The strange case of the missing “Revolutionary Subject”

In his dissertation, “Marx’s concept of the transcendence of value production” Peter Hudis levels an interesting criticism at Moishe Postone:

“Since Postone thinks that capital is the subject of modern society, and not the workers or other forces of liberation, he is led to argue that the alternative to capital will ultimately emerge not from the development of human agents like the proletariat but rather from capital itself.”

The criticism is based on Postone’s interpretation of Marx’s argument, in the words of Hudis, that

“Capital takes on a life of its own because the subjectivity of workers is subsumed by abstract labor.”

The problem of “The Revolutionary Subject” is a big one for Marxists academics because they just can’t figure out who the fuck is actually making this damn social revolution. And without being able to identify a subject, it is rather difficult to figure out to whom communists should be speaking.

CLUELESS: Bernanke’s desperate gambit

I stopped my examination of Bernanke’s approach to this crisis and the problem of deflation after looking at his 1991 paper and his speech in 2002. I now want to return to that series, examining two of his speeches this to discuss the problems confronting bourgeois monetary policy in the crisis that began in 2007-8.

CLUELESS: “Deflation is bad. M’kay?”

The world market had been shaken by a series of financial crises, and the economy of Japan had fallen into a persistent deflationary state, When Ben Bernanke gave his 2002 speech before the National Economists Club, “Deflation: Making Sure “It” Doesn’t Happen Here”. Bernanke was going to explain to his audience filled with some of the most important economists in the nation why, despite the empirical data to the contrary, the US was not going to end up like Japan.

Letter to the Occupy Movement: The jobs number you never hear about says Washington’s fucked

Here is an interesting chart from Zero Hedge: In data going back to 1980, employment for younger workers aged 20-24 has never increased — that is, it has never increased until this year:

I know what you are thinking: the data provided by Washington is a fraud. I am going to show why, even if we take that chart on its face value as genuine, Washington is completely fucked. I am going to subject the entire category “employment” to an analysis using Marx’s labor theory of value. By “employment”. of course, I mean wage slavery; which means, although it is commonly treated as a good, it is actually an evil. But, I intend to treat this “employment” on its own terms, as it is commonly held a some sort of social good.

Let’s begin with this morning’s non-farm payroll report — 114,000 net hires in the economy and an unemployment rate of 7.8%. Both of these numbers are, of course, cooked beyond all credibility, but this is not the point. It doesn’t get us any closer to the actual situation to state (as the GOP will, no doubt) that Washington cooks the unemployment numbers. Dems cook the books when they control Washington, the GOP cooks them when they are in control.

Washington has always cooked the numbers — now the numbers are burnt beyond all recognition.

(First a note about this morning’s serving of cooked data: According Mish Shedlock, the minimum net new hires needed just to keep the unemployment rate flat is 125,000 per month. Last month there were 114,000 net new hires, however the unemployment rate declined from 8.1% to 7.8%. So, before you Obama voters celebrate, you should be aware than the economy did not even provide enough new hires to offset people coming into the labor force looking for jobs.)

Compulsory employment growth and inflation

It is the labor force participation rate that is most revealing in the numbers. The labor force participation rate (the blue line in the chart provided by Calculated Risk below) peaked in 2000-2001 and has been on a slow decline since that recession. From a high of just over 67%, that rate has now fallen to about 64% in this report. This reverses a trend of increasing participation in the labor force — folks actively seeking work — that goes back at least to 1962, according to the data available to me. Since 1962, in other words, as a general rule each year has seen more people trying to get a job than the year before. This trend higher reverses in the 2001 recession, and as a general rule, each year fewer people are participating in the labor force.

Why is this reversal in labor force participation important to analysis? Well, let’s look at this statement by President Truman in 1950 speaking of the military buildup that commenced with the start of the Cold War:

“In terms of manpower, our present defense targets will require an increase of nearly one million men and women in the armed forces within a few months, and probably not less than four million more in defense production by the end of the year. This means that an additional 8 percent of our labor force, and possibly much more, will be required by direct defense needs by the end of the year.

These manpower needs will call both for increasing our labor force by reducing unemployment and drawing in women and older workers, and for lengthening hours of work in essential industries. These manpower requirements can be met. There will be manpower shortages, but they can be solved.”

Following World War II, Washington set it as a priority that the labor force should steadily increase each year, in order to siphon off a portion of this growth for its military expansion. This goal was secretly given legal form as National Security Council Report 68. The goal of “full employment” was made the primary labor policy of Washington in 1946 and renewed in 1978.

“Full employment” in this case should be understood as full employment of labor power resources. In other words, it was the policy of the United States to seek full employment of its labor power resources for its strategic national ends. This “full employment” policy was sold to Americans as Washington’s commitment to providing a job to everyone who needed a job.

