How the breakdown of production based on exchange value altered the terrain of Marxist strategy

At this point we have to ask ourselves two questions:

  1. How does the breakdown of production based on exchange value affect the terrain of classical Marxist strategy?
  2. Why would this impact on strategy have already been built into Marx’s assumptions from the beginning?

To begin to answer these questions it is necessary to understand what it means to say “production based on exchange value breaks down”.

According to Marx in the fragment on the machine, breakdown occurs because direct employment of human labor in production has been eclipsed by machines as the primary means of production of use-values. As machines become more important to the production of commodities than the direct expenditure of human labor, exchange value ceases to be the measure of use value.

In plain English, prices and profits begin to fall, an economic condition economists call deflation. Collapsing prices and profits are a signal to capitalist firms to curtail production. They begin to cut back their schedules, reduce orders, lay off workers, cut wages — all of which only serve to aggravate the crisis.

However, it is important to note that Marx argues exchange value itself ceases to be the measure of use value. This statement does not mean wages, prices or profit are too high or too low; rather, it implies that the very structure of production itself has changed. It is no longer individual production carried on for exchange.

Commodity production has been replaced by a cooperative social form of the labor process, involving the conscious technical application of science, the methodical cultivation of the soil, and the socialization of the instruments of labor for use as means of production by a combined, socialized labor.

Apart from whether society recognizes the material change that has occurred here, the actual transformation of production from individual production carried on for exchange to cooperative social form of the labor process is a real, material alteration in the material economic foundation of society.

As Marx explains in chapter 1 of Capital, use-values become commodities only because they are products of private labor carried on independently. These individual producers do not come into contact with one another until they exchange their products and their products do not exhibit a social character except in the act of exchange. Only by being exchanged do the products of labor acquire a uniform social status as values. The only evidence we have of the uniform social status of use-values as values are their exchange values.

Cooperative social production of the sort Marx identifies in chapter 32 involves no exchange of the products of labor similar to what he discusses in chapter 1 — a fact he even telegraphs by explicitly citing the modern factory example in chapter 1. Exchange value is, therefore, entirely foreign to this sort of mode of production.

This is a big problem for capital for two obvious reasons.

First, Marx traces the origin of money to exchange value. This would suggest that a system that is incompatible with exchange value is, therefore, incompatible with money. Given this, we should expect to see the breakdown of production based on exchange value to be expressed in a massive global monetary crisis of the sort that occurred at the onset of the Great Depression in 1929.

Second, labor power is simply a use-value unique to the mode of production, whose historically specific use for capital is the production of surplus value. If exchange value ceases to be the measure of use-value, this situation is true not only for a newly produced pair of shoes, but also for the labor power of the worker who produces them. If money (exchange value) is incompatible with social production generally, so is the buying and selling of labor power.

This is essentially the argument made by Grossman in his remarkable reconstruction of Marx’s theory of breakdown in 1929 on the eve of the Great Depression: at a certain point in the development of the mode of production, either wages have to be cut continuously or a reserve army must come into being. What mattered is not that wages were too high, but that they would always be too high.

It is also the argument made by Keynes from the viewpoint of the bourgeois class:

“A fall in real wages due to a rise in prices, with money-wages unaltered, does not, as a rule, cause the supply of available labour on offer at the current wage to fall below the amount actually employed prior to the rise of prices. To suppose that it does is to suppose that all those who are now unemployed though willing to work at the current wage will withdraw the offer of their labour in the event of even a small rise in the cost of living.”

“Wages must be cut continuously,” says Grossman, “or massive unemployment will result.”

“Oh, I have a plan for that,” Keynes responds.

So how do you cut wages once and for all?

Simple, if you sever your national currency from commodity money, it now will always express the exchange value of commodities, including labor power, as zero. No matter how high wages appear to be in currency denominated terms, its real (i.e., exchange value) equivalence will always be zero.

11 thoughts on “How the breakdown of production based on exchange value altered the terrain of Marxist strategy”

  1. Grossman’s book is mentioned, if I recall, in Karl H. Niebyl’s Ideology formation in the German trade union movement:

    Grossman pointed out that the system had no room any more, on pain of collapse, to even merely pay the value of labor-power. The value of labor-power itself was rising, eg due to a tendency (in advanced countries) of increased intensity of work (as you may recall, what Postone calls “historical time”, which indicates that an hour of labour is not a fixed time, but eg 1 hour of more intense labour today can = 2 hours of less intense labour in the past). The trade-union ideologists forget that, focusing just on wage pay “per hour” (as if the hour counts historically always of the same intensity). On the other hand the value of labor-power includes the ability to raise a family (and the original Roman meaning of “proletarian” I think was, of someone who has only their children in life), which I assume is why it declines when the wives are wage-laborers too. Or the population simply shrinks (unable to reproduce itself), which is what Anwar Shaikh said in passing one (almost echoing the white genocide paranoia), that in advanced countries the plan is for the population to die out.

