The Real Movement

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Tag: inflation

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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Deflation is good for you and here’s why

I had a short exchange with someone last night about this tweet on deflation:

@davidkorowicz: Deflation [here] we come, and though not polite to say in civilized conversation, the limits to growth are shadowing our present moment

The conversation the tweet sparked reproduced some of the most often made arguments for why deflation is an unwelcome development in a capitalist economy. Among the most important arguments was the assertion deflation will cut wages and increase debts.

The alleged mechanism of the negative effects of deflation on the working class are these:

  • Your company gets less income so they lay you off or cut your wages.
  • With lower wages or no job, your outstanding debts become harder to repay — which is a big thing if, for instance, you have a mortgage on a house or a car loan.

On the other hand, with inflation you get many of the opposite problems.

  • Inflation constantly increases your real cost of living.
  • With prices rising, you either have to get more frequent raises or work longer hours just to remain at your present standard of living.
  • With rising prices, you tend to become increasingly dependent on debt to make up the shortfall between your wages and prices at the checkout counter.

So which is worse? Losing your job and  facing wage cuts? Or working more hours just to keep your head above water?

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Are Marxists calling for a return to fascist state management in Greece?

Anyone who thinks Greece should leave the euro might want to revisit the Argentina depression of 1998-2002. According to Wikipedia, at the height of the depression almost 60% of the country lived below the poverty line. Argentina was forced to default on its debt, unemployment rose to 25% and the state froze all bank accounts for 12 months.

golden-dawn-greece-730The parallel to Greece is significant because although Argentina never was a member of a common currency, at the outset of the crisis, its currency, the peso, was fixed 1-1 to the dollar. The parallel between Greece and Argentina is that the euro also acts like a fixed exchange among many different national currencies. Thus, if Greece were to exit the euro common currency system, it would essentially be like floating the drachma against the mark, franc, and so forth. If this is true, at least in theory, the exit of Argentina from its fixed exchange with the dollar at the beginning of its own 1998 crisis may throw light on what Grexit would mean for the Greece working class.

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The phony crisis debate between David Harvey and Michael Roberts

Have you ever watched a frustrating debate where you knew both sides were wrong? 2qixqxfYou have probably experienced this watching some neoliberal Democrat politician face off against some neoliberal Republican politician in a staged campaign ‘debate’. During these phony debates, you know both sides share the same assumptions about how to exit the crisis and only differ as to which party should be granted the control of the state machine to attack the working class. Their shared premises never enter into the debate and it inevitably circles around matters of style and smoke and mirrors. If so, you know how I feel watching the phony debate on the causes of the 2008 financial crisis now going on between David Harvey and Michael Roberts.

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Catastrophe: Modern money, the state and labor theory

1. Modern Money Theory, or the state as monetary sovereign

I am reading, “Modern Money Theory 101: A Reply to Critics by Eric Tymoigne and L. Randall Wray”. I like this paper because it is a comprehensive defense of the ideology of the modern money school (MMT). Because it is a comprehensive statement of this school, it is possible to show modern money theory is a theory of fascism on steroids.

teapartyI want to state at the outset that by fascism I do not mean Nazism or any other peculiar manifestation of fascist politics from the 1930s. (Indeed, the ideas associated with modern money theory are popular across the entire spectrum of American politics — from the Tea Party to the progressive Left.) Rather, I will show that MMT expresses a fundamental tendency inherent in the capitalist mode of production toward the displacement of the capitalist class as managers of the production of surplus value by the state.

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Three critical comments on Zoltan Zigedy’s critical reading of Piketty’s ‘Capital in the Twenty-first Century’

bush-obama-imperialismA number of writers have attempted to critique Thomas Piketty’s Capitalism in the Twenty-First Century. However, I have found it a better use of my time to read and critique the Marxist critiques of Piketty’s 600 pages of worthless bourgeois simpleton trash. One theme that has emerged on both sides of the divide between Marxist and bourgeois criticisms of Piketty is his vague, semi-Marxian criticism of capital and inequality. This is probably something we need to clear up here and now. Piketty has nothing in common with Marx’s critique of political-economy. While Piketty spends an ungodly amount of electrons showing how capitalism creates inequality, Marx demonstrated something much more important:

Capitalism creates the material basis for communism.

Lack of clarity on this point must lead to some pretty bizarre results.

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How the basic income scheme could become the Left’s worst nightmare

So, let’s do a thought experiment just for the hell of it.

WARNING: This exercise is definitely not recommended for the fainthearted nor for those trapped in the social democratic delusion that the fascist state is a neutral field for competition between classes:

generation-basic-income-1024x682In my last post I asked if basic income can be employed to maintain wage slavery in face of chronic overproduction of capital. I explained, in this regard, the fact the basic income was incompatible with wage slavery has no place in the discussion, because chronic overproduction itself is already incompatible with wage slavery.

This means chronic overproduction itself should have already brought down wage slavery whether a system of basic income existed or not. Given this fact, the task is to explain why chronic overproduction did not bring down wage slavery and how  the capitalists managed to prevent this from happening.

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What does it take to beat capitalism when the deck is stacked against us

cardsOn Monday, I showed both the workers and the capitalists view economic choices through the lens of capitalist relations of production. The fact that both classes view the crisis of capitalism through the same filter means the both accept the same false choices in the crisis. It is not true in the least that the working class is brainwashed by the capitalists to act against their own interests. Rather, because both classes see the crisis from their respective positions within capitalist relations of production, they arrive at the same general conclusions.

Those conclusions are consistent with capitalist relations and, therefore, imply a definite outcome: labor exists only to fatten profits.

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“How Capitalism Works” (through the eyes of the working class)

trickledownYesterday, I showed why the inflation\deflation debate is concerned with the consumption of labor power and the debt of capitalist firms. Deflation carries a risk firms will not increase their employment and may go bankrupt because falling prices put pressure on profits.

My post led to the following response on reddit’s Socialism page:

“Too tired to read article but debt becomes worse with deflation because in real terms it is worth more (the corollary is that you can inflate debt away, since the debt which is constant becomes less in real terms after inflation. [Krugman] wrote a good op ed about that on April 4th, called oligarchs and money if memory serves). Aside from that this article seems a little wacky”

So does Krugman’s recent post to his New York Times blog contradict my argument? Well, let’s see:

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The False Choices of Bourgeois Economic Policy

It isn’t until I read this whole state debate thingy that I even realized the critical role inflation plays in the process. If Yaffe and Bullock are correct, profit is not possible unless there is inflation. Which is why there is such fear of deflation. I phillipskurvekind of knew this in theory already, but it only now makes sense to me that the inflation/deflation debate is not a side-show, but goes to the heart of capitalist relations of production. Without inflation, commodities cannot sell above their prices of production and without selling above their prices of production surplus value cannot be realized.

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