A Brief Sketch of the Political Economy of Barbarism

by Jehu

So what is the political economy of barbarism (fascism) and can it be critiqued by labor theory? I would suggest this is very difficult, since the law of value no longer operates freely in such a mode of production. What we take as the real categories similar to the ones found in Marx’s Capital can be entirely misleading unless we are careful in our analysis.

Starving-ChildWe can begin, as Marx did for political economy generally,  by examining the mode of production as it appears in bourgeois political economy itself and do in reverse what Marx did prospectively in some instances. In various places in his writings, Marx clarified the workings of the capitalist mode of production in terms of how similar processes would appear under communism. An example is to be found in a 2011 dissertation produced by Peter Hudis, “Marx’s Concept of the Transcendence of Value Production“.

Hudis argues in chapter four of his dissertation that in Capital Marx makes critical comments about the capitalist mode of production by throwing light on how these same processes might appear in the new society. He employs these observations in an attempt to construct in rough outline how the transcendence of value might appear in the new society. For instance, he states,

“While the scope of Capital is restricted to an analysis of capitalism, an examination of its most important concepts shows that they contain a number of suggestions regarding his view of a postcapitalist society.”

Is it possible to do this in reverse? Can we examine barbarism as it appears in the conception of bourgeois economists in order to relate these ideas to the familiar categories of labor theory analysis of the capitalist mode of production?

One clue to this is provided by John Weeks in a rather astonishing (for me at least) outline of the assumptions of neoclassical money theory in his paper: “The theoretical and empirical credibility of commodity money”. Although Weeks’ aim in this paper is to demonstrate the superiority of a commodity based theory of money compared to the neoclassical idea that ‘anything can be money’, in his attempt, he dissected the neoclassical idea of money for us. As a result of this effort, Weeks laid bare the basic mechanism of fascist state economic policy in a detail and clarity I had not encountered before.

Weeks’ discussion demonstrates that barbarism is not, as Luxemburg and Lowy assert, a regression in the mode of production, but an advance in the mode as was indicated by Engels in Socialism, Utopian and Scientific. It turns out state economic policy may be for the American system, what Gosplan was for the Soviet Union: a means of managing the total capital under the state’s control. The distinction between the two must be noted: Gosplan managed the act of labor itself and the production of use values directly. Fascist state economic policy, to the contrary, manages the act of production through the price mechanism, divorced from any particular act.

Both, however, can be thought of as similar to this extent: the whole of the capital operates essentially on the principle of a company town. Everything within the town is essentially owned or controlled by the company; all apparent distinctions between company and town governance is merely formal. The state is not just the representative of capital, it is the manager, more or less, of the process of reproduction of the total capital. In the Soviet system this management is completely transparent, while in the American system, the real and actual role of the fascist state in managing the reproduction of the total capital is indirect and obscured by the very method of management: prices.

So how is this management effected?

As would be expected, any system of management that takes prices as its mechanism of management, must begin with the object serving as money. This method of management requires the state has control over what ever material serves as the money in the so-called economy. According to Weeks, therefore, fascist state economic theory begins with a variant of the quantity theory of money that attempts to demonstrate how the quantity of money in circulation can determine, “the level of output and employment as well as prices and interest rates.”

To be clear (and I will show why this is true) it should be noted that what Weeks calls “prices”, is actually wages, and what he calls “interest rates” is actually profits. So fascist state money theory seeks to explain how the quantity of money in circulation determines employment, output, wages and profits.

Fascist state money theory, says Weeks, presents two difficulties from the outset. The first difficulty is whether the state is trying to determine the prices, employment, output and interest rates on production of only one or several commodities. According to Weeks,

“The standard approach in the neoclassical quantity-based monetary framework is to assume that the hypothetical economy has only one product”

Weeks thinks this assumption is absurd, but nevertheless forced on neoclassical economists:

“While the assumption of a single, composite commodity may seem absurd (which it is for most purposes), it is essential in the neoclassical monetary theory.”

