under whatever were the prevailing conditions of its extraction and realize a society in which they were not treated as the property of another in one guise or another. Marx makes no argument against this assertion, except to state that, owing to the conditions of society up to Capita,l all of these attempts merely end in new fetters on the individual. While the existing mode of the exploitation of labor is abolished, it is merely replaced by a new mode of exploitation. He does not offer a theoretical response to Carson’s hypothetical argument, but a historical one, in which men and women replace one limited mode of existence with another.

Carson, however, is not satisfied with this answer, so he further argues:

Had not the expropriation of the peasantry and the crushing of the free cities taken place, a steam powered industrial revolution would still have taken place–but the main source of capital for industrializing would have been in the hands of the democratic craft guilds. The market system would have developed on the basis of producer ownership of the means of production.

The point of Carson’s argument is, of course, that the market in wage labor need not result in a system of wage slavery. However, Marx never once argued development of the productive forces could not take place within a producer owned context; he only argued that the actual historical development of productive forces took place in opposition to peasant property and the free cities. Far from making the patently absurd argument that development of the productive forces could not take place within the context of producer control over the forces of production, Marx made the argument that, with the system of wage slavery, producer control of the productive forces could be achieved only through their voluntary association and the means of production made the common wealth of society — there was no other possible route to ownership and control over the means of production by the great mass of propertyless wage slaves other than by establishing this control in a voluntary cooperative union.

Moreover, Marx argues the system of wage slavery was itself the drag on the development of the productive forces. The productive power of social labor would never be truly realized as long as wage slavery existed. The system of wage slavery, he argued, increasingly demonstrated its senility as it proved unable to overcome the obstacles placed in the path of the development of the productive forces created by the system of wage slavery itself.

Thus we find, in the previously cited Capital, Volume 3, Chapter 15:

On the other hand, the rate of self-expansion of the total capital, or the rate of profit, being the goad of capitalist production (just as self-expansion of capital is its only purpose), its fall checks the formation of new independent capitals and thus appears as a threat to the development of the capitalist production process. It breeds over-production, speculation, crises, and surplus-capital alongside surplus-population. Those economists, therefore, who, like Ricardo, regard the capitalist mode of production as absolute, feel at this point that it creates a barrier itself, and for this reason attribute the barrier to Nature (in the theory of rent), not to production. But the main thing about their horror of the falling rate of profit is the feeling that capitalist production meets in the development of its productive forces a barrier which has nothing to do with the production of wealth as such; and this peculiar barrier testifies to the limitations and to the merely historical, transitory character of the capitalist mode of production; testifies that for the production of wealth, it is not an absolute mode, moreover, that at a certain stage it rather conflicts with its further development.

He later adds:

Capitalist production seeks continually to overcome these immanent barriers, but overcomes them only by means which again place these barriers in its way and on a more formidable scale.

The real barrier of capitalist production is capital itself. It is that capital and its self-expansion appear as the starting and the closing point, the motive and the purpose of production; that production is only production for capital and not vice versa, the means of production are not mere means for a constant expansion of the living process of the society of producers. The limits within which the preservation and self-expansion of the value of capital resting on the expropriation and pauperisation of the great mass of producers can alone move — these limits come continually into conflict with the methods of production employed by capital for its purposes, which drive towards unlimited extension of production, towards production as an end in itself, towards unconditional development of the social productivity of labour. The means — unconditional development of the productive forces of society — comes continually into conflict with the limited purpose, the self-expansion of the existing capital. The capitalist mode of production is, for this reason, a historical means of developing the material forces of production and creating an appropriate world-market and is, at the same time, a continual conflict between this its historical task and its own corresponding relations of social production.

From these passages, it is clear that Marx could not have believed that a non-exploitative society had to wait until the productive forces created by wage slavery reached their fullest possible development, because he believed the system of wage slavery itself created barriers to development of the productive forces. It follows from the evidence I have offered here that, for Marx, it was not a matter of tolerating the system of wage slavery until it has reached its fullest possible development, but precisely the opposite: without abolishing the system of wage slavery the productive forces of society could not reach their fullest possible development!

How Carson manages to stand Marx’s argument on its head, and to level this charge against him is simply incomprehensible to me, but is not the least bit surprising, since Carson sets out, not to disprove the arguments of the Anarcho-Capitalist and Marxist variants of critical communist thinking, but to synthesize their arguments with his own mutualist argument that a market in wage labor is consistent with a non-exploitative society. He therefore, ends up appropriating both the theoretical blunders of the Anarcho-Capitalist and the Marxist along with their insights.

I will turn to this angle in my next post.

A critical examination of Kevin Carson’s Mutualism (Part Three)

Even when it was laissez, it wasn’t faire

If it were merely a historical question of the material role the State played in the emergence of Capital, and the role it continues to play in Capital’s own development even now, Kevin Carson and Karl Marx would be in complete agreement on the facts. Even if we extended Carson’s argument to include the idea that every step in the development of Capital has required State coercion and violence, Carson would get no argument from Marx. Finally, Marx would entirely agree with Carson’s argument that the present system is exploitative; and that its exploitation depends solely on the state.

The disagreement between Marx and Carson is not with these historical and material facts, but with the question raised by them of, which, the State or Capital, is the driving force in this development. While Carson believes the State is the autonomous actor in the development of capitalist exploitation, Marx believed the State’s absolutely essential role in the development of Capital results from inherent internal barriers created by the capitalist mode of production itself. In support of my assertion on these points, I offer no other evidence than Marx’s own words as written in Capital, Volume 3, Chapter 15:

“If, as shown, a falling rate of profit is bound up with an increase in the mass of profit, a larger portion of the annual product of labour is appropriated by the capitalist under the category of capital (as a replacement for consumed capital) and a relatively smaller portion under the category of profit… Furthermore, the mass of profit increases in spite of its slower rate with the growth of the invested capital. However, this requires a simultaneous concentration of capital, since the conditions of production then demand employment of capital on a larger scale. It also requires its centralisation, i.e. , the swallowing up of the small capitalists by the big and their deprivation of capital… It is this same severance of the conditions of production, on the one hand, from the producers, on the other, that forms the conception of capital. It begins with primitive accumulation…, appears as a permanent process in the accumulation and concentration of capital, and expresses itself finally as centralisation of existing capitals in a few hands and a deprivation of many of their capital (to which expropriation is now changed). This process would soon bring about the collapse of capitalist production if it were not for counteracting tendencies, which have a continuous decentralising effect alongside the centripetal one.”

