So what is the political economy of barbarism (fascism) and can it be critiqued by labor theory? I would suggest this is very difficult, since the law of value no longer operates freely in such a mode of production. What we take as the real categories similar to the ones found in Marx’s Capital can be entirely misleading unless we are careful in our analysis.
We can begin, as Marx did for political economy generally, by examining the mode of production as it appears in bourgeois political economy itself and do in reverse what Marx did prospectively in some instances. In various places in his writings, Marx clarified the workings of the capitalist mode of production in terms of how similar processes would appear under communism. An example is to be found in a 2011 dissertation produced by Peter Hudis, “Marx’s Concept of the Transcendence of Value Production“.
Hudis argues in chapter four of his dissertation that in Capital Marx makes critical comments about the capitalist mode of production by throwing light on how these same processes might appear in the new society. He employs these observations in an attempt to construct in rough outline how the transcendence of value might appear in the new society. For instance, he states,
“While the scope of Capital is restricted to an analysis of capitalism, an examination of its most important concepts shows that they contain a number of suggestions regarding his view of a postcapitalist society.”
Is it possible to do this in reverse? Can we examine barbarism as it appears in the conception of bourgeois economists in order to relate these ideas to the familiar categories of labor theory analysis of the capitalist mode of production?
You can almost smell the frustration pouring off Paul Krugman these days, as he once again proclaims the latest in a series of victories of Keynesian economic theory over its monetarists opponents.
“Sorry, guys, but as a practical matter the Fed – while it should be doing more – can’t make up for contractionary fiscal policy in the face of a depressed economy.”
Krugman’s argument, which is a continuation and expansion on a more extensive argument by Mike Konczal can be simplified: Keynesian policies are better at generating an overworked working class than monetarist policies.
After reading and commenting on David Graeber’s post at the Guardian, I feel it necessary to comment more broadly on the problem the euro-zone faces in the crisis, as well as the problem posed by the austerity regime being pursued by the member nation of the European Union. My point is to show that the errors of the bourgeois economists Reinhart and Rogoff are not, as is commonly believed, a simple math or spreadsheet error. Behind these errors is concealed the fact that the euro-zone itself is founded on a fundamental structural flaw resulting from the monetarist economic theory on which it is constructed. This flaw was nothing more than an attempt to obstruct the working class majorities of the member nations from democratic control over their economies — a flaw that is now haunting the euro-zone and will likely cause its collapse.
David Graeber’s article in the Guardian, There’s no need for all this economic sadomasochism, is very disturbing because in it he adopts the argument of the MMT fascists. I want to state this clearly, although I am generally supportive of his activist work with Occupy, I think he is way off on this idea.
First he starts out by making the patently absurd argument that the euro-crisis is about morality, not profit:
“After all, as I and many others have long argued, austerity was never really an economic policy: ultimately, it was always about morality. We are talking about a politics of crime and punishment, sin and atonement.”
This, he knows, is not an accurate portrayal of austerity, but simply one that dovetails with his notions on debt in general. The aim of austerity has no more to do with morality than a tax on cigarettes has to do with discouraging smoking. The aim, in both cases, is to maximize fascist state control of economic life and maximization of profit through this control.
He then accuses Dutch and German voters of “fiscal sadism” because they don’t want their wages to bail out the holders of fascist state debts in Greece and Spain. What sort of nonsense is this? They should simply lie down and allow the banks to rummage in their wallets? The resistance to bailing out the Greece fascist state has less to do with “fiscal sadism” than a desire not to bail out German banks. I think, it is important we do not lump German voters in with German banksters in this crisis. While it is true, “Politicians locate economic theories that provide flashy equations to justify the politics”, this has nothing at all to do with the resistance of overwhelmingly working class voters to having their pocket picked by these politicians.
This conflation is bad enough, but then Graeber goes in to embrace the theoretical arguments of the fascistic Modern Money Theory (MMT) school. MMT is a ‘theory’ on the workings of so-called modern money, i.e., fascist state issued valueless counterfeit currency that began in use following the Great Depression. This counterfeited currency is employed by the state to manage economic activity within capitalist economies. It is the instrument by which the fascist state functions as national capitalist managing the national capital as direct exploiter of labor. It is impossible to employ this ‘theory’ in the interests of the vast majority of the society, who are being directly exploited by the state through the use of this currency.
Moreover, if MMT is correct, the problem faced in the euro-crisis exactly opposite of what it appears: there is not too much state debt, but too little. In modern money theory without sufficient debt, the excess capital sloshing around the system has no place to be profitably invested. To find a place for this fictitious capital, MMT argues, the fascist state must create an ever increasing quantity of debt instruments.
Which is to say, for German mercantilist policies to produce ever increasing quantities of excess capital, Greece must, at the same time, issue ever increasing quantities of bonds to absorb the German surpluses. Side by side with the German workers compelled to work long hours to produce otherwise unsellable exports, we get Greece workers working long hours to pay otherwise unrepayable public debts.
What sort of bullshit is this to adopt into Graeber’s anti-statist message?
The MMT argument is not particularly disturbing in itself. It merely carries the bourgeois economist’s argument to its absurd limits. What is disturbing, however, is the idea this “theory” is gaining any traction among antistatists. It is a completely fascistic theory that deserves only to be opposed wherever it rears its head.
Anti-statists have their own solution: wipe out all debts without exception and reduce hours of labor for the mass of society.
Anti-statists should not be trying to figure out how the states of Europe can carry even bigger loads of debt. Fuck the banksters — they can all go to hell and take their fascist mini-states with them.
Part One: “… the consciousness of the necessity of a fundamental revolution”
In the Communist Manifesto, Marx writes:
“Does it require deep intuition to comprehend that man’s ideas, views, and conception, in one word, man’s consciousness, changes with every change in the conditions of his material existence, in his social relations and in his social life?”
In this statement Marx is arguing changes in material existence and social relations must produce changes in consciousness.
Based on his argument, we can assume when, in the German Ideology, he and Engels wrote capitalism gives rise to,
“a class which forms the majority of all members of society, and from which emanates the consciousness of the necessity of a fundamental revolution, the communist consciousness”,
they were making the argument capitalism gives rise to changes in material existence, social relations and social life that produces a communist consciousness.
I ask this, because I certainly don’t want to be accused of “stringing quotes together”. I want to be sure these two concepts — one from the Communist Manifesto, the other From the German Ideology — actually are related. I want to be sure the two arguments form a discrete, coherent and continuous line of reasoning going through their life’s work. This is so when I ask dumb fucking vanguardist groupuscules (like, e.g., the SWP (UK)) why they exist, I am on solid ground. But. more important, I want to make sure I am on solid ground when I begin looking at the arguments of both Kautsky and Lenin on the issue of working class consciousness. I don’t want any silly mindless vanguardists to say I am taking Engels or Marx out of context when I rip Kautsky and Lenin new assholes.
Why the working class is not effectively defending itself actually is not a question posed by this crisis. Rather the question is:
“So what else did you expect?”
No matter how the working classes of Europe responded to this crisis politically, they were already effectively rendered politically defenseless before the crisis by the very structure of the euro-zone, which stripped the fascist states of Europe of their monetary sovereignty. So even before this crisis erupted into the open, the member states with their overwhelming proletarian majorities were already effectively kneecapped and rendered toothless. The very structure of the EU was nothing more than an attempt to rob the working class of any means to defend itself in a crisis. With monetary policy centralized in the European Central Bank the member states must follow procyclical policies during economic downturns. Essentially, they have no choice but to reduce their expenditures when the euro-zone experiences a depression.
