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Deconstructing the main thesis of Andrew Kliman’s “The Failure of Capitalist Production”

December 22, 2012 3 comments

The fundamental problem of fascist state data

Interesting argument by Andrew Kliman in his book, “The Failure of Capitalist Production”: the rate of profit tends to fall; but this tendency is “reversed” by the destruction of capital. I keep looking at this statement because it seems suspiciously widely accepted by Marxists all of a sudden. Kliman states it this way:

“The rate of profit—that is, profit as a percentage of the amount of money invested—has a persistent tendency to fall. However, this tendency is reversed by what John Fullarton, Karl Marx, and others have called the “destruction of capital” —losses caused by declining values of financial and physical capital assets or the destruction of the physical assets themselves.”

I am not questioning the idea the rate of profit tends to fall nor that this fall leads to crises. The problem I have here is with destruction of capital and Kliman’s definition of profit. First, a lot of people have looked at this profit thingy, and some agree with Kliman, while others disagree. My problem is not whether one group is right and the other wrong — it is how can any of this be determined based on fascist state data on corporate profits.

If we walk away from this highly controversial category for a second and look just at employment in the United States there is the same problem. The data, as compiled by the fascist state, is absolutely worthless to address important questions of Marxist theory. The whole of government employment is unproductive labor, but bourgeois data makes no distinction between productive and unproductive employment. Profit can only be calculated on productive employment — so where does the whole of fascist state employment belong?

Second, Kliman talks about “profit as a percentage of the amount of money invested”, but in actuality he uses dollars instead of money. Everyone uses this measure, but Carchedi’s essay calls it all into question: Washington doesn’t use money to pay its debts. The dollars the fascist state uses to pay its debts are either the result of revenue raised by taxes, or dollars created out of nothing — but, as Carchedi notes:

“… one does not “create money out of nothing”, an absurd proposition. Out of nothing, one can create nothing.”

When the state was a tiny sliver of the economy, this was not a big problem — but now it is 50% of the US economy, with a deficit of between 7 and 10% of GDP. This entire mass consists of labor that is, by definition, not productive in the capitalistic sense, and is itself only a form of surplus value wrung from the productively employed workers. This must be true by definition.

Most surplus value is consumed unproductively by the fascist state

Now Marx’s formula for profit is s/(c+v); and a shit load of the “s” does not take the form of corporate profits. The greater mass of this “s” is in the form of fascist state expenditures. At least, this is what makes sense to me — I could be wrong, but this is how I read Marx.

In fact, employment in the form of government is one of the fastest growing sectors of employment in the post-war period. To be sure, by definition, this is a portion of surplus value that is not being reinvested in productive capitalization — by definition. It represents, therefore, a massive destruction of surplus value on a scale unequaled in the history of society — annually!

So far as I can tell, no Marxist scholar has tried to include the massive quantity of surplus value expended in the form of the state into the discussion of the rate of profit. How can you tell whether the rate of profit has risen or fallen without including the single largest form of surplus value in “the economy”.

The total government consumption of surplus value amounts to $6.3 trillion; by comparison consider that China’s total GDP is estimated at $7.3 trillion. The US government sector is by far, the largest consumer of surplus value on the planet, yet it appears in no Marxist estimates of the rate of profit that I have seen.

This is just another example of the resistance of the Marxist school to subjecting the fascist state to historical materialist analysis. Marxists treat the state as if it is outside the economic structure of class society and figures only as an ahistorical mechanism of class rule.

Kliman argues in the introduction to his book

“However, I do not want to overstate the role of methodological and theoretical differences Prior to analyzing the data, I had no prior belief that actual rates of profit had failed to rebound since the early 1980s, and I even wrote that “profitability has been propped up by means of a decline in real wages for most [U.S.] workers”

I take this to mean Kliman alleges those who come to conclusion other than his are engaged in wholesale distortion of the empirical data. Which is to say the differences in methodology and theoretical assumptions do not account for the different results on the rate of profit. Is there some justification for this conclusion? Perhaps.

