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After decades
of passivity, the American social/political landscape erupted last fall
with the Occupy movement. Suddenly it’s no longer hip to be square and
apathetic. The deep global economic crisis which started in 2007, the
deepest such crisis since the 1930s, has exacerbated the squeeze on the
living standards of the vast majority and widened the already massive
gap between the richest one percent and the rest of society to such an
extent that an explosion was all but inevitable. So far, to its credit,
the Occupy movement has successfully fought off attempts to incorporate
it into the existing political apparatus. Yet the question remains how
much change it can bring, in particular to the systemic dynamics which
brought forth the global crisis to begin with. Its actions have managed
to stave off some of the worst consequences for people, particularly by
delaying or even preventing foreclosures and home evictions, and have
brought back to the American public awareness the question of class. In
shutting down the port of Oakland twice, the
movement also demonstrated the potential of collective action to bring
the present order to a halt. However, without challenging the very
basic features of capitalism, in particular capitalist social relations
and the fetishism of commodities which they are built upon, the
movement is unlikely to amount to anything except a rearguard reaction
which will fall by the wayside as it either gets destroyed and/or
co-opted by the forces supporting the continuation of the essential
features of the status quo. My focus is the web of class relations
which underlie capitalism, because as former Monthly Review
editor Ellen Meiksins Wood pointed out, while one can conceive of
capitalism continuing without identity-based oppressions, even if this
is highly unlikely, it’s impossible to imagine it lasting even a second
without the underlying class system and commodity relations between
people. I will first discuss commodity fetishism, then review the
various analyses and programmatic suggestions within the Occupy
movement, and end with my own suggestions.
The Ruling
Money Fetish
The notion of commodity fetishism, in particular regarding money, is a
key aspect of Marx’s analysis of capitalism, but one which has not been
understood by critics of Marx, or indeed even by most “Marxists.” In
fact, most Marx readers, friend or foe of his analysis, are not even
aware of it.
First we need to clarify the meaning of a key word, value. It is a
specific term in Marx’s critique of political economy and analysis of
capital, not to be confused with subjective evaluations or with
esteeming something. Political economists of the late 18th and early
19th Centuries developed the concept of value to denote a
characteristic of a commodity, a good or service made for market
exchange, around which its visible market price fluctuates, and
theorized that value is connected with the labor required for the
production of this commodity. A key reason why this concept, originally
postulated by Aristotle, was re-created by Adam Smith and other
political economists is that they analyzed profit and quickly realized
that, once regarded from the perspective of society as a whole, rather
than that of a single enterprise, profit cannot be explained as the
difference between revenue and cost, as the result of selling above
cost. If every enterprise was to sell at the average rate of profit,
say 10 percent, what is one enterprise’s gain is a cost for other
enterprises. This was deemed by them to be understandable by a 10 year
old. Amazing how this knowledge has been lost.
In a major analytical breakthrough, Marx grasped that value is not the
direct labor expended in producing a commodity, a good or service
produced for exchange, but the socially necessary abstract labor time.
Abstract labor time means that different forms of concrete labor, i.e.,
actual physical labor, are all equated through the exchange process.
“Socially necessary” means the average amount of such abstract labor
required to produce a given commodity under existing conditions of
production. The price of a commodity is only an approximation of its
value, and increasingly it has become an inaccurate representation as
the global capitalist system has grown and become more complex.
Money is a representation of value, it isn’t itself value. It exists to
facilitate commodity exchange. Originally, money did take the form of a
value-bearing commodity, starting with wheat and other consumables, and
later, precious metals, especially gold and silver. These, in
particular gold, are stable, durable (so that unlike consumables such
as wheat a given amount will not wear away, evaporate, blow away etc),
dense and hence capable of easy transport, easily divisible, common
enough to obtain readily yet rare enough to be special, and generally
lack direct uses. They are also esteemed for their attractive
appearances. Increasingly, commodity money was replaced by paper money
which was deemed to represent precious metals. By the 1970s, any such
pretense was dropped, and more and more even paper money has been
replaced by electronic blips in mainframe computers. Nevertheless,
money is still the representation of value.
The profits of all capitalist enterprises arise from surplus value, the
excess of time spent by people around the world working in the
production of commodities over the time equal to the value of the goods
and services they need to survive as workers. Surplus value is produced
globally, but realized by each enterprise via its market operation, a
process which is hidden from view because on the market, only prices
are detectable, not values. A much more thorough discussion of all
this, including the impossibility of profit being the result of sale
above cost. can be read in my previous article, “The American Left Doesn’t Get Capitalism,” as
well as “A Crisis of Value” by Sander in Internationalist
Perspective.
An illuminating discussion can be found in “Commodity Fetishism” by Fredy Perlman , an essay
he wrote as an introduction to Essays on Marx’s Theory of Value
by I.I. Rubin (1973). (References made to Rubin in Perlman's essay are
to this book.) I’ll use quotes from the Perlman essay, which really
can't be improved upon, followed by my comments:
“Marx's explanation of the phenomenon of reification, namely of the
fact that abstract labor takes the ‘form of value,” is no longer in
terms of people's habits, but in terms of the characteristics of a
commodity economy. In Capital, Marx points out that relations
among people are realized through things, and that this is the only way
they can be realized in a commodity economy: ’The social connection
between the working activity of individual commodity producers is
realized only through the equalization of all concrete forms of labor,
and this equalization is carried out in the form of an equalization of
all the products of labor as values ’ (Rubin, p. 130). This is not only
true of relations among capitalists as buyers and sellers of the
products of labor, but also of relations between capitalists and
workers as buyers and sellers of labor-power. It is to be noted that in
the commodity economy, the laborer himself is a ’free, independent’
commodity producer. The commodity he produces is his labor-power; he
produces this commodity by eating, sleeping and procreating. In David
Ricardo's language, the ’natural price of labour’ is that price which
enables laborers ‘to subsist and perpetuate their race’ ... namely to
reproduce their labor-power. The worker sells his commodity on the
labor market in the form of value, and in exchange for a given amount
of his commodity, labor-power, he receives a given sum of value, namely
money, which he in turn exchanges for another sum of value, namely
consumer goods.”
Perlman means that money is the socially-accepted equivalent to a
certain amount of value, since it itself contain value. It thus appears
to people that they are not connected to anyone else when it comes to
producing their survival needs, but that instead we are all individuals
working for an ever-present thing called money, which we earn in turn
for working, which can then be used to buy what we need. Our own
collective effort as a species appears to us to be a collection of
random acts done in pursuit of an abstract entity, money. which seems
to be a part of nature, like water or the sun, seemingly a fact of
human existence since time immemorial. This is very much not the case.
Early humans lived by way of hunting and gathering. Tribes occasionally
traded with neighboring groups, but this trade was incidental, did not
involve survival essentials, but only temporary surpluses, and was not
based upon quantitative measures of equivalence. Even as societies
developed further and trade expanded and became regular, it involved a
very small portion of the population, did not include much if anything
of survival essentials, and was governed by custom and other forms of
conscious social regulation, not by abstract market forces. Even the
markets of medieval Europe were a marginal social phenomenon, involving
few people, a very limited portion of total social production
(luxuries, for the most part), and noncompetitive buying and selling
governed strictly by custom.
Only under capitalism did markets grow to involve the population at
large and the majority of social production, including survival needs.
This was not the result of gradual evolution of trade, but of the
forceful imposition of the Enclosures in late medieval England and
similar steps subsequently taken by ruling elements around the world,
leading to the forced separation of the vast majority from the means of
directly producing their survival needs. This dispossessed population
had no way to survive besides selling its labor power, its ability to
perform work. Thus was born the working class. Again, see “The American
Left ....” and in particular the article referenced there, by Ellen
Meiksins-Wood, “The Agrarian Origins of Capitalism.”
“What the worker receives in exchange for his alienated creative power
is an ‘equivalent’ only in a commodity economy, where man's creative
power is reduced to a marketable commodity and sold as a value. In
exchange for his creative power the worker receives a wage or a salary,
namely a sum of money, and in exchange for this money he can purchase
products of labor, but he cannot purchase creative power. In other
words, in exchange for his creative power the laborer gets things.”