An interesting question from George Magnus of the banking giant UBS via Zero Hedge: “Why Are The European Streets Relatively Quiet?”
To understand the background of Magnus’s question we have to go to 2010. At that time, the economist Michael Pettis predicted Europe would have three years or or so to impose its “labor restructuring” before all hell broke loose and national politics descended into chaos:
“I don’t in any sense pretend to be an expert on the subject, but one of the things that surprises me is that as far as I know (perhaps because I am looking in the wrong places) and in spite of very clear historical precedent, very few analysts, even the greatest euro-skeptics, are wondering about the changes in electoral politics that are likely to take place in Europe over the next few years as a consequence of the euro adjustment. For example Wolfgang Munchau has an excellent article in the Financial Times in which he concludes, like I did in my post last week, that:
The eurozone is manoeuvring itself into a position where it confronts the choice between two alternatives considered “unimaginable”: fiscal union or break-up.
Obviously I think he is right, but I would add that the window for that choice is a small one. If Europe doesn’t move quickly, within two or three years it will probably be very difficult, if not impossible, to engineer fiscal union. By then domestic politics are likely to be too unstable for the European political elite simply to arrange union over the heads of the citizenry.”
But here we are five years after the outbreak of the global crisis and almost three years after Pettis wrote his words, yet still European working classes are offering only limited resistance — nowhere near the sort of political chaos the bourgeois apologist Pettis imagined.
A decades ago John Holloway shook up the Marxist academy with the publication of his book, Change The World Without Taking Power”. Holloway’s argument was that the Marxist preoccupation with taking power was not only obsolete, it was counterproductive, serving only to divert energy and time to a quixotic effort that leaves Marxists banging their heads bloody against the brick wall of capitalist relations of production. Said Holloway:
The world cannot be changed through the state. Both theoretical reflection and a whole century of bad experience tell us so. ‘We told you so’, say the satisfied ones, ‘We said so all along. We said it was absurd. We told you that you couldn’t go against human nature. Give up the dream, give up!’
A decade after it was published, I think it an examination is called for, the purpose of which is to see how Holloway’s critique of post-war Marxism stands up to time.
Keynesian economic policies don’t work, but fighting for these policies will?
Guglielmo Carchedi’s essay on the so-called Marxist multiplier has me bugging. He is handing out bad advice to activists in the social movements and telling them this bad advice is based on Marx’s labor theory of value. The bad advice can be summed up concisely: Keynesian policies do not work and cannot work, but the fight for these policies (as opposed to neoliberal policies) can help end capitalism:
From the Marxist perspective, the struggle for the improvement of labour’s lot and the sedimentation and accumulation of labour’s antagonistic consciousness and power through this struggle should be two sides of the same coin. This is their real importance. They cannot end the slump but they can surely improve labour’s conditions and, given the proper perspective, foster the end of capitalism.
Frankly, Carchedi’s advice is the Marxist academy’s equivalent of medical malpractice. (For the record, Michael Robert’s has his own take on the discussion raised by Carchedi’s essay.)
Tags: budget deficit, capital, debt, Depression, economic policy, Employment, falling rate of profit, financial crisis, great depression, Guglielmo Carchedi, inflation, Karl Marx, Keynesian economics, Marxism, neoliberalism, political-economy, unemployment
We have to change the terms of the debate on jobs and debt. We need to insist a job is nothing more than wage slavery and we don’t need Washington’s effort to create more of it by adding to this wage slavery even with more debt slavery. It is not like we have to argue existing jobs need to go away; why is Washington creating more of them, when existing hours can be reduced to solve the problem of unemployment rather than more debt?
2. Monetary Policy, or what happens when a hyperinflationary collapse of the dollar is NOT the worst possible outcome
The media is abuzz with speculation following the Federal reserves announcement of quantitative easing version 3.0. This version calls for the Federal Reserve to pour unlimited quantities of currency created out of nothing into the market, buying up worthless assets on a monthly basis to the tune of $40 billion per month. The result could be the printing of nearly a half trillion dollars in new, freshly produced, token money being forced into the economy every year until further notice.
The implications of this monetary insanity can be understood simply by reading the opinions of any number of economists and market watchers who are very delicately raising the spectre of a Zimbabwe style hyperinflation. Still subdued but growing talk of such an event has moved from the periphery of “financial advisers” and gold bugs into the mainstream argument of some pretty staid experienced players.
Take, for instance, a recent comment by Art Cashin, a veteran of the stock market who has probably seen every high risk moment in the market since well before Nixon closed the gold window in 1971, up to and including witnessing the market plunge 25% in a single day in 1987. Cashin oversees the management of more than $600 billion in assets and is not given to losing his head over every minor fluctuation in the S&P 500. A market crash is not Cashins concern, however — he fears hyperinflation. Cashin notes Weimar Republic hyperinflation did not burst out all at once, but was preloaded by continuous money printing that only made its way into the market over time:
“It (the inflationary spiral) was in fact delayed for a couple of years. But once it started, it could not be taken back. So here in the United States and in the European Union, there are very few, if any, signs of inflation because people are so concerned (that they are hoarding money).
“[You] will have to keep an eye on the velocity of money. Watch figures like, here in the United States, the M2 (figure), and see if it begins to grow through velocity, and get very cautious at that point. There are some potentially eerie parallels (today vs the Weimar Germany era). The United States trauma was unemployment and deflation (in the 30s), but in Germany in the 20s, it was money that ruined an entire society.”
Events are not yet to the point where Cashin is advising his clients to take their worthless fiat currency and sell it for gold, silver and other precious commodities, but he is suggesting there is such a heightened level of potential for a monetary catastrophe at present to warn people should begin to look for indicators of hyperinflation in the data:
“I think you are certainly at a ‘flashing yellow alert.’ You have in place a variety of things that could begin to react somewhat domino-like. As I said, there are measures and items that the listeners (and readers) can look for themselves. Look at, what is the growth in the money supply, M2? It comes out every week.
If [the M2 measure of the money supply] begins to grow rapidly, then the money that the Fed has created will be seen as moving through the system. That will create the high risk of accelerated inflation, and perhaps, God forbid, runaway inflation.”
Even if we discount Cashin’s argument as just another example of fringe hysteria, Zero Hedge recently explained, there are voices within the Federal Reserve’s own research department that echo Cashin’s argument:
Yes, it is ironic that the Fed is talking about “common sense”, we know. But the absolute punchline you will never hear admitted or discussed anywhere else, and the reason why the Fed can no longer even rely on its models is that…
Carlstrom et al. show that the Smets and Wouters model would predict an explosive inflation and output if the short-term interest rate were pegged at the ZLB (Zero Lower Bound) between eight and nine quarters. This is an unsettling finding given that the current horizon of forward guidance by the FOMC is of at least eight quarters.
In short: the Fed’s DSGE models fail when applied in real life, they are unable to lead to the desired outcome and can’t predict the outcome that does occur, and furthermore there is no way to test them except by enacting them in a way that consistently fails. But the kicker: the Fed’s own model predicts that if the Fed does what it is currently doing, the result would be “explosive inflation.”
You read that right: if Bernanke does what he not only intends to do but now has no choice but doing until the bitter end, the outcome is hyperinflation. Not our conclusion: that of Smets and Wouters, whoever they are.
And these are the people who are now in charge of everything.
