Moseley’s MELT

I have been reading Moseley’s 2011 paper, “The Determination of the “Monetary Expression of Labor Time” (“MELT”) in the Case of Non-Commodity Money”.

Don’t bother looking for the paper.

You probably won’t find it.

Since, above all, the subject of the paper is all about issues that determine your miserable life as a wage slave, naturally academics, as a public service to your venal slave masters, prefer to keep it well-hidden from you behind their intellectual property firewalls.

I only mention the source because I am working on an exhaustive examination of Kliman’s 2011 book and, while reading it, I felt had to address this very interesting bit of typical post-war Marxist revisionism by Fred Moseley in 2011. Kliman uses MELT in his book, so I will have to address it as some point. The comments here apply directly to Moseley’s variant of the MELT, but, as you will see, are probably appropriate to the entire class.

MELT sucks.

*****

Moseley’s MELT begins, quite naturally, as all such revisionism does, with a quote from Marx:

“If the paper money exceeds its proper limit, i.e. the amount of gold coins of the same denomination that could have been in circulation, then … it will still represent within the world of commodities only that quantity of gold which is fixed by its immanent laws.”

Our post-war Marxist revisionist then goes on to paraphrase (i.e., revise) Marx this way:

“Therefore, in the case of inconvertible fiat money, Marx’s theory is similar to the quantity theory of money in the sense that the quantity of money is independent of prices and determines prices (in part). However, Marx’s theory is also different from the quantity theory in the sense that the quantity of money does not determine prices directly, but rather indirectly through the MELT.”

Did you see that?

Hilarious, right?

In Marx’s original quote, paper money can only represent the value contained in a quantity of a commodity money. Moseley, however, revises Marx to assert paper money can represent some imaginary mathematical function.

He then attributes this new revised formulation of Marx to Marx.

Moseley performs this act of revisionism by reducing commodity money to an absolute theoretical abstraction: it is no longer the highest form of exchange value, i.e., the expression of the socially necessary labor time required for the production of a commodity expressed in the body of another commodity, but the mere paper cash equivalent of aggregate labor time in general.

The category, exchange value, has disappeared from Moseley’s new construct altogether — along with the distinction between useful labor and value-producing labor and the distinction between socially necessary and superfluous labor.

Moseley writes:

“In this case of inconvertible credit money, in any given period in the economy there exists a certain quantity of L, the total quantity of SNLT that must be represented in some way, and there is no other way to represent it except by credit money.”

In this statement — and despite much discussion to the contrary in the literature over the years — Moseley just expects us to accept as given that the “L” in his equations, or, more importantly, in government employment data, is equal to SNLT as defined by Marx.

If, however, “L” as presented in government stats is not the same as SNLT in Capital v1, chp1, Moseley has a huge problem. It is a huge problem because in Capital v1, chp1, SNLT can only be manifested as exchange value — i.e., in the body of another commodity, a money commodity.

Yet our revisionist, Moseley, has removed exchange value from his MELT equation.

Or, more accurately, society has removed exchange value from circulation and Moseley is trying to replace this necessary category of commodity production and exchange with his MELT.

Moseley continues,

“At the same time, there also exists M p V, the total quantity of paper money adjusted for velocity that is available to represent SNLT.”

Yes. Available to represent SNLT. But, in point of fact, this mass of M p V (i.e., value-less paper money) cannot differentiate between unnecessary labor time and socially necessary labor time; or between value-producing labor time and merely useful labor time.

Moreover, in his 2011 paper, Moseley offered nothing in his MELT that would allow us to make such a distinction.

Of course, Marx addressed this issue, but for some reason Moseley ignores Marx’s solution, although he actually quotes it:

“If the paper money exceeds its proper limit, i.e. the amount of gold coins of the same denomination that could have been in circulation, then . . . it will still represent within the world of commodities only that quantity of gold which is fixed by its immanent laws. No greater quantity is capable of being represented. If the quantity of paper money represents twice the amount of gold available, then in practice £1 will be the money-name not of 1/4 of an ounce of gold, but of 1/8 of an ounce. The effect is the same as if an alternation had taken place in the function of gold as the standard of prices. The values previously expressed by the price of £1 would now be expressed by the price of £2. (Marx 1867: 225)”

Marx appears to be saying that although gold no longer plays any direct role in the circulation of commodities, it still plays an indirect role in determining the value represented by prices of those commodities.

