The Real Movement

Communism is free time and nothing else!

Tag: surplus value

V: How Peter Jones demolished Andrew Kliman’s book in 22 brief pages

Does the collapse of the gold standard and the switch to commodity money have any implications for labor theory? The Brazil labor theorist, Paulani argues it does not:

“when, historically, the umbilical cord that linked the money form to the commodity form was cut (in 1971), the dollar value of goods shifted in relation to other currencies, but they kept between themselves the relations which their labour values (prices of production) produced earlier, backed in gold…”

According to Paulani, then, the prices of commodities may have no longer been convertible into gold after 1971, but they did not shift relative to each other. If, before the collapse of the gold standard, four candy bars exchanged for one pair of teatssocks, this much remained unchanged afterwards. Whether this is true is not the point, since, stated in this simplistic form, it can easily be disproven; however, many such changes can be written off to supply and demand “shocks” of one sort or another. Since any such shock is accidental, Paulani’s argument can be reduced this: whatever change did occur, they were accidental and did not result from the collapse of the gold standard. In fact, since relative prices fluctuated constantly even before the collapse of the gold standard, this is a reasonable explanation.

However this argument by Paulani in her 2014 paper is directly challenged by Peter Jones in his 2013 paper, The Falling Rate of Profit Explains Falling US Growth”. Jones argues the collapse of the gold standard directly explains the difficulty labor theorists are having substantiating Marx’s falling rate of profit thesis.

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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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Basic Income: Which class will be writing the legislation?

Since our Left supporters of universal basic income, like the working class in general, think they live in a classless society, it is no surprise that they forget there are two classes in society, each with antagonistic interests which will be dollarhandcuffsexpressed in whatever basic income scheme finally comes into being.

For our Leftists supporters of basic income, this interest may be expressed in a desire to see the end of poverty, to reduce the impact of unemployment on the wages of the employed, and to increase the capacity of the working class to fight against the other class, however, since there two classes showing an interest in basic income, we should not neglect the interests that stand behind the advocates of basic income on behalf of this other class and to examine basic income from the viewpoint of this other class.

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The core fallacy of Leftist basic income schemes

I am spending some time looking into the argument for basic income made by some of its defenders. In the course of my surfing, I came across this article by Carl Gibson, “The Case for a Basic Guaranteed Income for All”, which attempts to popularize the argument of basic income advocates.

logo-UBIEAccording to Gibson:

“By providing a basic income for all citizens through ending tax loopholes and preferential tax treatments for the super-wealthy, we’re directly correcting the ever-growing gap between the few who have more than they could ever spend in multiple lifetimes, and the vast majority fighting over crumbs.

More importantly, we’re also giving the poorest Americans a fighting chance at fulfilling their dreams, rather than spending their best years slaving away for a corporate giant that doesn’t respect basic human needs. We can’t call ourselves a free country until working Americans are freed from poverty wages and dead-end jobs.”

From the point of view of getting completely beyond capitalist society, basic income poses at least two obvious problems: First, a basic income does not and cannot get beyond money relations. Second, a basic income cannot get beyond the state. If basic income cannot get beyond money and beyond the state, it cannot get beyond labor despite what its defenders argue.

Why can’t basic income get beyond labor when so many of its defenders claim it can? The reasons are simple: First, although almost all basic income supporters never realize this, money itself is only an expression of socially necessary labor time. Typical of the sort of thinking in our society, most basic income supporters simply see money as a numeraire, not an expression of value. Second, the state itself is wholly funded by surplus value.

These two facts together mean basic income itself is funded by the surplus value, (i.e., the surplus socially necessary labor time) of the working class.

Making Capital Pay?

This presents us with the bizarre situation where one section of the working class lives parasitically on the surplus value squeezed from another section of the class. The typical response of basic income supporters to this bizarre situation is that this is not necessarily true. Instead of adding taxes to the employed sections of the working class, the fascist state could garnish some portion of already idle capital.

Carl Gibson, for instance, proposes the following measures to employ the excess profits of capital to fund a basic income scheme:

“The cost of guaranteeing every adult citizen (approximately 225 million, according to census figures) $12,000 a year is roughly $2.8 trillion. That sounds like a lot, until looking into just one of the least-mentioned sources – offshore tax havens.

Currently, $32 trillion is stashed in offshore accounts in notorious tax havens like the Cayman Islands and Bermuda. Much of that is profit made in the US by American corporations, but booked overseas to avoid taxes. And as journalist Nicholas Shaxson wrote in “Treasure Islands,” much more of it is held in blind trusts operated by oppressive authoritarian regimes, drug cartels, human traffickers, and other unsavory characters. $2.8 trillion isn’t even 1/8 of that amount. We aren’t asking for the whole pie, just a piece. And we’ll even save them a bite.

A few commonsense loophole closures like getting rid of the “carried interest” loophole, eliminating transfer pricing schemes like the “Dutch Sandwich” and “Double Irish” tax loopholes, and instituting a one percent sales tax on all financial transactions on Wall Street would be more than enough to cover the cost of a universal guaranteed income for all. And we still haven’t even discussed other widely-supported, commonsense initiatives like turning wasteful Pentagon spending like the F-35 project into money set aside for a universal basic income, taxing investment income at the same rate as real, actual work, raising the inheritance tax to pre-Bush levels, or creating new tax brackets for millionaires and billionaires.”

