How Marx got it wrong according to Peter Hudis

by Jehu

I am going to pull out a short portion of Peter Hudis’s book, Marx´s Concept of the Alternative to Capitalism — roughly pages 124-133 — in order to examine how Marxists address some interesting questions explored by Marx that are increasingly relevant for our own time. Of course, such a short excerpt by no means is representative of Hudis’s book and this examination is not meant to be a review of the book itself. Rather it is my own curiosity about the issues raised in Marx’s so-called ‘fragment on machines’ which plays a role in many Marxist debates.

Was Marx engaged in wishful thinking??

Michael Heinrich, for instance, dismisses this section of the Grundrisse as an example of Marx’s reaction to an unexpected period of political calm. Marx was expecting the mild depression of the 1857-58 to produce a new revolution, says Heinrich, and this expectation colored his analysis. He argues “In the Grundrisse, the theory of crisis bears the stamp of the expected ‘deluge’ that Marx wrote about in his letters.” Peter Hudis also makes an argument along the same lines:

“No thinker, not even one as great as Marx, is immune to the circumstances in which his or her ideas are composed; and the Grundrisse was composed in a quiescent political period in Europe in which the working class was not exactly storming the heavens.”

image.imgBoth writers, each for his own reason, seems to be trying to discredit or dismiss at least some part of this fragment but in a rather queer way: Although the writers each offer evidence that Marx was wrong in his prediction of a revolution in the 1857 depression — which, by the way, never appears in this fragment — they each note this error only in order to take aim at his much more significant and substantial conclusion: capitalism was headed toward a breakdown in production on the basis of exchange value.

The argument made by both writers seems to be: “See, Marx was wrong about this political prediction, so he was probably off in his analysis of the capitalist mode of production as well.”

What is it about this short section of the Grundrisse that poses such a problem for both writers they need “explain” it away? Both writers are trying to come to grips with the same three simple sentences in the Grundrisse:

“As soon as labour time in its immediate form ceases to be the great source of wealth, labour time ceases and must cease to be its measure, and therefore exchange value [must cease to be the measure] of use value. The surplus labour of the masses has ceased to be the condition for the development of general wealth, just as the non-labour of a few has ceased to be the condition for the development of the general powers of the human mind. As a result, production based upon exchange value collapses, and the immediate material production process itself is stripped of its form of indigence and antagonism.”

Marx’s argument is unambiguous: capitalism replaces direct labor with machinery, improving the productive capacity of labor in the process. As a result. labor would become less of an input in the production process; while the laborer would increasingly act as overseer and regulator of the process: gradually, the main agent of the production process would become the constant capital produced for this purpose. As the direct labor of the workers ceased to be the primary source of material wealth, their labor would cease to be the measure of this material wealth.

Essentially, the labor of millions of workers would become superfluous to the production of material wealth; the labor power they supplied would become redundant; the buying and selling of this labor power would come to a standstill and without the buying and selling of labor power, the mode of production, which is, in first place, the purchase and subsequent consumption of labor power, would grind to a halt. The labor of millions and the non-labor of a handful ceased to be a necessary condition for the production of material wealth. Once the buying and selling of labor power began to decline, production on the basis of exchange value would collapse.

Marx was, in other words, not predicting just another periodic economic bust, but the collapse of wage labor employment on an unprecedented scale. The production of material wealth would no longer require buying and selling of labor power on the scale that was necessary up to that point. The improvement in the productivity of labor eventually would make the industrial worker as obsolete as buggy whips. Long hours of manually screwing Bolt A in to Hole B would come to an end and millions of workers would be pink slipped.

True to Marx’s analysis, seventy years later capitalism ran into precisely the situation Marx predicted in the Grundrisse as the Great Depression erupted. In 1930, as that depression began to unfold, Keynes wrote an essay that essentially confirmed Marx’s theory:

“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.”

