The Real Movement

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Category: Politcal Economy of Barbarism

Wikipedia on Henryk Grossman’s reconstruction…

Wikipedia has this discussion of the formula Grossman introduces in his reconstruction of Marx’s labor theory of value concerning the number of years down to what is referred to in the entry as the absolute crisis of capitalism:

Discussion of the formula

The number of years n down to the absolute crisis thus depends on four conditions:

  1. The level of organic composition Ω. The higher this is the smaller the number of years. The crisis is accelerated.
  2. The rate of accumulation of the constant capital ac, which works in the same direction as the level of the organic composition of capital.
  3. The rate of accumulation of the variable capital av, which can work in either direction, sharpening the crisis or defusing it, and whose impact is therefore ambivalent.
  4. The level of the rate of surplus value s, which has a defusing impact; that is, the greater is s, the greater is the number of years n, so that the breakdown tendency is postponed.

The accumulation process could be continued if the earlier assumptions were modified:

  1. The rate of accumulation of the constant capital ac is reduced and the tempo of accumulation slowed down.
  2. The constant capital is devalued which again reduces the rate of accumulation ac.
  3. Labour power is devalued, hence wages cut, so that the rate of accumulation of variable capital av is reduced and the rate of surplus value s is enhanced.
  4. Finally, capital is exported, so that again the rate of accumulation ac is reduced.

These four major cases allow us to deduce all the variations that are actually to be found in reality and which impart to the capitalist mode of production a certain elasticity …

Much of the remainder of Grossman’s book is devoted to exploring these “elasticities” or counter-crisis tendencies, tracking both their logical and their actual, historical development. Examples of each would include:

  1. Depressed interest rates, investment capital transferred to unproductive speculation, e.g. housing stock, art objects.
  2. Enlarged state sector bleeds value from the accumulation process via taxes. Wars destroy capital values.
  3. The reserve army of labour (unemployed) created to discipline wage claims.
  4. Imperialism

The second section refers to four condition under which the accumulation process could continue if assumptions made by Marx were modified. The most important of these is 3., the devaluation of labor power. If wages were cuts, say the authors of this entry, the rate of accumulation of variable capital would slow and the rate of surplus value would increase.

Grossman had in mind a continuous reduction of wages below the value of labor power, with wages being cut continuously.

“I have shown that even if all conditions of proportionality are maintained and accumulation occurs within the limits imposed by population, the further preservation of these limits is objectively impossible. The system of production described in Bauer’s own scheme has to breakdown or the conditions specified for the system have to be violated. Beyond a definite point of time the system cannot survive at the postulated rate of surplus value of 100 per cent. There is a growing shortage of surplus value and, under the given conditions, a continuous overaccumulation. the only alternative is to violate the conditions postulated. Wages have to be cut in order to push the rate of surplus value even higher. This cut in wages would not be a purely temporary phenomenon that vanishes once equilibrium is re-established; it will have to be continuous. After year 36 either wages have to be cut continually and periodically or a reserve army must come into being.”

But Grossman thought this was not possible politically, because the working class would rise up in rebellion in the face of such wage reductions:

“A continuous deterioration of wages is only possible theoretically; it is a purely abstract possibility. In reality the constant devaluation of labour power accomplished by continual cuts in wages runs up against insuperable barriers. Every major cut in its conditions of life would inevitably drive the working class to rebellion.”

Unfortunately, what Grossman missed (and this is not his fault because no one could have foreseen it) is that the very same crisis that forced money wages to be reduced below the value of labor power would also force the state to debase its currency from gold (commodity money), effectively severing the currency from exchange value. In fact, what happened is that labor power was devalued, as Grossman argued, when wages were effectively reduced to zero in exchange value terms by one and the same act.

As Keynes later explained, after that debasement it was a simple matter of letting inflation eat away at the subsistence wages of the working class one or two percent a year. The Federal Reserve continues that same policy even today with its two percent inflation target.

This is the real implications of debasing the currency from gold in 1933 — the part missed by the authors of the entry.

