The Real Movement

So let’s get some tedious chart stuff out of the way. Once we do this I can return to the subject at hand; namely, Postone’s concept of the hollowing out of working society.

In my last post, I left you with this chart, so let’s begin there:

The chart shows the run up to one of the least understood events of the 20th century, the depression of the 1970s. What makes the depression difficult to understand is that it doesn’t take the form most people expect it to take. The depression wasn’t characterized by mass unemployment like the Great Depression of the 1930s. As the above chart demonstrates, instead there was an immense swelling of the expenditure of superfluous labor time in the United States economy.

This is important to understand, because it was the malignant expansion of superfluous labor time in the 1970s that gave the depression its peculiar inflationary character.

Stripping away the layer of superfluous labor time on the chart, allows us to see some of the critical landmarks in the development of the mode of production; landmarks which are not evident if we confine our analysis to the level of state issued currency data.

Having established that I can at least make an argument for the validity of the empirical data I am using, I now want to extend this data further to include the period from 1980 to 2000 as in the chart below:

Here now, I include the period of the so-called Great Stagflation, i.e., the second Great Depression of the 20th century, which, as far as I know, is acknowledged by no authority, either officially or unofficially, but which plainly appears in commodity money measures of United States gross domestic product in the historical record. Also appearing in this chart is the subsequent expansion from 1981 to 2000, that is far from stable, but which eventually exceeds the previous peak reached in 1970.

Let me point out a few things you won’t find, if you stick to the government data that is based on state issued dollar currency:

Chart 1: The foot print of the recession of 1973-1975 in the historical record

In chart 1, that odd protuberance in the middle of the 1970s depression is actually formed by the so-called “oil shock recession of 1973-1975”. Now you might ask yourself why a recession results in an increase in the production of socially necessary labor time? I don’t have an answer at this point in this discussion. All I can say is that this recession followed the second largest stock crash since the Great Depression. The largest crash was in 2008.

Not surprising, when stated in valueless state issued dollar currency, United States gross domestic product, year over year, shows no evidence that this event ever occurred.

Chart 2: The Volcker shock (double-dip) recession and the end of the Second Great Depression of the 20th Century.

In chart 2, the second great depression of the 20th century ends with a double-dip recession when then Chairman of the Federal Reserve Bank, Paul Volcker, raised the monetary policy interest rate, ultimately to 20%, in an effort to extinguish inflation that was then running at nearly 15%. Again, why did this recession, one of the worst in post-war history, result in an increase in the production of value? Again, I don’t have an answer at this point in the discussion.

Not surprising, in this case as well, when stated in valueless state issued dollar currency, United States gross domestic product, year over year, shows no evidence that this event ever occurred either.

Chart 3: That day the Earth stood still, but traders shit their pants, aka, “Black Monday”

In chart 3, we have October 19, 1987. It was a day that began like any other Monday. Before it ended, it had acquired the infamous tag, “Black Monday”. As the trading day crossed the international dateline and opened in Australia and New Zealand, this tag morphed into “Black Tuesday”.

So it goes.

The chart above suggest that Black Monday began long before that Monday in October. There is clear evidence that GDP measured in gold plateaued between 1984 and 1985 and then fell in 1986 and again in 1987. The culprit in this case may have been two measures designed to contain the growing Reagan-era budget deficits: Gramm–Rudman–Hollings Balanced Budget and Emergency Deficit Control Act of 1985 and the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987. Together these measures are known as Gramm-Rudman. Which is to say, the market crash on Black Monday likely began as an attempt to control the federal deficit — a side-effect we will see again later on a much larger scale.

For the third time, it is not surprising that when stated in valueless state issued dollar currency, United States gross domestic product, year over year, shows no evidence that this event ever occurred either.

Chart 4: There was a brief recession from July 1990 to March 1991, but this was accompanied by a real falling off in the production of value for the period 1990-1992.

In chart 4, we have the fourth and final event: a real drop in the expenditure of socially necessary labor time from 1990 through 1992. The culprit again appears to be an attempt to contain the budget deficit through a measure known as the Budget Enforcement Act of 1990. According to Wikipedia, roughly $500 billion in savings was achieved over five years through a combination of spending cuts and tax increases. As can be seen, the effect on the production of value was almost immediate, with socially necessary labor time contracting.

Needless to say, as with all the other events above, when stated in valueless state issued dollar currency, United States gross domestic product, year over year, shows no evidence that this event ever occurred either.

*****

But all of the charts above at trivial. I mean, they are important to me, because I actually care about labor theory of value. Most people don’t care about it and I can understand that.

