‘Overaccumulation of capital’ features prominently in Open Marixts texts as a sort of causative expression for breakdown of production growth or a crack in an acccumulation regime11.
Thus, Bonefeld notes that “what needs to be made manifest… is that the exploitation of labour’s productive power renders capitalist accumulation crisis-ridden because labour produces too much value than (sic) can be realized with rates of profit adequate to the continuous accumulation of capital on a progressive scale” (Bonefeld 2000: 54). But what is value?
Often, what is meant by overaccumulation is some kind of a monetary phenomenon. Thus Holloway states that in 1980s ‘capital’ was trying to postpone a ‘crisis’ by “an ever growing separation between productive and monetary accumulation. Money has been expanding at a far faster rate than the value it represents” (2000: 178). It is not clear what is meant by this statement – whether a growth in monetary aggregates or in prices, or both. Yet, what is even more significant is the fact that two phenomena become conflated here - monetary phenomena and movements in the value structure as derived from labour theory of value. For Regulationists this is clearly excluded as they, even when starting from the point of labour theory of value, accord to the monetary sphere a certain autonomy. In fact, this autonomy is a necessary precondition for money to fulfill its role of containing the contradiction of production and exchange spheres, as we will show when discussing money.
For the start into the discussion on the concept of value, let us begin by showing the problematicity of jumping onto the monetarist bandwagon and assuming money is an automatic expression of value. A simple example: with the demise of the Soviet bloc, the local currencies often quickly entered inflationary spirals and there was flight into “safe” Western currencies. One day, a local currency would have such and such purchasing power, or command of labour, another everything was different. Something needs to be entered to explain the value system that functions in a particular space at one point.
Another problem is the understanding of inflation as a ‘devaluation of capital’. At the level of individual economy, if the money supply grows by a certain percentage, then, ceteris paribus, the command remains proportionally the same (Aglietta 2000: 330). We will see later, in the section discussing money and credit, where Open Marxist end up when adopting the conceptual framework of simple monetarism, conceiving of money as an automatic expression of labour command.
Unlike Open Marxists, we need not speak of ‘the separation between real and monetary accumulation’ (Holloway 2000: 179). We need to start by divorcing conceptually value as understood in the space defined by abstract labour and the monetary system.
So, what is value? Aglietta produces a rigorous definition of value at the very start of his Theory. As opposed to neoclassical approaches that start with value as something defined by monetary expressions, and later insert auxilliary concepts such as the one of utility, Aglietta insists that “a scientific discipline consists in the identification of certain general properties that make of the object to be studied a measurable space”. In order to create a homogeneous abstract space, one must find the way of identifying processes that make objects in the space commensurable. As Aglietta notes “this process of homogenization is known as value, and its concept was first introduced by Marx”. Since the process of homogenization is a social relation, it makes sense to proceed via labour, the vis vitalis that connects the social mechanism. Labour is both the productive activity and the activity that, via exchange of use-values, creates the single space of abstract labour. “The exchange transaction realizes the uniformity of products as commodities by establishing an equivalence in which private labour appears simply as a fraction of the overall labour of society” (Aglietta 2000: 38).
This is a critical point. From the point of view that starts with the society as the defining framework of value, products of labour only gain value via abstract labour, which is an equivalence mechanism set in motion by market exchange. “It is quite correct, therefore, to say that commodities have a value, just as it is correct to say that material bodies subject to universal gravitation have weight” (Aglietta 2000: 39).
It is important to note here that Regulationists, following Marx, strictly discern between use-value, which expresses the usefulness of an object to a particular person for a particular circumstance, and exchange value, which connects up the commodities into a single space of value. For Regulationists, “exchange is not in fact a confrontation of subjectivities, it is rather a social process by which the products of independent private labours are integrated with one another and form fractions of society’s overall labour” (Aglietta 2000: 40). Unlike in neoclassical epistemology, we do not have here a motley of independent fields of value – individuals – that can be seen as helping themselves through single acts of exchange, with each act closing down the possible contradiction (and confrontation) due to achievement of mutual benefit thanks to utilising some comparative advantage via an act of exchange. On the contrary, the process of production and alienation of labour through commodification sets in motion complex contradictions that can only be contained via complex societal structures.
This is further underlined by the fact that the Regulation Approach firmly states that a commodity economy is a money economy. This again follows Marx and the process described by him as the metamorphosis of the commodity (Aglietta 2000: 43). Through the wage relation, value is construed as monetary expression of the working hour - but not as an automatic relation. There is nothing in this description of the metamorphoses of value that would imply a direct relation between abstract labour, wage relation, and the general equivalent.
Money is the necessity of a commodity economy. It is the general equivalent that makes alienated labour intelligible and also “capable of reproducing the entire set of conditions of production” (Aglietta 2000: 43).