Two days of debate, but value-form moron STILL can’t explain why commodity money disappeared after 4,200 years…

From Wikipedia:

Shekel or sheqel is an ancient Near Eastern coin, usually of silver. A shekel was first a unit of weight—very roughly 11 grams (0.39 oz)—and became currency in ancient Tyre and ancient Carthage and then in ancient Israel under the Maccabees. The word shekel is based on the Semitic verbal root for “weighing” (Š-Q-L), cognate to the Akkadian šiqlu or siqlu, a unit of weight equivalent to the Sumerian gin2. Use of the word was first attested in c. 2150 BC during the Akkadian Empire under the reign of Naram-Sin, and later in c. 1700 BC in the Code of Hammurabi. The Š-Q-L root is found in the Hebrew words for “to weigh”, “weight” and “consideration”.

The picture above shows an ancient shekel, a minted commodity money coin composed of silver said to circulate in circulate in Carthage between 310 BC and 290 BC, almost 2000 years before the rise of capitalism. As a circulating medium, it suggests there was already an established simple commodity production system well in advance of the capitalist mode of production as Engels stated in his supplement to Capital, volume 3.

For some reason this sort of commodity coin, and commodity money in general, disappeared from circulation throughout the entire world market in a blink of an eye between 1929 and 1971, after having a stable presence since at least 2150 BC — nearly 4200 years. No scholar in the value-form school seems to be able to explain why this happened, although Marx predicted the event about 100 years before it occurred.

I spent two days debating the issue with Marshall Solomon, trying to get him to offer some explanation of this event that is consistent with the value-form theory of money.

The results are below.

Read the rest of this entry »

Are we headed to another Great Depression … or something else

I have been reading this argument for why the CoViD-19 emergency will not lead to collapse of capitalist accumulation: “No, we’re not heading toward the next Great Depression.” I am constantly on the lookout for articles like this, because they offer a counter-argument to my own and thus challenge my own argument with a skeptical fresh opinion.

In this case, the writer, Cullen Roche, appears to think that the question of the outcome of this emergency hinges “on the outcomes of an exogenous virus” epidemic. I think he is making an error in this view, a typical error made by most bourgeois simpletons, but one that is all too often shared by many communists as well. Whether the capitalist mode of production collapses at this point has nothing at all to do with the pandemic.

The pandemic, as we stated from the outset, is only the trigger for the crisis.

*****

But let’s read his argument.

Following his view that the course of the pandemic will determine the course of the crisis, Roche sees two likely scenarios for how this crisis will play out: “short and sharp” and “shorter and sharper”.

Scenario Number One, which Roche thinks could last about 24 months, is the “shorter and sharper” of the two. It assumes that social distancing works, herd immunity builds, treatments improve, warm weather helps and we stave off the virus long enough for a vaccine to be developed before the next flu season.

Scenario Number Two, which Roche thinks may last as long as 36 months, is the “short and sharp” version of the crisis. This scenario assumes the virus mutates and lingers through the summer, decimating the population much like the Spanish Flu did in 1918.

While scenario number two lasts perhaps as long as three years, in neither case, should it take the so-called economy as much time to recover from the effects of the pandemic as it took to recover from the 2008-09 financial crisis. In Roche’s opinion, there is no possibility that we will suffer through an interminable recovery like the one society experienced during the Great Depression.

Which is probably great news for speculators like Roche, since, in truth, there was no actual recovery from the Great Depression. Instead, the United States and its allies just destroyed most of their competitors within the world market at the cost of some 80 million dead. The last imperialist power standing, the United States, picked up all of the marbles because everyone else was devastated by war.

Read the rest of this entry »

How the DSA is responding to the pandemic emergency – III

Continued from here

At one point, I said the DSA author’s People’s Recovery program was “a description of the United States (six months to a year from now) with unmitigated pandemic emergency measures?”

What do I mean by the term unmitigated pandemic emergency measures?

The short answer is that I am using an analogy with the response taken to the outbreak of the pandemic itself. To contain the pandemic itself the authorities have issued a number of stay-at-home orders. These orders confine citizens to their homes when not engaged in activities the state has deemed to be essential. The orders are meant to mitigate or slow the spread of the virus.

But the measures implemented by state and national governments to slow the spread of the virus themselves have an economic cost in that they displace millions of workers from their jobs and paralyze the process of capitalist accumulation world wide. The fascists hope (essentially) that this economic cost is transitory. They hope the accumulation process can be temporarily shut down and restarted much the same way a factory machine can be shut down at close of business one day and restarted when the business reopens the next.