In any case, the most amazing thing about the above charts is that when I set all of those developments against the change in the valueless state issued dollar currency measure of United States gross domestic product, you can see how those changes are almost imperceptible against the truly monstrous explosion of superfluous labor time since 1971:

Chart 5: Depression? What depression?

The historical data based on commodity money is literally buried in an ever growing mountain of expenditures of empty labor time, of labor time that creates no value. By 2000, the labor time that is socially necessary for the production of material wealth, as measured in a commodity money, has increased perhaps 33% — again, it forms that thin sliver of gold at the very bottom of the chart — while the actual labor time expended, as measured in state issued currency, has increased 955%, and was going parabolic by 2000.

The tedious part is over.

Let’s get back to Postone’s argument.

If the Great Depression of the 1930s signaled the collapse of production based on exchange value, as I have argued here, it also signaled the short-lived era of the state as manager of the national capital. This era, like the collapse of production based on exchange value that preceded it, had been predicted by Marx and Engels fifty years before it occurred, in 1880.

Here I quote the most significant of their insights on this subject from Socialism, Utopian and Scientific:

In these crises, the contradiction between socialized production and capitalist appropriation ends in a violent explosion. The circulation of commodities is, for the time being, stopped. Money, the means of circulation, becomes a hindrance to circulation. All the laws of production and circulation of commodities are turned upside down. The economic collision has reached its apogee. The mode of production is in rebellion against the mode of exchange. (My emphasis.)

This rebellion leads to the further socialization of the management of the accumulation process:

This rebellion of the productive forces, as they grow more and more powerful, against their quality as capital, this stronger and stronger command that their social character shall be recognized, forces the capital class itself to treat them more and more as social productive forces, so far as this is possible under capitalist conditions. The period of industrial high pressure, with its unbounded inflation of credit, not less than the crash itself, by the collapse of great capitalist establishments, tends to bring about that form of the socialization of great masses of the means of production which we meet with in the different kinds of joint-stock companies. Many of these means of production and of distribution are, from the outset, so colossal that, like the railways, they exclude all other forms of capitalistic expansion. At a further stage of evolution, this form also becomes insufficient. The producers on a large scale in a particular branch of an industry in a particular country unite in a “Trust”, a union for the purpose of regulating production. They determine the total amount to be produced, parcel it out among themselves, and thus enforce the selling price fixed beforehand. But trusts of this kind, as soon as business becomes bad, are generally liable to break up, and on this very account compel a yet greater concentration of association. The whole of a particular industry is turned into one gigantic joint-stock company; internal competition gives place to the internal monopoly of this one company.

And, ultimately, to the state itself being forced to take control of this process:

In any case, with trusts or without, the official representative of capitalist society — the state — will ultimately have to undertake the direction of production. This necessity for conversion into State property is felt first in the great institutions for intercourse and communication — the post office, the telegraphs, the railways.

In a footnote to this passage, Marx and Engels make clear that they were only talking about a situation where the state was forced by economic circumstances to assume this new role; thrust upon it, because capitalist accumulation would have outgrown every form of private management. This step would be economically inevitable, even if accomplished by the bourgeois state, and would mark an economic advance toward communism.

In other words (and putting this in terms that might be understood by our bonehead Marxists), at some point in the development of the forces of social production, there would be no alternative to some form of social management of the economy. If the proletarians were unable to take power, for whatever reason, the existing state would still find it necessary to assume this role. This assumption of economic management of the national capital by the existing state would not be “socialism’; just the opposite: the state would actually become the national capitalist:

“The capitalist relation is not done away with. It is, rather, brought to a head. But, brought to a head, it topples over.”

This brings us to 1980, 100 years after the publication of Socialism, Utopian and Scientific. If, in that short pamphlet, Marx and Engels predicted that there would be no alternative to the state assuming the role of the national capitalist, 1980 seems to point to the watershed period when “There is no alternative.” comes to symbolize the beginning of what many, dumb Marxists among them, mistook to be a historical regression:

The toppling over of the state-manage national capital.

So, let’s continue.

As I wrote in the previous post, in volume 3 Marx seems to suggest that, by combining the growing mass of excess capital with the growing surplus population of workers, after production based on exchange value had finally collapsed, Keynesian programs like FDR’s New Deal and Johnson’s war of aggression could, at least in theory, increase the mass of surplus value produced by the total national capital of a country.

But Marx also warned this effort to extend the shelf-life of capital would only succeed at the cost of further intensifying the contradiction between the conditions under which the additional surplus value was produced and the conditions under which it was realized. The result of such a strategy, which necessarily involves extra-economic intervention by the state, would be to increase the real productive power of social labor, even as the real consumption power of society was further narrowed.