Both Kliman’s data and Dumenil and Levy’s data depend not on Marx’s definition of surplus value, which must include the surplus consumed by the fascist state, but only various measures of reported profits assuming an economy solely composed of productive capitals. Since both begin not with Marx’s definition of surplus value but with the reported profits of private capitals they are both fundamentally flawed. The minor difference in their data at the end of this process conceals that both Kliman and Dumenil and Levy’s work are fatally flawed. For Dumenil and Levy this negates their conclusion entirely; however this is also true for Kliman’s conclusion — although he at least get the direction of the rate of profit correct.

In Kliman’s thesis, the rate of surplus value — not the rate of reported profits — is key to his argument. And his argument is that the fascist state is preventing the destruction of value, giving rise to stagnation and slow growth. In fact, it appears most surplus produced by the productive capitals is being destroyed by the fascist state but even this is not sufficient as the crisis demonstrates.

The rate of profit is indeed falling as Kliman alleges, and to a far greater extent than he even imagines. An ever increasing quantity of surplus must be absorbed by the fascist state solely to maintain capitalist relations of production. His theoretical assumptions led him to compile empirical data that actually weakens his argument. Moreover, Kliman misses the most important point buried in the data: the rate of profit is negative and has been negative since the 1970s!

A negative rate of profit?

As Kliman argues about growth generally,

“The generation of profit is what makes possible the investment of profit. So, not surprisingly, the relative lack of profit led to a persistent decline in the rate of capital accumulation (new investment in productive assets as a percentage of the existing volume of capital). Sluggish investment has, in turn, resulted in sluggish growth of output and income.”

This is the only conclusion to be drawn by the collapse of industrial employment since 1979. As can be seen in the BLS data below, employment in the goods producing sector of the economy (which I am treating as a proxy for productive investment in this note) peaked in 1979 and has been declining since:

Goods Producing employment 1939 to 2012 (Source: BLS)

Goods Producing employment 1939 to 2012 (Source: BLS)

Moreover, as is clear from the chart above, since 2000 this decline has become abrupt — which is also the time during which all the talk of deflation began. Kliman is likely not only correct in relation to Dumenil and Levy, he is likely more right than his pitiful charts on corporate profits demonstrate. Industrial employment has not been at this level since 1950 before the Cold War build out began. By the end of 2011, industrial employment has fallen 30 percent since its post-war peak.

During this period we see four things:

  1. despite the fall in goods producing employment, the rate of profit as measure by both Kliman and Dumenil and Levy and a host of others remains positive;
  2. US trade deficits open up and widen;
  3. the US federal budget deficits also widen;
  4. the world market is struck by a series of financial crises.

How in Marx’s theory can we explain the fact that the profit rate, as different theorists measure it, remain positive despite the fall in goods producing employment? One possible explanation is to discount entirely the collapse of goods producing employment over the past 30 years. As Kurz demonstrates an increasing mass of productive capital itself is financed by fictitious capital and is itself fictitious. For instance, 8 aircraft carriers have been produced on orders by Washington since 1980 and three more are under construction, this completely wasteful expenditure is embedded in the data on goods producing employment. Although this employment produced a commodity (of sorts) it represented a subtraction from the mass of capital.

But this fact only adds to the problem: even employment that might be considered productive turns out to be unproductive. The decline of productive employment is actually greater than the data implies, and thus greater is the negative value of the rate of profit. This further conflicts with the positive measure of corporate profits as measured by a host of different scholars. And this difference cannot be blamed on their different methodologies, but on their basic theoretical assumptions regarding the fascist state.

Can the rate of profit be reversed?

This raises an additional question about Kliman’s thesis: How is the fall in the rate of profit “reversed” by the destruction of capital? If profit = s/(c+v), how does the destruction of capital lead to an increase in the profit rate? If I am wrong in this, please correct me, but I read chapter 15 as stating the fall in the rate of profit leads to a wash out in those capital not able to offset the fall in the rate of profit by an increase in the mass of profits — it does not lead to a recovery in the rate of profit. Is Kliman’s thesis just badly worded or does he read Marx as stating the fall in the rate of profit can be reversed?