Consciousness and value transcendence

Which brings us to one of the weirdest puzzles since the Grundrisse was first published: Why don’t Hudis, Heinrich and most Marxists admit Marx’s prediction was dead on? There seems to be two objections to Marx’s prediction according to Hudis: first, Marx ignores the so-called subjective force in the process:

“there seems to be a problem here in Marx’s argument, for the Grundrisse’s discussion of capitalism’s tendency to eliminate value-creating labour from the production-process does not square easily with the claim that the transcendence of value-production is achieved by a subjective force that is internal to it, the proletariat.”

Hudis is basically arguing that, in his own analysis, value-production can only be ‘transcended’ by a conscious subject, who aims to bring this sort of production to an end. Marx, by contrast, introduces no conscious agent into his argument: the collapse of production on the basis of exchange value is produced by the same blind forces that compel the capitalists to introduce improved machinery into the production of material wealth. Competition among capitals force each to introduce or adopt improved machinery, technology and science to produce an average rate of profit. It is the competitive drive to maximize profits itself that ultimately undermine production on the basis of exchange value.

So far as I can tell, almost no Marxist believes this is true today.

Comically, Hudis himself gives two reasons why Marx was “wrong” about this: First, he argues, it is not possible to eliminate living labor from the production process under capitalism. Based on this, Hudis argues Marx is talking about a “tendency” toward the collapse of production on the basis of exchange value, not an actual collapse.

As is typical of a Marxist academic, Hudis introduces no evidence for this argument; he simply asserts it. Nowhere does Marx say, “As a result, production based upon exchange value tends toward collapse” or anything remotely like this. He says it collapses. And this assertion is unambiguous.

Even if we accept Hudis’ bizarre argument on this, we still have to explain Keynes’s own essay, which essentially confirmed Marx. In his own writings, Keynes is adamant that while the possibility might be avoided for a time through ‘creative’ state measures, eventually hours of labor must be reduced.

Although some wish to present it otherwise today, Keynes was no admirer of Marx. He had nothing but contempt for Marx and Marx’s ‘unnatural’ sympathies for the working class. Still Keynes could not avoid coming to the same conclusion as Marx and made essentially the same diagnosis of the depression as Marx. If there is any distinction between the two it is this: Marx diagnosed it SEVENTY years before it happened.

That’s 70 — seven-zero, seven decades!

This raises a very disturbing question: why are Marxists unable to see what even a bourgeois simpleton economist could see? Why are they so blinded by their ideology that even 80 years after Marx’s prediction is confirmed by bourgeois economists and 150 years after he made it, they still do not accept it?

According to Hudis,

“Marx neither infers that value production would be annulled in capitalism, nor does he suggest that living labour ceases to be a socially-determinative force in it. The transcendence of value-production and labour as the medium governing the social metabolism occur in a new postcapitalist society even if the conditions for this future state of existence are readied and prepared in the womb of the old one.”

This statement overlooks the fact that Marx did not predict the emergence of a “new post-capitalist society” in the ‘fragment on machines’. He simply predicted the break down or collapse of production on the basis of exchange value.

To be clear, Marx did not even predict the breakdown of capitalism. What is capitalism? It is the production of surplus value. Surprisingly, there is nothing in Marx’s writings that state the production of surplus value only takes place on the basis of exchange value. Marx only makes the assumption in “Capital” that surplus value is produced even if commodities are sold at their values. But this is a long discussion that I cannot get into here.

Wages and the value of labor power

What Marx predicts in the Grundrisse is the breakdown of production on the basis of exchange value. Henryk Grossman restated this prediction in his own essay in 1929: at a certain point in the development of the productive forces, the conditions of capitalist production as described by Marx in Capital must be violated if the system is to remain profitable.

“Beyond a definite point of time the system cannot survive at the postulated rate of surplus value of 100 per cent. There is a growing shortage of surplus value and, under the given conditions, a continuous overaccumulation. the only alternative is to violate the conditions postulated. Wages have to be cut in order to push the rate of surplus value even higher. This cut in wages would not be a purely temporary phenomenon that vanishes once equilibrium is re-established; it will have to be continuous. After year 36 either wages have to be cut continually and periodically or a reserve army must come into being.”