But the economic cost is massive. As of today, in the United States, 33 million workers are known to have been separated from their jobs by these stay-at-home measures. (The actual number is probably closer to 50 million.) If these workers do not get rehired quickly, or if only a part of these workers get rehired, this will lead to a sudden violent alteration in the material conditions of the working class. The collapse of prices that have been so entertaining in the oil market will finally reach the market in labor power.

When I refer to unmitigated pandemic emergency measures, I am referring to what will happen if the state takes no steps to address the situation where 20 or 30 million workers remain unemployed once the stay-at-home measures are lifted and the so-called “economy is reopened”. Historical experience suggest, nation states will make little or no effort to help this massive population of unemployed workers, just as it made almost no effort in the aftermath of the financial crisis, the collapse of the Soviet Union and the collapse of the various countries in the so-called socialist bloc. Which means, tens of millions of workers in the United States, and billions worldwide, will be left without work or income and without any possibility of finding work or income.

The problem is not just the difficulty the virus itself poses for most types of social production — like working in offices, on production lines and in retail settings — nor is it the hesitation customers might have venturing out to restaurants, casinos and ball games again once the stay-at-home orders are lifted. These problems are real, of course, and they do complicate things. These are very real complications, but people are clever and we’ll figure out a way to work around them.

The real problem is that capitalists hate paying wages and if they could figure out how to generate profits without paying a dime to workers they would do it in a heartbeat. And as Benanev and Clegg somewhat clumsily explain, this tendency, built into capitalism, toward eliminating living labor in production, now has become so pronounced that recent recoveries tend to be jobless:

“Today many speak of a ‘jobless recovery’, but if the ‘general law of capital accumulation’ applies then all capitalist recoveries are tendentially jobless. The tendency of “mature” industries to throw off labour, whilst facilitating expanded reproduction, also tends to consolidate a surplus population not fully absorbed by the subsequent expansion. This is due to the adaptability of labour-saving technology across lines, which mean that the manufacture of new products tends to make use of the most innovative production processes. Yet process innovations last forever, and they generalize across new and old capitals, while product innovations are inherently limited in their ability to generate a net expansion of output and employment. Here the problem is not merely that product innovations have to emerge at an accelerated rate to absorb the surplus thrown off by process innovations, it is that an acceleration of product innovation itself gives rise to an acceleration of process innovation.”

Benanev and Clegg actually downplay the extent of the problem of jobless recoveries. In reality, there have been no expansion of wage employment in the last 90 years since the Great Depression without a significant stimulus on the part of the state to generate growth.

Which is a pity, because a jobless recovery under normal condition of the last forty years is bad enough when unemployment is marginal, but a jobless recovery with 20-50 million already unemployed implies a staggering superabundance of workers as far as the eye can see, plunging wages, and scant social space for the sort of militancy most radicals assume would be necessary for a successful revolutionary strategy in the 21st century.

*****

Which means the greatest single victim of the coronavirus pandemic may be the failed communist strategy of the 20th century. Most communists are willing to concede that we are not living in what they call “a revolutionary period”. But this pandemic means there will never be a so-called revolutionary period again. Folks need to get this through their thick skulls. It ain’t happening; an approach that relies in any way on an assumption that there will be a revolutionary period in the future is as obsolete as retail malls.

I don’t think this is difficult to understand. The past forty years of history prove that it was never realistic to think the working class would be radicalized as its economic conditions deteriorated. That’s why we had to be organize and prepared to assume power before conditions deteriorated. The whole point of the preparation period prior to the breakdown (or collapse) of production based on exchange value was to prepare for that event.

You couldn’t wait for a collapse to happen and then begin preparing. Once breakdown occurred, it was too late for communists to begin organizing. The conditions themselves made it highly unlikely that we would succeed. Breakdown meant massive unemployment. This implies sharp competition within the working class and sharply falling wages. It is pretty hard to maintain solidarity under those conditions. After breakdown occurred, all bets were off.

Essentially, that is where we are now with this pandemic: we have been thrown back to the middle of the Great Depression, but with no labor organizations, no communist parties and no hope for a revolutionary strategy based on the 20th century model!