Accumulation would accelerate, as would the expansion of the national capital, to produce additional surplus value on an extended scale. The policies we now refer to as Keynesian deficit spending stimulus would not solve the problem of absolute overaccumulation of capital, but actually exacerbate it. It is probably not hyperbole to state that crisis would become a permanent feature of the mode of production.

But, and this is what seems to get lost in a lot of the analysis that takes place particularly after 1971, this is a crisis of a peculiar sort: it is a crisis where the so-called economy paradoxically is stuck in a permanent state of overdrive, or hyper-accumulation of excess capital.

To illustrate what I mean, let’s start with the chart we used in the previous post:

What follows here is not going to be pretty; in fact, you may find it hard to accept.

Don’t be concerned, lots of Americans don’t accept the idea of evolution, yet they eat bananas and climb trees just like their evolutionary ancestors.

*****

Now, let’s strip off the layer of superfluous labor time, to leave only the underlying socially necessary labor time:

This gives us an idea of the trajectory of capital during what is fondly remembered as the golden age of the social welfare state — the period from the end of World War II to about 1971.

Is this a credible picture of what is taking place in the so-called economy at the time?

Well, let’s check.

One way to double check that we are actually seeing real useful information and not just useless noise might be if we can detect events that previously were not readily evident to us using traditional historical empirical datasets. For this reason, I want to bring your attention to the two weird notches in the chart above that I have highlighted in the chart below:

Interestingly, those notches coincide with dates NBER researchers have identified as the effective beginning and end of full convertibility of currencies under the Bretton Woods fixed exchange system that was initially established in 1944. Most writing on the Bretton Woods system point to the 1944 date, but NBER researchers focus on 1959-1968 because this was the period of full convertibility. The dataset I am using, based on actual commodity money, indicates that a monetary disturbance of some sort actually took place during those time periods. After 1968, according to the NBER researchers, the Bretton Woods system effectively collapsed into a chronic dollar currency crisis, and the United States gave up trying to manage the crisis altogether in 1971. In this chart, those dates stand out like twin beacons, as does the date Nixon effectively ended US participation.

We capture all three dates on this one chart:

Once Nixon ends effective US participation in Bretton Woods, the value of United States gross domestic product, as measured in gold, falls off the cliff, producing the crisis of the 1970s that most radical Leftists and Marxists agree happened, but which cause they have mostly never been able to explain.

Radical and Marxist economists are unable to explain the crisis, because, according to official data, it never happened. Yes, there were some pretty bad recessions. And an oil shock or two. And a lot of inflation. But these folks mean more than just that.

They want to say there was a crisis, like the Great Depression was a crisis. Only, between 1971 and 1980, with the end of the dollar peg to gold, when the so-called U.S. economy slumped into a deep depression, there was no replay of the Great Depression in terms of massive unemployment of the working class. Paradoxically, superfluous labor time, rather than being shed, and converted into mass unemployment of the Great Depression type, simply expanded to monstrous proportions.

Another way to say this is that the existing US national capital was temporarily devalued to a fraction of the value it had prior to the crisis — roughly 17.4% of its former value, or about 3.4% of the total labor day. At the same time, the portion of the labor day that was superfluous to the production of value expanded to 96.6% of the working day by 1980.

And no one can explain how or why this happened; and they couldn’t even explain what had happened, because, in currency terms, nothing of what was happening appeared in official government data!

*****

The collapse of Bretton Woods is a critical watershed moment because, unlike with FDR’s devaluation in 1933, once it is gone there is no practical limit on the portion of the total working day that can be superfluous to the production of exchange value. By 1980, the working day in the United States was almost entirely hollowed out, emptied of exchange value producing labor.

Here is my original chart from the Great Depression era:

For shits and giggles, I have extended the above chart to 1971, just to see what it looks like:

So, now we have extended the chart based on the empirical data from 1939 to 1971. In extending the above chart, I have in no way changed any of the assumptions that I have made so far. (Notice, for instance, that my hands never leave my wrists):

What is obvious from the chart I have created above based on Marx’s labor theory of value is that by paying for labor that was clearly superfluous to the production of value, with a devalued currency, FDR’s New Deal era programs, like the Agriculture Adjustment Act and the Works Progress Administration, (and even Johnson’s Vietnam War) was able to add to absolute mass of profits created by the productively employed capital of the United States.

