I received this response by Adam Buick to my post, “The collapse already happened, Adam”,
Frankly, I don’t see how anybody reading the Fragment on Machines can come to any other conclusion than that Marx was writing about a theoretical situation where productivity had become so high that the labour-time content of individual commodities would be so low as to mean that their exchange value would be virtually zero. It is not about money or the rate of profit (though of course at this theoretical point the rate of profit too would be zero). And it wasn’t a “prediction” (i.e something he expected to actually happen) but rather a “thought experiment” based on assuming what would happen if current trends continued to their mathematical end.
I don’t think Marx thought that the abandoning of a currency directly linked to gold would mean the end of production based on exchange value. Fiat money (“inconvertible paper money issued by the state and given forced currency”) is even discussed as early as chapter 3 (section c) of Capital where there no suggestion that capitalist production could not continue if such money were to become the only currency. There is also a good discussion of fiat money and its relation to commodity-money (silver) rather than gold) in chapter 2 of Hilferding’s Finance Capital.
As to the rate of profit, we need to distinguish between the short-term fluctuations that govern the course of the business cycle and a theoretical long-run tendency for it to fall. This latter is, once again, a thought experiment, not a prediction, as Marx was well aware that in practice there were countervailing tendencies. In any event, the long-term rate of profit has not fallen to zero.
Let me first say that I am disappointed by this response, Adam. It did not move the ball one foot in either direction. You say Marx’s “collapse statement” was a thought experiment. I say Marx’s “collapse statement” was a prediction. Then you repeat that Marx’s “collapse statement” was a thought experiment. This accomplishes nothing.
Having set out our initial disagreement, what we now need to do is to agree to disagree, concede one or the other of our respective positions or buttress our respective positions with evidence.
Since I don’t want to waste my time engaging in a sterile “Yes, he did. No, he didn’t.” debate with you, let me try to move the ball down the field a bit.
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In your statement that Marx’s note in the Grundrisse “wasn’t a “prediction” (i.e something he expected to actually happen) but rather a ‘thought experiment'”, you fail to take into account an important piece of supporting evidence for my opposing position:
Marx devotes an entire section in volume three of Capital to the law of the tendency of the rate of profit to fall in which he makes the exact same point he made in the Grundrissse, only this time in relation to the rate of profit, rather than production based on exchange value:
“The rate of profit does not sink because the labourer is exploited any less, but because generally less labour is employed in proportion to the employed capital.”
Do you think the law of the tendency of the rate of profit to fall was also a thought experiment? Think carefully before you answer this question, because if you say, “Yes”, Marx’s entire explanation for periodic capitalist crises now gets thrown out the window.
According to Marx,
“the development of the productivity of labour creates out of the falling rate of profit a law which at a certain point comes into antagonistic conflict with this development and must be overcome constantly through crises.”
I asked that question, because a careful and close reading of the complete passage you quoted in the Grundrisse will show Marx believed that, at a certain point, as capital reduced the employment of direct labor in production, both the rate of profit falls to zero and production based on exchange value breaks down.
As Marx put it, in a more complete rendering of that passage you quoted:
“As soon as labour in the direct form has ceased to be the great well-spring of wealth, labour time ceases and must cease to be its measure, and hence exchange value [must cease to be the measure] of use value. The surplus labour of the mass has ceased to be the condition for the development of general wealth, just as the non-labour of the few, for the development of the general powers of the human head. With that, production based on exchange value breaks down…”
Note the statement about the surplus labor of the mass ceasing to be the condition for development of general wealth. This is an obvious reference to the production of surplus value. Chapter fifteen of volume three actually throws light on the meaning of Marx’s complete statement in the Grundrisse.
Marx’s prediction of a breakdown of production based on exchange value could not have been a thought experiment any more than the law of the tendency of the rate of profit to fall is a thought experiment, since both are produced by the same process: the reduction of direct labor in production.