Which is fine and dandy, except at the same time, Washington was deliberately debasing the currency, driving up prices, and forcing more folks (particularly women) into the labor force to compensate for falling consumption, and moreover, forcing people to work well past their retirement. So what at first appears to be a benign policy, even an commendable agreement between Washington and its citizens that it would do everything in its power to create jobs, turns out to be a policy of forcing every person under its domination to look for work.

Children barely off the breast were abandoned to daycare warehouses, so mothers could find work just to pay for daycare; even substitute formulas for the breast were devised, so children could grow up attached to a rubber substitute for their mothers; essential functions within the home like child-rearing were thus commodified. And this, in turn, led to its own set of social ills, as women were assaulted by their bosses, discriminated against in their careers and under-paid — as the nation was convulsed with real or imagined terror of child abuse in day care centers. A generation of children were now referred to as “latch-key kids”, and teenage pregnancies proliferated. The elderly went back into the work force and became greeters at Wal-Mart, as people delayed or altogether gave up on the idea of retirement, unable to amass sufficient savings to stop working. Taking care of the elderly itself became a commodity sold as nursing home care.

Still, labor force participation increased despite these horrors.

Compulsory employment growth and debt: the hidden relationship

Hand in hand with this goes the ever increasing accumulation of consumer debt that working folk used to compensate for stagnant wages, despite the fact that each family was working more hours than their parents had. And all of these ills, which list could be extended almost indefinitely, appeared to have no cause other than the individuals themselves. If someone ended up working in a Wal-Mart at 70, it was because they had not saved enough; if a woman abandoned her child to day care, it was because she or her husband had not spent enough time in college; if teenagers were now getting pregnant at 13, it was because the morals of society were collapsing.

No one looked at Washington and said, “You fuckers are responsible for this!” And, if by chance, someone did say this, it was only in the form: “You democrat fuckers have tied up the economy with your regulations”; or, “You Republican fuckers have crippled Washington to the point that government can’t provide enough stimulus to create full employment.”

No matter what the policy advocated — tax cuts or spending increases — there was always someone to assure us it would create jobs and pay for itself with “increased economic growth”. Through most of the period from at least 1980 until now the growth of employment has always been proportional to the increase in debt. From 1980 until at least 2006, the savings rate of American declined until it went negative entirely in 2004-2005. It is particularly interesting that the saving rate actually touched near zero just as the labor force participation rate reached its peak.

The problem with the latest employment figures, however, is not to be found in the effects of a rising participation rate on working families, either in the form of social ills or the accumulation of debt. It is that, no matter these ills and no matter the accumulation of debt, total hours of labor must increase — the fate of capitalism depends on this growth.

But, it is not increasing.

Why compulsory growth of employment is necessary for Washington

Capitalism is a mode of production where the employment of labor power must constantly increase, no matter what the consequences. This mean, the duration of labor must constantly rise, a duration that is a function of the number of workers times their hours of work. Washington and the political parties always directs our attention to the unemployment rate, which figures are usually cooked, but, what really matters for Washington, is not the unemployment rate, but the duration of the social working day. At least this seems to be what is relevant, from the standpoint of Marx’s theory.

According to the date I have access to, social labor day has fallen only four times in the last 36 years: briefly in 1991 and again in 2001, and in a sustained way from 2007 to 2009. In other words, since this depression began in 2001, the total hours of work has fallen 3 years between 2001 and 2009. The response to this fall the first time, was the Bush tax cuts, Paul Krugman calling for a housing bubble to replace the NASDAQ bubble Bernanke’s speech on deflation, and Alan Greenspan being asked to retire from the Fed.

The second and third times the total social labor day shrank, coincided with the collapse of the financial system and Fed monetary policy.

This argues that this measure of economic activity is more significant than the hype over non-farm payroll numbers would have you believe. Such an argument might be said to be based entirely on coincidence, were it not itself based on the arguments of Postone and Kurz. They suggested the social labor day must constantly expand if existing relations of production are to be maintained.

What is more, each writer comes to this conclusion from different premises, i.e., different and contradictory notions of value. Postone’s argument suggests that the total labor time of society must expand despite the contraction of socially necessary labor time in the forms of value and surplus value; while Kurz suggests the increasingly fictional quality of credit, of fictional claims to future profits, requires the constant expansion of total labor time of society. In either case, Postone in 1993, and Kurz in 1995, using different notions of value, argue the total labor time of society must increase. And when, in fact, this total labor time actually did not increase, first a depression was triggered, then a financial collapse.

But, I hear you: ‘I am still not convinced by the evidence — it could, after all, be a really good scientific wild-assed guess on the part of those writers.’

Good point! Evidence suggests each writer, Postone and Kurx, was familiar with the writings of the other — so this could be just another instance of group-think. Instead of just going from Postone and Kurz to the empirical data, we need to go from Postone and Kurz back to Marx’s argument to establish a logical chain of reasoning, and figure out if, in fact, these guys were just making a wild guess.