And if the profit rate cannot be reversed, as my reading of Marx suggests, it must go to zero at some point, without more involved. At some point the rate of profit must equal zero; or as Marx puts it:

“… the increased capital C + ΔC would produce no more, or even less, profit than capital C before its expansion by ΔC.”

In other words, my interpretation necessarily leads to absolute overaccumulation of capital. Kliman’s and Simon Clarke’s arguments against absolute overaccumulation of capital requires the fall in the rate of profit can be reversed. The profit rate can never go to zero and the demise of capitalism is not inevitable.

In addition, if Kliman and Clarke are correct the very idea the profit rate is negative at this point is not only wrong, but absurd. And this means there has to be some other explanation than the one proposed by Kliman for the decline of goods producing employment investment. I would very much like to hear that other explanation by anyone in the Marxist academy.

A negative rate of profit is important because it means the total mass of employed capital has been shrinking since the 1970s. Once the rate of profit goes negative, the mass of productively employed capital must eventually reach zero. This calls into question another facet of Kliman’s thesis. According to Kliman the capital destruction necessary to “restore the rate of profit” during the depression of the 1930s was very large and the process very traumatic to society. Based on this Kliman argues:

“Policymakers have not wanted this to happen again, so they now intervene with monetary and fiscal policies in order to prevent the full-scale destruction of capital value. This explains why subsequent downturns in the economy have not been nearly as severe as the Depression. But since so much less capital value was destroyed during the 1970s and early 1980s than was destroyed in the 1930s and early 1940s, the decline in the rate of profit was not reversed. And because it was not reversed, profitability remained at too low a level to sustain a new boom.”

Based on Kliman’s view that Marx’s theory allows for restoration of the rate of profit, this is a convincing argument. However, if the opposite holds, no restoration of profits rates is possible, the argument collapses in on itself. In the latter case, if the fascist state does not prevent the destruction of capital, but facilitates it, this would as well explain why there has been no replay of the Great Depression. Since the destruction of capital is necessary to begin a new expansion phase, and since this destruction cannot be prevented, it is entirely possible that Keynesian policies work by accelerating the destruction of capital, not preventing it.

And how might this destruction be facilitated? Simply by lending it to the fascist state, which — according to Carchedi’s essay — does not produce value but only consumes it.

This would also explain why the rate of growth of the economy has slowed: since an increasing portion of the produced capital is being destroyed by fascist state expenditures, a declining portion newly produced surplus value is actually reentering capital reproduction.

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

October 3, 2012 7 comments

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.

Read more…

Kicking Capitalism Down the Road: Occupy Wall Street and Debt

October 1, 2012 Leave a comment

The entire point of bourgeois misdirection in this crisis is to convince us that our choices are between debt or unemployment — that is between “growth” and “austerity”, and between taxes and reductions in our pensions, social security, and wages; that is, a choice between “kicking the can down the road”, or “taking our medicine now”.

It is important that the debate be framed this way, because these are the only two options consistent with existing relations of production. Since these choices are both consistent with existing capitalist relations of production, the fascist state does not care which option you choose. Just as Washington does not care whether Obama or Romney wins the next election, it does not care whether this crisis is resolved by debt or unemployment. You are free to make your choice based on what feels right to you — letting people go years without a job, or piling up the public debt.

Your choices are posed in this way because it is assumed you have already accepted the premise of these choices: It is assumed you have accepted the idea that this crisis can only addressed at your expense. You have, therefore, accepted the premise that you must either take the hit to your standard of living now, or in the future. Whether you take the hit now or in the future, you accept that this is the only way forward.

This is why there are so many people running around trying to stock up on guns, beans and gold — assuming the big hit is coming. It is just a matter of time, we are told — shit is going to get funky.

It is absolutely necessary that you never question this premise, and everything is aimed at preventing you from ever questioning this premise. This is not just the message coming from Washington and its servile agents in the media and economics profession; it is also the message delivered on the Left and the Right. On the Right, it is expressed in a demand to end the deficits no matter what the cost, on the Left it is expressed in a demand to end austerity no matter how this ends in more public debt.

