Towards a hypothesis of the final collapse of capitalism (3)
3. Capitalism without exchange value, or superfluous labor time
In part one of my essay, “Towards a hypothesis of the final collapse of capitalism”, I proposed a narrative to make sense of Luxemburg’s slogan, “Socialism or Barbarism”. That narrative goes this way:
- a. Marx and Engels predicted the collapse of production based on exchange value;
- b. this collapse would result in the abolition of capitalist private property;
- c. either the proletariat would accomplish this, or the bourgeois state would be forced to do it itself; and,
- d. this would set the stage for a final confrontation between the proletariat and the state, which would become the national capitalist after the abolition of capitalist private property.
In part two of the essay, I proposed that the collapse of production based on exchange value was the partial collapse of capitalism. This collapse basically resulted in an apparent absurdity: capitalism without exchange value. For production of surplus value to continue, the values of commodities, particularly labor power, could no longer be expressed as exchange values. The development of the new forces of production bound up with capitalism had finally and irreversibly pushed the rate of profit to zero. According to Grossman, the production of surplus value after this event essentially depended on the ability of the capitalist to purchase labor power below its value. This condition was satisfied by the collapse of the gold standard and replacement of gold by valueless debased state issued currency.
Let me now expand on the implications of the above points.
Beginning with the Great Depression, commodity money could not become capital, i.e., it could not circulate as money and thus could not purchase labor power. The state was forced to step in and replace commodity money with its own valueless token, which could continue to circulate as means of exchange precisely because this token has no value of its own. The bourgeois state’s solution to the crisis worked because its currency doesn’t express the values of labor power. The prices of commodities no longer express their values and thus no longer express the socially necessary labor time required for their production.
To solve the crisis, the capitalist were forced, like the workers themselves, to put an end to wage labor; not in reality, of course, but through the fiction of a valueless state currency with which the workers are paid. This valueless currency is the means by which the wages of the proletarians are summarily forced to zero by state fiat. Exchange value is effectively abolished and the values (socially necessary labor times) of commodities no longer regulate their production.
At the same time, however, the duration of the social labor day is no longer confined to the socially necessary labor time required for production of commodities. This key premise of Marx’s Capital is no longer valid in our analysis. A distinction must now be made between the actual duration of the working day and that duration of the working day that would be considered socially necessary according to Marx’s definition of value. It was exchange value — commodity money — that forced the duration of the actual working day to be no longer than was socially necessary for the production of commodities. This connection between the two labor times no longer exists.
According to Grossman, the breakdown of production based on exchange value was driven by absolute overaccumulation of capital and the resulting decline of the rate of profit to zero. To push the rate of surplus value even higher, it became necessary to reduce the wages of the working class below the value of labor power. This forcible devaluation of wages below the value of labor power could not be accomplished on the basis of commodity money; it required a ‘money’ that no longer expressed the values of commodities. Thus, the withdrawal of commodity money from circulation during the Great Depression set the stage for the introduction of a debased state issued token in its place.
At this point, it is necessary to state explicitly that this debased token cannot express the values of commodities. Certain Marxist theorists, like Moseley and Kliman, have argued a valueless token can still indirectly express the value of commodities. Marx, however, was very clear on this point in Capital, v1, c3:
“Paper money is a token representing gold or money. The relation between it and the values of commodities is this, that the latter are ideally expressed in the same quantities of gold that are symbolically represented by the paper. Only in so far as paper money represents gold, which like all other commodities has value, is it a symbol of value.”
Absent a relation to a definite quantity of commodity money, state tokens and prices denominated in these tokens do not express the value of commodities. As used by Marx here, value is the socially necessary labor time required for production of the commodities; thus, debased fiat tokens and the prices denominated in these tokens do not express the socially necessary labor time required for production of the commodities. An essential premise of Marx’s labor theory of value, that the prices of commodities express the socially necessary labor times required for their production, is no longer valid.
This much is already obvious since money wages paid for labor power contain no exchange value and thus no longer express the labor times of the commodities for which they are exchanged. Debased fiat tokens assures this always happens because they cannot express the value of any commodity, or, rather, always express the values or labor times of commodities as zero. Wages paid in these tokens no more represent the value of labor power than did scrip issued in the old company towns. This is evidently true with the decline of the purchasing power of real wages over a period of time proportional to the decline of the purchasing power of the tokens in which the wages are paid. For example, a worker in 1971 paid a wage of $3.00 per hour will in fact enjoy a far higher level of material subsistence than a worker paid $18.00 per hour in 2012, because the value represented by her $3.00 hourly wage in 1971, when the dollars were pegged to gold at $35/oz. can actually purchase commodities with many times the exchange value of the nominally higher wage in 2012, when the value represented by the dollars has declined to $1200/oz. The six-fold higher wage is easily offset by the steep 97% decline in the real purchasing power of nominal wages.
