I am adding additional comments to my reading of Weeks’ paper, “The theoretical and empirical credibility of commodity money” (PDF). In my first reading, I identified a problem with Weeks’ presentation of what he asserts is empirical evidence supporting a link between commodity-money and price. In my second reading I explained how Weeks’ real contribution to my understanding is his analysis of the neoclassical theory of money. In this reading, I am trying, based on Weeks’ argument to define exactly what the dollar and other fiat currencies are; and their relation both to commodity money and the circulation of commodities.
The problem posed by most Marxist attempts to analyze fiat currency is that state issued fiat is treated as if it is money when it is not; and prices denominated in a fiat currency are treated as if these prices express the value of commodities, which they do not. For years now Marxists have been asking if money can be a valueless piece of paper in Marx’s theory — the answer is no. This answer is unpalatable to many Marxists because they think it suggests Marx’s theory of money is invalid for purposes of analysis. My assumption in this post is that Marx’s theory is and remains valid AND this valueless currency is not money.
So if the dollar is not money, what is it? Why is it used for transactions? To answer these questions, we have to begin by understanding exactly how the currency works according to neoclassical theory.
(Shown in the above chart is the historical correlation between the change in debt and the rate of unemployment. Courtesy of economist Steve Keen and chrismartenson.com)
Libertarians, anarchists and communists who sincerely favor a stateless society must realize that the present crisis is not merely, nor even primarily, an economic crisis — it is a crisis of the State itself. There is no exit for the State from this crisis, and it must result in the collapse of the State.
How we approach this crisis can spell the difference between a long drawn out process of collapse, or a much shorter one.
The two great issues facing Washington in this crisis are the rising public debt and the rising population of persons who cannot find work. Since World War II, Washington has been able to enjoy a trade off between these two symptoms of capitalist breakdown by encouraging the accumulation of private and public debt to offset the tendency toward a fall in productive employment of labor power.
The growth in public and private debt has allowed Washington to perform its essential role in a period of capitalist relative breakdown: to maintain generally stable conditions for the purchase and sale of labor power. This role corresponds to the needs of both the working and capitalist classes insofar as we only consider them as poles within capitalist relations of production.
In the face of falling demand for the productive employment of labor power, Washington has encouraged and facilitated the expansion of unproductive employment based on various forms of consumer debt in particular — mortgage, credit cards, auto loans, etc. — but also public debt, including ever increasing levels of federal debt. This debt, since it can never be repaid and sits on the books of financial institutions as fictitious assets, must be succeeded by increasing levels of new debt. It is a classic Ponzi scheme that had to unravel eventually and finally did in the Great Financial Crisis of 2008.
Since 2008, Washington has attempted to stabilize the economy by accumulating massive amounts of debt in its own right, hoping for its stimulative interventions in the economy to trigger a new round of debt accumulation by consumers. Consumers, who have been hit hard by the loss of millions of jobs in 2008 and 2009 have not responded to Washington’s stimulative interventions, and appear to be having an increasingly hard time even servicing existing debt.
The central problem facing Washington is that massive amounts of new debt must be created each year to absorb those who lost their jobs in 2008-2009. Moreover, this new debt must be sufficient not only to absorb those who lost their jobs, but also more than a million new workers who enter the labor force each year looking for work, and those who continue to be displaced from productive employment because of improving productivity. If consumers (who are, overwhelmingly, those workers who still are employed) are not able to carry a sufficient new debt burden to absorb this huge mass of new and existing unemployed, plus offset the falling demand for employment of labor power resulting from improvements in productivity, Washington will face an ever increasing mass of unemployed persons who are living on the edge of starvation.
At the same time, since Washington has been trying to compensate for inadequate consumer debt accumulation by running massive deficits in 2009, 2010, and 2011, a broad section of the population has been growing uneasy with the seemingly endless river of red ink in the federal budget. It doesn’t take a degree in economics to figure out that the massive accumulation of new federal debt must in time be offset by equally massive increases in the tax burden on the population and severe austerity of the type already evident in many European countries.
The result must be the steady conversion of public taxes into debt service to line the pockets of the big holders of federal debt, even as Washington tries to maintain its completely superfluous expenditures on military adventures, while the social safety net is ruthlessly eviscerated; leaving large segments of the population to starve. In its extremity, the fascist State consists solely of an ever increasing mass of new debt undertaken to maintain itself as an aggressive military machine.
