The Value of Labor Theory (and the uselessness of labor theorists)

by Jehu

In 1971, the United States, under pressure from international economic forces, was forced to abandon the gold standard. Yet forty years later, labor theorists have failed to come to grips with that event and refuse to acknowledge what it technologicalunemploymentsignified: the final collapse of production on the basis of exchange value, as was predicted by Karl Marx in 1858. This incapacity to recognize Marx’s prediction in the actual events of 1971, probably more than any other single event in 20th century history, demonstrates the utter and complete failure of the post-war Marxist school.

In his Grundrisse, Marx wrote that the forces of social production appeared as mere means for creating vast wealth for capitalism, when, in fact, social labor was “the material conditions to blow this foundation sky-high”:

“The theft of alien labour time, on which the present wealth is based, appears a miserable foundation in face of this new one, created by large-scale industry itself. As soon as labour in the direct form has ceased to be the great well-spring of wealth, labour time ceases and must cease to be its measure, and hence exchange value [must cease to be the measure] of use value. The surplus labour of the mass has ceased to be the condition for the development of general wealth, just as the non-labour of the few, for the development of the general powers of the human head. With that, production based on exchange value breaks down, and the direct, material production process is stripped of the form of penury and antithesis.”

The most recent example of the refusal on the part of labor theorists to come to grips with the accuracy of Marx prediction is to be found in an almost indecipherable academic paper by the labor theorist Leda Maria Paulani, a Brazilian Marxist: “Money in contemporary capitalism and the autonomization of capitalist forms in Marx’s theory”.

Paulani has a somewhat different take on the events of 1971 than might be found in most Marxist writings. Whether by intent or accident, she manages to address the events of 1971 in much the same way Marx phrased his prediction in 1858 as the growing contradiction between use value and exchange value. However, as we will see, Paulani draws a conclusion from the collapse of Bretton Woods that is in complete contradiction to the one Marx predicted.

(First, a warning: For some reason, as is widely expected of labor theorists today, Paulani begins her discussion with the obligatory Hegelian ‘dialectical’ bullshit that only serves to bury her argument. Although most activists don’t know who the fuck Hegel was, we have to put up with this sort of half-baked sophomoric philosophical bullshit because academics are not writing for activists: rather, they write for themselves and their equally indecipherable colleagues.)

Paulani begins her discussion of the collapse of Bretton Woods in a way that seems, at first, promising: money carries in itself a contradiction between use-value — the specific qualities of the commodity that can satisfy human needs — and exchange value — the expression in some money form of the time it takes to produce the commodity.

“If we adopt a dialectical reading of Marx’s theory of money, we can see that money contains within it the contradiction of commodity itself (between use-value and value) and in so doing, it contains different strata of contradiction that logically and historically have come to the fore.”

This contradiction, Paulani explains, helps us to explain why, in 1971, the US was forced off the gold standard, and why today the dollar — a valueless fiat currency — effectively serves as money in the world market. The fact that valueless fiat dollars serve as world money to the exclusion of a commodity money like gold may seem to contradict Marx’s insistence that money must be a commodity, but Paulani assures us the absence of a commodity money today can be reconciled with Marx’s theory of money.

“In other words, my intention is to show that an autonomization movement that leads from commodity to fictitious capital is present in Capital. Perceiving this, helps us understand the relevance of Marx’s considerations in understanding today’s capitalism, with regard to the nature of money itself and the predominance of financial valorization with the increasing importance of fictitious capital.”

Paulani’s aim then, is to demonstrate why a valueless fiat currency is completely compatible with Marx’s theory of money and thus why the events of 1971 have no significance to us whatsoever.


“We are being afflicted with a new disease …”

In any exchange the use value of the commodity and its exchange value is positioned at opposite poles of the transaction: for the buyer, it is the useful side of the commodity that matters, while, for the seller, it is the value side that matters. What this means is that the value of the commodity — the time it takes to produce the commodity — always appears to us in the form of the money used to complete the transaction.

