You are currently browsing Jim's articles.
Article in the New York Times today: Geithner Said to Have Prevailed on the Bailout. And over whom has Geithner prevailed? Dissenting voices in his own administration:
In the end, Mr. Geithner largely prevailed in opposing tougher conditions on financial institutions that were sought by presidential aides, including David Axelrod, a senior adviser to the president, according to administration and Congressional officials.Mr. Geithner, who will announce the broad outlines of the plan on Tuesday, successfully fought against more severe limits on executive pay for companies receiving government aid.
He resisted those who wanted to dictate how banks would spend their rescue money. And he prevailed over top administration aides who wanted to replace bank executives and wipe out shareholders at institutions receiving aid.
Yves Smith at Naked Capitalism is calling the Geithner plan a fiasco:
In other words, Geithner followed the Paulson script of pushing hard to make the bailout industry friendly, to the extent of compromising the effort to get the plan fleshed out in adequate detail.
Smith is probably right that the plan won’t be much better than the one we got last fall from Paulson, though I think her general pessimism is misplaced. Geithner’s plan prevailed over countervailing opposition from David Axelrod and others within the Obama administration pushing for far more radical control over the banks we’re bailing out. It makes sense that the Obama administration would divide internally over how to deal with this problem and many others. Obama wasn’t elected by the left on a platform of social-democracy. He was elected by a coalition of students, white collar workers, blacks, and disaffected Republicans. The economy is the issue where mainstream American politicians tend to be the most conservative. The fact that the Obama administration is governing from the center and even from the same position as Bush on these issues at the moment shouldn’t come as a surprise.
Nevertheless, due to the severity of the situation we’re facing—the worst economic disaster of a generation, possibly a century—I expect the tone coming out of the White House to change rapidly. If this banking bill doesn’t sufficiently turn things around, it’s going to strengthen voices of opposition within the Obama administration, and we can expect even a drastic push to the left: not just caps on executive pay but also greater control over what institutions can do with bailout money. Geithner could easily be gone in a year.
The problem with Smith’s analysis and the analysis of those who take a “screw the Democrats” line isn’t that their criticisms of the plan are flawed but rather that they don’t take a nuanced-enough attitude toward politics in general. The Obama administration is hardly a homogenous body—to say nothing of the Democratic Party as a whole. The diverse interests present in the administration reflect the diverse class interests that brought Obama to power. While the interests present in the Bush Administration were uniform by comparison—representing a Dukes of Hazard mentality toward the world—one can begin to see the rudiments of actual class struggle playing out in the White House. I say “rudiments”, because there is hardly an open struggle right now between the interests of the people and the interests of the bourgeoisie. But it’s going to be impossible for Obama to continue to govern in the interests of a portion of his constituency which is growing in power while at the same time catering to the received wisdom of the financial markets that got us where we are. People are really fed up not just with the greed but with the seeming arbitrariness of the whole system, they want substantive change, and they’re not going to be able to get it so long as the Obama administration keeps one foot in the policies of the Bush administration. The class conflict we see playing out in the open is going to push him further to the left.
Of course, the same problem plaguing Menger has to be a nuisance to Smith, Ricardo, or anyone who wishes to posit the origin of economic value in labor. That problem, briefly, is that, when looked at from the practical, everyday point of view, the objects we use and buy have qualitatively distinct ends, so they are incommensurate. In appealing to the usefulness of everyday things as the source of their equality, Menger appeals to just that aspect of things that is in principle and hence necessarily unequal. Yet to say that labor is the source of their economic equality just pushes the problem back a step.
According to Smith’s and Ricardo’s labor theories of value, the economic value of the commodity is determined by the labor that goes into it. So the value of a bed comes from the labor of bed-making, and the value of a pair of shoes comes from the shoe-making. But making beds and making shoes have different ends. The end of the first is shoes, the end of the second is beds. Any two actions that aim at different things are really different actions. Therefore, bed-making and shoe-making are different actions. Apart from a mere expenditure of energy, sweat, etc., they have nothing in common in and of themselves. But if they have nothing in common, they can’t be the reason we say x beds = y shoes. So the labor that makes the useful thing can’t be the source of the economic value of the thing any more than its intrinsic usefulness can be.
This is Marx’s critique of the labor theory of value. Marx does not just believe there are problems with Smith’s and Ricardo’s labor theories of value. He doesn’t just think they’re magical or arbitrary. He thinks they’re flat out contradictory—and not in the pretty Hegelian sense. They’re just nonsense. Marx does not believe there is something special or exalted in cobbling or floor-sweeping that transfers a substance called “value” to a thing. All Marx sees in cobbling is the repair of shoes. All he sees in floor-sweeping is a dirty floor becoming clean. Anyone who thinks otherwise either has not read Marx or hasn’t bothered to read him carefully.