Washington is thus trapped in an intractable crisis of rising public debt coupled with rising unemployment and an increasingly naked militaristic posture, even as it fails to address its most basic function: maximizing the purchase and sale of labor power. To an extent not seen in the post-World War II period, we are seeing the formation of permanent unemployable mass on the scale previously experienced only during the Great Depression. Despite two massive stimulus injections of nearly $1 trillion each, unprecedented zero interest rates for more than two years, and Federal Reserve money printing on a scale never seen before in history, unemployment has not fallen to anything approaching pre-crisis levels.
Washington is vulnerable to attack by those who favor a stateless society on both fronts. I would suggest libertarians, anarchists and communists pursue these points of agitation in their work:
- Debt and deficit spending: Oppose any attempt by Congress to increase the debt ceiling. It is clear that the Obama administration is working with both the GOP controlled House and the Democratic controlled Senate to slip through another increase in the debt ceiling this Spring. Libertarians, anarchists and communists should not stand aloof from this fight. They must combine efforts to ensure a NO vote on raising the debt ceiling, and to identify those Republican and Democratic Party representatives and senators who are conspiring with the Obama administration to saddle the nation with more debt.
- Unemployment and hours of labor: To the charge by apologists for Washington that deficit spending is necessary to combat rising unemployment, we should answer that it is not necessary. The unemployment crisis is solely the result of the refusal by Washington to reduce hours of labor. Those who stand for a stateless society should point out that increasing productivity of labor has made the reduction of hours of labor the pressing issue of our time. Any attempt to substitute State intervention in the economy for this reduction can only lead to further accumulation of debt without solving the problem of unemployment.
Washington is caught in a cul-de-sac from which there is no exit. Now is the time to strike a deathblow to it, and pave the way for a stateless society. If we fail to take advantage of this opportunity, we will have only ourselves to blame.
I received this response to my post, What help for the 99ers? (Part four: It’s not personal), yesterday on GonzoTimes:
Turn your soul off. Turn your humanity off. Turn your brain off. And voila, you’ve turned into a Republican “pro-lifer” who says “screw the poor”. Genius!
The comment was a bit cryptic to me. Is the writer saying I have become a Republican pro-lifer who hates the poor? I could not be sure so I responded with this gem in a moment of anger:
If your cryptic comment is directed at me, I take offense — not with your remark, but with the phony humanitarianism hidden behind it. Giving the unemployed $300 a week does nothing to address the causes of unemployment, which is Washington itself. If you are moved by the plight of the 99ers, as I am, I suggest you link up and find ways to support them on an authentic basis, rather than mailing your support in via your taxes. But, more important, I hope you will be moved to fight to reduce hours of work to abolish unemployment and the system that creates it permanently.
You might also consider Badiou’s critique of phony humanitarianism in his book, Ethics.
I am not satisfied with this response. It was driven as much by defensiveness as by any positive statement on the situation of the 99ers. It, therefore, does nothing to convince those who really support the cause of the 99ers to take another look at their assumptions.
Am I a renegade? The question asked, of course, demands a complete response — not first to the commenter, but to myself. Am I on some slippery slope to the renegacy decried by Badiou? Definitely time for an attitude check, and a deep examination to make sure my humanity was still in working order.
I come away from this moment of self-reflection even more sure of my position and a more fervent opponent of unemployment compensation than before. I do not think my view is one of a renegade or heartless conservative, but one who remains committed to the aims I have stood for since I was a teenager and first encountered the idea of communism. I put forth below six reasons why I think it is the classical communist position to oppose unemployment compensation:
The question I asked myself is this: Would Marx have supported unemployment compensation in his day? And, my answer to that was, “Yes.” Without a doubt he would have advocated for it, and considered it a demand consistent with the aim of communism — a measure designed to protect the working class from the vagaries and misery of the business cycle. So, why am I advocating against it? This is not Marx’s day. In his day periodic crises were common enough and no more than temporary lulls between periods of expansion during which the productive capacity of society was being augmented by capital. The scale of production was being increased, and the numbers of laborers moving from agriculture into industry was, however subject to fluctuations and sudden fits and stops, progressively converting the labor process from that of solitary farmers into massive engines of immediately social production. The process was not pretty, by any stretch of the imagination, but it was moving society generally in the direction of the abolition of labor.