It is not just that these contradictory demands appear as polar wings of politics, it is that the demands themselves must be posed as an unbridgeable contradiction. In fact, there is nothing that prevents the Left from adopting the Right’s demand against deficits as well as its own against austerity. And there is nothing that prevents the Right from adopting both a demand against deficits and a demand against austerity. But if this phony contradiction is not maintained, there is no Left or Right — and the point of politics is that there should always be a Left and a Right.

I think this is the revolutionary significance of the Occupy movement’s idea of addressing debt; it breaches this false contradiction. Occupy, which has already clearly taken on austerity, is now adding the question of debt to its argument. With a movement that opposes both austerity and debt, the phony opposition between Left and Right will be ended. Combining a demand against austerity with a demand against debt, announces working people will not pay for this crisis now or in the future. It throws down a gauntlet to Washington and Wall Street in the form of a demand that is not consistent with capitalism or the state.

The significance of these two modest demands against austerity and debt, when combined, are far greater than it may look on the surface. For instance read this quote from David Graeber:

“One realization really startled me when researching the book: that is, the realization that throughout human history, most people have been in debt. Think about it for a second. Could the majority of the human race really be improvident failures unable to manage their affairs, and thus justly dependent on the rich? Of course not. Rather, states and elites have always colluded to ensure that their subjects become debtors; not least, because debt is the easiest way to take a relation of violent inequality, of violent extraction, and make it seem not only moral, but make it seem like it’s the victim who’s to blame.”

How does this describe euro-austerity and the continuing argument that Greece “deserves” austerity now because of its past public profligacy? The fact is the public debt Greece accumulated in the past was just the inter-temporal shift of austerity and nothing more.

And not only private debt, but public debt more so, since Washington can, through its inflationary monetary policy, extend the impact of this austerity throughout the world market. Washington can, therefore, under the pretext of increasing its own debt, impose an austerity on every nation trading in dollars.

Debt, Inflation, Unemployment and Austerity

Consider the problem of debt and austerity from another perspective: In an austerity, unemployment rises, wages and pension are slashed. An increase in debt now is nothing more than the inter-temporal transfer of these same effects over some period of time going forward — wages and pensions are gradually slashed over time. This is accomplished through inflation, and can be made to appear as the result of “natural” forces rather than deliberate policy.

Employment growth slows and persistent high level of unemployment can last for a decade or more. What is accomplished all at once in an austerity regime is, with debt, accomplished over a period of time. All the effects of austerity are still felt by the mass of society, but the torture is extended sometimes a decade or longer.

The state must impose this austerity on behalf of capital because it nothing more than capital organized as the state, but the question is whether the population will accept it all at once, or whether it must be stretched out. This is politics — how much pain can the proles take, and it is a practical question. If people surround the government and demand it resign, this government can be replaced by one “committed to growth”, i.e., the accumulation of even more public debt.

Although this new government only promises to stretch austerity over a decade, instead of imposing it all at once, it is sold as compassion. Twenty five percent unemployment now, or ten percent over the next decade; slashing wages and pensions now, or inflating away their value and compelling people to work longer — make your choice, folks. In either case, the mass of society suffers the effect of unemployment and reduced subsistence through state policy.

Occupy is taking on precisely this policy in both of its possible manifestations. It is combating both an immediate imposition of an austerity regime and an inter-temporal imposition of this regime through debt.

We have to consider also the relationship between unemployment and wages: the reduction of wages is the aim and unemployment is the means. In a market where there is low unemployment, there is less competition among the working class — it has the opportunity to organize itself. Moreover, even where there is some unemployment this occurs against a backdrop where this unemployment is unevenly distributed — in specific sectors or regions of the world market the demand for labor power may even exceed the supply. The impact this has on profits is obvious, and the capitalist class responds to this with all the means at its disposal — introducing new machines, reducing wages, layoffs.