This interaction between wage labor and capital, the most basic social
relation of capitalism, appears to people in today’s world to be a
timeless feature of human society. Any notion that we haven’t always
lived like this is not ever entertained seriously, and even if it is
brought up, it is quickly dismissed as irrelevant, “This is the way the
world is now, it’s too complex to be otherwise.” Without the
large class of dispossessed people, who essentially possess nothing
except the ability to perform work, however, capitalism and the
universal market, which were created by mass dispossession, and on
which everything is available for sale, could not continue to exist.
“In a commodity economy, people relate to each other only through, and
by means of, the exchange of things: the relation of purchase and sale
is ’the basic relation of commodity society’ (Rubin, p. 15). Production
relations among people are established through the exchange of things
because ’permanent, direct relations between determined persons who are
owners of different factors of productions, do not exist. The
capitalist, the wage laborer, as well as the landowner, are commodity
owners who are formally independent from each other.
Direct production relations among them have yet to be established, and
then in a form which is usual for commodity owners, namely in the form
of purchase and sale’ (Rubin, p. 18). It is on the basis of
these reified social relations, namely on the basis of production
relations which are realized through the exchange of things, that the
process of production is carried out in the capitalist society.”
People in a tribal society do not exchange items with each other, least
of all do they buy or sell labor power, the ability to perform work.
Even in subsequent societies, most of the relations between people did
not involve buying or selling, as the vast majority of the population
consisted of subsistence farmers who directly produced their survival
needs. Relations between feudal landlords and serfs, or between slaves
and slave owners, were direct relations, unmediated through the
exchange of things. Exchange relations became the dominant form of
social relations only in capitalist society, and this happened only
within the last few centuries. Even in Europe, particularly Russia,
land was “owned” communally in many parts, or was simply common land
owned by no one, the original “commons,” till the late 19th Century.
“[S]uperficially, it seems that capital, a thing,
possesses the power to hire labor, to buy equipment, to combine the
labor and the equipment in a productive process, to yield profit and
interest, ‘it seems that the thing itself possesses
the ability, the virtue, to establish production relations.’ (Rubin, p.
21)
Conservatives, liberals, “progressives,” and even many if not most
“Marxists” and “anarchists,” thus speak of means of production and
money pools as “capital” as if being capital is an inherent,
ahistorical feature of these things, instead of a result of social
relations of production specific to capitalist society. Capital is
simply money as well as means of production and raw materials which are
regarded as money equivalents and are combined with human labor to
produce commodities for sale on the market, with the aim being the
achievement of a greater sum of money or its equivalent than that which
existed in the beginning of the process. Something becomes capital only
if it is used by people for a specific purpose. Capital is a
social relation, a process whose aim is the production of profits, not
a thing.
“Capital is a thing [Perlman here speaks of how capital is perceived
in current society] which has the power to yield interest, land is a
thing which has the power to yield rent, labor is a thing which has the
power to yield wages, and money ‘transforms fidelity into infidelity,
love into hate, hate into love, virtue into vice, vice into virtue,
servant into master, master into servant, idiocy into intelligence, and
intelligence into idiocy,’(Economic and Philosophic Manuscripts of
1844, Karl Marx) or as American banks advertise, ‘money works for
you.’ Rubin states that ‘vulgar economists ... assign the power to
increase the productivity of labor which is inherent in the means of
production and represents their technical function, to capital, i.e., a
specific social form of production’ (Rubin, p. 28).”
Capital, a relation of production established between human beings,
thus not only appears to become a thing, a material entity, but one
which appears to have powers greater than that of human beings.
“A thing which possesses such powers is a fetish, and
the fetish world ‘is an enchanted, perverted, topsy-turvy world, in
which Mister Capital and Mistress Land carry on their goblin tricks as
social characters and at the same time as mere things.’ (Capital
Volume III) Marx had defined this phenomenon in the first volume of
Capital: ‘... a definite social relation between men ... assumes, in
their eyes, the fantastic form of a relation between things. In order,
therefore, to find an analogy, we must have recourse to the
mist-enveloped regions of the religious world. In that world the
productions of the human brain appear as independent beings endowed
with life, and entering into relation both with one another and the
human race. So it is in the world of commodities with the products of
men's hands. This I call the Fetishism which attaches itself to the
products of labour, so soon as they are produced as commodities, and
which is therefore inseparable from the production of commodities. This
Fetishism of commodities has its origin ... in the peculiar
social character of the labour that produces them.’(Capital,
Volume I).
The forces of production ‘alienated from labour and confronting it
independently’(Capital, Volume III) in the form of capital,
give the capitalist power over the rest of society......
[T]he subject of the theory of value is labor as it is manifested in
the commodity economy: here labor does not take the form of conscious,
creative participation in the process of transforming the material
environment: it takes the form of abstract labor which is congealed in
commodities and sold on the market as value.
'The reification of labor in value is the most
important conclusion of the theory of fetishism, which
explains the inevitability of 'reification' of production relations
among people in a commodity economy‘ (Rubin, p. 72). Thus the
theory of value is about the regulation of labor; it is the
fact that most critics of the theory failed to grasp.”
This is an aspect of any society organized around money which cannot
be reformed, be it by changing the people who are the
managers, or by making management more democratic and widespread, or by
altering the money system while maintaining exchange as the
basis of all human productive activity. Marx did not write Capital
to advocate a better management system for capitalism (something
“leftists” and even many “Marxists” seem to think), but to demonstrate
the need to get rid of the use of value to allocate human labor power
and other resources and to institute direct, conscious regulation in
its place.
“Marx was perfectly aware of the role of supply and demand in
determining market price, as will be shown below. The point is that
Marx did not ask what determines market price; he asked how working
activity is regulated........
[E]conomists did not replace Marx's answers to his questions with more
accurate answers; they threw out the questions, and replaced them with
questions about scarcity and market price; thus economists ‘shifted the
whole focus of economics away from the great issue of social classes
and their economic interests, which ha[d] been emphasized by Ricardo
and Marx, and centered economic theory upon the individual.’
Even theorists whose primary aim was not the celebration of capitalism
have interpreted Marx's theory of value as a theory of resource
allocation or a theory of price, and have underemphasized or
even totally overlooked the sociological and historical context of the
theory.”
This brings us to the project at hand, the complete jettisoning of
capitalist society. Under capitalism, the main focus of human activity
becomes the earning of the general equivalent, the legal tender, and
its subsequent spending to provide the material necessities (and
sometimes, luxuries) of life. The quest for the grand fetish structures
everything concerning how we live. Any enterprise operating on the
market is essentially competing for a share of surplus value extracted
on a global basis from a population of wage slaves, and has to scramble
to obtain enough of a share to enable it to operate as an enterprise.
Placing eco-activists, “progressive” luminaries or union members on the
board of a company or making them bank managers doesn’t change this
fact. Even worker-owned enterprises end up acting pretty much the same
as other business entities, as noted in an article by Louis Uchitelle
in The New York Times July 7, 1996. The profitability
requirements of capital ultimately trump whatever other feelings and
desires its managers may have, even if one’s name is not Trump. The
fact that in order to satisfy our material needs we relate to each
other not directly but through the mediation of value is the core
problem facing us.
The roots of the growing crisis of global capitalism lay in the very
functioning of the process of capital accumulation. Individual
enterprises increasingly replace human labor, the only source of
surplus value, by machinery to enhance competitive price advantage due
to the productivity gain. The subsequent overall result is an
increasing inability of global capital to extract enough surplus value
on a global scale to enable the continuation of capital accumulation.
