Seattle’s new $15 minimum wage law is killing employment (and that is good news)

minwage2The American Enterprise Institute has published great news for advocates of a higher minimum wage: the new $15 an hour minimum wage law in Seattle has already reduced employment by 11,000 workers.

Says the AEI, a leading neoliberal think-tank, Seattle’s minimum wage increase may be having a negative impact on employment. According to empirical data supplied by the think tank, in the months following an increase in the minimum wage employment began steadily falling just as many economist predicted.

Although many advocates of a higher minimum wage may be disappointed, this news is actually far better than they could have hoped for. Let me explain why.

Continue reading “Seattle’s new $15 minimum wage law is killing employment (and that is good news)”

Class suicide and the end of capitalism

The existential barrier of the Left is that it wants to abolish all the contradictions of wage labor without actually abolishing wage labor. Somehow, the Left believes it can get rid of inequality, poverty, racism and a host of social ills connected with wage slavery, yet continue to sell its labor power to capital much as before. Even the best minds on the Left assume the sale of labor power is an innocent commercial transaction that has no connection to its results.

There is nothing that can be done about this because the sale of labor power is, in reality, exactly like the sale of any other commodity. You can replace labor power by any other commodity — an apple, a car or a pair of shoes — and the transaction is identical in each case.

The typical Leftist asks an entirely logical question: If selling an apple or a car doesn’t necessarily lead to inequality or poverty, why would it be different for the sale of labor power? Indeed, millions of commodities are bought and sold every day without any evidence these transactions necessarily lead to inequality or poverty. The Leftist is, therefore, completely correct to believe the sale of labor power is no more the cause of poverty than the sale of any other commodity.

Continue reading “Class suicide and the end of capitalism”

Keynes and the myth of the Reagan administration’s neoliberalism

Robert Skildelsky, biographer of John Keynes, has written an essay written an essay on the 80 year legacy of the General Theory in which he credits Keynes with inventing macroeconomic policy and for showing how government could employ means at its disposal to offset economic depressions.

For all the genius of Keynes’ General Theory, its importance has not always been acknowledged by mainstream economics. By the 1980s, according to Skidelsky, most of mainstream economics came to reject many of the ideas first proposed by Keynes, particularly his argument capitalist economies were inherently prone to chronic underutilization of both capital and labor.

Continue reading “Keynes and the myth of the Reagan administration’s neoliberalism”

A future beyond capitalism is the end of the world

Zizek is famously quoted as saying, “it’s much easier to imagine the end of all life on earth than a much more modest radical change in capitalism.” I have been reading a lot of writers who are trying to prove Zizek wrong by imagining a society that might be loosely categorized as post-capitalism — a term I personally detest.

Despite my aversion to that term, I want to make several observations that might be considered odd for folks interested in the subject of post-capitalism:

Continue reading “A future beyond capitalism is the end of the world”

Four questions for LK on money

In another post to his blog, “A Marxist agrees with me on the Labour Theory of Value and Fiat Money!”, LK thinks I agree with him on labor theory and money. So, I thought I would mark where I think we agree and where we don’t agree just to keep both of us honest.

Among the points on which we agree are the following:

First, for Marx money is a commodity, a thing having both use value and labor value — Marx is clearly insistent on this point and held to it for his entire career. The labor value content of money allows it to express the value of all other commodities in a mode of production founded on exchange. Fiat currency is not money in the full sense that Marx uses that term, since it has no value of its own, but only symbolically represents some definite quantity of actual money. It is, in a phrase, a placeholder for money.

Second, I therefore, completely agree with this statement by the writer:

“It would follow that the trendy modern Marxist idea of the MELT is entirely intellectually bankrupt too, under Marx’s dogmatic metallist theory of money.”

I would quibble with the phrase, “dogmatic metallist theory of money”. Marx never said money had to be metal, he only said money was by its nature gold. “Gold is not money, but money is by nature gold” is how the concept is usually phrased. This implies that there is something of the nature of money itself that is not completely captured by any money object, even gold.

On the other hand, the writer is less than accurate to state that I think fiat currency has destroyed the ability of money to properly reflect values. What I stated is that fiat currency does not reflect the values of commodities. There is nothing in this that implies currency has destroyed the ability of money to properly reflect values. Gold still retains the capacity to properly reflect the values of commodities; it simply no longer serves as the medium for circulation of commodities. The only thing that has changed is that since 1971 fiat is no longer tied to any definite quantity of gold; this change only affected fiat and had no impact on gold as a measure of the values of commodities.

