Here is my original chart from the Great Depression era:
For shits and giggles, I have extended the above chart to 1971, just to see what it looks like:
So, now we have extended the chart based on the empirical data from 1939 to 1971. In extending the above chart, I have in no way changed any of the assumptions that I have made so far. (Notice, for instance, that my hands never leave my wrists):
What is obvious from the chart I have created above based on Marx’s labor theory of value is that by paying for labor that was clearly superfluous to the production of value, with a devalued currency, FDR’s New Deal era programs, like the Agriculture Adjustment Act and the Works Progress Administration, (and even Johnson’s Vietnam War) was able to add to absolute mass of profits created by the productively employed capital of the United States.
This may seem counter-intuitive, but Marx, in in this entirely too-long quote from volume 3 of Capital, suggested such a solution was possible, although he warned of the grim consequences of trying to do something stupid like this:
The conditions of direct exploitation, and those of realising it, are not identical. They diverge not only in place and time, but also logically. The first are only limited by the productive power of society, the latter by the proportional relation of the various branches of production and the consumer power of society. But this last-named is not determined either by the absolute productive power, or by the absolute consumer power, but by the consumer power based on antagonistic conditions of distribution, which reduce the consumption of the bulk of society to a minimum varying within more or less narrow limits. It is furthermore restricted by the tendency to accumulate, the drive to expand capital and produce surplus-value on an extended scale. This is law for capitalist production, imposed by incessant revolutions in the methods of production themselves, by the depreciation of existing capital always bound up with them, by the general competitive struggle and the need to improve production and expand its scale merely as a means of self-preservation and under penalty of ruin. The market must, therefore, be continually extended, so that its interrelations and the conditions regulating them assume more and more the form of a natural law working independently of the producer, and become ever more uncontrollable. This internal contradiction seeks to resolve itself through expansion of the outlying field of production. 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. (My emphasis)
Marx suggested in volume 3 that programs like FDR’s New Deal and Johnson’s war of aggression could, at least theoretically, increase the mass of surplus value produced by the total national capital of a country, but this would only succeed at the cost of further intensifying the contradiction between the conditions under which surplus value was produced and the conditions under which it was realized.
The productive power of social labor would grow, even as the consumption power of society was further narrowed. The tendency toward accumulation, to expand the national capital, to produce surplus value on an extended scale would accelerate. The policies we now refer to as Keynesian deficit spending stimulus would not solve the problem of absolute overaccumulation of capital, but exacerbate it.
The imagery Marx brings to mind here is of an ever accelerating rate of accumulation that could be said to foreshadow what has only recently made its way into the margins of nerd literature in the form of half-baked, infantile concepts like Vinge’s exponentially accelerating change or Kurzweil’s The Law of Accelerating Returns. Marx’s labor theory, which long predates these childish ideas, predicted that, at a certain point in the development of the capitalist mode of production, the contradiction between the conditions under which this surplus-value is produced and those under which it is realized would reach the breaking point, so that the two would no longer be compatible with one another; in other words, production based on exchange value would break down.
Beyond this point, the accumulating excess capital and the growing surplus population could be forcibly combined by some means, but this would only further intensify the underlying contradiction between the two. Postone restated Marx’s argument in a way that some might find it easier to understand: labor itself would become hollowed out.
As Postone put it just before he passed:
“Marx is pointing to a trend that empties proletarian labor of its content, diminishes proletarian labor and yet holds on to this labor.”
The content of which labor is emptied is its capacity for creating value. What is left as a residual is labor time that superfluous to the creation of value. The labor is empty because it produces neither social nor material wealth. It exists because labor time itself is a measure of social wealth.
But, trust me, it get worse, much worse:
In 1971, Nixon completely debases the dollar and all hell breaks loose