Is this neoclassical assumption really absurd, however? Of course not. We are after all talking about the capitalist mode of production, where there is only one commodity capable of making real capital of money capital: labor power. The sale and purchase of labor power is the sole necessary commodity transaction in the capitalist mode of production that is the premise of the mode itself. All other commodities produced in this mode of production are more or less raw materials in the production of this one commodity. And the production process of the mode is more or less the consumption of this one commodity to produce surplus value. While there are many commodities within any other system of commodity production, in the capitalist mode of production there is only one real or final commodity. Or, perhaps more accurate, all other commodities are only the production of this one commodity at its various stages of production. In any case, the whole of capitalist production can be conceptualized as essentially the production of labor power.

If the entirety of the output of a capitalist economy can be conceptualized as the production of a single commodity, labor power, the entirety of prices in the economy can be conceptualized as wages plus profits. As the blogger Sam Williams has pointed out, in neoclassical theory the term ‘interest rate’ has been substituted in place of the term ‘profit’. When neoclassical economists refer to the ‘rate of interest’, they are simply referring to the ‘rate of profit’, and nothing more. (I do not think this is an accident, but is determined by the very regime of accumulation in advanced capitalist economies.)

The second difficulty for fascist state economic theory is what serves as the money in the economy. Neoclassical theory assumes “the quantity of the means of payment is determined ex machina by an entity usually identified as the ‘monetary authority’.”

Can the state determine the supply of money?

Weeks’ discussion of this problem is not at all satisfactory, because he never grasps that the state control over what serves as the money in the economy arises because real (commodity) money no longer can circulate as money. It is not that the control over money is usurped from society by the state, but that society itself expelled money from circulation. This is not a mystery: we know exactly when and under what circumstances money was removed by society from circulation. And we know exactly how and under what circumstances the state had to step in with its own fiat as substitution for this catastrophic event.

The cause in both cases are identical: commodity production came to an end. Once commodity production came to an end, commodity money could no longer serve as money in the so-called economy. Labor theory emphasizes this: the movement of money is only a reflex of the movement of commodities. (How many times must this be repeated before goddamned Marxist academics get it through their thick skulls.)

The very same events that forced the fascist state in Washington to substitute its valueless fiat dollar for money, therefore, brought the whole of productive activity within the world market bound up with the dollar under Washington’s control. This was the culmination of decades of catastrophic development, consisting of two world wars, a massive depression, and the imposition of an effective hegemony over the national capitals of all advanced capitalist economies by Washington.

Let’s see why this is true.

Weeks explains that to understand the neoclassical theory, we have to “begin as capitalist exchange presents itself.” In a given time period, the sum of all sales (total number of commodity sold times their prices) is equal to the sum of all purchases (total means of purchase used in those transactions). If we divided the sum of purchases by the sum of means used to make purchases, we get the turnover rate of money. In standard neoclassical theory, there is only one commodity and the state controls the quantity of money in circulation. Thus, in order to erect a quantitative theory, therefore, neoclassical theory has to assume the turnover rate of money (velocity) is constant.

In labor theory the velocity of money rises or falls with the movement of commodities, but in neoclassical theory, it is constant. Since there is only one commodity in the economy and since the turnover of money (v) is constant, neoclassical theory proposes any change in the quantity of money in circulation will increase the price or the quantity of the single commodity. The state can, therefore, simply increase the prices and quantity of the single commodity by adjusting the quantity of fiat in circulation.

This argument, states Weeks, is vulnerable on a number of counts: First, there is not one, but millions of different commodities produced in the world market. Second, Weeks claims fiat behaves like commodity money, with some portion of fiat held idle. Thus the quantity of fiat in circulation may not equal the quantity counterfeited by the Fed. Third, Weeks claims the neoclassical theory is only valid if the output is constant. Lastly Weeks claims neoclassical theory is ultimately done in by the realization no state can determine the quantity of money in circulation.

So let’s take these objections one by one to see if Weeks critique of neoclassical theory is valid.

First it has to be stated that if we were dealing with a system of commodity production, Weeks would not only be true, he would be dead on. But we are not dealing with a system of commodity production — there is, in fact, only one commodity produced in this system. That commodity is labor power. which is the source of surplus value, and hence the only necessary commodity in the entire mode of production All other ‘commodities’ in this system are mere use values: they are not commodities, but the raw material necessary for the reproduction of labor power.