In Marx’s argument, capitalism is not just a system of commodity production; it is a system of surplus commodity production, of the production of surplus in the form of commodities, of the production of surplus values. As a system of commodity production that aims always at the production of surplus value, capitalism relentlessly aims toward self-expansion beyond its given limits — as Marx put it, it employs existing value to create surplus value. Both Postone and Kurz employ this argument to uncover the absolute necessity of capitalism, at a certain stage in its development, to produce a sector consisting entirely of superfluous labor. In fact, Marx himself hints at just this result in volume 3, when he writes:

“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. Hence the fantastic idea of priest Chalmers, that the less of the annual product is expended by capitalists as capital, the greater the profits they pocket. In which case the state church comes to their assistance, to care for the consumption of the greater part of the surplus-product, rather than having it used as capital.”

Marx is clearly suggesting the unproductive consumption of the total social product becomes increasingly necessary when he closes with the wry comment:

“The preacher confounds cause with effect.”

Still later, Marx decries the result of this process:

“In the first place, too large a portion of the produced population is not really capable of working, and is through force of circumstances made dependent on exploiting the labour of others, or on labour which can pass under this name only under a miserable mode of production.”

Which is to say, a growing mass of workers makes its living by subsisting on the surplus value of the productively employed population. So, for me at least, there is a clear line beginning with Marx, through the argument of Postone and Kurz, that is expressed graphically below in the empirical data on the social labor day:

This decline is far more significant than the manipulated data foisted on the population of voters this morning. It suggests there is a real material dysfunction in fascist state economic policy that cannot be altered with a set of misleading stats. Beyond the convenient and willful ignoring of the shrinking labor participation rate, and the mass of unemployed no longer counted, the data suggests a situation that cannot be repaired by confidence tricks designed to keep the two parties in power.

Almost a fifth of the population is now permanently locked out of the labor force — the highest on record — according to Zero Hedge calculations:

If hours of labor do not expand at a sufficient rate to sustain existing relations of production, the entire Ponzi scheme must collapse. This process has probably already begun, which explains the insanely desperate actions of the Federal Reserve over the past month.

The Postone-Kurz synthetic model of value and the transformation problem versus SKYNET

An explanation of capitalist prices or an explication of capitalist trajectory

I spent a sleepless night this week because it suddenly occurred to me that a synthesis of Postone’s and Kurz models of value is actually predicted by Marx’s transformation equation. If I had any competence in math, I could show why Marx is correctly accused of being “inconsistent” about the transformation of values into prices in the same way quantum mechanics is “inconsistent” in its description of the electron or photon.

Briefly stated when Postone’s definition of value is identical with Kurz’s definition of value; the sum of prices equals the sum of values and the sum of profits equal the sum of surplus value — and the condition for these three is the same: the rate of profit = 0.

In which Jehu finds G:D on a rainy Sunday morning, thanks to Andrew Kliman and @BrianGallaghe17

Tweep @BrianGallaghe17 sent me this tweet the other day:

@ReThePeople Kliman interviewed about his new book in which he claims the profitability crisis is from the 70s

So I went to see what Kliman is up to now. In the interview, Kliman makes this statement:

So what we have is a major debt crisis. I don’t think it’s very likely that we’ll have a sustained boom unless and until the debt problem and the deeper, underlying problem – the profitability problem – are resolved. We may have a long period of very weak growth, as Japan has had ever since bubbles in its real-estate and stock markets burst at the start of the 1990s, or we may have something worse. Given the magnitude of the bust in the US construction industry and the magnitude of the recession in general, it would have taken a long time for production and employment to return to pre-recession levels in any case. It’s likely that the persistent debt problems and pessimism about the future have slowed down the recovery, and that they’ll continue to do so. Real gross domestic product in the UK and most other major European countries is still lower than before the recession. And even in countries where that’s not the case, like the US and Germany, GDP growth is still quite slow.

I wondered if in the US case GDP grew at all, much less growing slowly, since 2007. In 2007, GDP was estimated by the BEA at $14.028 trillion versus $15.075 trillion in 2011, an increase of $1 trillion or so in output. As far as Kliman is concerned, that pretty much settles it, because the fascist state says dollars are money, not tokens of money. We can, therefore, assume that these dollars measure “real” economic activity, without more inquiry.

However, Marx said money had to be a commodity — and no matter how much Kliman might trust Washington’s monetary policy, good analysis suggests we should at least check GDP using a commodity money to see if we can confirm Washington’s numbers. In 2007 one ounce of gold fetched a price in the market of $695.39, however by 2011, that same ounce of gold was priced at $1,571.52. So, during the same period that GDP rose 7.5% in nominal dollars, these same dollars depreciated to less than half their former purchasing power against gold.

Now before I read and compared Kurz to Postone, I would have suggested dollar denominated measures of GDP were completely bogus. But, no more — I am reformed, I have seen the light! Thank you Jesus! I have come to the conclusion that, in fact, both are right, Halleluiah!

Can I get an Amen?