In this sketch of the contradictions inherent in Wage Slavery, Marx demonstrates why continuous state intervention is necessary not merely at the earliest periods of the emergence of the social relation, during the period of primitive accumulation, and in its latest period of development, a period of absolute over-accumulation of capital, but why state intervention in the social process of production is required during the whole of the capitalist epoch. On its own, the contradictions inherent in the capitalist mode of production itself would drive it to rapid extinction.

As with Carson’s Mutualist analysis, there is in Marx’s theory no period of laissez-faire political relations in which “the… character of the system was largely… a “neutral” legal framework…” This much should already be obvious, since, in 1848 — six years before Benjamin Tucker was born, more than two decades before he became an Anarchist, and nearly three decades before his first published work  — Marx wrote in the Communist Manifesto, “The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.”

Precisely when the mainstream historian, the Anarcho-Capitalist and the Marxist propose the State operated as a neutral legal framework, and not to enforce the system of Wage Slavery — and, precisely when each proposes Capital was in its alleged “competitive”, as opposed to its alleged “monopoly”, phase — Marx was describing the State in exactly these terms. Historical materialism has never proposed any other relation between the State and the total social capital than the one cited above — that the State, insofar as it can be considered a distinct entity in capitalist society, acts as the general social manager of the mode of production.

However, even if we go beyond the merely formal distinction between Capital as a form of private property and the State as the general manager of the interests of these private capitals — i.e., as the general manager of the system of Wage Slavery — and assume the State has acted throughout history directly on its own behalf as the social capitalist, it is still obvious that the inherent contradictions of the capitalist mode of production impose on the State-Capital entity precisely the same laws as are imposed on the total social capital when it is formally operating independent of the State. The entirely formal distinction between the State, on the one hand, and the total social capital, on the other, has absolutely no impact on the influence of the relations of production on political relations generally, but only on the ways this influence is expressed in actual political events.

This is because, in historical materialism, the State, whatever its relation to the existing mode of production prevailing in society, is nevertheless only a body composed of members of society carrying out the particular public functions of the State. It is a part of the general division of labor prevailing in society, and not, as mainstream political-economy would have us believe, an entity standing outside this division of labor. It does not matter in the least whether politics forms a sphere separate from the direct exploitation of labor power in the capitalist mode of production — as, for instance, is said to prevail in the United States — or is entirely fused with this direct exploitation of labor power — as might be argued in the case of the People’s Republic of China at present — the contradiction arising from the process of production of surplus value itself gives rise to the same necessities.

Moreover, in every historical epoch known to us, the State is not, and has never been, anything but a given quantity of surplus product of the existing mode of exploitation of labor organized in the form of the State. Since, in all epochs for which historical records are available, it is composed of men and women who are, by definition, unproductive drones within society, wasting the productive capacity of society on efforts, which, under any and all previous epochs, are entirely superfluous to human needs, it follows that its entire constitution depends on the productive labor of the remaining portion of society, and on the actual mode of production of surplus product prevailing in the society, however historically determined. For the State to be otherwise, it would no longer be the State, but a particular element of the productive capacity of society itself.

Finally, it is an obvious conclusion that whatever the social relations under which the surplus product of society is produced in an epoch, these social relations are of paramount importance to the State, precisely because it has bearing not only on private interests bound up with the mode of production, but with the interests of the State itself. If this relation between the State and the prevailing mode of extraction of surplus product had not been already explicitly argued for by centuries of observers, it could be easily deduced from historical experience. Thus, for example, Wikipedia tells us, in the literature of Ancient Greece, the only basis on which utopian society is organized without a slave population is that where labor itself has been abolished:

The Greeks could not comprehend an absence of slaves. Slaves exist even in the “Cloudcuckooland” of Aristophanes’ The Birds as well as in the ideal cities of Plato’s Laws or Republic.^[161] The utopian cities of Phaleas of Chalcedon and Hippodamus of Miletus are based on the equal distribution of property, but public slaves are used respectively as craftsmen^[162] and land workers.^[163] The “reversed cities” placed women in power or even saw the end of private property, as in Lysistrata or Assemblywomen, but could not picture slaves in charge of masters. The only societies without slaves were those of the Golden Age, where all needs were met. In this type of society, as explained by Plato,^[164] one reaped generously without sowing. In Telekleides’ Amphictyons^[165] barley loaves fight with wheat loaves for the honour of being eaten by men. Moreover, objects move themselves—dough kneads itself, and the jug pours itself. Society without slaves is thus relegated to a different time and space. In a “normal” society, one needs slaves.

What is particularly offensive in this regard, is the implication made by Kevin Carson, that somehow, Marx held to the same conclusion as the ancient Greeks, namely, that the system of Wage Slavery could only be abolished given the abolition of labor itself. Carson argues:

A second failing of Marxism (or at least the vulgar variety) was to treat the evolution of particular social and political forms as natural outgrowths of a given technical mode of production.