The relationship of equivalence here described makes it clear that what market agents deal with in the acts of exchange can only very problematically be described via the neoclassical view of utility. It is worth quoting Aglietta at length on the subject:
Every agent of exchange is equipped with a value materialized as a product of labour, and must find in the general commodity circulation, by means of the exchange transaction, a commodity (one or more) that has some utility for him. This utility has nothing in common with some mythical and generic ophelimity, the phantom of a human nature. It is rather a social utility characteristic of the division of labour. It indicates that each private producer has to find the conditions for the reproduction of his activity in the general circulation” (2000: 42, emphasis added).
Of course, a commodity ends as a use-value. So, after leaving the sphere of circulation, commodities are consumed and “annihilated as value” (Aglietta 2000: l44). Production is a reproduction of social relations. Of course, production is only part of the general system of commodity circulation, and the reproduction of societal regime can only happen through devalorisation.
In 1946, a book called Economics in One Lesson was published by certain Henry Hazzlitt, who ferociously attacked Keynesian demand management and argued that Keynesian economics requires physical destruction of assets in order to work . The book still gets published, often endorsed by celebrity businessmen such as Steve Forbes. This, one might say fetishised, view, completely negating the notion of value as a social product, is often implied in Open Marxist writings.
Consider the series of statements in which Open Marxists argue that capitalism is in crisis, talking about “inflationary dissociation of money from production” and command of labour (1996d: 212) and imply war is the only way of resolving the crisis:
Bonefeld and Holloway proceed as follows. First they state that in 1987, “even the most fierce monetarists advocated expansion – anything to avoid the catastrophe, and confrontation, that a slump would bring”. Then they continue that “there seems to be no way forward, for capital or for labour”, which is followed by the remark that when capitalist crisis seemed permanent in 1930s, “capital did resolve its crisis, through blood. Capital was restructured and the basis for a new period of accumulation created”. They say that “it is possible that the crisis will be permanent”, while “the ‘permanence’ of the crisis is not only a warning but a message of hope” although it is not at all clear what they mean12. But “it is possible too that the crisis will not be permanent, that it will be in fact resolved: what the resolution of ‘permanent crisis’ can mean stands behind us as a warning of a possibly nightmarish future” (1996d: 224-225).
One reading of this catastrophic sentence is that the war would somehow lead to renegotiation of the general equivalent. Leaving now aside the question of inflation and allegedly weakened ‘command of labour’ associated with it, there is also the question of simply why a war should be understood as the means of solving an inflation or credit expansion problem. Inflation followed, not preceded World War I. 1930s were not marked by high inflation or credit expansion, on the contrary, the prevailing economic policies were still relatively strict, compared to post-war arrangements. Taking the extreme case of hyperinflation, nine out of sixteen known ones occurred at the end of either of the two world wars. Of the remaining seven, only one was followed by a war, in the case of Yugoslavia (based on Lewis and Mizen 2000: 172).
The other reading would be the Hazzlitt interpretation of Keynesianism. Commodities need to be destroyed to make space for new production. This is more plausible and logical (although it is slightly doubtful that Bonefeld and Holloway had this in mind given the hint at “inflationary dissociation of money and production”).
This view equates use-values and economic values of commodities. Yet the two, though related, are not coterminous. Annihilation of values, just as production of them, is to large extent a social process. First of all, when looking at it through the lens of labour theory of value, the labour content of a commodity is not a fixed value content. The value of a commodity is determined via abstract labour, which is a homogeneous space of value, refracted by the money constraint.
Also, to put it in very simple terms, for example, due to social circumstances a commodity may grow obsolete when a replacement is devised. A value of a commodity is determined by the interaction of the production and consumption sphere. A technological advancement, as long as it reconstitutes the integrated circuit of commodity circulation, and therefore of labour exploitation, effects a process of devalorisation for a commodity segment. Of course, physical destruction of commodities is one possible way of devalorisation. However, what Regulationists show is that the crucial step forward is the creation of a new mode of consumption. This for them is the way labour is reintegrated into the capital circuit. After all, ‘booms’ instigated by simple depletion of stocks tend to be short-lived, as the short boom of 1919-20 after World War I showed (Kindleberger 1986: 16).
Consider two statements. Capitalist production is at the same time reproduction of social relations – this happens around extraction of surplus value. Secondly, capitalism is not just a production of use-values – in capitalist process of valorisation, primacy is given to exchange value. If exchange processes break down, then capitalism is in crisis. The primacy of exchange value over use value leads Boyer to state that “once industrial capitalism has been established, the workers’ submission to capital is no longer merely formal, so that the labour process tends to be dominated by a logic other than the production of use-values” (1990: 34).