So what is Marx’s theory of value? Marx believes value is necessarily connected with labor, so Marx holds a labor theory of value as economists understand the definition of the word. Further, Marx believes there is a necessary connection between value and market price, and so there is a necessary connection between labor and market price. The connection Marx draws between labor, value, and price is, if not foundational, then at least essential to his analysis of the capitalist mode of production. So if what Marx says about the connection between these things is wrong, his theory about capitalism must be wrong, too. There is no Marxism without Marx’s labor theory of value.
Taking the aforementioned problematic of the commensurability of labors as our starting point, we can categorize Marx’s labor theory of value in very broad outline in the following way:
- If labor is the matter of exchange-value, then it cannot be labor in the form of “natural” labor, labors as we understand them in the everyday, practical sense as activities directed toward unique ends. The only type of labor that can play that kind of role is a labor that is in some sense metaphysically unique: it has to be homogeneous, uniform, and without quality. This is the requirement any labor theory of value must meet if it is to make sense. Smith’s and Ricardo’s do not meet this requirement.
- Marx believes there is such a homogeneous, uniform labor without quality, and pace Smith and Ricardo, he believes this, not natural labor, is the matter of exchange-value. Marx’s name for this type of labor is abstract labor.
- At no point do any of us perform abstract labor simpliciter. Each of us has different jobs. Some of us write computer programs, some of us make music, some of us wash dishes. No one has the job of doing abstract labor in and of itself apart from particular natural labors. So if abstract labor really exists—and Marx believes it does—then we must be performing it at the same time that we’re performing natural labor.
- No natural labor contains abstract labor in and of itself. Bees building a hive and making honey are not producing exchange-value, so they are not engaged in abstract labor. A chattel slave working his master’s olive orchard in 5th century Athens was not producing exchange-value, so he was not engaged in abstract labor, either. There is no quality of labor in and of itself that is abstract and produces exchange value. There is no material substance of value that olive-picking generates the way a gland produces a tear. So if abstract labor becomes incorporated into natural labor so that exchange-value is produced, it is only because a metaphysical transformation of that labor has taken place so that it is transformed from a qualitative thing distinguished by species into something purely quantitative which is now undistinguished by species.
- According to Marx, systematic exchange brings about this metaphysical transformation of labor. Abstract labor and natural labor get tied together by virtue of a specific social interaction between people, viz., the adjustment of prices in a market economy.
That’s the outline. I’ve said nothing about the specific way in which abstract labor is related to concrete labor, i.e., whether abstract labor “belongs” to concrete labor somehow, whether it’s a “property” of it, whether and how natural labor is treated as abstract labor despite the concrete differences, etc. Nor have I said anything about how a social relation can change the metaphysical character of something (we normally think of metaphysics as being independent of society). Nor have I said anything about why this particular social interaction (systematic exchange) has this particular power to transform labor in this particular way. One has to have answers to all of those in order to fully understand Marx’s labor theory of value. All I wanted to do in this post was to show what one has to understand in order to comprehend Marx. It turns out to be very different from what many people believe they have to understand in order to understand Marx. It involves more than thinking that labor is the source of value (in fact, in an important sense, labor is not and cannot be the source of value). And it involves solving a metaphysical, non-economic problem about the essence of labor itself.
I would draw the reader’s attention to one aspect of Marx’s labor theory of value which is not quite at the core of it but which follows from it. If under conditions of systematic exchange, qualitatively distinct natural labors with different ends (production of use-values) are treated as qualitatively undifferentiated with the same end (production of exchange-value), then the metaphysical transformation of labor brought about by conditions of systematic exchange introduces a metaphysical contradiction into labor. Labor aims at two exclusively contradictory ends: the production of use-values and the production of exchange-value. At the core of Marx’s understanding of capitalism is the idea that capitalism is a mode of production that aims first and foremost at the production of profit (a kind of exchange-value). Meeting the concrete needs of humans (to say nothing of their desires and the things that would allow them to flourish) is secondary. This contradicts the bourgeois understanding of capitalism, according to which it is a system that aims at allocating scarce resources. This is an ideological difference, for sure, but it is more importantly a metaphysical difference. Aristotle might have been the first to recognize that exchange-value and use-value are contradictory ends, and that one cannot pursue both in equal measure by means of the same action. And even if one does it to produce a use-value more than he does it to produce an exchange-value (i.e., if a person practices medicine first because he loves medicine and second because he must make a living by doing it), the true and natural aim of the activity (e.g., curing people) will suffer from the presence of the ulterior motive (making money). According to Marx, there are many “contradictions” inherent in capitalism, all of which make it a system perpetually and necessarily prone to multiple kinds of crises. We can see one of these potentials for crises in the outline we have given of Marx’s labor theory of value: capitalism is ostensibly a system for delivering goods to people, and yet it aims at an end which is radically different. Were it not for the fact that capitalism must deliver the goods (i.e., sell them) in order to exist, this wouldn’t be a problem. But if capitalism cannot deliver the goods at all, it cannot make a profit, and so it goes into crisis. The end capitalism pursues, therefore, contradicts the necessary means of fulfilling that end. Capitalism perpetually and necessarily undermines itself. By pursuing exchange-value at the cost of use-value, it contradicts itself. But this necessary contradiction immanent to the capitalist mode of production itself is invisible if one does not start from the appropriate metaphysical perspective on labor and goods.