Is there anything worse than a hyperinflation for capitalism?
The warnings by Cashin and the writers at Zero Hedge suggest Bernanke’s Federal Reserve is engaged in an extremely risky gamble on a policy that could lead to the dollar replacing Kleenex as the preferred method of catching sniffles during cold and flu season. I think it is safe to say the Fed would not be undertaking this gamble just to move unemployment a few points. A high risk gamble on this scale with the world’s reserve currency clearly hints what is at stake is likely much worse than a mere outburst of hyperinflation.
So what is worse than a hyperinflation of the dollar? What threat could there be to capitalism right now that risks reducing the dollar to a worthless piece of scrip with no purchasing power whatsoever? How about, a hyperdeflation, an inverse condition where all prices instead of going to infinity and beyond go to zero?
But there is a big problem with this argument: There is not a single recorded instance of hyperdeflation in history, we are told, and logically it cannot happen. Zero Hedge remarks on the question in a caustically titled post “The Monetary Endgame Score To Date: Hyperinflations: 56; Hyperdeflations: 0″:
We won’t waste our readers’ time with the details of all the 56 documented instances of hyperinflation in the modern, and not so modern, world. They can do so on their own by reading the attached CATO working paper by Hanke and Krus titled simply enough “World Hyperinflations.” Those who do read it will discover the details of how it happened to be that in post World War 2 Hungary the equivalent daily inflation rate of 207%, the highest ever recorded, led to a price doubling every 15 hours, certainly one upping such well-known instance of CTRL-P abandon as Zimbabwe (24.7 hours) and Weimar Germany (a tortoise-like 3.70 days). This and much more. What we will point is that at no time in recorded history did a monetary regime end in “hyperdeflation.” In fact there is not one hyperdeflationary episode of note. Although, we are quite certain, that virtually all of the 56 and counting hyperinflations in the world, were at one point borderline hyperdeflationary. All it took was central planner stupidity to get the table below, and a paper with the abovementioned title instead of “World Hyperdeflations.”
The Cato Institute’s paper presents a very powerful empirical argument against the case for deflation and hyperdeflation. Unfortunately it rests entirely on two fallacies that are hidden in its very title: First, hyperdeflation has nothing to do with the fate of any fiat currency, even the world reserve currency, the US dollar. A hyperdeflation is not the death of any particular currency nor even a series of currency collapses — it is the death of money itself.
The second fallacy in the Cato paper will take a bit longer to explain and once explained will show why it is so important to every anarchist, libertarian and Marxist.
Can there be such a thing as a hyperdeflation?
A hyperdeflation might possibly be defined as a situation where prices of commodities declined even as the supply of money increased. As the Cato Institute paper explains — there is no recorded instance of a hyper-deflation in the historical record. Of course, mild and even very severe deflations did occur several times up until the Great Depression; but history has many more examples of hyperinflations, as the Cato paper argues.
The problem with the Cato paper, however, is that its argument rests on the “quantity theory of money” fallacy — which according the Wikipedia states “that money supply has a direct, proportional relationship with the price level.” Which is to say, the Federal Reserve can force prices to increase — create inflation — if it increases the quantity of currency in circulation. In fact, this theory is wrong. The prices of commodities do not depend on the quantity of money in circulation, but on the quantity of socially necessary labor time required for their production. And here, at least theoretically, the case against hyper-deflation falls apart.
Here is the problem at the end of capitalism’s life: If the Marxist writers Moishe Postone and Robert Kurz are correct, the socially necessary labor time of commodities now have two distinct and contradictory measures: its labor time as a simple commodity and its labor time as a capitalistically produced commodity — yielding two quite different potential prices.
To put this in simpler terms, the price paid in a store for a typical commodity like an iPhone is mostly a reflection of the costs of economically wasted labor. The iPhone itself takes very little direct labor to produce, but, if its production is to be profitable, the accumulated costs of waste within the economy requires a massive mark up in the price you pay for it at the checkout counter.
What is this waste? Well, one source is the overhead created by the costly burden of government at present. Since the government doesn’t produce anything, its entire cost is borne by the rest of society. If, for instance, government accounts for about 50% of GDP, this means every product has a 100% markup just to pay for the operating expense of federal, state and local government. So about half the cost of your iPhone goes to cover things like drone attacks on Afghanistan civilians or corn subsidies to agribusiness. These cost don’t appear anywhere unless it comes directly from your wages in taxes, but even in this case the costs must be passed on in commodity circulation and will accumulate there in the costs of each commodity.
So every commodity essentially has two prices: the one that you pay at the checkout counter, which includes all the wasted economic activity in society, and the other, hidden, true price, which is the actual direct cost of producing to commodity. Surprisingly, this latter price is now only a negligible fraction of the total price of an iPhone, a pair of shoes, or even an automobile — the overwhelming bulk of the price of every product you buy consists of the hidden costs of economic waste within society that has accumulated over the past eighty years.
This is why, as I discussed in part one of this series, it now takes as much as seven dollars of debt, or even more, to create a single dollar of wages through fascist state economic policies designed to create jobs. Simply put, this internal discordance in the price of every commodity is a hyperdeflation weapon of mass destruction just waiting for a triggering event. What is making the Federal Reserve risk even the total collapse of the dollar on an insane gamble is the fact that this implosion can be triggered by the mildest hint of deflation. To prevent this event, the Federal Reserve must restart the failed system of debt accumulation that crashed in the financial meltdown of 2008.
Anarchists, libertarians and Marxists have a chance to put sand in the gears of the fascist state and bring it down along with the entire mode of production. All it requires is for us to change the debate over jobs and debt — opposing both Federal Reserve monetary and Washington fiscal policy aimed at expanding still further the system of wage slavery through policies designed to promote economic waste and debt.
But we can do this only if we are willing to take capital and the state head on by demanding an immediate reduction in hours of work until everyone who wants to work has a job, along with the elimination of all public and private debts, and abolition of all taxes.
Tags: Barack Obama, budget deficit, Depression, economic policy, Employment, Federal Reserve, financial crisis, political-economy, shorter work time, shorter work week, stupid economist tricks, Stupid progressive tricks, stupid Washington tricks, The Economy, Trickle Down Economics, unemployment, Wall Street
As a contribution to Occupy Wall Street’s efforts against debt, I am continuing my reading of William White’s “Ultra Easy Monetary Policy and the Law of Unintended Consequences” (PDF). I have covered sections A and B. In this last section I am looking at to section C of White’s paper and his conclusion.
Back to the Future
It is interesting how White sets all of his predictions about the consequences of the present monetary policies in the future tense as if he is speaking of events that have not, as yet, occurred. For instance, White argues,
“Researchers at the Bank for International Settlements have suggested that a much broader spectrum of credit driven “imbalances”, financial as well as real, could potentially lead to boom/bust processes that might threaten both price stability and financial stability. This BIS way of thinking about economic and financial crises, treating them as systemic breakdowns that could be triggered anywhere in an overstretched system, also has much in common with insights provided by interdisciplinary work on complex adaptive systems. This work indicates that such systems, built up as a result of cumulative processes, can have highly unpredictable dynamics and can demonstrate significant non linearities.”
It is as though White never got the memo about the catastrophic financial meltdown that happened in 2008. If his focus is on the “medium run” consequences of easy money that has been practiced since the 1980s, isn’t this crisis the “medium run” result of those policies? Why does White insist on redirecting our attention to an event in the future, when this crisis clearly is the event produced by his analysis.
