How fiat currency killed Marxism

Part One

“I remember quite clearly watching with comrades in a Capital study group on Sunday August 15, 1971 the broadcast of Nixon’s announcement that he had ordered the “closing of the gold window.” Given that we were reading for the previous few months passages like the following from Capital: “money–in the form of precious metal–remains the foundation from which the credit system, by its very nature, can never detach itself” (Marx 1994:606), we left each other that night with the thought that either Capitalism or Marxism was coming to an end before our very eyes! —George Caffentzis, Marxism After the Death of Gold

What crippled and ultimately killed off the Marxian theory was the realization that capitalism, although severely damaged by the Great Depression, did not die. The confidence Marxists felt before the depression that capitalism was a historically limited, relative, mode of production was shattered by the post-depression recovery of the Golden Age of Fascism.

Critical to the difficulties post-war Marxian theory has suffered is it inability to come to grips with the significance of the collapse of the gold standard. That collapse is the subject of this two part series.

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Reply to LK: Notes on the historical and monetary implications of the transformation problem

One of the big problems with a discussion of Marx’s formula for transformation of labor values into capitalistic prices of production is that no one, not Marxists nor bourgeois simpleton economists, seem to understand what he was doing. Now, I will admit this argument is pretty arrogant, because it implies that I, somehow, have figured out what everyone else didn’t, but bear with me and decide for yourself. If my argument doesn’t make sense at the end, please correct me.

As I stated in my last post, the transformation problem expresses an irreconcilable contradiction within the capitalist mode of production. Marxists will not be surprised at this assertion; digital_money_764bourgeois economists, on the other hand, deny the existence of this contradiction and have an ahistorical conception of capital. In their view, the bourgeoisie has invented the ideal state of man which, having been invented, can continue indefinitely unless interrupted by an exogenous event. So, when they look at the transformation formula, they see in it a contradiction and assume Marx has failed to make his case.

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Husson’s and Treillet’s call for labor hours reduction: Important but seriously flawed

I just finished reading this article by Michel Husson & Stephanie Treillet on the significance of labor hours reduction, Liberation Through Vacation. I want to offer some thought on why I think it is, on sfweek29ethe whole, as important as it is disappointing. I make these points, not because I disagree with what I think was the intended thrust of their article, but because certain folks will go after Husson’s and Treillet’s argument. For instance, A. Kliman has already taken David Graeber and others to task for their weak arguments on labor as just another attempt to rebrand social democracy. (See Kliman’s, Post-Work: Zombie Social Democracy with a Human Face?) My point here is to expose weaknesses in their argument because Husson and Treillet’s main thrust is, after SYRIZA’s election, the most important development to emerge from the crisis in 2015.

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How the state began systematically privatizing profits and socializing losses

In my previous post I showed that unemployment in the capitalist mode of production has its genesis in employment. Unemployment is not the result of a lack of means to employ the unemployed, but results from the fact that the steady bankers-dont-go-to-jailimprovement of the productive power of labor displaces an ever larger portion of the working class from all possibility of being employed productively.

In the mode of production, to be employed productively means the worker is employed directly for production of value and surplus value. It has to be understood that capitalism is not the production of useful objects in general, but useful objects only insofar as these objects also contain surplus value, i.e., profit.

With development of the productive forces — of machinery, technology, science and the division of labor — an ever larger mass of useful commodities can be produced in the same period of time. On the other hand, a given mass of commodities can be produced with a diminishing expenditure of human labor.

The capitalist is not concerned with the ever growing mass of useful objects that can be produced, but with the diminishing expenditure of human labor necessary for production. This human labor alone is the source of the profits that is the sole aim of capitalist production.

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Capitalism’s Dirty Little Secret: Employment creates unemployment

bushquoteIn my previous post, I argued the aim of fascist state “full employment” policy is maximization of profits, not maximization of employment. The term “full employment” is a deliberately misleading label chosen by the fascists to present the policies of the fascist state as necessary to promote employment in the interest of both classes. In fact, “full employment policies” do not in any way address the need of workers and are only designed to maximize the profits of capital.

This is a significant finding at odds with how the issue is often presented on the Left. To put it simply, “full employment” is only necessary for the working class insofar as the worker is treated as a draught animal to be kept constantly at work.

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‘Full Employment’ and Profits: An introduction

CTW-SpeakoutForGoodJobs-2coThis new paper, by Hornstein, Kudlyak and Lange, shows how simpletons are trying to minimize unemployment by constructing a new measure of what they call “resource utilization in the labor market”. The message of the paper seems to be clear: If you have no hope of ever recovering employment to pre-2008 crisis levels, explain it away with statistics.