This may seem counter-intuitive, but Marx, in in this entirely too-long quote from volume 3 of Capital, suggested such a solution was possible, although he warned of the grim consequences of trying to do something stupid like this:

The conditions of direct exploitation, and those of realising it, are not identical. They diverge not only in place and time, but also logically. The first are only limited by the productive power of society, the latter by the proportional relation of the various branches of production and the consumer power of society. But this last-named is not determined either by the absolute productive power, or by the absolute consumer power, but by the consumer power based on antagonistic conditions of distribution, which reduce the consumption of the bulk of society to a minimum varying within more or less narrow limits. It is furthermore restricted by the tendency to accumulate, the drive to expand capital and produce surplus-value on an extended scale. This is law for capitalist production, imposed by incessant revolutions in the methods of production themselves, by the depreciation of existing capital always bound up with them, by the general competitive struggle and the need to improve production and expand its scale merely as a means of self-preservation and under penalty of ruin. The market must, therefore, be continually extended, so that its interrelations and the conditions regulating them assume more and more the form of a natural law working independently of the producer, and become ever more uncontrollable. This internal contradiction seeks to resolve itself through expansion of the outlying field of production. But the more productiveness develops, the more it finds itself at variance with the narrow basis on which the conditions of consumption rest. It is no contradiction at all on this self-contradictory basis that there should be an excess of capital simultaneously with a growing surplus of population. For while a combination of these two would, indeed, increase the mass of produced surplus-value, it would at the same time intensify the contradiction between the conditions under which this surplus-value is produced and those under which it is realised. (My emphasis)

Marx suggested in volume 3 that programs like FDR’s New Deal and Johnson’s war of aggression could, at least theoretically, increase the mass of surplus value produced by the total national capital of a country, but this would only succeed at the cost of further intensifying the contradiction between the conditions under which surplus value was produced and the conditions under which it was realized.

The productive power of social labor would grow, even as the consumption power of society was further narrowed. The tendency toward accumulation, to expand the national capital, to produce surplus value on an extended scale would accelerate. The policies we now refer to as Keynesian deficit spending stimulus would not solve the problem of absolute overaccumulation of capital, but exacerbate it.

The imagery Marx brings to mind here is of an ever accelerating rate of accumulation that could be said to foreshadow what has only recently made its way into the margins of nerd literature in the form of half-baked, infantile concepts like Vinge’s exponentially accelerating change or Kurzweil’s The Law of Accelerating Returns. Marx’s labor theory, which long predates these childish ideas, predicted that, at a certain point in the development of the capitalist mode of production, the contradiction between the conditions under which this surplus-value is produced and those under which it is realized would reach the breaking point, so that the two would no longer be compatible with one another; in other words, production based on exchange value would break down.

Beyond this point, the accumulating excess capital and the growing surplus population could be forcibly combined by some means, but this would only further intensify the underlying contradiction between the two. Postone restated Marx’s argument in a way that some might find it easier to understand: labor itself would become hollowed out.

As Postone put it just before he passed:

“Marx is pointing to a trend that empties proletarian labor of its content, diminishes proletarian labor and yet holds on to this labor.”

The content of which labor is emptied is its capacity for creating value. What is left as a residual is labor time that superfluous to the creation of value. The labor is empty because it produces neither social nor material wealth. It exists because labor time itself is a measure of social wealth.

But, trust me, it get worse, much worse:

In 1971, Nixon completely debases the dollar and all hell breaks loose

I took so long to write this post because I had to completely rethink my roadmap.

Somewhere I dropped a thread, I think. I have to address an important issue before I move forward. In particular, I want to point out a queer anomaly between the two charts below to see if everyone else can see what I see in the stylized chart I created applying Marx’s argument on our poor, historically doomed 19th century hand-loom weavers to Roosevelt’s poor, historically doomed depression-era dirt farmers.

First, here is the dirt farmers’ chart:

And here is the chart I created employing the actual historical data from the Great Depression:

Can you see my problem?

If you are sharp, you will notice, that my original chart for Roosevelt’s poor, historically doomed depression-era dirt farmers doesn’t predict any change in the mass of socially necessary labor time created by Roosevelt’s intervention in 1933 through the Agriculture Adjustment Program and dollar devaluation against gold. Yet the actual historical data show there was actually a huge change in the mass of socially necessary labor time following Roosevelt’s intervention.