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Even more depressing was your statement that there is nothing in Capital to suggest that capitalist production could continue in the absence of commodity money. Who made any such suggestion, Adam?
Oh yeah, that’s right. That suggestion wasn’t made by me, but perhaps by people like George Caffentzis who falsely conflate money with capital:
“I remember quite clearly watching with comrades in a Capital study group on Sunday August 15, 1971 the broadcast of Nixon’s announcement that he had ordered the “closing of the gold window.” Given that we were reading for the previous few months passages like the following from Capital: “money–in the form of precious metal–remains the foundation from which the credit system, by its very nature, can never detach itself” (Marx 1994:606), we left each other that night with the thought that either Capitalism or Marxism was coming to an end before our very eyes!”
Anyone who regularly follows my blog knows I have never subscribed to this nonsense — if for no other reason than the fact that money is not capital.
The point of my post wasn’t just that capitalism could continue after 1929 even if money had been replaced by debased state-issued fiat currency, but that capitalism could continue after 1929 only because money was replaced by debased state-issued fiat currency. Had money not been replaced by this debased state-issued fiat currency, capitalism would have collapsed along with production based on exchange value.
As I have demonstrated in several posts, drawn from the actual historical record, after 1929, commodity money would no longer circulate in the world market. It had begun to be withdrawn from circulation by its owners and hoarded.
One example of this sort of hoarding behavior taken from another one of my posts should suffice here:
In October 1930, the Fed warned massive quantities of gold were being drained from the economy when it reported the loss of over $700,000,000 of gold.
“The most important question which the System faces at present is the problem of bank failures and hoarding of currency. Failures had been increasing at a rapid rate and are exercising a terrific pressure on the credit situation. Every action of the System should be considered in the light of its possible effect on these failures and on the willingness of banks to help out their correspondents in time of difficulty# A decrease in the System’s holdings of government securities might affect the situation adversely, first, by its psychological influence as indicating a policy of pressure, and second* as tending to increase the amount of member bank discounts and so making them somewhat less willing to lend freely to help banks actually in need.”
At the same time, according to Eichengreen’s book, Gold Fetters, in Argentina, gold could no longer be obtained in return for domestic currency. In Brazil, it was impossible for investors to convert currency into gold. Meanwhile, Canada lost a one fourth of its gold reserves in 1928.
There is a big problem with the sort of gold hoarding that took place in 1929: capitalist production requires the sale of labor power. Labor power can’t be sold if the owners of gold will not part with their gold because they think they cannot make a profit buying labor power, as was precisely the case in 1929.
Historical studies have concluded that only after countries abandoned commodity money did the rate of profit begin recover and capitalist economies begin to grow again.
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I had more, but this subject is very complicated and freighted with a long history of highly subjective interpretations. It probably helps to address it in little chunks, so I will stop here.
I would like to hear your thoughts on this.
The Real Movement 
It seems so odd to consider the Fragment just an aside or a thought experiment — when read in this light, so many of the statements (“material conditions to blow this foundation sky-high”, “As the system of bourgeois economy has developed for us only by degrees, so too its negation, which is its ultimate result”, etc.) become incoherent in their placing. Also when we track the pieces of the Fragment into the the volumes of Capital itself, it’s clear that he’s describing tendencies and their ultimate horizon (which culminates, in the structure of his argument, with the falling rate of profit).
I’ve recently gotten very interested in figure named Andrew Ure, who wrote a book called the “Philosophy of Manufacturers”. It’s bourgeois ideology for sure, but it was also an immense influence on Marx. At the end of the section of the Grundrisse immediately prior to the Fragment, Marx gives a lengthy quote from Ure: “In its most rigorous sense, this term [factory] conveys the idea of a vast automaton, composed of numerous mechanical and intellectual organs operating in concert and without interruption, towards one and the same aim, all these organs being subordinated to a motive force which moves itself”. Part of this phrase returns again in the most famous bit of the Fragment — ” the means of labour pass through different metamorphoses, whose culmination is the machine, or rather, an automatic system of machinery… set in motion by an automaton, a moving power that moves itself; this automaton consisting of numerous mechanical and intellectual organs, so that the workers themselves are cast merely as its conscious linkage” — which positions an appraisal of Ure at the center of the Fragment (which as far as I can tell is something that has not been noticed by anyone else).