Which means, quite oddly, that the US “economy” has both grown and shrunk during the same period 2007 to 2011. So things are a bit more complicated than simply stating the economy grew or shrank during some period of time. By one measure it has grown and this has implications, but by another measure it continues to shrink and this has other implications. If we say it grew, simply because dollar denominated values have increased, we miss that it shrunk in commodity money terms. On the other hand, if we say it shrunk in commodity money terms, we miss the fact that it grew in dollar denominated terms.

We end up dissing either Postone or Kurz, and I kind of like both of them.

It occurred to me while reading the Kliman interview that we need a measure that captured this relationship in terms of the historical trajectory of value. Something along the lines of Marx’s organic composition of value, c:v. This measure would reflect the dollar denominated value of output as a ratio to the commodity money value of this same output.

But how would it be structured as a ratio? Gold to dollars, or dollars to gold? Bourgeois economics places the relation as the dollar price of gold, i.e., the value of gold is measured in some quantity of dollars. This relationship can be expressed as dollars per ounce of gold. This is precisely the question I am interested to know when i am trying to stock my gulch with beans, guns and gold for the coming global apocalypse that threaten civilization itself.

However, Sam Williams and I have suggested the actual relationship is reversed: it is actually some physical quantity of gold per dollar; which is to say, dollars do not denominate the price of gold, gold denominates the price of dollars. I am proud to say I blatantly stole the idea from FOFOA, the Austrian school blogger, where he quotes his mentor, Another:

Another:
Gold! It is the only medium that currencies do not “move thru”. It is the only Money that cannot be valued by currencies. It is gold that denominates currency. It is to say “gold moves thru paper currencies”.

FOFOA:
Dollars bidding on MSFT stock set the value of that stock. If dollars are frantically bidding on MSFT (high velocity), the stock skyrockets. If dollars stop bidding for MSFT all at once (low velocity), the price falls to zero. This is true for everything in the world **except gold**.

Gold bids for dollars. If gold stops bidding for dollars (low gold velocity), the price (in gold) of a dollar falls to zero.

And he arrives at the conclusion that:

All Paper is STILL a short position on gold!

Which is to say, fiat currencies do not express the value of gold, but only symbolically represent some magnitude of value denominated in a physical quantity of gold. Employing this method, I think, but I am not sure, that the ratio should be set as G:D — which is a bizarrely pseudo-religious formulation. If we used this to measure the value content of a single dollar, this is how GDP has actually changed since 2000:

That is also the value content of US GDP over the same period. If we look at how the value content of the dollar has fallen since 1970, the results are even more starkly represented.

During this same period, 1970 until 2011, the nominal GDP of the United States has almost increased every year, but the value content of this GDP has fallen for most of that period. This graphically represents the relation between Postone’s and Kurz’s definitions of value as a relation between gold and the dollar. It confirms, I think, the argument of both that the value form, measured in dollar, and the content of this form, measured in gold, have become completely disconnected from one another.

Reply to @sushi_goat: How does reducing hours of labor work?

Tweep @sushi_goat asked me a series of questions regarding reducing hours of labor yesterday. I made a stab at it, but I want to give a fuller answer here.

My argument on the impact of a shorter work week on “the economy” is based on Postone’s and Kurz’s analysis of superfluous labor. In his magnificent book, “Time labor and Social Domination”, Postone showed that superfluous labor is a necessary result of late capitalism and includes labor time that is necessary from the standpoint of the capitalist mode of production but superfluous from a higher mode of production. To call labor superfluous therefore does not imply that it appears empirically in this form within the capitalist mode of production itself. Within the capitalist mode of production this superfluous labor appears to be necessary.

In his own groundbreaking essay, “The Apotheosis of Money“, Kurz further defined this category from the standpoint of a theory of capitalist circulation as a whole. While he enumerated how this form appears in the form of many particular and obvious types of labor time, his real contribution was to nail down its implications for the capitalist mode of production. What Kurz showed is that this superfluous labor time consists in the production of values that do not reenter the capitalist reproduction process. To give an example: the production of an ear of corn is the production of a value; but if the corn is not consumed by a worker productively employed in the capitalist production process, it cannot reenter capitalist self-valorization. The corn could be eaten by a soldier, but the soldier as living labor does not replace the ear of corn in the capitalist production process, thus the value is consumed unproductively.

Unfortunately, what Postone has not done (yet?) nor Kurz before his death is extend this analysis to the category of Marx’s organic composition of capital. If this had been done, I think it would have yielded very important results regarding the significance of their ideas.

First we begin with three important formulas in Marx’s theory:

1. c:v, or the organic composition of capital. This is the ratio of constant capital (c) necessary to set in motion a given quantity of living labor (v). In Marx’s theory, this ratio is always increasing.

2. s/v, or the ratio of newly produced surplus value (s) to the mass of living labor expended in its production (v).

