Towards a hypothesis of the final collapse of capitalism (4)

by Jehu

4. Full employment, or the deferral of communism

In my last post, Towards a hypothesis of the final collapse of capitalism (3), I showed that the duration of the social labor day is no longer confined to the socially necessary labor time required for production of commodities. 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 that constrained the duration of the actual working day to be no longer than was socially necessary for the production of commodities. With the breakdown of production based on exchange value, i.e., the collapse of the gold standard, this connection between the two durations of labor time no longer exists.

Between the actual duration of the social working day and the duration of the working day required for production of commodities, a new category of labor time emerged that Moishe Postone calls superfluous labor time. This superfluous labor 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 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 time, it is now the essential condition for its opposite, socially necessary labor time.

The emergence of superfluous labor time, time that adds neither to the productive capacity of society nor to its consumption power, is made possible by the replacement of commodity money by debased valueless fascist state tokens. These tokens express the value of commodities, including labor power, as zero. As I explained in a separate blog post, the fascist state can, therefore, “buy” any commodity simply by printing up the requisite quantity of currency, without actually paying for with real exchange value.

The state can, in other words, buy without selling, without first acquiring the means to purchase by offering a commodity in return, and without taxing or borrowing.


This argument prompted a question from one reader, citizencokane:

“Fascist governments certainly have the legal ability to print up whatever amount of money they like, and as you pointed out Jehu, they make use of this legal ability from time to time (of course, always in the narrow interests of certain segments of the capitalist class; never in the interest of workers).

However, do you think there would be no consequences if this were extended more generally? I would contend that even their limited printing already has consequences, albeit ones that take some time to be expressed in superficial phenomena. The long-term devaluation of the dollar vs. gold that you cite is one such consequence. ”

As an example of unintended consequences of currency printing, citizencokane points to the long-term devaluation of the dollar against gold. The long-term devaluation of the dollar against gold can be visualized in this chart:

The collapse of dollar purchasing power as measured in physical units of gold (1920-2010)

The first and most obvious consequence of counterfeiting the currency is the devaluation of the dollar’s so-called purchasing power against gold, or what we might call the steady decline in the amount of gold symbolically represented by each unit of the dollar. It pays to remember that the dollar is not itself money; it is a symbol or token of money. As Marx put it, state issued fiat currency is a token representing some definite amount of exchange value, i.e., gold or another commodity money; but this is true only in so far as the token is actually pegged to a definite quantity of a commodity money, which like all other commodities has value. Once this peg is eliminated, the debased fiat no longer represents exchange value. To find the physical quantity of a commodity money represented by a dollar is not very difficult. It is the inverse of the so-called “price” of gold. In 1920, one ounce of gold was represented by $20.67; i.e., one dollar represented 1/20.67 ounce of gold. Today, one ounce of gold is represented by about $1250.00, i.e., one dollar now represents only 1/1250 of an ounce of gold. Since 1920, in other words, the dollar has lost about 98% of its so-called purchasing power against gold.

As I will now show, the devaluation of the currency is not the only, or even the most important consequence of currency printing by the fascist state.


If the “price” of an ounce of gold has risen from $20.67 in 1920 to $1,250 today, it now takes about 50 dollars today to equal the same quantity of exchange value as was represented by a single dollar in 1920. Gold as money, is exchange value, the universal expression of the values of commodities. This means it is the universal expression of the socially necessary labor time required for production of commodities. Thus, if in 1920 $20.67 equaled one ounce of gold and one ounce of gold required 10 hours of SNLT to produce, $20.67 represented 10 hours of SNLT. To produce a commodity with the same exchange value in dollars as was contained in one ounce of gold in 1920, a worker would have had to labor for ten hours. However, to produce a commodity with the same quantity of exchange value today as was contained in that 1920 commodity, the worker today would have to labor fifty times as long — 500 hours!

To understand why the productivity of a worker might increase but be expressed in a greater amount of absolute labor time requires a discussion of a concept Marx introduces in Capital, v1, c15: the density of labor. Although the productivity of labor has increased and the value contained in each commodity has fallen since 1920, the working day has, at the same time, become more porous — less dense — requiring a longer absolute duration of labor time to produce the same quantity of exchange value. Unfortunately, I cannot discuss this problem here within the limits of this blog post. I will have to return to it at a later point. For now it is enough to state that, under the capitalist mode of production, at a certain point in the development of the productive forces, as the productivity of labor increases, the density of labor must fall. And this means it takes an ever longer duration of labor to produce the same quantity of exchange value.