Just as important, however, is the fact that the money wage of $30 per hour paid to one worker in 2012, represents no more exchange value than the wages of, say, $7.50 per hour paid another minimum wage worker. The actual exchange value of both wage rates is zero, and the value they represent is also zero. This result is, of course, counter-intuitive and seems to throw the mind of the typical Marxist economist into complete and utter confusion. They are confused by the nominal difference in the two wages rates and completely overlook the fact that each quantity of debased fiat has no value and thus cannot express the value of the labor power for which it is exchanged. If a wage rate of $7.50 expresses the value of labor power as zero exchange value, a wage rate four times higher at $30 represent four times zero exchange value, i.e., zero. There is no monetary expression of labor time function you can apply to nominal wages that gets zero exchange value to be greater than zero exchange value. By paying wages in a debased state issued currency in place of commodity money, the exchange value of labor power was reduced to zero no matter its nominal value.
“Just a fucking minute!”, exclaims our dumb Marxist economist. “Certainly an hourly wage of $30 will purchase four times as many commodities as can a minimum wage of $7.50. Even if the exchange value of the labor power is now zero and nominal wage differences do not matter, certainly it matters in the grocery store.”
What our dumb Marxist misses, of course, since he was so busy absorbing the nonsensical theories of bourgeois economists long before he undertook the study of Marx’s labor theory of value, is that, although indeed $30 will purchase four times as many commodities as $7.50, the actual value expressed in the two quantities of commodities is still zero — and our analysis of the capitalistic mode of production is concerned with production of value and surplus value, not money. The sale of each basket of commodities depends on the fact that no exchange value is involved in each of the transactions. When the value of the labor power is expressed as zero, the values of the commodities purchased by nominal money wages must also be zero. The abolition of wage labor, even when it is only accomplished through the fiction of a valueless currency, must lead to the abolition of commodity exchange as well; which is to say, the prices of all commodities no longer express the socially necessary labor time required for their production and production itself is no longer regulated by the values of commodities.
With the abolition of exchange value, i.e., the collapse of the gold standard, which began with the Great Depression and culminated with the final end of the gold standard in 1971, the length of the labor day is no longer determined by the socially necessary labor time required for production of commodities. This key premise of Marx’s Capital, that the prices of commodities express the socially necessary labor time required for their production, is likewise no longer valid. A distinction must now be made between the actual duration of the working day and that portion of the working day that would be considered socially necessary according to Marx’s definition of value.
It was exchange value — commodity money — that forced the duration of the actual working day to be no longer than was socially necessary for the production of commodities. This material connection between prices and socially necessary labor time no longer exists. Between the actual duration of the working day and the duration of the working day required for production of commodities, a new category of labor time emerged that Moishe Postone, in his groundbreaking book, Time, Labor and Social Domination, calls superfluous labor time.
According to Postone, the development of the productive forces bound up with capital had far-reaching, historically unprecedented effects:
“Until this historical stage of capitalism, according to Marx’s analysis, socially necessary labor time in its two determinations defined and filled the time of the laboring masses, allowing nonlabor time for the few. 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.”
According to Postone this ‘extra time’ is labor time that cannot be employed productively, it is superfluous to both wage labor and capital. In a socialist society, this labor time could only be set free entirely to make room for free disposable time for everyone. In the capitalist mode of production, however, this labor time cannot be set free because as superfluous labor it is now the essential condition for its opposite, socially necessary labor time, i.e., surplus value.
Kliman, Moseley, Arthur and a host of neoclassical simpletons, as well as open defenders of fascism, assume all paid labor is socially necessary labor, but this assertion immediately runs into the complication that the state, being the sovereign issuer of the debased fiat currency, can spend simply by crediting the accounts of its vendors. At this point the assumption that all paid labor is socially necessary labor reduces to the fallacy that all state spending is necessary.
But, as Postone explains, even this fallacy contains an essential historical truth: if production based on wage labor is to continue, state spending must constantly increase no matter the social necessity for this spending. Eventually, the monstrous reality of production for the sake of production finds its visible expression in the equally monstrous expansion of state spending for the sake of capitalist accumulation. State spending does not grow, as most observers assume, because there are new social needs that can only be satisfied by this spending, but because the expansion of state spending is now the essential precondition for increasing the rate of surplus value.
This new category of superfluous labor time is superfluous not just in relation to the subsistence of the worker, but also in relation to the profit of the capitalists; it is absolutely superfluous with regards to all possibilities of productive employment. According to Postone this new ‘extra time’ is labor time that cannot be employed productively, it is superfluous to both wage labor and capital. In a socialist society, this labor time could only be set free entirely to make room for free disposable time for everyone. In the capitalist mode of production, however, this labor time cannot be set free because as superfluous labor it remains the essential condition for its opposite, socially necessary labor time, i.e., to the production of surplus value.
As Marx argued, capital “posits the superfluous in growing measure as a condition – question of life or death – for the necessary.” This superfluity not only takes the forms of a population of superfluous laborers and a mass of superfluous capital, but also and importantly, a mass of superfluous labor time embodied in a superfluous social product — a product that is entirely superfluous to both the needs of the social producers and to productive employment. While employment of the excess population of workers and the excess capital can increase the production of surplus-value, it also intensifies “the contradiction between the conditions under which this surplus-value is produced and those under which it is realised.” Within the confines if the capitalist mode of production, this contradiction can only be resolved by relentless expansion of the bourgeois state.
At the same time, this extraneous, completely superfluous labor time is also the material precondition for realization of the higher phase of communism; only with the emergence of absolutely superfluous labor time, labor time that is superfluous even to the needs of the capitalistic mode of production, is it possible to realize a society characterized by the principle of “to each according to need”.