Money systems and market interactions are a feature of commodity
circulation, an important part of the cycle of capital accumulation, as
what is produced needs to be sold if profit is to be realized. But
circulation is not where the basic cause of the capitalist crisis is
located. Market phenomena are merely a surface reflection of the deeper
dynamics which take place in production. Taking action in the realm of
circulation at best has indirect, impossible-to-predict effects on
these deeper dynamics. The process of ever-increasing insufficiency of
the extracted surplus value to support capital accumulation is known as
the tendential fall in the rate of profit. It is not directly
measurable via the indices of the realm of circulation, such as profits
measured in terms of prices. It can only be detected indirectly, as
when crises erupt.
Better regulation of financial institutions, supposedly better ways of
measuring value (an impossible goal), moving towards a more equitable
distribution of wealth (expressed in monetary terms), a wider
distribution of social decision-making power, ... none of these even
touch this fundamental design flaw. Higher taxes on the rich, be they
on income, or on speculative activity (e.g. the Tobin tax), perversely
imply that the rich would have to be enabled to make lots of money, so
they can be taxed. The idea frequently expressed by “progressives” and
even radicals that “there is plenty of money” for various social
programs betrays a deep fetish, as i money is something like the rain
which humans capture and use and just needs to be shared in a more just
way, as if money is a resource instead of a representation of a social
relation. Same thing with the slogan “money for _____, not for war,”
which totally obfuscates the fact that the only reason that the US
government has money available is because its overwhelming military
force ensures that US capital gets first dibs on globally produced
surplus value. “Progressives” love to spout all about how nonmilitary
spending is more effective at creating jobs, as if the whole point of
the system is to create jobs, as if getting a job in order to buy stuff
is a vital aspect of being human. As if even nations which are not
overtly militarized don’t have economic structures which depend upon a
global structure resting on dispossession and exploitation, a structure
which requires massive force in order to be sustained.
In addition, the world today faces two other growing crises which
cannot be reformed away, namely the destruction of the world’s
ecosystem, including climate destabilization, and the depletion of
critical resources, in particular oil (peak oil), water, topsoil, and
critical metals and minerals. A system which requires endless
exponential growth, as does capitalism, cannot solve these crises.
These are all facts which the movement needs to face.
None of this should be taken as my advocating that people not resist
austerity and repression in all forms, be it wage and service cuts,
speedups, laws making workplace organization more difficult,
elimination of safety and environmental regulations, cutbacks or
wholesale elimination of programs in education, or social services,
home foreclosures and evictions, militarization of life, the war on
(some) drugs, attacks on civil rights or reactionary cultural agendas,
such as attacks on women’s reproductive rights. All these simply have
to be understood in the context of the overall crisis of the system. A
patient requiring drastic surgery could of course use band-aids,
transfusions, and other temporary measures, but these should not be
confused with the actual cure, which becomes increasingly imperative
with time. The hour is way too late for band-aids.
What Not
to Do: Bad Directions for the Movement
Some people have attempted to push the movement into becoming a part of
the effort to reelect President Obama in 2012. Given how blatantly the
Obama administration has pursued policies favorable to the corporate
ruling apparatus, it’s no surprise than these attempts have generally
been unsuccessful. Others are more subtle, calling for the movement to
push Obama into “doing the right thing,” i.e. implementing a “green New
Deal” with emphasis on “alternative energy,” education and housing
while making the US more ‘competitive” internationally, while focusing
primary blame for bad policies upon “reactionary Republicans” and “the
mess they left behind.” This has been the program pushed by the likes
of filmmaker Michael Moore, former Secretary of Labor Robert Reich,
former Obama jobs adviser Van Jones, writer Naomi Klein, “independent”
senator Bernie Sanders, “left” members of the Democratic Party such as
media critic Norman Solomon, “progressive” media figures such as
Democracy Now’s Amy Goodman and The Nation’s Katrina vanden Heuvel, and
“progressive economists” such as Mark Weisbrot and Dean Baker. In many
situations, these people have managed to put forth lists of “demands”
as if these was being backed by Occupy. These policy suggestions could
easily be backed by many in the Democratic Party.
One such list was in a leaflet titled "Occupy Wall Street/the 99%ers
10-POINT PLAN!" The points include:
1. Campaign finance reform and repeal of corporate personhood (not
really all that important, as its absence has not prevented large
capital's overwhelming dominance everywhere else in the world!)
2. Eliminate Bush tax cuts, with the claim that if the rich are made to
pay what they did under Clinton, then "you start to heal [the
"economy"], albeit slowly.’ As if things were good before 2001. As if
the Clinton-era "prosperity" which so many "progressives" talk about
wasn't based upon the hi-tech stock market bubble and the looting of
Eastern Europe, Asia and Latin America, as if it didn't fall apart in
2000, before Clinton left office, though the effects didn't become
visible till after Bush took over...
5. Jobs, Jobs, Jobs. Government subsidized jobs, guaranteed annual
wages, .... To be paid how? And to make more people wage slaves?
6. Renewable energy, to be developed by government, universities, "our
allies in other countries, private industry, and former defense
contractors." Not so subtle here about the intended beneficiaries.
All these demands and similar ones, which are aimed at restoring an
era, supposedly from WWII to Reagan’s election in 1980, during which US
living standards rose and distribution of wealth was not as extreme as
it is today, are operating under the illusion that history is one big
cycle, that the past can be repeated ad infinitum. From 1945 to around
1970, global capitalism benefited from the reconstruction of the world
industrial apparatus, after much of it was destroyed during WWII, and
the US in particular benefited from the restructuring of the world
market with the dollar being made the reserve currency, institutions
such as the IMF and World Bank created to facilitate international
capital coordination, and much of the not-yet-industrialized world
being made into a virtual US colony, as well as from vastly increased
permanent military spending (the “military-industrial complex” was born
in the late 1940s) and massive expansion of credit. Such measures are
no longer available. By 1970, a global economic crisis began
manifesting itself again. It took the form of "stagflation," meaning
high inflation rates alternated and increasingly coincided with high
unemployment and low growth rates. All this happened before
Ronald Reagan took office and pushed through his tax cuts, a step which
the “left-progressive” consensus currently pushes as the point at which
the crisis begun.
Other analyses from a variety of perspectives which explain why the
“golden” era cannot be brought back, both because of the capitalist
crisis as well as the ecological and resources crises, include “The Social Democratic Illusion,” by Emmanuel
Wallerstein; “Two Sides of Austerity,” Endnotes (from the UK),
October 2011 (of this group of articles, this one comes closest to my
perspective); “Becoming Legion: Are the Occupations a Brief
Preoccupation or the Sign of a World-Altering Transformation?” by
Ellen LaConte; “Economics Pre- and Post- Copernican,” by Erik
Lindberg; and “Erasing/Seizing Wealth of "The 1%" Cannot Create Real
Middle Class or Solve Sustainability Crisis,” by Jan Lundberg.
Other tendencies in the broad social movement for change, such as the
Transition Cities movement, correctly sense that society needs to be
decentralized, localized and democratized to both deal with the various
interrelated crises mentioned above. For the most part, however, those
promoting this perspective still believe that such a change can be made
within capitalism, that hope lies with local currencies, “slow money”
and investment targeted at small, locally owned enterprises. They need
to be asked where profits come from under such arrangements. Again, the
all-encompassing market and capital investment aimed at profitable
operation (i.e. accumulation) require a populace composed largely of
dispossessed people who have to sell their labor power to survive and a
global operation of surplus value extraction.
A somewhat different perspective, one which appears
on first look to be a more radical critique, is presented by
self-described “socialists,” who advocate measures such as the
government takeover of large corporations, in particular banks, and the
encouraging of “economic democracy” via the creation of more
worker-owned enterprises and co-ops, including the assumption of the
ownership and management of existing businesses by their workers. One
prominent exponent of this viewpoint is Richard Wolff, an economics
professor from The New University in New York, who describes himself as
a “Marxist economist,” apparently without realizing how this label is
an oxymoron, given Marx’s own explicit antagonistic words regarding
political economy and the so-called science of “economics” which
replaced it in the late 19th Century in an effort to obfuscate the
Marxian critique out of existence. For a discussion of political
economy, Marx’s critique of it, and “economics,” see my article “Michael Hudson and Webster Tarpley Disseminate
Disinformation”
In early 2011, Wolff delivered a talk in the San Francisco Bay Area,
excerpts of which were played on KPFA’s Morning Mix March 2, 2011. He
contended that the economic crisis is the result of the last 30 years
(i.e. since 1980) of American capitalists junking their supposed
historical practice of constantly raising wages and instead resorting
to computerization and the exporting of jobs, out of greed for bigger
profits. He claimed that American capitalism was uniquely prosperous
from 1870 to the 1970s because American businessmen, faced with a
"labor shortage," always increased wages, enabling US workers to spend
more money and facilitate high economic growth rates and prosperity.
