Class Struggle and the Breakdown of Production Based on Exchange Value

by Jehu

2002_currency_exchange_AIGA_euro_moneyYou have to notice what the labor theorist, George Caffentzis, asserts in his essay “Marxism After the Death of Gold“. Although, according to Anitra Nelson, Marx believed the credit system itself “signals the disintegration of capitalist relations”, according to Caffentzis, the final detachment of the credit system from gold refutes Marx. Caffentzis and other labor theorists had two ways of interpreting Nixon’s actions in 1971: the death of capitalism or the death of labor theory.

Guess which one they chose.

For labor theorists like Caffentzis, the collapse of the Bretton Wood agreement wasn’t a signal that production on the basis of exchange had finally broken down completely, rather, it was a signal that Marx turned out to be completely wrong about such an elementary and fundamental category of his labor theory as money.

Thus, throughout the 1970s, we have these Marxists who are trying to explain the relationship of the state to the mode of production yet don’t even realize production based on exchange value no longer exists. Moreover, as the recent publication of Caffentzis’ essay demonstrates, even 40 years later they don’t realize it. Yet we are expected to believe these labor theorists are able to explain the relationship of the state to a mode of production that effectively ceased to exist in 1971?

It is, of course, a heresy these days to suggest production on the basis of exchange value no longer exists, despite the fact Marx predicted just such an outcome. Even if Marx had not predicted precisely this outcome, all the evidence at the disposal of labor theorists point to this conclusion. The fact that on top of Marx’s prediction, the evidence available to labor theorists supports this conclusion only makes their errors that much more egregious and unforgiveable.

If production on the basis of exchange value had already ceased to exist by the time of the debate of the 1970s, what then was the “function” of the state? The question answers itself: the function of the state was to facilitate the production of surplus value in a period where exchange value no longer existed. The production of surplus value did not cease, but the newly produced surplus value could no longer be expressed in the form of exchange value. To be expressed in the form of exchange value required a commodity money to serve as standard of prices, however, in 1971, the US was forced to end redemption of dollars with gold under the Bretton Wood agreement. Henceforth dollars could only be redeemed for dollars, or, what is the same thing, the dollars themselves become “world money”. The role played by gold as world money came to an end along with breakdown of production on the basis of exchange value in the world market.

Facilitating the production of value amidst the breakdown of production based on exchange value is not a function of the state in general; rather it is a function that can only be played by one state in particular: Washington. No other state has this capacity and, therefore, in relation to Washington, all other states are merely failed fascist states. Thus, by the 1970s, the relation of the state to the mode of production came down to the relationship of Washington to the total capital of the world market.

Since the relationship of “the political” to “the economic” (as Clarke puts it), is the relation of any given state to the total capital of the world market, it is obvious that, contrary to Holloway and Picciotto’s argument, the class struggle of any country has no impact whatsoever on this relation. The class struggle in Britain is over which class will control the state power in Britain, but the state power in Britain has no control over the total capital of the world market. The same, with more or less the same degrees of validity, can be said of the class struggles in Greece, Spain, Russia, Ukraine, etc.

What does it mean to say production on the basis of exchange value finally broke down in 1971? It means, in first place, that capital could no longer become money and, unable to become money, could not be exchanged for labor power. As explained in Wage Labour and Capital,

“Capital perishes if it does not exploit labour-power, which, in order to exploit, it must buy.”

To exploit wage labor, capital must first become money, i.e., the surplus value produced exploiting labor power must be realized in a sale. The breakdown of production on the basis of exchange assumes no more than this leap of value from commodities to money cannot take place. This is exactly the situation France and other advanced capitalist countries found themselves in when Nixon closed the gold window. The dollars they accumulated through trade surpluses with Washington were only placeholders, tokens, of money to be redeemed for gold. When Nixon refused to redeem the dollars for gold, these countries were forced to recognize the dollar as “money”, just as previously their own citizens were forced in the 1930s to recognize the tokens issued by each state as such.

But the recognition of US dollars as “world money” amounted to the exchange of commodities for a symbol of money having no value at all. It was, in fact, the recognition that the commodities themselves had no exchange value and, therefore, that the surplus value they contained could not be realized. Although nations protested this state of affairs, outside the dollar zone the limits of surplus value realization was severely constrained.

To realize the surplus value in the form of a trade surplus, this trade surplus had to be realized in the form of valueless American tokens. And this was because no other nation was willing or able to run the trade deficit necessary to absorb the excess capital accumulating within the world market. Just as Keynesian style deficit spending had been shown to be necessary to avoid depression within each nation, the deficit spending of the United States was now a condition for production of surplus value in the entire world market.

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