One final question raised by John Milios’ paper on crisis theory remains to be addressed.
I have shown that Keynes’ explanation of the Great Depression was identical to that underlying Marx’s prediction that commodity production would collapse, namely the constant reduction of the socially necessary labor time required for production of commodities.
I have also shown that the Great Depression took the form predicted by Marx: a collapse of production on the basis of exchange value. If, as Marx’s theory asserts, exchange value must take the form of commodity money, we should expect the collapse of production on the basis of exchange value to express itself as a crisis of commodity money. The minutes of the Federal Reserve from the outbreak of the Great Depression does indeed indicate that commodity money stopped circulating in the “economy” after 1929.
Keynes failed prediction
Moreover, Keynes initially argued this crisis made necessary both the reduction of hours of labor as well as existing “social customs and economic practices, affecting the distribution of wealth and of economic rewards and penalties”. In other words, Keynes thought the Great Depression established the immanent economic necessity for an end to a society founded on wage slavery. If the critical question debated by the classical Marxists was whether or not Marx had established the immanent economic necessity for socialism, Keynes appears to suggest he did — although he never mentions Marx in his essay.
Thus, in his 1930 essay, “Economic Possibilities for our Grandchildren “, Keynes appears to fully confirm Marx’s labor theory of value. If the Great Depression was caused by the constant reduction of the socially necessary labor time required for production of commodities, it seems rational to expect Keynes’ solution to follow directly from this conclusion: hours of labor should be progressively reduced. Indeed we find in the 1930 essay exactly this argument:
“There is evidence that the revolutionary technical changes, which have so far chiefly affected industry, may soon be attacking agriculture. We may be on the eve of improvements in the efficiency of food production as great as those which have already taken place in mining, manufacture, and transport. In quite a few years-in our own lifetimes I mean-we may be able to perform all the operations of agriculture, mining, and manufacture with a quarter of the human effort to which we have been accustomed.”
In not too distant a future, says Keynes we may be able to get by with as little as 15 hours per week of paid labor. All of this sounds like a silly utopian fantasy in our own time when unemployment ravages one part of the working class, while overwork ravages the other. Indeed, since the 2008 financial crisis, many writers have commented on how Keynes’ promise in his 1930 essay never actually materialized. So, what happened to Keynes’ 1930 prediction?
Tugan-Baranovsky, Keynes and John Milios
What happened can probably be best understood by explaining why John Milios believes Tugan-Baranovsky’s theory provides the necessary connection between Marx and Keynes.
In his 1930 essay, Keynes traced the Great Depression to the same cause predicted by Marx in Capital: the reduction in socially necessary labor time required for production of commodities. If Milios had been looking for the connection between Marx’s analysis and Keynes argument, this would seem to be the ideal starting point. Yet, for some strange reason, Milios chose not to begin with the Great Depression — an actual crisis — but with Tugan-Baranovsky’s theory that, unlike either Marx and Keynes, argued capitalism is not prone to crises.
Bizarrely, Milios wants to explain the Great Depression using a theory that argued there would be no Great Depression, in order to “allow for a Keynesian interpretation of Marx’s theory of expanded reproduction of social capital, according to which a constantly increasing investment demand may always compensate for the lacking demand for consumer goods.”
Just to avoid any confusion: John Milios, who purports to be a Marxist, seeks to formulate a connection between Marx’s prediction of a coming collapse in commodity production, and Keynes explanation of the Great Depression, employing Tugan-Baranovsky’s hypothesis that claimed capitalism had no tendency toward crisis. And this idiot was helping to devise economic policy for SYRIZA? Is there any question why SYRIZA’s strategy was doomed from its inception?
So what accounts for Milios’s bizarre attempt to link Marx’s analysis to Keynes analysis via Tugan-Baranovsky’s hypothesis? What changed? Frankly, Keynes is what changed. And, as I will show, Marx’s theory of collapse anticipated this change.
