Third-Worldism: How to stop communism with a 2% wage increase

I’m reading a fascinating book: “Divided World, Divided Class” by Zak Cope that was recommended to me by Justin Wooten (@justinwooten on twitter). It’s completely wrong, but the writer exhaustively lays out the case for a bribed first world working class.

This is the labor aristocracy theory explanation for why the class struggle in the advanced countries is muted. Cope introduces his argument for the theory this way:

“This book began as an attempt to understand the regularity and intensity of racist and imperialist attitudes and beliefs within the working class of the advanced capitalist nations in order to explain the evident disinterest and disdain with which it greets revolutionary socialist ideas.”

maxresdefaultYou see, if the working class rejects the self-evident truth of ‘revolutionary socialist ideas’, they must somehow be defective. If we could just figure out what this defect is, we may be able to remedy it. If we can’t remedy it, then we should turn our attention to workers who don’t have this defect. Those less bribed workers, of course, are located in the oppressed countries of the world market.

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“We state” (Does the end of labor mean the end of the state?)

1. Is v= 0 a formula for the end of the state as well?

What is the impact of the end of the capitalist mode of production on the state itself. That is, what happens to the state when v = 0? How does the abolition of labor relate to the abolition of the state? What about other forms of social domination like sexism and racism? Do these disappear simply because v = 0?

we stateV, of course, is the notation used in labor theory to denote the employment of living human labor in the production of material wealth. When v = 0, the employment of living labor in the production of material wealth has ceased. In the extreme scenario (although this might not be necessarily true), production is now carried on entirely by machines. With living labor no longer involved in the production of material wealth, value and surplus value are no longer being produced and the capitalist mode of production collapses.

The argument Marxists have made for years, and for which they have been criticized, is that with the abolition of labor in the production of material wealth the state itself disappears. The argument is extended to other forms of social domination like male and white supremacy often on basis of the argument that these are no more than expressions of the general domination of labor by capital.

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James Petras and the dying Cult of the Three Saints

James Petras has an article in which he tries to describe what he calls the rise of the non-leftist Left, The Rise of the Non Leftist Left
The Radical Reconfiguration of Southern European Politics.

By the non-leftist Left, Petras means the new players in Europeans politics, like SYRIZA and Podemos, who defy “traditional” Left politics. According to Petras, these new elements, “no longer are qi52893be9based on class conscious workers nor are they embedded in the class struggle. With the decline of unions in the advanced countries, he argues we are witnessing the emergence of a “middle class radicalism”. This middle class radicalism is accompanied on the Right, by escalating state repression instead of state economic intervention. The repressive intervention of the state aims to completely dismantle the social welfare programs that emerged immediately after World War II. The non-leftist Left that has emerged to resist this sort of state intervention advocates a horizontal-style but practices top down politics aimed at securing state power. On the Right, the fascists no longer pursue national autarky, but willingly strip their countries of national sovereignty.

I think Petras missed the opportunity to coin a useful term here. In place of “non-leftist Left”, I would have called it the neoliberal Left. Same letters could be used “NLL”, but “neoliberal Left” like its predecessor “social-fascism” more accurately describes what is taking place. The term, social-fascist, was self-explanatory: fascist economic policies advocated by the socialist parties of the Second International. In the same way, “neoliberal Left” describes the neoliberal policies of a rump collection of Third International political formations.

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A policy framework that kills capitalism, rather than fixing it

albert-einsteinI am in the process of reading a book with a very long title, Black hole: how an idea abandoned by Newtonians, hated by Einstein, and gambled on by Hawking became loved by Marcia Bartusiak.