How the DSA is responding to the pandemic emergency – II

Continued from here

Now, here’s a question: if you agree with the DSA on this basic analysis, why would you have anything to do with this group of losers?

Basically the DSA is saying that in six months to a year things will settle down and life will pretty much be the way it was before the pandemic. That means, in six months to a year the folks who run this shit will still be running this shit and people like the DSA will still be carrying their water. Why would you want to be a water carrier when you can be a player?

I’m just trying to figure out how these folks brains work.

The answer must hinge on the idea that as the economic position of the working class deteriorates, it will become radicalized. However, with the exception of Andrew Kliman, who has his own peculiar method of calculating such things, I know of no economist who argues that the economic position of the working class has been improving for the last forty years. Every other economist seems to agree the economic position of the working class has been declining the entire time.

Yet there is no evidence that the working class has been politically radicalized by this decline. Even if we leave aside electoral politics, historical evidence of labor militancy have almost vanished in the last 40 years. Strikes are almost non-existent today, labor union membership and organization has collapsed; and not just in the United States but across the world market.

It is possible that declining economic position of the working class has not led to their increasing militancy, because their declining economic position is itself a product of their declining militancy and organization. We are then forced to explain the common source of both the declining militancy and the declining economic position of the working class.

The most likely explanation regularly cited in the literature is a persistent superabundance of workers relative to the demand for labor power in the market. This superabundance would tend to undercut both the wages of the working class and the class solidarity necessary to support labor organization and unity of the working class.

*****

But what does this mean about the present pandemic emergency?

Nothing fucking good, I can tell you that.

Even if we assume, for sake of argument, that the authors of the DSA People’s Recovery program are absolutely correct and the system overall survives, so that, in six months or so, wage slavery will basically be intact and functioning as before, the economic position of the working class will have deteriorated violently and traumatically.

The superabundance of the working class relative to the demand for labor power may have increased as much as ten-fold or twenty-fold, shattering all possibility of labor militancy. Two, perhaps three times as many workers will be unemployed as belong to the unions associated with the AFL-CIO. While the system overall may survive as the authors argue, the economic position of the working class will be fundamentally impaired permanently.

And, to be clear, this is not a situation that is likely to be reversed by a new expansion of capitalist accumulation any more than the Great Depression was, because, like the Great Depression, what passes for a recovery will come on top of an already existing crisis of absolute overaccumulation of capital that is already clearly shown in the growing gluts in food production, the oil industry, auto production, etc..

It helps to remember that the absolute overproduction of capital in the 1930s was resolved only by the wholesale destruction of the productive forces during World War II.

Moreover, it is highly unlikely that most nation states are going to attempt to stimulate their way out of this economic catastrophe. They have neither the inclination nor the means. And, as the OPEC dispute shows, it is unlikely they will achieve some sort of negotiated shut down of excess productive capacity.

This means, after a severe collapse of global economic activity of 30% to 40% or more in this emergency, we may see a modest bounce back of 5-15% in the first year, before things settle down in the 2% to 5% growth range for as far as the eye can see.

We are, therefore, looking at decades of 10-20% unemployment, if we are lucky. Such chronic superabundance of workers beyond any conceivable need for human labor power is hardly the suggestive of a new upsurge in working class militancy.

Continued here

How the DSA is responding to the pandemic emergency

I was listening to a speculator on one of the business channels this morning who described the stock market rally of recent weeks this way (paraphrasing):

The real economy is in dire shape, but we know this. The stock market is a discounting mechanism for this. It is looking beyond the present information into the future. In that future I see the UK stock market going to 7000 before it goes to 5000. (It is presently at around 6000.)

This made me think of the proposed People’s Recovery program of the Democratic Socialists of America that I read last night. It might help to look at the People’s Recovery program as a discounting mechanism and ask ourselves what members of the DSA are discounting.

Clearly, the authors of this document are discounting the present dire situation, which is only natural from their viewpoint. They are saying to the rest of us, essentially,

“No matter how the Trump administration and the other nation states screw things up, the system overall will survive.”

And, there is no doubt about it, the fascists have screwed things up. They have interrupted the capitalist accumulation process, they have shut down the global economy. Despite this massive fuck up, the authors of this program think in six months to a year or so wage slavery will basically be intact and functioning as before. The present pandemic emergency barely calls for any change in the DSA program at all.