Second, we are talking about a continuous process of circulation, where capital must always circulate to be capital. The problem here — the obstacle to the continuous circulation of capital — is itself commodity money, which is why society abolished it. To prevent capital from becoming a hoard of commodity money, commodity money had to be replaced by valueless token dollars. The assumption here is that these valueless tokens will remain in circulation because they are money-capital, not money. So, the assumption in labor theory is that no capital is held idle and money that is held idle is not capital. This assumption suggests neoclassical theory is only concerned with money-capital, not money at all. Moreover, as I will show, the velocity of money has no significance whatsoever under barbarism.

Third, the assumption that the system is always at full potential is very odd. The self-expansion of capital is already given as the aim of the capitalist mode of production. And the exploitation of labor power (the sole commodity consumed) the production of surplus value is already given as the means to this aim. As I will show, just as v (turnover) has no meaning under barbarism, so Y — that is labor power — has none at all.

Fourth, this is the triggered my understanding of how profound Weeks’ paper was. Weeks argues “Not even in theory can there exist a monetary authority that determines the quantity of money.” This statement has to be seen as absolutely true, BUT entirely beside the point: society has already set the quantity of money at zero. It set the quantity of money at zero when it removed all commodity money from circulation and forced the state to replace it with fiat. The rest of Weeks’ paper is devoted to this problem, but the problem doesn’t actually exist. In the mode under consideration, barbarism, the total sum of money in circulation, in all currencies and forms, is zero. Moreover, the total sum of the various monies and near monies in circulation has to be zero because real money, and any token of money pegged to it, won’t circulate AS MONEY.

The argument by neoclassical theory in this instance is a feint, and Weeks fell for it, as I will show. It is obvious that the Federal Reserve cannot itself determine the quantity of money, even if it had a definition that was less bullshit than the one offered by neoclassical theory. As Weeks shows, this definition basically comes down to this: nothing will be allowed to threaten the position of the dollar as reserve currency in the world market. Weeks puts it this way:

“The essence of the neoclassical monetary problem can be simply stated: the theory provides no nominal anchor for prices. Without a nominal anchor, the need to define and restrict what can serve as money is absolute.” (my emphasis)

Simply stated, The United States will turn this fucking planet into a SMOKING CINDER before it lets any other currency threaten the dollar’s position as world reserve currency. Academics are entirely too polite when it comes to telling the rest of the world the limits to their behavior that will be tolerated by Washington. Misconceptions, like the US will stand by idly and let other nations challenge the dollar, must lead to Iraq being reduced to a mass of burning flesh and screaming women and children. So while Weeks is trying to prove why an ounce of gold serves better as a measure of value in the economy, the US is explaining the harsh realities of fascist state economic policy to recalcitrant pupils in Afghanistan, Libya, Syria, etc.

Anything can be money?

Although fascist theory states anything can be money, it turns out the real problem, if neoclassical theory is to be believed, is precisely that “anything can be money”, which is to say, in barbarism, money is a worthless token whose function can be filled by ANYTHING. Under this condition, the fascist state has to ensure that its token alone serves as money, to the exclusion of all other tokens. The real monetary policy of the United States, according to Weeks, consists entirely of preventing any competitor to the dollar to emerge.

Weeks argues:

“The theoretical ambiguity is implied, since something which can be anything has no separate existence from all other things. The existence problem derives from the methodological core of neoclassical economics, the combination of the assumptions of individual utility maximization and full knowledge of the information generated by markets. If people have full knowledge of all markets, they will know the money price at which each commodity would be bought and sold. If they know this, they can exchange commodities directly without passing through the intermediary of money.”

This criticism is badly stated: In a factory system, unlike the market, it is not true that economic actors have no knowledge of the socially necessary labor time required for the production of their commodities. Since in the factory system all production proceeds according to a plan — however despotic this plan may be — the requirements of the activity of producers does not have the anarchistic character of a society of individual producers each of whom carry on their activity in isolation. Money itself arises because the activity of isolated individual producers only becomes social in the act of exchanging their commodities. In the factory system no such impediment occurs and there is no need for money arising from exchange of products.