What Keynes explained to the capitalist class is that its typical response to this condition — slashing wages — is counterproductive. Since the Great Depression, profitability cannot be restored simply by slashing wages — as Greece and Spain is demonstrating graphically. What is gained by slashing wages, is lost when the working class goes into the market to purchase goods. The state, Keynes argued, can accomplish the task far more efficiently than capitalists in slashing wages. This is because the method employed — debt — has the effect of subsidizing profits even as the purchasing power of wages fall.

Of course, Kurz explains, this results in the accumulation of debt that cannot be paid off — but that is the can that must be “kicked down the road”. In the long run the debt cannot be paid off, but in the interim it can transfer the product of labor from wages to profits. And, as Keynes observed, in the long run you will be dead after having slaved your entire life away to service that debt.

It is not just private debt that transfers the product of labor from one class to the other, state debt has this very same effect. Your take home pay doesn’t change, but the prices of what this take home pay buys spirals out of sight. In the choice between austerity and debt, debt is actually the preferred option because the state doesn’t provoke people into the streets. As Keynes explained in his General Theory, unions will fight a cut in their wages, but not one imposed through debt and inflation.

“Thus it is fortunate that the workers, though unconsciously, are instinctively more reasonable economists than the classical school, inasmuch as they resist reductions of money-wages, which are seldom or never of an all-round character, even though the existing real equivalent of these wages exceeds the marginal disutility of the existing employment; whereas they do not resist reductions of real wages, which are associated with increases in aggregate employment and leave relative money-wages unchanged, unless the reduction proceeds so far as to threaten a reduction of the real wage below the marginal disutility of the existing volume of employment. Every trade union will put up some resistance to a cut in money-wages, however small. But since no trade union would dream of striking on every occasion of a rise in the cost of living, they do not raise the obstacle to any increase in aggregate employment which is attributed to them by the classical school.” (my emphasis)

I bet you could count the number of major demonstrations against inflation in the past forty years on a single hand — I know of no strikes produced by it. Nobody ever surrounded the congress to demand a reduction in inflation nor fought the police in the streets with firebombs because of it. As a matter of fact, the prima facie silliness of the euro-austerity regime in Spain, Greece, Ireland, Portugal etc., suggests the states and ruling classes of those nations are now trapped and cannot employ debt to meet their aims.

By taking on the issue of debt Occupy is in fact taking on one of the most powerful tools in the state’s arsenal for imposing austerity — debt. Occupy is showing that it is not just a matter of austerity versus debt, but also of austerity through debt. The debt campaign is big because it calls bullshit on both the Democrats and the GOP and can appeal to whatever healthy elements remain in the Tea Party.

*****

As a side note I also want to point out that not one Marxist critic of David Graeber was able to uncover this hidden connection between debt and austerity that Occupy has discovered purely through its practical activity alone. This includes that asshole over at Jacobin, Mike Beggs; that “humanist marxist” Andrew Kliman; Dean, Deseriis, and a host of other imbeciles. Nor does it appear in the writings of Marxists who feel an obligation to repair capitalism, such as Dumenil, Levy, Saad-Filho and that sorry lot.

What good is a goddamned theory if the people using it are idiots.

Oh yeah. And fuck Zizek too!

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

September 28, 2012 11 comments

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.

Social emancipation cannot be founded on labor

September 14, 2012 9 comments


Disconnection from the current relations of production is easier said than done in Kurz’s opinion. It is not a matter of simply seizing a single factory, a retail outlet, an office or a school, nor even of seizing all the factories, retail outlets, offices and schools altogether in a simultaneous uprising in all countries at once. These institutions evolved within the context of commodity production and exchange and are fit only to function within this mode of production. It is not simply a matter of laying hold to them on the day after “the revolution” and employing them for the cause of social emancipation. Says Kurz,

The difficulty consists in the fact that the capitalist form of the functional division of society, as in the case of the capitalist structure of use value, cannot be assimilated, without alterations, into an emancipatory reproduction.

