The Real Movement

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How John Weeks misunderstands neoliberalism

Professor John Weeks has written some papers on neoclassical economics that have been useful to me in understanding its core assumptions. In particular, I have found his paper on neoclassical theory of money to be extremely helpful. In Margaret Thatcher-1507907that paper, Weeks made it clear that since in neoclassical economics anything can be money, the fascist state must ensure its currency alone is money. Which means what serves as money within the world market cannot be open for negotiation. This argument goes a long way toward showing why the United States will not give up the special place of the dollar in world trade. I don’t always agree with Weeks conclusions, but I think his grasp of neoclassical theory is extremely worthwhile.

So, when I came across this three part interview on neoliberalism that Weeks held with The Real News Network it peaked my interest. Unfortunately, it turns out to be another example of how Week’s mastery of the assumptions of of neoclassical theory often has to be separated from his conclusions.

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Response to David Graeber: If basic income is so good, why not start with the Koch Brothers?

Par7731873This Graeber article, “Why America’s favorite anarchist thinks most American workers are slaves”, is just chock full of the most egregious bullshit on the basic income issue possible.

There are two possible directions for the Left to take at this point and both are said to achieve the same goals. The first is basic income and the second is reduction of hours of labor. For some reason, David Graeber has suggested the working class should be fighting for the first, not the second.

The oddest thing, however, is that I have very little to dispute with many of Graeber’s points in the article. His argument for basic income is a convincing one that any supporter of reducing hours of labor would embrace — and this might just be the problem.

First, Graeber lashes out at the welfare and social benefits bureaucracy:

“The problem is that we have this gigantic apparatus that presumes to tell people who’s worthy, who’s not, what people should be doing, what they shouldn’t.”

Against this massive and utterly useless bureaucracy, Graeber proposes individuals should be able to choose for themselves the activity they value most:

“We don’t really know how to assess the value of people’s work, of people’s contributions, of people themselves, and philosophically,  that makes sense; there is no easy way to do it. So the best thing to do is just to say, alright, everyone go out and you decide for yourselves.”

Not only is the fascist bureaucracy unable to decide for each individual what is most important for them to be doing,  the present system inevitably destroys the true source of innovation in society. Graeber speaks of a friend who, unable to make it as a ‘professional’ musician, opted to be a corporate lawyer. He also raises the spectre of innumerable Derridas or Sartres who, absent sufficient income, deliver our mail. The Left, says Graeber, has not taken into account the millions of program beneficiaries and enforcers who might otherwise compose music or profound philosophical treatises.

By far his most important, salient and biting observation is that the Left has little or no understanding of the insidious and oppressive nature of the fascist bureaucracy as seen from the viewpoint of the worker who is unfortunate enough to fall under its domination:

“I think that one big problem we have on the left is we don’t really have a strong critique of bureaucracy. It’s not because we like bureaucracy very much; it’s just that the right has developed a critique. I don’t think it’s a very good critique,  but at least it’s there. I think this is a perfect left critique of bureaucracy: Who are all these people  sitting around watching you, telling you what your work is worth, what you’re worth, basically employing thousands of people to make us feel bad about ourselves.”

The Left doesn’t really want to think about this because of the profound implications for its sordid, squalid, filthy little love affair with fascist state food-stamp socialism.

Graeber’s solution to  this overbearing machinery of state is simple: replace all of these useless bureaucrats with a cash handout to everyone — “Those people [making the decisions] don’t really contribute anything to society; we could get rid of them.” Indeed, says Graeber, when they tried this in Namibia, people decided to pool their resources and create a post office. Society knows exactly what it needs to function in a civilized fashion without an army of bureaucrats making this decision for them. Moreover, even in prison, where, arguably, people have every simple need provided for, people have shown they value productive activity and make an effort to secure productive labor as the alternative to being stuck in a prison cell all day.

“I think that it’s really important to bear in mind two things. One is it’ll show people that you don’t have to force people to work, to want to contribute.”

Motivated by their own desire to express themselves in their creative activity, once set free of abject poverty people will produce things we cannot imagine. Human beings are, by nature, creative animals and, given the opportunity, will come up with all sort of innovative stuff in a society no longer characterized by wide-spread poverty:

“The other point we need to stress is that we can’t tell in advance who really can contribute what. We’re always surprised when we leave people to their own devices.”

