The Real Movement

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Tag: Fred Moseley

Money and socially necessary labor time: A (Pre-)Review of Moseley’s new book

You are not supposed to review a book without having read it. This often poses a problem for me, since I never buy books, but sometime want to say something about them before I can steal them off the internet.

Such is the case with Fred Moseley’s new book, ‘Money and totality’. Fortunately, in the case of Moseley’s new book, there is a paper trail going back at least to the 1990s on which I can draw to raise questions about his argument. These pre-publication texts (here, here, and here, along with a recent review of the book by Michael Roberts, raise enough questions about Moseley’s so-called ‘macromonetary’ approach to capital that allow me the opportunity to outline a number of troubling problems with methods.

I will detail them in the following post. The reader is forewarned, however, that what I say here may have already been addressed by Moseley in the book.

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Whoops! Did Michael Roberts and Fred Moseley just revise Marx?

In this morning’s compare and contrast, we look at two different formulations of the category, socially necessary labor time, in Roberts’ essay, Consistent, realistic, verifiable; his review of a new book on labor theory by Fred Moseley:

Formulation 1: “Marxist value theory is based on the view that commodities are priced in the market according to the labour time expended on them.”

Formulation 2: “The market decides whether certain amounts of labour time expended on producing particular commodities are ‘socially necessary’.”

In labor theory of value, socially necessary labor time, of course, is the labor time required for production of a commodity, its value. However, in Roberts’ summary of the argument made by Fred Moseley SNLT is first described as a quantity of labor existing before exchange. Then it is later described by Roberts as a quantity of labor determined by exchange — by “the market”.

So which is it, Mr. Roberts? Is socially necessary labor time determined by production or exchange? There is no rush on this, Mr. Roberts. I am sure the proletarian revolution can wait patiently while you theoreticians figure this out.

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The TSSI school has completely capitulated to the value-form school

In a surprisingly abrupt about face, it looks like the TSSI school has capitulated to the value-form school of Michael Heinrich and company on all the important points of controversy between the two schools.

Of course, the TSSI school is the least ethical of all Marxist schools, because they want to drop Marx while pretending to defend him. The value-form school at least has enough principles to admit they think Marx was wrong, but not the TSSI school. Expect the TSSI school to continue pretending they uphold an orthodox interpretation of Marx’s labor theory of value.

In any case, we now have it in black and white, courtesy of Michael Roberts, who, in his review of Fred Moseley new book, Consistent, realistic, verifiable, argues that Marx labor theory of value basically examines the capitalist mode of production, “[from] the capitalist point of view, [where] money advanced must lead to more money, or forget it.”

I have no words to describe my reaction to this statement.

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Why Marxists can’t explain how Keynesian policies work

(And they can’t explain why Keynesianism collapsed either)

Part Two

This is part two of the series, “How fiat currency killed Marxism”. Part one is here.

YoungstownPlantAt the high level of abstraction of Capital, money has to be a commodity, because Capital presents a theory of a “pure” capitalist economy, without state intervention. And in the 19th century laissez-faire capitalism (without state intervention) that Marx was analyzing, money was a commodity and money had to be a commodity in its functions of measure of value and store of value. However, in the post-1973 contemporary capitalism, money is no longer a commodity (i.e. is no longer convertible into gold at a fixed exchange rate), and money does not have to be a commodity in Marx’s theory. The state-guaranteed fiat money serves the same purpose as gold under the gold standard – it provides an observable, homogeneous, quantitative, and socially valid expression of abstract labor.  —Fred Moseley, Money has no price

If Keynesian currency devaluation allows the state to maintain production for profit by reducing the real value of wages, why were Keynesian policies abandoned in the late 1970s for neoliberalism? To explain why this happened, requires some discussion of the problem with simple Keynesian “full employment” policies.

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V: How Peter Jones demolished Andrew Kliman’s book in 22 brief pages

Does the collapse of the gold standard and the switch to commodity money have any implications for labor theory? The Brazil labor theorist, Paulani argues it does not:

“when, historically, the umbilical cord that linked the money form to the commodity form was cut (in 1971), the dollar value of goods shifted in relation to other currencies, but they kept between themselves the relations which their labour values (prices of production) produced earlier, backed in gold…”

According to Paulani, then, the prices of commodities may have no longer been convertible into gold after 1971, but they did not shift relative to each other. If, before the collapse of the gold standard, four candy bars exchanged for one pair of teatssocks, this much remained unchanged afterwards. Whether this is true is not the point, since, stated in this simplistic form, it can easily be disproven; however, many such changes can be written off to supply and demand “shocks” of one sort or another. Since any such shock is accidental, Paulani’s argument can be reduced this: whatever change did occur, they were accidental and did not result from the collapse of the gold standard. In fact, since relative prices fluctuated constantly even before the collapse of the gold standard, this is a reasonable explanation.

