The Real Movement

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Tag: absolute overaccumulation

September 16, 2015

Why Keynes predicted a 15 hour workweek, but Marx did not

One final question raised by John Milios’ paper on crisis theory remains to be addressed.

I have shown that Keynes’ explanation of the Great Depression was identical to that underlying Marx’s prediction that commodity production would collapse, namely the constant reduction of the socially necessary labor time required for production of commodities.

3026617I have also shown that the Great Depression took the form predicted by Marx: a collapse of production on the basis of exchange value. If, as Marx’s theory asserts, exchange value must take the form of commodity money, we should expect the collapse of production on the basis of exchange value to express itself as a crisis of commodity money. The minutes of the Federal Reserve from the outbreak of the Great Depression does indeed indicate that commodity money stopped circulating in the “economy” after 1929.

Keynes failed prediction

Moreover, Keynes initially argued this crisis made necessary both the reduction of hours of labor as well as existing “social customs and economic practices, affecting the distribution of wealth and of economic rewards and penalties”. In other words, Keynes thought the Great Depression established the immanent economic necessity for an end to a society founded on wage slavery. If the critical question debated by the classical Marxists was whether or not Marx had established the immanent economic necessity for socialism, Keynes appears to suggest he did — although he never mentions Marx in his essay.

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September 14, 2015

That time when Ben Bernanke admitted Marx was right and John Milios was wrong

So what do we know regarding the validity of SYRIZA economist John Milios’ criticism of Marx’s alleged theory of crisis?

  • First, we know Marx never had a theory of crisis. This has long been acknowledged by almost all scholars of Marx’s theory.
  • Second, we know Marx predicted the collapse of production on the basis of exchange value. However, this fact is ignored by almost all scholars of Marx’s theory.
  • Third, we know Keynes agreed with Marx on what caused the Great Depression: the improvement in the productivity of labor.

ben-bernanke-goes-hardcore-doveKeynes hypothesis of the cause of the Great Depression, which is fully consistent with Marx’s theory, completely disagrees with the dominant explanations of crises advanced by the underconsumptionists, the falling rate of profit school and the “multi-causal” school of Milios, Harvey and Heinrich. Keynes, like Marx, locates the cause of crises in the constant reduction of socially necessary labor time required for production of commodities.

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September 13, 2015

How John Milios even screwed up Keynes’ argument

Mikhail_Ivanovich_Tugan-BaranovskijIt seems to me that for John Milios to be correct in his argument, the following must be true:

  1. Bernstein must be correct that Marx never demonstrated there was an immanent economic necessity for socialism.
  2. Tugan-Baranowsky must have proved a fully automated capitalist economy was possible without a necessary intervening collapse of capitalism that Marx himself predicted.
  3. Keynes must have corrected (or at least completed) Marx’s flawed analysis of the capitalist mode of production.

According to Milios, Tugan-Baranowsky’s analysis of Marx’s theory can be used as a point of departure to correct an apparent defect in Marx’s theory. Milios suggests the necessary connection between Marx and Keynes will be found by asking how investment can provide the demand that might be lost owing to the restriction on the consumption of the working class majority:

“What determines net investment and what dictates that it should occur to the extent required for unimpeded reproduction? And, by extension, what is it that, even if only temporarily, influences it in such a way as to generate disproportionality, and therefore crises? These questions open the way for creating a theoretical relation between Tugan-Baranowsky’s analysis and the Keynesian concept of effective demand.”

Thus, according to Milios, the problem Tugan-Baranowsky’s analysis uncovered is how to expand the net investment required for expanded reproduction. But is this actually the connection between Marx and Keynes? Drawing on Marx’s own argument on capitalist development in Capital and Keynes’ own discussion of the causes of the Great Depression, we find that what the two had much more in common than the alleged problem of managing net investment. What the two really had in common was an identical explanation for the Great Depression itself.

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September 12, 2015

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

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

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

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September 9, 2015

John Milios’s strange explanation of capitalist crises

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

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

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June 14, 2015

Reply to LK: Notes on the historical and monetary implications of the transformation problem

One of the big problems with a discussion of Marx’s formula for transformation of labor values into capitalistic prices of production is that no one, not Marxists nor bourgeois simpleton economists, seem to understand what he was doing. Now, I will admit this argument is pretty arrogant, because it implies that I, somehow, have figured out what everyone else didn’t, but bear with me and decide for yourself. If my argument doesn’t make sense at the end, please correct me.

As I stated in my last post, the transformation problem expresses an irreconcilable contradiction within the capitalist mode of production. Marxists will not be surprised at this assertion; digital_money_764bourgeois economists, on the other hand, deny the existence of this contradiction and have an ahistorical conception of capital. In their view, the bourgeoisie has invented the ideal state of man which, having been invented, can continue indefinitely unless interrupted by an exogenous event. So, when they look at the transformation formula, they see in it a contradiction and assume Marx has failed to make his case.

