July | 2014 | The Real Movement

July 30, 2014

IV: Simon Mohun’s unproductive effort to identify productive labor

As I explained in my last post, substantiating Marx’s falling rate of profit as the cause of capitalist crises, and, in particular, as the cause of the so-called great financial crisis of 2008, runs into the difficulty that Marx made his argument on the basis of values. The difficulty this poses for analysis is that, since 1971, the various categories of analysis employed in measuring the rate of profit are denominated in inconvertible fiat dollars. Fiat dollars are not money in themselves, but tokens — 2007-10-20-77368474 placeholders — for commodity money. Prices denominated in this inconvertible fiat, therefore, are not values in the sense Marx employs this term throughout Capital.

Thus, in order to construct an empirical proof of Marx’s thesis on the causes of capitalist crises using the empirical data, labor theorists are forced to convert inconvertible fiat prices into Marxian values. This is a new problem that did not exist before the period between 1933 and 1971 when the gold standard began to come unraveled. Since the dollar was pegged to some definite quantity of gold, dollars prices represented some definite quantity of gold as well. After the collapse of Bretton Woods in 1971, however, this relationship was severed and the dollar’s exchange rate with gold was allowed to float.

The question immediately arose whether Marx’s theory applied in the case where the currency used in daily transactions no longer had any fixed and definite relation to commodity money. Since the quantity of fiat in circulation has always been determined by the state, not by the values of the commodities in circulation, was it not the case that the socially necessary labor time required for production of commodities (value) no longer determined how a capitalistic economy functioned?

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July 28, 2014

III: How Fred Moseley MELTed Kliman’s argument on the falling rate of profit

One of the little discussed problem with Andrew Kliman’s attempt to empirically verify Marx’s falling rate of profit thesis is that he is working with inconvertible fiat dollars (dollars which no longer can be redeemed for gold) and dollar prices — in the form of GDP, wages, profits, etc. — and these prices are not labor values as Marx defined the term. How Kliman handled this problem in his analysis of the empirical data is a story in itself.

In his paper, “The Law of the Tendential Fall in the Rate of Profit as a Theory of Crises”, Gugliemo Carchedi answered critics who argue the falling rate of profit thesis cannot be empirically substantiated because Marx was discussing values not prices in his thesis. Fiat prices, however, are not values and have no relation to the values or socially necessary labor times required to produce commodities.

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July 26, 2014

II: How Andrew Kliman crippled his own argument on the rate of profit

The phony debate over investment and the cause of crisis

One of the biggest controversies among labor theorists when it come to calculating the rate of profit is whether the profit rate should be calculated based on the original amount of capital laid out by the capitalists minus depreciation or the current cost of replacing this capital. For example, assume I bought a widget machine for 100 dollars last year. Assume also that since I bought this machine, the price of widget machines fell from 100 dollars to fifty dollars. When I calculate my profit do I do this based on my original investment of 100 dollars or on the basis of the current market price of fifty dollars?

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July 24, 2014

I: Critical weaknesses in Andrew Kliman’s argument on the falling rate of profit

I have been looking at the numbers in this very interesting paper by Carchedi: “The Law Of The Tendential Fall In The Rate Of Profit As A Theory Of Crises”. I decided to test his 12 reasons why the falling rate of profit is the best explanation for the financial crisis of 2008 — not because I disagree, but because I think he makes a poor case for it. I thought I might go over his material in order to get an idea of how far off his calculations are when measured against a commodity money as Marx used in Capital. The problem, however, is that, so far as I can tell, Carchedi has not published the source data he used to arrive at his conclusions in the paper. (It is possible he published it in a different place, but I just haven’t come across it yet.)

Fortunately, an argument similar to Carchedi’s is also made by Andrew Kliman in his 2011 book, ‘The Failure of Capitalist Production’. And, unlike Carchedi, Kliman generously published a comprehensive spreadsheet of his source material compiled while writing his book. So, with this post, I am going to kick off a comprehensive review of Kliman’s empirical argument for the falling rate of profit thesis.

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July 20, 2014

Labor Theorists, Money and Lies: A brief rant

So here is a case study for how our Marxist labor theorists work:

First you establish a position that is diametrically opposed to Marx; namely that he was wrong to say money has to be a commodity. Second, you “prove” why labor theory also shows why Marx was wrong, because, in your opinion, the “dialectical movement of money as a category” means money loses its commodity character. Third, you declare you are the real Marxist and Marx was just some witless Victorian who did not have the relevant data at his disposal.