This isn’t due to any change in the value of the gold, nor in the productiveness of the worker. In fact the value contained in an ounce of gold has fallen and the productiveness of the labor of the workers has increased. Rather, it is because the exchange value represented by $20.67 in 1920 — ten hours of socially necessary labor — now requires fifty times the amount of labor that it required in 1920. To say the dollar depreciated by 98% against gold means that to produce the exchange value formerly represented by $20.67 in 1920, the worker today has to work 50 times as long.

This, of course, sounds absurd. No worker could work 50 times as long as she did in 1920. Indeed, since 1920, average hours of labor have fallen. Despite this, the quantity of exchange value the worker creates today with ten hours of labor, could have been created in about 12 minutes had not the density of the social labor day declined. We imagine our living standard today is so much higher than it was in 1920 and it is. But this is only true with regards to use values we enjoy. For roughly about 12 minutes of social labor today, we could easily afford the typical subsistence of a worker in 1920. The socially necessary labor required for production of commodities has fallen so far, that with a negligible amount of labor, we live far better than the worker did in 1920.

However — and this is what our Marxist academics constantly overlook — it must never be forgotten that capital is solely interested in exchange value, not use value. Although productivity of labor has increased so much that it now requires only a negligible amount of labor to produce what the worker did in ten hours in 1920, capital is only interested in how much value has been produced. Thus, we still work almost as long as the worker did in 1920; the legal working day in 2016 is not that much shorter — and certainly not 98% shorter — than it was in 1920.

Which begs the question: where is all of that extra labor time — about 98% of the working day — going?


Let me give you a graphic example of this problem. Here is a comparison of US GDP measured in both dollars and gold since 1929:

United States gross domestic product as measured in dollars and in physical units of gold (1929-2010)

The green shows the growth of US GDP in dollars since 1929; while the gold shows the same growth of US GDP in ounces of gold. According to dollars, the US economy has been growing at a fair clip since the Great Depression. According to gold it’s been mostly stagnant. This is a huge puzzle, because gold is exchange value, the expression of the socially necessary labor time of society. That measure says socially necessary labor time of the US economy today is not that much greater than it was in 1920.

If this is true, what does the dollar measure of US GDP tell us? I think it is telling us that although we are working ten hours today, we are producing no more value than we did in 12 minutes in 1920.

This means Postone is right; there is a huge mass of unnecessary, superfluous labor being expended in our economy, likely 98% of all labor. The growing divergence between the two measures of GDP is an expression of the growing accumulation of superfluous labor time. This unnecessary labor time adds to the prices of total output but adds nothing to the values of this output. The growing divergence between the sum of dollar prices of annual GDP and the sum of values of GDP is what we call inflation. Inflation is not simply, nor even primarily, a monetary phenomenon. It is the expression (in prices) of massive waste of social labor time within the social working day, an expression of the declining density of this labor time.

And let me add another observation: This is how communism is being deferred.


In other words, what we call inflation, what Postone calls superfluous labor and what some theorists have called the deferral of communism are just different ways of saying the same thing: the final collapse of capitalism is being retarded by fascist state economic intervention. Inflation, superfluous labor and deferral of communism are not just the same things stated differently, we know them today as so-called fascist state “full employment” policies. Moreover,  we can explain how fascist state full employment policies work to create inflation, increase superfluous labor and defer communism based on nothing more than the assumptions of Marx’s labor theory of value.

In his discussion of the working out of the law of value in Capital, v3, c15, Marx argues the development of the productive forces of capital produces excess capital at one pole and an excess population of workers at the other pole. Marx’s argument has to raise a question in the reader’s mind: If capital generates both idle capital and idle workers, what is preventing the capitalists from simply taking this idle capital and putting the unemployed to work producing even more surplus value? Marx asked the same question and offered this answer:

“But the more productiveness develops, the more it finds itself at variance with the narrow basis on which the conditions of consumption rest. It is no contradiction at all on this self-contradictory basis that there should be an excess of capital simultaneously with a growing surplus of population. For while a combination of these two would, indeed, increase the mass of produced surplus-value, it would at the same time intensify the contradiction between the conditions under which this surplus-value is produced and those under which it is realised.”