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June 8, 2015

The Myth of Secular Stagnation, Part Two

In part one of my blog post, The Myth of Secular Stagnation, I explained the background to the debate among bourgeois simpleton economists. The stagnation debate among bourgeois economists begins with the Great Depression and Keynes’ characterization of the problem of the Great Depression as “technological unemployment”. The source of the technological unemployment was the improvement in the productivity of labor, the industrial revolution wrought by capital. For Keynes in 1930, this was not necessarily a malady in and of itself, it promised a future where labor itself would be abolished. The transition to a society of less work might be very painful, but the distress was only temporary.

By 1933, however, Keynes’ argument had changed: although he continued to insist that, technically, the “economic problem” had been solved he now focused on the problem of restoring capitalist profit. The Great Depression was no longer caused by the lack of investment opportunities, instead there was a lack of sufficient state deficit spending. The Great Depression, now having lasted 3 years, required state intervention; “a blend of economic theory with the art of statesmanship”.

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May 22, 2015

MMT and the heresy of the self-financing fascist state

At Nathan Becker’s (twitter: @netbacker) suggestion, I have been reading this piece by Billy Mitchell on modern money theory, Deficit spending 101 – Part 3. If you have any background in the assumptions of mainstream economic theory, you will notice that the piece makes a number of surprising claims:

The idea that a currency-issuing government is financially constrained is a myth. The funds that government spends do not come from anywhere and taxes collected do not go anywhere. Taxes do not finance anything and government spending is independent of borrowing. The government deficit determines the cumulative stock of financial assets in the private sector. Moreover, when government runs a surplus, purchasing power is destroyed forever. Finally, government expenditures do not crowd out private expenditures.

That is a lot of heresy in one short (by Billy Mitchell standards) article. People hearing the MMT argument for the first time must have the same reaction I had the first time I heard Warren Mosler pedro-meyer_06explain it in simple language: “That guy is insane.” Over time, I gradually began to realize what Mosler was saying: modern money (as they call the floating dollar/gold standard) was the practical result of the US withdrawing from Bretton Woods in 1971. When the US went off the gold standard, the fascist state no longer was financially constrained in its spending, i.e., it was no longer constrained by the requirement it exchange its worthless currency for gold. The implications of Moser’s talk was that the fascist state’s capacity to absorb excess surplus value is limited only by the quantity of excess surplus value produced in the entire world market. Previously, a given fascist state could appropriate (i.e., borrow or tax) the surplus value produced by private capitals within their territories (including colonies). Since 1971, however, the United States has been able to do this to the entire planet, because it alone controls the world’s reserve currency.

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April 3, 2015

A dagger aimed at the heart of capitalism

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

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September 22, 2014

MMT and the United States as the international monetary sovereign

NOTE FOR THE READER: I want to reiterate that fascism, in the sense I use the term, only describes a state managed economy. I need to clarify again that my argument is not that modern money theory (MMT) is wrong, but that it correctly describes how fascism works. Nor do I wish to suggest that fascism means MMT is Nazism — many people who could never be described as Nazis embrace MMT insights. A fascist state, as I use the term, must be contrasted with a commune of the social producers, not with ‘democracy’ or a bourgeois republic. In fascism the bourgeois state manages the economic activity of the whole society, while a commune of social producers is self-managed. If the reader fails to keep these critical ideas in mind when reading this post, nothing much of my argument will make sense to you.

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A ‘sufficient’, but not ‘necessary’ cause?

At this point, I want to discuss a critical weakness in Tymoigne and Wray’s “Modern Money Theory 101: A Reply to Critics”, that is exposed when a third, external trade, sector is introduced to the simple two-sector MMT model of an reservecurrencieseconomy. In the simple two-sector model, the means of exchange used by society in its exchange relations is assumed to be supplied by the state. According to MMT, the preference for state issued inconvertible fiat currency — over commodity money or bank notes — is that the state imposes taxes for which it only accepts its currency as payment. This, the writers argue, is sufficient to explain what “drives” state fiat as currency:

“The simple fact is that almost all monies of account are ‘state monies’ and almost all government currencies do have taxes or other obligations standing behind them. Further, even if one can find a money of account and a currency that has no fee, fine, tax, tribute, or tithe backing it, that would not invalidate MMT. Perhaps Palley does not understand the difference between ‘necessary’ and ‘sufficient’ conditions: a tax (or other involuntary obligation) is sufficient to drive a currency; it might not be necessary. MMT theory relies on the sufficient condition, not the necessary condition.”

For the moment, I will overlook the questionable assertion that “almost all monies of account are ‘state monies'”. For July alone, in the US, consumer credit outstanding — a money form that is not in any way a ‘state money’ amounted to $3.2 trillion. This private money is, of course, denominated in US dollars, but it is a privately issued money form that seldom takes the form of state currency.

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