No social order is ever destroyed before all the productive forces for which it is sufficient have been developed, and new superior relations of production replace older ones before the material conditions for their existence have matured within the framework of the old society. Mankind thus inevitably sets itself such tasks as it is able to solve, since closer examination will always show that the problem itself arises only when the material conditions for its solution are already present or at least in the course of formation. In broad outline, the Asiatic, ancient, feudal and modern bourgeois modes of production may be designated as epochs marking progress in the economic development of society. (169)

For the Marxists, a “higher” or more progressive form of society could only come about when productive forces under the existing form of society had reached their fullest possible development under that society. To attempt to create a free and non-exploitative society before its technical and productive prerequisites had been achieved would be folly. The proper anarchist position, in contrast, is that exploitation and class rule are not inevitable at any time; they depend upon intervention by the state, which is not at all necessary. Just social and economic relations are compatible with any level of technology; technical progress can be achieved and new technology integrated into production in any society, thorough free work and voluntary cooperation. As G. K. Chesterton pointed out, all the technical prerequisites for steam engines had been achieved by the skilled craftsmen of the High Middle Ages. Had not the expropriation of the peasantry and the crushing of the free cities taken place, a steam powered industrial revolution would still have taken place–but the main source of capital for industrializing would have been in the hands of the democratic craft guilds. The market system would have developed on the basis of producer ownership of the means of production. Had not Mesopotamian and Egyptian elites figured out six thousand years ago that the peasantry produced a surplus and could be milked like cattle, free people would still have exchanged their labor and devised ways, through voluntary cooperation, to make their work easier and more productive. Parasitism is not necessary for progress.

Is this right? Is Marx making the absurd statement that Wage Slavery could not be abolished until the productive forces founded on Wage Slavery “had reached their fullest possible development under that society.” Carson offers not one bit of evidence to support this outrageous claim, and is demonstrably wrong on it.

I will examine this absolutely incomprehensible charge in my next post.

A critical examination of Kevin Carson’s Mutualism (Part Two)

Our friend, Moneybags, must be so lucky…

I apologize to readers for the mind-numbingly extensive quotes in the previous post, but I wanted it to be absolutely clear that the historical record demonstrates Carson is entirely on firm footing when he asserts Capital — that is, Wage Slavery — would be impossible without the State — not just presently, but in the earliest moments of its emergence as well. I now want to be equally clear that Marx himself acknowledges this to be a fact, when he writes:

For the conversion of his money into capital, therefore, the owner of money must meet in the market with the free labourer, free in the double sense, that as a free man he can dispose of his labour-power as his own commodity, and that on the other hand he has no other commodity for sale, is short of everything necessary for the realisation of his labour-power.

The question why this free labourer confronts him in the market, has no interest for the owner of money, who regards the labour-market as a branch of the general market for commodities. And for the present it interests us just as little. We cling to the fact theoretically, as he does practically. One thing, however, is clear — Nature does not produce on the one side owners of money or commodities, and on the other men possessing nothing but their own labour-power. This relation has no natural basis, neither is its social basis one that is common to all historical periods. It is clearly the result of a past historical development, the product of many economic revolutions, of the extinction of a whole series of older forms of social production.

So, too, the economic categories, already discussed by us, bear the stamp of history. Definite historical conditions are necessary that a product may become a commodity. It must not be produced as the immediate means of subsistence of the producer himself. Had we gone further, and inquired under what circumstances all, or even the majority of products take the form of commodities, we should have found that this can only happen with production of a very specific kind, capitalist production. Such an inquiry, however, would have been foreign to the analysis of commodities. Production and circulation of commodities can take place, although the great mass of the objects produced are intended for the immediate requirements of their producers, are not turned into commodities, and consequently social production is not yet by a long way dominated in its length and breadth by exchange-value. The appearance of products as commodities pre-supposes such a development of the social division of labour, that the separation of use-value from exchange-value, a separation which first begins with barter, must already have been completed. But such a degree of development is common to many forms of society, which in other respects present the most varying historical features. On the other hand, if we consider money, its existence implies a definite stage in the exchange of commodities. The particular functions of money which it performs, either as the mere equivalent of commodities, or as means of circulation, or means of payment, as hoard or as universal money, point, according to the extent and relative preponderance of the one function or the other, to very different stages in the process of social production. Yet we know by experience that a circulation of commodities relatively primitive, suffices for the production of all these forms. Otherwise with capital. The historical conditions of its existence are by no means given with the mere circulation of money and commodities. It can spring into life, only when the owner of the means of production and subsistence meets in the market with the free labourer selling his labour-power. And this one historical condition comprises a world’s history. Capital, therefore, announces from its first appearance a new epoch in the process of social production.

From this passage we can see that Capital, that is, Wage Slavery was, in Marx’s opinion, not a result of nature, nor was it the mere product of preexisting social development. Rather, it was a rupture — a world historical occurrence — in pre-capitalist social relations. Even with the appearance of commodities, trade, money, etc. the emergence of capitalist social relations is not a necessary outcome. It occurs in history only when the owner of the means of production and subsistence enters into a specific relationship with another who has the “freedom” to sell her capacity to labor and is, moreover, compelled by circumstances, on pain of starvation, to sell this capacity. However, as was shown in the previous post, even facing starvation, it still took relentless state violence over many decades — centuries — for this mass of pitiful sub-humans to be broken to a life of wage slavery.

Wage slavery is no natural state for any human being. Despite the violence of the State and the efforts to starve them into submission, domesticating human beings to the routine of modern wage slavery was nowhere near as clean and elegant as is implied by the supply/demand curve of the simple-minded economist. It was — and remains today — an arena of constant violent aggression within society against the worker, in which every means available — political, military and economic — are brought to bear to compel her submission. The neglect of this fact is all the more to be denounced, since, in the Fascist State, the wage slave is routinely portrayed as the willing partner in an otherwise unremarkable market transaction — the Fascist State is all too ready to deny the paternity of its bastard offspring, and swear them all to be the product of Virgin Birth.

Kevin Carson may be polite, and keep this discussion on an intellectual plane, but I am not so polite; I am willing to thrust the face of the Anarcho-Capitalist in the shit that is the history of Capital. As the Anarcho-Capitalist drones on and on about the “Rights of Englishmen”, and “Taxation as a form of Involuntary Servitude”, this nonsense can be brought to a sudden halt merely by asking him to consider how long the wealth of one would be safe, if the State could not be called upon to protect his property rights from the anger of the remaining 9,999 living on the edge of existence. Nothing converts a Rothbardian Anarcho-Capitalist into a model Fascist Citizen so quickly as the possibility of Voluntary Association of the laborers and the eradication of Wage Slavery.