If the quantity of currency in circulation exceeds the amount of coin that would have been required for circulation, the paper currency would still only represent this amount of gold and no more.

To put this another way, if the United States were to withdraw all of its coin from circulation on April 5, 1933 and replace it with inconvertible currency, and at the same time devalue the currency by 70% — from 20.67 dollars a troy ounce to 35 dollars a troy ounce — the new currency would still represent no more gold (value) on April 5, 1933 than it did on April 4, 1933.

The effect of this currency devaluation would simply be to inflate paper money prices by 40%.

Subsequently, even a floating regime could be calculated as a simple relation between the old price standard and the inverse of so-called floating price of gold.

Which is to say, for all of its nice maths, Moseley’s MELT is entirely superfluous.

We can calculate the value of any commodity by applying the inverse of the price of gold to its nominal currency price denominated in dollars. We can even do this with the value of the output of the entire US GDP.

*****

One other thing remains to be noted about this 2011 paper by Moseley:

Unlike Marx, as part of his MELT theory, Moseley offers no reason for the sudden and complete disappearance of commodity money from the entire world market in every country more or less simultaneously. Nor does he offer any explanation why nation-states stepped in after this sudden disappearance to replace commodity money with their own fiat currencies.

Is it just a case, as certain bourgeois writers have proposed, that commodity money was an aberration in world history or have we witnessed a world historical movement in our time?

If it is the latter, what is the nature of this world historical movement of society?

About now Trump is probably happy for the first time that he…er, ‘lost’ the election…

Let’s say you’re the President of these United States and you order your generals to leave Afghanistan.

But your generals tell you that if they leave Afghanistan all hell will break loose and the shit will hit the fan, yadda, yadda, yadda…

Nevertheless, being president, and being in charge, you look your generals in the eyes and tell them in no uncertain terms that by a date certain their asses should be out of Afghanistan and you don’t want to hear no more fucking discussion on this stupid subject out of them.

“Fine,” say your generals and salute smartly.

And they begin to hatch a plot to make you look like the biggest loser asshole president in the history of loser asshole presidents — I mean a real Kennedy-style Bay of Pigs fiasco to turn the entire country over to the Taliban as they walk out the door.

In the interim, however, this other guy — let’s call him “Jim-Crow Joe” Biden — steals the election and you’re forced to… um, retire to Florida.

Now “Jim-Crow” also wants to leave Afghanistan and the generals can’t convince him otherwise either. But thank god they are still in charge of all the planning and execution of the withdrawal.

And who is better to organize a disaster than the guys in charge of planning the entire operation in the first place — who were against it from the very beginning?

So, its all good.

Kudos to all those ‘communists’ who held their noses and voted Democrap this cycle…

Imagine how horrific this might look if Trump had won…

(Looking at you, Andrew.)

The Fed is dead…

For the past two years or so, Washington has pumped almost 6 trillion dollars of deficit spending into the so-called US economy.

Yet after this staggering bout of mind-boggling unprecedented stimulus, the Federal Reserve still can’t decide when it should begin tapering its bond buying program — much less try to move away from the notorious zero lower bound on interest rates.

Can someone tell me what monetarist textbook this insane policy is based on?

Can someone tell me why, despite the fact that Washington is running both fiscal and monetary policy at full-bore open throttle, inflation is barely registering on the dial and wage employment continues to falter?

Bonus points, if you can explain the implications.

Just saying…

WTF! I guess Q was right. Turns out the FBI and DoD really were diddling little girls, while trying to get rid of Trump.

Somebody tell Kliman.

Labor power, the Law of Value and social production as an emergent property

This post continues from here

Marx was emphatic that labor power is not labor; it is a commodity. But he was equally emphatic that it is not an ordinary commodity.

According to Marx, labor power is a peculiar commodity, what we today would call a superposition — a mashup — of the two categories: a commodity,“whose use-value possesses the peculiar property of being a source of value, whose actual consumption, therefore, is itself an embodiment of labour, and, consequently, a creation of value.”

Labor power is a social, scalable commodity; essentially, forming one homogenous mass composed of billions of individual units, each of which are assumed, in Marx’s theory, to possess the properties applying to the whole.

Also, unlike labor, but like commodities in general, labor power has exchange value, which, according to Marx,“resolves itself into the value of a definite quantity of the means of subsistence [that] varies with the value of these means or with the quantity of labour requisite for their production.”