Today it is otherwise. Society is drowning in its own productive capacity and we face a State that, for its own purposes, seeks to drive us under altogether. This requires we rethink all our assumptions. So here are my thoughts:
First. Today’s crises are not the mere interruption of an otherwise revolutionary reconstitution and enhancement of the productive power of labor. They are failures of State measures to facilitate the constant expansion of completely superfluous labor. Supporting unemployment compensation today, when unemployment is no longer a temporary condition but a permanent feature of an economy drowning in a surplus population of able-bodied workers, and when the only effective policy to reduce this surplus population is to reduce hours of labor, is a travesty.
Second. Just as this crisis is not a momentary cessation between periods of expansion of capital, so it is not an accident, defect, or aberration. It has been established by economists that we are facing a long-term secular decline in Washington’s capacity to force the creation of new jobs. Washington’s tools of fiscal and monetary policy are gradually becoming ineffective in stimulating superfluous economic activity. It is also requiring more aggressive measures to produce the same effect — much like in the case of a junkie requiring larger doses of his preferred substance to achieve the same high. Washington is now creating massive amounts of new debt each month in a desperate attempt to keep this ugly Ponzi scheme right side up. The declining effectiveness of job creating measures stems not from lack of serious effort on Washington’s part, but on the very goal of the effort itself: to create work where there is no need for work.
Third. The strategy adopted by Washington to create unnecessary work was predicted to fail by many economists during the housing bubble; and at least as early as 1993, Hyman Minsky predicted a financial disaster was unfolding before our eyes. He warned of just the kinds of Ponzi schemes that Washington was facilitating in its deregulation of financial activities in its desperation to lengthen the working day by encouraging working families to accumulate unprecedentedly large personal debts. Despite these warnings, Washington, under the Clinton administration, and again under the Bush II administration, facilitated this accumulating family debt and even put in place measures to prevent working families from declaring bankruptcy to relieve themselves of it. Fully two thirds of all job creation during that period resulted from such debt accumulation.
Fourth. Beyond this, Marx and many other writers warned that a collapse of capital was inevitable. The growing output of industry resulting from improvements in productivity of social labor, Marx explained, was running into declining demand for productive employment of labor resulting from this improvement. In its drive to accumulate surplus, capital was making the ever increasing employment of superfluous labor into the necessary condition for the employment of productive labor. In time it would, he argued, become a matter of life or death for capital to find some means to increase the absolute waste of human labor in order to support profitable investment. That time arrived during the Great Depression when every industrialized nation suffered a catastrophic economic failure, and the State stepped in as the ultimate consumer of commodities and labor power rendered superfluous by overly long hours of work. Efforts by many to reduce hours of work during that period were defeated in Washington, which went on to erase the possibility of less work time from political-economic conversation.
Fifth. Despite all of the above, an argument could be made that we are nevertheless forced to support unemployment compensation because we have no power to change the situation in the short run. I think this argument is specious and even misleading: Unemployment compensation is exactly the wrong measure to pursue at present because it asks people to identify with the very cause of their unemployment. It is the political equivalent of asking people to lobby Bill Gates and Warren Buffett for handouts to ease their poverty. This “progressive” solution to the problem of the ever lengthening work day, which is the entire basis for the present unemployment, is to ask the very institution in society responsible for unemployment to ease the impact of the problem it created in the first place. We have to wake up to the fact that Washington is not a neutral actor in this play: it is the largest single consumer of surplus value in the society — and in human history; beside it, every other consumer — all “the rich” taken in their entirety — run a poor second. Washington not only knows the consequences of its policies, it fucking intends to create those consequences! The whole of its policies are designed to press the consumption of the mass of society to the lowest possible level in order that it may feed on the resultant surplus.
Sixth. We should be completely offended by the very concept of State aid for unemployment in any case. The entire argument for it, as offered by progressives and Marxists, rests on the image of the unemployed as helpless victims who must be protected from the vagaries of economic forces. As Badiou might argue, this image is completely isolated from its social context. The image of the suffering victim does not ask us how this pathetic creature came to be in her circumstance, nor does it seek to identify who caused her suffering. We are left with the need to do something — anything — to end the suffering. But, what? It is all too easy to write your congressperson or senator demanding an end to the suffering, and then sit comfortably at home watching the progress of the bill on the Rachel Maddow Show — self-satisfied that you did your part, and outraged at those who didn’t.
