September | 2014 | The Real Movement

September 28, 2014

“All Slaves Should Get Sundays Off”: Richard Wolff on the four day work week

Richard Wolff, clueless economist that he is, has even managed to fuck up a discussion of hours of labor reduction. He has written a very interesting piece in Truthout proposing a reduction of the workweek with no cut in pay. The idea is very attractive, and Wolff is a ‘celebrity’ Marxist who can give the issue wide circulation.

In principle I have no opposition to Wolff’s proposal, which at least raises the possibility that the present 40 hours work week was not handed down from Mt. Sinai on two tablets of stone. Wolff shows why we can set any number of hours of labor as the social norm that we want.

Unfortunately, almost from the first, Wolff mangles the discussion of hours of labor reduction in two important ways: First, by conflating his own reduction of hours of labor with several capitalist proposals to ‘compress’ the work week into fewer days. Wolff never clearly distinguishes his proposal for a reduction of labor hours from the capitalists’ own proposal for a compression of the present 40 hours of labor into fewer days per week.

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September 27, 2014

To move forward, the Left must admit it has been a failure for forty years

A tweep tweeted this gem the other day and I honestly didn’t know how to respond to it:

“Inequality grew faster under Obama”

It would be no surprise to learn that the guy who wrote the tweet self-identifies as a “Breitbart conservative”. For some on the Left, his opinion can be safely ignored, because, as we all know, the ‘real cause’ of growing inequality in society is Boehner or the Koch Brothers, or the Tea Party. When you think about it, his argument is no more politically opportunistic than someone describing herself as an Obama Democrat blaming Boehner for the low wages of the working class.

While, by every measure, the headline is correct, what does it even mean to say inequality has grown faster under Obama? Is the tweep suggesting growing inequality is Obama’s fault? Is Obama personally responsible for it? Is the tweep implying the crisis would have turned out differently if, say, McCain or Romney had been elected?

I mean, as a communist, I have answers to headlines like this; but my answer operates on a whole different level from mainstream party politics. There are so many people who blame basic shit about capitalism on one or another party, administration or politician. And — yes — this would be intolerable for a communist or some advanced thinker, but, on another level, it is how the rest of the world actually thinks about capitalism. Most of the working class thinks the problems associated with capitalism can be blamed on Obama or Bush or some party.

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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 economy. 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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September 16, 2014

Public Debt and Financial Accumulation: The fascist implications of the MMT two sector model

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Continuing with my critique of Tymoigne’s and Wray’s defense of modern money theory, which can be found here. In my last post, I argued that MMT has no explanation for how the state became monetarily sovereign and thus avoids examining the implications of this development. The very way the paper is organized leads to the conclusion that consumption must come before production and buying must come before selling.

This is explains why Tymoigne and Wray begin their discussion with an examination of the monetarily sovereign state and then proceed to introduce the so-called private sector into their analysis. This method of presentation of their argument makes it appear as if the state’s activities precede that of society. In fact, the premise of the state’s activities is the overproduction of real capital — a mass of excess capital in the form of money, means and labor power. We can trace this excess not to some distant historical event, surrounded by the mists of time, but to the Great Depression. In the paper, however, the writers never discuss this ‘prehistory’ of the fascist state because they begin with the assumption the fascist state already exists.

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September 11, 2014

Catastrophe: Modern money, the state and labor theory

1. Modern Money Theory, or the state as monetary sovereign

I am reading, “Modern Money Theory 101: A Reply to Critics by Eric Tymoigne and L. Randall Wray”. I like this paper because it is a comprehensive defense of the ideology of the modern money school (MMT). Because it is a comprehensive statement of this school, it is possible to show modern money theory is a theory of fascism on steroids.

I want to state at the outset that by fascism I do not mean Nazism or any other peculiar manifestation of fascist politics from the 1930s. (Indeed, the ideas associated with modern money theory are popular across the entire spectrum of American politics — from the Tea Party to the progressive Left.) Rather, I will show that MMT expresses a fundamental tendency inherent in the capitalist mode of production toward the displacement of the capitalist class as managers of the production of surplus value by the state.

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September 8, 2014

Ten common questions about the revolutionary potential of reducing hours of labor

According to this note by Warren Mosler of the modern money school, more income inequality will require bigger deficit by the state to maintain full employment.

This implies we need a larger deficit than otherwise to close the output gap/sustain full employment, has higher income earners tend to generate more unspent income/more savings than lower income earners.

Looks to me like the “1.2 million who lost benefits at year and took menial jobs” narrative has run its course, and consequently H2 employment gains will be that much weaker than H1, as suggested earlier…

The idea that increasing income inequality requires larger state deficits points to the basic irrationality of the modern money school’s policy recommendations. As income becomes more unequal, more excess capital is being produced, this excess capital cannot produce a profit unless it is lent to the state, thus the total output that must be unproductively consumed by the fascist state constantly increases.

But this increase in unproductive state consumption does not do away with the inequality; it simply acts as a savings account for excess capital. The state not only absorbs the excess capital, it begins to pay interest on the capital, adding to the income inequality.

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September 7, 2014

Will a $15 minimum wage create jobs in Seattle?

According to this article, “Thinking Bigger in Local Minimum Wage Campaigns: The Fight for $15 in Seattle”, raising the minimum wage to $15 would reduce poverty in Seattle from 13.6% to 9.4%. The increase, we are told, would affect more workers than any NLRB action in US history. The increase will have positive effect on the entire economy because “more people with more money means more customers for more businesses.” It is based, David Rolf asserts, on a “commonsense ‘middle out’ argument about how economics works”.

Of course, if this is actually “how economics works”, how did we get to a situation where poverty has been increasing for most of the last 40 years? Suppose a higher minimum wage actually means fewer businesses, i.e., suppose it wipes out the fast food industry. If this turns out to be the outcome of an increase in the minimum wage, would Mr. David Rolf then suggest the minimum wage must be reduced? If raising the minimum wage results in the collapse of a host of marginally profitable businesses, would he change his tune?

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September 4, 2014

Capitalization, Rupture and the future of capitalism

I am reading, “Systemic Fear, Modern Finance and the Future of Capitalism” by Shimshon Bichler and Jonathan Nitzan and my head is exploding as I try to grasp the implications of their argument. I will try to cover this paper in two parts.

In this part I want to show why Bichler and Nitzan are concerned only with a certain sort of capital — superfluous or excess capital. In the next part I will show why this capital, since it has no productive purpose, i.e., because it does not produce surplus value, can only function as capital if it lent to the fascist state. My argument has implication that I will develop in part two.

Capitalization and ‘rupture’

According to Bichler and Nitzan, capital is finance capital and is only concerned with the present value of future stream of profits:

“In its modern incarnation, capital exists as forward-looking capitalization, a universal financial ritual that discounts expected future earnings to a singular present value.”

This perspective ignores the “duality” between real and fictitious capital; between material production and finance. In terms Marx might put it, Bichler and Nitzan proposed that the reality of capital in the 21st century is not M=>C=>P=>C’=M’, but the truncated formulation of fictitious capital, M=>M’. In short, this is the capital that Marx says knows nothing about production; It is a speculative capital that makes its home solely in the sphere of fictitious profits.

For this reason, perhaps, Bichler and Nitzan do not speak of a capitalist mode of production at all, but a ‘capitalist mode of power’.

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Month: September, 2014