On the other hand, we have the Marxist, who, despite his self-identification, could not pick Karl Marx out of a crowd of well shaven Keynesian economists. Unlike the Anarcho-Capitalist — who, reflecting his social base, decries the imposts of the Fascist State on the meager wealth of the petty capitalists, marginalized from productive employment of their capital by the progress of Capital itself, and forced to scurry about in various speculative enterprises to protect it from inflation — the Marxist is a poseur, who advocates on behalf of the wage slave — but only so far as she remains a slave of the State. Reduction of hours of labor to end unemployment forever? The Marxist has never heard of such nonsense, despite having read Capital, where Marx explicitly referred to it as the “modest Magna Carta” of the working class. In any case, the Marxist explains, we need the Fascist State to “invest” in “infrastructure” and “green jobs”, so the active laboring population must be worked to its absolute limit and the unemployed left to starve, so that the Fascist State may have the resources it needs to accomplish this. (Taking a page from the talking points memo of Fascist economists like Paul Krugman, the Marxist has taken to referring to wasteful Fascist State expenditures as “investments”.) If, by some fantastic chance, working people should overthrow this Fascist State, the Marxist explains, even then compulsory labor cannot be done away with. The workers is not prepared intellectually to manage her own affairs without the despotism of the party-state, which alone has the foresight and vision to manage society on her behalf until such time as she is deemed capable. When might this be? The party-state will know it, when the time arrives, of course.

Carson is not only right to take both Anarcho-Capitalists and Marxists to task on this point, he has the entirety of the bloody history of Wage Slavery on his side — a history both the Anarcho-Capitalist and the Marxist wish to ignore; which they wish to prettify by blaming its results either on the State, as the Anarcho-Capitalist does, or on Capital, as the Marxist does. The true facts are these: the Wage Slave was bludgeoned by decades of State violence, even as she was starved out by the monopoly owners of Capital, in an efforts to make her submit to the very conditions of life we now take as the natural state of society. If, Kevin Carson is to be criticized for anything in this regard, it is that he did not treat these critical communist trends with the contempt they deserve — that he did not call them out on their nonsense, and expose their muddle-headed arguments as such. I think there is a reason for this; and, I believe that reason lies in the flaws of Carson’s own argument regarding both Capital and the State — a flaw he shares with both communist trends.

I will turn to this in my next post.

A critical examination of Kevin Carson’s Mutualism (Part One)

Punishment in a forced labor camp II, 1930s, Georgia (www.slaverybyanothername.com)

Capital, or Slavery by Another Name

Kevin Carson’s “Austrian & Marxist Theories of Monopoly Capital: A Mutualist Synthesis” states his Mutualist position in opposition to both the anarcho-capitalist Libertarian and Marxist theories of monopoly capitalism. The theories of the Anarcho-Capitalist camp and the Marxist camp are, in turn, set in opposition to mainstream liberal and conservative arguments.

According to Carson, mainstream liberals and conservatives argue the Fascist State acts as a constraint on Capital. Though differing on whether this constraint operates in favor of society or against, both wings of the dominant consensus hold to this view:

Both mainline “conservatives” and “liberals” share the same mirror-imaged view of the world (but with “good guys” and “bad guys” reversed), in which the growth of the welfare and regulatory state reflected a desire to restrain the power of big business. According to this commonly accepted version of history, the Progressive and New Deal programs were forced on corporate interests from outside, and against their will. In this picture of the world, big government is a populist “countervailing power” against the “economic royalists.” This picture of the world is shared by Randroids and Chicago boys on the right, who fulminate against “looting” by “anti-capitalist” collectivists; and by NPR liberals who confuse the New Deal with the Second Advent. It is the official ideology of the publick skool establishment, whose history texts recount heroic legends of “trust buster” TR combating the “malefactors of great wealth,” and Upton Sinclair’s crusade against the meat packers. It is expressed in almost identical terms in right-wing home school texts by Clarence Carson and the like, who bemoan the defeat of business at the hands of the collectivist state.

The conventional understanding of government regulation was succinctly stated by Arthur Schlesinger, Jr., the foremost spokesman for corporate liberalism: “Liberalism in America has ordinarily been the movement on the part of the other sections of society to restrain the power of the business community.” Mainstream liberals and conservatives may disagree on who the “bad guy” is in this scenario, but they are largely in agreement on the anti-business motivation. For example, Theodore Levitt of the Harvard Business Review lamented in 1968: “Business has not really won or had its way in connection with even a single piece of proposed regulatory or social legislation in the last three-quarters of a century.”

Carson has this to say of the critical communist theories of Anarcho-Capitalism and Marxism:

Stromberg’s argument is based on Murray Rothbard’s Austrian theory of regulatory cartelization. Economists of the Austrian school, especially Ludwig von Mises and his disciple Rothbard, have taken a view of state capitalism in many respects resembling that of the New Left. That is, both groups portray it as a movement of large-scale, organized capital to obtain its profits through state intervention into the economy, although the regulations entailed in this project are usually sold to the public as “progressive” restraints on big business. This parallelism between the analyses of the New Left and the libertarian Right was capitalized upon by Rothbard in his own overtures to the Left. In such projects as his journal Left and Right, and in the anthology A New History of Leviathan (coedited with New Leftist Ronald Radosh), he sought an alliance of the libertarian Left and Right against the corporate state.

Rothbard treated the “war collectivism” of World War I as a prototype for twentieth century state capitalism. He described it as

a new order marked by strong government, and extensive and pervasive government intervention and planning, for the purpose of providing a network of subsidies and monopolistic privileges to business, and especially to large business, interests. In particular, the economy could be cartelized under the aegis of government, with prices raised and production fixed and restricted, in the classic pattern of monopoly; and military and other government contracts could be channeled into the hands of favored corporate producers. Labor, which had been becoming increasingly rambunctious, could be tamed and bridled into the service of this new, state monopoly-capitalist order, through the device of promoting a suitably cooperative trade unionism, and by bringing the willing union leaders into the planning system as junior partners.