Tags: Bailout, debt, Depression, economic collapse, economics, fascist state economic policy, Federal Reserve, Finance, financial crisis, Hyman Minsky, inflation, international financial system, Krugman, monetary policy, political-economy, qe3, qu, quantitative easing, Quantitative easing and debt, stupid economist tricks, Wall Street Crisis, william white
!Quelle Surprise! Like Greece and Spain before it, the UK finds austerity can only result in more austerity:
U.K. Tories to Press Ahead With $16 Billion of Welfare Cuts
The Conservative Party will press ahead with plans to cut 10 billion pounds ($16 billion) from the welfare budget and reduce spending by most other departments as it extends Britain’s austerity program into a seventh year.
The cuts to the benefits budget will go ahead as long as they meet safeguards sought by Work and Pensions Secretary Iain Duncan Smith, who has clashed with Chancellor of the Exchequer George Osborne on the issue since the party came to office in 2010. Duncan Smith and Osborne published a letter today saying the differences had been resolved.
“We are both satisfied that this is possible and we will work together to find savings of this scale,” the ministers said, according to excerpts released by Osborne’s office.
Osborne will address activists at the Conservatives’ annual conference in Birmingham, central England, later today, seeking to assure voters that his party will spread the pain of austerity across society. He’ll accuse the opposition Labour Party of focusing too much of that effort on the rich.
“There’s unfairness if people listening to this show are about to go out to work and they look across the street at their next door neighbour with blinds pulled down, living off a life on benefits,” Osborne said in an interview with BBC Radio 5 today. “Is it fair that a young person straight from school who has never worked can find themselves getting housing benefit to live in a flat when people who are working, perhaps listening to this program, are still living with their parents” because they can’t afford to move out, he asked.
Osborne is seeking to extend spending reductions across government departments as a 2010 effort to rid Britain of its budget deficit by 2015 is pushed back a further two years. Britain spends more than 200 billion pounds a year on welfare, accounting for 30 percent of total government spending. The Treasury said in March that welfare cuts of 10 billion pounds are needed by the fiscal year that runs through March 2017 on top of the 18 billion pounds of savings already announced.
See this is the problem with austerity — the more you cut, the more you must cut. Folks, if the fascist state is subsidizing capitalism by accumulating debt, cutting fascist state deficits only weakens capitalism.Since the fascist state is propping up profits through its accumulation of debt, if this debt accumulation is reduced, it sets off a vicious cycle which can only end in each round of cuts making necessary the next round of cuts.
Tags: austerity, budget deficit, CURRENT ACCOUNT DEFICIT, debt, Depression, economic collapse, economic policy, inflation, Karl Marx, political-economy, Politics, recession, shorter work time, shorter work week, stupid economist tricks, TRADE DEFICIT, Trickle Down Economics
We have to change the terms of the debate on jobs and debt. We need to insist a job is nothing more than wage slavery and we don’t need Washington’s effort to create more of it adding to this wage slavery even with more debt slavery. It is not like we have to argue existing jobs need to go away; why is Washington creating more of them, when existing hours can be reduced to solve the problem of unemployment rather than more debt?
1. Fiscal policy, or how to create one job on Main Street by borrowing five jobs from Wall Street
In 2011, a congressman made the argument that Obama’s stimulus program had produced jobs at the cost of $278,000 per job. Although the charge was nothing new, it made its rounds on the conservative GOP talking points circuit, and even ended up in the congressional record. This number, of course, was so outrageous by any measure of efficiency that it had to be analyzed by what we might call “clear thinking persons with no agenda”, i.e., the news media.
One “news source” in particular known for its ability to vet these things is PolitiFact.com, and it went after the congressman’s charge. PolitiFact established that the congressman, a Republican, was deliberately distorting facts against Obama’s stimulus program.
At $666 billion, the bill was estimated by the White house to have “saved or created” between 2.4 to 3.6 million jobs. What the congressman did, was employ the low end of the number of jobs “created or saved” and apply it to the total of the bill.
The Obama administration responded that this was unfair, since the money went to more than just creating jobs, it also invested in infrastructure, energy, education etc. Which is an odd response, since obviously the administration included those “investments” in its estimate of jobs “created or saved”. The Associated Press made the further argument that,
“Any cost-per-job figure pays not just for the worker, but for the material, supplies and that workers’ output — a portion of a road paved, patients treated in a health clinic, goods shipped from a factory floor, railroad tracks laid,”
So what AP is stating is that a job created by economic stimulus must account not just for the labor power directly expended, but also the constant capital used up in the course of this expenditure. But then AP performs an almost unnoticed sleight of hand and counts everything twice. So we count the money spent to build a road in terms of wages and materials, then we count the road as a finished product; we count the wages and material employed to build a clinic, and then we count the clinic as an operating concern.
Once we remove the misleading double counting from our calculation in the argument in the AP version of this story, how this differed from what the congressman said, is unclear. Indeed his criticism was later refined by one conservative media outlet this way:
“He says he never said that $278,000 per job went to salaries, but ‘rather that each job has cost taxpayers $278,000.’”
Five dollars of debt to produce one dollar of wages
So what the worker actually receives of the $278,000 spent to create her job is one thing, and the cost of creating that job is another. Assuming the worker received an average hourly wage of around $19, she would have an annual wage of $38,760, minus taxes. But to receive this $38,760 minus taxes in wages, the taxpayer must pony up $278,000 minus the taxes paid by the worker.
Which is to say, it roughly takes about 7 dollars of spending to create 1 dollar worth of wages using fiscal stimulus. Moreover, this fiscal stimulus must be newly created money, through debt, and, therefore, created out of nothing. If we take the administrations preferred figure of $185,000 per job, this still amounts to 5 dollars of new debt to produce 1 dollar of wages.
Between the GOP and the Democrats, then, there is agreement that it takes somewhere between $5 and $7 of debt to create $1 of wages. For some reason, despite the general validity of the congressman’s claim, PolitiFact.com decided it was not true on a technicality:
“Contrary to Dewhurst’s statement, the cited cost-per-job figure was not aired by the Obama administration. At bottom, his statement leaves the misimpression that the money went solely for jobs rather than a range of projects and programs, including tax breaks. We rate his claim False.”
There is, of course, another way of looking at this from the point of view of Wall Street banksters. From their point of view, it only takes 1 dollar of wages to create 5 dollars of new debt. Since the banksters are only interested in the accumulation of debt, which sits on his book as an asset, this is a fine ratio.
If the fascist state wants to create one job, it has to borrow the equivalent of five jobs to create this one job. The accumulation of the public debt outruns the income of the members of society who must eventually pay off the debt with their income. For every dollar they get in increased income, their debt obligation increases by five dollars. They must work to pay off this debt, requiring a further extension of wage slavery beyond what is required just to satisfy their needs.
Since after the housing market meltdown citizens can no longer be relied upon to accumulate this debt on their own (they have all become subprime borrowers) the state now takes on this obligation on their behalf, and raises the funds to service it by slashing their retirement and health benefits, reducing their access to public services like education, and inflating the prices of commodities by depreciating the currency.
This is how the scam works, folks!
You vote for Obama and the Democrats, and they mortgage your life and labor to banksters. They call this mortgaging of your life “progressive fiscal policy”, and sell it to you as a benefit.