If this argument sounds familiar to you, it should; it is precisely the difficulty the Communards faced in Paris when they took control of the old machinery of the state. They were compelled to dump that entire structure and create a new one on the fly to suit their specific needs. Marx concluded from that experience that the working class could not simply lay hold of the existing machinery of state and wield it for its purposes — that machinery had to be broken. Kurz is extending Marx’s argument well beyond the state to encompass the entire economic mechanism bound up with the capitalist mode of production. And he gives several pretty convincing reason for his conclusion:

First, if a group of workers could seize their own factory, office or school, this institution could not be pulled out of the commodity production system, because the workers don’t produce anything they directly consume. This is already obvious in an office or a school since nothing material is produced in those institutions at all — they only serve as moments in the overall system of commodity production. But, it is also true for workers in an auto factory, a packing plant, or an industrial farm.

Second, even if we assumed a global movement of factory, office and school expropriations that succeeded throughout the world market, we would still be presented with a very great difficulty. Many of these firms engage in business that are absurd outside of commodity relations — like a human resources firm, a private security firm, or contractors supplying the needs of the fascist state military for “commodities” like trident nuclear subs or predator drones. Others pose an ongoing hazard to the public, like GMO producers, pesticides manufacture, or firms constructing and operating nuclear power plants.

Third, Kurz argues there is a grotesque ignorance on the part of capitalist society and its members concerning how the current system as a whole actually functions. Most firms know little about the larger material requirement of their own activity beyond their own suppliers and clients. Frankly, what keeps capitalism working is not the conscious action of the individuals within it, but blindly acting forces operating behind the backs of the members of society. The relations between billions of daily separate acts of production only become visible in the form of innumerable transactions and capital flows.

Fourth, these billions of separate individual acts of production could only be mediated by money relations or, in the best possible outcome, by a new political structure of planning and control, which would have to intervene in social production and would, because of this, bring in its trail the danger of a new managerial elite always ready to usurp control on its own behalf. Moreover, planning, in old Marxist theories of transition, does not overcome the problem of commodity production, but merely mediates it. It simply replaces the role of prices in commodity production with the plan itself as regulator of billions of acts of production. And the plan itself is as much subject to the law of value as are the fluctuations of prices in unplanned social production. By definition, “The Plan” must be the plan of “society” as a whole, in direct opposition to the free conscious self-activity of society’s billions of individual members.

Kurz concludes from this that social emancipation cannot begin, as traditional Marxism holds, with seizing this machinery of production, but only where the act of production bound up with capitalist relations ends:

“An embryonic form such as that of a “microelectronic natural economy”, which supersedes private property in the means of production, cannot be represented at isolated points within the structure of reproduction (which at the beginning only exist in a capitalist form), but only at its end-points—where production becomes consumption. Only at these points is the constitution of a social space of cooperation possible whose activities do not lead back to the market, but are preferentially consumed, in their results, by the members themselves.”

Which is to say, this new form of organization of society must be a self-contained, autonomous, space situating entirely outside capitalist structures. Unfortunately, Kurz fails to actually come up with a model, I think, because he neglects a simple logical implication of his own analysis. In this passage, Kurz treats the material side of capitalist production and consumption as the production and consumption of material objects that can, somehow, be removed from the process of capitalist production as a whole, when it is actually inextricably connected to the production and consumption of values in the process of capitalist reproduction.

This is a common enough mistake — we all make it — but in this case it damages Kurz overall magnificent analysis. Insofar as capitalist production and consumption is conceived, it must be conceived simultaneously as the production and consumption of values, and of material objects. Thus, with regards to this capitalist act, social emancipation should be conceived as having nothing to do either with production or consumption in any form, nor as beginning with consumption, nor with regards to the nexus between the two. This must include both the production and consumption of values and also the material objects in which these values are embedded.

