Schrödinger’s Capital: Is Marxism now a variant of anarcho-capitalism?

NOTE 6: Why did the gold standard collapse?

In 2003, Chris Arthur wrote a paper which if valid has staggering implications for labor theory. The topic of the paper was one question facing labor theorists: Was Marx correct to insist money had to be a commodity?

The implication of the question is staggering, because, since 1971, the international currency system is not tied to any commodity. The system is a collection of valueless currencies not backed by any commodity that float against each other. All Marxists agree Marx himself held that in the final analysis money had to be a commodity. If this is true, something with huge implications for labor theory of value occurred in 1971 — something so huge no labor theorist can ignore it.

Continue reading “Schrödinger’s Capital: Is Marxism now a variant of anarcho-capitalism?”

“Schrödinger’s Capital”: How Marxist academics use ‘Dialectical’ to turn bullshit into a theory

NOTE 5: The paradox of the value-form

What do you do when you can’t explain how concrete labor is reduced to abstract labor?


You just do what Chris Arthur did in 2012: deny that labor is the source of value.

Chris Arthur realized the argument of the value-form school was falling apart on a critical question. The value-form school could not explain the process by which concrete labor was ‘reduced’ to abstract homogenous labor. Certainly, the value-form school argued, value required the value-form, i.e., money, but how exactly could you explain where money comes from without assuming the prior existence of value and exchange value?

According to Marx’s labor theory, money began as a simple commodity long before it emerged as the money commodity. But even as money the commodity serving as money is a simple use value having no unique value characteristics. Value, on the other hand, is complete abstraction from the useful qualities of the commodity.

Continue reading ““Schrödinger’s Capital”: How Marxist academics use ‘Dialectical’ to turn bullshit into a theory”

“Schrödinger’s Capital”: How is concrete labor actually reduced to abstract labor?

NOTE 4: What accounts for the value attribute of the commodity?

If concrete labor is always concrete, what accounts for the reduction of concrete labor to abstract labor?

There should be no question that the value-form theory approach to the origin of the value attribute of commodities and Marx’s approach are not the same theoretically. This requires an explanation from the advocates of value-form theory.

To be sure, the problem is not that the value-form school disagrees with Marx: so far as I can tell everybody and their mommas disagree with Marx. In fact, these days, you have to explain why you don’t disagree with Marx.

Instead the problem is both practical and theoretical: If the values of commodities is not the manifestation of the total labor power of society as Marx argues, the value-form school must offer a plausible explanation for how the products of concrete, particular, useful labor carried on by individual producers in isolation are reduced to abstract homogenous labor values through money and exchange.

In particular, the value-form school must provide the answers to three big questions avoided by modern economics:

  • How is concrete labor reduced to abstract labor?
  • Where is this reduction accomplished?
  • What is the evidence the reduction has taken place?

To give an analogy drawn from quantum mechanics: In quantum theory we have the difficult scientific problem that the properties (or state) of particles are apparently instantly coordinated across vast distances. How this coordination of the state of particles is accomplished is not known; faster than light communication between widely separated particles cannot occur, so far as we know. This poses a difficult problem for physics because it points to an event occurring at the level of the individual particle that appears to have no known cause. That the a coordinated change in the properties of widely separated particles occurs is without question, yet we presently have no plausible mechanism to explain it.

In a similar vein labor theory as described by the value-form school suffers a defect that the property of the commodity appears to mysteriously undergo a qualitative transformation from a mere concrete particular use value to an abstract homogenous labor value as it exits individual production and enters into intercourse within the larger community. Value-form school theory has offered no explanation (nor even a speculative mechanism) by which an expenditure of concrete particular useful labor is reduced to abstract homogenous labor as the value-form school insists happens.

Concrete useful labor is expended in millions of ways that are incommensurable with one another. These labors result in products of labor, commodities, that have the same qualities as the labor that produced them. Yet, we are told, once exchanged in the world market, value-form theory says each commodity is now identical and indistinguishable from every other commodity as is required by labor theory; the unique and useful qualities of the commodities are somehow reduced to abstract values as they are passed from one individual producer to the next.

If this reduction really is taking place, and is not simply a mental construct, the value-form school must explain the mechanism by which this is accomplished.

It’s okay, we can wait for for you value-form theorists to come up with a plausible explanation. Just don’t expect us to forget you haven’t given us one — yet.

David Harvey: “As if this is actually occurring through world trade.”