According to Bartusiak,  few scientists believed Einstein’s theory had any practical use before mid-century. Einstein’s theory wasn’t even taught in most universities and Newton’s theory was thought to be adequate:

“After the flurry of excitement in 1919, when a famous solar eclipse measurement triumphantly provided the proof for Einstein’s general theory of relativity, the noted physicist’s new outlook on gravity came to be largely ignored. Isaac Newton’s take on gravity worked just fine in our everyday world of low velocities and normal stars, so why be concerned with the minuscule adjustments that general relativity offered? What was its use? “Einstein’s predictions refer to such minute departures from the Newtonian theory,” noted one critic, “that I do not see what all the fuss is about.” After a while, Einstein’s revised vision of gravity appeared to have no particular relevance at all. By the time that Einstein died, in 1955, general relativity was in the doldrums.”

As I read Bartusiak’s book it occurred to me that much the same is true of Marx’s theory. Marx’s labor theory of value, although a giant step beyond the classical theorists of his time, and despite initially producing a huge wave of revolutionary fervor, has mostly been ignored at least since the 1930s.

The depression that never ended

In his own book, Austerity, the history of a dangerous idea, Mark Blyth argues that Marxists in Germany in the 1930s assumed the Great Depression be like any previous crisis– it would devalue excess capital and establish a basis for a new expansion. Although Blyth is only speaking of the SPD he may have a point. Every previous crisis had unfolded that way. Why would the Great Depression be different? No one at the time knew things had changed forever, nor how they had changed forever. Most of all no one seems to have realized that only with the Great Depression did Marx’s theory really become relevant to policy.

Most economists, even Marxist economists, are not accustomed to thinking about labor theory as a policy framework. Even for self-identified Marxists like SYRIZA in Greece or the SWP in Britain Keynes not Marx provides the policy framework. This leads to the sort of theoretical contradictions highlighted by SYRIZA MP and Marxist economist Costas Lapavitsas that the Keynesian policies he advocates are designed to save capital not kill it:

“Keynes is not Marx, and Keynesianism is not Marxism. Of course there’s a gulf between them, and it’s pretty much as you have said. Marxism is about overturning capitalism and heading towards socialism. It has always been about that, and it will remain about that. Keynesianism is not about that. It’s about improving capitalism and even rescuing it from itself. That’s exactly right.”

Hence in an ironic turn of a phrase usually applied by Stalinists to Trotskyists, Marxists appear to oppose capitalism everywhere but where it exists. If you ask Marxists what they would actually do once elected they could hardly give you anything more Marxist than SYRIZA’S Thessaloniki programme. The program that Marxists run on in elections is not their complete program, of course, and they will emphasize this, but it is their ‘immediate’ program to ‘address the crisis’; while their full program is overthrow of capitalism.

I would argue this sort of division between immediate and full program is what became obsolete in the 1930s.

The breakdown of marginalist school theory

How does this relate to Bartsiak’s insightful observation about Einstein’s theory? When scientists began to test the limits of Newton’s theory its limitations became apparent and Einstein’s theory became necessary. Bartusiak observed that Newton’s theory was good enough to get us to the moon and back, but broke down after that. In a similar sense, marginalist theory worked up until the Great Depression, but proved incapable of addressing the sort of mass unemployment that erupted in the 1930s.

Marx’s theory certainly predicted the emergence of mass unemployment, but this prediction, although interesting, was irrelevant until capitalism reached a certain point in its development. Up until that point, economists could ignore the contradiction between production on the basis of exchange value and production for profit. Which is to say, they could ignore the contradiction between values of commodities and their capitalistic prices of production. Even if this contradiction existed, as a practical matter the mode of production was motivated by profit, not by exchange value. As a practical matter, if you want to transform values into prices, said Paul A. Samuelson:

“It’s easy, you erase [Marx’s labor] values and replace them with prices of production”.

This is how things stood until the Great Depression, when, as former Federal Reserve Chairman Ben Bernanke put it, the gold standard mysteriously “malfunctioned”; transmitting the shock of absolute overaccumulation throughout the entire world market. Capitalism, in short, had gone to the moon and back, but it was now on the frontier of an economy where marginalism was inadequate.