I am sorry, but I do demand you do something — something real, something authentic! I demand you go out of your house and find 99ers, create a network of support among folks in your community to support all 99ers. Make their plight your own in voluntary association with others. And, demand Washington cease to exist.
I did not mean to go on this long on the dire future of the 99ers. I wanted only to show the connection between their demand for assistance and the demand for the abolition of the State — and, of Washington, which is the headquarters of the machinery of State, its coercive machinery of repression and imperialist adventures. Nevertheless, I am drawn to extend this thread by things which occur to me in the course of considering the 99ers, who are our family and friends, neighbors and buddies, and who, without some bold step by us all, will become the fulcrum to impose a devastating austerity on us all.
“The law, in its majestic equality,” says, Anatole France, “forbids rich and poor alike to sleep under bridges, to beg in the streets, and to steal their bread.” In this elegant sentence, France encapsulates the entirety of the relation between the individual and modern society: the State exists as an immediate totality; ideally, its laws are meant to apply to all equally without regard to the circumstances of any particular individual. Seen in the most favorable light, all we can hope to achieve under the conditions of modern society is the equal application of State laws over a society composed of individuals who are anything but equal in their actual circumstances, wants, needs or desires. To actually function as the representative of a society gripped by such vast inequality as our own, Washington essentially must be indifferent to that inequality, to presume no more than the typical circumstances. Only by being indifferent to the manifold miseries of its citizens can Washington truly represent them.
And, this is also true for unemployment: insofar as Washington is concerned, the unemployed worker is a devastating insult to the Puritan Ethic — it is the tool of Satan’s workshop, a potential source of civil unrest and Bolshevik militancy, an existential threat to the existing order. But, this worker as constituted by capital are not the actual living breathing individual workers as they really exist. but only the collective mass of these immediately social laborers, which mass exists as a totality and only within this totality. This collective worker is, of course, composed of individuals of varying demographic characteristics which are to each, on the one hand, advantages — such as education, skills, and social, familial, ethnic relationships, etc. — and, on the other hand, disadvantages — skin color, national origin, sexual orientation, language, etc. Position within this hierarchy of the collective laborer, thus, appear altogether arbitrary and at once the result of certain fixed prejudices within the society or the result of certain “objective” qualities — education, skills, etc.
The State, for its own purpose, as representative of society, may enforce laws preventing discrimination against certain individual characteristics, or promote the development of certain skill sets or level of education, but, to the extent it pursues these goals, it does not do so because of its desire to improve the lot of the individual worker, but to perfect the collective worker as a collective worker — that is, as a body capable of producing surplus value.
Washington’s indifference to the fate of the 99ers should not be confused with an indifference toward unemployment in general; Washington is keen that the collective worker should work as many hours as can be squeezed into a single social workday and seeks to maximize those hours through its fiscal and monetary policies. Its goal, whether unemployment be high or low, always is to work this collective body to the legal limit of the workday. It is, by contrast, only indifferent to which individuals composing this collective body actually work and which starve. Washington’s indifference to the 99ers, to quote Tom Hagen, “is business not personal.”
The indifference of Washington to the fate of the 99ers is only a reflexive expression of its hostility to reducing the legally mandated limit on hours of labor. Since the aim of the State is always and under all circumstances to maximize its enlargement, it must, of necessity seek to extend the work day not merely beyond the time needed to produce the commodities required by the collective body of workers, but also beyond that required to the collective body of capitalists to expand the scale of production. Since, capital’s hunger for profit knows no bounds, the State knows no limit to its own enlargement. Thus, the State’s ceaseless stimulation of profitable economic activity results in the ceaseless expansion of the State itself. Washington decries unemployment, but only to the extent that employment reaches what it calls “full employment” — a euphemism for that level of employment where additional State action produces no additional surplus value. It is the task of a vast army of economist functionaries, public, private and academic, to determine by any number of measures where precisely this level is — and, it is the subject of much controversy, which, to the uninitiated, can be confused with an actual interest in the conditions of the working class as individuals, but, in fact, it is just business.
