(OPE-L) Measurement of abstract labor

From: glevy@PRATT.EDU
Date: Mon Jul 26 2004 - 09:51:46 EDT

---------------------------- Original Message ----------------------------
Subject: Measurement of abstract labor
From:    "Jurriaan Bendien" <andromeda246@hetnet.nl>
Date:    Mon, July 26, 2004 9:49 am


Hi Claus,

You wrote:

It seems to me that this statement of yours is based on implicit unproven
pressupositions, which are: 1) that in Marx's time the massive creation of
credit and of fiduciary money were phenomena of minor significance, of
which people seem to have been unaware, which I think is not true; 2) that
Marx's theory of money did not contemplate and/or is unable to take into
account and explain those phenomena, which I think is also not true; 3)
that what you call the abandonment of the gold-dollar standard implies
that gold has lost its monetary role, which in my opinion cannot be taken
as a proven fact.

As regards 1), Marx was well aware of credit-creation, and Engels mentions
it in Cap. Vol. 3, but if today for example British households
collectively carry more than 1 trillion of debt, or given that the total
indebtedness of the USA (household, federal, state, local govt and
household debt) is in excess of US$40 trillion (i.e. four times the size
of annual GDP) while more US currency and dollar-denominated claims
circulate overseas than inside the country, then we're talking about a
phenomenon of quite a different order and magnitude I think. As regards
2), I agree with you in principle. As regards 3), the USA still holds very
substantial gold stocks. The IMF reports that the US holds 261.59 million
troy ounces, worth $11 billion.
http://www.imf.org/external/np/sta/ir/usa/eng/curusa.htm#I But other
industrialised countries, including e.g. Britain and Holland, have been
auctioning off gold in recent years.

So you are correct, gold is still part of the monetary system. Point is
that its role has been vastly diminished, simply because the volume of
monetary claims in circulation is much larger than the value of gold. The
classical commodity theory, according to which the long-run value of money
is related to the production-costs of the precious metals used as monetary
standard was counterposed to the quantity theory, according to which the
"value" of money is simply determined by the quantity of money available
in the economy. Obviously, currency itself is also a commodity, in the
sense of a tradeable object that can be the source of capital
accumulation, hence the phenomenon of "money-markets".

Clause wrote:

I'm not sure I understand what you mean: you seem to believe that the
market is compatible with socialism. I'm sorry if I understand you
wrongly, but if that is your belief, then your interpretation of Marx's
theory of money is in my opinion problematic. If I missunderstood you,
please don't consider my remark.

One of the goals (not the only goal) of socialist economy is to encourage
the transcending of a system of resource allocation exclusively on the
basis of buying power or profit criteria, through legally sanctioned
citizens entitlements and rights, which include a guaranteed subsistence
and educational opportunities. But that doesn't mean the abolition of
money, rather it means restricting money-economy to those spheres where it
is useful, efficient and serves socially decided goals - and this is done
by clearly demarcating which goods and services may be generally traded,
and which may not, and by whom they may or may not be traded. Moreover,
money remains a unit of account, along with physical unit accounts and
labor-accounts. All of this is discussed in the more intelligent East
European literature.

The dispute among real Marxists has never been about whether there should
be a market or no market, but (1) where markets are effective and
efficient, and where they are not, or violate social priorities, (2) how
these markets should function, and (3) to what extent it is possible to
replace markets by superior forms of resource allocation, which is the
overall aim. That is how Lenin, Trotsky and Bukharin approached it as
well. The goal is to abolish a situation where production of output is
mainly conditional on accumulation of private capital, rather than
conditional on social priorities agreed to by the majority of society. But
this does not mean that a private sector would not continue to exist to
some extent, in areas where that is useful and productive, for example,
entrepreneurship. In large part, the large corporations are internally
already functioning as planned economies, and for basic consumer goods the
demand is known, predictable and stable, and is supplied by just a few
corporations. In that sense, socialisation is objectively already

Personally, I have never belonged to that school of Marxists which
believes that money is the root of all evil, because it isn't.
Marx's critique is that money becomes an autonomous force as private
capital, in which case people are used and exploited in the pursuit of
property ownership and private enrichment, and moral and social priorities
of human life are disregarded.