In other words, the exchange value of labor power is equal to the value of the means of subsistence required to maintain it.

The consumption of labor power, the act of labor itself, creates both use-values and values, in the form of commodities. Unlike the consumption of any other commodity in the act of production, however, this consumption of labor power — its expenditure in the act of labor — does not simply pass into the value of the new use-values, but creates new value.

So, sharing characteristics of both the commodity (in that it possesses a definite value) and labor (in that it creates new value), labor power possesses a two-fold character.

And, like all commodities, it is the use-value of labor power, not its exchange value, that is relevant to its purchaser, the capitalist. Relevant for good reason in this case:

The use-value of labor power is the very premise of the capitalist mode of production: the production of surplus value, production of profit.

*****

Biden could have issued an order to stop climate change in the time it took to mandate vax

Biden’s Covid-19 mandate was a surprising u-turn. In a single set of measures, he:

• ordered millions of federal government employees to get vaccinated or find another job
• ordered all federal contractors to follow suit
• issued the same ultimate to over 17 million healthcare workers at hospitals that participate in Medicare and Medicaid
• forced companies with 100 or more employees to vaccinate their workers or conduct expensive testing weekly, a requirement expected to impact more than 80 million people.
• required nearly 300,000 educators under the federal government’s Head Start Program also be vaccinated,
• expanded free testing, including $2 billion to distribute rapid tests in community health centers, food banks, and schools.
• doubled the fines against those who refuse to wear a mask when traveling

Had he so desired, Biden could as easily have dramatically reduce climate change with the similar set of measures. Simply by reducing the workweek to four days:

• for all federal employees;
• all federal contractors;
• all employees of any private institution, or state or local government that receives any federal funds;
• all companies with more than 100 employees; and,
• imposing steep fines per infraction on any of the above that failed to comply

And, perhaps, one additional measure:

• impose 200% tariff on imports from any country with a workweek longer than 32 hours.

This likely would reduce the U.S. carbon footprint well below its current impact.

The difference, of course, is that the Covid-19 vaccination is all about restarting surplus accumulation, while ending climate change threatens accumulation.

Does one simple rule doom capitalism?

GRAPH: Rules Depending on More Than One Relation
SOURCE: Wolfram Physics Project

This post continues from here

Now, I will admit that it is not very often that the term superposition is applied to a capitalistically-produced commodity by Marxists. In fact, I think I may be the only student of Marx who has ever used the two terms together in the same sentence, although I am prepared to be wrong about this.

The term is usually applied to physical systems that exhibit certain unique properties and some might even question that the term applies to the case of the capitalist mode of production for good reasons.

Why?

Well, according to the Wikipedia:

The superposition principle, also known as superposition property, states that, for all linear systems, the net response caused by two or more stimuli is the sum of the responses that would have been caused by each stimulus individually. So that if input A produces response X and input B produces response Y then input (A + B) produces response (X + Y).

Note the term in the definition given by the Wikipedia: “linear systems.”

The sorts of systems characterized by superposition relations are typically highly mechanistic, linear systems. System of this type, according to the Wikipedia, exhibits certain other unique characteristic properties:

A system is linear if and only if it satisfies the superposition principle, or equivalently both the additivity and homogeneity properties, without restrictions (that is, for all inputs, all scaling constants and all time.) (my emphasis)

The additivity property states that if the same amount is added to both sides of an equation, then the equality is still true. And, according to Wikipedia, “In physics, a homogeneous material or system has the same properties at every point; it is uniform without irregularities.”

Obviously, the capitalist mode of production is not, by any stretch of the imagination, a linear, mechanistic system; otherwise how could there be crises — periodic breathtaking cascades of disequilibrium that shake the entire system to its core? And since the mode of production evidently is not a linear system, it must be the other kind: a non-linear, apparently chaotic, system.

It would appear, then, that at first blush the term, ‘superposition’, probably could not be applied to the capitalistically-produced commodity, although the object appears to exhibit both the characteristics of a commodity and the characteristics of a capital — a commodity form of capital, with a price that appears to be determined by two — not one — laws of motion.

All is not lost, of course.

Just reducing the workweek to 4 days would cut UK’s carbon footprint as much as if all cars were eliminated

How much is wage slavery killing not only you, but the planet too?