Why would Marx’s theory be particularly relevant beginning with the Great Depression? First, because in Marx’s theory capitalism constantly reduces the socially necessary labor time required for production of commodities. The reduction of the socially necessary labor time required for production of commodities is the reduction of the values of commodities. Second, and simultaneously, capitalism constantly extends the labor time of the social producers so as to maximize its profits. With the values of individual commodities declining, and the total labor time of society increasing, the mass of commodities produced during the labor day grows phenomenally.

It is true that new consumer needs are created by, and new export markets open up to, this massive torrent of commodities, but eventually, as Keynes observed, the growing productive capacity of social labor outstrips any and all new uses for labor. Commodities can no longer be sold at their prices of production, because the average rate of profit has fallen to zero. The capitalist mode of production has reached the limits of the expansion of capital, of production of surplus value, production for profit.

In Marx’s labor theory, the capitalist price of a commodity is some duration of living labor, divided into necessary and surplus labor time. This gives us the mathematical expression, v+s. This is opposed to the simple labor value of a commodity, whose price is mathematically expressed as v. The capitalist commodity production price is maintained by extending the labor of the worker beyond the point necessary given the technological development of the productive forces. This extension is mathematically expressed as s — i.e., surplus value or surplus labor time. So long as the labor time of the social producers can be extended beyond what is necessary for their material need, surplus value is created.

Thus, at the point where capitalistically produced commodities can no longer be sold at their prices of production, the labor time of the social producers can no longer be extended beyond that duration necessary to satisfy their material needs. The surplus labor time of the social producers, no matter how great or materially necessary, produces no new value. Since capitalist production is the production of surplus value, it halts, and must of necessity halt, at the point where labor no longer produces value.

Animal spirits versus labor time

This cessation of production is not a subjective phenomenon; the result of animal spirits, or inadequate demand; nor is it the result of malinvestment, overproduction of commodities or too little money or some other nonsense. The source of the collapse of capitalist production is too much capital, i.e., the production of surplus value, production for profit. Capital suffocates on its own capacity for self-expansion. So soon as capital has successfully reconstructed society in its image, the means by which it overturns the old society — by extending the labor time of the producers and increasing the productivity of labor — becomes a weapon turned against itself.

Like Einstein’s theory in the natural sciences, Marx’s theory only proved significant when society had actually crossed the threshold of absolute overaccumulation. Until that time, capitalist production went through crises, but these crises were simply momentary forcible adjustments that paved the way for new capitalist expansions. When the Great Depression hit, everyone thought it would end up the same way — a short-term forcible readjustment of capitalist production. In fact, the depression never ended; it just went on and on without any let up. As in the case of Greece today, no one realized something had changed permanently with the way capitalism worked.

When it comes to policy, Marx’s argument is not well understood even by Marxist economists and certainly not by anyone else. To understand why this is true, doesn’t take much analysis. We can all agree that Marx essentially called for the abolition of wage labor. This call by Marx is typically cast in a political context: The working class must seize political power and employ its position as the new ruling class to work out its emancipation. There is, in fact, nothing about this political interpretation of Marx’s theory that is wrong or even misunderstood, per se.

However, what most people overlook is that Marx did not make this argument out of the blue, i.e., he was not describing his peculiar blueprint for society, nor a vision of the future that could be imposed by political measures. For Marx, capitalism was already in the process of abolishing labor by developing the productive forces of society. The proletariat could not abolish labor unless, simply because it wanted to end wage slavery, any more than slaves could abolish slavery simply because they wanted to be free.

What the proletariat had that slaves did not is that the capitalist mode of production itself was already headed toward abolition of wage slavery — something that was never true of slavery. The proletariat could accelerate the process already under way in the capitalist mode of production, because the way capital accomplished the abolition of labor periodically created obstacles to that historical result. Properly armed with theory, the working class could remove those obstacles and emancipate itself. Simply removing the obstacles to the development of social labor was sufficient to accelerating the process.