However, since the congressman hails from the GOP, an avowed political opponent of the democrat president, he failed to add this additional fact: The argument does not change if, instead of democrat spending, we substitute GOP tax cuts, except that tax cuts are even more inefficient at “creating jobs” than fiscal spending. With GOP tax cuts, as the research suggest, the actual relation between the debt accumulated and the jobs created is aimless and dispersed and rather a bit more difficult to assess. Rather than aiming at some specific form of wage slavery as the democrats do, GOP tax cuts aim solely at subsidizing all wage slavery.
Tax cuts only have some definite targeted effect to the extent they increase the deficit and the flows of state expenditures into the coffers of banksters. While both spending and tax cuts result in a massive expansion of the public debt, in general, the less targeted the accumulation of the public debt, the more it directly favors only the banksters, who, in any case, underwrite this debt. The question is only one of degree, not result.
With democrat spending, the accumulation of debt takes a specific form — a road, a school, or an industry. It is targeted, and, therefore, can be more precisely applied, no matter that is still wasteful. What’s more, as Democrats and Republicans alike already know, the produced product can now be renamed the Obama Bridge-Tunnel Highway to Nowhere, or the Obama Elementary School, or the Obama Green Energy Research Park, or, as is always inevitable, no matter which party incurs the debt, the USS Obama.
If the outrageous cost of creating unnecessary jobs by fiscal policy is staggering, just wait until I next explain what knowledgeable insiders are saying about the cost of the Federal Reserve’s monetary policy.
Tags: Barack Obama, budget deficit, Depression, economic policy, Employment, Federal Reserve, financial crisis, political-economy, shorter work week, stupid economist tricks, Stupid progressive tricks, stupid Washington tricks, The Economy, Trickle Down Economics, unemployment, Wall Street
Since Occupy Wall Street appears to be undertaking a concerted push toward addressing the growing debt servitude of the mass of working families to Wall Street banksters, I thought it might be interesting to understand how the Federal Reserve is now doubling down on a policy of manufacturing an even greater debt burden for working families under the guise of stimulating the economy.
Comments and suggestions for improvement to this post are welcomed.
Tags: Bailout, debt, Depression, economic collapse, economics, fascist state economic policy, Federal Reserve, Finance, financial crisis, Hyman Minsky, inflation, international financial system, Krugman, monetary policy, political-economy, qe3, quantitative easing, Quantitative easing and debt, stupid economist tricks, Wall Street Crisis, william white
Disconnection from the current relations of production is easier said than done in Kurz’s opinion. It is not a matter of simply seizing a single factory, a retail outlet, an office or a school, nor even of seizing all the factories, retail outlets, offices and schools altogether in a simultaneous uprising in all countries at once. These institutions evolved within the context of commodity production and exchange and are fit only to function within this mode of production. It is not simply a matter of laying hold to them on the day after “the revolution” and employing them for the cause of social emancipation. Says Kurz,
The difficulty consists in the fact that the capitalist form of the functional division of society, as in the case of the capitalist structure of use value, cannot be assimilated, without alterations, into an emancipatory reproduction.
If this argument sounds familiar to you, it should; it is precisely the difficulty the communards faced in Paris when they took control of the old machinery of the state. They were compelled to dump that entire structure and create a new one on the fly to suit their specific needs. Marx concluded from that experience that the working class could not simply lay hold of the existing machinery of state and wield it for its purposes — that machinery had to be broken. Kurz is extending Marx’s argument well beyond the state to encompass the entire economic mechanism bound up with the capitalist mode of production. And he gives several pretty convincing reason for his conclusion.
Tags: anti-economics, anti-politics, commodity fetishism, Karl Marx, Labor theory of value, Marxism, Occupy the Marxist Academy, political-economy, Politics, Robert Kurz, shorter work time, shorter work time Tags: anti-capitalism, social emancipation, social revolution, Statism
In the first section of his essay, Kurz examined the limitations of 20th Century Marxism that, he argued, was incapable of theoretically superseding capitalism except by means of a proposed future event, the proletarian political revolution, which, would solve all of capitalism’s ills and manage society in some undisclosed fashion. To address this theoretical failure, in section two of his essay, Kurz returns to the basic schema of Marx, the link between the forces and relations of production. Kurz proposes the technologies associated with the digital revolution renders living, value producing, labor increasingly superfluous to production. Kurz concludes the significance of the new technology is not to be found in its production, but in its utilization by society. This technology cannot be employed to mobilize the massive labor armies of the Fordist era.
I argue, following Kurz, the impact of the digital revolution on the ‘economy’ appears to us in its phenomenal or perceptible form as a growing potential for social collapse and regression to a primitive state of simple survival. This survivalist fear is simply the result of the conditioning of our consciousness by commodity production itself — since we have been conditioned by bourgeois society to take its relations as the “natural” form of society, we experience capitalism’s potential for collapse as the potential for the collapse of civilization itself, when it is actually otherwise. In fact, as Kurz seems to argue, the potential inherent in this technology for the collapse of commodity production must actually be the premise of our conceptions of social emancipation; because this technology makes possible a decentralized organization of society without the necessary fulcrum of the state and commodity fetishism generally.
Tags: anti-capitalism, anti-economics, anti-politics, Karl Marx, Labor theory of value, Marxism, Occupy the Marxist Academy, political-economy, Robert Kurz, shorter work time, social emancipation, social revolution, Statism
The nightmare scenario typically presented by bourgeois thinkers to the possibility of the collapse of capitalism can pretty much be summed up in six words:
“Buy guns, gold and beans! Now!”
In this view, the passing of capitalism is equated with the complete breakdown of civilization and a regression to some primitive state. Without market forces and the centralized control of the fascist state, we are warned, society must splinter into roving gangs of murderous, zombie-like, scavengers.
Tags: anti-capitalism, anti-economics, anti-politics, Karl Marx, Labor theory of value, Marxism, Occupy the Marxist Academy, political-economy, Robert Kurz, social emancipation, social revolution, Statism
5. The recovery of capitalism is no longer possible
Kurz’s overall analysis of the crisis that emerged full blown in 2008 consists of four fundamental bullet points:
First, in the course of capitalist development Marx’s theory states there is a rising composition of constant capital to variable capital; this rising composition of capital compels an increasing dependence of productive capital on interest yielding capital, i.e., on debt.
Second, this rising composition of capital is also a declining ratio of variable capital to constant capital that compels the total capital to find new outlets. This dependence can, at first, be satisfied through outward expansion into new markets, but ultimately can only be met by the growth of an unproductive service (or tertiary) sector.
Third, based on the above two developments, there is an increasingly paradoxical (self-contradictory) dependence of productive capital on profits derived from debt of the non-productive sector that consists entirely of a dependence of productive capital on fictitious claims to its own future profits.
Fourth, this third paradoxical, self contradictory, dependence can only be resolved ultimately through the dependence of this entire increasingly fragile structure of accumulation on the consumption and debt of the fascist state.
In the first instance, the increasing dependence of the total social capital on the state is made necessary by the fact that the state becomes essential to the expansion of the total social capital into new markets through the means of imperialist wars and predations. But, this dependence really only comes into its own when the state becomes the consumer and debtor of last resort. In the final analysis the growth of a non-productive sector must be dependent on the growth of the fascist state as consumer of last resort. And this latter, if it is to maintain existing commodity production relations, must be dependent on expansion of the public debt. This is true because only the state can decide what serves as money within its territory and what means are used to pay its debts. It can, therefore, pay its debts with “money” it creates out of nothing, simultaneously “satisfying” this debt and evaporating its value.