We can see nowadays what the downside of capitalism means; Fidel Castro
discussed it in detail. In 70-80 of the 100 or so 'developing' countries
the average income per head of the population is today lower in real terms
than ten or even 30 years ago. The FAO estimated that the number of
chronically hungry human beings around the world rose to 842 million in
2000, an increase of 18 million. Around 25 million human beings die
annually from hunger. Developing countries account for over 800 million
undernourished human beings, and this number is climbing at a rate of
almost five million a year. About 34 million human beings are hungry in
"marketised" countries of the former Soviet bloc, followed by 10 million
in industrialised Western countries. This is not market efficiency.

Currently world unemployment is steadily increasing and stands at about
180 million people, according to the ILO, including 50 million in the
industrialised countries. A billion people (a third of the world's work
force) are unemployed or underemployed. Some 550 working poor live on US$1
or less per day. 3 billion people earn 2 euro or less per day, i.e. less
than 730 euro a year. There are now 27 million people on earth living in
slavery, as slaves, men, women and children being bought and sold. Then
you're talking 0.4 percent of the world population, or around 1 percent of
the world's workforce. In the next decade, there will be another 460
million young workers streaming onto the job market, but at the moment
there is no significant net increase in world employment. Climate change
over the next 50 years is expected to drive a quarter of land animals and
plants (1 million species) into extinction. And so on. At the same time
that this is happening, utilisation of installed productive capacity in
industrialised countries is running at 75-85%, i.e. between a quarter and
a sixth of available capacity is not used simply because the buying power
is not there. This is not "market efficiency".

These problems cannot be solved by capitalism, not just for demographic
reasons but because universal marketisation just increases the
socio-economic inequality; it does raise productivity and raises a stratum
out of poverty, but not in a way that benefits the majority. The fastest
growth areas of production are in the area of luxury production and
weapons production, and this is logical, because the incomes of the mass
of ordinary consumers are stagnating or increasing only very slowly. That
is why state planning, democratisation and socialisation are necessary.
But this does not mean abolishing all markets, this is completely
impossible. World trade is necessary.  It means rather that we consider
more carefully what markets really are, how trade must occur, and where we
want to have markets and where we don't want to have them. Commoditisation
is conditional on privatisation, and privatisation is about asserting
property rights. If you change the system of property rights, some thing
can no longer be
commodities, simple as that.

Deregulation of the wealthy means regulation of the working classes. You
can also turn that around, and regulate the rich more, and deregulate the
creative potential of the working classes. Markets can accomplish some of
that, but without appropriate regulation they don't have an overall
beneficial effect. The dogma that all markets are bad, cost the lives of
millions of people. It is not a viable position, anymore than the idea
that markets are always good is a viable position. What is a viable
position, is to regulate markets so that they serve social priorities, and
there is no particular mystery about what those are, since there is a
basic sequence of human needs that must be met for people to be able to
realise their potential, and we know a lot about the psychology and
physiology of human development now.

So to cut a long story short, yes, markets are compatible with socialism.
But not any kind of market; the pattern of trade must satisfy social
criteria. All that postmodernist confusions really achieve is that people
think they are no longer able to agree about moral principles about
resource allocation and therefore that anything goes within the strictures
of market behaviour. But as soon as the market ceases to function for
them, then all of a sudden it is discovered that people have very strong
values, very strong moral beliefs, and absolute moral principles... in
which case all the postmodernist fuzziness disappears. And of course,
moral principles have their class basis as well. The preoccupation with
themes such as identity presupposes that you have the ability to think
about that identity, and this has definite material and social sublimates.

Now I have to concentrate on making some money...


PS - a good article on abstract labor is at:

The author carefully distinguishes like Marx does between the substance,
form and measure of economic value.

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