In this article, which is a review of the literature, Kevin Carson attempts to synthesize the view of the two critical communism theories. Carson takes on both the opportunism of Anarcho-Capitalism and Marxism, with regards to capitalist property and the State, respectively. He attempts to demonstrate what these critical communist theories have in common, but also how their differences leads them into errors.

He argues, rather persuasively, that capitalist social relations are impossible without the State. His argument refers not just to present day Capital — during this period of over-accumulation — but also to the very beginning. So, he is making the argument that Capital itself arose on the basis of violence and state-sponsored primitive accumulation. He is, therefore, not making a hypothetical argument, but a historical one – which argument can be actually confirmed by historical records.

While we can make hypothetical arguments against his position, the real question is: “Does his argument hold water as history?” The answer to this can only be, “Yes.” So, that being the case, my own review begins with acknowledging this historical fact. So far as I can see, Marx and Carson agree on this point. Even though Carson asserts Marx disagrees with him in the German Ideology. Marx does not. He writes of the bloody violence unleashed on the floating population of England under Henry VIII, and, moreover, the history of plunder and colonization, and intensified inter-state conflict that accompanied the rise of Capital:

With guild-free manufacture, property relations also quickly changed. The first advance beyond naturally derived estate capital was provided by the rise of merchants whose capital was from the beginning movable, capital in the modern sense as far as one can speak of it, given the circumstances of those times. The second advance came with manufacture, which again made mobile a mass of natural capital, and altogether increased the mass of movable capital as against that of natural capital.

At the same time, manufacture became a refuge of the peasants from the guilds which excluded them or paid them badly, just as earlier the guild-towns had [served] as a refuge for the peasants from [the oppressive landed nobility].

Simultaneously with the beginning of manufactures there was a period of vagabondage caused by the abolition of the feudal bodies of retainers, the disbanding of the swollen armies which had flocked to serve the kings against their vassals, the improvement of agriculture, and the transformation of great strips of tillage into pasture land. From this alone it is clear how this vagabondage is strictly connected with the disintegration of the feudal system. As early as the thirteenth century we find isolated epochs of this kind, but only at the end of the fifteenth and beginning of the sixteenth does this vagabondage make a general and permanent appearance. These vagabonds, who were so numerous that, for instance, Henry VIII of England had 72,000 of them hanged, were only prevailed upon to work with the greatest difficulty and through the most extreme necessity, and then only after long resistance. The rapid rise of manufactures, particularly in England, absorbed them gradually.

With the advent of manufactures, the various nations entered into a competitive relationship, the struggle for trade, which was fought out in wars, protective duties and prohibitions, whereas earlier the nations, insofar as they were connected at all, had carried on an inoffensive exchange with each other. Trade had from now on a political significance.

With the advent of manufacture the relationship between worker and employer changed. In the guilds the patriarchal relationship between journeyman and master continued to exist; in manufacture its place was taken by the monetary relation between worker and capitalist — a relationship which in the countryside and in small towns retained a patriarchal tinge, but in the larger, the real manufacturing towns, quite early lost almost all patriarchal complexion.

Manufacture and the movement of production in general received an enormous impetus through the extension of commerce which came with the discovery of America and the sea-route to the East Indies. The new products imported thence, particularly the masses of gold and silver which came into circulation and totally changed the position of the classes towards one another, dealing a hard blow to feudal landed property and to the workers; the expeditions of adventurers, colonisation; and above all the extension of markets into a world market, which had now become possible and was daily becoming more and more a fact, called forth a new phase of historical development, into which in general we cannot here enter further. Through the colonisation of the newly discovered countries the commercial struggle of the nations amongst one another was given new fuel and accordingly greater extension and animosity.

Beyond Marx himself, further support for Carson’s position is found on the website, Spartacus Educational, regarding the bloody history of the emergence of wage slavery:

Poverty in Tudor Times

In Tudor England about a third of the population lived in poverty. Their suffering always increased after bad harvests. A shortage of food resulted in higher prices. This meant that poorer families could not afford to buy enough food for their needs.

Wealthy people were expected to give help (alms) to local people suffering from poverty because they were old, blind, crippled or sick. Some wealthy people were generous while others were mean. This meant that poor people in some villages were fairly well cared for while others died of starvation.

Unemployment was a major cause of poverty. When large landowners changed from arable to sheep farming, unemployment increased rapidly. The closing down of the monasteries in the 1530s created even more unemployment. As monasteries had also helped provide food for the poor, this created further problems.

Unemployed people were sometimes tempted to leave their villages to look for work. This was illegal and people who did this were classified as vagabonds.

A law passed in 1536 stated that people caught outside their parish without work were to be punished by being whipped through the streets. For a second offence the vagabond was to lose part of an ear. If a vagabond was caught a third time he or she was executed.

In 1550 Parliament passed a law stating that every parish had to build a workhouse for the poor. Edward VI set an example by giving permission for Bridewell Palace in London to be used as a workhouse. In exchange for food and shelter, the people who lived in the workhouse worked without wages. If people without work refused to go to the workhouse they were to be treated as vagabonds.

To pay for these workhouses, vicars were given permission to ask everyone in the parish to give money. If people refused, the vicar had to report them to his bishop. Workhouses did not solve the problem. It has been estimated that in 1570 about 10% of the population were still wandering around the country looking for work.

In 1576 a new Poor Law was introduced. Each parish had to keep a store of “wool, hemp, flax, iron or other stuff that was to be handed out to the unemployed. In exchange for the goods that they produced, the parish gave them money. In this way, the poor could continue living in their own homes. This new law also introduced fines for those who refused to pay money to help the poor.

This was followed in 1601 by another Poor Law. Workhouses now had to be provided for people who were too old or ill to work. People who refused to contribute money to help the poor could now be sent to prison.

The website offers the following documentation of its assertions:

Thomas More, Utopia (1516): “The landowners enclose all land into pastures (for sheep)… the peasants must depart away…. And when they have wandered… what else can they do but steal or go about begging.”