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Employment or Profit: The Left must decide

employment-population-ratioEarlier this week, I had an exchange with @marissaluck7 about an article in the New York Times, In Tepid Wage Growth, a Potent Sign of a Still-Fragile Economy. The NYT piece is part of the debate over fascist state interest rate policy and, in particular, which is a better gauge for when interest rates should be raised: the official unemployment rate or the nominal wage level. Federal Reserve bank policy right now is said to be tied to the unemployment rate — which sits around 6.3% — while two economists, David G. Blanchflower and Adam S. Posen, make the argument Fed policy should be focused on changes in the nominal wage level.

For the Left, this is a phony debate: Workers cannot survive without jobs and the only rate of unemployment we should accept is zero. Hours of labor must be reduced until every worker who wants a job has one — no matter how much this hurts profits.

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Open Marxism’s Unspoken Prescription for the Current Crisis: Vote Harder

Continuing with the discussion of Holloway and Picciotto’s paper, “Capital, Crisis and the State”, which makes up chapter 3 of Simon Clarke’s book, The State Debate.

hatebushIn my last post, I showed how Holloway and Picciotto arrived at the conclusion that the definition of capital as the production of value and surplus value was insufficient basis to explain “the political”. I think the critical part of this story was the struggle to place the post-war full employment policies of the fascist state and implementation of “progressive” legislation of the 1960s and 1970s in some consistent theoretical context. “Open Marxism” was trying to explain policies that appeared to contradict Marx’s infamous base-superstructure analogy of “the political”.

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Open Marxism and the “Benefit” of Longer Hours of Labor for the Working Class

In a paper that forms chapter 3 of Simon Clarke’s book, The State Debate, Holloway and Picciotto, having decided “the political” is relatively separate from “the economic” must explain why this is so. But they have to do this while avoiding being associated with “orthodox Marxist determinism” prevalent in the Third International variant of Marxism.

As I argued, to do this, they redefine capital as a historically “specific form of class domination” and set this definition against Marx’s definition of capital as the production of value and surplus value. Within this historically specific form of class domination, “the political” and “the economic” are two separate moments of the totality. This, they argue, avoids the “iron economic determinism” by providing “an understanding of the determinants and limits of state action”. base-superstructureThe state sphere is separate from the sphere of direct exploitation, but it is not separate from capital as a specific form of class domination.

The solution, however, is made more difficult because Holloway and Picciotto cannot employ Engels as their convenient whipping boy: Engels’s “positivism” did not lead to the formulation of the foundation-superstructure analogy; Marx’s “dialectical method” did.

Ignoring for the moment that their definition of capital as an historically specific form of class domination flies completely in the face of Marx’s definition of capital as the production of value and surplus value and his elaboration of the whole base-superstructure thingy, what is gained by this redefinition of capital? While this redefinition might be useful in critiquing the reformism of Second International Marxism, it still doesn’t explain how “the political” is actually determined by “class domination”, since there is no obvious mechanism outside Marx’s own base-superstructure analogy. Holloway and Picciotto admit:

“If we insist on starting with the category of capital because it is the contradictions of the capital relation (as the basic form taken by class antagonism in capitalist society) which provide the basis for understanding the dynamic of social and political development in capitalism, the problem of the nature of the relation between the actions of the state and the accumulation of capital remains.”

This, I really need to emphasize, IS NOT a mere theoretical question: “Open Marxism” is trying to grapple with the fascist state, in order to explain so-called “progressive” legislation. In the United States, for instance, since the end of WWII, we saw, among other things, the collapse of segregation, the Civil Rights Act, the Environmental Protection Agency, the establishment of a woman’s right to choose, and a host of other reforms. Any argument on the relation between the mode of production and the state had to explain how this “progressive” legislation came about. At the same time: we have Vietnam and Chile, which horrors requires little or no elaboration, not to mention Thatcher/Reagan neoliberalism. The state appeared to accommodate a very wide spectrum of activity that could not be directly traced to exploitation in the factory.

“Open Marxism” argued the whole base-superstructure analogy did not seem to captures the true nuance of the relation between state and the mode of production. Holloway and Picciotto ask:

“[Should] this problem simply be dismissed as being no problem, the autonomy of the political denied, the correspondence between the actions (and structure) of the state and the requirements of capital accumulation taken for granted?”