Scientists have an idea, according to a recent article from the Guardian:

The introduction of a four-day working week with no loss of pay would dramatically reduce the UK’s carbon footprint and help the country meet its binding climate targets, according to a report.

The study found that moving to a four-day week by 2025 would shrink the UK’s emissions by 127m tonnes, a reduction of more than 20% and equivalent to taking the country’s entire private car fleet off the road.

That’s right. As world wide lockdowns to contain the pandemic suggested last year, reducing the work-week world-wide by just one day could basically end global warming immediately.

Wage slavery is killing you and the planet.

Value, price and the superposition of the capitalistically-produced commodity

This post continues from here

Michael Heinrich thinks Marx prediction of capitalism’s inevitable collapse as a result of progressive substitution of machinery for human labor was itself simply the result of his (Marx’s) irrational exuberance in the 1850s.

So, for shits and giggles, let’s assume Heinrich is wrong about this.

I know, I know — Heinrich’s been published by Monthly Review for God’s sake! He’s actually German or some shit. He actually LIVES in Germany.

He just HAS to know what he is talking about, right?

Bear with me.

Let Marx speak for himself — even though he wasn’t published by Monthly Review, lived in England for a good period of his life and was prone to irrational exuberance in the 1850s.

*****

In the 1850s, Marx and Engels think capitalism was headed for collapse for reasons I already explained above.

In the 1880s, Marx and Engels apparently still think capitalism was headed for collapse — again, for reason I already explained above. (Weren’t you listening, edwad?)

Between those two decades, in the 1860s, Marx writes Capital, which, according to Heinrich, contains not a trace of this irrationally exuberant prediction.

It turns out that another critic, Eugen von Bohm-Bawerk, made a criticism similar to Heinrich’s that Marx made some sort of 180 in his thinking while writing Capital. The issue was not expressly the same as the one directly touched on by Heinrich, but, I want to suggest, it is related to it: the transformation of labor values into prices of production.

Why the two criticisms are related is the subject of this series.

To be clear, although Volume Three was only published in the 1890s, according to Rudolf Hilferding, two years before he publishes Volume One Marx had already completed at least portions of the draft for the third book concerning the transformation of values into prices.

Specifically, Hilferding says:

Before we consider these “arguments” and the counter-arguments of Böhm-Bawerk, it is necessary to say a word or two concerning the “contradiction” or the “withdrawal” which Marx is supposed to have perpetrated in the third volume. As regards the alleged withdrawal, those who use this term have forgotten that the first volume was not published until the tenth chapter of the third volume, which forms the bone of contention, had already been composed. For the draft of the last two books of Capital was composed by Marx during the years 1863 to 1867, and from a note by Engels (III, 209n) we learn that the tenth chapter of the third volume, the one containing the solution of the riddle, was written in 1865. To speak of a withdrawal in this connection is tantamount to saying that Marx, in order to remain at a definite point, first moved a mile forward and then a mile backward. Such is, nevertheless, the view which the vulgar economists have formed of the essence of the dialectic method, because they never see the process but only the completed result, so that the method always seems to them a mystical “hocus-pocus.” Nor is there any better justification for the accusation of contradiction than for the accusation of withdrawal.

I offer this statement only in order to establish a timeline, of sorts, for when Marx formulated his argument on the transformation problem in Volume Three. It seems that Marx was writing portions of several volumes at once, although they were published serially — and two of them posthumously.

Like Bohm-Bawerk on the transformation problem, many post-war Marxists like Michael Heinrich expect us to believe that Marx somehow made a prediction of a collapse of production based on exchange value in the Grundrisse, only to later withdraw that prediction when he set down to write Capital. According to this conspiracy theory, Marx then later stood by, in silent acquiescence, as his life long collaborator, Frederick Engels, revived his allegedly long abandoned prediction in the latter’s own book, the highly popular primer on Marx’s ideas: Socialism, Utopian and Scientific.

Well, I am not buying the “Marx made a U-Turn on his collapse theory” argument.

Instead, I propose an alternative theory:

Das Kapital is Marx’s presentation of the theory of the inevitable collapse of production based on exchange value in its complete form.

*****

This is where the discussion of the transformation of values into capitalist prices of production in Volume Three may be relevant.

And to understand why the transformation problem is relevant, we have to talk about … uh, why Albert Einstein never won the Nobel Prize for his General Theory of Relativity.