For Ure, capitalist production would tend to the point in which the worker is completed eliminated from production save for a technical role, as ‘watchers and regulators’ of machinery. This too appears in the Fragment, with the discussion of labor becoming scientific and managerial in nature, with the extended comments on the scientific regulation of industrialized agriculture as the chief example. In Capital Vol. 1, Marx critiques Ure on the grounds that he confuses what comes beyond capitalism as something that occurs internally to capitalism itself (it’s worth pointing out that this occurs in chapter 15, which returns to a lot of what is happening in the Fragment, right down to the language and argumentative structure that is used). What this means is that Marx isn’t dispensing with Ure in full, but relocating the future give as the logic of production that will exist in the post-capitalism epoch.
When read through these lenses, the suggestion that the Fragment is thought experiment becomes shakier — what is being grasped are structural tendencies that, for Ure, pointed to the highest affirmation of the capitalist order, but for Marx outlined its negation.
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Yeah, it is as though we have been sucked into a wormhole and are now forced to re-stage the debate over catastrophism all over again, which I suppose is the truth of it, since that debate ended so inconclusively at the time.
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Slightly off topic but two bits of the fragment that I think are very interesting, and that I’d like to hear/read other peoples’ thoughts on are (emphasis added):
” Labour no longer appears so much to be included within the production process; rather, the human being comes to relate more as watchman and regulator to the production process itself. ****(What holds for machinery holds likewise for the combination of human activities and the development of human intercourse.)****”
[Is the parenthetical indicating that society would become more and more disciplinary – a tendency towards the whole of human relations being regulated labor in a supervisory capacity, as with machines in a factory? And if so, tell me again why we’re supposed to write off Foucault? 🙂 ]
and
“Hence it diminishes labour time in the necessary form so as to increase it in the superfluous form; hence posits the superfluous in growing measure as a condition – question of life or death – for the necessary.”
[Does “superfluous” here imply a growing consumption of labor power the output from which can not be realized – yet which is necessary for wage labor to continue?]
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Thomas, this is really interesting (and ties directly into what I was saying to Jehu above with regards to the influence of Andrew Ure on Marx, especially at the moment of the Fragment):
>Is the parenthetical indicating that society would become more and more disciplinary – a tendency towards the whole of human relations being regulated labor in a supervisory capacity, as with machines in a factory?
It seems to me that this needs to be apprehended dialectically, with this situation emerging from the opening of that which moves beyond capitalism (the arc of techno-industrial development and its relation to the economy of time) and that which restrains it. In the section immediately after the Fragment, Marx comments that the machines that capitalism is putting into motion — precisely those that, on the one hand, suspend the proletariat within its gears, stripped of autonomy, and that on the other make possible real free time — are better suited for communism than they are for capitalism. This is undoubtedly due to the way in which the real potentials here have to be repressed due to the law of value.