3. s/(c+v), or Marx’s formula for profit, expressed as the ratio of newly produced surplus value (s) to the mass of constant capital used up in production (c) and the mass of living labor expended in this production (v).

For the purpose of analysis, I assume the total labor time of society can be divided into a mass of productively expended labor time (Vp) plus a mass of unproductively expended labor time (Vu). In other words, let the mass of the total labor time of society be represented by V, this total labor time can be further divided into productively employed labor time (Vp) and Postone’s and Kurz’s unproductively employed labor time (Vu)

On this basis the total labor time of society can be represented by the equation

4. V = Vp+Vu

Again on this assumption, the organic composition of capital (C:V), can be further defined as:

5. C:(Vp+Vu)

The problem here is that in Marx theory the organic composition of capital can only refer to capital’s self-expansion, which implies all labor is employed productively. So, the formula, C:(Vp+Vu), must be understood only as the prospective (or fictitious) organic composition of capital. Which is to say, this formula applies only to how the organic composition must appear, consistent with capitalist relations of production.

In this formula, however, it appears the expenditure of unproductive labor time reduces the organic composition of capital — as several writers have asserted, most notably Chris Harman, who argued:

“There is a vicious circle. Reactions by individual firms and states to the falling rate of profit have the effect of further reducing the resources available for productive accumulation. [47]

“But the effect of unproductive expenditures is not only to lower the rate of profit. It can also reduce upward pressure on the organic composition of capital. This was an insight used by Michael Kidron to explain the “positive” impact of massive arms spending on the system in the post-war decades. He saw it, like luxury consumption by the ruling class and its hangers-on, as having a beneficial side-effect for those running the system – at least for a time.

“Labour which is “wasted”, he argued, cannot add to the pressure for accumulation to be ever more capital intensive. Value which would otherwise go into raising the ratio of means of production to workers is siphoned out of the system. Accumulation is slower, but it continues at a steady pace, like the tortoise racing the hare in Aesop’s fable. Profit rates are weighed down by the waste, but do not face a sudden thrust into the depths from a rapid acceleration of the capital-labour ratio.”

In fact, this was complete nonsense. The organic composition of capital is not affected by the growth of superfluous labor time. So-called “economic growth” appears to stagnate not because superfluous labor makes capital less productive, but because the increase in the productive capacity of labor requires increasing quantities of unproductive labor time.

In the capitalist mode of production Vp+Vu can only appear as V — which is to say as abstract homogenous labor in general. It cannot, under any circumstances appear as discrete quantities of qualitatively differentiated labors Vp and Vu. On the other hand, only productive labor can produce surplus value; unproductive labor as Kurz argues, does not produce surplus value but only mediates its distribution. This has implications for my analysis.

Since, Vp+Vu can only appears as V, it would appear that a reduction of labor hours imposed on capital must result in a proportional reduction of both productive and unproductive labor. For instance, it would appear reducing hours of labor from 40 to 24 would have an equal impact both on General Motors and Federal employment. In fact, this cannot happen: General Motors as a productive capital produces surplus value that is distributed as the profit of GM and state expenditures. Given this, the effect of reducing hours of labor must have a greater impact on the state, or a defense contractor, than it has on productively employed capital.

Why? If we plug our substitute for V into Marx’s formula for surplus value, it might become clearer:

The formula 2. s/v becomes:

6. s/(Vp+Vu)

In this case, only Vp produces the surplus value shared between both sectors Vp+Vu.

And the formula for profit s/v+c becomes

7. s/c+(Vp+Vu)

Since the aim of capital is self-expansion, and, therefore, of the production of surplus value, this has implications for the impact a reduction of hours has on the mode of production. Labor time Vu produces no surplus value, although it will mediate the distribution of the surplus value produced by Vp. The reduction of total hours of labor will not have a proportional impact on the two mass of labor time, Vp and Vu, but a disproportional impact — reducing the relative proportion of labor time, Vu against Vp.

This is because, 1. a reduction of labor time Vp, reduces the mass of surplus value, and therefore, the mass of s in the formula for profit, s/c+v; while, 2. the reduction of labor time Vu, has no impact on the mass of surplus value, and, therefore, no impact on the mass of s in the formula for profit, s/c+v. On the other hand, the increase in the mass of labor time expended productively (Vp) will increase the mass of surplus value s, while the increase in the mass of unproductively expended labor time (Vu) will not.

The distribution of the mass of profit produced by productively employed capitals is, in part, settled by competition between the class of owners of capital. Under conditions of a general and comprehensive reduction of hours of labor, productively employed capital can increase their profits by reducing the expenditure of labor in unproductive forms, such as the state sector. While the state is incapable of increasing itself, by increasing its unproductive consumption of the surplus value produce by productively employed capital, i.e., by raising taxes or borrowing.