Third, the writer then asks a critical question: “How, then, could Marx’s theory still be right?” His answer is relevant:

“The answer: modern currency is not really money at all! In addition, prices and labour values diverge as in volume 3, but now fiat money has destroyed even any relation between values and prices of production even as postulated in volume 3 of Capital, since this is (apparently) the trajectory of capitalism as supposedly prophesied by Marx.”

The writer is basically correct here, although, again, I would quibble with his phrasing. What makes Marx’s theory correct is that his theory predicted the breakdown of production on the basis of exchange value, i.e., money, almost 70 years before it happened. Moreover, Marx’s theory is the only theory that made this prediction.

This should count for something. It is entirely unfair and even specious to acknowledge, on the one hand, that Marx held to the opinion money is a commodity, yet, on the other hand, ignore he also stated this money commodity would eventually become an obstacle to production of material wealth. Yet this is what many writers on labor theory want to do.

Where we definitely do not agree is on the writer’s assertion that money is the same thing as currency. Currency is, of course, a money-form, a form derived from money in its specific function as medium of exchange, but so is a ledger entry in an accounting book, a paper IOU, or a price tag. Side by side with “real”, i.e., commodity money, are a number of symbolic representatives of money adapted to specific needs of commerce. What the writer calls Marx’s basic concept of money includes all of these derivative forms in principle.

And what are we to make of this statement by the author:

“If fiat money is impossible, then our modern economies would have collapsed decades ago when money was severed from gold in the 1930s for domestic economic transactions, and certainly since the end of Bretton Woods (a system in which gold only had a role in the international payments system anyway).”

Now, here is the thing about the author’s argument that I find somewhat disturbing: On the one hand, first he ridicules Marx’s prediction the trajectory of capitalism led to the breakdown of the relation between value and prices. Then he argues the actual breakdown of the relation between value and prices would mean “our modern economies would have collapsed decades ago when money was severed from gold”.

This argument is very muddled and raises questions as to whether the writer has really thought through his/her position vis a vis labor theory.

First, to be clear, Marx never predicted a breakdown of capitalism; he predicted a breakdown of production on the basis of exchange value.

Why do I make this rather obscure distinction?

Because the relation between values and prices was severed by industrialized countries in the 1930s precisely to save capitalism, to prevent its total collapse. As the author fully knows, or should know, the economies of the industrial nations did actually collapse in the 1930s — we call this collapse the Great Depression. The historical evidence gathered from many sources shows the economies of these countries only began to recover once they left the gold standard and severed the values of commodities from their nominal (fiat) prices.

Again, am I making this fact up? Let’s consult the Wikipedia:

“According to later analysis, the earliness with which a country left the gold standard reliably predicted its economic recovery. For example, Great Britain and Scandinavia, which left the gold standard in 1931, recovered much earlier than France and Belgium, which remained on gold much longer. … The connection between leaving the gold standard as a strong predictor of that country’s severity of its depression and the length of time of its recovery has been shown to be consistent for dozens of countries, including developing countries.”

While the writer wants us to believe that severing gold from fiat leads to economic collapse, Marx actually predicted the reverse: economic collapse would lead to the severing gold from fiat.

I am willing to engage the writer on this subject, but he has to come clean on several points:

  1. Did not Marx predict the collapse of production on the basis of exchange value?
  2. Did this collapse occur in the 1930s just as Marx predicted it would?
  3. To save capitalism was it not necessary to sever gold from fiat?
  4. What was the implication of the collapse of the gold standard for Marx labor theory of value? Does it validate Marx’s theory of money or disprove it?

Liars Can Figure: How James Sherk made poverty disappear (Part 1)

Have workers’ wages risen or fallen since the 1970s? This is the question posed to me on

“The left likes to throw the “real wages have depreciated greatly since the 1970s” argument around a lot. What would you say to this article that sets out to debunk that?”