Marx proposed that value was not an attribute of the commodity itself, but a manifestation of the total labor power of society. However, according to David Harvey, in his Companion to Capital, Marx was actually tacitly relying on a mechanism he (Marx) did not admit to: “To speak of ‘the total labour-power of society'”, says Harvey, “is tacitly to invoke a world market that has been brought into being under a capitalist mode of production.”

“It is on this dynamic global terrain of exchange relations that value is being determined and perpetually redetermined. Marx was writing in a historical context where the world was opening up very fast to global trade, through the steamship, the railways and the telegraph. And he understood very well that value was not determined in our backyard or even within a national economy, but arose out of the whole world of commodity exchange. But he here again uses the power of abstraction to arrive at the idea of units of homogeneous labor, each of which “is the same as any other, to the extent that it has the character of a socially average unit of labour-power and acts as such;’ as if this reduction to the value form is actually occurring through world trade.”

Indeed, Marx does appear to make just this sort of argument, not in Capital, but in his 1851 work, Reflections on Money. (NOTE: You won’t be able to find this essay at anymore, because the fascists have claimed it as their intellectual property. However, it can be found if you look hard enough.) In that essay, Marx argues, the prices of commodities are determined by world trade.

“[The] trade between dealers and dealers in England, for example, is by no means circumscribed by the trade between dealers and consumers in England, but more or less by that between dealers and consumers on the world market as a whole. For instance, the India Company or East India merchants send indigo to the London market. There it is auctioned. This is a transaction between dealers and dealers. The purchaser of the indigo sells part of it in France, Germany, etc., where it is bought by various dealers and manufacturers. Whether they will in the end recover the price of the indigo, will depend on how the final product is sold to the consumer, who lives perhaps on the Ionian Islands or in Afghanistan or in Adelaide”

Here Marx gives the example of a single commodity and how its price is determined by far-flung transactions within the world market, just as Harvey argues. What Harvey fails to note, however, is the level of the discussion at which Marx engages the role of the world market in labor theory. If the value-form school’s argument is accepted, Marx is only considering the exchange of simple use values and of prices, which are themselves denominated in a simple use value, gold or another commodity.

Where does the reduction of the indigo and the gold to abstract labor values take place? When the indigo was gathered in India for sale? When it was auctioned in England? When it was used in production in Germany? When it was sold to the end user in Afghanistan? Specifically, how did this reduction from a concrete use-value to an abstract labor value take place? What evidence do we have for this reduction?

To be absolutely precise, according to the value-form school, Marx is stating the price of indigo is determined by far-flung transactions within the world market. But the price of any commodity is only the worth of that use value expressed in the form of another, universally recognized, equivalent use value, a money commodity. Taken by themselves, neither the indigo nor the money in the trade have any identifiable material property of value in their composition. Each use value left production and entered into commercial relations as the product of the expenditure of concrete, useful labor.

To be absolutely clear on this point, in value-form theory it does not matter whether we are talking about the exchange of use values between two individual commodity producers or the highly sophisticated trade of the world market where a good produced in India is auctioned in England to be used in production in Germany for sale in Afghanistan. In either case, we are simply talking about the exchange of one inert use value having no abstract labor value attributes for another inert use value having no abstract value attributes.

Even when we introduce the assumption that what is now taking place is a succession of serial exchanges of the commodity before its final consumption, nothing obvious has changed qualitatively. Indeed, in the case of the money commodity in the exchanges — a gold coin, for instance — a succession of exchanges is already a characteristic and unique attribute, since the money commodity is never consumed, but simply changes hands. For all this, the gold coin still remains a use value, an inert piece of metal, serving as universally recognized means of exchange. No matter its function in the world market, the coin contains no detectable quantity of abstract labor value.

Although so highly prized in a community of commodity producers like our own that the gold coin is locked in a safe, in a communist community of the future someone would pick it off the street and toss it into the recycle bin with other metals. It would be nothing more than an object to recycle or, at most, a quaint peculiar totem of a long dead mode of production.

This is the point of Marx’s discussion of the fetish of commodities and the inability of political economy to understand the social nature of the commodity springs not from the characteristics of the use value itself, but from its social context in a community of commodity producers where the historically specific configuration of the total labor power of society (the division of labor) already determines the abstract labor attributes of the product of labor.

Operating at the level of superficial economic relations of the market, political economy never demonstrated precisely what had to be shown: the jump that must take place in a product of labor from use value to abstract labor value, nor when and where this jump occurs. Likewise, no value-form theorist has ever shown an actual process by which concrete labor is reduced to abstract labor. If this reduction or leap is actually taking place in reality and not simply in the minds of Marxist theorists it must be demonstrated.

