“There is no alternative”, is the famous aphorism coined by Margaret Thatcher in reply to her critics. According to the Wikipedia, TINA means, “economic liberalism is the only valid remaining ideology.” Economic liberalism is generally taken to mean dismantling of the social welfare state that emerged after World War II and collapsed into disarray beginning with the 1970s depression. However, in a recent interview, Costas Lapavitsas essentially argued that, for Marxists another sort of TINA reigns: Because of a lack of policy tools drawn on labor theory, Marxists had on alternative but to make use of the very same Keynesian policy tools that produced the rampant stagflation of the 1970s depression. In this post, I take exception with Lapavitsas’ argument.
My argument is not only that Marxists have no need to rely on Keynesian policy tools for their short-run program, Keynesian policy tools have the same aim of Margaret Thatcher’s neoliberal policy tools and run counter to the aim of communism. Instead, Marxist should drawn directly on labor theory to produce a set of immediate demands. Labor theory, according to my reading, argues Marxists should not seek to “exit” the crisis of capitalism, but should take as their starting point the limits imposed by production for profit on the production of material wealth. Our immediate program should be to push the production of material wealth beyond the limits imposed on it by production for profit.
According to this note by Warren Mosler of the modern money school, more income inequality will require bigger deficit by the state to maintain full employment.
This implies we need a larger deficit than otherwise to close the output gap/sustain full employment, has higher income earners tend to generate more unspent income/more savings than lower income earners.
Looks to me like the “1.2 million who lost benefits at year and took menial jobs” narrative has run its course, and consequently H2 employment gains will be that much weaker than H1, as suggested earlier…
The idea that increasing income inequality requires larger state deficits points to the basic irrationality of the modern money school’s policy recommendations. As income becomes more unequal, more excess capital is being produced, this excess capital cannot produce a profit unless it is lent to the state, thus the total output that must be unproductively consumed by the fascist state constantly increases.
But this increase in unproductive state consumption does not do away with the inequality; it simply acts as a savings account for excess capital. The state not only absorbs the excess capital, it begins to pay interest on the capital, adding to the income inequality.
Ray Brassier’s take on Nick Land is jaw-droppingly silly for someone whose Wikipedia entry touts him as “one of the foremost philosophers of contemporary Speculative realism interested in providing a robust defense of philosophical realism in the wake of the challenges posed to it by post-Kantian critical idealism, phenomenology, post-modernism, deconstruction, or, more broadly speaking, “correlationism”.”
You would think with those sorts of credentials he could understand Land’s argument at least at the level of a recent entrant to university.
“If State consumption and State credit, crushed together as if by an avalanche, play a central role in this development, this is also due of course, to the fact that the State (unlike a private entity which avails itself of credit) is considered to be a “secure debtor” which means, however, that the State, in the event of a great monetary and credit crisis, will not declare bankruptcy, but will simply expropriate its citizen-creditors.”
The argument Kurz makes here is that the unproductive consumption of surplus value, made possible by the credit extended to the state, is dependent on the state’s ability to repay its debt and must, sooner or later, result
in the state expropriating the owners of capital. I am not especially satisfied with the way Kurz formulates the problem here. My difficulty with Kurz’s formulation is probably best expressed in the words of the bourgeois simpleton, Paul Krugman — for reasons that are not entirely clear to the bourgeois simpletons the long-standing prediction of an impending crisis for Washington’s finances over the last thirty years never finally materialized:
“Fear of a Greek-style fiscal and financial crisis has loomed over much of our policy discourse over the past four years, and has played a significant role in shaping actual policy, constituting the principal argument for austerity in countries that don’t face any current difficulties in borrowing. However, despite repeated warnings that crises of confidence are imminent in floating-rate debtors – mainly the United States, the UK, and Japan – these crises keep not happening.”
Krugman has his explanation for why the predicted crisis “keeps not happening”, but he is a simpleton who thinks the problem is, “as simple and silly” as he is. Labor theory offers a much simpler and elegant explanation for why Washington has never experienced the sort of crisis predicted by bourgeois economists. It is an explanation I will need if I am to finally explain how reduction of hours of labor affects profits in an economy characterized by massive expenditures of unproductive labor time.
I want to turn to the question of the impact of the growing mass of superfluous labor time has on the exchange value and prices of commodities. Once i am finished, I hope you will understand why inflation is not a mystery — and, consequently, why all inflation within the mode of production can be traced to the growing mass of unproductive labor.
As I explained in the previous post, the emergence of a significant mass of superfluous labor time within the mode of production is the result of the tendency toward overproduction of commodities, of overproduction of capital in the form of commodities.
According to Marx in Volume 3 of Capital, this overproduction necessarily results in the devaluation of capital: At the point where overproduction of capital becomes a general condition of the mode of production, no increase in the mass of capital can add to the mass of profits; indeed, the possibility exists that an increase in the mass of capital actually results in a fall in the mass of profits.
