IV: Simon Mohun’s unproductive effort to identify productive labor
As I explained in my last post, substantiating Marx’s falling rate of profit as the cause of capitalist crises, and, in particular, as the cause of the so-called great financial crisis of 2008, runs into the difficulty that Marx made his argument on the basis of values. The difficulty this poses for analysis is that, since 1971, the various categories of analysis employed in measuring the rate of profit are denominated in inconvertible fiat dollars. Fiat dollars are not money in themselves, but tokens — placeholders — for commodity money. Prices denominated in this inconvertible fiat, therefore, are not values in the sense Marx employs this term throughout Capital.
Thus, in order to construct an empirical proof of Marx’s thesis on the causes of capitalist crises using the empirical data, labor theorists are forced to convert inconvertible fiat prices into Marxian values. This is a new problem that did not exist before the period between 1933 and 1971 when the gold standard began to come unraveled. Since the dollar was pegged to some definite quantity of gold, dollars prices represented some definite quantity of gold as well. After the collapse of Bretton Woods in 1971, however, this relationship was severed and the dollar’s exchange rate with gold was allowed to float.
The question immediately arose whether Marx’s theory applied in the case where the currency used in daily transactions no longer had any fixed and definite relation to commodity money. Since the quantity of fiat in circulation has always been determined by the state, not by the values of the commodities in circulation, was it not the case that the socially necessary labor time required for production of commodities (value) no longer determined how a capitalistic economy functioned?
In his paper, Carchedi argued that it is possible to convert inconvertible fiat dollar prices into Marxian value employing the so-called MELT: Carchedi argues that the key to the conversion of prices into values is the relation between the number of hours or of labor units and the sum of money profits plus wages paid.
What makes this an attractive argument is that, to a rank amateur, it is just the sort of things that looks like it could work: Given the massive amount of data compiled by the fascists, certainly we can find the two quantities — wages and profits — and divide that sum by total of hours worked. Every month, for instance, the fascist state publishes the number of workers actively employed; and this is accompanied by the average hours they worked. This report is called the Non-Farm Payroll report and it is published on the first Friday of the month. It does not take a genius to take the number employed and multiply by the average hours worked to arrive at a figure for total hours worked — data on wages and profit, while more difficult to find, can be compiled to complete the calculation.
But, what Carchedi doesn’t mention is that not all of this labor time is socially necessary labor time, i.e., not all labor performed in our society produces value. Of the billions of hours of labor actually expended in the economy, the only thing we are concerned with is that portion of labor time that is socially necessary — the socially necessary labor time required for production of the commodities.
Every crisis is preceded by the expenditure of billions of hours of labor that, only in retrospect, turn out to be not socially necessary. Crises are just capitalism’s way of telling society it is doing a lot of unnecessary labor. When, in retrospect, this labor proves to be not socially necessary, the results is a massive devaluation of capital — a depression. The valuation of the capital before the crisis turns out to have been entirely fictitious and evaporates in a puff of smoke.
According to Simon Mohun, Moseley’s MELT required some method for determining the total hours of value producing labor, not just wage labor in general. Thus, before even beginning to create a monetary expression of labor time, the MELT folks have to figure out how to determine which members of society are actually performing value producing labor — at least, this appears to be what Mohun is saying in this terribly nerdy sentence:
“Conservation of aggregate value added entails that the total hours of productive labor and the money value of aggregate value added measure the same thing, so that one can determine how many hours are represented by a unit of money (the value of money) and, inversely, how much money value added is created by an hour of productive labor (the monetary equivalent of labor-time).”
The distinction in Mohun’s argument is that he admits the possibility that not all labor in the economy is productive. Since not all labor is necessarily productive, it is not so simple as taking total wages and profits and dividing this by total hours of labor. To actually produce a MELT as Moseley proposed in 2004, you have to be able to define which hours of labor are productive and which are not. During any period of time — say, one year — the total hours of value producing labor time should equal the sum of wages and profits denominated in inconvertible fiat dollars. Once we have completed our calculation, we should know how much value is symbolically represented by a single inconvertible fiat dollar.
Borrowing from Marx own argument in his “Theories of Surplus Value”, Mohun suggested value producing labor can be identified by an important characteristic:
“Conservation of aggregate value added through the circulation phase of the circuit of capital entails that there is no alteration of aggregate value added in the flows that transform a stock of money capital (M) into a stock of productive capital (C: inputs of labor-power and non-labor means of production), and in the flows that transform a stock of commodity capital (C’: outputs) into a stock of money capital (M’). Hence any laboring activity involved in these “metamorphoses” of capital (M – C and C’ – M’) adds no new value, and is unproductive. Only the wage-labor involved in the transformation of productive capital into commodity capital is productive.”
In something approaching a language normal people actually speak, Mohun argued that any attempt to calculated the value represented by a single inconvertible fiat dollar has to exclude the labor of any worker who is simply involved in the activities that do not actually create new use values or materially modify existing use values. Only the labor of those who perform this sort of particular useful concrete labor could be said to create value.
Okay, fine. So who is this?
Mohun then lists who it is not in this category: a very long list of folks I will not quote here, but which you can find starting on page 4 of his paper. But take my word for it — it is a pretty long list. In table 2 and 3 in his paper, Mohun summarizes his discussion by ordering SIC and NAICS according to whether he considers them productive or unproductive.
His effort is very helpful … and, theoretically, at least, very useless.