In 1566 Thomas Harman wrote a book about vagabonds: “They are punished by whippings. Yet they like this life so much that their punishment is soon forgotten. They never think of changing until they climb the gallows.”

In 1594 William Lambarde made a speech about poverty in England: “There were always poor lepers, aged poor, sick poor, poor widows, poor orphans, and such like, but poor soldiers were either rarely or never heard of till now… They lead their lives in begging and end them by hanging… They fight our wars… enduring cold and hunger when we live at ease, lying in the open field when we are in our beds.”

Letter sent by the citizens of London to Edward VI (1553): “It was obvious to all men that beggars and thieves were everywhere. And we found the cause was that they were idle; and the cure must be to make them work… by providing work ourselves, so that the strong and sturdy vagabond may be made to earn his living. For this we need a house of work… And so, we ask for the king’s house of Bridewell.”

Law passed by Parliament in 1576: “So that youth may be accustomed and brought up in labour and work, and so they do not grow to be idle rogues… it is ordered… that in every city and town within this realm a large stock of wool, hemp, flax, iron… shall be provided.”

Report on a survey carried out in Norwich in 1571: “Many of the citizens were annoyed that the city was so full with poor people, both men women and children, to the number of 2,300 persons, who went from door to door begging, pretending they wanted work, but did very little.”

Law passed by Parliament in 1597: “Every vagabond or beggar… shall be stripped naked from the middle upwards and publicly whipped until his or her body be bloody, and forth with sent to the parish where he was born… If any vagabond or beggar return again, he shall suffer death by hanging.”

Wage slavery was born of violence, and violence has accompanied it during its entire reign. Capital is the mother, the State is its father. The wage slave is the bastard offspring of both. And, this antihuman union has been quite fertile. The connection between the state and compulsory labor is so seamless that even the Workers’ Paradise had laws against “flitters, loafers, absentees, and grabbers”:

In the Soviet Union, the workers work not for capitalists, but for themselves, for their socialist state, for the good of all humanity. The overwhelming majority of laborers and office workers honorably and conscientiously work in enterprises, transport, and establishments, take a professional attitude toward work, offering models of Stakhanovite valor, strengthening the might and defense capabilities of the motherland..

But side-by-side with honest and conscientious workers, there are still scattered unmotivated, backward, or dishonorable people — flitters, loafers, absentees, and grabbers.

With their second-rate work, absenteeism, lateness to work, aimless wandering about the factory during work-time, and other violations of the rules of internal work organization, and likewise with individual capricious migrations from one establishment to another, these people disrupt labor discipline, and bring great losses to industry, transport, and all of the national economy.

They try to give as little work as possible to the state, and grab as much money as possible for themselves. They abuse Soviet labor laws and reles, using them for their selfish interests. They do not work fully even druing the established hours of the working day; often they work only 4 or 5 hours in all, wasting the remaining 2-3 hours of working time. With this, the people and the state lose every year millions of work days and billions of rubles.

When flitters and loafers are fired, they start filing lawsuits, and, not working, win payments for supposedly involuntary unemployment. Dismissal from an establishment for violating labor discipline, as a rule, is no sort of punishment at all for truants, since in the majority of cases they quickly find work in other establishments.

Using current regulations about granting vacations, according to which the right to vacation is granted after 5 1/2 months of work in a factory or institution, flitters and loafers, running from one establishment to another, contrive to get two vacations in one year, ending up in a preferred position over conscientious laborers and office-workers.

In housing projects, built by factories for their laborers and office workers, apartments are often occupied by persons who either voluntarily quit work in these establishments or were fired for violating labor discipline; because of this laborers and office workers, who have worked long and honorably in one establishment, are entirely deprived of necessary living-space.

In distribution of trips to rest homes and sanatoriums, flitters and truants enjoy the same rights as honestly working laborers and office-workers. In the same way, both in payment of insurance awards for temporary infirmity, and in the awarding of pensions, the necessary sharp distinction is not made between conscientious workers with long uninterrupted terms of service in a given factory or institution, and violators of labor discipline — flitters, running from some factories and institutions to others.

Some trade-union, managerial, and even judicial organs show an inadmissible, antisocial, complaisance toward violators of labor discipline and even connive with them — against the interests of the people and the state, — often deciding questions about reinstatement at work, about payment of insurance for temporary inability to work, about eviction from factory apartments, etc. in favor of flitters and truants.

All this leads to a situation, where dishonorable workers, laboring little, can live at the expense of the state, at the expense of the people. This evokes just protests from the majority of laborers and office workers. It demands the introduction of various changes in current rules of internal labor administration and in the norms of social insurance, so that in the future there will no longer be the same treatment for conscientious workers as for loafers and flitters; so that encouragement will be offered only to honestly working laborers and office workers, and not to those who subvert labor discipline and skip easily from one establishment to another.

Major abuses are found also in the practice of using leave for pregnancy and birth. It often happens that some women, seeking by deceitful means to live at the expense of the state, go to work in factories or institutions soon before giving birth only in order to receive the 4-month paid leave, and never return to work. The interests of the state demand an immediate end to this abuse..

Moreover, laws against vagabonds are still on the books in the United States today. According to one writer, it was not unusual for these laws to be used against Black men even into the 1950s in Birmingham. Police would sweep up all men who appeared to be without jobs. Once convicted, they would be hired out the mining companies. Carl V. Harris writes of this practice in his 1972 book, “Reforms in Government Control of Negroes in Birmingham, Alabama, 1890-1990”

“When the newspapers announce that the ever alert Sheriff and his trusted deputies rounded up some twenty or thirty negroes in the woods, wounded two or three and landed the balance in the county jail for crap shooting, does anybody believe that the peace of the county is being conserved, or does every man know that the syndicate is trying to reimburse itself for its campaign expenditures?” Thus did Walker Perry, chief attorney for the Tennessee Coal, Iron, and Railroad Company, denounce in 1912 the oppressive fee system, under which the Sheriff’s “syndicate” in Birmingham and Jefferson County, Alabama, allegedly earned $50,000 per year in fees by energetically arresting Negroes on petty gambling charges. Perry, as chairman of a reform crusade to abolish the fee system in Jefferson County, was one of many reform movement leaders who between 1890 and 1920 sought to remedy defects in the local government’s methods of controlling Negroes.

