Schrödinger’s Capital: What can the defunct Soviet Union tell us about value, exchange value, prices and money

NOTE 23: What can the Soviet-era rouble tell us about the inconvertible fiat dollar?

For one thing, it tells us that sometimes it is very difficult to look at a category like value in isolation and assess what about it is necessary and what is purely contingent.

To clarify what I mean, let me use two analogies, both drawn from evolution science:

At some point a feathered flying creature emerged that was no longer a dinosaur but not yet a bird. At another point an upright walking ape emerged who was no longer simply an ape, but not yet human. In either case, what we have learned by studying the fossil record is that the creatures were both specific forms of life and, at the same time, transitional forms to new forms of life.

We encounter a similar difficulty when trying to ascertain the significance of categories of capitalist society. Which of the phenomenon we observe are necessary and which are purely transitory expressions of the movement of society.

To show how this might be significant to the problem of value, exchange value, and money, it might help to do what Marx did: compare present society to social formations that had none of these categories.

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Reply to LK: How labor theory of value destroys fiat ‘money’

It’s not very often that I agree with Keynesians about anything, but this post, Fiat Money Destroys the Labour Theory of Value, comes real close. The writer of the post, LK, who has a surprisingly good grasp of labor theory basics, argues that fiat money destroys labor theory of value and I completely agree with him/her on this point.

“Marx’s whole explanation of the emergence of money in Chapter 2 of Capital assumes that money must be a commodity. … So only if money is a special commodity that itself has a labour value can it function as a universal medium of exchange and numéraire. You couldn’t have a clearer expression of Marx’s view: money must by necessity be a produced commodity with a labour value in order to even function as money, because, in Marx’s view, all commodity exchange is founded on the fact that commodities (including money) are made commensurable by having quantitative labour values.”

0If Marx appears to be demonstrably wrong about anything in economics, this is likely the single most glaring example. However being wrong about money is not like being wrong about your prediction for GDP next year. Everything Marx argues in Capital is built on his arguments in the first three chapters, including his analysis of money. For Marx to be wrong about money has implications at least as profound as establishing beyond all doubt that value has nothing to do with labor. It is not as though Marxists could admit labor is not the source of value, but maintain Marx was still right “overall”. In that same sense, there is no way you can pretend Marx was wrong about money being a commodity, but right about most everything else. You can’t do it and LK isn’t going to let Marxist economists try to put that weak bullshit over on us.

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Gold after the death of Marxism: A reply to George Caffentzis

This post is in response to a question posed to me on regarding George Caffentzis’s essay, Marxism after the Death of Gold:

“You’ve probably read this, and may have already addressed it on your blog, but in case you haven’t, I’d appreciate your thoughts.”

I am familiar with the essay in question and have written about it before. But I will return to it to provide an answer that takes into account my personal theoretical development since that time.


9547247-making-money-with-your-computerGeorge Caffentzis does something in his essay that Marxists occasionally (all too often?) do: Completely and baldly lie about Marx’s theory. This essay is founded on a lie that Caffentzis knows or should know is a lie. And the case does not look good here: Either Caffentzis does not know the premise of his essay is a lie and is therefore unqualified. Or he know it is a lie and is not to be trusted because his knowing distortion of Marx’s argument clearly has an agenda.

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Part 2: How the Khoikhoi taught the labor theory of value to European merchant capital

Subjectivity and early fixed exchange systems

Under the conditions Graeber posits — simple commodity exchange among potentially hostile neighboring groups that are themselves internally bound by moral relations —  the determinants of the fixed exchange ratio schedules anthropologists find are not likely to be subjective. And this is for the same reason that the exchange ratios between differing products of labor are fixed in the first place: to avoid conflicts that could spill over into war between communities.

khoe-jjIf, in the middle of a gathering for purposes of exchange between hostile groups of hardened combatants, individuals had to sort out their subjective arguments for why, say, eighteen, and not fourteen, arrow heads should exchange for one canoe, and if these subjective arguments differed among individuals on both sides of the dispute, what is the likely outcome of this process? How long could any given fixed exchange ratio be relied upon to remain fixed should a dispute break out?

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Part 1: Some thoughts on David Graeber, barter and the invention of money

I have been reading Engels “Origin of the Family, Private Property and the State” — and it is fascinating. To accompany it, I looked for recent works that more or less critique it, employing scientific information available after the book was written.

ancient-mesopotamian-inventions-3My first stop was this very good David Graeber response to the bourgeois economist, Robert F. Murphy, On the Invention of Money.. It is pretty good to have a communist who can call bullshit on everyone in the room on the basis of scientific expertise. Graeber, for instance, make this observation of the explanation for money offered by mainstream economics:

“Just in way of emphasis: economists thus predicted that all (100%) non-monetary economies would be barter economies. Empirical observation has revealed that the actual number of observable cases—out of thousands studied—is 0%”

Ha! I wish I had wrote that line.

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Abstract Labor and the Puzzle of Unproductive Labor

Value-form theorists love to repeat a statement of Marx that seems to have been first marked by Rubin in the 1920s.

“Political economy has indeed analysed, however incompletely, value and its magnitude, and has discovered what lies beneath these forms. But it has never once asked the question why labour is represented by the value of its product and labour time by the magnitude of that value.”

Says Rubin,

“The concept of labour must be defined in such a way that it comprises all the characteristics of the social organisation of labour, characteristics which give rise to the form of value, which is appropriate to the products of labour.”

As the name implies, the value-form school places great emphasis not simply on the value of commodities and the magnitude of value, but also on the appearance value takes in a commodity producing society. Rubin argues “that value arises not only from the substance of value (i.e. labour) but also from the ‘form of value’”

This argument resonates with a very large body of labor theorists today because of one simple fact: What we today call money is a valueless token issued by the fascist state and controlled by it through its laws and central banks.