In the first place, a general and comprehensive reduction of hours of work — e.g., from 40 to 24 hours — must result in a reduction first of the state sector. In the second place, it must result in massive shift of the employment of labor from unproductive capitals (e.g., finance) to productive capitals. The losers in such a reduction would be first the state, second those capitals producing for the state (defense contractors) and financing it (Wall St.). By contrast, the productive employment of capital becomes more profitable, although the actual quantity of surplus value produced is smaller. Although less actual surplus value is produced, less also has to be shared with a mass of unproductive capitals and the bloated state.

This must increase demand for the productive employment of labor power, along with an increase in the wages. The rise in wages would in turn force productively employed capitals to further rationalize expenditures of labor through methods that improve the productivity of labor. Although employment is rising, along with wages, the actual improvement of the productivity of labor compels the further reduction of hours. In this way, there is both a rapid increase in the material living standards of the mass of society and more disposable time.

Reducing hours of labor not only means free disposable time for the mass of society, it pays for itself by compelling capital to revolutionize the labor process and increase the efficient employment of existing labor power. In Capital somewhere, Marx argues the capitalist class is, historically speaking, only the stewards of the total capital, who used their position to the disadvantage of the mass of society. This might not have been obvious in his day, but with the professional class of managers who have since arisen and now shuttle between Washington and Wall Street, and the resulting division of ownership from effective control of capital, it is clear this is all that class ever was. Paris Hilton’s family has long since retired to the vocation of coupon-clipping, while her functions have been assumed by these parasites.

For this reason, I think the most fanatical opponent to reducing hours of labor will be the state itself, and, in second place, the managers of the capitalist firms directly dependent on the state. Reducing hours of labor cannot be thought of as a political demand; it is, rather, a textbook example of what Kurz called antipolitics.

The key thing to understand here is that with Postone and Kurz we get two entirely antithetical forms of labor time that result in two contradictory definitions of value.

Marxists have yet to integrate Postone’s and Kurz arguments into an updated analysis of capital in the tradition of Marx reflecting post-war capitalism, although both arguments rest directly on Marx’s own analysis. It makes it difficult, if not impossible, therefore, to convince Marxists of the significance of a demand for reduction in hours of labor.

This provides with a practical route to what Kurz called the internal breach in the capitalist mode of production itself:

Where and how to begin, within the existing capitalist form of socialization which rules over all reproduction, with the intention of finding in the latter, so to speak, an internal breach and to break free of it, to take the first step, to point out a formulable beginning for social emancipation?

Clearly, this crisis presents us with a mass of unemployed workers, who are having great difficulty finding work in the advanced countries, side-by-side with a regime of austerity that only promises to intensify unemployment. If this breach can be exploited by a concerted call on the Left for a reduction in hours of labor, the stage may be set for a series of events carrying all of society beyond this historical phase.

Postone’s take on the current crisis

A new article (PDF) by Postone is likely one of the best things written by a Marxist on this crisis. In the critical segment posted on Principia Dialectia, Postone critiques, and demystifies, Hardt’s concept of value. This critique of Hardt shows why Postone remains the single most insightful Marxist scholar today. His reconstruction of Marx’s labor theory of value is one of the single most important theoretical accomplishments of our time.

To understand the far-reaching significance of the argument Postone makes in this piece, substitute the term “socially necessary labor time” for the term “value”.

The Trouble with Marxism (Part Two)

The portion of the labor day that is socially necessary as a percentage of GDP

So, I got feedback from three people who, in one way or another, say they don’t understand my last post on my conversation with Andrew Kliman. One person posting on Reddit, complained it was too dense; another wondered if I was advocating a return to the gold standard; a third person, who I asked to read it and give me feedback, began to have difficulty with it about halfway through it. Specifically that person had difficulty understanding my discussion of the “transformation problem”.

This is three more examples of my “tin-ear”, which expressed itself in my disagreement with Andrew. I have not been able to explain “my point” in a way that is not abstract, or explain the relevancy of the various statements I make to real events within society. Part of this is because I am a “Marxist” in the same way I could be considered a “Darwinist” — I am not an expert on either. The theory makes sense to me, and I accept it as a reasonable explanation for how the world works.

But, if someone argued a eugenics distortion of Darwin, I could not argue against that person by quoting Darwin. And, if someone argued a Keynesian distortion of Marx, I probably could not argue back using quotes from Marx. Until recently I was more a leninist than a “Marxist”; having read a lot of Lenin, but little more of Marx himself than the Communist Manifesto. And, neither of them had I read for more than two decades.