Most Birmingham whites believed that their local government should exercise vigilant control over the Negroes who composed approximately 40 percent of the population of their city. In 1889 the editor of the Birmingham Age-Herald declared: ‘The negro is a good laborer when his labor can be controlled and directed, but he is a very undesirable citizen.” In 1906 the editor of the Birmingham News said: ‘Anyone visiting a Southern city or town must be impressed at witnessing the large number of loafing negroes… They can all get work, but they don’t want to work. The result is that they sooner or later get into mischief or commit crimes.” The editor believed that such Negroes were “not only a menace to the public safety” but also “to some extent a financial burden upon the taxpayers.”

The Constitution actually allows this practice in the very amendment that outlawed slavery:

Thirteenth Amendment – Slavery And Involuntary Servitude

Section 1. Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.

Section 2. Congress shall have power to enforce this article by appropriate legislation.

For decades this amendment was used to justify state action that in essence, reproduced all the vilest practices of slavery. How soon will it be before these laws are applied to the 99er population?

Inflation, the negative rate of profit, and the Fascist State (Part seven)

In part one of this series, I showed how inflation affects not only consumption but also production. In the former, inflation expresses itself in the fall of the consumption power of the mass of society. In the latter, inflation expresses itself as a fall in the actual realized rate of profit — a negative rate of profit arising not from a material change in the composition of capital, but from a depreciation in the purchasing power of money. The two of these effects are achieved by one and the same cause. The two effects do not simply exist side by side, but influence each other: in the circulation of capital, excess money-demand effectively reduces the portion of the output of productively employed capital that is realized in sales. With an inflation rate of ten percent, a capital with value of $100 now can be realized only if $110 is offered for it. On the other hand, a capital with the actual value of $110, is effectively purchased for $100.

The problem here is that between the production of the commodity and its realization in a sale the purchasing power of the money has depreciated. The problem can be better understood if we divide value and price and examine each separately. If we assume a capital with the value of $100, represents 10 hours of socially necessary labor time, we can make the following observation: The capitalist takes his capital with a value of $100 or ten hours of labor time and produces a quantity of commodities with a new total value of $110, representing 11 hours of socially necessary labor time. However, during this same period, the purchasing power of money has changed so that 1 hour of labor time no longer has a price of $10, but has a new price of $11. His capital now has the value of 11 hours of labor time with an implied expected price of $121 (11 times 11 = 121), yet he only realizes $110, or 10 hours of labor time under the new price conditions.

From the point of view of value, the capitalist has taken his capital with a value of 10 hours of socially necessary labor and produced a capital with a value of 11 hours of socially necessary labor. Yet, of this 11 hours of value he only realizes 10 hours, i.e., he realizes no more than his original investment. From the point of view of price, the capitalist has taken his capital with a money-price of $100 and produced a capital with a money-price of $110. He expects no more than $110 and is satisfied with this, despite the fact that this $110 in sales only has a value of 10 hours of socially necessary labor time.

The riddle of the divergence of prices from values

The riddle of this perverse situation can only be solved if we assume that a change occurred in the relationship between values and prices during the exchange of money and commodities — that the realization of the value of capital produced suffered from a defect such that a portion of the value this capital was lost in the act of exchange itself. This defect, as we showed in part three, is already inherent in the value/price mechanism itself. The value/price mechanism contains in itself a contradiction between the actual labor time expended on the production of a commodity and the socially necessary labor time required for its production; a contradiction between the value of the commodity itself and the expression of the value in the form of the price of the commodity; and, a contradiction between the price of the commodity denominated in units of the money and the socially necessary labor time required for the production of the object that serves as the money.

These contradictions exists only in latent form until crises bring them to the surface in a sudden divergence between prices and values of commodities. During periods of over-production of commodities — or, more accurately, over-accumulation of capital — these crises are expressed in the sudden collapse in the prices of commodities below their value, or socially necessary labor times. The divergence between prices and values of commodities only express the fact that for a more or less lengthy period of time wealth can no longer accumulate in its capitalistic form; and, as a result, the socially necessary labor time of society must contract to some point where the production of surplus value no longer takes place. Precisely because the circulation of capital requires not just the production of surplus value in the form of commodities, but also its realization in a separate act of sale of these commodities, the possibility exists for an interruption of the process of realization for a longer or shorter period of time until balance between production and consumption is restored — that is, until conditions exist for the total social capital to once again function as capital; for the process of self-expansion of the total social capital to resume.

If, for whatever reason, conditions are not established for the total social capital to resume functioning as capital — for the process of self-expansion of the total social capital to begin again — production itself must cease. The interruption of exchange — which, I note for the record, begins not with too much money-demand for too few commodities, but precisely the reverse — creates a sudden fall in the rate of profit to zero. If this occurs not as an intermittent breakdown, but as a permanent feature of capitalist production — which is to say, if the over-accumulation of capital is not momentary, but a now permanent feature of the mode of production — capital has encountered its absolute limit as a mode of production. From this point forward the production of wealth can no longer take its capitalistic form — can no longer take the form of surplus value and of profit.

Over-accumulation of capital and civil society

Moreover, since the production of surplus value is the absolute condition for the purchase and sale of labor power, the sudden interruption of its production affects not just the capitalist class, but the class of laborers as well — it appears in the form of a social catastrophe threatening the existence of the whole of existing society, and all the classes composing existing society without regard to their respective place in the social division of labor. Each member of society encounters the exact same circumstance: she cannot sell her commodity, whether this commodity is an ordinary one — shoes, groceries, etc. — or the quintessential capitalist commodity, labor power. The premise of all productive activity in society is that this activity can only be undertaken if it yields a profit; if, in other words, the existing socially necessary labor time expended by society realizes, in addition to this value, additional socially necessary labor time above that consumed during its production.