Next, we will see how Chris Arthur tries to finesse this problem.

Schrodinger’s Capital: The fatal defect of the value-form

NOTE 3: The concrete is always concrete

I pointed out in my last note that the value-form school places great stock in Marx’s question:

“why [is] labour … represented by the value of its product and labour time by the magnitude of that value”?

Marx’s argument seems to be this occurs because the productive activity of the total labor power of society is not regulated by the producers. The value-form school, however, provides another reading of Marx’s question:

“how [do] people’s productive relations find their expression in value.”

reificationWith Marx, it appears the nub of the problem lies with the lack of conscious organization of social production. But with the value-form school, the problem lies elsewhere: the process by which unregulated private productive activity becomes social. In either case we begin with a common social fact: the existing organization of the total labor power of society in which producers carry on their productive activity through exchange of commodities.

Marx asks WHY the total labor power of society manifests itself as the value of its product. The value-form school asks HOW the total labor power of society manifests itself as the value of its product.

We already have Marx’s answer: the total labor power of society manifests itself as the value of its product, because the productive activity of the total labor power of society is not regulated by the producers whose powers they are.

The necessary form of appearance…

This answer is inadequate for the value-form school, because they think Marx does not explain the process by which concrete, particular, useful labors are reduced to identical units of abstract homogenous labors. This, they argue, requires an appreciation for the role of the value-form, of money. According to Rubin, use values are reduced to abstract labor values by being universally compared to one and the same use value by the producers of a commodity producing community.

If this is true, we have a real theoretical problem. Since neither the individuals nor their products carry any information about the values of their commodities, this information cannot be transferred between them through an exchange of the commodity for a money commodity.

I have no information regarding the socially necessary labor time required to produce my commodity and neither does anyone else. Moreover, this information is not contained in my commodity nor in the commodity of any other producer. Even commodities like gold or silver have no information on their socially necessary labor times. They, like all commodities, are simply concrete, particular, use values and the product of concrete, particular useful labor.

In a commodity producing society, the critical information regarding the productive activity of individual producers is carried only in their actual living material relations of production. The information is not carried by individuals, nor does it appear in their products in a manner the information can be gleaned by the individuals. This suggests the productive activity of the individual producers always remains concrete, particular and useful; and the products of their labors always remain concrete, particular use values.

All of the above is true not just at the dawn of the epoch of commodity production and exchange, but remains so today. None of the labor expended today is inherently ‘value producing labor’; nor are any of the products of labor intrinsically ‘values’.

Commodities are the product of concrete, particular, useful labor and are themselves concrete, particular use-values. They can never be anything but concrete, particular use values and have no capacity to become abstract, homogenous and identical values. Nor is there any technology, application of scientific knowledge or material process by which human beings can turn use values into values. (If the above were not true, alchemy would be a branch of industry, not a mediaeval superstition. No one can turn a base metal like lead into gold and no one can turn a pair of shoes or an apple into values.)

The value-form is itself concrete

The exchange of an ordinary commodity for the money commodity, however, has the same defect that is found in the exchange of use values in general: Each use value is incommensurable with others. It does not matter that, in place of the exchange of many separate use values with many other use values — e.g., apples for pitchforks, shoes for hats, cars for houses — all use values are exchanged for one money commodity. Either in the case where many commodities are being exchanged for many other commodities or all commodities are exchanged for a money commodity, the problem is the same: Each use value — the apple, the pitchfork, the shoes, the hats or the gold coin — is a concrete, particular, useful object that is qualitatively unique and satisfies a qualitatively unique need. None of the concrete labor going into each can be compared to the concrete labors of the others.

In labor theory, no use value can be compared to another qualitatively different use value, because they are not commensurable — and this must be true even if one of the commodities in the exchange serves as the universally recognized money in the community.

Even if we concede to the value-form school that abstract labor requires a money, they still must explain how money, a concrete, particular use-value, accomplishes this. How does replacing all of the use-values on one side of the exchange equation with a single use-value solve the problem that concrete labor times of none of the use-values can be compared.

Information is embedded in relations, not commodities

Marx’s theory suggests the productive activities of commodity producers are being coordinated by information they do not themselves possess and which is not contained in the products of their activities. While this might seem bizarre, it is not. It is actually a principle found in quantum theory.