This notion is a combination of stupidity and barefaced lying. American
wages did not experience a constant rise during the mentioned period,
and neither was prosperity the norm. There were many sharp economic
downturns, during which wages fell. In fact, American workers were the
least organized and most exploited in the capitalist industrial world
till the 1930s. During the early 1910s and 1930s, of course, there were
global economic crises, particularly affecting the US, during which
conditions were quite abysmal and "growth" was noted in its absence. In
the 1920s, before the '29 crash, inequality was in fact as extreme as
it is today.
The one period which featured regular wage growth was the post WWII
era, till around 1970. And this was the result of a unique set of
circumstances. See above for a discussion regarding this period and
other articles i referenced regarding the closing of the doors on any
possibility of reclaiming the post-war era. Wolff also left out the
fact that the crisis in fact started in not in 1980, but in 1970, well
before Reagan became president and instituted tax cuts, and before
globalization and the exporting of jobs.
Wolff stated that the way out is "Marx's idea" that the workers own the
means of production, by which he literally meant that they own
enterprises operating on the market. This is an idea which Marx poured
scorn on many times. See for example Critique of the Gotha
Program. But how many listeners know this?
In an online discussion with Prof Michael Hudson posted
around the same time, Wolff said: "I think the issue here is a kind of
class war, but not the way people think about it. If you go back to the
1950s and '60s in the United States, . . . the proportion of the
government's revenue coming from corporations as opposed to individuals
was much, much higher than it is today..... So over the last 50 years,
we've shifted the burden of taxes from corporations to individuals and
among individuals from the richest to the rest of us. That's a class
war. That's a class war that's been fought for 40 years in this country
in which the middle and lower classes have consistently lost. You don't
have to be a revolutionary; you just have to suggest here that you
should to go back to what we used to have in the '50s and '60s in the
way of a fair tax system; and I might remind people that in the '50s
and '60s with those higher tax rates, we had a faster rate of growth in
the United States than we have today and we had far lower unemployment
than we have today. We ought to do that, just undo the class war that
the middle and lower income groups have lost, and then we would be able
to put a major dent in our so-called deficit and have a fairer tax
system at the same time." Once again, Wolff is either ignorant of or is
lying about what was going on in the US and the world economy during
the ‘50s and ‘60s, as well as about the return of the crisis in 1970
On KPFA's Sunday Morning show on April 17, 2011, host Philip Maldari
interviewed Wolff, who reiterated his “raise taxes” rap. He then
claimed that European politics were far superior to American ones,
which is why supposedly conditions were better over there. Maldari
pointed out that the largest economies in Europe were run by
conservative parties. Wolff countered that there were several nations
run by "socialists," mentioning Greece and Portugal. An obviously
disturbed Maldari blurted "Oh no, don't say Portugal." Even he was
aware of the then-recent descent of Portugal into bankruptcy and appeal
to the EU for rescue, as the class conflict was heating up. But
apparently he thought Greece was different, or thought listeners didn't
know that Greece was in similar straits, as was Spain, which was also
run by a "socialist" party. The crisis in those countries has continued
to worsen, and in fact the “socialists” are no longer in power, though
they continue to support severe austerity policies designed to obtain
“rescue loans” from the IMF and the European Central Bank.
Wolff repeated his contention that from the 1870s through the 1970s,
the US economy rested upon workers being paid high wages, and this time
added that this was because otherwise the workers would have run off to
free land, and that this high wages regime made for steady economic
growth. But the land was never free. Even back in the 1860s it may have
been cheap but required lots of work, and the railroad companies, which
got the best and the most land, together with banks and wholesale grain
companies soon made the farmers into virtual wage workers. This
resulted in a second set of enclosures (the first being the forceful
taking of the land from the indigenous inhabitants) by the 1880s, and
the Populist rebellion in farm country. And, seriously, were workers
really somehow capable of running off from their jobs and farming? This
wave of enclosures picked up after WWI and even more after WWII, it's
the main reason for the black migration from the South (with more than
a few white farmers joining in).
In October, 2011, Wolff was out with a new speech which he delivered in
another Bay Area appearance, as well as to various Occupy sites, and
excerpts were again played on several KPFA programs. In it, Wolff
asserted that FDR cured the Great Depression with a massive public
works program, and that he financed it entirely by taxing the rich,
instead of debt expansion. In fact, US government debt doubled between
June 30, 1933 and June 30, 1940, from about $22 billion to $42 billion,
at that point it was by far the largest such expansion in US history
except for WWI. As for the Depression being cured, unemployment was
still in double digits in 1940, was 9.9% in November 1941 (on the eve
of Pearl Harbor), in spite of massive expansion in military production
as the US was producing weapons and munitions for the "Allies" and
massively expanding its own armed forces. Also in November 1941, the
inflation rate hit doubt digits, and had been going up steadily, a
consequence of debt expansion. And the Roosevelt administration also
begun in 1937-8 the pursuit of a massive exports drive, pushing US
exports in markets in direct competition with exports from other
industrial nations, especially Germany and Japan. This trade war
escalated into WWII. Wolff thinks the same policies of massive public
works spending financed by taxing the rich can work today. Of course,
no one asks him how the rich can be taxed unless they are making a lot
of money.
On December 27, 2011, Dennis Bernstein, host of KPFA's Flashpoints,
interviewed Wolff about "the economy in 2011." Wolff reiterated his
absolutely nonsensical analysis of the crisis as being the result of
insufficient consumption ability on the part of the working class (aka
"under-consumptionism"). He presented this notion as being the core of
Marx's crisis theory. Never mind that Marx totally shredded the notion
countless times, including this classical passage: “It is pure
tautology to say that the crises are provoked by a lack of effective
demand or effective consumption. The capitalist system does not
recognize any forms of consumer other than those who can pay, if we
exclude the consumption of paupers and swindlers. The fact that
commodities are unsalable means no more than that no effective buyers
have been found for them, i.e. no consumers. If the attempt is made to
give this tautology the semblance of greater profundity, by the
statement that the working class receives too small a portion of its
own product, and that the evil would remedied if it received a bigger
share, i.e. if its wages rose, we need only note that crises are always
prepared by a period in which wages generally rise, and the working
class actually does receive a greater share in the part of the annual
product destined for consumption. From the standpoint of these
advocates of sound and 'simple' (!) common sense, such periods should
rather avert the crises. It does appear that capitalist production
involves certain conditions independent of people's good or bad
intentions, which permit the relative prosperity of the working class
only temporarily, and moreover always as a harbinger of crisis." (Capital,
Volume II).
Wolf lamented the complete absence of any "progressive" members of the
elite who can see how the growing wealth inequality is destroying the
system. He again claimed that this is a unique feature of the last
30-40 years, whereas previously American workers have uniformly seen
their wages rise as their productivity rose. He added that he'd like to
see the Occupy movement change its direction, hinting that it should
emulate the 1930s movement, as if that's even possible, i.e. as if a
New Deal could be implemented today under the conditions of mass
indebtedness and US global decline. This harkens back to an interview of Wolff by the Greek daily Avgi,
June 6, 2010, in which he stated concerning state funding cuts,
“Particularly hard hit are public educational institutions, which
compromises the ability of the US to compete in the long-term, since
the majority of the US skilled labor force is trained through public
higher education.” When all is said and done, Wolff wants to help the
elite save the system, to enable the US to better compete on the world
market, as if this would benefit anyone and anything except capital.
