In the last post I argued that, eventually, the state would have to find a way to pay working society for labor time that was not socially necessary on pain of its dissolution.
Well, “eventually” turned out to be somewhere around 1933, in the middle of the great Depression.
And, to be fair, the state did not set out to actually pay people for labor that was not socially necessary; it just kind of ended up that way.
What they set out to do was, among other things, save the social equivalent of our poor, doomed hand-loom weavers, poor doomed depression-era farmers.
Prices in 1933 were crashing in a deflationary death-spiral not unlike that faced by our poor doomed hand-loom weavers. The state was finally forced to intervene to take control of capitalist production, beginning with agriculture.
One source put it this way:
Within days of his inauguration in 1933, President Roosevelt called Congress into special session and introduced a record 15 major pieces of legislation. One of the first to be introduced and enacted was the AAA, the Agricultural Adjustment Act. For the first time, Congress declared that [it] was “the policy of Congress” to balance supply and demand for farm commodities so that prices would support a decent purchasing power for farmers. This concept, outlined in the AAA, was known as “parity.” AAA controlled the supply of seven “basic crops” – corn, wheat, cotton, rice, peanuts, tobacco and milk – by offering payments to farmers in return for taking some of their land out of farming, not planting a crop.
As you can see from the above quote, the early Roosevelt fascist programs were based on a flawed idea: the state was “offering payments to farmers in return for taking some of their land out of farming, not planting a crop.”
Owing to the improvements in application of science and on the progress of technology in agriculture the need for human labor in the sector was plummeting. Consequently, the value of agricultural products and their prices plunged. Very quickly farmers found themselves in the same situation as our poor doomed hand-loom weavers: working long hours for very little return. Roosevelt promised he could fix this by, essentially, paying them to not grow stuff — an early example of what is now known as basic income.
It took a genius like Keynes to see the flaw in this dumb idea:
To judge from some utterances of the Chancellor of the Exchequer, he has been attracted to the idea of raising the prices of commodities by restricting their supply. Now, it may well benefit the producers of a particular article to combine to restrict its output. Equally it may benefit a particular country, though at the expense of the rest of the world, to restrict the supply of a commodity which it is in a position to control. It may even, very occasionally, benefit the world as a whole to organise the restriction of output of a particular commodity, the supply of which is seriously out of balance with the supply of other things. But as an all-round remedy restriction is worse than useless. For the community as a whole it reduces demand, by destroying the income of the retrenched producers, just as much as it reduces supply. So far from being a means to diminish unemployment, it is, rather, a method of distributing more evenly what unemployment there is, at the cost of somewhat increasing it
The only thing to be gained by paying farmers not to grow crops, said Keynes, is to make everyone in the farming community poorer!
As an alternative, Keynes proposed a rather startling axiom:
For commodities as a whole there can be no possible means of raising their prices except by increasing expenditure upon them more rapidly than their supply comes upon the market.
In other words, to stop the collapse of prices in the Great Depression, the state had to pay more for commodities despite their diminishing value.
Price would no longer express the socially necessary labor time required to produce a commodity, its value.