Accumulation of surplus value is the necessary principle of capitalism. The accumulated surplus value becomes capital. When surplus value is individual, it is necessary to view it as heterogeneous. This is why Aglietta strictly warns against proceeding straight from defining homogeneous field of value to the problems of competition (2000:47). The rate of surplus value here is still a non-dimensional number, which explains why Marx was able to suppose the same surplus-value for all branches of production, as Aglietta explains, adding the warning “it can never be repeated often enough that not all economic problems can be treated at the same level of abstraction”.
The analysis of production of heterogeneous surplus value shows how capital needs to “raise the rate of surplus-value by modifying the structure of the social processes of production”. This leads us back to the issue of labour productivity which “is a potential of the organized productive forces which the wage relations transforms into property of capital in general”. It “involves a continuous series of feedbacks from the set of exchange equivalence classes onto itself” (Aglietta 2000: 55).
This is, then, how the capital-labour relationship is described by Regulationists in the production nexus. There is no simple economic tendency and a struggle-based counter-tendency of exploitation mechanisms, and the simple tendency for a rate of profit to fall, and so on. Regulationists choose to describe the capital relation through laws – but through a set of them. No individual law can describe the capital-labour relation, and the narration of Regulations texts reflects this – at every point they try to make reference to the set of laws, which together express the contradictory complex of capital accumulation, competition, and exploitation of labour.
One crucial derivation that Regulationists are capable of making thanks to rigorous definition of the general space of value is the explanation of the pivotal role of the wage relation. Rejecting Marx’s treatment of labour power as a thoroughly commodified relation once circulation of commodities is established, Aglietta states “if labour-power is a commodity, and consequently has a value, its use is labour itself. This is why the wage relation is both a relation of exchange and a relation of production” (Aglietta 2000: 46). In other words, “it is the wage relation that makes labour-power a commodity” (2000: 45), and so “wages form a very special exchange relation, one completely dominated by the relations of production” (2000: 47). In Jessop’s words, labour power is a “fictitious commodity” (Jessop 2002: 13).
We will come back to the significance of this shortly. For now, what is important to summarize is the labour theory of value. As we said, value is here conceived as operation of equivalence classes in a general space of value. The labour value of a unit of good is best understood as defined by a set of simultaneous equations. This “corresponds to the fact that labour values are determined by what are currently the most efficient techniques of production, and not by the techniques that as a matter of historical fact were used…” (Elster 1985: 129). Marx: ”What determines values is not the amount of labour time incorporated in products, but rather the amount of labour time necessary at any given moment” (1973: 135).
Labour theory of value is a typical concept of 19th century economists, something that Marx took over from Ricardo, among many other things. It is a controversial concept. Aglietta, who used labour theory of value in Theory later picked up other value concepts.
Two problems arise even before moving beyond the confines of an industrial commodity economy. One is the transmission of labour value magnitudes into prices (Elster 1985: 141, see also Aglietta, footnote 2000:18). Marx evidently did not take this problem lightly, and tried to address it in Capital I and then, in a revised version, in Capital III (Elster 1985: 134). It is quite curious to see that Open Marxists freely take prices as an expression of a rate of exploitation. Thus, Bonefeld describes how ‘capital’ pressures “national states should the exploitation of labour within their jurisdiction fall below the average world market rate of profit” (2000: 38). As Elster warns, “to confuse value and profits is to commit the dialectical sin of mixing essence and appearance” (1985: 134).
The other problem is more substantive, and that is the assumption that we can speak of an ultimate homogeneity of labour. Marx, who, as we said, understood labour-power as a commodity, defined it as such, via skills:
In order to modify the human organism, so that it may acquire skills and handiness in a given branch of industry, and become labour-power of a special kind, a special education or training is requisite, and this, on its part, costs an equivalent in commodities of a greater or less amount…The expenses of this education (excessively small in the case of ordinary labour-power) enter pro tanto into the total value spent in production (Marx 1967: 198).
As Elster notes, this runs aground on the issue of non-producible skills. Moreover, forms of work may vary according to unpleasantness involved, which gives rise to wage differentials unaccountable for through this commodity definition of labour (Elster 1985: 131). As we have seen, Regulationists partly avert the problem as they take labour power out of the commodity relation, however, the problem is thus not really solved13.
The problem of transmission between labour values and monetary magnitudes is a crucial one. And it is the one that Open Marxists completely ignore. “Dissociation between money and production” needs very serious qualifications. It is simply not possible to speak about valorisation without specifying a time frame. This is why Aglietta speaks of construction of capitalist temporality (2000: 61, see also 44-5). The concept of metamorphoses of value takes this into account. It stands against the monetarist assumption that money is simply the transmission mechanism for exchange. We will discuss this concept now, and then further build on it in the section on money and credit.