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Tag: law of the tendency for the rate of profit to fall

How SYRIZA economist Milios deliberately distorted Marx’s theory to serve his own purposes

In my previous post, John Milios’s strange explanation of capitalist crises, I noted Marx did not have a theory of crisis. Mind you, everybody who has ever studied Marx’s theory knows this is true and there is not the slightest hint of disagreement about this. Since the lack of theory of crisis is alleged to have such far-reaching theoretical implications, you would think scholars of labor theory would devote at least a paragraph or two to speculating why Marx himself did not feel the need to develop a theory of crisis.

Instead, folks like the German theorist, Michael Heinrich, suggest Marx was so overwhelmed by his subject that he was unable to complete it. Heinrich argues capitalism was rewriting its own code faster than Marx could transcribe it into a finished work. This argument, although having a hint of credibility, is actually self-serving hogwash on the part of Heinrich. For Heinrich’s version of history to be correct, capitalism has to be fundamentally different than what Marx describes in Capital. How different? In the Grundrisse, Marx predicts a specific historical event he believed was inevitable: the complete collapse of commodity production, but Heinrich argues collapse was never inevitable:

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John Milios’s strange explanation of capitalist crises

I have been reading this paper by John Milios, a SYRIZA party economist, “Marxist approaches to economic crises”. The paper is interesting in that Milios is trying to advance an alternative hypothesis of the cause of capitalist crises that avoids both underconsumptionist explanations of crises and the argument that they are produced by the law of the tendency of the rate of profit to fall.

Among Marxists particularly those with only passing familiarity with Capital the underconsumptionist explanation for crises is quite popular. Of late that school has been challenged by folks like Andrew Kliman and others who claim crises are caused by the tendency of the rate of profit to fall. Milios is advancing what he says is a third explanation for capitalist crises in which the crisis may be caused by any number of situations.

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A conversation with Phil Greaves: Neoliberalism, Communism and the State

I spent the greater part of a day having an exchange with Phil Greaves over the situation in Syria. The exchanges have been sharp and uncompromising, but very helpful to me, in the sense it has allowed me to understand a problem that can only be discussed in wider context than I have so far.

That problem is this: So far as I can figure out, neoliberalism is the crisis of the existing state, a period of its collapse. If this is true, we are looking at almost 200 states that will more or less effectively disappear over the next few decades. I have spent most of the last year watching this process unfold in Greece, but Greece is not by any means the only example of the process. Just to name a few, we have seen political crises in Egypt, Spain and Japan. We have watched the rise of a nationalist movement in Scotland and euro-skeptic movements in the UK, France, Germany, etc. Finally, we have seen ongoing US and NATO aggression in Ukraine, Venezuela, Libya and Syria. The crisis of the state is now morphed into a prolonged global political and economic crisis.

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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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A dagger aimed at the heart of capitalism

The beauty of reducing hours of labor is that it appears to be an insignificant reform, when, in fact, it has the potential both to lay the foundation for communism and destroy capitalism. The significance of the conflict over hours of labor is as deeply obscured by capitalist relations of production as the role labor plays in the production of surplus value. However, anyone familiar with Marx’s reasoning, would understand why he called the struggle for reduction of hours of labor, “the modest Magna Carta of a legally limited working day.”

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VI: Kliman’s staggering 2009 admission that the rate of profit did not fall before the financial crisis

Can state deficit spending be used to artificially add to the mass of profits? And if so, would deficit spending account for the rather ambiguous (even contradictory) results labor theorists’ produce when they try to empirically substantiate Marx’s thesis on the falling rate of profit?

In his 2013 paper, the Australian labor theorist, Peter Jones, provided a persuasive argument that the fascist state can indeed augment or subsidize the rate of profit through its deficit spending. And he argues this capacity can explain much of the ambiguous results labor theorists have produced over the last three decades as they attempt to empirically demonstrate or disprove Marx’s argument on the role played by the falling rate of profit in capitalist crisis.

According to Jones, government borrowing mystifies economic relations by making it appear as if the state can consume surplus value without reducing either profits or wages. If labor theorists do not account for this false appearance, they are implicitly accepting the Keynesian assumption embedded in mainstream economics that government borrowing can create new surplus value.

In his 2012 paper, “Could Keynes end the slump? Introducing the Marxist multiplier”, Gugliemo Carchedi discussed how Keynesian deficits spending works and, like Jones, concluded this deficit spending cannot create money (or, more accurately, value) out of nothing. However, he went one step further: Carchedi argued that once the state began to repay its debt, it would have to raise taxes for this purpose. Whatever additional ‘demand’ the state created by deficit spending during an economic downturn would turn out only to be deferred taxation on the population. Essentially, since the state is not a producer of commodities, it could only bring spending forward; this credit funded ‘prosperity’ would have to be repaid at some point by higher taxes.

Carchedi’s argument may or may not be correct in the long run, but Jones’ paper suggests Washington has been able to run deficits — and, therefore, artificially prop up profits — over a fairly long period of time without running into the need to balance its budget. For more than thirty years, the US has been able to spend more than it takes in without apparent difficulty or obvious limits.

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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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Yaffe and Bullock on the ‘Contradictory’ Role of the State

Yaffe and Bullock’s paper sought to explain why 1970s stagflation could only be explained by the conditions of capitalist production:

“The crisis has to be located at the level of capitalist production. To show how the central tendency of the rate of profit to fall can express itself as inflation and eventually stagflation (stagnation and inflation), we need to examine how the capitalist experiences this tendency and attempts to maintain profitability by increasing prices. We then have to consider how these prices set by the individual capitalist can be realised – that is how commodities can be sold – exchanged for money – at these prices.”

2qixqxfHowever, in an attempt to refute the theory that inflation was caused by rising wages, they ignored the implications of their argument for the general state of the capitalist mode of production itself. When Yaffe and Bullock wrote the paper, they wanted to show how inflation was caused by the mode of production and attempts to maintain profitability in the face of chronic overproduction. Unfortunately their aim in the paper never actually directly addressed the implications of stagflation for the mode of production itself.

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