Ure thought it would come about naturally since he has no understanding value; what’s interesting is this other document that gets cited in the Fragment, “The Source and Remedy of the National Difficulties, Deduced from Principles of Political Economy, in a Letter to Lord John Russell”, which Marx elsewhere cites as having gotten close to the correct formulation of surplus value. This pamphlet realized that the bourgeoisie would have to suppress the real potentials of industrialization in order to preserve itself:
>He sees, and sees clearly, and justly, that labour and capital will multiply produce too fast; that the exactions from labour by the capitalists have a limit, and consequently that their demands for produce have a limit, but that produce itself has no limit, no bounds, and consequently that all machinery tending to multiply produce tends to abridge labour. So far his lordship is correct; but then I say, multiply machinery to the utmost; assist the labourer all that is possible; let us seek to abridge his hours of toil from 12 to 6 hours a day, and then we may boast of the wealth, the happiness, the prosperity of England; but here his Lordship dissents. Let us destroy machinery, says his Lordship; let us curse the fertility of nature, and the inventions of human ingenuity, that abridge the toils of the labourer. What is the poor man to do? Your machinery has so multiplied produce, that there is not work enough to employ your population three days a week, and they must receive aid out of the poor rates. Why, truly they must, my Lord, if the capitalists are permitted to continue their exactions: but I have done little if I have not shewn, that capital left to itself would leave the labourer a maintenance though he should work but six hours a day; and if the legislature will countenance and protect these exactions, they must not complain of the poor-rates. They have thought to counteract
nature, and find it impossible. If I have mistaken his Lordship’s argument, he has nothing but blank absurdity to ground his motion on.
Of course by the time Marx is writing, the path of ‘abridging the hours of toil’ is what had been taken, but the outcome is still the same: there is no liberation from the law of value (liberation from the economy of time) because what takes place is the passage from absolute surplus value to relative surplus value. I think this corresponds directly to the situation being outlined in the Fragment…
People in the Regulation School, namely Aglietta, have highlighted exactly how changes in the nature of surplus value (absolute -> relative -> further modulations of relative) re-organize managerial regimes. New machines are introduced, the division of labor is altered, the requirements of specialization are enhanced, complexity increases overall, means of coordinating the different departments in this complexity are required, producing an integrated — and intensifying — managerial order. It makes sense that as the coordination of labor to machines (which spills out of the factory and across society as a whole, ultimately) becomes regimented on a microscopic level, then too managerialism also molecularizes (and might not even look like managerialism at all).
One of the flip-sides or dynamical/dialectical reversals we could use to re-assure ourselves at this point, maybe, is Marx’s comments in Vol 3. that the increasing centrality of management in capitalism indicates precisely the pointlessness of the capitalists themselves!
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I don’t know why people are getting hot under the collar over the term “thought experiment”. It is not the theory of the tendency of the rate of profit to fall nor the theory (fact) that most commodities tend to become cheaper and cheaper that is this. It’s continuing these trends to their logical conclusion that is. I don’t think Marx expected, let alone predicted, the rate of profit to actually fall to zero or for commodities to be produced so cheaply as to have a zero price. For him, these were just tendencies.
Both Adam Smith and David Ricardo thought that capital accumulation would eventually come to a stop due to a falling profits. Ricardo explained this in terms of conditions outside the system (exhaustion of fertile land). Marx set out to explain this tendency as intrinsic to the system.
In any event, we are nowhere near the state of affairs where the long-term rate of profit is even approaching zero. It’s the same with the price of commodities. Nearly all commodities still require some significant labour-time input (from start to finish) and so are nowhere near becoming price-less.
The theory that capitalism was saved from collapse in the 1930s by the replacement of fiat money for commodity-money is a different issue. I would tend to think that this happened because a currency convertible ion demand into gold (or silver) at a set rate was no longer necessary. Also, some form of link to gold (via the dollar) did of course survive until 1971.
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@Jehu
One of the criticisms of Postone made by Kurz and Scholz (who obviously held Postone’s work in high esteem) is that he focused on commodity and labor rather than capital, and that as a result he fails to address money and has a difficulty addressing the present, in which finance does not serve production, but production serves finance. It strikes me that a lot of your argument goes hand in hand with Kurz’s work at the end of his life, and Scholz’s ongoing development of those points.
Whatever their disagreements, the Krisis folks take up the same issues.
It would be interesting to get a translation of Kurz’s last complete book, Worthless (Valueless?) Money, which I think was directed at many of these issues too.
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