According to The Complete Idiot’s Guide to String Theory:

“Objects can become coordinated and only then acquire specific properties. … relationships between objects can embody information that the individual objects do not.”

While various prequantum theories assumed the state of a particle was determined by its specific properties, quantum theory shows this is not true. In quantum theory, the behavior of a particle is coordinated with the behavior of other particles first and only later does the particle acquire the specific property.

This is exactly the process labor theory proposes for the emergence of value: Producers enter into material relations of cooperation first, and the products of their labor only later comes to express those relations of dependence. Contrary to the argument of the value-form school, it is not money that makes value possible, but the pre-existing productive cooperation of producers of commodities that makes money necessary.

Since the problem identified by Marx at the outset is the lack of conscious organization of social production, this cannot be fixed by money. Money itself is only the visible expression of the lack of conscious organization of social production.

Schrödinger’s Capital: Concrete labor, abstract labor, values and prices

NOTE 2: Concrete labor and abstract labor, values and prices

The whole problem of the value-form school in a nutshell can be found in its response to this statement by Marx from Capital, volume one, chapter 1, section 4: Why, Marx asked, is labour represented by the value of its product?

“Political Economy has indeed analysed, however incompletely, value and its magnitude, and has discovered what lies beneath these forms. But it has never once asked the question why labour is represented by the value of its product and labour time by the magnitude of that value.”

In his 1927 essay, Abstract Labour and Value in Marx’s System, I.I. Rubin offered his own response:

“Following Marx, we must solve our problem in this way. Our task does not only consist in showing that the value of a product can be attributed to labour. We must also show the converse. We must reveal how people’s productive relations find their expression in value.

“This is the basic statement of the problem, which must be considered the most methodologically correct from the Marxian standpoint.

“If we put the question in this way, we take not the concept of value as the starting point of the investigation, but the concept of labour. We define the concept of labour in such a way that the concept of value also follows from it.”

I could be wrong, but I don’t think Rubin was asking the same question Marx was asking: Why is labor represented by the values of commodities?

Continue reading “Schrödinger’s Capital: Concrete labor, abstract labor, values and prices”

“Schrödinger’s Capital”: Notes on concrete and abstract labor

WARNING: None of this is in any order. I am just making notes as thoughts occur to me. I am setting aside this topic for notes preparing for a future essay titled “Schrödinger’s Capital”, which will be a reading of Marx’s labor theory of value through the lens of quantum theory. The essay will be a response to the value-form school’s attempt to revive the writing of the labor theorist I.I. Rubin and to similar arguments that can be found in David Harvey’s Companion to Marx’s Capital.

schrodingersThe subject, value, seems extremely complex and dense. It is also the source of most of the misreading of Capital I come across these days. Using some of the principles of quantum theory, I hope to clarify why Marx’s concept of value is so little understood by Marxist writers.

Quantum theory has long been subjected to, and misused by, new age interpretations by charlatans. I want to emphasize this effort on my part is not a gimmick; I am not trying to advance a “new age” interpretation for labor theory of value by spinning quantum theory. Rather, my argument is that labor theory is as much a rigorous science as quantum physics and should be subjected to the same rigorous treatment. The insights of quantum theory may be “weird” when first encountered, as one writer put it, but its accuracy in describing the physical universe is not in dispute.

In my opinion, it is not enough to assert, for instance, the collapse of capitalism is inevitable. Labor theory’s accuracy must be challenged and shown to be as accurate as the physical laws of any science.

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Can the state prevent the collapse of capitalism by printing currency?

Tom Cutterham seems to believe to the answer to that question is, Yes. Cutterham’s review of Paul Mason’s book, Postcapitalism — Forget Wikipedia — is a common enough response by some activists to any mention of communism:

“Again and again, those who predicted imminent collapse were proved wrong. There were always new ways for the system to adapt to its inherent contradictions and crises, always new markets to pry open and new forms of labour to exploit.”

Capitalism, this argument goes, is apparently capable of almost infinite adaptation. The response usually does not deny that capitalism is prone to crises, nor that these crises may trigger some political event like a social revolution. However short of a social revolution, (triggered usually by an alteration of consciousness secondary to a crisis), there is nothing inherent in capitalism driving it toward its self-annihilation.

The current iteration of this argument, which among Marxists seems to date back to Tugan-Baranowsky, is now defended by the value-form school and almost all Marxists today. This school includes very influential Marxist writers like Michael Heinrich in Germany, John Milios in Greece and David Harvey in the United States.