Even if we assume, as does the progressive or vulgar Marxist, that the expansion of the State is necessary for the general improvement of the population of workers who are under increasing financial distress, and suffering misery, it cannot be denied that this expansion must come at the expense of the workers themselves. Their polite demands for laws to be passed to improve the lot of working families amounts — although the progressive would be horrified at the suggestion — to a demand for confiscation of the property of “the rich”, and the assumption by the State of the role of social capitalist. Indeed, it is the self-evident implications of their own demands that cause progressives to pull back from this implicit logic and submit themselves to meekly following in the wake of the Party of Washington — being entirely satisfied with whatever meager realization of their demands against the existing order can be achieved in the cloakroom of Congress. They are reduced to a mere lobby, another one of the special interests with their hands in the pockets of the taxpayer fishing through them for spare change.
On the other hand, their craven cowardice when facing the implications of their own demands, leads them to turn on the workers themselves and chastise them for over-consumption, gluttony and spoiling the planet. The worker is now transformed from a vulnerable victim needing the protection of the State into a greedy malevolent hedonist caring only for his own satisfaction and the world be damned. The logic of the demands require the State erect protection of the working class at their own expense, hence, consumption must be curtailed and taxes raised so that the State, having impoverished the worker, can now rescue him from his impoverishment. In this regard we see a slew of new and increased taxes on the substances commonly consumed by the population of workers that can be labeled as “sinful” — taxes on cigarettes, alcohol, gasoline, etc. — to fill the ever widening black hole that is government’s need for new sources of revenue.
Progressives completely miss the point here: for government expenditures to have an economic effect, i.e., a stimulative effect on employment, they must be entirely superfluous both to the consumption of the working class, and to the requirements of capital as such; that is, to the productive employment of labor and the expansion of the means to productively employ labor. But, the phrase, “the consumption of the working class”, includes the consumption of both those workers who are productively employed and those workers who are unproductively employed, as well as those who are altogether unemployed and living on government assistance. Simply put: to render “aid” to the 99ers by political means, the State must be indifferent to them and their daily increasing misery; it must do precisely those things which offer no assistance to them, impoverish them still further, and meet no human need, whatsoever.
It’s not personal; it is just the way the mode of production operates.
Why is Washington so implacably hostile to a reduction of hours of work as the solution to unemployment? And, why has it abandoned the 99ers to their fate?
The answer to these questions is simple: Washington depends on the unpaid hours of labor wrung from the working population as much as capital itself. Washington is not a neutral party when it comes to hours of labor; it is, without exception, the largest single consumer of surplus labor time in society. The entirety of its revenues amount to the unpaid labor of society either directly, in the form of taxes, or indirectly, in the resources it controls through debt or money printing.
This fact is never admitted by progressives, nor even by vulgar proponents of Marx’s theory. The argument made by the Marxists against the current State amounts not to a recognition that the machinery of state shares with capital the total pot of surplus labor time, and, as a result, must be interested in the longest possible duration of unpaid labor, but only that this machinery is under the control of capital and should instead be controlled by the working class. The progressive critique of the State amounts to a demand that this unpaid labor time be devoted to the “improvement of society”; the typical vulgar proponent of Marx differs from this only in that he proposes this be under the direction of a working class party. Neither raises the demand for the abolition of all unnecessary labor, and with it, the state in its entirety.
When the Great Depression erupted Washington suddenly had access to billions of hours of unpaid social labor which it, along with the other great powers, immediately set about throwing into preparation for World War II. Government, already the largest single consumer of unpaid labor time in society, expanded monstrously – consuming perhaps as much as 40 percent of national output. But, in the aftermath of that horrible conflict, we really see its voracious hunger, and insatiable lust for surplus as the Truman administration conceived of and implemented a policy of a permanent war footing: The Cold War.
In his annual message to the Congress, delivered January 12, 1951, Truman opened with these words announcing the birth of the national security state:
We face enormously greater economic problems, as I transmit this fifth annual Economic Report, than at any time since the end of World War II. Although our economic strength is now greater than ever before, very large new burdens of long duration are now being imposed upon it.
The United States is pledged and determined, along with other free peoples, to cheek [sic] aggression and to advance freedom. Arrayed against the free world are large and menacing forces. The great manpower under the control of Soviet communism is being driven with fanatic zeal to build up military and industrial strength. We invite disaster if we underestimate the forces working against us.
The economic strength of the free peoples of the world is, however, superior to that of their enemies. If the free nations mobilize and direct their strength properly, they can support whatever military effort may be necessary to avert a general war or to win such a war if it comes. The resources are on our side. The only question is whether they will be used with speed and determination. The answer will depend upon unity of purpose and of action–unity among the free nations, unity here in the United States.
