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Posts Tagged ‘labor theory’

Where the fuck is the ‘revolutionary subject’ in the European crisis?

March 24, 2013 1 comment

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An interesting question from George Magnus of the banking giant UBS via Zero Hedge: “Why Are The European Streets Relatively Quiet?”

To understand the background of Magnus’s question we have to go to 2010. At that time, the economist Michael Pettis predicted Europe would have three years or or so to impose its “labor restructuring” before all hell broke loose and national politics descended into chaos:

“I don’t in any sense pretend to be an expert on the subject, but one of the things that surprises me is that as far as I know (perhaps because I am looking in the wrong places) and in spite of very clear historical precedent, very few analysts, even the greatest euro-skeptics, are wondering about the changes in electoral politics that are likely to take place in Europe over the next few years as a consequence of the euro adjustment.  For example Wolfgang Munchau has an excellent article in the Financial Times in which he concludes, like I did in my post last week, that:

The eurozone is manoeuvring itself into a position where it confronts the choice between two alternatives considered “unimaginable”: fiscal union or break-up.

Obviously I think he is right, but I would add that the window for that choice is a small one.  If Europe doesn’t move quickly, within two or three years it will probably be very difficult, if not impossible, to engineer fiscal union.  By then domestic politics are likely to be too unstable for the European political elite simply to arrange union over the heads of the citizenry.”

But here we are five years after the outbreak of the global crisis and almost three years after Pettis wrote his words, yet still European working classes are offering only limited resistance — nowhere near the sort of political chaos the bourgeois apologist Pettis imagined.

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Wage Labor, Capitalism and Communism

March 12, 2013 6 comments

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Okay, so this is not going to be the usual examination on the topic of wage labor, capitalism or communism. Sometimes when you run into a conceptual brick wall it helps to completely change perspectives. I am trying to find a new way to describe why and how capitalism itself anticipates communism without producing a predictable 20th century Marxism argument.

CAVEAT: Of course, this just might fall completely flat, but thems are the breaks. So you can be skeptical of the result, since I am just attempting a thought exercise.

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Why is the Bank for International Settlements interested in Karl Marx? (FInal)

January 20, 2012 Leave a comment

Paul A. Samuelson: bald-faced liar and propagandist for the fascist state

(Or, more importantly, why should anarchists, libertarians and Marxists be as well)

So, has any reader of this blog heard that economists have conceded Marx was right after all? Have you at any time during the past 40 years heard an economist admit that Marx was correct in his transformation argument? I am really confused by this, because although Paul A. Samuelson declared Marx’s labor theory of value irrelevant in 1971, it is still being studied by BIS economists today. If I told you Marx’s theory was being studied by economists because Samuelson was a bald-face liar and a practiced dissembler, you would probably just yawn.

Of course, he was lying — he’s an economist. Economists are paid to lie and distort reality. They are employed by Washington not to explain economic processes, but to obscure them. To call an economist a bald-face liar, is simply to state he is breathing — nothing more.

But, to understand why Samuelson was lying, and why it was necessary that his lie stand unchallenged for forty years, we have to figure out the problem posed by Marx’s so-called “transformation problem”.

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Why is the Bank for International Settlements interested in Karl Marx? (Part three)

January 14, 2012 Leave a comment

In my previous post, I stated:

In reality, there was nothing in Bohm-Bawerk’s argument to be disproved. Bohm-Bawerk had indeed cited the essential contradiction at the core of capitalism. His problem, however, was to imagine the contradiction to be a defect of Marx’s theory, and not a fatal flaw laying at the heart of the capitalist mode of production itself.”

Bohm-Bawerk had inadvertently confirmed the rather grim future arrived at by Marx’s theory: Capitalism would kill the so-called free market, and in so doing, would destroy itself. It was, as Marx argued, creating its own gravediggers, a mass of directly social laborers who did not need it, and would see it as an impediment to their very survival, owing to obstacles it put in the way of its own operation.

By the 1970s, economists finally were forced to acknowledge there was in fact no inconsistency in Marx’s argument. Marx had, just as Bohm-Bawerk accused him, arrived at a theoretical description for why prices, although resting on the socially necessary labor time required to produce commodities, nevertheless appeared to reflect the prices of production of these commodities and not their labor times. It was not, as Werner Sombart feared, that from Marx’s labor theory of value “emerges a ‘quite ordinary’ theory of cost of production”, but precisely that Marx’s theory predicted from the first that the value of commodities must appear in the form of prices of production.

Moreover, Marx had demonstrated his proof almost in real time, so to speak, in front of his audience in a painstakingly detailed series of volumes — subject to the critical purview of his opponents. He had, as it were, made the elephant in the room — socially necessary labor time — disappear before the disbelieving eyes of his skeptical audience. It was a performance so dramatic and unprecedented, it took decades for the skeptics even to figure out what they had just witnessed with their own eyes.

The acknowledgement of Marx’s triumph took the form of a paper by Paul A. Samuelson, and was couched in the form of the complaint echoing that leveled against Marx by Sombart, as previously quoted by Bohm-Bawerk :

“…if I have in the end to explain the profits by the cost of production, wherefore the whole cumbrous apparatus of the theories of value and surplus value?”

Taking a cue from Sombart, Samuelson, in a paper titled “Understanding the Marxian Notion of Exploitation: A summary of the So-Called Transformation Problem Between Marxian Values and Competitive Prices”, introduced his so-called erasure method arguing,

It is well understood that Karl Marx’s model in Volume I of Capital (in which the “values” of goods are proportional — albeit not equal — to the labor embodied directly and indirectly in the goods) differs systematically from Marx’s model in Volume III of Capital, in which actual competitive “prices” are relatively lowest for those goods of highest direct-labor intensity and highest for those goods of low labor intensity (or, in Marxian terminology, for those with highest “organic composition of capital”). Critics of Marxian economics have tended to regard the Volume III model as a return to conventional economic theory, and a belated, less-than-frank admission that the novel analysis of Volume I — the calculation of “equal rates of surplus value” and of “values” — was all an unnecessary and sterile muddle.’

Samuelson gave a simple straightforward explanation of his “erasure method”:

I should perhaps explain in the beginning why the words “so-called transformation problem” appear in the title. As the present survey shows, better descriptive words than “the transformation problem” would be provided by “the problem of comparing and contrasting the mutually-exclusive alternatives of `values’ and `prices’.” For when you cut through the maze of algebra and come to understand what is going on, you discover that the “transformation algorithm” is precisely of the following form: “Contemplate two alternative and discordant systems. Write down one. Now transform by taking an eraser and rubbing it out. Then fill in the other one. Voila!

For all his genius, Samuelson argued, Marx had produced a theory which offered no greater insight into the social process of production than was already present in the form of mainstream economics. It could, for this reason, be entirely ignored.

Ignored also, however, would be the entire point of Marx’s “unnecessary and sterile” detour: namely, to demonstrate in comprehensive and theoretically ironclad fashion why the capitalism mode of production is doomed.

This only deepens the mystery of David Bieri’s interest in a theory routinely dismissed by economists as, at best, a vestigial remnant of classical political-economy. Why would this former bureaucrat of the Bank for International Settlements still be reviewing an obscure technical problem of a long dead theory?

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