There was not just a huge change in the United States, according to most students of the Great Depression, every country that altered the gold standard in the 1930s saw a similar result:

According to later analysis, the earliness with which a country left the gold standard reliably predicted its economic recovery. For example, The UK and Scandinavia, which left the gold standard in 1931, recovered much earlier than France and Belgium, which remained on gold much longer. … The connection between leaving the gold standard as a strong predictor of that country’s severity of its depression and the length of time of its recovery has been shown to be consistent for dozens of countries, including developing countries. This partly explains why the experience and length of the depression differed between regions and states across the world. (Wikipedia)

Again, here is the dirt farmers’ chart based on stylized model, which show no alteration in the trajectory of socially necessary labor time:

And here is the chart based on the actual historical data, where, in reality, we get a sharp alteration in the mass of socially necessary labor time in 1933 that basically brings the contraction phase of the Great Depression to an end and begins a recovery of sorts — although this recovery is decidedly tentative and halting.

As can be seen in the above chart, “real” GDP, as measured in exchange value (gold), immediately stops contracting in 1933. By 1937, it is approaching where it was in 1932, when another downturn occurs in 1938. It seems that, by increasing the mass of superfluous labor time, Roosevelt’s devaluation and public spending not only stopped the economic contraction in place, but actually boosted the production of exchange value.

Recall again the argument Marx makes in the Grundrisse that capital “posits the superfluous in growing measure as a condition … for the necessary.”

And in “Time, Labor and Social Domination”, Postone takes this to mean that “With advanced industrial capitalist production, the productive potential developed becomes so enormous that a new historical category of “extra” time … emerges … in the form of “superfluous” labor time.”

This extra time emerges because capital cannot dispense with the unnecessary labor time, since labor time is social wealth for capital even when it is superfluous to the production of material wealth. On the other hand, as can be seen from the actual historical data, this growing mass of superfluous labor time is not just necessary for capital in its own right, it is now also the condition (Marx says the “life or death” condition) for the further expansion of socially necessary labor time.

To understand how this works, think of all of those workers who need subsistence wages while they are building aircraft carriers to threaten the planet.

Good jobs at good wages!

As I will show, this is, by far, the most staggering implication to be drawn from the chart above.

According to Postone, then, what I naively have been referring to as superfluous labor time is only superfluous from the standpoint of a future communist society. The region of my chart I have labeled superfluous labor time is actually somewhat inaccurately labeled, since superfluous labor time remains necessary for capital despite the fact that it is, at the same time, entirely superfluous to the production of material wealth.

Does this makes sense?

If not, here is how Postone argued his case in his own words from Time, Labor and Social Domination:

My examination of the dialectic of the two dimensions of capitalism’s underlying social forms has shown, however, that a general reduction of socially necessary labor that would be fully commensurate with the productive capacities developed under capitalism cannot occur, according to Marx’s analysis, so long as value is the source of wealth. The difference between the total labor time determined as socially necessary by capital, on the one hand, and the amount of labor that would be necessary, given the development of socially general productive capacities, were material wealth the social form of wealth, on the other, is what Marx calls in the Grundrisse “superfluous” labor time. The category can be understood both quantitatively and qualitatively, as referring both to the duration of labor as well as to the structure of production and the very existence of much labor in capitalist society. As applied to social production in general, it is a new historical category, one generated by the trajectory of capitalist production. (p. 374-75)

In other words, despite the staggering increase in the productive power of social labor, there is a growing mass of unnecessary labor time that capital literally cannot strip off precisely because labor time itself, not material wealth, is the measure of social wealth for capital!

For this reason, in the chart below you will notice that the area I formerly labeled “superfluous labor time” is now provisionally re-labeled “capitalistically necessary labor time”.

Capitalistically necessary labor time refers to labor time which necessarily arises solely from the requirements of the capitalist mode of production. It is labor time that does not create value and should not be confused with socially necessary labor time which is defined by Marx as that labor time, “required to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time.”

Moreover, according to Marx, superfluous labor time is not just necessary for capital, the premise of the mode of production is of an ever growing expenditure of superfluous labor time as the indispensable precondition for the expenditure necessary labor time.

To be honest, I should have figured this out on my own since Marx says as much in the Grundrisse:

Capital itself is the moving contradiction, [in] that it presses to reduce labour time to a minimum, while it posits labour time, on the other side, as sole measure and source of wealth. Hence it diminishes labour time in the necessary form so as to increase it in the superfluous form; hence posits the superfluous in growing measure as a condition – question of life or death – for the necessary. On the one side, then, it calls to life all the powers of science and of nature, as of social combination and of social intercourse, in order to make the creation of wealth independent (relatively) of the labour time employed on it. On the other side, it wants to use labour time as the measuring rod for the giant social forces thereby created, and to confine them within the limits required to maintain the already created value as value. Forces of production and social relations – two different sides of the development of the social individual – appear to capital as mere means, and are merely means for it to produce on its limited foundation.