A new and somewhat different approach is now being promoted by people
such as Professor Michael Hudson of the University of Missouri, Kansas
City and affiliated analysts, such as lawyer/writer Ellen Brown. Under
the label “Modern Money Theory,” they are pushing the idea that nations
should simply create new “debt-free” money to pay all bills, all debts,
allow economic expansion and full employment while eliminating all
vestiges of the crisis, which they see as a strictly financial
phenomenon. This, i will show, is merely putting new clothes on the
fetish and painting it in new colors.
I have previously analyzed Hudson’s work in both “The American Left...”
and (more thoroughly) in “Michael Hudson....” I should add something i
failed to catch which he said during his interview on KPFA’s Guns and
Butter on February 10, 2010. He responded to host Bonnie Faulkner's
question to explain the labor theory of value by making it to be simply
a calculation of production costs, whereas the theory of price is
supposed to account for the difference between production cost and
selling price by taking note of interest, rent and other non-productive
expenses. He thus made value and price to be the same thing, and
includes in production cost the profits of capitalists engaged in
production, as if industrial capital is simply entitled to a profit by
its very act of investing. This in no way explains where profit comes
from. Furthermore it is a subtle legitimation of capitalism. Hudson
also talked of Marx's analysis of primitive accumulation as being about
military conquest and insider political dealing. He totally left out the
Enclosures, the process Marx considered to be the most
essential factor of primitive accumulation, which has made capitalism
possible.
Since my article on him, Hudson has appeared several times on
“progressive” media. On July 13, 2011, he was on Guns and Butter. His
presentation revolved around the notion that finance is a new form of
warfare. Hudson repeated his contention that the "global economy" has
been hijacked by a financial elite which is milking it strictly to
enlarge the personal fortunes of its members, to the detriment of
everything else. During the program, he stated that society produces a
surplus which properly goes to pay worker salaries, to investing, and
to fund social benefits, but which is being siphoned away by this
elite. It is as if this surplus is merely an aspect of the very nature
of human society. In fact, this is not material surplus, but surplus
value which takes the form of money. This requires the coerced
extraction of surplus labor out of the part of the world's working
population which is engaged in the production of goods and
services(which itself requires the separation of this population from
the means of producing their own survival needs directly) and the
destruction of the ecosystem as everything natural and living gets
turned into dead commodities. And this process is wracked with crises,
in fact its very structure embodies an inherent tendency towards
crisis, which we are seeing in action today. Thus Hudson is obscuring
the injustice at the heart of capitalism.
On July 22, 2011, Hudson was on Democracy Now. He discussed the then on-going
negotiations over the US budget. He went where he has not gone before
in terms of stupidity and lying. As before, he asserted that there is
no crisis whatsoever going on, just attempted robbery by the financial
elite, but this time said the US borrowing limit is meaningless, it's
always been routinely raised, no reason why it couldn't be raised again
aside from an attempt to create a false crisis. It's as if it doesn't
matter that at this point, total US debt is about to exceed the total
GDP, as if debt can be expanded forever, with no limits. He also
asserted that debt should be expanded at a time of a downturn, since
this is how recovery and renewed economic growth are attained. "That’s
why the economy needs a budget deficit to grow. When the government
runs a budget deficit, that puts money into the economy and helps us
recover from the recession. That’s pretty obvious."
This shows Hudson is hanging on to Keynesian orthodoxy and illusions,
facts of the last 40 years be damned. Keynes's ideas were shredded
quite well by Paul Mattick over 50 years ago. See earlier in this
article. Hudson also repeated an assertion frequently made about
Clinton running a budget surplus. Actually, the US ran a surplus in the
late 1990s only because of the hi-tech stock bubble and the looting of
the treasuries of Eastern Europe (especially Russia) and eastern Asia
in wake of their meltdowns in 1997-8. The bubble blew in April 2000,
but the effects were not clearly visible till after Clinton left office
on January 20, 2001.
On August 2, 2011, Hudson was back on Democracy Now. Regarding the new
budget deal, he asserted: “That means that the government is going to
be sucking money out of the economy. Normally, government is supposed
to provide the economy with money, provide it with purchasing power. By
government running a deficit, this is what, traditionally, for 5,000
years, in every country, has supplied money.” What amazing nonsense.
As if capitalism has been around for 5000 years, as if money then is
money now, as if every society since then has been structured by the
market. “And now the government isn’t going to do it. There’s a kind of
junk economic belief that governments shouldn’t run a deficit, and yet
it’s by running a deficit that an economy expands. That’s what injects
the purchasing power in it.” More Keynesian mind rot. We can see how
“well” Obama’s $700 billion stimulus package has worked out.
On September 14, 2011, Hudson was back on Guns and Butter, an interview
taped apparently before September 7, as he referred to an "anticipated
ruling" on that date by the German supreme court about the on-going
bailouts. The topic was "debt deflation in Europe and the US."
Somewhere in the middle, Hudson set about explaining the framework of
his analysis. He has claimed in the past to be a political economist
and even Marx-friendly (while identifying Marx, a trenchant critic and
foe of political economy and capitalism as a political economist and a
fan of capital, a complete falsehood). But on this show he was strictly
a know-nothing economist. The basis of the economy, according to him,
is that people work in jobs and make money and then go out and buy the
stuff that was produced by businesses, which then use money to make
more stuff and hire more workers who buy more.... What an incredible
piece of nonsensical circular reasoning. Workers and businesses just
sprout out of nowhere? And the businesses make a profit by earning more
on sales than their costs? And all production is intended for
consumption, yet accumulation happens anyway? This is as bad a voodoo
economics as anything ever spouted by the Reaganites or any of the
other brands of apologists.
Hudson asserted that Europe is in much better shape than the US because
it did not suffer a mortgage crisis which affected banks, except for
Ireland. Right, apparently there is no housing bubble in Spain, no
matter all the equivalents of savings and loans institutions which had
been going under. Likewise, no problem with the banks owned by the
various German states, or all the large private German banks which have
run into similar trouble, such as Hypo Real Estate. He also sang the
praises of the German economy and its export boom. Too bad that stats
even then were showing the German GDP is back to near-zero growth, due
largely to a drastic drop in exports. This trend has worsened since. He
kept asserting that European plans for consolidation of decision making
combined with bailouts is something being pushed by "right wingers,"
when in fact the German Social Democratic Party is more solidly in
support for such steps than the right wing ruling Christian Democrats.
In addition, he proposed knocking down mortgages to fit the new lower
home values, thereby wiping out large amounts of debt, so that "the top
1% gets its share of wealth knocked down towards its more traditional
level," and the US economy can get back to competing for its share of
global markets. A share of 39% is apparently OK (that's what he said)
but much higher is bad. Debt write-offs do nothing about the basic root
of the crisis, which lies in production, not in circulation,
specifically the production of surplus value. Global
competition under such conditions leads to one thing: war. Plus, growth
nowadays also faces the planet's physical limits, which he completely
fails to acknowledge. Yet even within the limits of existing social
conditions, his solution is ludicrous. If debt can be ordered to be
written off, why would anyone lend again, especially when there are
other options for investment?
On February 29. 2012, i tuned in to Guns and Butter and i thought i was
hearing Michael Hudson again. Well, turned out it was former bank
regulation official William Black, but the analysis sounded almost the
same as Hudson's: "we" need to better regulate banks, break up the big
ones into smaller, "more efficient" units, root out corruption, and the
system can be made to work once again. The words may sound "radical,"
yet the implicit message is anything but. It is that there is nothing
essentially wrong with the capitalist system which some honest and
vigorous regulation cannot cure. This turned out to be just the first
part of what has become a series of shows about Hudson and company and
their pushing of Modern Money Theory. Black is now at the University of
Missouri, Kansas City, like Hudson.