Unity is imperative on the economic front. On this front, under the American system, everybody is involved–every businessman, worker and farmer; every banker and scientist and housewife; every man and woman. We can win our way through to ultimate triumph if we all pull together. Decisive action, essential to our safety, should not be halted by controversy now.
Truman, in his report, explains the implications of a conflict with the Soviet Union of a very long duration:
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.
For those readers whose critical facilities have been dulled by countless hours of exposure to American Idol, what we have here are the words of a craven hustler — a two-bit con artist trying to sell you something you don’t need. Washington is in the business of selling security and its sales methodology is the practice of sowing fear of chaos, terror, and the unspeakable strange unknown. This sales strategy required the creation of an adversary to the “American system”, as well as its domestic avatar buried deep within the populace, to create a pervasive sense of vulnerability and distress among the population. It doesn’t matter that this adversary is Soviet communism or “Islamofascism”, nor that its domestic avatar appear in the form of a devout Muslim citizen or communist trade union activist; what matters is that the threat be, at the same time, pervasive and discrete, universal and particular, potentially life-threatening and merely strange.
This impeccably crafted direct appeal to the collective lizard brain of society, which paralyzes critical thought as our painfully slow brain tries to calculate the odds that the Sikh gentleman sitting in front of us on the bus might be strapped with explosives — renders critical thinking useless, and, therefore, a mere impediment to the apprehension of our empirical circumstances, reduces each of us to a suggestible sheeple, and set us up for acquiescence to the burden of providing Washington with ever greater hours of unpaid labor.
On the one hand, this “service” provided by Washington is very profitable to capital in its own right, since it requires enormous amounts of otherwise unprofitable output in the form of every imaginable thing from paperclips to the most advanced spy satellites, and launchers to put them in orbit. On the other hand, the demand for these products are the very kinds of superfluous expenditures that become increasingly necessary for the continuation of this social form of production.
Once the identity of interest between capital and the State in the longest possible extension of hours of labor is established, it is possible to understand not only Washington’s hostility to work time reduction as the means to end unemployment, but also its imposition of the regime of global competition on the American economy, its facilitation of companies moving industrial facilities and service jobs off-shore, and its hypocritical promotion of amnesty for undocumented immigrants: the capitalist state is a state that must operate according the laws of capital because it is founded entirely on the consumption of the surplus labor created by capital.
It also helps us explain the abandonment of the 99ers to their fate, the impending evisceration of the social safety net and the brutality of the austerity regime now being prepared by Washington. Far from merely falling under the control of Wall Street, Washington itself wants and needs this brutal assault on the living standards of Americans because all other methods of increasing the extraction of surplus value have failed.
In my rant yesterday, What help for the 99ers?, I made an argument why folks who support the 99ers should nevertheless oppose extension of unemployment compensation beyond 99 weeks. That argument made what might be considered an obscure connection between the unemployed and the large body of “public servants” who compose the state machinery of repression, totalitarian control and imperial expansion.
Let me add a few remarks to clarify how I see this connection.
To do this, we have to look at Karl Marx — not the infamous icon of Marxism, but the real guy, the writer and, to some extent, anthropologist of capitalist society — Often the two get conflated, so that, for instance, the utterances of any knucklehead running around with a copy of the Communist Manifesto sometimes is mistaken for the actual words written down on paper by the original person.
In Marx’s model of capitalist society, the unemployed worker is not an accidental occurrence and should not be treated apart from the labor force itself. The unemployed worker is a reserve force available to capital for those periods where new profitable opportunities or requirements for additional labor suddenly open up. The idled worker makes it possible for these new areas to be exploited by providing the additional labor capacity necessary to take advantage of them. This reserve also serves a function of depressing wages during times of depressions, when capital rationalizes its operation to resume profitable expansion by pressing wages below their cyclical average.
Thus, unlike economists, who treat unemployment as an aberration, a defect, or failure of the market, Marx believed a relative surplus population of workers was essential to the functioning of the capitalist system of production itself. The constant expansion and contraction of the labor reserve is consistent with his comprehensive model of capital in which, for example, the price of a good had to fluctuate according to the laws of supply and demand, and only reflected the value of the good through the moving average of these fluctuations. Capitalism is a social system of production carried on by millions of individuals acting privately — unless the system itself had flexibility to adjust to billions of differing and even contradictory decisions each day it would soon break apart.