What is Grossman describing here? He is basically saying that at a certain point the condition that labor power is purchased at its value is violated. Labor power, a commodity with exchange value like all other commodities, could no longer be sold at its value. At a certain point, the exchange value paid for this commodity must fall below its value if the system is to remain profitable. Marx was very precise in the terminology he used: “breakdown in production on the basis of exchange value”. At a certain point in the development of the productive forces, profits can only be maintained by progressively forcing wages below the value of labor power. Yes. This is not the assumption Marx makes in Capital. Yes, this violates a basic premise of “how capitalism works”. But that was the fucking point! At a certain definite point in the development of the productive forces, capitalism would begin to violate its own premises!!!

Now look at the fucking data since 1970 — was Marx wrong? Jesus Christ on a cracker!

For forty years now, Marxists have watched the working class slowly sink into poverty and never made this connection. Instead we get books by folks like Piketty, whose merits Marxists debate as if he is not just another bourgeois simpleton.

There are a number of ways to test Marx’s theory empirically regarding the breakdown of production on the basis of exchange value. For instance we could look at the increasing divergence of prices of commodities from their value in some commodity money. But this will never happen, because Marxists have also decided Marx theory of money is bullshit too, but then, how could you confirm Marx’s prediction or disprove it, if you no longer hold to his theory of money — i.e., exchange value?

Hudis’s second objection to Marx’s prediction that the development of the productive forces leads to the collapse of production on the basis of exchange value is equally interesting; he quotes Marx to make the point that a collapse of wage labor employment would “produce a revolution”:

“‘A development in the productive forces that would reduce the absolute number of workers, and actually enable the whole nation to accomplish its entire production in a shorter period of time, would produce a revolution, since it would put the majority of the population out of action’.”

You just cannot make this shit up. Here is a Marxist saying the blind forces of the mode of production could not lead to the collapse of production on the basis of exchange value — why? — because Marx thought such a collapse would lead to a revolution. Oh, really? Capitalism cannot get rid of the employment of living labor in production because it might — MIGHT — lead to a revolution? How about Marx was banking on it leading to a social revolution?

“Marx’s point is that although capital’s tendency is to eliminate living labour, it faces ‘characteristic barriers’ that prevent this tendency from becoming fully realised. One of them is the threat of social revolution by unemployed workers who are cast aside as capitalism becomes increasingly productive.”

Here you have an incredibly thick-headed Marxist who makes the fantastic argument that capitalism doesn’t progressively reduce the socially necessary labor time required for production of commodities, because this would produce a social revolution! This is all that is left of Marxism today — this is what it has become. Really, you cannot make this up: no one would believe any group of people could be this damned dumb.

Clearly Marx believed the collapse of production on the basis of exchange value would lead to widespread unemployment and a social crisis. Everything in his writings and in his political life supports this view; and the effort to form a proletarian political party seems premised on a coming crisis. Not only that: it is clear his differences with the anarchists like Bakunin was driven by this view. If the crisis was coming, the proletarians needed to be organized and prepared for it politically.

Classical Marxists held to the view that society was heading into a fork in the road where the choice would be ‘socialism or barbarism’. Engels, for instance, wrote this crisis could lead not just to a chance for proletarian power, but also to the state taking control of management of the productive forces and operating as the national capitalist. All of this is made comprehensible only Marx, Engels and the classical Marxists were assuming society was headed toward a breakdown of production on the basis of exchange value. A breakdown, which, as Hudis argues, would lead to the sort of widespread unemployment that would create a massive social crisis. Millions of workers would be rendered superfluous to the production of material wealth because accumulation itself lead to, as Marx stated in Capital, volume 3, “unemployed capital at one pole, and unemployed worker population at the other.”