Finally, you declare the collapse of the Bretton Woods in 1971 was not the collapse of production on the basis of exchange value, but the “dialectical movement of money as a category”, which you then top off with this sort of completely devious and deliberately misleading statement:

“Nevertheless we cannot deduce from this any sort of a ‘breakdown’ theory of capitalism.”

The actual breakdown of production on the basis of exchange value in 1971 — the collapse of Bretton Woods itself — having been dismissed as unnoteworthy, you are now free to state that there is nothing about the situation after this breakdown that shows the necessity of a breakdown!

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July 19, 2014

The Value of Labor Theory: Money as a class dictatorship

Continued from here

Labor screen_shot_2014-04-13_at_7.29.21_pm theorists are so used to expressing their ideas in the form of abstract, scholastic, indecipherable bullshit, they have lost all ability to state in clear language, comprehensible to the working class, the gist of the argument they wish to make.

Take, for instance, this passage from Paulani’s paper:

“the categorical evolution of money results in a need for the expulsion of the materiality of money, that is, its ‘natural’ logical movement leads it to a figure that is no longer connected with a real (produced by labour) commodity.”

What does this gibberish even mean?

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July 16, 2014

The Value of Labor Theory: Money is a political weapon of one class over another

Continued from here

Here is a fact that is absolutely vital to your material standard of living and that of your children:

Money is political.

atlanticapril2012 It is a political weapon employed by one class in society to subjugate the other class and force it to labor ceaselessly.

Yet, today, we have a bunch of useless labor theorists running around who approach money as if it is above classes. There are two classes in society and, therefore, two antagonistic and incompatible expressions of the socially necessary labor time of society. This cannot but give rise to two fundamentally incompatible money forms. The struggle in society over which money form will be established as the universal equivalent cannot be divorced from the struggle over what constitutes the socially necessary labor time of the working class.

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July 14, 2014

The Value of Labor Theory: Money as an unconscious class war raging in society

Continued from here

One of the difficulties I often encounter when discussing money is that the discussion is so couched in incomprehensible philosophical or scholastic bullshit that the absolutely vital stake ordinary working folks have in the debate never sees the light of day. The question at issue in the debate is not just “What is money?” Rather, the question posed is “What would be the socially necessary labor time of society today if the money we used was a commodity money as Marx argued?”

Labor theorists have a number of very interesting answers to the question, “What is money?” But not a single one of them has ever actually investigated the implications for wage slavery if their pet answer were true. You can look at the writings of people like Moseley, Foley, Nelson, Arthur, Campbell, etc. All have very interesting answers to the question, “Must money be a commodity?” However, one thing you will notice in common in all of these papers is that not one of these useless academics ever manages to explain how their particular answer affects the labor time of the working class.

It is time to put an end to this sort of nonsense: money is class warfare and labor theorists are fighting on the wrong side.

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July 13, 2014

The Value of Labor Theory: “Our friend, Moneybags, should be so lucky …”

In part I of this series, I explained how the events of 1971 — the collapse of Bretton Woods — had its roots in a process Marx first fully described in Capital: the ever increasing separation of the useful qualities of the commodity from its value, i.e., the socially necessary labor time, required for its production. In this separation, for the first time the labor time required to produce the commodity takes a form that is independent of the useful qualities of the commodity.

This fact has significance for us because unless Marx established in the opening chapter of Capital that these two characteristics of the commodity take on forms that are independent of one another, he could not show that Keynes’ so-called “technological unemployment” was an inevitable result of capitalist commodity production. In other words, Marx intended to show that absolute overaccumulation — in the form of an excess mass of capital and an excess population of workers — had to develop, leading to the complete breakdown in production on the basis of exchange value that he predicted in the Grundrisse.

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July 11, 2014

The Value of Labor Theory (and the uselessness of labor theorists)

In 1971, the United States, under pressure from international economic forces, was forced to abandon the gold standard. Yet forty years later, labor theorists have failed to come to grips with that event and refuse to acknowledge what it signified: the final collapse of production on the basis of exchange value, as was predicted by Karl Marx in 1858. This incapacity to recognize Marx’s prediction in the actual events of 1971, probably more than any other single event in 20th century history, demonstrates the utter and complete failure of the post-war Marxist school.

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Month: July, 2014