Marx argues in Capital Volume 3 that capitalist production presupposes a tendency toward the absolute development of the productive forces of society, irrespective of the consequences implied by this development for capital itself. What does Marx mean by this? As a mode of production, capital shares with all previous modes of production the feature of being founded on natural scarcity, on the insufficiency of means to satisfy human need. Yet, at the same time, it implies a tendency for the productive capacity of society to develop more rapidly than consumption power of society — a tendency for more commodities to be thrown on the market at any given time than society can consume under the given conditions of exchange. What society can consume at any given moment is not determined simply by the amount of commodities available to be consumed, but by class conflict between the mass of owners of capital and the mass of laborers; a conflict which presupposes the reduction of the consumption power of the mass of laborers to some definite limit consistent with the realization of profits.

That this conflict, absent a successful attempt on the part of the mass of society to end the monopoly over the means of production by an insignificant handful of predators, must be settled in favor of capital and, therefore, that production is constantly kneecapped by  completely artificial limits on consumption, is already given by capitalist relations of production themselves — relations which nowhere figure in the description of capital by simple-minded economists, who instead ascribe this barrier to the gold standard, etc.

This contradiction — that the productive power of society tends toward its absolute development, yet the consumption power is constantly constrained by the need to produce commodities at a profit — implies that at a certain point in capital’s development production and consumption come into absolute conflict — a conflict which, on the one hand, cannot be resolved by simply increasing this productive power still further, nor by limiting consumption still more severely. It can only be overcome by such means as overthrow capitalist relations entirely, or, alternately, destroy both the productive and consumption power of society together in one and the same act of exchange.

Exchange and disaccumulation, or, the destruction of value through exchange

I have made the assumption that both the productive power of society and the consumption power of society are destroyed by one and the same act of exchange. Based on this assertion, I define inflation not simply as the increase in money-demand over the supply of commodities, but the actual destruction of the productive power of society and consumption power of society during the act of exchange. Or, what is the same thing, by the progressive reduction of the total social capital circulating within society, i.e., the reduction of the quantity of the existing total social capital which continues to function as capital within society, through exchange.

I have also made the assumption that this same act of exchange also expresses,

1. the contradiction between the actual labor time expended on production of commodities and the socially necessary labor time required for production of these commodities — inflation, therefore, expresses itself as a declining portion of the total labor time expended by society that is socially necessary, or, alternately, the constant increase in the total labor time of society in relation to the social necessity for productively expended labor time;
2. the contradiction between values of commodities and the expression of these values in the prices of commodities — inflation, therefore, is expressed as a decline in the value of commodities as a proportion of the prices of commodities, or, alternately, the constant increase in the prices of commodities in relation to their values; and,
3. the contradiction between the prices of commodities denominated in units of the legally defined money and the price of the commodity that historically served as the money — inflation, therefore, is expressed in the constant depreciation of the exchange ratio of the money token against the commodity historically serving as the standard of price, or, alternately, as the rising price of the commodity historically serving as the standard of prices denominated in the money token, i.e., a secular rise in the price of gold.*

The conditions of this act of exchange, which destroys both the productive power of society and its consumption power — and which, on this basis, progressively reduces the quantity of the existing total social capital which continues to circulates as capital and function as capital on this basis — is fulfilled only by exchange of that portion of the newly created social capital representing surplus value with ex nihilo money, and the unproductive consumption of this newly created value by the Fascist State. Moreover, this unproductive consumption of the newly created surplus value is only fulfilled if it is entirely unproductive in all of its forms, i.e., whether this unproductive consumption takes the form of the unproductive consumption of commodities, of labor power, or, of the fixed and circulating capital.

Fascist State expenditures consist entirely of removing the surplus product of labor from circulation, consuming it unproductively, and replacing this surplus product in circulation with a valueless ex nihilo money that formally completes the act of exchange, but that in reality abrogates it. The total mass of capital circulating within society is thereby reduced by this exchange, while the total money-demand in society is simultaneously increased.

The chief symptoms of inflation, therefore, is (1.) the unproductive consumption of the existing total capital by the Fascist State, no matter what form this unproductive consumption takes; (2.) the constant secular increase in Fascist State expenditures, no matter how these expenditures are financed, but which is no more than the continuous exchange of every form of commodity (i.e., of capital in the form of commodities) for newly created valueless ex nihilo money; and, finally, (3.) the constant expansion of the total labor time of society beyond that duration required by the satisfaction of human needs. In tandem with the improvement in the productivity of labor, society is compelled to expend an ever greater amount of effort just to feed, house and clothe itself. In tandem with the reduction in the value of commodities, the prices of commodities soar still higher. In tandem with relentless expansion of Fascist State expenditures, the actual provision of necessary public services — education, health care, provision for the disabled and those no longer able to work, public infrastructure and communications — sink into decay and obsolescence.

The terminal trajectory of capitalist social relations is expressed precisely in the fact that at a certain stage of development the total social capital can no longer function as capital, can no longer realize the constantly increasing quantity of surplus value produced in the form of profits, that, to the contrary, this surplus value must be unproductively consumed in its entirety by the Fascist State and replaced by purely fictitious profits denominated in a purely fictitious money.

*****

*NOTE: I need clarify from Part Three that this third contradiction implies gold tends to exchange with other commodities at some exchange ratio below its relative value, despite its rising nominal price. As is obvious, if commodities are priced above their values, the purchasing power of gold — the physical body of exchange value — is exchanged below its value. This situation, which once occurred only during periods of general capitalist expansion, is now a permanent feature of exchange. It is, however, expressed through the intermediary of the money token by commodities being priced above their values, while gold is priced below its value. An existing quantity of money token can buy fewer commodities, but more gold, than otherwise expected. This inevitably leads to charges by gold-bugs that the price of gold is being deliberately suppressed, but I think it is actually a natural consequence of over-accumulation of capital — a condition normally seen at the apex of an expansion. Commodities in general are devalued, but this devaluation is expressed most thoroughly in the devaluation of the former money commodity which serves little other function in society but to express value.

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.