Sources/Additional Reading
Aristotle, Politics, Ch 1
Marx, Karl, Capital, Ch 1, Sec 1
Meikle, Scott, Aristotle’s Economic Theory, Ch 3 and 9
I initially wrote this as a reply to Jake off my previous post about capital being “diseased”. I’m trying to apply some of the ideas I’ve been picking up from reading Harry Cleaver’s Reading Capital Politically. I’m also trying to put them together with the more philosophical readings of Marx (which Cleaver would probably reject). But I thought the ideas in my reply were important and controversial enough to reproduce them in their own post.
I don’t think the capital social relation is idiotic or stupid exactly. (Though I do think it is counterintuitive and destructive.) It has a rationality to it, and understanding capitalism is equivalent to understanding that rationality. But to my mind there has been no comprehension of the essence of the capital social relation that was more fundamental than that provided by Karl Marx in Volume 1 of Capital. And what Marx shows there is that the rationality of capital is inherently contradictory. This contradiction is more often than not understood as the inevitability of “crisis” in capitalism. It is less often understood as the inevitability of resistance to capitalism by the working class.
There’s an episode of The Simpsons where Mr. Burns goes to the doctor to get a physical. Upon running tests on Mr. Burns, the doctor informs him that he is the “sickest man in the United States”, and the only reason he is still alive is because all his diseases exist in precarious equilibrium with one another. You can view the clip here.
Reading about capitalism fills me with the same incredulity at the fact that it continues to exist.
Think about what the capital power relation consists in. One class—the capitalist class—forces the bulk of the population to sell its labor power in order to survive and enjoy any access to the fruits of social wealth. People are forced to work to create social wealth. That social wealth is stolen from them, and then it is sold back to them as though it is the capitalist’s private wealth.
Pitched this way, capitalism is the world’s most elaborate confidence game. The first thing you do is force people to work. That’s nothing new. As a form of social control, forced work has existed in many societies. But no slave or serf is under the illusion that anything he is doing is forced work. The lord comes down from his castle, he takes a portion of what you’ve produced, and he lets you keep some for yourself.
Capital isn’t about half-measures, though. The capitalist takes the whole thing. Unless you’re stealing from the office or warehouse—which people spontaneously do as a primitive form of class struggle—you don’t keep anything you make. Instead you get a wage. You get a paycheck at the end of the week or every two weeks. And then you take that paycheck to the store and you decide what you’re going to spend the money on. For the vast majority of working families in the United States, what you spend the money on is determined in large part on what you can spend the money on. That is determined by the price of commodities, which in large part is determined by mere chance.
It’s sort of crazy when you think about it. The capitalist steals what you make. That’s not crazy, that’s just violent. But then he tells you he’s giving you the privilege of getting back some of what he and the other capitalists have stolen with credits earned through the labor which the capitalist forced you to do in the first place. It’s like winning the right to buy back your stolen goods from the trunk of a car on the side of the street two weeks after your house was robbed. If that happened, you wouldn’t feel privileged to buy your stuff back. You’d be pissed and call the police. But no one polices the capitalists but themselves.
You might wonder why people would ever stand for something so simultaneously unnatural and idiotic. The truth is that they don’t, and they never have. In any social organism where one class pumps surplus out of another class (i.e., steals what they make), the overriding and perennial problem is to maintain control over the class from which the surplus labor is pumped. In a sense, that’s exactly what the history of any class society is about: the changes undergone so that one class can continue to pump surplus out of another class. But the history of all societies is equally the history of resistance to this imposition of work and the various measures the ruling classes take to adjust to that resistance and keep the extraction going. When the extracting class runs out of options to meet these challenges, or when the challenges become so formidable they overwhelm all attempts to contain the contradictions, the pump stops moving surplus from one side to the other, and the history of that social organism is at an end.