However this argument by Paulani in her 2014 paper is directly challenged by Peter Jones in his 2013 paper, The Falling Rate of Profit Explains Falling US Growth”. Jones argues the collapse of the gold standard directly explains the difficulty labor theorists are having substantiating Marx’s falling rate of profit thesis.

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IV: Simon Mohun’s unproductive effort to identify productive labor

As I explained in my last post, substantiating Marx’s falling rate of profit as the cause of capitalist crises, and, in particular, as the cause of the so-called great financial crisis of 2008, runs into the difficulty that Marx made his argument on the basis of values. The difficulty this poses for analysis is that, since 1971, the various categories of analysis employed in measuring the rate of profit are denominated in inconvertible fiat dollars. Fiat dollars are not money in themselves, but tokens — 2007-10-20-77368474placeholders — for commodity money. Prices denominated in this inconvertible fiat, therefore, are not values in the sense Marx employs this term throughout Capital.

Thus, in order to construct an empirical proof of Marx’s thesis on the causes of capitalist crises using the empirical data, labor theorists are forced to convert inconvertible fiat prices into Marxian values. This is a new problem that did not exist before the period between 1933 and 1971 when the gold standard began to come unraveled. Since the dollar was pegged to some definite quantity of gold, dollars prices represented some definite quantity of gold as well. After the collapse of Bretton Woods in 1971, however, this relationship was severed and the dollar’s exchange rate with gold was allowed to float.

The question immediately arose whether Marx’s theory applied in the case where the currency used in daily transactions no longer had any fixed and definite relation to commodity money. Since the quantity of fiat in circulation has always been determined by the state, not by the values of the commodities in circulation, was it not the case that the socially necessary labor time required for production of commodities (value) no longer determined how a capitalistic economy functioned?

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III: How Fred Moseley MELTed Kliman’s argument on the falling rate of profit

One of the little discussed problem with Andrew Kliman’s attempt to empirically verify Marx’s falling rate of profit thesis is that he is working with inconvertible fiat dollars (dollars which no longer can be redeemed for gold) and dollar prices — in the form of GDP, wages, profits, etc. — and these prices are not labor values as Marx defined the term. How Kliman handled this problem in his analysis of the empirical data is a story in itself.

7351347-crisis-finance-the-dollar-symbol-in-melting-ice-devaluated-money-image-symbolizing-the-bankruptcy-1024x939In his paper, “The Law of the Tendential Fall in the Rate of Profit as a Theory of Crises”, Gugliemo Carchedi answered critics who argue the falling rate of profit thesis cannot be empirically substantiated because Marx was discussing values not prices in his thesis. Fiat prices, however, are not values and have no relation to the values or socially necessary labor times required to produce commodities.

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The Value of Labor Theory: Money as a class dictatorship

Continued from here

Labor screen_shot_2014-04-13_at_7.29.21_pmtheorists are so used to expressing their ideas in the form of abstract, scholastic, indecipherable bullshit, they have lost all ability to state in clear language, comprehensible to the working class, the gist of the argument they wish to make.

Take, for instance, this passage from Paulani’s paper:

“the categorical evolution of money results in a need for the expulsion of the materiality of money, that is, its ‘natural’ logical movement leads it to a figure that is no longer connected with a real (produced by labour) commodity.”

What does this gibberish even mean?

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The Value of Labor Theory: Money is a political weapon of one class over another

Continued from here

Here is a fact that is absolutely vital to your material standard of living and that of your children:

Money is political.

atlanticapril2012It is a political weapon employed by one class in society to subjugate the other class and force it to labor ceaselessly.

Yet, today, we have a bunch of useless labor theorists running around who approach money as if it is above classes. There are two classes in society and, therefore, two antagonistic and incompatible expressions of the socially necessary labor time of society. This cannot but give rise to two fundamentally incompatible money forms. The struggle in society over which money form will be established as the universal equivalent cannot be divorced from the struggle over what constitutes the socially necessary labor time of the working class.

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The Value of Labor Theory: Money as an unconscious class war raging in society

Continued from here

One of the difficulties I often encounter when discussing money is that the discussion is so couched in incomprehensible philosophical or scholastic bullshit that the absolutely vital stake ordinary working folks have in the debate never dwars 88 Unifac Financien - Basia Dajnowiczsees the light of day. The question at issue in the debate is not just “What is money?” Rather, the question posed is “What would be the socially necessary labor time of society today if the money we used was a commodity money as Marx argued?”

Labor theorists have a number of very interesting answers to the question, “What is money?” But not a single one of them has ever actually investigated the implications for wage slavery if their pet answer were true. You can look at the writings of people like Moseley, Foley, Nelson, Arthur, Campbell, etc. All have very interesting answers to the question, “Must money be a commodity?” However, one thing you will notice in common in all of these papers is that not one of these useless academics ever manages to explain how their particular answer affects the labor time of the working class.

It is time to put an end to this sort of nonsense: money is class warfare and labor theorists are fighting on the wrong side.

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