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

I made the following points in the first part of this series:

1. As regards the definition of inflation: The definition of inflation found in the Wikipedia entry is deficient because it assumes that the value of money is simply the reciprocal of the prices of commodities. This argument is a tautology which provides us with no real understanding of the problem of inflation. We are led to believe that inflation can be thought of as a rise in the price of commodities or, alternately, the depreciation of the “real value” of money. And, what is the “real value” of money? According to the economist, the “real value” of money is its purchasing power, i.e., the reciprocal of the price of the commodity. I will show why this definition of the depreciation of money is inadequate.
2. Prices versus consumption: The Wikipedia definition is superficial, i.e., it is limited to generally rising prices. This only looks at the problem from the least important aspect of inflation, the increase in prices of commodities. But, if the amount of money in circulation is fixed, as it is more or less for each member of society, we can see also that inflation implies the reduced consumption of the mass of society — the impoverishment of society.
3. Consumption versus production: Moreover, the Wikipedia definition of inflation only examines the effects of rising prices on consumption. Once we go beyond money as mere means of purchase and consider it as the money form of capital, i.e., once we leave the world of consumption and enter the world of production, we find that these rising prices act to reduce the profitability of productive economic activity. The depreciation of money acts to reduce the average rate of profit. It can be thought of as a negative rate of profit resulting from the depreciating purchasing power of money-capital over time.
4. Money and demand: The Wikipedia’s explanation of the causes of inflation is nothing more than a tautology. First, the two causes identified as the cause of inflation: 1. an excess of the rate of growth of the money supply over the general rate of expansion of economic activity; and 2. the imbalance between the rate of expansion of demand for commodities over the rate of growth of the supply of commodities, resolves themselves into one and the same cause: the excess in the money-demand for commodities over the production of these commodities to satisfy this money-demand, or, alternately, the decline in the production of commodities relative to the money-demand for those commodities. Second, whenever we find that the rate of growth of the supply of commodities falling behind the rate of growth of the money-demand for these commodities, we cannot be speaking of imaginary demand — such as the human need created by a hungry belly — but “real” money-demand — i.e., a hungry belly with a wallet full of cash. The capitalist is not in the business of producing for people who imagine they are hungry, homeless, and naked, but only those who can prove they are hungry, homeless, and naked, by presenting him with sufficient cash to purchase food, shelter and clothing. On the other hand, money-demand is not limited to satisfying hungry bellies — it is still money-demand even if the demand to be satisfied is that of generals, national security agencies, or failed banksters. The authors of the entry discuss the imbalance of money-demand over the supply of commodities to satisfy this demand as if this is the entire story.
5. Inflation as a policy: Only in the fourth paragraph does the Wikipedia entry hint at the most important characteristic of inflation: that it is not a naturally occurring economic malady — the result of actual processes arising from the production, exchange and consumption of commodities, but is a matter of Fascist State policy. Thus, only here do we find that it is the deliberate policy of the Fascist State to reduce the consumption power of society, its productive capacity, and to ensure a general and secular, i.e, chronic, inadequate supply of means of consumption in relation to the money-demand for those means of consumption — that the economic policy of the Fascist State is to maintain society in a condition of a wholly artificial scarcity.

The Fascist State as a mode of Capital’s own existence

Before we continue further we have to deal with the unstated assumption of the Wikipedia entry that Fascist State policy can be treated apart from and independent of the capitalist process of production and distribution. This notion, which is the standard thinking on all economic issues, and permeates the thinking not only of economists, but also of social revolutionaries and society generally, divides society into Civil Society, on the one hand, and the State, on the other. The fallacy of this sort of thinking is revealed whenever we investigate the causes of social maladies like inflation. We begin with the notion that inflation, poverty, hunger and scarcity arise solely from Civil Society and natural conditions, only to discover, under the capitalist mode of production, that, in addition to the invisible hand of the market, there is also the iron fist of the Fascist State — that the very real material conditions determining the capitalist mode of production have their ideal expression in State action.

Our picture of Capital is incomplete if we naively consider it a purely economic relation. For his part, Marx understood Capital as a social relation that permeated society — penetrating, reconstructing, reconstituting and revolutionizing the sum total of those relations, and, by these means, transforming society in its own image. It is clear from Moishe Postone’s work, “Time, Labor and Social Domination“, that this process, in Marx’s mind, was far more insidious — pernicious, subtle — than is generally understood even by Marxists — who never miss the opportunity to reduce his ideas to caricature — and most certainly by the outright opponents of his ideas, for whom most of his argument passes overhead cleanly and without effect.

In Marx’s theory, the State is not simply, nor even primarily, a sphere of politics; it is, itself, a mode of Capital’s own existence. In every stage of human development up to the present, the State has been inseparable from Civil Society, a mere part  of society’s greater division of labor in the social act of production. In capitalist society, however, the State appears indifferent to Civil Society — aloof from it — and, it is under these conditions that Civil Society begins to imagine its own independent existence apart from, and in conflict with, the State. Although Civil Society is no more than a collection of petty interests in continuous conflict with its own very real, flesh and blood, communal interest, because this communal interest is not the starting point of individual activity, this communal interest arises as an abstraction, in the conception of a General Interest — e.g., the so-called “National Interest” — standing over against the individual’s very real material flesh and blood interest. This abstraction finds its ideal expression in the form of a State that is aloof and indifferent to the many and varied individual interests of society, and, only represents them in the abstract.

