Why Marxists can’t explain how Keynesian policies work

(And they can’t explain why Keynesianism collapsed either)

Part Two

This is part two of the series, “How fiat currency killed Marxism”. Part one is here.

YoungstownPlantAt the high level of abstraction of Capital, money has to be a commodity, because Capital presents a theory of a “pure” capitalist economy, without state intervention. And in the 19th century laissez-faire capitalism (without state intervention) that Marx was analyzing, money was a commodity and money had to be a commodity in its functions of measure of value and store of value. However, in the post-1973 contemporary capitalism, money is no longer a commodity (i.e. is no longer convertible into gold at a fixed exchange rate), and money does not have to be a commodity in Marx’s theory. The state-guaranteed fiat money serves the same purpose as gold under the gold standard – it provides an observable, homogeneous, quantitative, and socially valid expression of abstract labor.  —Fred Moseley, Money has no price

If Keynesian currency devaluation allows the state to maintain production for profit by reducing the real value of wages, why were Keynesian policies abandoned in the late 1970s for neoliberalism? To explain why this happened, requires some discussion of the problem with simple Keynesian “full employment” policies.

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How fiat currency killed Marxism

Part One

“I remember quite clearly watching with comrades in a Capital study group on Sunday August 15, 1971 the broadcast of Nixon’s announcement that he had ordered the “closing of the gold window.” Given that we were reading for the previous few months passages like the following from Capital: “money–in the form of precious metal–remains the foundation from which the credit system, by its very nature, can never detach itself” (Marx 1994:606), we left each other that night with the thought that either Capitalism or Marxism was coming to an end before our very eyes! —George Caffentzis, Marxism After the Death of Gold

What crippled and ultimately killed off the Marxian theory was the realization that capitalism, although severely damaged by the Great Depression, did not die. The confidence Marxists felt before the depression that capitalism was a historically limited, relative, mode of production was shattered by the post-depression recovery of the Golden Age of Fascism.

Critical to the difficulties post-war Marxian theory has suffered is it inability to come to grips with the significance of the collapse of the gold standard. That collapse is the subject of this two part series.

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Marx and Engels’ theory of the end of class society

Marx and Engels’ theory of classes in bourgeois society is detailed in the German Ideology. I want to examine it in some detail, because I think it raises fundamental questions about the strategy of the radical Left as this strategy is commonly understood.

Wikipedia defines a theory this way:

“In modern science, the term “theory” refers to scientific theories, a well-confirmed type of explanation of nature, made in a way consistent with scientific method, and fulfilling the criteria required by modern science. Such theories are described in such a way that any scientist in the field is in a position to understand and either provide empirical support (“verify”) or empirically contradict (“falsify”) it. Scientific theories are the most reliable, rigorous, and comprehensive form of scientific knowledge, in contrast to more common uses of the word “theory” that imply that something is unproven or speculative (which is better characterized by the word ‘hypothesis’). Scientific theories are distinguished from hypotheses, which are individual empirically testable conjectures, and scientific laws, which are descriptive accounts of how nature will behave under certain conditions.”

To be a valid theory of classes, Marx and Engels’ theory must be

  1. “a well-confirmed type of explanation of nature”;
  2. “described in such a way that any scientist in the field is in a position to understand and either provide empirical support (“verify”) or empirically contradict (“falsify”) it”; and
  3. provide an empirically testable account “of how nature will behave under certain conditions.”

I think the theory of classes outlined by Marx and Engels fulfills these conditions on all three counts. This conclusion will not be welcomed by most Leftists since, as I will show, this theory of class contradicts almost every assumption of radical strategy.

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Deflation is good for you and here’s why

I had a short exchange with someone last night about this tweet on deflation:

@davidkorowicz: Deflation [here] we come, and though not polite to say in civilized conversation, the limits to growth are shadowing our present moment

The conversation the tweet sparked reproduced some of the most often made arguments for why deflation is an unwelcome development in a capitalist economy. Among the most important arguments was the assertion deflation will cut wages and increase debts.