There is, of course, nothing about what Graeber has said in all of this that can be disputed. There is little in his argument against fascist state bureaucracy, the innate creativity of human beings and their desire to express this creativity to be disputed. Since there is very little to dispute in his argument, why then does he think this requires, or can be addressed by, basic income, when the same argument easily could be made for reduction of hours of labor or abolishing wage labor outright?

What is it about basic income that makes this solution the policy to be preferred by an anarchist and activist? At the outset, Graeber makes this revealing argument: Giving people money won’t eliminating a market system. It levels the playing field between the two classes:

“If everybody has the same means to vote [money -- Jehu], then the market will actually represent what most people want.”

Really? How does a handout do this?

“First of all, survival needs would be taken care of, so that skews people, and you could see what people think is actually  important in life. I think that’s why even a lot of libertarians, whom I don’t agree with on a lot, actually kind of like the idea of basic income — because they know that it would make the market work the way they say a market should work.”

Graeber seems to think that by giving people basic income, you can fix the negative outcomes of the capitalist mode of production. I am not sure why this particular argument appeals to Graeber — or to the many folks on the Left who think that, somehow, the mode of production can be fixed by handing out money to the working class. But Graeber is not alone in this particular delusion by any means and I don’t mean to single him out except that he is a juicy target.

I want to be serious about this: What Graeber has said is not at all unusual on the Left — he just can say it with a high profile.

I cannot quite wrap my head around why people want to save the market, or why they think saving the illusion of exchange relations works; because, frankly, basic income really is just an illusion of market exchange — some bureaucrat goes into a room and inputs so many dollars into a computer. This completely imaginary “money” is then transferred to your account. The balance in your account is a total illusion in every way except one extremely relevant way:


Now you can extend this limit by $1000 or even $10,000, but your consumption is still fucking limited by whatever number you want to imagine. Why does the Left think the consumption of the working class – the fucking source of all wealth in this fucking society – need to be limited? Really, who the fuck do the supporters of basic income think they speak for! Because it seems to me you have no fucking right to speak for the working class: the only goddamned group producing anything in this society.

If basic income supporters want to limit the consumption of anyone to a pittance, I suggest you start with Warren Buffett and the Koch Brothers; expropriate their wealth and make them live on $11,000 a year. If this turns out to be insufficient to address their needs, they can go out and get real jobs like the rest of us.

What does it take to beat capitalism when the deck is stacked against us

cardsOn Monday, I showed both the workers and the capitalists view economic choices through the lens of capitalist relations of production. The fact that both classes view the crisis of capitalism through the same filter means the both accept the same false choices in the crisis. It is not true in the least that the working class is brainwashed by the capitalists to act against their own interests. Rather, because both classes see the crisis from their respective positions within capitalist relations of production, they arrive at the same general conclusions.

Those conclusions are consistent with capitalist relations and, therefore, imply a definite outcome: labor exists only to fatten profits.

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“How Capitalism Works” (through the eyes of the working class)

trickledownYesterday, I showed why the inflation\deflation debate is concerned with the consumption of labor power and the debt of capitalist firms. Deflation carries a risk firms will not increase their employment and may go bankrupt because falling prices put pressure on profits.

My post led to the following response on reddit’s Socialism page:

“Too tired to read article but debt becomes worse with deflation because in real terms it is worth more (the corollary is that you can inflate debt away, since the debt which is constant becomes less in real terms after inflation. [Krugman] wrote a good op ed about that on April 4th, called oligarchs and money if memory serves). Aside from that this article seems a little wacky”

So does Krugman’s recent post to his New York Times blog contradict my argument? Well, let’s see:

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The False Choices of Bourgeois Economic Policy

It isn’t until I read this whole state debate thingy that I even realized the critical role inflation plays in the process. If Yaffe and Bullock are correct, profit is not possible unless there is inflation. Which is why there is such fear of deflation. I phillipskurvekind of knew this in theory already, but it only now makes sense to me that the inflation/deflation debate is not a side-show, but goes to the heart of capitalist relations of production. Without inflation, commodities cannot sell above their prices of production and without selling above their prices of production surplus value cannot be realized.

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Yaffe and Bullock on the ‘Contradictory’ Role of the State

Yaffe and Bullock’s paper sought to explain why 1970s stagflation could only be explained by the conditions of capitalist production:

“The crisis has to be located at the level of capitalist production. To show how the central tendency of the rate of profit to fall can express itself as inflation and eventually stagflation (stagnation and inflation), we need to examine how the capitalist experiences this tendency and attempts to maintain profitability by increasing prices. We then have to consider how these prices set by the individual capitalist can be realised – that is how commodities can be sold – exchanged for money – at these prices.”