My argument on this point requires us to expose the mystified form on which the entire notion of value rests. Value is not a substance embedded in the commodity itself, as Marx explains in volume 1 of Capital; it is nothing more than the amount of labor time required for the production of the commodity. It, therefore, cannot be separated from the existence of the commodity itself. A society governed by value is nothing more than a society governed by the labor time required for the production of its material needs. It is silly to keep discussing value in its mystified form, as a quality of commodities, once Marx demonstrated this fact. Ninety-nine percent of the stupidities passing the lips of a Marxist consists of treating value as some ethereal substance that permeates the atmosphere of capitalist society.

As a result of this mystification of value most Marxist theories of social emancipation consists of various schemes to set labor on a new foundation when the point of the fucking exercise is to abolish labor entirely. social emancipation is not, and cannot exist, as a new foundation for labor — communist society is not a fucking society of labor. Social emancipation begins and can only begin where the socially necessary labor time of society ends — and this is the whole meaning of the present crisis.

The labor time of society has been pushed well beyond its necessary limit and this has resulted in the formation of a mass of superfluous workers and capital — as many writers like Kurz have demonstrated. The argument of bourgeois thinkers (and in this sense we must include both Marxist and alternative theorists) consists in their refusal to recognize any limits to capitalist accumulation. A society whose thinking is conditioned by the value fetish is a society whose thinking is conditioned by labor — simply put, it is a society conditioned by inescapable material want.

The true perversity of this material want is not that it exists beside actual and real wealth, but that it cannot conceive of wealth in any other fashion than universal want. It, therefore, takes the absence of want as the premise of a social catastrophe that threatens the existence of civilization itself. On all accounts, this universal want, which is the only conceivable form of wealth in a society regulated according to the law of value, must be imposed with all the means available to society.

It is only on this premise that the insane logic of fascist state economic policy can appear rational by a society drowning in unemployment, overproduction and the filth created by its own productive capacities. Marx explains this in the Grundrisse, where he writes that capitalism creates, for the first time in human history, the possibility of free disposable time for the mass of society, but only in the form of surplus labor time by this mass:

“The creation of a large quantity of disposable time apart from necessary labour time for society generally and each of its members (i.e. room for the development of the individuals’ full productive forces, hence those of society also), this creation of [non-labour] time appears in the stage of capital, as of all earlier ones, as [non-labour time], free time, for a few. What capital adds is that it increases the surplus labour time of the mass by all the means of art and science, because its wealth consists directly in the appropriation of surplus labour time; since value [is] directly its purpose, not use value. It is thus, despite itself, instrumental in creating the means of social disposable time, in order to reduce labour time for the whole society to a diminishing minimum, and thus to free everyone’s time for their own development. But its tendency always, on the one side, [is] to create disposable time, on the other, to convert it into surplus labour. If it succeeds too well at the first, then it suffers from surplus production, and then necessary labour is interrupted, because no surplus labour can be realized by capital. The more this contradiction develops, the more does it become evident that the growth of the forces of production can no longer be bound up with the appropriation of alien labour, but that the mass of workers must themselves appropriate their own surplus labour. Once they have done so – and disposable time thereby ceases to have an antithetical existence – then, on one side, necessary labour time will be measured by the needs of the social individual, and, on the other, the development of the power of social production will grow so rapidly that, even though production is now calculated for the wealth of all, disposable time will grow for all. For real wealth is the developed productive power of all individuals. The measure of wealth is then not any longer, in any way, labour time, but rather disposable time. Labour time as the measure of value posits wealth itself as founded on poverty, and disposable time as existing in and because of the antithesis to surplus labour time; or, the positing of an individual’s entire time as labour time, and his degradation therefore to mere worker, subsumption under labour. The most developed machinery thus forces the worker to work longer than the savage does, or than he himself did with the simplest, crudest tools.>”

Social emancipation consists in no more than the mass of society’s members wresting this free disposable time back from capital. This is not time spent in capitalist production (which, as Kurz explains, must be understood as both production and consumption bound up with capitalism, or commodity production generally) but in non-labor for the mass of society, freeing them to develop their own capacities apart from labor.