Abstract homogeneous labor versus concrete particular labor
Here is the thing about capitalist labor: even if we assumed everyone was employed productively, not all of their labor would be socially necessary. A capitalist crisis of overproduction makes clear that not all productive labor is socially necessary when warehouses fill with unsold commodities. If it were as simple as identifying workers who create or materially modify use values, figuring this shit out would not be a problem.
But what our labor theorists can’t seem to get through their thick skulls is that use values are not values and Marx’s falling rate of profit thesis is only concerned with value and surplus value. A auto worker can produce automobiles all day long — a useful productive activity — but this does not in the least imply she is producing values. If the two activities were identical, she would not be laid off every fucking time there is a crisis — and GM would not have needed a bailout in 2009.
The production of value is not given in the product of any particular concrete useful labor; value is the product of the total labor power of society — abstract homogeneous labor. Marx says this directly in chapter 1 of Capital:
“Some people might think that if the value of a commodity is determined by the quantity of labour spent on it, the more idle and unskilful the labourer, the more valuable would his commodity be, because more time would be required in its production. The labour, however, that forms the substance of value, is homogeneous human labour, expenditure of one uniform labour power.”
I could be wrong, but it seems to me that Marx believed value was the product of the total labor power of society, not of any particular concrete useful labor. Some portion of the total labor time of the total labor power of society may directly produce use values, while others do not; but when discussing the production of value, we have to begin with the expenditure of labor by total labor power of society.
In his discussion of productive and unproductive labor, Mohun begins at the opposite end of the analysis from Marx: with particular concrete useful labors. He thus begins by excluding various job classifications that, in his opinion, are not productive of surplus value.
It’s like — My God, how dumb can you be not to notice this has nothing to do with labor theory!!!
To be productive of use values does not at all mean you also are productive of values — and capital is production of surplus value. Now, let’s be clear: in Capital, there is only one way to tell if the labor expended on production of a commodity is productive of value: Since value can only be manifested in the bodily form of another commodity, whether the labor expended of a commodity is also productive of value can only appear to us in this fashion.
We already know this; so we can sit back watch as Simon Mohun makes a fool of himself trying to find a work around for this problem. Mohun’s method was absolutely astonishing, because he tried to decide who is productive by ticking off various forms of particular concrete useful labor. In other words, in the same way Kliman employed measures of utility like the CPI and PCE as the measure of value, Mohun employed concrete particular useful labor as the measure of abstract homogeneous labor.
This, I believe, is a critical and ultimately fatal defect in Moseley’s MELT, in Mohun’s argument and in Kliman’s analysis of the rate of profit. They are trying to go from dollar prices to values and from concrete labor to abstract labor. And this is a critical transition if they are to demonstrate the validity of the falling rate of profit thesis.
If the critics of the falling rate of profit thesis were worth their salt, Kliman’s analysis could easily be debunked just on these problems
Kliman begins with the problem that dollars are not commodities and prices are not values. He tries to circumvent this problem by employing Moseley’s MELT. But Moseley’s MELT requires some method to determine value producing labor in society. This, the supporters of the falling rate of profit try to circumvent by cherry picking jobs on the NAICS and SIC tables. But this approach to the problem of value contradicts Marx’s thesis that value producing labor is the product of the total labor power of society, not particular concrete useful labors.
And I am not even sure how they ran themselves into this dead end. As both Sam Williams and I have explained, the commodity money standard of prices for inconvertible fiat dollars is simply the inverse of the price of gold. Here is Williams making the case for this argument:
“Strictly speaking, paper currencies—token money—are symbols of a given quantity of the commodity in whose use value the exchange value of all other commodities are measured. For example, if the dollar price of gold is $1,200 a troy ounce, the dollar represents 1/1,200th of an ounce of gold. The use value of gold is measured in units of weight. Under prevailing conditions of production, 1/1,200th of a troy ounce of gold represents a given quantity of abstract labor time—the substance of value when embodied in a commodity—measured in terms of time.
while it is often said that paper money is a symbol of value, paper money cannot represent value—a given quantity of abstract labor measured in terms of time—directly but only indirectly by symbolizing a given quantity of the use value of the money commodity, which itself on average takes a given quantity of abstract human labor to produce.”
As Marx explained, it does not matter whether gold is legally recognized as money in the United States, gold remains money in any case. In the case of inconvertible currency, Marx, in the Grudrisse, looked at case of an inconvertible currency issued by the Bank of England and argued:
“The Bank of England experienced this precisely during the period when it was legally empowered to issue inconvertible notes. These notes declined in relation to gold bullion, but the mint price of gold likewise declined in relation to its bullion price. In relation to the note, gold had become a special kind of commodity. It can be said that the note still remained dependent on gold only to the extent that it nominally represented a certain quantity of gold for which it could not in fact be exchanged. Gold remained its denomination, although it was no longer legally exchangeable for this quantity of gold at the bank.”
Labor theorists confuse the money character of gold with the legal or official recognition of this character; but no state law has ever determined what is money for society and no law forces China to accept dollars as money today. If China accepts dollars in exchange for its exports, this has nothing whatsoever to do with the fact that Washington has legally determined that its currency is money domestically. The government of Zimbabwe had a similar law for its own Zim dollar, but this law was ignored by its own citizens and the US dollar and euro became defacto currencies there — a situation the government had to finally accept.
In labor theory, there is only one theoretically consistent method for employing fascist state data in the empirical substantiation of Marx law of the tendency of the rate of profit to fall. This is to convert inconvertible fiat dollars into some definite weight of a money commodity.