This can easily be seen when we evaluate the equations provided by Weeks in his paper: In equation 1, the sum of all purchases is equal to the sum of all payments:

Sum (P1Q1) = Sum M1

What is the value of M1? In neoclassical theory this value is assumed to be zero since money itself has no value. Which is to say, the sum of all transaction is always zero no matter how large the number or how big each transaction is. The value of the total trade between the US and China has exactly the same value as a candy bar: zero. If the sum of all transaction is zero, the sum of all purchases must be zero as well, e.g. the prices of all the commodities purchased and sold in the US annually (GDP) is zero.

This, mind you, is not an artifact of some silly assumption of neoclassical theory: in order for fascist state policy to work, the products of labor no longer can be treated as values, as commodities; they can only be treated as use values. In order for the fascist state to take the management of the total capital of the world market under its control it must, at the same time, strip this capital of its labor values.

Since the total capital of the world market can only be managed as a whole if the products of labor is treated as non-commodities, as mere use values, what function do prices play in this system of production? If prices do not result from the socially necessary labor time required for the production of goods, they must have some other cause. Marx already has established the values of commodities do not arise from anything particular to those commodities — weight, color, etc. No particular characteristic of individual commodities plays any role in the determination of their value.

Now, if neoclassical theory is to be believed, and the characteristics of the currency employed in the economy tends to support their assertion, socially necessary labor time itself plays no role in the determination of their prices. But, the exchange value (price) of an object is a wholly social relation between people that appears in the form of a relation between things, so this would suggest that price in this case expresses an implicit relation between the social producer and the product of her labor: it is not hers. The product of her labor belongs to the issuer of the currency that serves as money in the transaction.

But it seems to me this does not exhaust the issue: in the exchange of labor power for wages, the worker is paid nothing. Since the currency with which she is paid has no value, from the standpoint of both labor theory and neoclassical theory, she is working gratis. Isn’t this right? It is not as though labor theory comes to one conclusion and neoclassical theory another — both agree on this — a valueless inconvertible token cannot express the value of any commodity.

Fiat currency, therefore, stamps not only the product of her labor, but the worker herself as the property of the fascist state. How the fuck is this not slavery? What the fuck am I missing here?

See, here is the problem: the worker has no means to life nor access to any means to produce those means. She is, therefore, absolutely dependent on selling her labor power to access those means. But the sale of her labor power for valueless fiat in no way constitutes an exchange of equivalents — she has essentially given it away.

This is not just the conclusion of labor theory analysis of the transaction, it is the conclusion of fascist state economic policy itself. Which means fascist state economic policy BEGINS with the assumption that the worker is not paid for her labor power. It begins with the assumption that all sales and purchases of labor power in the so-called economy are fictions. Labor theory does not disagree with this conclusion: it confirms that, indeed, every transaction in this economy is a fiction.

And this raises no red flags among the Red Flag people?

The value of any commodity can only be expressed in the form of an exchange value contained in the money. Fascist state issued currency — the dollar — has no value at all and, therefore, cannot express the value of a commodity in its own material. This is not an accident of history, the fascist state from the beginning sought to replace money with an object having no value. Moreover, this has to be emphasized: I am not talking about sterile competing theories of money here, I am describing what is actually occurring in the ‘economy’ right now. A transaction in which one individual must provide to another an object of value in return for nothing is not a transaction, it is slavery. The pieces of scrip floating around through the economy as a result of ‘transactions’ of this sort, are only a distraction. The pieces of scrip conceal the unique feature of barbarism: in this mode of production the worker herself is the property of the state.

The worker in this mode of production is no longer the doubly free laborer Marx wrote of under capitalism: she is free of all means to life, but free also from the ‘burden’ of her peculiar property. She is, in other words, absolutely impoverished, absolutely immiserated, completely bereft even of herself — and this no longer merely the result of exchange relations. Alienation (to use a term that will be comprehensible to our dumb fucking Marxist academics with eight fucking semesters of god-damned Hegel) has reached its extreme expression within society, in which the vast mass of the population no longer even own themselves, but merely inhabit the property of the fascist state.