This self-development has no aim other than that given to it by the individual herself. It is, therefore, no longer “productive” in any sense of that term — neither materially or value-producing — but only the free individual unstructured activity of the members of society. As can be now seen, by resting the premise of the inevitability of the collapse of capitalism on the productive forces created by the digital revolution, and the resulting mass of superfluous workers and capital, Kurz also rendered his argument for a positive program of social emancipation unnecessary. The material for the supercession of capitalism by social emancipation is already given in the form of a mass of superfluous labor and capital produced by the material impact of the digital technology itself. To realize this new stage of society, we need only reduce hours of labor within the logic of value production and realize the result as free, disposable time of each individual.

This is why bourgeois economists, like Paul Krugman, condemn every suggestion that unemployment can be ended by a reduction of hours of labor. This proposal is routinely disparaged by the advocates of fascist state fiscal and monetary policy, who call it a proposal based on the “lump of labor fallacy” that there can be an end to the need for labor. For the apologists of the capitalist mode of production any suggestion hours of labor can be reduced is tantamount to a suggestion there is a limit to capitalist accumulation. And it is why even academic Marxists like Michael Heinrich must denounce Kurz’s analysis and posit in its place (as the blog principia dialectica delightfully put it) a theory of “the eternal return of capitalism”. As Kurz argued, no less than bourgeois economists, “historical materialism “pisses its pants”, so to speak, as soon as it is called upon to define the so-called socialist revolution.” And this is because it is incapable of conceiving human activity outside the fetishistic structures of value production.

The Marxism of the 20th Century is dead and its foul rotting corpse is stinking up the very air we breathe. All the categories of traditional Marxist analysis, having reached the theoretical limits of the expansion of human activity under the value form, can offer no help in defining social emancipation insofar is this emancipation actually crosses the threshold of communist society itself. A completely new discourse is necessary formulated in the concept of freely associated individuals, for whom activity serves as forms of self-development of each individual; and of the further development of society within these forms. This discourse, contrary to most Marxist assertions to the contrary, is littered throughout Marx’s own argument and is the premise of his own critique of social emancipation (i.e., Utopian Socialism) from the start of his career to its end.

Kurz’s argument is not quite yet that discourse, but must be considered the moment when such a discourse became necessary for the further advance of social emancipation. Our job is to elaborate this discourse, showing that it rests on the very premises of existing society – a mass of unemployed labor and a mass of superfluous capital, the premise of wealth that rests on, and cannot be conceived apart from, universal want and privation — that makes possible the unfettered self-development of each individual within society.

When we say that social emancipation is the solution to capitalist crisis, we only mean free disposable individual time away from labor is the solution to the horrors of capitalist austerity, unemployment, poverty and want.

Social emancipation is incompatible with every form of property

September 11, 2012 1 comment


In the first section of his essay, Kurz examined the limitations of 20th Century Marxism that, he argued, was incapable of theoretically superseding capitalism except by means of a proposed future event, the proletarian political revolution, which, would solve all of capitalism’s ills and manage society in some undisclosed fashion. To address this theoretical failure, in section two of his essay, Kurz returns to the basic schema of Marx, the link between the forces and relations of production. Kurz proposes the technologies associated with the digital revolution renders living, value producing, labor increasingly superfluous to production. Kurz concludes the significance of the new technology is not to be found in its production, but in its utilization by society. This technology cannot be employed to mobilize the massive labor armies of the Fordist era.

I argue, following Kurz, the impact of the digital revolution on the ‘economy’ appears to us in its phenomenal or perceptible form as a growing potential for social collapse and regression to a primitive state of simple survival. This survivalist fear is simply the result of the conditioning of our consciousness by commodity production itself — since we have been conditioned by bourgeois society to take its relations as the “natural” form of society, we experience capitalism’s potential for collapse as the potential for the collapse of civilization itself, when it is actually otherwise. In fact, as Kurz seems to argue, the potential inherent in this technology for the collapse of commodity production must actually be the premise of our conceptions of social emancipation; because this technology makes possible a decentralized organization of society without the necessary fulcrum of the state and commodity fetishism generally.

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Marx’s Inconvenient Truth for Marxism and the Left

July 2, 2012 9 comments

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.

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