In times of unusually vigorous expansion, and even for war, the great mass of this population of unemployed would be “called up” (both metaphorically and actually in the case of the military draft) to fill needed positions in industry or on the battlefield. Thus, the “liquidity” of the reserve source of labor power is not simply a matter of business concern, but also a matter of state. So, for example, it is not a surprise to see a statement by White House in the debate over the DREAM Act explaining why the act would be useful for its ongoing military operations:
Secretary of Defense Gates has written to DREAM Act sponsors citing the rich precedent of non-citizens serving in the U.S. military and stating that “the DREAM Act represents an opportunity to expand [the recruiting] pool, to the advantage of military recruiting and readiness.
The size of the reserve labor force is not determined by the means available to expand the scale of productive activity, but to expand activity that creates profit and for purposes of State. But, this purely cyclical movement in unemployment is not of the least concern to us, because it merely masks a longer term trend identified by Marx: the conversion of this reserve labor force from a relative oversupply of labor into an absolute oversupply of labor.
Over time the improvement in the productive capacity of labor — by augmentation with new types of machinery, new methods of organizing work, application of new scientific knowledge, and technology — is increased to such an extent that the relative proportion of workers who can be employed productively shrinks and a permanently unemployable reserve of labor emerges. (Today, this unemployable reserve consists not only of the 99ers, but also a massive hidden population of young people who have never entered the labor force and who, in addition, compose the largest part of the swollen prison population.) This permanently unemployable reserve — a growing stratum of the labor force rendered entirely superfluous by the advance of industry — loses its opportunity to engage in productive labor and is reduced to serving only as a market for the output of the productively employed labor force.
Along with the emergence of a permanently displaced population of workers we find the emergence of the fascist state — a peculiar type of state organism combining both a permanent war footing with an extensive social safety network of state provided services. Although this state is typically identified with German Nazism and Italian Fascism it is not limited to them, but emerges in all the industrialized nations during the Great Depression, and is the essential feature of Franklin Roosevelt’s New Deal. The social basis of these fascistic entities is the general clamor among all classes in capitalist society for state action to preserve the conditions of existence of the society; namely, the purchase and sale of labor power. It is for this reason the fascist state appears on the scene as the embodiment of the national interest and asserts the populist idea of a national rebirth through a pan-class coalition.
The charge of this state, as imposed by general social demand on it, is to employ the unemployable, and hence, to provide the demand for the output of industry. From this point, political-economy becomes concerned with the problem of consumption of the massive and ever growing output of industry. The fact that the emergence of an absolute oversupply of labor implies the possibility of a drastic reduction in hours of labor for all in society, and, therefore, the awareness of the possibility that society might be entirely freed from labor and the system of domination inherent in the division of labor is, from this point, not only ignored, but actively suppressed. Thus, we see, from the end of World War II, that discussion of the idea improving productivity would lead to the abolition of labor disappears from economic textbooks — to be replaced by the phrase, “the lump of labor fallacy”.
The erasure from economic textbooks of the idea that a reduction and ultimate abolition of labor was the probable outcome of improving productivity foreshadowed last night’s news that the House of Representatives had abandoned the 99ers to their fate. As we showed in the case of the Obama administration, Washington is not merely unaware that unemployment can be wiped out by drastically reducing hours of work, it is hostile to the idea.
Why is Washington ignoring the 99ers, and why is it hostile to the great question of work time reduction? We will answer this in the next post.
I am having a “marxist moment” today. The Obama tax deal, in addition to its other flaws, has completely excluded mention of those who first lost their jobs in 2008 and early 2009, when the worst of the layoffs hit the economy. Millions have already exhausted their benefits, and perhaps 4 million more will join them in the next few months.
So what is to be done for them?
Think about a situation where an unemployment check is fifty, seventy or even ninety percent of the income in your household. And, now, that income is approaching imminent termination. You have probably run through your savings, stopped paying credit card debt and the mortgage; you may even be parking the car away from home to avoid repossession. The crisis was not your fault. You never made sub-prime loans, nor was your own home purchase financed by the deliberate fraud of a liar’s loan. You weren’t the one who bundled those loans and sold them to Iceland and pension funds. You probably never missed a payment on your mortgage, auto or credit card loans until that day the company announced it was shutting down your entire division and began handing out severance checks.