Capitalism’s difficulty in this sense is twofold. Not only does it have to keep the condition of forced work in place, but it also has to keep the illusion going that it is somehow doing people a favor by allowing them access to anything less than 100% of the vast social wealth produced by our labor and ingenuity. In some places in the world, so much of the surplus is stolen from the workers and so little is given back that people are starving. Their access to social wealth is almost nonexistent. This is a necessary consequence of having the distribution of the surplus determined by the arbitrary averages of the price form. It is rife with contradiction, and we’ll quickly see the point where the contradiction explodes the system—just as it has done in every other form of slavery known to man.
Young people nowadays who never saw the upheavals of the 60s or 70s think the earth is more likely to be hit by a comet which eradicates all life than that capitalism will end. As if it will take a miracle for enough people to wake up and put a stop to this. In fact the real miracle is that this idiotic, counterintuitive, contradictory system of bald theft and violence continues at all.
It’s the capitalist who is the sickest man in the world, and the slightest breeze coming for him will be a hurricane.
Often I encounter bright, worldly, middle class people my own age who are critical of capitalism and aware of its injustices but whose disillusionment of one form or another prevents them from seeing socialism as a viable alternative to what we have now. I was having drinks with two such people last night—old friends of mine who radicalized me in my teens—and one of them raised the following question which I’ve heard many times before: Doesn’t human nature make socialism or really any alternative to capitalism impossible? Don’t we have a “natural” system set up now that rewards innovation, punishes laziness, and which channels our innate animal aggressivity?
I’ll admit the amount of lager in my system preempted a considered response, but here is at least the beginning of one: though the question of where society leaves off and nature begins is one we cannot answer, we can say with certainty that the capital social relation is not natural in the least. Capitalists had to violently impose the commodity-form on labor. They had to kick people off the land. Without access to the means of production, people could no longer grow food to feed themselves and their families. They had to buy it from the capitalist with wages “earned” from working in the capitalist’s factory. But as Marx points out, the propertyless are more likely to become “vagabonds, robbers, or beggars” than workers. Getting those people off the lands and into the factories was an extraordinarily difficult process for the capitalist class. They met with resistance every step of the way. With regard to some who resisted—the aboriginal people of North America, for example—the task was impossible, and the capitalists had to exterminate them.
The great watershed of human history—the universalization of the commodity-form—was accomplished by means of naked brutality and aggression. Perhaps one might argue that this very brutality is part of the human condition. Capitalism is merely a new thing to enforce. However, I think it becomes difficult to defend this position when you consider the sheer magnitude and extent of the violence which in this case was global, absolute, and directed toward the whole of humanity in such a way as to encompass and determine nearly every aspect of social existence. The argument is made more difficult when you consider the aggression was perpetrated by a relatively small group of bourgeoisie coming from one specific part of the world. If there is a natural, biological, anthropological component to this violence, it is obviated by whatever manmade conditions arose to give it such a radically different, absolute, and universal character.
The arbitrary, unnatural essence of the capital social relation does not disappear once the commodity-form has been imposed, either. Friction continues, first in the form of a struggle against the length and quality of the work day. Legislation limiting the length of the work day and the people who are allowed to work did not come from the kind hearts of legislators concerned about the breakdown of the Christian family. It came about because the large bulk of workers protested and threatened to shut down the entire operation. The capitalist class was then forced to introduce mechanical automation into the production process in order to make up for the productivity lost when the work day was shortened and children and women were no longer allowed to work.
It would be reasonable to assume that the introduction of automation would make labor easier. Did we only live in such a world! Toil became greater as fewer workers now struggled to keep up with the machines. As a result, workers end up working harder and longer than “primitive” people who lacked technology all together. This paradox arose because workers lacked and still lack any control over the production process. Technology is not introduced in order to make life easier for people. It is introduced in order to maximize the surplus the capitalist can steal from the workers. The use of technology in capitalist society is inseparable from the essence of capitalism itself, in other words.
After the revolution, this will no longer be the case. What we produce and how we produce it will be determined by a conscious effort to increase our satisfaction, lessen our toil, and maximize our time for social activities other than work. Under capitalism, work increases as productivity grows. Socialism promises the opposite, more rational alternative: as our productivity as a society grows, we will work less, because there is objectively less need to. The measure of wealth will be what everyone already knows it should be: disposable time. What is more “natural” than that?

Recent Comments