How Benanev and Clegg tried to obscure the role of the post-war state in maintaining wage slavery (Part 1)

by Jehu

I want to emphasize two points about what the Endnotes collective is trying to accomplish with this essay, before moving on with the rest of this useless economic argument for communization. In this post and the next, I want to set up an argument that will be important for what follows.

That argument can be stated as follows:

The continuous intervention of the bourgeois state in the economy is now essential to the maintenance of the system of wage slavery.

This is what the Endnotes collective is trying to conceal with their blatant bastardization of Marx’s theory. This bastardization is premised on two essential arguments:

First, Benanev and Clegg, writing on behalf of the Endnotes collective, strip Marx’s theory of its fundamental categories, value and surplus value. This reduces Marx’s theory to a description of a technical process of production. In this technical description, worthy of a first year introduction to microeconomics textbook, technical changes in in methods of production lead inevitably to scarcity of wage employment. As Keynes puts it, technological development leads to technological unemployment; the means of economizing on the employment of wage labor in production outruns the pace at which capital can find new uses for wage labor.

Second, having throttled Marx’s theory with this purely technical description of the capitalist process of accumulation, Benanev and Clegg offer historical evidence that Marx has been refuted. Wage employment did not become scarce, say these two academics. Marx’s theory was an incomplete description of process of capitalist accumulation:

What Marx did not foresee, and what actually occurred in the 1890s, was the emergence of new industries that were simultaneously labour and capital absorbent, and which were able to put off the decline for more than half a century. The growth of these new industries, principally cars and consumer durables, depended on two 20th century developments: the increasing role of the state in economic management, and the transformation of consumer services into consumer goods.

In this post, I want to address these two allegations level by the Endnotes collective against Marx’s theory in reverse order. In the next post, I will provide supporting empirical data for my argument.


According to Benanev and Clegg, then, Marx did not foresee the increasing role of the state in economic management. As far as I can tell, this assertion means this passage from Engels’ Socialism, Utopian and Scientific, published in 1880, must be talking about something else:

“In any case, with trusts or without, the official representative of capitalist society — the state — will ultimately have to undertake the direction of production. This necessity for conversion into State property is felt first in the great institutions for intercourse and communication — the post office, the telegraphs, the railways.

If the crises demonstrate the incapacity of the bourgeoisie for managing any longer modern productive forces, the transformation of the great establishments for production and distribution into joint-stock companies, trusts, and State property, show how unnecessary the bourgeoisie are for that purpose. All the social functions of the capitalist has no further social function than that of pocketing dividends, tearing off coupons, and gambling on the Stock Exchange, where the different capitalists despoil one another of their capital. At first, the capitalistic mode of production forces out the workers. Now, it forces out the capitalists, and reduces them, just as it reduced the workers, to the ranks of the surplus-population, although not immediately into those of the industrial reserve army.

But, the transformation — either into joint-stock companies and trusts, or into State-ownership — does not do away with the capitalistic nature of the productive forces. In the joint-stock companies and trusts, this is obvious. And the modern State, again, is only the organization that bourgeois society takes on in order to support the external conditions of the capitalist mode of production against the encroachments as well of the workers as of individual capitalists. The modern state, no matter what its form, is essentially a capitalist machine — the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage-workers — proletarians. The capitalist relation is not done away with. It is, rather, brought to a head. But, brought to a head, it topples over. State-ownership of the productive forces is not the solution of the conflict, but concealed within it are the technical conditions that form the elements of that solution.”

If Marx did not foresee the increasing role of the state in management of the economy, how did he and Engels manage to publish this prediction in 1880; at least a full decade before what the writers argue was the onset of the tendency toward increasing state management of the economy?

According to Marx and Engels, the development of the productivity of social labor would first render a growing population of workers superfluous to production (what Keynes called technological unemployment), then it would render a growing mass of the capitalists superfluous to production as well. At that point, the state would be forced to step in and undertake the management of the economy. This event would not result in the abolition of wage labor — “the workers remain wage-workers” — rather, it would mark the emergence of the state as the national capitalist.

Mind you, Socialism, Utopian and Scientific was not an obscure pamphlet in 1880 as it is today. At the time of its publication, it outsold the Communist Manifesto. A generation of communists were raised studying this primer on Marx theory. What we have here is a textbook confirmation of Marx’s theory presented to the reader as a refutation of that theory: Marx was wrong, you see, because he didn’t predict this thing his theory clearly predicted at least fifty years before it culminated with the onset of the Great Depression.