At the risk of personalizing this discussion, I know people like this — one is a neighbor, another is a friend and former co-worker at a debt mill run by a large financial company. The debt manufacturer has a seat on the Federal Reserve Bank, and when its debt creating operation ran into the difficulty, it ran to Uncle Sam to bail it out — just another welfare queen in an Armani suit.
I DVR’d the CEO of Motorola talking on PBS Newshour yesterday, because I couldn’t believe what I had heard — I had to record it, so I could look at it today and confirm that, yes, he is that much a self-absorbed bastard. The CEO had just exited a gathering with President Obama of corporate bosses discussing what it would take for the nation’s largest companies to start hiring again. He opined that the administration was moving in the right direction and that President Obama had made a good deal with the Republicans in congress for across the board extension of President Bush’s 2001 tax cuts, which are heavily weighted toward the income of the top one percent of the population. The CEO praised the agreement for its effect in ending much of the uncertainty surrounding the administration’s tax policy.
Now, he said, we had to get serious about the deficit and deal with entitlements.
This morning I am trying really hard to avoid playing the class war card. Playing the class war card in these circumstances doesn’t require any creativity or thoughtful response. It is the political equivalent of yanking back your hand from a hot stove. Yes, corporate CEOs are ruthless narcissistic bastards, who have stripped the nation of its productive assets, moved them offshore, and left us with a hollowed out economy devoted to imperial adventures. And, the situation of the 99ers is pitiable. In conversation with my friend and with my neighbor, I have survivor’s guilt — and this, when I just might be the next dead hostage.
Yes, President Obama is a shameless whore who sold out his sacred pact with his supporters at the first opportunity!
Yes, the 99ers are at the point of extreme financial duress and tilting dangerously on the edge of physical existence!
Yes, our corporate masters are little more than Caligula’s court!
Yet, for all of this the move by the Congressional Black Caucus to introduce an amendment to President Obama’s and the GOP’s tax cut deal by extending unemployment benefits beyond 99 weeks must be opposed. That, this deal is an ugly filthy thing from the progressive perspective is obvious. But, no amount of sweetner will make horse urine taste like champagne. No more than will allowing gays to serve openly change the fact that they are now allowed to be openly gay while carrying out the military policy of an empire.
But, my opposition goes beyond simply “rejecting the good for the perfect” — a child-like refusal to accept compromise: The CBC’s proposal is itself to be condemned because it extends the dependence of the 99ers on state handouts and does not call on both those who are working and those who are unemployed to put an end to this dependence, and the larger dependence on selling themselves into slavery to survive. I think we should be sickened by the recent AFL-CIO internet commercial which portrays the 99ers as helpless, vulnerable victims of economic forces over which they have no control. A depression is not a natural disaster; we are not helpless victims of some financial force of nature beyond our control.
It is a matter of demonstrable fact that the Obama administration knows that all it takes to eliminate unemployment in this society forever is a large reduction in hours of work. His former economic adviser, Larry Summers, former president of Harvard University, and former Treasury Secretary in the Clinton administration, stated this directly:
“I think we got the Recovery Act right,” Larry Summers, the president’s chief economic adviser, said in an interview. “The primary objective of our policy is having more work done, more product produced and more people earning more income. It may be desirable to have a given amount of work shared among more people. But that’s not as desirable as expanding the total amount of work.”
Preferable for whom? For the state, of course, which now has ample excess resources it can put to work expanding the empire. Resources that, having no possible productive employment opportunity, can be employed for whatever unproductive purpose Washington demands. Beyond simply holding down the wages of those who work, the unemployed are the cannon fodder of empire, the TSA gropers, the bureaucrats ceaselessly promulgating new directives that other bureaucrats enforce. They are the drug enforcement agents, the cultivators of every new would-be “muslim terrorist”, the operators of a vast systematic destruction of young minds in the guise of public education. They are the operator of the largest prison population on the planet — a filthy, vile, unspeakable chamber of horrors that excels only in spreading disease and moral breakdown.
The CBC’s proposal not only does not address these concerns, it reinforces them and promises only to extend them indefinitely. A consistent anti-statist position has to call for the end of all unemployment compensation and its replacement by a large reduction in hours of labor.