Given a mass of idle capital that cannot find productive employment and a population of workers who cannot sell their labor power, it would seem to be a no-brainer to bring the one together with the other. Marx admit that, indeed, the rate of surplus value could be increased if these two can be brought together and employed for capitalist production. The problem faced by capital, however, is that bringing them together would produce even more excess capital and unemployed workers than before. The newly produced surplus value would only be added to the already excess mass of capital and workers than was the case prior to their employment to produce additional surplus value. In order to increase the mass of surplus value by employing the excess capital and unemployed workers, the two must be brought together in such a way that they do not actually add to the problem of overaccumulation of capital.

Interestingly enough, the first fascist regime to hit on a solution for the dilemma of overaccumulation was Nazi Germany, according to David Leonhardt of the New York Times in a 2009 opinion piece, Stimulus Thinking, and Nuance:

“In the summer of 1933, just as they will do on Thursday, heads of government and their finance ministers met in London to talk about a global economic crisis. They accomplished little and went home to battle the crisis in their own ways.

More than any other country, Germany — Nazi Germany — then set out on a serious stimulus program. The government built up the military, expanded the autobahn, put up stadiums for the 1936 Berlin Olympics and built monuments to the Nazi Party across Munich and Berlin.

The economic benefits of this vast works program never flowed to most workers, because fascism doesn’t look kindly on collective bargaining. But Germany did escape the Great Depression faster than other countries. Corporate profits boomed, and unemployment sank (and not because of slave labor, which didn’t become widespread until later). Harold James, an economic historian, says that the young liberal economists studying under John Maynard Keynes in the 1930s began to debate whether Hitler had solved unemployment.”

What Hitler discovered is that even if the excess capital and unemployed workers of Germany could not be employed productively, they could still be employed for unproductive purposes like an arms buildup. They buildup might add nothing to Germany productive capacity or to the actual living standard of German workers, but it could add to the military force Hitler contemplated. As a result of this make-work program, Nazi Germany became the first country to declare it had achieved “full employment”.

And we all know where that ended up.


Actually, Hitler wasn’t the first person to think up a hare-brained scheme like this. In volume three, Marx quotes some preacher in his own time who explained how diverting newly produced surplus value to unproductive state spending could increase capitalist profits:

“If, as shown, a falling rate of profit is bound up with an increase in the mass of profit, a larger portion of the annual product of labour is appropriated by the capitalist under the category of capital (as a replacement for consumed capital) and a relatively smaller portion under the category of profit. Hence the fantastic idea of priest Chalmers, that the less of the annual product is expended by capitalists as capital, the greater the profits they pocket. In which case the state church comes to their assistance, to care for the consumption of the greater part of the surplus-product, rather than having it used as capital.”

In other words, rather than having the new surplus value enter circulation as additional capital, the state could consume it unproductively as revenue. New surplus value would be created in production, but immediately consumed unproductively by the state on its various unnecessary programs — like Hitler’s military expansion program. Keynes was so impressed by Hitler’s ingenuity, he rushed his General Theory into print arguing for similar programs for the UK. To increase the production of surplus value the excess capital had to be brought together with the population of unemployed workers; but — and this is the important thing — the increased employment of labor and capital should add neither to the productive power of society nor to its consumption power.

The production of surplus value takes place at one point in space and time, while the realization of the new surplus value takes place at another point in space and time. Given that there is now, as Marx put it, “the contradiction between the conditions under which this surplus-value is produced and those under which it is realised”, state intervention is now required to divert the excess newly produced surplus value from circulation before it enters into capitalist production as new capital. The worker is indeed still exploited, but her exploitation is realized in such a way as to avoid a total or partial failure to realize the surplus-value pressed out of her.

Which is to say, essentially, the fascist state simply intervenes with its debased currency and “purchases” the excess product of labor, or, in its more developed form, the state sector becomes the ultimate destination of all the newly produced surplus value.


My argument here is the starting point of description of what the final collapse of capitalism will look like.