The March 7, 2012 show featured comments from the opening session of a
late February conference in Rimini, Italy, regarding Modern Money
Theory(MMT), whose aim was to present alternative economic policies for
austerity-wracked Europe. First on was Stephanie Kelton, another Hudson
colleague from the University of Missouri, Kansas City and a very
prominent exponent of MMT. She sounded very much like Hudson. Within
minutes, she concluded her remarks, and followed by..... Michael
Hudson. A transcript of the show was posted at Hudson’s
website. All the quotes of Kelton and Hudson appear here as posted at
the URL. I will start with Kelton’s remarks.
“Modern Monetary Theory is a revolutionary way to think about the way a
modern capitalist economy works..... It is the key to understanding how
a modern economy can achieve what has for so long been unthinkable:
full employment for all people with stable prices.......
What is money? All money exists as an IOU. It’s a debt. When we say, ‘I
owe you,’ we mean two people are involved in every monetary
relationship. The ‘I’ is the debtor. The ‘U’ is the creditor. I Owe
You. IOUs are recorded in what we call the money of account.....
The money of account is something abstract, like a meter, a kilogram, a
hectare. It’s not something you can touch or feel. It’s
representational, something only a human could imagine. In any modern
nation the money of account is chosen by the national government. MMT
emphasizes the state’s power over money. This is not something new. It
dates back as far as Aristotle. You can find it in Adam Smith and in
the work of John Maynard Keynes.”
Thus, money is debt, but debt is ... an amount of money owed by one
entity to another? Can we say “circular reasoning?” All this simply
assumes the existence of money, indeed its existence throughout
history, as if money has always been the same thing. Such analysis
completely ignores what money represents: a given quantity of
value. The word “value” does not appear once, let alone is it
defined as being a measure of abstract socially necessary labor time.
Aristotle indeed discussed value as being implicit in the very fact
that two items can be exchanged for one another, an act which infers
they have some quality which is equivalent. He never fully explained
what the basis of value is, this task fell to the political economists
and eventually to Marx’s critique of political economy. Kelton’s
perspective is taking commodity fetishism to a new height.
“As long as the state has the power to enforce its tax laws, the people
will need the government’s money. The currency will have value. People
will work to sell things—goods and services—to the government in order
to get government money. Whatever the government accepts in payment to
itself becomes the ultimate, ‘definitive,’ money in the economy. It is
the only way to settle a debt.”
“Value” here is used as “having the ability to be exchanged for
something.” This has zero connection to the real meaning of value.
Again, money, debt and all these feature are simply assumed to be an
inherent part of human society. Kelton’s reasoning, again, is circular:
money becomes money.
“The U.S. government taxes in dollars. It spends in dollars. And it
controls its own currency. Why is this important? What are the benefits
of issuing your own currency? They are extraordinary.
The government, when it issues its own currency, and goes into debt in
that currency can always pay its debt, can never go broke, can never
run out of money. It can afford anything that is for sale in that
currency. It doesn’t need to borrow its own currency. And it can set
its own interest rate. It does not have to pay what markets want. It
does not become a victim to speculation, to bond vigilantes. It has
additional policy space. It can do things for its economy and for its
people that a government that does not have a sovereign currency cannot
do.”
The fetishism involved here again reaches new heights. Money is
apparently whatever a government says it is, with absolutely zero
connection to anything in the real world, particularly to the relations
of production between human beings and between them and the means of
production, of which money is but a representation. One can easily see
where this will go: every government will strive to make its own piece
of the puzzle function as smoothly as possible, regardless of the
effects upon other governments. It is all out war between various
national capital entities.
“Think about what the hierarchy would look like under a gold standard.
Many governments operated under gold or silver or both for some period
of time in our world history. Under a gold standard, the government
promises to convert its currency into gold. In that situation, what
sits at the top of the pyramid is not the state’s currency, but the
gold reserves. This means that the government must be careful about how
much it spends. If it spends too much of its own currency, it can
jeopardize the entire system because it may not be able to convert
currency into gold as promised. You have to limit your spending and
limit what you do with your policies. Governments operating under a
gold standard do not have sovereign currency.”
Gold was simply a useful commodity which could be used as a general
equivalent to all other commodities, given its material nature. See
earlier in the article. It was like all other commodities the product
of abstract labor, which allowed certain quantities of it to be
equalized to certain quantities of other commodities. Making other
materials money, or making money completely immaterial, does not do
away with the basic nature of exchange, which tends
towards the exchange of equal values. One doesn’t need to fetishize
gold, like Ron Paul and his followers, to see how focusing on one
particular form of money misses the main point.
“The hierarchy in a country that operates fixed exchange rates places
someone else’s currency at the top. You also lose control of your
interest rate—something that’s crucial to retain control of—if a
country is going to have a sustainable debt and full employment.
The euro is not a fixed exchange rate system, but it’s not a sovereign
currency either...... A sovereign government should be in control of
the currency that sits at the top of its pyramid. If it gives up
control of the sovereign currency, it also gives up the power to set
reasonable policy in its own country. It hands over that power to the
bond markets who, ultimately, decide how much can be spent—what can be
done.
Abba Lerner was an economist, a contemporary of John Maynard Keynes. He
saw this very clearly. He said:
‘‘By virtue of the power to create or destroy money by fiat and its
power to take money away from people through taxation, [the State] is
in a position to keep the rate of spending in the economy at the level
required [for full employment].’
“The problem with the euro is that it cannot be created at will.“
This is quite an appalling display of a belief in absolute state power
and in money as being the essence of human productive activity, rather
than a poor representation of it in a society marked by division into
separate producers who are connected only via fetishized symbols and
symbolic activity. This is post-modernist Keynesianism, a belief that
nothing is real except the symbols, that everything is determined by
the “text,” constructed by a fetish created to facilitate an exchange
which in fact is made necessary only because of the division of society
into antagonistic interests. A process whereby every state pursues
policies intended to benefit itself is a recipe for trade wars and
their logical outcome, military conflicts.
Kelton was followed by Hudson, whose remarks took up the rest of the
show. “What you have today is a new kind of a war. It’s a financial
war. You can get by privatization and financialization what armies used
to get by force of arms. This is not the class war that people spoke of
a hundred years ago. It is a financial war. And it is a war that
classical economists warned against. 300 years of classical political
economy sought to get rid of landlords and bankers. A hundred years ago
people spoke of technology. Nobody believed that the vested interests
could fight back. But they did fight back in the way that parasites do
in biological nature.”
As i discussed in my previous article about Hudson, he openly lies
about what political economy was about. He then takes some more shots
at the financial sector, whose machinations he deems to be the reason
for the crisis.
“Central banks create money, you can say. And commercial banks create
credit. The last three years since September 2008 have seen the largest
money creation and credit creation in history in the United States.
And, yet, prices have not gone up at all. That is, consumer prices have
not gone up since 1980. Wages in the United States have drifted
downwards for 30 years. And consumer prices and commodity prices have
been stable.”
The claim regarding prices since 1980 is patently false. Just look at
education costs, rents,... The claim regarding the period since 2008 is
true only if one isolates the US from the rest of the world. Globally,
the massive expansion of money and credit by the US Federal Reserve,
also known as Quantitative Easing (QE), has been a key reason for
destabilizing monetary flows, large rises in the prices of raw food
commodities and energy, and for inflationary pressures elsewhere in the
world. It has been a key method for the American ruling elite to export
the worst symptoms of the crisis, foist them off onto other nations,
particularly US trade/political rivals such as the EU, China and
Brazil. See comments by Brazil’s president Dilma Rousseff to
Obama on April 10, 2012, regarding this matter. In fact, even in the
US, certain prices, specifically food and energy, have gone up a lot.
Government statistics leave out these factors because they are deemed
“volatile.” A generally good analysis (even if a faulty conclusion) of
QE can be read here.
“Under industrial capitalism, the idea was that credit would be created
productively to fund capital investment that would employ labour. That
is not what is occurring today. When commercial banks create credit, it
is [to] create claims on wealth. It is [to] create mortgage debt. It is
[to] create corporate debt. It is to create personal debt, and student
loans, and credit card debt. This is what makes commercial bank credit
creation different from the central banks’ creation of money.”