The questioner offered a paper by the bourgeois simpleton economist, James Sherk, Productivity and Compensation: Growing Together, as a refutation of the dominant Left opinion that wages have depreciated greatly since the 1970s. Sherk argues:

“Conventional wisdom holds that worker productivity has risen sharply since the 1970s while worker compensation has stagnated. This belief rests on misinterpreted economic data. Accurate and careful comparisons show that over the past 40 years measured productivity has increased 100 percent and average compensation has risen 77 percent. Inflated productivity measurements account for most of the remaining 23 percentage point difference. An apples-to-apples comparison shows that employee compensation continues to closely follow productivity. American workers continue to earn more as they become more productive. To help Americans advance economically, policymakers should seek policies that will increase productivity.”

richal 04To be sure, the argument made by James Sherk is not entirely silly. It even has some support among a small group of Marxist labor theorists. The Marxist scholar, Andrew Kliman, has written a book, The Failure of Capitalist Production: Underlying Causes of the Great Recession, making the very controversial assertion that total compensation paid for labor power, including non-cash benefits, have more or less not fallen since the 1970s.

However, what no one disputes, at least so far as I have read, is that real wages have fallen during this period; in fact, even Sherk admits wages have fallen over the period by 7 percent. Instead the author examines another, perhaps related, question: has total compensation for workers increased since the 1970s as the productivity of labor has increased? Continue reading “Liars Can Figure: How James Sherk made poverty disappear (Part 1)”

It’s not easy being the Green Party, but it’s better than voting Democrat

The strengths and weaknesses of the Green Party platform

For those who can’t see themselves voting for a candidate from the Party of Slavery, Jim Crow Segregation and War  — no matter how ‘progressive’ or ‘socialist’ that candidate might market himself — an alternative might be The Green Party. The Green Party has an advantage for the Left that it has already made the effort to break with the Party of the KKK, Lynch Mobs and Obama Drones.

SANDERS OBAMAWhile a candidate like Bernie Sanders might promise he will break with the neoliberal policies of Obama and Clinton, the Green Party has already begun to break with those policies.

The problem, as I will show, is that the Green Party’s break with the Democratic Party hasn’t yet advanced beyond organization. The Green Party signals the limitations of its break with the Party of the Cold War by adopting much of its political program. The limitation of the Green Party’s break with the Democratic Party is telegraphed by its platform which it unironically calls, “A Green New Deal”. This is a not so subtle reference to the Roosevelt administration’s own New Deal legislation during the Great Depression. Continue reading “It’s not easy being the Green Party, but it’s better than voting Democrat”

Was the world economy in a recession in 2015? Labor theory says, “No.”

There is an interesting dispute brewing over the figures the IMF provided for global growth for the period 2013-2015. The IMF is showing the global economy grew during 2015, while others dispute the methodology the IMF is using to calculate its figures.

The details of this simpleton cat fight can be found here, “The World’s Economy Soared Last Year (or Plunged)“.

The IMF employs the so-called purchasing power parity (PPP) method that allegedly adjusts for changes in the exchange rate between currencies. (The explanation for how the IMF uses PPP to calculate GDP is described here.) Other researchers are crying foul on this method because they think it overstates the extent to which the world economy is presently growing. Continue reading “Was the world economy in a recession in 2015? Labor theory says, “No.””

The state and the final collapse of capitalism

I received a very good question on my

“Can you sketch out a devaluation crisis/scenario that would collapse capitalism?”

I could only partially answer the question, because of the limited space allowed by In my answer, I was only able to set the premises of my particular scenario for capitalist collapse. I want to extend my remarks here to fill in whatever blanks may exist.

Here is the most important premise I will be using in the following scenario, which is, of course, open to question:

The capitalist mode of production is in a permanent and continuous state of overaccumulation of capital. This condition Marx described as capital having reached the point where no new capitalist investment can increase profits. Under these conditions, each increase in capitalist investment of new capital has the paradoxical effect of reducing profits. This gives rise to a mass of capital that cannot be productively employed and a population of workers who cannot find productive employment.

Continue reading “The state and the final collapse of capitalism”

Can SYRIZA be fixed? Can Greece?

If this Jacobin article, Becoming Syriza Again, is any indication, even the remaining radicals within SYRIZA have no idea why it is failing.

The writer acknowledges that the debate over Greece leaving the euro, which raged within SYRIZA for a period of time before the split, was an oversimplification. However, even now he proposes no alternative economic program that would allow SYRIZA to achieve its stated aim of bringing austerity to an end while avoiding Grexit.

He proposes a 5 step solution in which SYRIZA must:

  • Hold onto power;
  • Stop fighting with KKE and other Leftists;
  • Eliminate opportunism in its ranks;
  • Reconsider staying in the eurozone; and,
  • Put forward a new vision that inspire the country.

Here is my problem with this essay.

Continue reading “Can SYRIZA be fixed? Can Greece?”