2qixqxfHowever, in an attempt to refute the theory that inflation was caused by rising wages, they ignored the implications of their argument for the general state of the capitalist mode of production itself. When Yaffe and Bullock wrote the paper, they wanted to show how inflation was caused by the mode of production and attempts to maintain profitability in the face of chronic overproduction. Unfortunately their aim in the paper never actually directly addressed the implications of stagflation for the mode of production itself.

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The Falling Rate of Profit, Class Struggle and the State

inflationAfter coming across David Yaffe while reading Simon Clarke’s book, The State Debate, I figured I would give a paper he wrote with Paul Bullock, “Inflation, the Crisis and the Post-War Boom”, a once over. This paper, written in 1975, attempts to understand the depression of the 1970s through the lens of labor theory. I find it interesting because the authors make this rather bold, and in retrospect, horribly mistaken pronouncement:

“No nation’s currency can displace money of the world, gold, as the final means of international payments.”

The weirdest thing about this Yaffe and Bullock paper, however, is that it already has the explanation for the 40 years persistence of the dollar as “world money” and why, consequently, the writers were wrong:

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Open Marxism’s Unspoken Prescription for the Current Crisis: Vote Harder

Continuing with the discussion of Holloway and Picciotto’s paper, “Capital, Crisis and the State”, which makes up chapter 3 of Simon Clarke’s book, The State Debate.

hatebushIn my last post, I showed how Holloway and Picciotto arrived at the conclusion that the definition of capital as the production of value and surplus value was insufficient basis to explain “the political”. I think the critical part of this story was the struggle to place the post-war full employment policies of the fascist state and implementation of “progressive” legislation of the 1960s and 1970s in some consistent theoretical context. “Open Marxism” was trying to explain policies that appeared to contradict Marx’s infamous base-superstructure analogy of “the political”.

Mind you, Holloway and Picciotto were not completely stumbling around in the dark on this. It is obvious that the history of capitalism is replete with instances of arbitrary actions on the part of the state that might be gathered together under the heading of primitive accumulation. The authors write:

“We have said that the initial moment of the formation of the capitalist state is dominated by the spread of commodity relations. However, until commodity production becomes fully established (when labour power becomes a commodity and primary accumulation of capital achieved), social relations and state forms are by no means dominated by equal exchange, but rather by its opposite: compulsion. Thus the mercantile state is structured around trade privileges, monopolies and regulations of commerce. It facilitates the commercialisation of agriculture and the consequent expropriation of the labourer from the land. A major feature is the direct management of the ‘surplus population’ thus created as a labour force, by various systems of direct and forced labour: vagabondage laws, houses of correction, deportation to the colonies etc. All the forms, policies and ideology of such a state exhibit the startling contradictions of a state power purporting to be the state of society as a whole, but continually exercised to favour commercial privilege and the accumulation of property. The mercantile state, therefore, is characterised not by equal exchange but by unequal relations of appropriation backed by authority and force.”

Holloway and Picciotto argue this element of compulsion remains as an aspect of the state. The principle of equality operates in the sphere of circulation, however this principle is constantly upset by the inequality in the form of production of surplus value, or, to put it in terms Marx employed: bourgeois right in the sphere of circulation is constantly at loggerheads with real material inequality in the sphere of production:

“The immediate contradictions of this process consists of the continual undermining of the appearance of equality of exchange in the sphere of circulation by the inequality in the sphere of production.”

According to the authors, this real and material inequality inherent in the production of surplus value is the heart of the contradictions of liberal capitalism and of the liberal moment of the state.

And here Holloway and Picciotto make a series of observations that should have been all they needed to understand the class implications of fascist state full employment policies. Marx, they state, points out that after the mode of production stands on its own feet, the demand for ever greater mass of surplus value took the form of the excessive prolongation of the working day:

“The struggle between capital and labour over the length of the working day … exposes most clearly the contradictions of exchange equality … the social relations of production having been established on the basis of wage-labour and the apparent equality of exchange of wages for labour-power, the working class finds capital pressing to the limits of extraction of absolute surplus value from that labour-power.”

This insight is all Holloway and Picciotto ever needed for their critique of Yaffe’s argument on full employment. If the state policy was directed at full employment of the working age population, this was not out of any desire to relieve the working class from the nightmare of unemployment, but because this policy directly expressed capital’s thirst for absolute surplus value.