More mystification of how things were back during the good old days,
when industrial barons ruled the day. The capitalists were not
motivated by the idea of creating jobs, not then, not now, not ever.
Their motivation was and is the accumulation of capital by any means
necessary.
“When central banks create money, they do so for a long-term public
purpose. They fund government spending and capital investment and
public infrastructure. In most countries in the world, public
infrastructure, roads, communication systems, railroads, water and
sewer systems have all taken a capital investment that is larger than
all the manufacturing capital investment....... There is a formula, MV
= PT. It means an increase in the money supply increases the price
level. But the price level that the textbooks talk about are only
consumer prices and commodity prices. Nowhere in the textbooks do you
find a relation between the credit supply and asset prices, real
estate, stocks and bonds.”
More mystification. All the infrastructure investment was done in order
to facilitate accumulation, not for some noble “public purpose.” The
flow of capital into financial speculation is the result of falling
profit rates in production, the long term tendency which is inherent in
capitalism due to its very structure. See earlier in this article.
“In the textbooks there are happy pictures about banks lending to
industry to build machines and factories with a smokestack coming out
and employing labour. But this is a fiction; this is not what occurs in
practice. All of the increased capital investment in the United States
economy comes from the retained earnings of corporations—not from
banks. Banks do not lend to bring new capital investment into
existence. They lend against mortgages, against capital in place,
against real estate, against assets that already exist—not to create
new assets.”
This is an invented reality. The idea that US industrial corporations
have been strictly self-financing is totally unsupportable by facts.
See for example the following article dealing with non-financial corporate debt.
“So, when we talk about government money. We [, we] talk about
government spending that is, indeed, to spur the economy, to spur
economic growth, to spur new investments. The function of government
investment and government central bank money creation is very different
from the private banks. The government money is, indeed, debt, the lira
that you have in your pocket are debt. Paper currency is debt. But it’s
debt that nobody ever intends to be repaid because, if government
currency is debt, than to repay it would mean that you would not have
any currency left in the pocket. The commercial debt is expected to be
repaid; and it bears interest.”
Again, money is debt, and debt is... an obligation to pay money. What a
wonderful circle.
“There is a political aspect to all of this technical discussion of
money. The political aspect is if governments create money, then
they’re creating a mixed economy—a mixed economy of private and public
capital investment. This is what made all of the countries of Europe
and the United States rich. The government investment in the public
infrastructure that has been able to be supplied to the economy at
cost; so, you get to drive on most roads for free; you get to use this
huge capital investment in infrastructure for free. But if governments
are not allowed to create their money, then all of the credit the
economy needs is created by the commercial banks. And when the
commercial bank credit creation leads to debt deflation and the
government cannot finance the deficit to pay the interest, then the
commercial banks say: Alright, sell off and privatize your
infrastructure. This is what we’re seeing in Greece today, in Ireland.
You’ve seen it in Iceland. What you are seeing is a financial grab of
infrastructure that is taking place by the ability of commercial
bankers to prevent the central bank from creating credit.”
Utter rubbish. What has made the ruling elites of Europe and the US
(not the nations as a whole) rich is surplus value extracted from wage
slaves engaged in commodity production, both domestically as well as
around the world. Government spending is simply a deduction from
surplus value which is then redistributed to sectors where state
managers believe it can facilitate generalized capital accumulation.
See earlier in this article for Paul Mattick’s critique of Keyens.
“So, in the United States, the real economy of production and
consumption has actually declined over the last 30 years. All of the
growth in the economy is overhead to the rentier sector—to what we call
the FIRE sector: Finance, Insurance, and Real Estate, which now should
include the legal system and the monopoly system. So, almost without
the textbooks or anyone noticing, what used to be analyzed as
industrial capitalism has turned into finance capitalism. And this
finance capitalism has not been the kind of finance that was imagined a
hundred years ago. It is not financing of industry. It’s financing of
economic parasitism and overhead. And all of this is presented as if
the way to get rich is to go into debt—to borrow—to buy assets that are
being inflated in price...... Foreclosure time arrives and, so,
financial capitalism turns into a bubble economy because the only way
that banks can avoid default and a break in the chain of payments is to
lend more money.”
The terms “industrial capitalism” or “finance capitalism” are
misleading. Capitalism is one system in which the dominant social
relation of production is capital. The one and only real goal of
capital is self-reproduction at an enhanced level, i.e. capital
accumulation. This was always and still is being done only via the
extraction at the global level of surplus value from wage workers
involved in the production of goods and services. This extraction
process is still the base which capital accumulation everywhere and in
every sector depends upon, regardless of what particular business
pursuits particular chunks of capital are invested in. When profit
rates on production have dropped, capital has always flowed into
speculation. The extent to which capital is increasingly tied in
speculation and reliant upon a relatively ever-shrinking base of
production is unprecedented. But this is a quantitative change, not a
qualitative one. The likes of Hudson wish for you to believe that if
financial capitalists are curbed or even eliminated, and the state were
to create massive new amounts of “debt-free currency” (i.e. massive
“printing” of money) to finance infrastructure development and enable
industrial expansion, prosperity and full employment can all be
attained. He wants to push the expansion of industrial production at a
time when just about every industry in the world market is experiencing
overcapacity, an apparent excess of production capacity relative to the
ability of the market to absorb what is produced. This is how the
shortage of surplus value manifests itself in the world of appearances,
but it isn’t itself the problem. This cannot be cured by enabling
increased purchases of the produced goods and services.
The March 28, 2012 Guns and Butter episode featured more remarks by
Kelton and Hudson. Speaking first, Kelton went at length about how not
having a job essentially robs a person of their humanity, as if wage
labor is in our genes, or even has been a feature of human society for
very long. . She stated that governments can basically ensure full
employment and righteous functioning of capitalism by injecting the
correct amount of fiat money into the market, that there are no limits
on keystrokes (for creating money via computers), just as there are no
limits on how many points can be scored in a certain sports game. As if
points, which are not equivalent to anything, are the same as money,
which is a representation of value, used in a strict
political economic sense, i.e. the abstract socially necessary labor
time to produce a good or service intended for market exchange. Again
she presented the theory of Keynes to support her contentions.
Hudson followed. The transcript can be read here. “And in all the textbooks there was
what was called Say’s Law; workers had to be able to buy the results of
what they produced. And this was a circular flow, the circular flow
between producers and consumers. And this idea goes all the way back to
the French Physiocrats, just before the French Revolution, who created
economics and account keeping......
So, the idea was that all of this increased production had to increase
consumption. So, the idea was, as a variant of functional finance, that
production creates its own market for consumption by paying workers,
who’d then buy the products they produce. So, the question is: Why
hadn’t this occurred? With all of this productivity since the end of
World War II and, especially, since 1980, why aren’t you all rich and
enjoying a leisure economy?........
Well, obviously, what has happened is that what was then applauded as
the post-industrial economy has become the financialised economy. The
reason you are working so much harder than you were before is because
you are paying off your debts. You’re not buying the goods and services
that you produce. You’re paying the banker because you can only
maintain your consumption standards and keep on spending what you
produce if you borrow to do it. That is the euro plan for you. That is
how the euro plan is replacing industrial capitalism with finance
capitalism.
Wages and living standards have not risen. All of the gains have been
siphoned off by finance. When they call for austerity, it is not the
fat that they are cutting—the fat is the financial sector—it’s the
bone; it’s the industrial sector. So, the post-industrial economy means
deindustrialization. It means unemployment for you. And unemployment
means lower wages.”
From the previously-cited Mattick article on Keynes: “Economic
stagnation and large-scale unemployment was at the center of Keynes’
interest. Traditional economic theory was bound to the imaginary
conditions of full employment and to Say’s ‘law of the market’ — to the
belief, that is, that ‘supply creates its own demand.’ Like Say, Keynes
saw in present and future consumption the goal of all economic
activity, but, in distinction to the French economist, he no longer
held that supply brings forth sufficient demand to maintain full
employment. The refutation of ‘Say’s law’ is hailed as the most
important aspect of the Keynesian theory, particularly because it
defeats this ‘law’ on its own ground by showing that just because of
the ‘fact’ that production serves consumption, supply does not create
its own demand.