So, everything listed in the proposed People’s Recovery program of the DSA is more or less the same as what the DSA demanded before the pandemic:

  • Medicare for All and total medical debt forgiveness.
  • A healthcare jobs program.
  • Workplace protections and a jobs guarantee.
  • A rent freeze and an eviction moratorium.
  • A homes guarantee.
  • Protections for all workers.
    • 30 days paid sick leave for each and every worker
    • hazard pay and benefits for all workers whose services will remain essential through the crisis
  • End the deadly Cuba blockade and drop all sanctions.
  • Close the border camps, end cash bail, abolish prison labor, and make inmate phone calls free.

The authors did add two demands, apparently:

  • Full staffing at the San Francisco Department of Public Health
  • Safe staffing at the San Francisco Unified School District

But even these two demand assume the continued existence of SFDPH and SFUSD in an otherwise unaltered state.

*****

There are two things to say about the DSA authors’ view of what this pandemic emergency has wrought:

First, the DSA authors are not saying the situation isn’t dire at present. Instead, they are saying that no matter how dire it is, the system as a whole will survive. Which means, Trump may be reelected or be gone; Biden may replace him or fail to win the election. In any case, no fundamental change will occur in the mode of production. It will chug along as before and stumble from one crisis to another as before.

Second, the DSA authors are assuming generally deteriorating economic conditions for the working class — including long-term job losses, persistent homelessness, a large-scale medical emergency, constant threat of job-related medical hazards, rising threat of war and international tensions and growing antagonism against migrants. This deterioration of the economic position of the working class is not inconsistent with the continued survival of the system, but an expression of the continued survival of the system.

In fact, the DSA program should not be thought of as a program at all. It is actually a snapshot of the United States taken three months ago and projected six months to a year into the future. Preexisting trends with which we are already familiar will be exacerbated, of course, but, aside from this, nothing fundamental will change.

We could call the proposed DSA program a description of the United States with unmitigated pandemic emergency measures.

Continued here

This shit is what passes for economics today…

CNBC: Real US debt levels could be 2,000% of economy, a Wall Street report suggests.

I can’t even…

 

Thinking about negative interest rates

I have used this chart before. It shows that, presently, many of the most important economies of the world market have interest rates that have plunged below the zero lower bound.

This event is so unprecedented in economic history that no one knows what to make of it. Prior to a decade ago or so, no one even thought it possible that lenders would advance credit at a loss. But here we are.

Germany bond yield curve, September 6, 2019 (Source: Trading Economics)

If Marxist theorists need any further confirmation that fiat currency doesn’t behave like money, they need look no further than Germany bonds, where the yield curve out to 30 years is now negative. Just try explaining, on the basis of Marx’s labor theory of value, creditors who lend their capital to the German state with the firm expectation they will incur a loss.

The only explanation that makes sense to me is that they are trying to avoid bigger losses of capital elsewhere. They accept a loss on the capital they lend to the Germany state to avoid losing more, or even all, of their capital elsewhere. In a commodity money regime, this situation could not happen. Alongside interest rates falling to zero, gold would be withdrawn from circulation into hoards. The two movements are driven by the same phenomenon — the falling rate of profit, which produces an ever growing mass of superfluous capital.

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An interesting new mandate for the Fed…

In December of last year, I speculated that the Fed is playing games with the economy in order to tank it just prior to the 2020 elections. I further speculated that Powell may be doing this in order to ensure that Trump loses the election.

Now, former New York Federal Reserve chief Dudley adds his view that the Federal Reserve Bank has a duty to manage United States politics as well as its economy:

There’s even an argument that the election itself falls within the Fed’s purview. After all, Trump’s reelection arguably presents a threat to the U.S. and global economy, to the Fed’s independence and its ability to achieve its employment and inflation objectives. If the goal of monetary policy is to achieve the best long-term economic outcome, then Fed officials should consider how their decisions will affect the political outcome in 2020.

Trump has declared war on the Federal Reserve…

Taken from CNBC:

The knives are out. Trump will campaign against the Democrats by using the Fed as a foil. Just to be clear, the Fed is a proxy for Wall Street. When the Democrats rush to its defense, they will destroy their own credibility.