The alleged mechanism of the negative effects of deflation on the working class are these:

  • Your company gets less income so they lay you off or cut your wages.
  • With lower wages or no job, your outstanding debts become harder to repay — which is a big thing if, for instance, you have a mortgage on a house or a car loan.

On the other hand, with inflation you get many of the opposite problems.

  • Inflation constantly increases your real cost of living.
  • With prices rising, you either have to get more frequent raises or work longer hours just to remain at your present standard of living.
  • With rising prices, you tend to become increasingly dependent on debt to make up the shortfall between your wages and prices at the checkout counter.

So which is worse? Losing your job and  facing wage cuts? Or working more hours just to keep your head above water?

Continue reading “Deflation is good for you and here’s why”

This post has no answers

If elections are not a vehicle for radical change, what is? Tad Tietze’s new article, The Failed Strategy argues the problem SYRIZA ran into was a strategy that had to fail.

“Those who continue to portray the government as a victim forget that the Greek political class has not only willingly signed up to the euro project, but that even the “radical left” Syriza variant of that political class treats the eurozone as (in Varoufakis’s words) “just like the Eagles song ‘Hotel California’ — you can check out any time you like, but you can never leave.”

It’s a familiar pattern of weak politicians and governments hiding behind EU technocrats, matching their own detachment from real social interests with claims that they are in no position to deliver on those interests because of the very institutions they desperately cling to. The only new thing here is that the radical left has been able to provide a fresh face for a discredited political system, more honest about its inability to make a difference beyond the political sphere.”

AP976590909234-1280x960But suppose it was not just SYRIZA’s strategy that was bad, but the very idea you can introduce radical change through elections? If this is not possible what other path is there beyond capitalism? Quite simply, there seems to be no way to get past capitalism without some sort of mass political action at the ballot box or the barricades. Assuming that anyone who thinks radicals can challenge the existing state through force of arms are living in a dream world, I think the past 7-8 months in Greece shows the absolute futility of trying to produce radical change through the ballot box.

I agree with Tietze that SYRIZA had the wrong strategy — only, I ask what was that strategy? SYRIZA’s strategy was the same old strategy as the radical Left in all its manifestations has ever had: the conquest of political power by the Left. Every radical change ever undertaken by the radical Left since 1848 has depended on, somehow, seizing political power. This could be through force of arms, elections, or mass strikes; but the strategy is always the same.

  • First we get the power; then,
  • Something …
  • Finally, Communism!

Whatever it was we were supposed to accomplish required us to first get our hands on the levers of power in society. This grand strategy has been mostly unchanged since the 19th century — although there have been major and minor variations on it. But here is a big problem: Most of the very best theory out there on the Left suggests capitalism is a highly abstract mode of subordination without a subject. Understood properly, there is no capitalist class or really even a capitalist state to be overthrown in the sense we normally think of this. As capitalism evolves, it loses its patriarchal character with an identifiable enemy who imposes his will through an identifiable structure

To give an example: Today the chief defenders of the state are Sanders supporters who do not want to discuss the issue of police killings. They don’t want anything to take place that might upset their candidate’s prospects against Clinton. For some reason they have decided this even extends to discussion of cops killing citizens in the streets with impunity. There is no evil capitalist class directing their response — they even suggest the protestors themselves are directed by the capitalists. There are no Koch Brothers behind the scene funding #BlackLivesMatter; but these people react to it as if there was.

The indifference of the state to human life is thus expressed in Symone Sanders leading Sanders’ supporters in chants to drown out the protests of #BlackLivesMatter.  Just how fucked up is that? That is the state, that is its complete indifference to all human life on full display. It does not take many brain cells to extrapolate that shit to all of society. This is the true nature of capitalism, to which the grand strategy of the Left has been devoted to upending since 1848. How do you “overthrow” that shit? What good are your guns against it? How many votes against it do you think you can muster?

It would be nice if this could be reduced to the “phony Leftism” of SYRIZA or another party, but this is a problem the entire Left faces. In fact, that is just how the problem manifests itself: The failure of the Left in general always appears as the failure of one or another Left party; just as the inhumanity of the state in general always appears as the inhumanity of one or another politician. We always think we can fix this shit by replacing one Left party with a better one or one politician with a better politician.