“Almost seventy-five years earlier [before Keynes’ article, which was
published in 1935], Marx had already pointed out that only an
accelerated capital expansion allows for an increase of employment,
that consumption and ‘consumption’ under conditions of capital
production are two different things, and that total production can rise
only if it provides a greater share of the total for the owners and
controllers of capital. The ‘dull and comical ‘prince de la science’,
J.B. Say,’ Marx did not find worth overthrowing, even though ‘his
continental admirers have trumpeted him as the man who had unearthed
the treasure of the metaphysical balance of purchase and sales’ (A
Contribution to the Critique of Political Economy, Karl Marx) For
Marx, Say’s law of the market was sheer nonsense in view of the growing
disequilibrium between the profit needs of capital expansion and the
rationally considered productive requirements of men, between the
‘social demand’ in capitalism and the actual social needs; and he
pointed out that capital accumulation implies an industrial reserve
army.”
Thus, whereas Keynes rejected Say’s Law, and thought government
intervention could fill in the gap between production and consumption,
Hudson appears to accept it, with the caveat that it would work if only
the speculators and the financial sector were severely curbed, the
government were to print money with no restrictions and industrial
capitalism was to be brought back. It’s as if the accumulation needs of
capital can be infinitely accommodated with no problems. Hudson, who
has claimed to be the heir of political economy and indeed of Marx,
once again reveals himself as a fraud of the first degree.
The steps Hudson proposes would do nothing about the constant scramble
by units of capital seeking surplus value for their capitalization
needs inherent in capitalism at every stage, and in particular nothing
about the increasing insufficiency of the globally-extracted surplus
value to enable this accumulation to proceed, which greatly worsens the
scramble. Instead of international prosperity and full employment, a
far more likely outcome is a war of all against all, as every nation
seeks to reflate and drive down the value of its currency to gain trade
advantage over all others. Those nations in a position to do so will
export the effects of the massive increase in money supply to others
for as long as they can, as per QE, till the inevitable retaliation
results. Those which cannot do so will have to adopt strict trade and
capital controls, and place their populations on a virtual war footing.
It is very illustrative to note that Hudson and his minions frequently
talk of how the US (or whatever nation they happen to be speaking at)
can once again become “competitive” on the world market, as if global
competition is a good thing.
As long as the money fetish continues to rule, as long as the
production relations of capital remain intact, there will be no respite
from the crisis, and in fact such measures will worsen the crisis and
hasten the recourse towards global war, the only thing which ended the
other two global capitalist crises in history, the one in the early
1910s and the one in the 1930s. And the MMT crowd completely fails to
deal with the fact that the world is facing increasing shortages due to
depletion of vital resources and also the consequences of the
destruction of the ecosystem. Hudson and his MMT sales people are
pulling a real fast one upon the world, and it’s a shame to see
supposed “progressives”/”leftists” participate in marketing this scam
to a vulnerable audience eager for some solution to the growing global
depression, one which somehow will allow them to keep present
social/economic arrangements, in which they are invested, basically
intact.
De-monetize,
De-commodify, De-Enclose
All the strategies i reviewed involve maintaining the money fetish and
attempting to manage it somehow. This has clearly been shown to be
impossible, so we should stop wasting our time trying. There is no
reason for doing so aside from the conviction that humans are incapable
of relating to one another in any way except through mediating
fetishes. The allocation of social labor on the basis of mutually
antagonistic interests which have to be mediated via objects, real or
imagined, inherently leads to conflict. It is increasingly impossible
to carry on in this manner on our depleted planet. The ages-old human
way of allocating social labor on the basis of cooperation, direct
satisfaction of needs and direct, participatory decision-making is the
only logical way, indeed the only viable way, for our species to
proceed any further.
The Occupy movement should begin to move towards eliminating money and
begin confronting the essential features of the dominant social order,
while also dealing with the ecological and resources crises. Already,
some efforts have been made to occupy vacant structures and use them as
community centers. Similar initiatives have been made concerning
housing, though in many cases this has taken the form of helping people
force a bank to adjust mortgage terms, not of challenging the private
property form. Such efforts should be escalated and taken to their
logical conclusion. Housing should be made available for free, rather
then as a commodity which one buys or rents. Vacant lots should be
occupied and turned into food gardens. An interesting initiative on
this matter is the occupation of the Gill Tract, a lot of land in
Albany, California, used by the nearby UC Berkeley for years for
agriculture research, which on Earth Day (April 22) 2012 was occupied by
community activists and students whose goal was to turn it into an
urban farm. This initiative received a supporting message from Brazil's MST,
the movement of the landless, which has been pursuing such tactics over
the last couple of decades. The key aspect of the Enclosures was the
separation of the masses of people from the means of producing survival
needs, especially food. This is why people are forced to work for a
wage under demeaning and often dangerous conditions: they have to, if
they wish to eat. The more we produce of our necessities ourselves, the
less power capital has over us. This should be extended to all other
facets of life, ASAP. A key aspect of this can be the occupation of
workplaces by workers who then begin to use the occupied facilities to
satisfy the needs of the local community.
Efforts at establishing non-market societies have taken place many
times before. A good overall review of history is provided in Communalism: From Its Origins to the Twentieth Century
by Kenneth Rexroth. During the English Civil War in the 17th Century,
groups such as the Levelers and the Diggers occupied land collectively
in order to resist the Enclosures which were then being drastically
stepped up, and even propagandized about the possibility of a
communitarian society based upon sharing. See the classic The World Turned Upside Down by Christopher
Hill. In the US in the 18th Century, a large community made up of
indigenous people as well as runaways from the British colonies, both
African slaves as well as previously enclosed Europeans, was
established in the Great Dismal Swamp of the backwoods of Virginia and
North Carolina, and functioned along lines which could be regarded as
quasi-anarchist. See Gone to Croatan by James Koehnline
A good review of movements with this goal in more recent history is Non-Market
Socialism in the Nineteenth and Twentieth Centuries, edited
by John Crump and Maximilien Rubel. One notable instance was the Russian Revolution during
its more radical phase, i.e. the period between the czar's overthrow
and the Bolshevik takeover of state power. Workers had to take over
factories which were abandoned by owners who fled the country. This led
to a widening production web run by the workers via workplace
committees in conjunction with directly democratic organs of mass
participation and decision-making, the soviets (“councils” in Russian),
drawing in not only working people but the many soldiers and sailors
who had rebelled against the Czarist authorities. This was totally
outside the Bolshevik party which later came to assume state power and
in the process took away power from the soviets and committees. Another
is the Spanish Civil War, in the early stages of which workers took
over the factories of Catalonia, then the nation’s industrial center,
and the farms of Aragon next door, and ran them as federated anarchist
collectives, often outright abolishing money and allocating work and
products via planning and directly-democratic decision-making carried
out via mass assemblies. Their worst enemy turned out to be not
Franco’s fascist army, but the Stalinist/”liberal” government in Madrid with
which they were supposedly allied (this article takes note of peak
oil). In 1968, a student strike at a campus in suburban Paris
mushroomed into a nation-wide general strike, during which most
workplaces were occupied by the workers, who in some cases began
running the factories on the basis of direct use, in the
reconfiguration of much of social space, and the re-emergence of the
notion of direct democracy in the context of abolishing capitalism..
There have been instances even in the US.
Given that our situation is different, these experiences should by
viewed as rough drafts rather than blueprints. I’m sure many a reader
would react at this point by saying “all this stuff is hopelessly
utopian.” Well, when one is riding in a car, and the engine is starting
to throw rods, the transmission gears are obviously ground down, the
drive shaft is cracked, etc., what is utopian is to think that a change
of drivers, or a change of oil, or a new coat of paint will enable the
car to keep running. It doesn’t matter if the car’s occupants aren’t
ready for a fundamental change, they are the ones who need to “get
real.”
posted May 15, 2012
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