While we’re on the topic of predictions, how about this one: I have argued that although Marx and Keynes assumed the same general technical improvements in productive power of social labor, they differed as to the impact these technical improvements would have on demand for wage labor. Keynes, as we all know, predicted technological unemployment. Marx, by contrast, predicted that production based on exchange value would collapse.

What did Marx mean by the phrase, production based on exchange value? Other people may have their own idea of what this phrase means, of course, but in many cases what they mean by the phrase and what Marx meant by the phrase are very different. As I stated above, the morons at Endnotes stripped Marx’s theory of the fundamental categories, value and surplus value. They did not inform the reader that they did this; they just did it and presented their crippled version as an accurate restatement of Marx’s theory. However, when they stripped Marx’s theory of references to value and surplus value, they also stripped it of the category, exchange value.

This is a problem, because if there is no exchange value, how can there be production based on exchange value? And if there is no production based on exchange value, how can production based on exchange value collapse?

So what is exchange value? And why might the collapse of production based on exchange value be important?

According to Marx’s theory, exchange value is the manifestation of the value of a commodity expressed in the material of another commodity. The notion of exchange value is necessary to Marx’s theory, because there is no direct way to see the value of a commodity. The value of a commodity only appear to us when one commodity is exchanged with another commodity, e.g., ten pairs of socks might be exchange for one pair of pants, or 100 ounces of gold might be exchange for one house. The value of the pants or the house is expressed in a market exchange as some definite quantity of socks or gold, respectively.

In a developed commodity economy, where production is based on exchange value, some commodity serves as the material to express the values of all other commodities. We call the commodity that serves this role, money. Thus, production based on exchange value can also be called production based on commodity money. The commodity serving as money expresses the exchange value of all other commodities in circulation throughout the community. We call this expression of the values of commodities in the form of the money commodity price. The value of any commodity is expressed in its money price.

Here is the problem with the above statement: since 1971, no commodity plays the role of money. The last significant commodity money was the US dollar, which was tied to gold. Today, perhaps for the first time in human history since money first emerged, not a single commodity money is in use anywhere within the world market. The fact that no commodity serves as money within the world market today means, essentially, that the prices of commodities within the world market no longer express their labor values — no longer expresses the socially necessary labor times required for their production. This is what Marx meant when he predicted the collapse of production based on exchange value: the relation between values and prices of commodities, the premise of production based on exchange value, collapses.

It therefore comes as no surprise that when Henryk Grossman restates Marx’s argument in 1929, on the eve of the outbreak of the Great Depression, he predict wages will no longer represent the value of the quintessential capitalist commodity, labor power. If the prices of all commodities no longer express their value, this is true most of all for the single commodity that makes real capital out of money capital.


We thus have two rather bizarre charges against Marx’s theory, both of which may seem plausible to folks who are only tangentially familiar with his theory, but are in fact wrong:

First, labor theory of value does not predict the increasing role of the state in management of capitalist accumulation.

Second, labor theory of value does not predict collapse of production based on exchange value, because, essentially, there is no such thing as production based on exchange value.

Benanev and Clegg explicitly make the first outrageous charge against Marx regarding the state, despite incontrovertible evidence to the contrary that I have cited above. The second charge against Marx is the necessary result of the deliberate erasure of value, surplus value and exchange value from the restatement of Marx’s model.

The two accusations against Marx are not a coincidence.

When production based on exchange value collapsed during the Great Depression, major industrial states removed their national currencies from the gold standard. At the same time these states assumed the function of manager of the national capital using what had been up to that time war-time fiscal deficit spending as Keynes suggested. Keynesian intervention in the economy was made possible because the Great Depression had forced the owners of gold to remove their bullion from circulation and begin hoarding it.

Because gold was now being hoarded, debased state fiat currencies were the only form of money that remained in circulation. Oddly, although Benanev and Clegg assert the state manages national economies today, they do not explain that the state performs this function through its control of a fiction that now serves as money in our economy. The national currencies that serve in the function of money today are not money; they are money in name only.

Money, as Marx defined that term in his theory, no longer exists. What we today call money is a valueless scrip, an administrative tool employed by the state to manage the national economy; i.e., to manage the production of surplus value, the exploitation of the working class. It doesn’t behave like money and this difference in the behavior of money and debased fiat currency can be empirically demonstrated in the historical record.

I will offer historical evidence for this why the dollar is not money in my next post.