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Tag: breakdown of production based on exchange value

Capital, commodity production and collapse (V): After collapse, what?

Part 5: Is Marxism today out of sync with history?

“Whether you can observe a thing or not depends on the theory which you use. It is the theory which decides what can be observed.” –Albert Einstein

In first place, the failure to recognize production based on exchange value has already collapsed implies Marxists are (or may be) looking for an event to occur in the future that has already happened in the past. In second place, it is effectively the same thing as stating Marx was wrong about the ultimate trajectory of capitalist production. At best, we have to explain why Marx’s predicted breakdown has not happened already; at worst, we might conclude Marx’s theory has been falsified by history.

This problem is further complicated when Marx’s theory is misread to predict something he clearly never predicted, “a collapse of capitalism”. If capitalism did not collapse as Marx said it would — and, obviously, it has not — it must follow his theory has been falsified by history. The problem with this conclusion, of course, is that Marx never actually predicted capitalism would collapse, he predicted production based on exchange value would collapse. In Marx’s theory, the collapse of production based on exchange value might very well lead to the end of capitalism as well, but it could just as easily lead to the state becoming the national capitalist, the direct exploiter of the working class.

If you think Marx predicted the collapse of capitalism, Marx is obviously wrong. This is bad for Marx, but no worse than hundreds of would-be prophets throughout history who have turned out to be wrong, including a considerable population waiting for Jesus to return. But if you think Marx predicted the breakdown of production based on exchange value, as I do, the implications are much worse for the working class today.

If Marx was right, Marxists today are completely out of sync with history.

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Capital, commodity production and collapse (IV): Collapse or Collapsed?

Part 4: Back to the future?

If you ask the typical Marxist to name the most important prediction made by Marx’s labor theory of value, they will likely point to his prediction of a proletarian social revolution. Few, if any, Marxists will argue Marx’s most important prediction was that commodity production would break down, capitalist private property would be expropriated and the bourgeois state would be forced to undertake management of production.

Which is odd, since, in the intervening 160 years, no successful proletarian revolution has occurred, yet we have witnessed the collapse of production based on exchange value, the expropriation of capitalist private property and we have seen the state undertake management of production — a ubiquitous and routine function in all countries today. By the measure of an alleged prediction of a proletarian social revolution, it can be said Marx’s theory, at best, remains unproven. Yet, by the measure of a break down of production based on exchange value, Marx’s theory has been remarkably accurate.

It’s almost as if Marx knew what he was talking about. “Almost”, reply many of our most influential Marxist theorists.

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Capital, commodity production and collapse (III): Collapse of what?

Part 3: Breakdown in Marx’s Theory

So, I have been mulling Marx’s prediction of the ultimate result of capitalist development with increasing confusion — confusion because Marx is extremely precise, yet he never exactly predicts the breakdown or collapse of capitalism itself.

Marx makes three important predictions about capitalism.

First, in the Grundrisse, he predicts,

“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, and the direct, material production process is stripped of the form of penury and antithesis.”

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Capital, commodity production and collapse (II)

Part Two: The ambiguous case of the Soviet Union

To explain profit, Marx proposed the existence of a new type of commodity peculiar to the capitalist mode of production. This new commodity, labor power, had the characteristics of a typical commodity; it had a value equal to its socially necessary labor time and it had a specific social use value: it could be used as capital to produced surplus value. The specific social use value of this commodity, argued Marx, explained how capital created profit apparently out of nothing.

It also explained how capital violates the premises of commodity exchange generally.

In commodity production, of which capital is a specific historical form, the value of a commodity is equal to the socially necessary labor time required for its production. The time spent on production of the commodity in excess of what is necessary on average for its production creates no value.

To illustrate his point, Marx pointed to the case of a producer who, by lack of skill or laziness, spent more time producing her commodity than the social average. This additional labor time, argued Marx, produced a commodity with no more value than that embodied in a commodity produced by a skillful efficient producer. In the market, each would fetch the same price, with no more paid for the commodities of lazy unskillful producers than for the commodities of efficient ones.

The reproduction of labor power as a commodity, however, operates according to decidedly different laws than those of simple commodities. It is the source of surplus value and the quantity of surplus value created by its productive consumption is directly proportional to its duration. In contrast to ordinary commodities, therefore, the duration of labor expended by labor power in production must always exceed the duration of socially necessary labor time required for the reproduction of the labor power itself.

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Capital, commodity production and collapse (I)

Part One: Capital and commodity production

The anti-communist, Karl Popper has argued a good scientific theory is one that can be falsified by evidence. By this measure Popper claimed Marxism was not scientific.

Another, broader, view of what constitutes a scientifically valid theory is offered in Lee Smolin’s book, The Trouble With Physics, which makes this point about good theory: It brings together things once thought separate and thereby broadens our understanding of the world around us. A good theory, even when it cannot be immediately verified by experiment, revolutionizes our understanding of the world around us:

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Is there a political path to communism?

I got this question on my

“In a recent post you said you didn’t think there is a political path to communism. Can you elaborate on that some? What might a non-political path look like?”