Every crisis is a crisis of overwork

The biggest obstacle to development of the productive forces was the tendency toward overaccumulation of capital. But the overaccumulation of capital resulted solely from the extension of hours of labor of the social producers beyond that duration socially necessary for production of commodities. Marx’s theory states that the solution to any crisis of capitalism is simply to reduce hours of labor.

Perhaps, he got this wrong; perhaps he dropped a stitch somewhere. In that case, those who accuse Marx of getting it wrong have to explain why every crisis is accompanied by a general social demand for Keynesian stimulus to achieve full employment. If hours of labor are not the problem, why does the fascist state have to create jobs to maintain full employment? Why does every crisis generate political calls for job creation or a subsistence stipend for those without jobs? Why do even the opponents of the working class drape their proposals in the flag of job creation?

If Marx’s theory is correct, the only policy any Marxist needs to advocate “to address the crisis” is a reduction of hours of labor. But the reduction of hours of labor is itself only the progressive abolition of wage slavery itself. Thus, the immediate program of Marxists to “address the crisis” is EXACTLY the same as their full program; there is no longer the contradiction of an immediate program to address a capitalist crisis that saves capitalism rather than killing it.

Why must the organization of the proletarians be global?

Here is a question directed to me from Due to space limitations, a portion of my answer was cut off, so I am publishing in full here:

“can you expand on your idea that class is a totality (assuming global) and not national?”

This is determined by the proletariat itself, its material conditions of existence, and in first place, by the material requirements of directly social production. Uniquely for the proletariat, the productive forces employed by it only exist as a totality within the world market. For this class, as opposed, for instance, to the peasant, the means of production cover the entire globe and can only be set in motion by the combined effort of the entire class together.

The producer here is not the individual workers each employing her own means of production, but the collective body of workers, who are compelled to cooperate to employ what is essentially a single gigantic machine which operation must be coordinated as if under a single will although it is spread out over both time and space. In this highly developed mode of social labor, no single act of labor is complete in and of itself, but only appears as a link, or stage, in a chain of much larger and more sophisticated act of production. The workers are bound together in an act of social production in which their own actions are inseparable from the acts of billions of others

workers-unite-tag1This imposes unique constraints on the proletariat that are unprecedented in all of human history. The action of a worker in Shanghai, must be coordinated with the actions of workers in New Delhi, Durban, Oslo, Bogota and Chicago. And these separate acts of production are separated not only in space over the face of the globe, but perhaps by months or years in time.

The global character of the means of production created by capitalism necessarily must be reflected in an association of producers that is itself global in nature. The association of the social producers must, by definition, extend beyond every border where the mode of production has already extended modern trade. This is because the labor of the social producers is a single act of production although composed as it is of billions of separate acts. A single machine requires a single will to set it in motion, i.e., a mass of individuals who cooperate according to a predetermined plan. It requires, in other words, that the totality of production be brought under the conscious control of the individuals concerned.

How can this be achieved? How is it possible to subordinate the productive activities of billions of individuals to a single will? It just doesn’t seems possible without some sort of despotic power over these individuals, right? This implies not social emancipation, but converting all of society into a miserable work house.

This is usually as far as most “socialists” get before they throw up their hands or let their imaginations take flight with fantasies of “market socialism”. The contradiction between the material needs of production (which are not and cannot be subject to debate and democracy) and the self-activity of individuals appears irresolvable. This contradiction is indeed real and can only be resolved on the basis of a very high level of development of the productive forces. It requires, in first place, that the material needs of production can be satisfied in very little time.

So long as the needs of production consume the greater portion of the time of individuals, society is condemned to poverty and the despotism. This poverty is not simply (or even primarily) the lack of means to satisfy wants, but the lack of opportunity for self-activity and self-development. Only when directly social production appears on the stage, does it become possible for the material needs of production to be so reduced that self-activity and self-development become ends in themselves. The measure of this state of society is the free disposable time enjoyed by all members of society.