This fact suggests Marx fundamentally misunderstood a critical category of the capitalist mode of production. Since the movement of capital begins and ends with money, you cannot misunderstand money without misunderstanding both the beginning and end of the movement of capital itself.

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Prices, Profit and the Sraffian “One-Commodity” Corn Model

A drop in the rate of profit is attended by a rise in the minimum capital required by an individual capitalist for the productive employment of labour; required both for its exploitation generally, and for making the consumed labour-time suffice as the labour-time necessary for the production of the commodities, so that it does not exceed the average social labour-time required for the production of the commodities. Concentration increases simultaneously, because beyond certain limits a large capital with a small rate of profit accumulates faster than a small capital with a large rate of profit. At a certain high point this increasing concentration in its turn causes a new fall in the rate of profit. (Karl Marx, Capital, Volume 3, Chapter 15)

The problem of prices and profit and of the relation between the two, which has bedeviled the simpleton economist for two hundred years, has reared its ugly head again in a series of posts amounting to a food fight among bourgeois silverqueensimpletons. The question raised in the exchanges, which I have previously covered here, involves the question of the source of profits in the capitalist mode of production and the interrelation between profit and prices.

At stake is far more than is apparent in the obscure criticism raised by heterodox economists against the mainstream neoclassical school that the neoclassical school wants to determine profit by the marginal productivity of capital, and then calculate the quantity of capital in part by asking how profitable it is to own the capital goods. If prices and profit are dependent on each other in this way it calls into question the historical trajectory of the mode of production itself.

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A brief note on bitcoin and labor theory

I am throwing this out as notes toward a more comprehensive look at digital currencies in the future from the perspective of labor theory. I am not sure any of the points I am making here will stand up to further scrutiny. I only offer it because some folks have asked me for my opinion on it. –Jehu

bitcoin-minerAmong a certain section of anti-statists there is something of an obsession with the “digital currency”, bitcoin. Bitcoin is supposed to have everything going for it that would make for an anti-statist wet dream: it is said to be decentralized, not subject to government regulation — although this will change — “produced” under the control of a program that imposes strict control over its creation, etc.

The last point in particular seems to be a selling point for the “currency” among some of its proponents. With every central bank on the planet pumping counterfeit fiat into their respective national economies and the world market, Wikipedia notes:

“Some have suggested that Bitcoin is gaining popularity in countries with problem-plagued national currencies, as it can be used to circumvent inflation …”

Actually, looking at the literature, it occurs to me that one of the most egregious errors in thinking by the critics of bitcoin is the possibility its scarcity will collapse, because of the emergence of imitator “digital currencies”. In these notes, I want to show why I think this may not at all be true. For reason that will become clear, I believe it is the scarcity of bitcoins that may be the most critical weakness of so-called “digital currencies”.

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Can We Completely Abolish Labor, Right Now (Final)

7. The Centrality of Labor in Marx

At the start of this series I noted that, according to Elmar Flatschart, wertkritik states the abolition of labor is not the same as social emancipation. In his view, the abolition of value is only a condition of social emancipation, but social emancipation itself is a more complex problem.

At first glance this conclusion might be seen as very pessimistic, since it implies that even in the absence of any material need for labor, the great mass of society might still be trapped in compulsory labor and the debilitating division of labor to the sole benefit of an ever diminishing group of exploiters.

Gold Coins Being Weighed on ScaleThis is not a minor point. The concept of the abolition of labor is central to Marx’s and Engels’ theory. Uri Zilbersheid calls the abolition of labor one of Marx’s most important ideas; he notes the concept is central at least in “his early writings and to some degree in his later writings”. Yet, Zilbersheid observes, the abolition of labor receives little attention from Marxists:

“the radical Marxian vision—the abolition of labour—has not gained due recognition. Marxian thought is devoted to liberating humanity from all kinds of servitude, and the abolition of labour constitutes a major aspect of this liberation.”

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Can We Completely Abolish Labor, Right Now (Part 3)

5. Capitalistically Determined, Materially Determined and Superfluous labor times

If I understand Postone’s argument in his book Time, Labor and Social Domination, (and he can speak to this if I am misreading him) in the capitalist mode of production value (i.e., ‘socially necessary labor time’) appears in not one, but two distinct, historically determined forms. So far as I know, Postone is the first theorist since Marx and Engels to show how these two forms of labor time are embedded in the capitalist mode of production itself. He defines the two forms of value for us as,

“the total labor time determined as socially necessary by capital, on the one hand, and the amount of labor that would be necessary … were material wealth the social form of wealth, on the other”.

There is, as Postone explains, a duration of socially necessary labor time that arises from the material needs of the social producer, the combined body of all workers engaged in social production, and a distinct and separate duration of socially necessary labor time that arises from the needs of the capitalist mode of production itself. I will refer to the total labor time of society as the capitalistically determined labor time and the amount of labor that would be necessary if material wealth were the social form of wealth as the materially necessary labor time.

money-toilet-paperThere is nothing to say that these two durations of socially necessary labor time must be the same. In fact, the recurrent crises of the capitalist mode of production is nothing more than the forcible adjustment of these two durations of socially necessary labor time. Moreover, as Postone shows in his reconstruction of Marx’s category of superfluous labor time, the aim of capitalist production is the constant and ever increasing extension of labor time beyond that duration required for the needs of the social producers. Which is to say, the aim of the mode of production is to maintain and increase, by all means at its disposal, an imbalance between the two durations of socially necessary labor time — to constantly generate labor that is completely superfluous to society.

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