The answer to this question has to begin with the basic premise of historical materialism taken from the preface to A Contribution to the Critique of Political Economy:

“In the social production of their existence, men inevitably enter into definite relations, which are independent of their will, namely relations of production appropriate to a given stage in the development of their material forces of production. The totality of these relations of production constitutes the economic structure of society, the real foundation, on which arises a legal and political superstructure and to which correspond definite forms of social consciousness. The mode of production of material life conditions the general process of social, political and intellectual life. It is not the consciousness of men that determines their existence, but their social existence that determines their consciousness. “

In my reading of this statement, I can only come to the conclusion that communism as a political movement can only arise if the real movement (trajectory) of society ends in communism. To put this another way, a political path to communism is only an expression of real historical changes in the mode of production. Communist politics are nothing more than an expression in political relations of material changes in the mode of production.

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Schrödinger’s Capital: How Marxists erased Marx’s prediction of capitalist collapse

NOTE 26: The contradiction between the two rules within the capitalist mode of production

In my last post, I discussed the odd coincidence between quantum theory and economics. The coincidence is that, in both disciplines, the respective processes appear to be determined by two different sets of rules.

In economics these two different sets of rules are given expression in the division of economics into what is today known as macroeconomic and microeconomic theory. Behaviors at the level of the firm are determined by the rules of microeconomic theory, while behavior of the economy as a whole is determined by the rules of macroeconomic theory.

I argued that this division occurred because bourgeois economics takes as it starting point not production of commodities, but the consumption choices of agents on the margin. Neoclassical theory thus overlooks the fact that the act of production is also a form of consumption.

There is another feature of this split of bourgeois economics into separate microeconomic and macroeconomic rules that may not be obvious at first: both sets of rules are valid and reflect a real contradiction within the capitalist mode of production.

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Endnotes 4: Trying to dazzle us with bullshit

I have been reading Endnotes 4, when I came across an argument by the collective in Part 3 on why the industrial working class never became the majority of society and how this led to the failure of the working class movement. The argument the collective makes has my mind twisting:

“Revolutionaries’ belief that trends would continue to move in their favour was enshrined in the policy of abstentionism. Social Democratic parties became the largest factions in parliaments, even if they remained in the minority; but those parties abstained from participating in government. They refused to rule alongside their enemies, choosing instead to wait patiently for their majority to arrive: ‘This policy of abstention implied enormous confidence in the future, a steadfast belief in the inevitable working-class majority and the ever-expanding power of socialism’s working-class support.’ But that inevitability never came to pass.”

industrial_revolutionSo, the workers’ parties expected that a working class majority would soon arrive and produce a majority in favor of socialism. Is this the argument the Endnotes collective is trying to make? If true, where did this belief in inevitability go wrong?

What happened, according to the Endnotes collective, is that the working class met its external limit of growth long before it became a majority of society:

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The state and the final collapse of capitalism

I received a very good question on my

“Can you sketch out a devaluation crisis/scenario that would collapse capitalism?”

I could only partially answer the question, because of the limited space allowed by In my answer, I was only able to set the premises of my particular scenario for capitalist collapse. I want to extend my remarks here to fill in whatever blanks may exist.

Here is the most important premise I will be using in the following scenario, which is, of course, open to question:

The capitalist mode of production is in a permanent and continuous state of overaccumulation of capital. This condition Marx described as capital having reached the point where no new capitalist investment can increase profits. Under these conditions, each increase in capitalist investment of new capital has the paradoxical effect of reducing profits. This gives rise to a mass of capital that cannot be productively employed and a population of workers who cannot find productive employment.

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Schrödinger’s Capital: Is the US dollar world money or the end of money?

It is important to say I want to preserve the science of historical materialism. To be clear, the outcome of this debate has nothing whatsoever to do with the outcome of the class struggle. Despite claims to the contrary by various vanguardist parties, no class in history ever made a revolution based on its theoretically accurate grasp of the society it was seeking to overthrow. The proletariat will not break that pattern. We can thus safely separate the issue of the scientific veracity of historical materialism from the social implications of its conclusions to answer the troubling questions raised by the value-form school argument.

I say this to emphasize I do not think Chris Arthur is “being revisionist” or some such nonsense. Instead, the science itself is being challenged by the appearance of something many people assume labor theory never predicted, a fiat currency filling the role of ‘world money’. Historical materialism has a big problem of explaining whether this fiat ‘world money’ is in fact money, and, if so, how it works.

NOTE 12: The end of exchange value?

According to Marx, a use value has value only if it is the product of human labor. The quantity of value contained in any product of human labor is the duration of socially necessary labor time required to produce the commodity. The value of a commodity is expressed as exchange value in a transaction in which the value of the first commodity is expressed in the use value of the second commodity. According to Marx the value of a commodity can only be expressed in the use value of another commodity also having value. The commodity socially recognized as playing the role of money is simply the one whose use value serves to express the values of all other commodities in the community.

This definition of money is commonly recognized by almost all Marxists. But if Marx is correct about this, the dollar, a valueless state issued inconvertible fiat paper currency, cannot be world money. The problem with the dollar serving in the role is that, as bitcoin shows, it can be produced with no expenditure of human labor whatsoever. And, it can be produced in whatever quantity is required almost instantaneously. This means the dollar is not a product of human labor and thus contains no value at all.

Which bring Marxists face to face with a paradox: If the dollar is world money, Marx must be wrong by his own definition. If Marxists recognize dollars as world money, they are — by the same definition — no longer Marxists.

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