A global association of the producers, therefore, sets as its immediate aim the constant expansion of free disposable time away from labor. But the constant expansion of free disposable time is nothing but the abolition of labor, the working class itself and classes generally.

Still dabbling with fascism at the 11th hour

Tsipras has his work cut out for him. On one side, he is trapped between those knuckleheads in KKE and Left Platform who appear bent on restoring the SU. On the other side is the whole of western capital, who wants him dead and his bloodied corpse displayed in Berlin.

Yves Smith summed up SYRIZA’s predicament this way:

“We warned readers that the creditors had implements of torture that they had yet to deploy. The forced choice of a bail-in versus a Grexit is the ugliest, but the fact that the ECB has used this weapon before (under its “we’re just following the rules” excuse) means it might resort to it again. Since this post is already long, we will save the description of some of the other possible discipline mechanisms for future discussions. … The consensus is moving away from our initial view, that the best solution for Greece is a default in the Eurozone. The problem is that the country remains in what I’ve called the creditor sweatbox, without a primary surplus due to the deterioration of its economy. It has to pay pensioners and government employees in scrip.”

Anti-austerity-protest-in-004In other words, having engineered a horrific collapse of the Greece economy, the EU creditors now intend to use this collapse to force SYRIZA to make further concessions.

Smith does nothing at all to sugar coat the dire situation facing SYRIZA at this point: Once Greece defaults, the ECB will use this as a pretext to shut down Greece’s banks, lock Greece out of the Target2 payment system, wipe out the bank bondholders and expropriate both small and large depositors. Then, if the ECB has its way, it will be able to expropriate the financial wealth of the country and force Greece to leave both the euro and EU.

“An economy hamstrung by capital controls, a government without any cash and a banking system struggling on life support, Greece would essentially begin a drawn-out process of economic suffocation.”

Of course, here is the part that all of these doomsayers overlook: The argument has a big hole in it, since it assumes SYRIZA will lead “a government without any cash”. The SYRIZA government has a lot of cash, but its expenditures are larger still. It simply has to bring its expenditures into line with its tax base and do this without imposing still more austerity on Greece’s citizens. This is not difficult at all — it just means SYRIZA has to go after the bloated state sector, which cannot pay its own way under any circumstances, by reducing the hours public employees are expected to work. Once this has been done, SYRIZA will no longer be a government without any cash, since its non-wage costs consume 70 percent of its budget.

The Left has dabbled with fascism for too long and now it is being forced to make a choice: attack the working class or the existing state. On which of these options SYRIZA chooses hangs the balance of its survival and the immediate prospects of Europe. The radical Left has been driven into a corner from which there is no hope of escape nor possibility of escape. It dropped the ball in the 1930s and plunged the planet into an unimaginable catastrophe. If it does it again, the Left will not get a third chance.

The Greece nation state is dead and its counterparts will soon follow it. If the Left tries to save this disgusting hangover from previous epochs, it will be dragged into the grave with it.

Fully assimilated liberal drivel

mcm_cmc has been think about life after capitalism, and, apparently, it is not all abundance and partying naked on the beach:

“I will argue that it fails to deal with various very real limitations on automation, increased consumption and the fulfilment of desires. Furthermore, in attempting to think in a utopian manner about possible post-capitalist societies it is necessary to consider questions of changing social relations and relations between humanity and nature that the luxury communism vision avoids.”

B2zqi09CQAAXRqTThe phrase, “fully automated luxury communism”, is an interesting attempt to describe a vision of communist society that is not (a) founded on an egalitarian shared poverty; and, (b) a state regulated workhouse.

Whether this idea succeeds or not is not the point, since it apparently began as a joke in the UK Left.