Simply stated, in 1930, Keynes had correctly diagnosed the underlying causes of the Great Depression, but when he turned his attention to addressing those causes, he forgot all about that hogwash about the need to reduce hours of labor.
Marx corrects Keynes
Surprisingly, where Marx differed from Keynes is that Marx never predicted a reduction of hours of labor; instead he predicted the opposite development. Capitalism, said Marx, “diminishes labour time in the necessary form so as to increase it in the superfluous form”. This conclusion led Marx to the exact opposite conclusion from that arrived at by Keynes in his 1930 essay: Hours of labor would not be reduced once production on the basis of exchange value collapsed; rather, there would be a tendency toward increased expenditure of labor that is totally superfluous to society. Moreover, the increased expenditure of completely superfluous labor would become the condition for necessary (productive) labor.
In his groundbreaking reconstruction of Marx’s theory, Time, Labor and Social Domination, Moishe Postone explains Marx’s own theory leads to a far different outcome than Keynes predicted:
With advanced industrial capitalist production, the productive potential developed becomes so enormous that a new historical category of “extra” time for the many emerges, allowing for a drastic reduction in both aspects of socially necessary labor time, and a transformation of the structure of labor and the relation of work to other aspects of social life. But this extra time emerges only as potential: as structured by the dialectic of transformation and reconstitution, it exists in the form of “superfluous” labor time. The term reflects the contradiction: as determined by the old relations of production it remains labor time; as judged in terms of the potential of the new forces of production it is, in its old determination, superfluous.”
Marx never predicts the technical improvement of labor leads to the reduction of hours of labor; he predicts it leads to collapse of commodity production. This is because capital aims to increase the production of surplus value, no matter that it waste billions of hours of labor in that effort. It may be completely true that the technical improvement in the productivity of labor makes possible the reduction of hours of labor to some definite minimum, but the realization of this in an actual reduction of hours of labor requires a social revolution. Socialism is a necessity because only this movement of society can convert the technical potential for abolition of labor into a reality.
Thus, contrary to John Milios, the political action of the proletariat was not required to determine the level of exploitation of the working class, but to put an end to labor itself.
To put this is in a way that might be comprehensible to our Marxist scholars who are so enamored of Keynes, when Keynes argued we could soon accomplish “all the operations of agriculture, mining, and manufacture with a quarter of the human effort to which we have been accustomed”, he was also stating 3/4 of what was in 1930 necessary (paid) labor time would soon be converted into surplus labor time. It is true that this extra labor time could be employed to reduce the work hours of the working class, but it was just as true (and far more likely) that it would be turned into surplus value for capital.
Capital, or the production of surplus value
To put this another way, if it had simply been a matter of the technical requirements of production, Tugan-Baranovsky would have been right. The improvement in the productivity of labor introduced by capitalism would have led to the abolition of labor. There would have been no collapse of production on the basis of exchange value; and no crises.
Which is why Marx continually reminded his readers that capital aims not at reduction of the socially necessary labor time required for production of commodities, but the production of surplus value, of profit. What Milios, Tugan-Baranovsky and Keynes ignored is that reduction of hours of labor is not for capital an end but only a means. As Marx comments in chapter 15 of volume three, no capitalist ever introduces improved means of production unless by so doing he can increase his profit. Thus Marx predicts not the progressive reduction of hours of labor but collapse of production on the basis of exchange value.
The collapse of production on the basis of exchange value is not just necessary because capital is solely concerned with production for profit, but also that production for profit cannot continue without the collapse of the premises of commodity production. As Henryk Grossman explained in his refutation of the neo-harmonists, at the point of capitalist breakdown, production for profit can only continue if the commodity, labor power, is sold below its value.
When Keynes takes a later look at the Great Depression, we will find he no longer holds to the idea technical improvement in the productivity of labor will force society to reduce hours of labor. Instead, in his most famous work, Keynes seeks to uncover the means by which labor can be reduced below its value.