Fortunately, Postone made sure we never forgot shit like this.

Finally, in contrast to Marx’s definition of socially necessary labor time, capitalistically necessary labor time is entirely superfluous and its expenditure creates no value. Thus, it follows that the exchange value of capitalistically necessary labor time in the market is always zero.

Just a lot of empty labor time, just like Postone said.

Which creates an obvious difficulty:

• how are we to distinguish commodities that contain socially necessary labor time from commodities that contain only capitalistically necessary labor time?
• what happens to prices when some commodities have a price that is partially composed of socially necessary labor time and partially composed of capitalistically necessary labor time.
• how would we distinguish which part the price of a commodity is which?

Postone left a lot of stuff for grad students to figure out, but let’s not hold our breath. We’re at least as smart as they are, so let’s continue.

In response to my last post, I received this question from a reader on my askFM:

Was the breakdown of production based on exchange value essentially a state mandated phenomena? Had FDR not made the decision to devalue the dollar, would this collapse have been delayed to a further date?

No, the Great Depression itself was the end of production based on exchange value, or, in common language, production based on money. But, as Marx explains in chapter four of Capital:

“As a matter of history, capital, as opposed to landed property, invariably takes the form at first of money; it appears as moneyed wealth, as the capital of the merchant and of the usurer. But we have no need to refer to the origin of capital in order to discover that the first form of appearance of capital is money. We can see it daily under our very eyes. All new capital, to commence with, comes on the stage, that is, on the market, whether of commodities, labour, or money, even in our days, in the shape of money that by a definite process has to be transformed into capital.”

So, (and this is the second implication of the chart, as I will explain), the breakdown of production based on exchange value amounts to “the end of history” wherein capital makes its first appearance as money. Capital is now emancipated from money, so to speak, existing apart from it and independent of it. Money once again has become money in its full sense: it has solidified into a lifeless hoard of gold, while capital ceaselessly circulates and self-expands, never resting, never able to assume the form of money again.

FDR’s actions were forced on him by the mode of production itself. The state could either assume the mantle of capitalist or capital itself would collapse.

*****

Back to our chart now, because Postone had some very interesting things to say about it that I briefly touched on in my answer above, although he passed from this earth before I constructed it:

As you will see, the chart provides two different measures of United States gross domestic product (GDP) for the years 1929 to 1939: one based on exchange value (the gold area) and one based on currency (defined by the green line).

But these are not just two different measures of GDP: as we know from my previous work with our poor, historically doomed hand-loom weavers and our poor, historically doomed dirt farmers, they are also two different measures of labor time. The yellow area represent socially necessary labor time, while the green line defines the actual aggregate labor time expended by society. To put this another way, the green line defines the labor time “paid” in dollars, while the yellow area is labor time that would have been paid if a commodity money were employed in transactions.

This chart was produced by my hand, but it is actually an attempt to visualize Postone’s argument from his groundbreaking reconstruction of Marx’s theory, Time, Labor and Social Domination. In that book, Postone explains Marx’s theory leads to a rather interesting result that I tried to capture from the actual historical data:

With advanced industrial capitalist production, the productive potential developed becomes so enormous that a new historical category of “extra” time for the many emerges, allowing for a drastic reduction in both aspects of socially necessary labor time, and a transformation of the structure of labor and the relation of work to other aspects of social life. But this extra time emerges only as potential: as structured by the dialectic of transformation and reconstitution, it exists in the form of “superfluous” labor time. The term reflects the contradiction: as determined by the old relations of production it remains labor time; as judged in terms of the potential of the new forces of production it is, in its old determination, superfluous.”

To call this labor superfluous is to seriously misapprehend its role in the capitalist mode of production; it is only superfluous from the standpoint of communist society.

If the chart from the previous post seems a bit bizarre to you, let me explain some of its implications.

In post V, I stated:

So have you ever wondered what happens to all the labor time that our hand-loom weavers spend producing their product that was not socially necessary?

Me neither.

To be honest, no one cares, actually; which is why almost no one produce anything by hand these days.

But, according to Postone, superfluous labor is still out there.

Masses of it — really, a whole lot more than you can imagine.

And not just in the U.S. Defense Department.

Scads, actually. Just a huge amount. The sheer amount would fry your brain trying to conceptualize.

All that labor time is still being expended by our poor latter-day hand-loom weavers without so much as a single second of real compensation by the market. It is just so much wasted labor time that creates no value and that consequently has no exchange value. And I think it accounts for what Postone calls the hollowing out of working society.