    I just copy-paste a descriptive passage from Niebyl’s thesis:

    It is legitimate to raise the question of what becomes of the worker displaced from employment after he reaches his middle forties. Now, if the worker will retain his eligibility for employment by a greater intensiveness of his labor, his wage has to increase not only in proportion to such greater current expenditure of labor energy, but also to compensate him for his diminished industrial longevity. Several investigations in this field have already been [conducted]. Dr. Mary Bernays writes: “Exactly at the time in which the proletarian is at the peak of his spiritual powers (about forty years), his whole occupational existence breaks down suddenly. He sees before him the abyss into which he is about to tumble, or, at best an inclined plane which eventually will lead him to the same end”. Schuman, contributing to the same investigation, comes to the conclusion that “the workers, especially those working on piece—work, have the highest output between ages thirty and thirty-five, after which it decreases rapidly, due to strenuous and exhausting work, Ermantzki himself, after having collected and examined a great amount of material, concludes his investigation with these words: “the energy of the worker is worn out (through increased intensity of work) with extraordinary rapidity, of which the first and main consequence is the shortening of the duration of the life of the worker . . . But even if we leave the question of the natural longevity out of consideration, still another and equally important problem, the problem of his industrial longevity remains. They may manage to keep alive, but become invalided, robbed to a high degree of their capacity to earn. After the excessively intensive work has exhausted them entirely in a short time, these workers are in reality no more than living corpses”. Concentration of capital, i.e. , the increase in mass production industry with their highly mechanized methods of work, usually accompanied by the expansion of the piecework system, contributed markedly to this development. The modern methods of work, i.e., the increased intensiveness of work, has had, however, still further consequences for the worker.


  2. In short, gentlemen: we’re all fucked and there’s nothing we can do.

    But, they way I think about it, what keeps me going, is the following thought: it had to happen to someone eventually. Just like you are going to grow old eventually, just like you are going to die eventually.

    The system, by necessity, had to overproduce labor (soon to be 8,9 billion souls), and deplete fuels by machine production, and in our world particularly by the cars/trucks/ships/planes depleting oil in their engines. This all was baked in, a long time ago. You are kidding yourselves if you think differently. The strength of industrial and later financial capitalism is that it neatly aligns with human psychology, a psychology which evolved over long former periods of scarcity including hunter/gatherer and agricultural times. If things are scarce, as they were back then and are now, you have to compete or die.

    Marxism and everything that followed, particularly during the long moderation that followed WW2, was always an intellectual construct that assumed surplus would continue indefinitely. But this was an illusion: entropy, the reduction of surplus into gradients, was always present.

    So best to become a declinist. It’s the only way now, it absolves you of responsibility for the system which is exactly what we need. Because the system cannot be stopped, nor reformed. Let it burn out. Do not concern yourself with it. It doesn’t fucking matter if Bezos and Gates and Buffet and Musk end up with quadrillions of dollars. There’s not going to be anything left! They are as powereless as you to create anything out of thin air. They are going to be pissing themselves in a nursing home eventually, looked over by a poorly paid, sour nurse. They aren’t going to be immortal space gods. Just ask: what do I want to do with my life before I die.


  3. “if you sever your national currency from commodity money, it now will always express the exchange value of commodities, including labor power, as zero. No matter how high wages appear to be in currency denominated terms, its real (i.e., exchange value) equivalence will always be zero.”

    I’m interested in hearing this related to the growing development of Central Bank Digital Currencies, particularly in China and in various recent U.S. congressional proposals.


      1. Hmmm, the DCEP looks like a settlements system tied to the yuan to evade the one dominated by the United States tied to the dollar. It’s effectiveness depends on the capacity of the PRC to flood the world market with yuan.

        Here is the thing: Part of the attractiveness of the dollar is that the US stands ready to serve as the market of last resort for all excess capital (including capital in the form of commodities). This allowed the US to cement its position as the dominant national capital. Further, the US only accepts payment in the form of dollars. It will lend dollars out for this purpose. And it actively promotes the export of its domestic industries to other countries to import goods back. I am not sure China wants to plays this role. The euro sort of does all of this, but on a limited scale within the eurozone. Its apparent influence is an illusion produced by the role it serves as the currency of the eurozone.


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