Yeah, that’s right.

Einstein won the Nobel Prize in 1925, but not for Relativity. Instead, he won it for settling a long-standing controversy, much like the one Marx settled in Volume Three. Only for Einstein, the controversy was about the nature of light.

What was the controversy about the nature of light that Einstein settled?

About 2400 years ago, the philosopher, Democritus and the mathematician, Euclid proposed models that assumed light was composed of particles. About 1000 years ago, the scientist, Ibn al-Haytham, described light as a ray composed of particles traveling from a point of illumination to the eye.

That view of the nature of light mostly held sway until about 400 years ago, when philosopher, mathematician and scientist, Rene Descartes, proposed an alternative model in which light was a wave that behaved much like sound waves through a medium he called the “aether.”

The controversy over the nature of light, whether it was a particle or a wave, continued until Einstein proposed a rather startling answer: Light was both a wave and a particle, simultaneously — a superposition of the two states.

To borrow a quote from the Wikipedia, which is usually accurate about this sort of thing, except when it comes to Marx’s labor theory of value:

It seems as though we must use sometimes the one theory [of the nature of light] and sometimes the other, while at times we may use either. We are faced with a new kind of difficulty. We have two contradictory pictures of reality; separately neither of them fully explains the phenomena of light, but together they do.

-Albert Einstein, 1938

*****

We have a similar controversy in classical economics prior to Marx.

The problem was this: if value is an objective thing, having a real influence on the real world market, how do we go from this objective thing to actual prices that this objective thing (namely, value) is supposed to determine?

Now, basically, this doesn’t seem like a really big problem to explain, if the only thing you cared about was how value and price worked together in simple pre-capitalist commodity producing societies — although even there some difficulties arise.

But when political economists like Smith and Ricardo tried to describe how prices and profit worked in the more modern complex capitalist mode of production — (and who wasn’t trying to do this in the 18th and 19th century?) — they kept running into an irreconcilable contradiction.

The problem: In theory, at least, there appears to be not one, but two determinants of price in the capitalist mode of production. Further, the two determinants are irreconcilable because they don’t agree on the price of the commodity.

As Sam Williams of the Critique of Crisis blog explained, those two determinants of price are the Law of Value and the Law of the Average Rate of Profit.

The first law says that the price of a commodity is determined by the socially necessary labor time required for production of the commodity:

The law of value as developed by classical political economy held that the value of a commodity is determined by the amount of labor that under the prevailing conditions of production is on average necessary to produce it.

According to the classical economists, the value of a commodity determines its natural price around which market prices fluctuate in response to changes in supply and demand. The fluctuations of market prices around values—or what comes to exactly the same thing, according to classical political economy, natural prices—regulate the distribution of capital among the various branches of production.

But the second law says that the price of a capitalistically produced commodity is determined by the average rate of profit on the total capital of society:

However, it was realized already by Adam Smith that the law of value thus formulated is in apparent contradiction with the tendency of competition to equalize the rate of profit. Under the relentless pressure of competition, no individual capitalist can afford to settle for a lower rate of profit if a higher rate of profit can be achieved. Every capitalist under pain of bankruptcy must seek the highest rate of profit possible.

Assuming there are no barriers to the free flow of capital among the various branches of production—that is, free competition or, as Adam Smith called it, “perfect liberty”—competition among capitals will tend towards a situation where capitals of equal size earn equal profits in equal periods of time.

To put this in terms that might be familiar to folks who are acquainted with the physical sciences, the problem of the price of capitalistically produced commodities result from the fact that they occupy a superposition of both a commodity and a capital.

Marx described it this way:

The whole difficulty arises from the fact that [capitalistically-produced] commodities are not exchanged simply as commodities, but as products of capitals, which claim participation in the total amount of surplus-value, proportional to their magnitude, or equal if they are of equal magnitude. And this claim is to be satisfied by the total price for commodities produced by a given capital in a certain space of time. This total price is, however, only the sum of the prices of the individual commodities produced by this capital.

-Marx, Capital, Volume Three

If, in the case of light, we find it to behave both as a particle and as a wave and neither of these behaviors, taken separately, completely explain physical reality, so in the case of capitalistically-produced commodities, their prices behave simultaneously as if they are the product of labor carried on separately, and the product of directly social labor carried on in cooperation.

This has several implications that I will discuss in the next post.