In my last post I showed why I think a reduction in hours of labor would affect the “economy” the same way as a crisis brought on by the falling rate of profit does. The reduction of hours of labor has the effect of withdrawing a portion of the surplus labor time of the working class from exploitation and of reducing the time available to capitalists for production of surplus value.
However, so long as the labor time withdrawn from the capitalist does not reduce hours of labor below the duration necessary for the reproduction of the labor power of the working class, the working class should suffer no change in its material standard of living. The reduction only affects capital and has the same impact as a rise in the organic composition of capital. In this case, however, the rise in the organic composition of capital is achieved by a forcible reduction in hours of living labor imposed by the actions of the working class, rather than by an increase in the proportion of constant capital to variable capital resulting from a crisis of overproduction.
I think this is correct and would appreciate any input others might have on this question.
In my last post I deliberately left out the question of the role superfluous labor plays in this problem; however, in reality the efficiency of the employment of capital in the course of the labor day is not 100%. Some portion of the labor day is wasted, i.e., does not produce value and, therefore, does not count as productive labor time. The portion of the labor day that might fall under this heading has been calculated by various yardsticks by both bourgeois simpletons and by labor theorists. The estimate employed by Borsch-Supan is that wasted labor time amounts to anywhere from 10% to 30% of the typical labor day. On the other hand, labor theorists, employing different measures from bourgeois economists and even among themselves arrive at between 50% and 66% of the typical working day. My own calculation, based on a comparison of currency prices to commodity money prices, finds this wasted labor time now amounts to more than 90% of the labor day.
After realizing Borsch-Supan ignored the impact of labor hours reduction on profits — he never mentions profits even once in the entire paper — it finally sunk into my thick skull that “the economy” would respond to a reduction in hours of labor in much the same way that it responds to a fall in the rate of profit resulting from other causes. This had occurred to me perhaps a year ago, but somehow I forgot it when looking at Borsch-Supan’s paper. That realization was triggered by this ridiculous statement:
In this post I show the surprising results of the empirical literature on hours of labor reduction: Contrary to the commonsense assumption, if hours of labor are reduced, the reduction will probably have no impact on wages at all.
Borsch-Supan states there are arguments for the idea reducing hours of labor will reduce the rate of unemployment, but these arguments rest on assumptions that go against the empirical evidence (which he calls “counterfactuals”). The question he asks us to ponder is whether, based on empirical evidence, there is a case for the idea employment will increase if hours of labor are reduced.
By contrast, there is no basis for such an argument within labor theory, because the expansion of employment in labor theory is determined by the rate of surplus value and, all else held equal, the quantity of surplus value produced is a function of the duration of labor. If the duration of labor is reduced, the mass of surplus value will also be reduced; if the mass of surplus value is reduced, the rate of expansion of the existing capital (new employment of living labor) must also fall.
At the same time, a reduction in the mass of surplus value produced means the mass of profits have fallen, since profits are nothing more than the mass of surplus value divided by the total capital invested. Since profit is the motive of capitalist production, the capitalist will again take steps to increase profits by further reducing wages. How this is done is not important at this point, but in labor theory there is no reason to assume fewer hours of labor increases employment — just the opposite: fewer hours of labor accelerates the reduction of living labor in production.
6: Communism and the complete indifference of the most privileged workers to the rest of the class
If “orthodox” Marxists were being the least bit honest in the debate over privilege, they would have to admit that the overthrow of the capitalists does not of itself and cannot eradicate inequality within the working class. Why they make such a fuss on this point and cannot accept this admission as the starting point of an honest debate is beyond me. They continue to insist that getting rid of the capitalists of itself is sufficient to end all inequality, when this argument is clearly untenable.
No less than Marx himself explained that the overthrow of the capitalists does not do away with inequality, but only the inequality that rests on private ownership of the means of production. This form of inequality is done away with — no longer is a parasitic stratum of society able to live off the labor of others. However it must be admitted openly, as Marx himself did, that getting rid of the parasites will still leave us confronting what is likely to be historically unprecedented levels of inequality within the working class.
5. Marx as the first privilege theorist?: Competition and privilege in labor theory
At the beginning of this series on privilege theory, I suggested that the debate between privilege theory advocates and “orthodox” Marxists could be simplified to two conflicting propositions:
Proposition 1. With the overthrow of capitalism, racism, sexism and all forms of oppression will be done away with.
Proposition 2. Racism, sexism and other forms of privilege cannot be ended simply by overthrowing capitalism.
I called the first the “orthodox” Marxist position, but my employment of the phrase was never meant to suggest the “orthodox” view was the position of either Marx or Engels. In fact, contrary to what is now known as the “orthodox” Marxist position, Marx himself agreed with much of what might be called the privilege theory position.