Capitalism is bizarre in that it frustrates any real radical change, but always makes it appear as though this failure to achieve real radical change is the fault of some particular party. It is almost as though radicals are being deliberately seduced to keep playing a game they can never win. If you really want to drive someone crazy, you just keep them thinking they can win a game they can never win.

It is how the lottery works, right? Everyone knows you can’t win the lottery, but this never stops people from playing it. My chance of winning Mega Millions is about 1 in 175 million. But my chance of winning if I don’t pony up the cash for a ticket is infinitely less at 0 in 175 million. I am thus seduced into playing the game at least to the extent of buying a single ticket that has infinitely better chance of winning than no ticket. Similarly, radical change may not be likely, but the chances of realizing it is better when you play the political game.

At least, this is the theory — which is seldom challenged in the discourse. One thing we know is that my chances of winning the lottery may be negligible but better than not playing — but the state always wins. Yes, eventually, someone inevitably win the jackpot, but the state wins every time you buy the ticket. And even when you win — in Massachusetts at least — the state steps in and takes another 60%. Your jackpot is now income and the state demands its additional increment.

This is the game the Left has been playing for the last 170 years in various forms. It is no surprise then that every single social revolution — without exception — has failed. Failure was woven into the very fabric of the grand strategy. We are trying to abolish the state but the first step in our grand strategy involves taking over the state. Then we hope (at least in Marxian variants) to get rid of the material conditions of society that make the state necessary. Once these material conditions have been abolished, we assume, the state itself will disappear — wither away.

Only it never seems to wither away — it actually grows in importance. Once we seize the state, we use it to direct production and the employment of labor. The state becomes critical to how production is organized and managed and how the product of labor is distributed. Of course, there are also other states who are hostile to our state and so we must be on guard with a large standing army. And there are those inside the commune who work with these outsiders, so we need police and intelligence agents — spies. Thus, in the end, rather than society getting rid of the state, the state has abolished civil society.

I want to be clear that I am not quibbling with the grand strategy here. If you work backwards from the goal, it makes perfect sense. We want to abolish the state — something everyone agrees on. But the state doesn’t just hang over society on wires descending from heaven; it is a manifestation of actual material relations. To rid society of the state, you have to abolish the material conditions that give rise to it. To abolish the material conditions of society, you have to complete the bourgeois social revolution — develop big industry and vastly increase the production of material wealth. The state power can serve a critical role as the means for effecting this sort of social transformation.

All of this makes complete sense, except it has never worked out in practice — never, anywhere. At best, all it has ever accomplished is to turn the state into an absolute power over society. Radicals can critique anything except their grand strategy. Once they turn the weapon of critique on themselves they run into a brick wall. Thus they continue to wander around in this political netherworld where nothing seems to work and nothing they do has any lasting value.

The radical dilemma is that the very means the working class employs to realize its emancipation becomes the further means to subjugate it. The working class in Greece elects a radical 3rd International party to put an end to austerity, only to find this party becomes the new instrument of austerity. While across the pond a movement of activists tries to end the epidemic of state violence against its own citizens, only to find the citizens themselves rebuff them, call them provocateurs, and drive the activists from their ranks.

How are we to explain this? Is it that SYRIZA was never really radical and Sanders supporters were never really committed to radical change? I would suggest this is not so. Have we descended to such a savage state that it is now radical to simply demand you not be beaten, starved and murdered by your own fucking state? In truth, there is nothing really radical about simply demanding the state stop trying to starve and murder its own citizens?

The most bizarre thing about the Sanders supporters reaction to #BlackLivesMatter is that the demand advanced by the movement has no radical content at all. All people are asking for is to not be killed by their own government. Yet, even this essentially pedestrian, banal, demand threatens existing political relations such that it cannot be tolerate even among those who are held to be the most radical elements of mainstream politics.

Some people might want to write this off to “white skin privilege” or racism or what have you, but hundreds of white folks have also died this year at the hands of the police. The epidemic of state violence directed at US citizens might have the usual racial overtones, but is not itself a racial problem. It is a state problem.