Thus, Gibson believes capital can be made to pay the cost to support idled workers through a combination of taxes on offshore accounts, closing loopholes, ending defense contracts and raising inheritance and capital gains taxes to pre-Bush administration levels.

This proposal, however, is simply a shell game since the origins of this idle capital is none other than the excess labor time of the worker. Assuming all of these forms of subsidy to capital were eliminated, we would still face the same problem — only now the capitalists would be intermediaries for an indirect tax on the employed workers. The capitalist would extract surplus value from his wage slaves and split the proceeds with the fascist state. The fascist state would then hand out the loot extracted from the workers by capital to the unemployed.

Although it appears as if capital is being taxed to maintain those unable to find work, in fact one section of the class is being made to support the other by working longer hours than is necessary.

Unemployment and Poverty as the Product of the Employed Worker

Supporters of basic income argue the scheme would make it possible for a large portion of the class to withdraw from the labor market; giving freedom to some workers to live entirely without laboring. In fact this is only true for that portion of the class that has already been rendered superfluous to productive labor. So long as the portion of the working class that composes the surplus population depends on value squeezed out of the employed section, the “freedom” to live without labor is materially limited by the rate of surplus value.

In any case, the mass of surplus value extracted from the employed workers must be equal to the average rate of profit, plus the expenditures of the fascist state, plus the basic income paid to those not working. The social spending formerly undertaken by the fascist state has not disappeared at all — it has only been reorganized. In place of a host of targeted programs, we now have a cash allotment handed out to those who have already been rendered surplus by capital. Assuming the program is revenue neutral, it only represents a change in the form of distribution of social spending and who receives it.

By and large the supporters of basic income will not listen to this argument, since they are not familiar with labor theory or think it is wrong. In their view, money and profit has no necessary relation to labor time. Money can be created out of thin air and is simply a numeraire, while commodities enter circulation without values: in this confused argument, the commodities only actually acquire value in the market when they are bought and sold. Thus, profit is produced by capital, not labor, and can be taxed without any impact on labor time generally.

Finally, there no recognition of the connection between the excess population of workers on the one hand, and the overwork of the employed. If there is any connection acknowledged in this regards, it is only that the unemployed represent a threat to the employed by holding down the wages of the latter. The essential role the employed workers play by actually producing the unemployed workers is never acknowledged.

Along with a steadily growing mass of commodities, resulting from improvement of the productivity of labor, the employed workers produce a steadily growing mass of workers who cannot, under any circumstance, find a place in productive employment. The unemployment of one section of the working class is, thus, the aim and purpose of the activity of the other. The employed worker never realizes this, until she is confronted by a mass of unemployed who attempt to undercut her wages by offering themselves on ever more desperate conditions. The worker, therefore, never recognizes these competitors as her own special product — the direct product of her own labor.

The advocates of basic income believe this mass of workers, who are now utterly dispossessed even of their labor power, can be made to disappear simply be taxing capital. This is their ignorance, their stupidity: they refuse to recognize that their own labor is the sole basis and fundamental premise of capital and its profits.

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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Superfluous labor and state debt

In his “Apotheosis of Money”, Robert Kurz makes this statement:

“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

Decreasing federal deficits preceded both the 2001 and 2008 crises. (Source: St. Louis Federal Reserve)

Decreasing federal deficits preceded both the 2001 and 2008 crises. (Source: St. Louis Federal Reserve)

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.

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Looking for an Exit from the Crisis

participants-of-the-g20After writing the post about Michael Spence and his proposal for the advanced countries to pursue an export-led growth strategy as way out of the crisis, I became intrigued with looking at how mainstream economics thinks exit will happen. So I have been spending time trying to find the answer to this question.

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The future does not, in any way, belong to the wage laborer

Mr. Excess Capital allow me to introduce you to Mr. Excess Population Of Workers.

According an essay,  “Europe’s Hidden Stimulus”, by the bourgeois simpleton, Eric Labaye, European companies had excess cash of €750 billion in 2011 that is not being invested.

Indeed, publicly traded European companies had excess cash holdings of €750 billion ($1 trillion) in 2011, close to a 20-year high. Unlocking that cash would give Europe a much larger stimulus package than any government can provide. In 2011, for example, private investment in Europe totaled more than €2 trillion, compared to government investment of less than €300 billion.

And yet, while trends among European economies have varied, private investment was, overall, the hardest-hit component of GDP during the crisis, plunging by more than €350 billion – ten times greater than the fall in private consumption and four times more than the decline in real GDP – between 2007 and 2011. The magnitude of the private-investment downturn was, in fact, unprecedented – and lies at the heart of Europe’s economic malaise.

Likewise, by historical standards, the private-investment recovery is running late. In more than 40 past episodes in which GDP fell and private investment declined by 10%, recovery took an average of five years. Europe is four years removed from the onset of recession, but private investment in 2011 was still lower than its 2007 level in 26 of the European Union’s 27 member states.

one_hundred_dollars_in_ice_cube_melting_036FRE01183It seems only logical to this bourgeois apologist that Europe could bring this excess capital together with a staggering mass of excess labor power Europe now suffers. The problem clearly is not the lack of means nor the lack of workers able and willing to work — Greece, for instance, now suffers upwards of 27% unemployment and youth unemployment is far higher — but the lack of profit for employing either. Labaye argues this mass of frozen capital could be freed up for investment if the proper deregulatory regime were enacted and he proposes some marginal changes. He argues over-regulation is Read the rest of this entry »