Ten common questions about the revolutionary potential of reducing hours of labor
According to this note by Warren Mosler of the modern money school, more income inequality will require bigger deficit by the state to maintain full employment.
This implies we need a larger deficit than otherwise to close the output gap/sustain full employment, has higher income earners tend to generate more unspent income/more savings than lower income earners.
Looks to me like the “1.2 million who lost benefits at year and took menial jobs” narrative has run its course, and consequently H2 employment gains will be that much weaker than H1, as suggested earlier…
The idea that increasing income inequality requires larger state deficits points to the basic irrationality of the modern money school’s policy recommendations. As income becomes more unequal, more excess capital is being produced, this excess capital cannot produce a profit unless it is lent to the state, thus the total output that must be unproductively consumed by the fascist state constantly increases.
But this increase in unproductive state consumption does not do away with the inequality; it simply acts as a savings account for excess capital. The state not only absorbs the excess capital, it begins to pay interest on the capital, adding to the income inequality.
While many MMTers advocate it for reasons that might be labeled ‘progressive’, in the end MMT simply becomes another means to offset the falling rate of profit. If the fascist state does not pay interest on this ever growing mass of excess capital, it will have to be devalued.
Based on questions I have received, I decided to contrast Mosler’s approach with a labor theory approach the calls for reduction of hours of labor. I have set it up in the forms of several pointed questions about, and objections to, the idea that people have directed at me at one time or another.
1. Why is it necessary to run bigger deficits?
ANSWER: Because the rising income inequality is symptomatic of growing rise in the mass of excess profits that cannot be productively employed, i.e., cannot be employed as variable and constant capital for the production of surplus value.
2. How does increased deficit spending fix the problem of excess capital?
ANSWER: It does this two ways: First, the excess capital cannot be employed productively and, therefore, cannot produce surplus value. If the excess capital is lent to the state, the state can pay interest on it and the capital can still appear to undergo self-expansion without being employed productively. Second, when the excess capital is lent to the state it is consumed in its entirety. The unproductive consumption of the state thus removes huge masses of excess capital from circulation and destroys it even as it pays interest on the destroyed capital.
3. Why do you insist state expenditures are consumed unproductively? Why can’t the state invest it like a private business?
ANSWER: Because the problem forcing the state to borrow the capital is excess capital. If the state were then to employ this borrowed capital productively, this would only exacerbate the original problem.
4. Assuming the state cannot employ it productively, why can’t it be used socially to fix inequality by creating jobs or a basic income?
ANSWER: For the same reason one cannot use a credit card to buy groceries: First, the revenue used to create jobs or a basic income is borrowed from the capitalists. Interest must be paid on the borrowed capital. By paying interest on the borrowed capital the state does not fix inequality, it adds to it by paying a stream of income to the wealthiest members of society. Second, since the capital borrowed from the capitalists is not employed productively, the consumption of the capital is not replaced by new value. The means to repay the debt must come from still more borrowing, which further exacerbates inequality.
5. Why can’t capital be taxed instead of borrowed?
ANSWER: The capital can be taxed, but this defeats the purpose of state intervention in the first place: the state intervenes because a mass of capital has been produced that cannot find its place in productive employment for purposes of creating surplus value. If the state simply taxed the excess capital away, this would effectively reduce the rate of profit to zero — bringing down capitalism.
6. “What inhibits the “excess capital” from being “employed productively” eg. venture capital? State regulations?”
ANSWER: The productivity of labor, its sheer capacity to produce material wealth, has outgrown the narrow confines of production for profit. This is expressed in the tendency toward a fall in prices below the costs of capitalistic production, i.e., deflation. If the existing capital were employed to the extent possible, prices would never recover the costs of inputs plus an average rate of profit. State intervention is only required because it can offset this by unproductively consuming the excess produced capital.
7. How does reducing hours of labor address the problem of overproduction of capital differently than state full employment policies?
ANSWER: The problem inequality has to be addressed at its source, i.e., beginning with the overproduction of capital itself. In labor theory, the mass of excess profits produced is a function of the length of the total social labor day. State economic policy attempts to address the problem after the excess capital has already been produced, while labor theory proposes to reduce the excess capital being produced by reducing the portion of the labor day that is excess. The labor day is too long and must be shortened; this will convert the excess hours of labor into free time for the whole of society.
8. Why would this not just damage the economy and reduce the whole of society to poverty, (i.e., who will build the roads?)
ANSWER: According to labor theory analysis, the portion of the labor day that is excess has nothing to do with the production of material wealth. It is completely superfluous to all productive purposes. This is labor time being expended by society that produces neither value (social wealth) nor use value (material wealth). This excess labor time takes the form of state debt precisely because only the state can pay its debt with currency created out of nothing. The currency created out of nothing can purchase commodities that have no value — such as the bloated military industrial sector. People cannot eat, wear, or shelter themselves in the faux use values and they exist only threaten mankind with destruction. If labor theory is correct, the growth of labor time that is unnecessary must take the form of an ever growing mass of state debt. The empirical evidence tends to support this claim — the state sector has grown faster than almost every other sector except finance.
9. So you are claiming that it is possible right now for society to work fewer hours and still enjoy more material wealth?
ANSWER: Yes. This is my claim. The first effect of reducing hours of labor is to reduce the mass of labor that is currently being wasted. This way the mode of production is presently organized is such that waste has become the condition for any new productive investment. Once hours of labor are reduced, waste will no longer figure as economically necessary for the production of material wealth
10. Why isn’t reducing hours of labor just another reformist utopian panacea?
ANSWER: The aim of social emancipation is to free society from labor and the division of labor. Reducing hours of labor directly seeks to accomplish this by forcibly imposing a reduction of the employment of living labor in production. In contrast to all other methods for freeing society from the domination of capital and from wage slavery, only reducing hours of labor directly attacks the problem in a way that is empirically obvious to the vast majority of workers. The result of the movement is exactly what is aimed at and involves no gimmicks. It simplifies the contradictions of capital into a single, directly resolvable, movement of society.