So we should try to quantify it, since a thing that can’t be measured probably doesn’t exist — even when a genius like Postone says it does.

At the risk of sounding like the complete asshole that I am, what I produced in the last chart is a tool for accurately measuring the mass of superfluous labor time in our so-called economy, using nothing more than the assumptions of Marx’s labor theory of value.

I present it again below in all of its simplicity:

The first and most important implication of the above chart is that it suggests that, by employing the assumptions of Marx’s labor theory of value rigorously, we can objectively identify and quantify a growing mass of superfluous labor time within the so-called United States economy. This mass of superfluous labor time is very similar to the sort of labor time we might expect if Postone’s hypothesis is correct.

In the first place, superfluous labor time is unnecessary labor time that has been expended without creating value, and which, therefore, is not expressed as exchange value in the market. This unnecessary labor time, however, has the peculiarity that, although it has no exchange value, since 1933 it retains a currency price.

Which is to say, the exchange value of the commodity and the price of a commodity no longer coincide, but increasingly diverge. As we will see, eventually, this divergence will become so extreme that as the exchange value of the commodity falls, the currency price of the commodity will increase.

The chart below singles out the portion of the chart labeled superfluous labor time. It shows that this sort of labor time begins to emerge at the nadir of the Great Depression, following Roosevelt’s devaluation of the US dollar against the gold standard and the initiation of the Agricultural Adjustment Act in 1933.

I refer to this effect as an inflation of dollar-denominated GDP:

In fact, inflation and superfluous labor time are simply two different terms for one and the same process. The first term, inflation, falsely identifies as a purely monetary phenomenon, what the second more accurately (but still not quite correctly) identifies as a growing mass of unnecessary labor time.

If you recall from the passage I quoted from Keynes, the inflation is deliberate in that, as we learned in post VI, it consists solely of “increasing expenditure upon [commodities] more rapidly than their supply comes upon the market” to prevent the collapse of prices. Roosevelt was basically doing this when he created a shit-ton of counterfeit dollars and used them to “purchase” the unsaleable crops of our poor, historically doomed dirt farmers, and a lot of other stuff — like unemployed labor power for the Work Progress Administration.

Eventually, Roosevelt would use the same method to rearm America and guide it to world domination, but that is the next post. For this post, it is probably enough that we realize that superfluous labor time can be identified and quantified. We can now move on to show, objectively, based on the actual empirical data, how this labor time develops over time and how it leads to what Postone calls “the hollowing out of working society.”

The obvious question at this point is how this highly stylized presentation holds up once we try to apply it to a real world instance — say the actual historical data drawn from the Great Depression?

I’m glad you asked, because I just happened to have some of that data here, which includes the actual historical data of the Great Depression years 1929 to 1939.

The chart for that data looks something like this:

When I apply the same template to identify the regions of socially necessary labor time and superfluous labor time that I applied to our poor, historically doomed dirt farmers and to Marx’s poor, historically doomed hand-loom weavers, I come up with this chart:

Now, I want to be clear that I have done nothing here with regards to US GDP in the 1930s that I haven’t already done with the stylized information for our 1930s dirt farmers:

Which is to say, first, I took the stylized information I developed based on Marx’s text in chapter 1 of Capital and applied it to the actual historical data drawn from US GDP during the 1930s. I could do this because, no matter that in the first case we are talking about 19th century hand-loom weavers and in the second case we are talking about an innumerable variety of types of 20th century labor, in both cases we are talking about the same thing: abstract homongenous labor.

Again, abstract homongenous labor being what it is, namely “one and the same sort of labour, human labour in the abstract”, we can smoothly substitute the previously developed charts showing the expenditure of the actual and socially necessary labor times of our poor, historically doomed hand-loom weavers in the 1860s or that of our poor, historically doomed dirt farmers in the 1930s, with the innumerable labors of the entire US economy in the 1930s without much fear of committing a theoretical faux pas.

Got that?

Okay, let’s proceed.

Second, as in the case of our poor, historically doomed dirt farmers, I have carefully shown that bizarre dogleg in 1933-34 where Roosevelt devalues the dollar from 20.67 dollars to one troy ounce of gold to 35 dollars to one troy ounce of gold. The dogleg is nothing more than an alteration in the standard of prices — the gold standard — following Executive Order 6102. When Roosevelt devalues the dollar against gold. After that devaluation, you will remember, he was then free to print up a boat load of dollars and use those dollars to buy the unsold crops of the dirt farmers under the AAA.

Third, I then label the two regions of the chart “socially necessary labor time” and “superfluous labor time”.