Tags: ex nihilo currency, financial crisis, Karl Marx, Keynesian stimulus, Labor theory of value, Money, Occupy the Marxist Academy, political-economy, Robert Kurz, shorter work time, the Fascist State, THE GREAT DEPRESSION, transcendence of capitalism
As part of my continuing occupation of the Marxist Academy, I have been looking at various Marxist theories of the crisis of neoliberalism. I am now reading the late Chris Harman’s “The rate of profit and the world today”, written in 2007, just prior to the big crash. This is part two of my examination.
Before we go any further, let me reiterate one thing: In Marx’s theory, the law of the falling rate of profit is not expressed in “stagnation of economic growth” directly or indirectly. The so-called “stagnation thesis” appears no where in the body of Karl Marx’s works on the capitalist mode of production spanning more than 40 years. Nor does it appear in any of Frederick Engels works on the same subject spanning nearly fifty-five years. It is not even an indirect result of the laws of motion of the capitalist mode of production. Moreover, in addition to the idea of “stagnation“, no Marxist can point to a single reference in the collective body of work by these two writers — together amounting to a century of research and publication — where either the terms “financialization” or “globalization” appear.
So, why the fuck are Marxist academics trying to explain these nonexistent phenomena? I think the answer to that question is simple: they are trying to explain stagnation, financialization and globalization because they can’t explain this:
Tags: Absolute Over-Accumulation, capitalist booms, Chris Harman, debt, Depression, economic growth, economic policy, fascist state political economy, Frederick Engels, great depression, Great Stagflation, Karl Marx, Keynesian economics, Marx, neoliberal, neoliberalism, otma, political-economy, rate of profit theory, stagnation, The Commune, The State
As part of my continuing occupation of the Marxist Academy, I have been looking at various Marxist theories of the crisis of neoliberalism. I am now reading the late Chris Harman’s “The rate of profit and the world today”, written in 2007, just prior to the big crash.
Harman appears to be one of a group of the influential Marxist thinkers in the last quarter of the 20th Century, and especially the period leading to this crisis, who helped refocus Marxist academic attention to Marx’s rate of profit theory. In this paper, to some extent an outline of his book, published in 2009, on the same topic in the middle of the crash, Harman presents the result of his research on the rate of profit and offers some ideas to explain his findings.
In Harman’s view Marx’s argument that the rate of profit falls over the life of capitalism has far reaching implications because it argues capitalist crises result, not from some sort of failure in the mode of production, but from its successes:
The very success of capitalism at accumulating leads to problems for further accumulation. Crisis is the inevitable outcome, as capitalists in key sections of the economy no longer have a rate of profit sufficient to cover their investments. And the greater the scale of past accumulation, the deeper the crises will be.
For some reason Harman does not follow up on this very interesting argument — if in fact capitalism’s crises are not a sign of failure but a sign of success, this indicates capitalist crises themselves should not be the focus of attention when studying the mode of production.
Crises are no more than a interval during which the mode of production resolves the contradictions produced by its previous successes. As such, these crises cannot be the reason why Marx labeled the mode of production a relative, historically limited, form of development. While the recurrent crises of increasing scale demand our attention because they momentarily bring economic activity to a near standstill these crises in no way are the source of processes leading Marx to his conclusion regarding the fate of the mode of production.
The conclusion resulting from this realization are pretty staggering: for all of its social consequences, the depression of 2001 is not the harbinger of the demise of capitalism, but an interval during which the mode of production prepares for its further expansion. This may explain why Marxists, when looking at the recurrent explosions of capitalism, see no reason why they cannot continue indefinitely.
They are looking at the wrong thing.
Tags: Absolute Over-Accumulation, capitalist booms, Chris Harman, debt, Depression, economic growth, economic policy, fascist state political economy, Federal Reserve Bank, Frederick Engels, great depression, Great Stagflation, Karl Marx, Keynesian economics, Marx, neoliberal, neoliberalism, otma, political-economy, rate of profit theory, stagnation, The Commune, The State, zero growth
As part of my continuing occupation of the Marxist Academy, I have been looking at various Marxist theories of the crisis of neoliberalism. This is the final part of my critique of Andrew Kliman’s “Neoliberalism, Financialization, and the Underlying Crisis of Capitalist Production” (PDF).
As can be seen in the chart above, most bourgeois economists look at fascist state economic data and conclude we are experiencing nothing like the sort of economic event that occurred in the Great Depression. The Great Depression was just that — a depression — while what we are experiencing is perhaps a more severe than normal recession generated in the aftermath of a financial crisis. For the bourgeois economist this description of the situation may or may not be entirely satisfactory.
For anyone attempting to understand the fascist state economic data using Marx’s theory of the capitalist mode of production it is less than worthless — it can turn Marx’s theory into a useless glob of shit that describes nothing — least of all what is occurring within the capitalist mode of production.
Tags: Absolute Over-Accumulation, Andrew Kliman, capitalist booms, debt, Depression, Depressions, Dominique Levy, economic growth, economic policy, fascist state political economy, Federal Reserve Bank, Frederick Engels, Gerard Dumenil, great depression, Great Stagflation, Karl Marx, Keynesian economics, Marx, Michael Roberts, neoliberal, neoliberalism, otma, political-economy, rate of profit theory, The Commune, The State, zero growth
I have been reading David Harvey’s “Organizing for the Anti-Capitalist Transition” (2010). Harvey’s theory of the current crisis differs somewhat from the other Marxists I have been following. I actually rather enjoyed reading Harvey because he is simple to read without being simplistic like Wolff’s and Resnick’s piece. Harvey gave this originally as a talk to the World Social Forum in 2010,
Harvey opens his talk by stating boldly:
The historical geography of capitalist development is at a key inflexion point in which the geographical configurations of power are rapidly shifting at the very moment when the temporal dynamic is facing very serious constraints. Three percent compound growth (generally considered the minimum satisfactory growth rate for a healthy capitalist economy) is becoming less and less feasible to sustain without resort to all manner of fictions (such as those that have characterized asset markets and financial affairs over the last two decades). There are good reasons to believe that there is no alternative to a new global order of governance that will eventually have to manage the transition to a zero growth economy.
I liked his argument here, but, I think, he could have clarified things by explaining what he meant by “three percent compound growth…” Growth is one of those terms from bourgeois economics that has been adopted into the lexicon of Marxism as a category without critical examination. When Harvey then proposes that “compound growth” must sooner or later give way to “zero growth”, he unwittingly injures his own argument.
Tags: David Harvey, Depression, economic growth, economic policy, Fascist State, fascist state political economy, great depression, Great Stagflation, Keynesian economics, neoliberal, neoliberalism, otma, political-economy, The Commune, The State, zero growth
The modern state, no matter what its form, is essentially a capitalist machine — the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage-workers — proletarians. The capitalist relation is not done away with. It is, rather, brought to a head. But, brought to a head, it topples over.
Frederick Engels, Socialism: Utopian and Scientific
I am now reading John O’Connor’s “Marxism and the Three Movements of Neoliberalism” (PDF)
O’Connor proposes what he calls a “Marxian conceptual and empirical framework for understanding the disparate research on neoliberalism”. As with Saad-Filho’s work, John O’Connor’s is deeply flawed and is not in any fashion based on Marx’s theory of the Capitalist mode of production. Rather than an exercise in historical materialist analysis, O’Connor serves up a rehash of progressive nostalgia for a mythical pre-1970s Keynesian social compact, combined with a laundry list of ideological and policy crimes by the Neoliberal world order. We end with no more understanding of this thing, Neoliberalism, within the context of history, than we did at the beginning. O’Connor fails the essential test of the historical materialist critique of the capitalist mode of production.