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Ignoring the lessons of SYRIZA’s capitulation

It seems as though the lessons of SYRIZA’s failure will likely be ignored or dismissed on the Left for various reasons. Some argue, with certain justifications, that Europe went out of its way to 1200x-1sabotage the government and thus to teach the Left a lesson. Others will argue SYRIZA, despite its roots in the 3rd International, was never as radical as it appeared or was hyped on the Left. Still others will argue SYRIZA’s failure can be blamed on its unwillingness to exit the common currency — a mostly self-inflicted defeat.

All of these arguments contain an element of truth, but the failure will nonetheless haunt the Left. If the Left is not fatally wounded, it will at least require a long period of recovery.

You can almost feel the sense of defeat on the Left after SYRIZA agreed to capitulate to Merkel and Hollande. SYRIZA was the best chance in the past 35 years for the radical Left to change the debate and prove Thatcher wrong. Had SYRIZA succeeded, there would have been an alternative to neoliberalism that the Left promised was possible. In the aftermath of SYRIZA’s capitulation, however, there is a real question whether any alternative is possible. Podemos, the powerhouse Left formation in Spain, which seemed poised to benefit from the SYRIZA election victory in January, has since peaked in the polls and seems to be flatlining.

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The hidden conflict within the fascist state for control of economic policy (5)

I have been going through this process in order to clarify for myself the logic of the current discussion of so-called negative interest rates — an oxymoron if ever there was one. This is part five of the series; part one, part two,  part three and part four can be found here. I hope it also will have some use to readers.

Part Five: The dollar and the increasing possibility of 21st Century Currency Warfare

Can monetary policy be rescued from oblivion? Probably not. There are just too many difficulties with the idea of negative interest rates on currency.

As I explained in part four of this series, Haldane proposes that the way around the zero lower bound on monetary policy may be to impose a negative interest rate on the holders of state issued currency. If a way could be found to force the holders of currency to pay interest on the currency in their bank accounts, wallets, pockets — and even in their mattresses — the distinction between credit money and currency could be forcibly imposed on society by the state despite a zero interest rate environment.

Once stripped of its deceptive wrapping as mere monetary policy, what Haldane is proposing is the outright expropriation of your savings account, your checking account and even the currency in your wallet and cookie jar. This goes well beyond monetary policy and begins to encroach on the limits of national economic policy itself. Under the most charitable interpretation, his proposal is well into the sphere of fiscal, even currency, policy despite the attempt to conceal it behind protective coloration as a negative interest rate on currency.

For the moment, however, let’s ignore this potential objection to his proposal. Instead, let’s treat it as a proposal for a measure similar to what FDR did in 1933: pure and simple devaluation of the currency.

What are the difficulties to be considered?

Continue reading “The hidden conflict within the fascist state for control of economic policy (5)”

The hidden conflict within the fascist state for control of economic policy (4)

I have been going through this process in order to clarify for myself the logic of the current discussion of so-called negative interest rates — an oxymoron if ever there was one. This is part four of the series; part one, part two and part three can be found here. I hope it also will have some use to readers.

Part Four: The desperate search for an exit from failed monetary policy

“I think we got the Recovery Act right. The primary objective of our policy is having more work done, more product produced and more people earning more income. It may be desirable to have a given amount of work shared among more people. But that’s not as desirable as expanding the total amount of work.” Larry Summers, Washington Post, November 8, 2009

“We didn’t think it would take that long.” Ben Bernanke, USA Today, October 5, 2015

The disappointment with the weak impact of counterfeiting the currency was admitted by Bernanke in a recent interview. This was not supposed to happen according to the dominant monetary theory, and Ben Bernanke in particular, where the prices of commodities are a function of the supply of currency in circulation. According to Bernanke’s “quantity theory of money”, the government had this technology, the printing press, which it could use to manage the US national capital. In fact, following the financial crisis, the policy rate went to zero without providing any real stimulus at all.

The chief economist of the Bank of England, Andrew Haldane, gave a speech in September on the problems faced by monetary policy. Although Haldane never mentions Larry Summers, his speech addresses the same concerns Summers raised in his own November 2013 “secular stagnation” speech. The problem is that monetary policy, on which the United States has relied since 1979, has run into a dead end, the zero lower bound. Had Washington not stepped in and provided a multi-year, multi-trillion dollar fiscal stimulus, capitalism likely would have collapsed. No one will admit it, but this is in fact what has happened after the 2008-2009 financial crisis.

Continue reading “The hidden conflict within the fascist state for control of economic policy (4)”