You can also see that once Roosevelt devalues the dollar, a portion of labor time that is superfluous to the production of value has now acquired a “price”. The term price here is in quotes, because it is entirely fictitious.

How do I know the price is fictitious?

You already know how I know it is true.

Our dirt farmers, remember?

Prior to the AAA, a portion of their crops could not be sold. The market price of this portion, based on exchange value calculation, was zero. After Roosevelt devalued the dollars and prints up the currency, he was able to “purchase” the crops with his crapload of phony paper dollars. That crapload of phony paper dollars had no value of its own.

Basically, Roosevelt used valueless currency to buy valueless crops — a fair trade by labor theory standards.

This would suggest that the labor time that was expended on production of the unsold crops was superfluous, had no exchange value and, therefore, no price in the market.

It also suggests that, through devaluation, Roosevelt altered currency prices to include at least a portion of superfluous labor time.

In the remaining posts I am going to discuss the implications of that chart I created above, see what happens when I extend it down to the present and discuss how it confirms Postone’s argument on the hollowing out of working society.

I will then fold all of this into a single paper and leave it on my public drive for comments and criticism.

Our next step begins with a brief comparison.

In our discussion of the hand-loom weavers, we noted that although they were only paid for their socially necessary labor time in the market, Marx argued they continued to labor the same amount of time as before. We created a chart that demonstrated what these two durations of labor time actually looked like:

I then extrapolated Marx’s argument ten periods to produce this chart:

In my last post, I substituted mid-1930s, depression-era dirt farmers for Marx’s mid-19th century hand-loom weavers and converted the above raw labor time information into exchange values to arrive at this chart:

Now, let me say a word about this chart, because it is not as simple and straightforward as it appears.

First, it should be noted that there are two lines, not one. This is because we are dealing with money (gold) and currency (dollars). Keep in mind that money is the actual commodity, while currency is the token typically used in transactions that represents money symbolically. Currency is NOT money; it is pegged to money and this peg can be changed or adjusted.

Second, as I said in post V, when I convert raw labor time into exchange values, labor time that is not socially necessary is stripped off:

To be clear, this was not just labor time that created no value. Empirically, in Marx’s labor theory of value this labor time didn’t exist at all! It was stripped off by commodity exchange. Only labor time that creates value remains in Marx’s theory and socially necessary labor time remains as a residual because it alone is expressed as exchange value

This is important to understand because it means that, for us, the only labor time that counts appears in the region below the exchange value line. This is socially necessary labor time, labor time that produce value and is, therefore, expressed in the market as exchange value. All labor time taking place above this region is superfluous to the creation of exchange value and is no longer expressed anywhere in our calculations. This unnecessary or superfluous labor time literally no longer exists as far as labor theory of value is concerned:

In reality, however, it continues to exist and Marx acknowledges that it exists when he says:

The hand-loom weavers, as a matter of fact, continued to require the same time as before; but for all that, the product of one hour of their labour represented after the change only half an hour’s social labour, and consequently fell to one-half its former value. (My emphasis)

In other words, the hand-loom weaver still needed the same time as before to do what they need to produce their commodity, but their labor itself created less value. There was no change in the actual amount of labor time they needed as individuals to create their product. But a portion of their labor time now became superfluous to the creation of value. Which is to say, it now fell above that exchange value line in the above chart — in the region I have labeled “superfluous labor time”.

Everything Marx said about the hand-loom weavers I am applying to the dirt farmers as I stated in post VII.

… abstract homongenous labor being what it is, namely “one and the same sort of labour, human labour in the abstract”, we can smoothly substitute the previously developed chart showing the expenditure of the actual and socially necessary labor times of our poor, historically doomed hand-loom weavers in the 1860s for that of our poor, historically doomed dirt farmers in the 1930s, without much fear of committing a theoretical faux pas …

Now, let’s see what happens when we add Roosevelt’s devaluation of the dollar in 1933 and the start of the Agricultural Adjustment Act the same year:

Based on the above chart, I can only come to the conclusion that, beginning in 1933, Roosevelt’s fascist AAA program basically paid our poor, historically doomed dirt farmers for labor time that produced no value at all, i.e., superfluous labor time, as a means of exiting the Great Depression.

At the same time, beginning in 1933, the prices of commodities no longer expressed the socially necessary labor time required to produce them. Beginning with 1933, we must make a distinction between the prices of commodties and the value.  As I will show next, the historical data appears to be suggest that this is what is happening for the entire economy.

The implications of the data directly support Postone assertion that working society is being hollowed out.