The key phrase in the question is “Should this problem simply be dismissed as no problem”. The writers are reacting to the tendency among Marxists to simply dismiss the range or spectrum of fascist state action. If, in the end, all fascist state action boils down to the requirement of capital, even profound developments like the end of segregation can be ignored.

But ignored by whom? Certainly black workers did not ignore the end of a century of segregation; women workers did not ignore the end of the prohibition on abortions in the United States; and anyone concerned with the environment did not ignore the establishment of the EPA by the Nixon administration. Finally, no Marxist could ignore the collapse of Bretton Woods, which signaled either the death of capitalism or the death of labor theory.

Placing these real historical events in a consistent theoretical context seemed necessary, but neither 2nd International Marxism nor 3rd International Marxism seemed up to the task. In this regard, the example Holloway and Picciotto refers to in this section is telling because it deals with a cornerstone policy of the fascist state. Some writer named David Yaffe pointed out that the fascist state policy of full employment runs into the problem, “that there are limits to the extent and effect of state expenditure which result from its unproductive nature and hence the requirements of accumulation.” The constant extension of total social hours of labor came at the cost of an increasing mass of unproductive fascist state expenditures. There is, in Yaffe’s view, a limit to the policy of full employment. The argument is compelling and relevant to our situation today — unfortunately Holloway and Picciotto tells us little else about the paper. However another of Yaffe’s papers along these line can be found here.

In their response, Holloway and Picciotto criticize Yaffe for not expanding on his analysis of the state in this discussion:

“What results is a rather monolithic view of the state in which the growth of the state apparatus is attributed simply to the state’s post-war commitment to full employment, and in which the effect of state expenditure is seen as being adequately grasped by its classification into the categories of ‘productive’ or ‘unproductive’

However no matter their criticism of Yaffe for neglecting the state, Holloway and Picciotto are forced to concede his analysis “may” be crudely valid:

“But then how are we to understand the role of bourgeois democracy, and how are we to see individual state actions which apparently do not correspond to the interests of capital?”

Yaffe’s argument, they explain, focuses on one aspect of the limitation of fascist state action: that its expenditures represent a deduction from the total surplus value! In this assertion, Holloway and Picciotto are not only wrong, but horribly off-base in their criticism of Yaffe, which appears to make three questionable assumptions: First, they assume that the full employment policies of the fascist state were undertaken for the benefit of the working class. Second, they assume this alleged benefit is paid for by a deduction from the total surplus produced by capital. Third, they assume this deduction is “limited by the competing claims of private capitals on that surplus value which must be met if accumulation is to continue.”

All three of these assumptions were terribly wrong.

The constant extension of hours of labor (so-called full employment) was itself the “class domination” imposed on the working class for the purpose of expanding (not deducting from) the production of surplus value by unproductively consuming the resultant product of labor. Holloway and Picciotto (and perhaps also Yaffe, it is not clear) all begin their analysis of full employment with the totally outlandish assumption that longer hours of wage slavery is a benefit for the working class!!!!

From their point of view, if there is anything to be explained regarding this “benefit”, it is the limit on the state’s ability to grant it. Apparently it never occurred to these bumbling fools that the interest of capital is always to extend hours of labor even if this can only happen in the form of increasingly unproductive activity on behalf of the fascist state. Having assumed (apparently along with Yaffe) that ever longer hours of labor is a “benefit” for the wage slave, Holloway and Picciotto then have the gall to chastise the writer for not recognizing,

“the other limitations arising from the nature of the state’s structural relation to, and separation from the immediate process of exploitation — limitations which greatly restrict or render impossible state action in the rational interests of capital, irrespective of the limits of state expenditure.”

Which is to say, since longer hours of labor benefit wage labor, not capital, there must be a separate political limit on the state providing this benefit that arises from the nature of the state itself.


Platypus Question No. 6: Is there a concrete demand for the immediate abolition of wage labor?

In question 6, Platypus asks if there is a concrete political demand for the immediate abolition of wage labor:

“If the abolition of wage labor should indeed be a goal of emancipatory politics, what forms of politics or concrete demands should be pursued to attain this goal? How do we get from ‘here’ to ‘there’?”

The question is somewhat confused: Since the state itself is maintaining and enforcing the conditions for capitalist reproduction by extending hours of labor, a political demand for the abolition of labor is not possible. The problem is further complicated by the fact the Left faces is that it conflates opposition to fascist state economic management with opposition to social progress. To resolve these complications, we need to go back to my definition of overwork and unemployment.

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