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Reply to LK: Notes on the historical and monetary implications of the transformation problem

One of the big problems with a discussion of Marx’s formula for transformation of labor values into capitalistic prices of production is that no one, not Marxists nor bourgeois simpleton economists, seem to understand what he was doing. Now, I will admit this argument is pretty arrogant, because it implies that I, somehow, have figured out what everyone else didn’t, but bear with me and decide for yourself. If my argument doesn’t make sense at the end, please correct me.

As I stated in my last post, the transformation problem expresses an irreconcilable contradiction within the capitalist mode of production. Marxists will not be surprised at this assertion; digital_money_764bourgeois economists, on the other hand, deny the existence of this contradiction and have an ahistorical conception of capital. In their view, the bourgeoisie has invented the ideal state of man which, having been invented, can continue indefinitely unless interrupted by an exogenous event. So, when they look at the transformation formula, they see in it a contradiction and assume Marx has failed to make his case.

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Reply to LK: How labor theory of value destroys fiat ‘money’

It’s not very often that I agree with Keynesians about anything, but this post, Fiat Money Destroys the Labour Theory of Value, comes real close. The writer of the post, LK, who has a surprisingly good grasp of labor theory basics, argues that fiat money destroys labor theory of value and I completely agree with him/her on this point.

“Marx’s whole explanation of the emergence of money in Chapter 2 of Capital assumes that money must be a commodity. … So only if money is a special commodity that itself has a labour value can it function as a universal medium of exchange and numéraire. You couldn’t have a clearer expression of Marx’s view: money must by necessity be a produced commodity with a labour value in order to even function as money, because, in Marx’s view, all commodity exchange is founded on the fact that commodities (including money) are made commensurable by having quantitative labour values.”

0If Marx appears to be demonstrably wrong about anything in economics, this is likely the single most glaring example. However being wrong about money is not like being wrong about your prediction for GDP next year. Everything Marx argues in Capital is built on his arguments in the first three chapters, including his analysis of money. For Marx to be wrong about money has implications at least as profound as establishing beyond all doubt that value has nothing to do with labor. It is not as though Marxists could admit labor is not the source of value, but maintain Marx was still right “overall”. In that same sense, there is no way you can pretend Marx was wrong about money being a commodity, but right about most everything else. You can’t do it and LK isn’t going to let Marxist economists try to put that weak bullshit over on us.

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To confront Washington, China should cut hours of labor now

From FT Economics today, China is dangerously flirting with deflation:“PBoC admits defeat in war on deflation.”

“China’s central bank this week faced reality and revised down its inflation estimate to half the level targeted by Beijing, implying it is failing — as global peers have before — to combat the threat of deflation.

That is not only bad news for a country struggling to stimulate growth, it also threatens a ripple effect around the world: cheap made-in-China goods contained price rises around the world when that was a force for good.”

China needs a plan B just about now and I think they should revisit the debate between Mao and Deng over China’s path for the most rapid development path.HKG105:CHINA-DENG:SHANDONG,CHINA,13OCT94-FILE PHOTO 03MAR59- Chinese leader     Deng Xiaoping (L), is seen confering with the late Chinese Chairman Mao Tse-tung [Mao Zedong] in Shandong province March 3, 1959. B/W ONLY

Maoists will know I am referring to the debate of the 1960 and 1970s over the path for China’s development. The two sides of the debate is pretty simple to describe. The Dengists raised the slogan: “Black cat or white cat; the cat that catches the mouse is a good cat.” Essentially, their pragmatic argument was that it did not matter which measures the state employed, so long as those measures sped the development of the productive forces. This attitude, of course, horrified the Maoists who rightly saw in it the formula for unbalanced growth, rising inequality and,  eventually, full capitalist restoration. This debate shaped China history for most of the latter part of the 20th century and played a significant role in the Great Proletarian Cultural Revolution, which shook China and the world for more than a decade. In the end, Deng and the Dengists won, in large part simply by outliving Mao.

Continue reading “To confront Washington, China should cut hours of labor now”