The problem with this argument for Holloway and Picciotto, however, is that it undermined their argument that Marx’s base-superstructure analogy was not nuanced enough to express the relation between “the political” and “the economic”. Nevertheless, Holloway and Picciotto do not stop at this point; instead, they go on to argue:

“The liberal capitalist state is therefore engaged in a continual process of upholding the principles of freedom and equality, while constantly modifying their application in practice, in order to overcome the contradictions continually created by the central contradiction at the heart of the relations of production.”

This insight by Holloway and Picciotto, is not in the least original, since it can be found in Engels’s “Socialism”, where he writes:

“And the modern State, again, is only the organization that bourgeois society takes on in order to support the external conditions of the capitalist mode of production…”

But acknowledging that Engels had long since made the observation that the state serves to support the external conditions for the production of surplus value, with the clear implication that this support is expressed in the fascist state’s full employment policies, would have further undermined Holloway and Picciotto’s argument against the Third International Marxism argument that, over time, the state and capital fuse together into one — since it is precisely in the passage I cited that Engels makes his famous prediction:

“In any case, with trusts or without, the official representative of capitalist society — the state — will ultimately have to undertake the direction of production.”

What then explains Holloway and Picciotto’s reluctance to accept Marx’s base-superstructure analogy that the economic base of society determines the political superstructure?

I think there is a very simple answer to this: in Marx’s base-superstructure analogy, there is no determining role for the class struggle. The class struggle is itself simply a surface expression of the underlying process of capital’s own development. Rather than determining capital’s development, as Holloway and Picciotto tried to argue, the class struggle is always and everywhere determined by capital’s own development. But since Marxism is merely the political expression of the proletarian’s own movement, the idea that the political struggle in no way determines the development of capital is hard for Marxists of all variants to swallow.

People really want to believe they can overcome capitalism simply by demonstrating more vociferously, signing more petitions, or voting harder.

Open Marxism and the “Benefit” of Longer Hours of Labor for the Working Class

In a paper that forms chapter 3 of Simon Clarke’s book, The State Debate, Holloway and Picciotto, having decided “the political” is relatively separate from “the economic” must explain why this is so. But they have to do this while avoiding being associated with “orthodox Marxist determinism” prevalent in the Third International variant of Marxism.

As I argued, to do this, they redefine capital as a historically “specific form of class domination” and set this definition against Marx’s definition of capital as the production of value and surplus value. Within this historically specific form of class domination, “the political” and “the economic” are two separate moments of the totality. This, they argue, avoids the “iron economic determinism” by providing “an understanding of the determinants and limits of state action”. base-superstructureThe state sphere is separate from the sphere of direct exploitation, but it is not separate from capital as a specific form of class domination.

The solution, however, is made more difficult because Holloway and Picciotto cannot employ Engels as their convenient whipping boy: Engels’s “positivism” did not lead to the formulation of the foundation-superstructure analogy; Marx’s “dialectical method” did.

Ignoring for the moment that their definition of capital as an historically specific form of class domination flies completely in the face of Marx’s definition of capital as the production of value and surplus value and his elaboration of the whole base-superstructure thingy, what is gained by this redefinition of capital? While this redefinition might be useful in critiquing the reformism of Second International Marxism, it still doesn’t explain how “the political” is actually determined by “class domination”, since there is no obvious mechanism outside Marx’s own base-superstructure analogy. Holloway and Picciotto admit:

“If we insist on starting with the category of capital because it is the contradictions of the capital relation (as the basic form taken by class antagonism in capitalist society) which provide the basis for understanding the dynamic of social and political development in capitalism, the problem of the nature of the relation between the actions of the state and the accumulation of capital remains.”

This, I really need to emphasize, IS NOT a mere theoretical question: “Open Marxism” is trying to grapple with the fascist state, in order to explain so-called “progressive” legislation. In the United States, for instance, since the end of WWII, we saw, among other things, the collapse of segregation, the Civil Rights Act, the Environmental Protection Agency, the establishment of a woman’s right to choose, and a host of other reforms. Any argument on the relation between the mode of production and the state had to explain how this “progressive” legislation came about. At the same time: we have Vietnam and Chile, which horrors requires little or no elaboration, not to mention Thatcher/Reagan neoliberalism. The state appeared to accommodate a very wide spectrum of activity that could not be directly traced to exploitation in the factory.

“Open Marxism” argued the whole base-superstructure analogy did not seem to captures the true nuance of the relation between state and the mode of production. Holloway and Picciotto ask:

“[Should] this problem simply be dismissed as being no problem, the autonomy of the political denied, the correspondence between the actions (and structure) of the state and the requirements of capital accumulation taken for granted?”