If Neoliberalism is simply an ideological, policy, or governance construct, why is this construct the necessary form of ideology, policy and governance at this stage of development of the mode of production?
Fascism and the Myth of Keynesian Social Accommodation
For some strange reason, O’Connor arbitrarily begins his narrative in 1950 — completely bypassing a decade of depression ending in world war . He wants us to ignore this catastrophe and the war of redivision of the planet that ended in the destruction of much of Europe and Japan — 80 million dead and the productive capacity of Europe and Japan laying in ruins. He also wants us to ignore the rise of the fascist state and the debasement of currency that made that war possible. This allows him to portray the period roughly from 1950 to 1974 as a “Golden Age of Capitalism” following Glyn and Hosbawm.
Completely ignoring the fact that Europe and Japan lay in ruins at the end of the war — and, therefore, that any measure of post-war expansion begins from a base determined by this previous horrific loss of productive capacity — O’Connor tells us the “post-war economic boom was exceptional in capitalist history for its explosive growth, high profits, technological innovation, and reliance on government policy.” This last thing “reliance on government policy” is the kicker, because O’Connor is now going to use it as a crutch to get him to 1974. The “Golden Age” was made possible by two things: class accommodation at home and state involvement in the accumulation process. We don’t get any critical look at this so-called class accommodation nor state involvement in the accumulation process. In fact, both are filler material, placed there solely to let O’Connor to segue into the “crisis” of 1974-82. With this filler material O’Connor can stuff in the typical myth-story about a “Golden Age”” which he finds already present in our national political discourse.
Gone is the Great Depression, the debasement of the currency and the rise of the fascist state, the catastrophic wars of the 30s and 40s, US aggression in Korea, and a series of other police actions and coups, the red scare, the arms race, the Suez incident, Vietnam and the horrors of the United States’ Southeast Asian murderous rampage. What was blood red in reality, becomes a hazy faint shade of pink in O’Connor’s make-believe world of “I Love Lucy”. At some point, someone is going to have to call Marxists out on their patriarchal, racist, elitist, Anglocentric, rewrite of history. Frankly, the shit is just fucking unnerving — there was no “Golden Age” of capitalism! For John O’Connor, Saad-Filho, Richard Wolff and the rest of the Marxist Academy to continue referring to this myth is just bizarre!
The period under question begins not in 1950, but in 1929 with the collapse of capitalism world-wide, from which capitalism never recovered. Rather, all industrial states stepped in as the national capitalist and immediately imposed a continuous wage reduction regime across the board on their respective working classes in a ruthless act of class warfare. Then each fascist state turned on its neighbors and slaughtered everyone they could get their hands on in an orgy of bloodletting. It wasn’t enough to kill them — NO! — they then leveled their cities, destroyed their factories and productive capacity, and stole their resources to starve them out.
You want to see the “Golden Age” of Keyesianism — just look at World War II. Thanks to Lord Keynes the United States was able to devote 40% of its GDP to slaughter and pillage, and still have “economic growth”. In the United States alone 1500 factories were built from scratch to murder strangers — not feed them and ourselves. Sixteen million men were withdrawn from all productive labor and sent to murder, fully outfitted and fed by American industry — the same American industry which, just months earlier, could neither hire nor feed them — that’s your fucking Keynesian “Golden Age”, bitches.
The insult to the 100 million dead in two global wars of redivision cannot be worst than out of the mouth of a Marxist who states, as John O’Connor does, “the USA and Britain took steps to ensure that a stable liberal world order was recreated”.
The Second Great Depression
Having used this “Golden Age” of capitalism as a crutch to get him to 1974, O’Connor misses the beginning of the crisis in the 1960s. Had he done the least bit of analysis on the period 1929 to 1950 he might have noticed a little event called debasement of the currency. With this debasement, and the devaluation of wages by 70% that accompanied it, American capitalism went through an expansion phase. That expansion was not just fueled by the devaluation of wages, but also the war expenditures of World War II and the absorption of a hefty section of post-war Europe and Japan into the newly emerging fascist American Empire. This expansion phase comes to a head not in 1974, but in the mid-sixties with the collapse of the London gold pool in 1968 (pdf) , which facilitated manipulation of gold bullion price and allowed the US to share in the extraction of surplus value wrung from the European and Japan working classes — the so-called “exorbitant privilege”, a term coined by the French. (Of course, since Marxists are MARXist in name only, they have ignored the implications of the French critique.)
The crisis begins in the mid-sixties with a run on US gold reserves, and culminates in the collapse of Bretton Woods, and the end of dollar convertibility for settling international obligations. But this is just its superficial expression — what really happened is that the new productive capacity of Europe and Japan came online. For a period this overaccumulation was disguised by the murderous war on Vietnam and the swelling of American domestic spending to stem protests. But all of this comes to a head with the opening moments of the Second Great Depression of the 20th Century — the Great Stagflation. This depression triggers the collapse of Bretton Woods and the end of dollar convertibility by the Nixon administration. And it occurs not in 1974 but years earlier, although the actual expression of this crisis in unemployment is itself triggered by the massive inflation that occurs as Washington tries desperately to spend its way out of the contraction. Those of a certain age will remember Nixon declaring fatuously, “I am now a Keynesian in economics”.
The attempt to slow the contraction by a massive expansion of government spending ultimately fails and the Federal Reserve has to choke off credit in the midst of a depression to slow the inflation of prices. Nixon is gone, Gerald Ford is running around handing out “Whip Inflation Now” (WIN) buttons, and the Fed is trying to douse inflation with unemployment. None of this has any effect on the depression, however, which continues unabated for the next five or six years — in other words Keynesian economic policy is overcome by the growing productive capacity of society and the dissolution of nation-state economic management begins.
Only at this point do we finally reach O’Connor’s dating of the initial emergence of what eventually becomes neoliberalism — the crisis has, by this time, gone on for nearly a decade.
Neoliberalism and the Demise of the Nation State
The easiest way to understand neoliberalism is to understand exactly what the fascist state accomplished that can now only be accomplished by its demise. The success of the fascist states rested on what O’Connor terms a “distinct structural, institutional, and class foundation.”
This state led monopoly capitalism, as described by Fine and Harris (1979), was marked by the socialization of economic activity, in which the state took an active role in the accumulation process. Economic socialization helped offset the unproductive costs of accumulation and the reproduction of the labor force (Gough and Eisenschitz 1996). Through a wide variety of non-market mechanisms, the state balanced the social nature of production with the private appropriation of capital.
Okay, I admit I haven’t a clue what this means — so I am going to parse it.
“State led monopoly capitalism” appears to be some sort of a distinction from the state-as-capitalist — a concept that is apparently alien to Marxists. What role does the state play in this “state led monopoly capitalism” – clearly it is not the capitalist, so is it leading the capitalists? So how is it leading them? And to where? Well, it appears to be leading them toward some “socialization of economic activity” — which is clearly not socialism, but “socialization”. Which is to say, the capitalist accumulation process, having grown beyond the control of various forms of private management, must at some point fall under the direct management of the state. How does this work? Well, the state takes “an active role in the accumulation process”.
Okay, now I am stumped. What exactly is “an active role in the accumulation process”?