In Marx’s theory, I believe (and I stand to be corrected if I am wrong), this conflict between Civil Society and the State arises from the mutual conflict of all of these petty interests with each other that arises from their increasingly universal and all-sided competition, and because their innumerable separate activities are not subjected to their common control and direction. To really represent the General Interest of society, the State must be increasingly indifferent to the many petty interests that constitute Civil Society; yet, at the same time, it must be continually reconstituted by Civil Society in proportion as ever newer petty interests emerge.

Hence, the bewilderment of the progressive activist, who finds, despite all of her fulminating and effort to overturn a political regime that favors the “Rich”, the greater her effort, the more surely politics is subjugated to the interests of the very biggest owners of Property. Hence, also, the Tea Party activist, who rebels against the increasing encroachment of the State on her “constitutional liberties”, that the more forcefully she attempts to throw off this oppressive interference in her private commercial activities, the more completely the State dominates them. Hence, finally, the bizarre counsel of the economist, who, trying to solve the riddle of stagnating economic growth in capitalist society, recommends precisely the policy that only deepens this stagnation and destroys the productive capacity of society: Inflation.

Fascist State policy and Civil Society

The problem posed for us by Marx’s theory of social revolution is not why the Fascist State embarks on a policy that maintains society in a wholly artificial condition of scarcity. We can consider and discard any number of competing theories regarding the motives of the Fascist State: that is seeks power for its own sake; or, that it represents the interests of the very wealthiest members of society against the rest of society; or, that it is a body of individuals committed to a collectivist vision of society; or, that it is an instrument of a small group of men and women engaged in a far reaching conspiracy against society bound up with their financial interests, and/or their industrial interests, and/or their political, religious, ethnic, national, regional etc. interests. And, we can also advance any number of anecdotes and statistics to sustain any one or all of these arguments.

Yet, all of these arguments come down to one of two explanations: The Fascist State maintains society in a condition of scarcity for its own purpose, or, for the purposes of individual interests arising from the ongoing conflicts within Civil Society that proceed from whatever source among the innumerable divisions within Civil Society. Thus, even if we accept all of these competing motives as partial explanations for the policies of the Fascist state, all that these competing explanations can tell us is that both for its own interest and the interests of the whole of Civil Society, the Fascist State is engaged in the systematic destruction of the productive capacity of society, and an ongoing degradation of its consumption power — that, for any the reasons advanced (yet, at the same time, for all of them together) the Fascist State is deliberately and systematically trying to maintain a general condition of scarcity for mankind. From this point of view, all of the reasons for the policies of the Fascist State are merely accidental and transitory, as first one and then another reason for these policies come to the fore, and assumes in our mind the position of THE general explanation for Fascist State policies, beside which all the other explanations are merely specific expressions.

Thus, in one instance, the Tea Party activist can assert that the economic policies of the Fascist State result from the collectivist impulse of the Obama administration, while the progressive activist counters that these same policies result from the subjugation of the Fascist State to the interests of the rich; still another faction of society asserts that these very same policies result from the Fascist State’s aggressive foreign policy, while a fourth blames these policies for an alleged loss of national sovereignty and the conspiracy of men and women committed to a New World Order. What none of these competing theories can explain is why any of these alleged causes must lead to the systematic destruction of the productive capacity of society, and the ongoing degradation of its consumption power. All of these explanations cannot tell why, as the productivity of labor increases, the actual productive capacity of society must fall, and society remain trapped in conditions of scarcity.

We are thus forced to assume what Marx’s theory assumes:

First, under the capitalist mode of production the productivity of labor advances under conditions that tend toward what Marx called the absolute development of the productive forces of society — of the capacity to produce an entire world of commodities in a dazzling array and seemingly endless variety. This implies not an excess of money-demand, but its opposite: circumstances under which the production of commodities constantly run into the limited conditions of consumption, which threaten social production with a continuous crisis and wholesale ruin — not just a depression, but an unprecedented Great Depression erupting not in just one country, but throughout the whole of the World Market and at once — which brings society itself to the brink of catastrophe and threatens the very existence of Civil Society itself. And, under which, as a result of this crisis and the Hobbesian environment of universal competition it provokes, the actual flesh and blood material relations of Civil Society escape its control completely and take the form of the Fascist State — absolutely indifferent to it, absolutely hostile to it, and standing over against it as a totalitarian power existing for, and answerable to, no other mandate than its own logic.

Second, insofar as the productive capacity of society advances toward its absolute development, and, therefore, insofar as the onrush of a catastrophic collapse of existing society itself looms on the horizon, and Civil Society experiences this onrush with the level of horror appropriate to it — since it implies, above all, the abolition of all of the existing conditions that are its own premise, and, thus, sounds the death knell for Civil Society itself , and for the State  — the  State detaches itself completely from Civil Society, and, in turn, seeks to destroy the very productive forces that threaten the whole of existing society.

To be continued