The key phrase in the question is “Should this problem simply be dismissed as no problem”. The writers are reacting to the tendency among Marxists to simply dismiss the range or spectrum of fascist state action. If, in the end, all fascist state action boils down to the requirement of capital, even profound developments like the end of segregation can be ignored.

But ignored by whom? Certainly black workers did not ignore the end of a century of segregation; women workers did not ignore the end of the prohibition on abortions in the United States; and anyone concerned with the environment did not ignore the establishment of the EPA by the Nixon administration. Finally, no Marxist could ignore the collapse of Bretton Woods, which signaled either the death of capitalism or the death of labor theory.

Placing these real historical events in a consistent theoretical context seemed necessary, but neither 2nd International Marxism nor 3rd International Marxism seemed up to the task. In this regard, the example Holloway and Picciotto refers to in this section is telling because it deals with a cornerstone policy of the fascist state. Some writer named David Yaffe pointed out that the fascist state policy of full employment runs into the problem, “that there are limits to the extent and effect of state expenditure which result from its unproductive nature and hence the requirements of accumulation.” The constant extension of total social hours of labor came at the cost of an increasing mass of unproductive fascist state expenditures. There is, in Yaffe’s view, a limit to the policy of full employment. The argument is compelling and relevant to our situation today — unfortunately Holloway and Picciotto tells us little else about the paper. However another of Yaffe’s papers along these line can be found here.

In their response, Holloway and Picciotto criticize Yaffe for not expanding on his analysis of the state in this discussion:

“What results is a rather monolithic view of the state in which the growth of the state apparatus is attributed simply to the state’s post-war commitment to full employment, and in which the effect of state expenditure is seen as being adequately grasped by its classification into the categories of ‘productive’ or ‘unproductive’

However no matter their criticism of Yaffe for neglecting the state, Holloway and Picciotto are forced to concede his analysis “may” be crudely valid:

“But then how are we to understand the role of bourgeois democracy, and how are we to see individual state actions which apparently do not correspond to the interests of capital?”

Yaffe’s argument, they explain, focuses on one aspect of the limitation of fascist state action: that its expenditures represent a deduction from the total surplus value! In this assertion, Holloway and Picciotto are not only wrong, but horribly off-base in their criticism of Yaffe, which appears to make three questionable assumptions: First, they assume that the full employment policies of the fascist state were undertaken for the benefit of the working class. Second, they assume this alleged benefit is paid for by a deduction from the total surplus produced by capital. Third, they assume this deduction is “limited by the competing claims of private capitals on that surplus value which must be met if accumulation is to continue.”

All three of these assumptions were terribly wrong.

The constant extension of hours of labor (so-called full employment) was itself the “class domination” imposed on the working class for the purpose of expanding (not deducting from) the production of surplus value by unproductively consuming the resultant product of labor. Holloway and Picciotto (and perhaps also Yaffe, it is not clear) all begin their analysis of full employment with the totally outlandish assumption that longer hours of wage slavery is a benefit for the working class!!!!

From their point of view, if there is anything to be explained regarding this “benefit”, it is the limit on the state’s ability to grant it. Apparently it never occurred to these bumbling fools that the interest of capital is always to extend hours of labor even if this can only happen in the form of increasingly unproductive activity on behalf of the fascist state. Having assumed (apparently along with Yaffe) that ever longer hours of labor is a “benefit” for the wage slave, Holloway and Picciotto then have the gall to chastise the writer for not recognizing,

“the other limitations arising from the nature of the state’s structural relation to, and separation from the immediate process of exploitation — limitations which greatly restrict or render impossible state action in the rational interests of capital, irrespective of the limits of state expenditure.”

Which is to say, since longer hours of labor benefit wage labor, not capital, there must be a separate political limit on the state providing this benefit that arises from the nature of the state itself.


“Open Marxism” and the Myth of the Class Struggle

capitalistThere is a truism of sorts stated in Sol Picciotto’s paper: “the crisis of international capital is also a crisis of the international state system.” Given this, the aim of labor theory has to be to uncover this crisis and its material reality beneath fetishized forms of appearance.

For “open Marxism” to say the crisis of international capital is also a crisis of the international state system is, however, ambiguous at best and in practice completely misleading. No one will take exception to the idea the crisis of capitalism is also a crisis of the state, however I think Picciotto defines it this way in order to assert we are facing two different crises, not one and the same crisis.

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