O’Connor tells us that it “helped offset the unproductive costs of accumulation and the reproduction of the labor force”. So what are these unproductive costs of accumulation and the reproduction of the labor force? Clearly by “the reproduction of the labor force” O’Connor can only mean wages and (perhaps) a meager provision of public education and a national health system. Can the state add to wages, educate, or cure illness? Not likely, since it is a bloated parasite on society, it can’t even put a chicken in a single pot. Since the state creates nothing, and produces nothing, it can only “offset … the reproduction of the labor force” by driving wages down. Perhaps I got this wrong; perhaps the state can magically whip up a subsidy for wages by creating food, clothing, and shelter out of nothing. I am not as educated as fucking Marxists Academics, but it seems to me all O’Connor is suggesting is that the state devalues labor power!
Of course, I could be wrong. Maybe Obama is feeding the working class from that victory garden over at the White House.
And what are the “unproductive costs of accumulation”? How does the fascist state “offset” these costs pray tell me? Frankly, I have never heard of the term “unproductive costs of accumulation” before I read this paper — the term appears nowhere in Marx. Nowhere in three fucking volumes of Capital does Marx ever mention an animal going by the name of “unproductive costs of accumulation”. Even if we assume the state plays some role in offsetting these mysterious costs, there are only two classes for the distribution of the social product of labor: workers and capitalists. If the state is “offsetting the unproductive costs of accumulation” for the capitalists, it has to be taking it from the working class.
So when I parse O’Connor’s argument, “Economic socialization helped offset the unproductive costs of accumulation and the reproduction of the labor force”, I only get two things out of it: “devaluation of the wages of the working class” and “more devaluation of the wages of the working class”. Since I am not a Marxist, you probably can understand why I come to that ‘absurd’ conclusion. If I were a Marxist, I could invent another phantom source of value for the state to redistribute as wages and profits.
Once we get past the silliness about the Keynesian “Golden Age” of capitalism, it is clear neoliberalism is not in the least a switch from social accommodation between capital and wage labor to coercive competition as O”Connor argues, but simply an intensification of systematic impoverishment of wage labor, for which Keynesian state policy was, by the 1960s and 1970s, insufficient to realize. This does not in the least require any modification of Marx’s labor theory of value, nor any special explanations. It simply requires us to grasp national capitals behave just like privately owned capitals, but with grim consequences for both national sovereignty and national fiscal/monetary policy. Which means these national capitals, although for a time appearing quite permanent features of economic analysis, were always transitory and subject to the very same laws as determine the capitalist mode of production generally: equalization of the rate of profit, concentration and centralization of capital, overaccumulation, falling rate and mass of profit, a growing superfluity of capital, a growing mass of workers who fill the ranks of the industrial reserve, etc.
What is distinct about these national capitals, however, is the constitution of purely national political class struggles. The political contest between any class of wage laborers and their national capital is fought out within the context of a nation-state form that is rapidly approaching extinction. Already countries very close to the core of Europe have been stripped of their national sovereignty, not to mention peripheral nations. And the more these nations lose their sovereignty, the more indifferent they become to both their domestic working class and domestic capitalist class.
Tags: Depression, economic policy, Fascist State, Federal Reserve Bank, great depression, Great Stagflation, John O'Connor, Karl Marx, Keynesian economics, neoliberalism, otma, political-economy, The State
This is very geeky, sorry. I posting it because I intend to revisit it sometime in the near future in the context of a review of the Euro-zone crisis.
My post on Moseley’s MELT paper (pdf) argues the so-called “price of gold” is actually the standard of price for a currency. I argued in the paper that dollars do not buy gold, gold buys dollars. Dollars are “sort of” a commodity necessary to convert gold into capital. I said “sort of”, because I really cannot describe it, except along the line of Marx’s argument on loaned capital:
M ==> M ==> C.
Where the first M is the bank’s money to be loaned, and the second M is the actual conversion of this loaned money into industrial capital. We could think of the movement of gold similarly as:
Mg ===> Mc ===> C.
Where Mg is a quantity of gold, Mc is a quantity of a particular currency, and C is the commodity.
The owners of gold, however, have a choice of currencies whose bodily form their gold can assume: euros, dollars, yen, yuan, reals, pesos, etc. And, each of these currencies have their own standard of price, i.e., their own specific exchange rate with gold. Each of these standards of price is an expression of the quantity of a given currency in domestic circulation to the quantity of domestic socially necessary labor time. Since, in each country, the relation between the total currency in circulation and total socially necessary labor time is different, the standard of price for each country currency must necessarily be different.It would seem to follow from this that the relation between currencies, their relative exchange rates, should be determined by the above. For instance, if country A has a standard of price with gold of 10 currency A units per ounce of gold, while country B has a standard of price of 20 currency B units per ounce of gold, the relation between the two should be:
one unit of currency A = 2 units of currency B
However, just as different industries have different composition of capital, so different nations have different compositions. The composition of capital in the US is far higher than that of the People’s Republic of China, or Zimbabwe. The movement of gold between currencies, I think, is determined much like the movement of capital between industries. On the one hand, the standard of prices in various countries arise from the domestic quantitative relation between the currencies and socially necessary labor time. On the other hand, for the owners of gold, these currencies are no more than forms gold must take if it is to become capital — and capital is self-expanding value, the production of surplus value through the consumption of labor power.
This suggests that although the standard of price of a currency is determined solely by the relation between the mass of currency and the mass of socially necessary labor time; it is also being determined by the rate of surplus value within each country as determined by their varying compositions of capital.
I think we are again face to face with Marx’s transformation problem, where the law of value confronts the law of average rate of profit. One law suggests the standard of price of a currency is determined solely by the relation between the total quantity of currency in circulation domestically and the total quantity of socially necessary labor time; the other law suggest the relative exchange rates among all currencies is determined by the law of the average rate of profit. The latter law suggests currencies are exchanging in the world market above or below their actual domestically determined standard of prices.
What use might this argument have?
- This might just offer an idea how, without violating Marx’s labor theory of value, imperialist super-profits are obtained.
- It could offer a way of modeling the emergence of world market prices, and the dollar as world reserve currency.
- It could also explain the empirical data, which shows neoliberal free trade policies produced a US expansion in the 1980s and 1990s.
- Finally, it explains why China’s currency appears undervalued on the world market and the US dollar overvalued against what we would expect.
Wikipedia describes the division by zero problem in mathematics this way:
In mathematics, division by zero is division where the divisor (denominator) is zero. Such a division can be formally expressed as a / 0 where a is the dividend (numerator). Whether this expression can be assigned a well-defined value depends upon the mathematical setting. In ordinary (real number) arithmetic, the expression has no meaning, as there is no number which, multiplied by 0, gives a (a≠0), and so we say that division by zero is undefined. Historically, one of the earliest recorded references to the mathematical impossibility of assigning a value to a / 0 is contained in George Berkeley’s criticism of infinitesimal calculus in The Analyst (“ghosts of departed quantities”).
In computer programming, an attempt to divide by zero may, depending on the programming language and the type of number being divided by zero, generate an exception, generate an error message, crash the program being executed, generate either positive or negative infinity, or could result in a special not-a-number value.
Academic Marxism has a divide by zero problem. The biggest failure of academic Marxists is their inability to grasp that the dollar is a valueless scrap of paper, and nothing more than an instrument of class dictatorship. Because they failed to understand the dollar, academic Marxists like Moseley, Kliman etc., contribute to the ongoing failure of the Left in general.