In chapter 1 of Capital, Marx argues that with money the value or labor time required to produce the commodity effectively becomes independent of its qualities as an object capable of satisfying a human need. To put this another way: according to Marx, in the capitalist mode of production the need a commodity satisfies (its use value) has nothing to do with the amount of labor it takes to produce the commodity.

Keeping the argument at this level, it is possible to understand the most important assumption point Marx was trying to establish in chapter 1 of Capital: Social production through exchange leads to the separation of the useful qualities of the commodity from the labor time required to produce it.

Why is this understanding important?

For us this has significance because, as can be seen in the quote at the top of this essay, Marx wanted to show why the capitalist epoch is one where the labor time necessary to produce a commodity is constantly reduced by the improvement in the productivity of labor and why this had to ultimately lead to the breakdown of production on the basis of exchange value. To make this clear, Marx had to show why the reduction of socially necessary labor time (which makes possible the creation of surplus value, i.e., profit) has nothing whatsoever to do with the need the commodity satisfies.

The value of the commodity was completely independent from its use value, making possible a growing antagonism between use value and exchange value that, in Marx opinion, would lead to the end of production on the basis of exchange value. In the 1850s, Marx was already clear that the spread of social production had to eventually put an end to labor and he set up his argument in chapter 1 of Capital so as to make this assumption clear to us:

“As use values, commodities are, above all, of different qualities, but as exchange values they are merely different quantities, and consequently do not contain an atom of use value.”

This is the “contradiction” in the commodity that first expresses itself externally in the form of exchange value, i.e., in the form of some definite amount of a commodity money. After the exchange, the use value of the commodity is consumed by its new owner; while money allows the exchange value of the commodity to become independent in the form of some definite amount of money in the pocket of the seller.

Paulani calls Marx’s description of what is taking place in any transaction the first movement of the separation of value and exchange value — money allows value (the time it takes to produce a good) to exist independently of use value (the use served by the good for us):

“with the introduction of money, value becomes autonomous from use-value that also constitutes the commodity.”

Unfortunately, Paulani — like many other labor theorists — mystifies Marx’s point in my opinion. As I stated above, all Marx is saying is that, with the emergence of social production through exchange, the time it takes to produce a commodity (its value) has nothing to do with the need it satisfies (its use-value). The commodity producer is only really concerned about the value of the commodity — he does not care about its use value, except that he must find a buyer for this use value.

For Marx — writing in the 1840s, 1850s and 1860s — the most important thing about the capitalist mode of production was its revolutionary impact on the social labor time of society. It would be almost a century before economists like Keynes would admit to the problem this posed for capitalism: the problem of what Keynes called “technological unemployment”. In Keynes words, “technological unemployment” simply means the need for labor was being reduced faster than new uses for labor could be found — leading to a permanent surplus population of workers:

“We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come–namely, technological unemployment. This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.”

In chapter 1 of Capital, Marx was setting up an argument for why this “technological unemployment” was an inevitable result of capitalist commodity production.

Now, so far as I can see, if you ask the average labor theorist today what Marx was trying to do in chapter 1, not a single fucking living one of them seems able to explain in simple words what I just wrote in the above paragraphs. They cannot tell you why Marx was going to great effort in section 1 of chapter 1 to clearly separate the two aspects of the commodity. They haven’t the slightest fucking idea — not one of them. And thus not one of them realizes the connection between Keynes’s admission in 1930 and Marx’s argument in 1867. Keynes is portrayed as this fucking 20th century genius, when in fact he was just beginning to catch up to the argument Marx made some 60 years earlier.

Marx already saw in the early 19th century what Keynes only realized when it was staring him in the face as a Great Depression and he set up his argument in chapter 1 to emphasize this point: as a result of capitalist development of the productivity of labor power, the need for labor itself was going to go away.

To be continued