And that is the problem the Left faces: Once all social contradictions become state problems, the Left has no answers.

Does communism have to be boring — Even in Canada?

The election programme of the Communist Party of Canada (CPoC) is, unfortunately mostly mediocre and incoherent because of the way it is organized. It is a collection of nice ideas with no apparent internal logic.

By “nice ideas’ I mean who can argue with a higher minimum wage, affordable housing, eliminating taxes on income under $40,000, and getting out of NATO. As a Left (radical) party platform of attractive reforms it is not bad overall, but hardly anything that screams “Vote Communist!”

Convention_yclIn a phrase, the election programme of the Communist Party of Canada is boring as fuck!

It is necessary to ask whether this platform offers any real reason for people to stop voting for whichever party they vote for now and take a chance on communists? Given that communism as a political idea and as a model for society has huge negatives in polling among voters, what is offered in this platform? The answer to that question is literally nothing at all that probably could not be found in any other vaguely radical party platform.

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On the irrelevancy of Andrew Kliman

Andrew Kliman writes about the relevance of Marx’s “Capital” today; in it he highlights five aspects of the book he thinks continue to make it relevant. According to Kliman, the continuing relevancy of Capital depends on five things:

First, Capital is a “stripped down” description of the capitalist mode of production, not a complete and final description of capitalist society. Second, the book not only critiques bourgeois economics but many of the most popular alternatives offered by radicals of its time. Third,  capitalism, as described in Capital, is an autonomous, self-acting, process in which “those in power” aren’t really in control of the process. The fourth point is that Capital explains a process where the ‘rules’ of commodity production continue to hold in for the total national capital, even if these rules are violated in particular cases. The fifth and final point is that Capital shows technological improvement tends to reduce the profitability of investment.

Since Andrew Kliman is almost always wrong about everything he discusses of Marx’s theory, it is no surprise to me that he is wrong about the book, Capital, as well. Kliman completely misses the true significance and relevancy of Capital, because he really has no idea why the book remains relevant today.

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A conversation with Phil Greaves: Neoliberalism, Communism and the State

I spent the greater part of a day having an exchange with Phil Greaves over the situation in Syria. The exchanges have been sharp and uncompromising, but very helpful to me, in the sense it has allowed me to understand a problem that can only be discussed in wider context than I have so far.

That problem is this: So far as I can figure out, neoliberalism is the crisis of the existing state, a period of its collapse. If this is true, we are looking at almost 200 states that will more or less effectively disappear over the next few decades. I have spent most of the last year watching this process unfold in Greece, but Greece is not by any means the only example of the process. Just to name a few, we have seen political crises in Egypt, Spain and Japan. We have watched the rise of a nationalist movement in Scotland and euro-skeptic movements in the UK, France, Germany, etc. Finally, we have seen ongoing US and NATO aggression in Ukraine, Venezuela, Libya and Syria. The crisis of the state is now morphed into a prolonged global political and economic crisis.

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Postone on structure and agency

“One of the things I found very eye opening about the Grundrisse … was that Marx was not simply interested in the end of exploitation  of the proletarian labor but rather in the abolition of this labor. Most interpretations of surplus value missed this point.  The idea that Marx was interested in the self-abolition of the proletariat and not in its realization, led me to begin rethinking  Marx fundamentally.” –Postone, Interview with Moishe Postone: “Critique and Dogmatism”

In this quote from a 2011 interview, Postone describe what I agree is the most important aspect of historical materialism outlined by Marx. My ‘difficulty’ (if that is the right word) with Postone on this point is that, in the interview itself, he never relates Marx’s insight back to a real process. This might mislead the casual reader into believing Marx’s argument is merely political.

Postone does relate his point directly back to the real process in his book, Time, Labor and Social Domination, where he shows that Marx ‘interest’ in the abolition of labor is only a theoretical expression of the actual process of capitalistic development. Which is to say, Marx only demonstrates theoretically that abolition of labor is the trajectory of the capitalist mode of production itself. Postone makes this point in his book, but not in his interview.

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