In a period in which capital has been on the offensive for many years, using debt and financial crises as rationales for wielding austerity to hammer down wages and social services and terrorism as an excuse for attacking civil liberties, it is important to realize that the origins of this long period of crisis lay in the struggles of people to free their lives from the endless subordination to work within a society organized as a gigantic social factory. In both the self-proclaimed capitalist West and socialist East the managers of that subordination, whether in private enterprise or the state, repeatedly found their plans undermined by people who refused to play by their rules and who elaborated activities and social relationships that escaped their control. The refusal of their rules meant crisis for the managers; the elaboration of other ways of being – whether characterized as the crafting of civil society or as autonomous self-valorization – meant crisis for and freedom from society-as-work-machine. As always, the capitalist response has involved instrumentalization and repression; basically its managers have sought to harness what they could and eliminate what they couldn’t. For a long time instrumentalization was most obvious in the West and repression was most obvious in the East, yet both were always at play everywhere, and everywhere those responses were resisted and often escaped. It was that resistance and those escapes that led to the unleashing of the monetary weapons of financialization and their current employment to convert crisis-for-capital into crisis-for-us. It is in past and present resistance and escapes that we must discover both our weaknesses and our strengths in order to overcome capital’s current offensive and to elaborate new worlds. It is the overall thesis of this paper that Marx’s labor theory of value still provides vital aid in helping us understand these historical developments. A new chapter in the unfolding Eurozone debt crisis seems to have begun with mass protests in Portugal against the latest austerity measures. After putting up with earlier attacks on their standard of living, growing numbers of Portuguese citizens are now following the lead of Spanish and Greek protests against the imposition of even harsher measures. Once again, I should think, all Europeans should be asking themselves why such vicious measures continue to be pushed by the banks and the International Monetary Fund with the backing of the political leaders of the Eurozone – given that such measures have clearly had the effect of inducing depression, raising unemployment and lowering standards of living. But then, these are only the most dramatic cases. Similar questions could be asked about the more general austerity approach to economic recovery that has been adopted by European and American policy makers in response to the depression brought on by the global financial crisis after 2008. Certainly the way those policy makers bailed out the very financial institutions whose speculations and fraud brought on the crisis – while doing little for the millions who have suffered the consequences – set the tone for all that has followed.
The severity of the austerity measures adopted has, of course, varied from country to country and policy makers have sought to convince those less severely affected that those being more harshly punished have deserved it. Thus, apparently, many Germans have been convinced that the profligate Greeks have only been getting what they deserve for trying to live extravagantly beyond their means. Certainly this is the way the situation is often portrayed in the United States, especially by those calling for the government to adopt more extreme austerity measures at both state and federal levels, despite the spread of protest that followed the Occupy Wall Street movement.
While each particular local situation certainly deserves detailed historical analysis to reveal the dynamics of these unfolding dramas, I think the last forty years have provided us with more than enough experience to postulate some general characteristics of the nature and sources both of “debt crises” and of the punishing policies that have generally been adopted to deal with them. As a contribution to such postulation, I propose three theses.
Thesis #1: what most people think of as the current global crisis, commonly dated from the onset of financial crisis circa 2008, is only the latest phase of a much longer and more general global crisis of capitalist command that has been going on for over forty years and has involved a whole series of financial crises.
Thesis #2: that longer, general crisis has been brought about by a panoply of struggles that have ruptured the fundamental substance and sinew of capitalist society: its subordination of peoples’ lives to work (or labor)3. The depth of the crisis – for capital – is the reason for the brutality of its responses, responses that have included, but have by no means been limited to, the imposition of austerity.
Thesis #3: Marx’s labor theory of value, by providing a theory of the value of labor to capital, continues to provide insights into what it means to subordinate life to work and the roles money plays in that subordination. It also reveals the possibilities of rupture in both the roles of money and in subordination itself. Moreover, the struggles that have generated the current global crisis – and continue to thwart capitalist counterattacks – have also repeatedly crafted alternative ways of being in which work ceases to be a vehicle of social control and becomes one of many modes of human self-realization, both individual and collective.
Although I will elaborate briefly on the first and second theses, what follows will deal primarily with the third on Marx’s labor theory of value.
Thesis #1: what most people think of as the current global crisis, commonly dated from the onset of financial crisis circa 2008, is only the latest phase of a much longer and more general global crisis of capitalist command that has been going on for over forty years and has involved a whole series of financial crises. Because I, and others, have written quite a bit about this elsewhere, I want to make just two points here.4 The first point is to situate my position among the many analyses that have been put forward as explanations of how the last four decades have unfolded. Basically, my position embraces the general argument that a cycle of working class struggle in the late 1960s and early 1970s ruptured the dynamics and institutions of capitalist control that were associated with what some call the Keynesian Era and what others call the period of Fordism. This argument differs from most traditional Marxist theories of crisis that have located the causes of the tumultuous events of the last forty years in such mechanisms as the tendency of the rate of profit to fall, chronic underconsumption, overaccumulation, disproportionality or the inherent tendency of monopoly capital to run out of profitable investment outlets.
The second point is simply a reminder, and here I will just paraphrase an excerpt from my preface to the German edition of Reading Capital Politically: The contemporary history of financial and monetary crises includes the following list of events, which is by no means exhaustive : the crisis in early 1970s of the Bretton Woods system of fixed exchange rates and the replacement of that system by one of flexible exchange rates among major currencies; the New York City fiscal crisis of the mid-1970s in which the imposition of austerity set a pattern which is still with us today; repeated crises in the flexible exchange rate system that led to “dirty floats” and drove European policy makers to search for stability through a return to at least locally fixed rates; accelerating inflation in the late 1970s that produced negative interest rates and led to a sudden tightening of US monetary policy that triggered the global depression of the early 1980s; the resulting international debt crisis that began in 1982 when Mexico effectively defaulted on its international debts; the collapse of the stock market and US Savings & Loan industry in the late 1980s; the crisis of the European Exchange Rate Mechanism (ERM) in 1992; the Peso Crisis of 1994; the Asia crisis of 1997; the Russian financial crisis of 1998; the repeated failures in the late 1990s to implement the European Monetary Union; the Turkish financial crisis in 2000; and the 2001-2002 financial crisis in Argentina.5 Thesis #2: that longer, general global crisis has been brought about by a panoply of struggles that have ruptured the fundamental substance and sinew of capitalist society: its subordination of peoples’ lives to work. The depth of the crisis – for capital – is the reason for the brutality of its responses, responses that have included, but have by no means been limited to, the imposition of austerity. Again, because this argument has been made elsewhere, and is, to some degree, repeated in the elaboration of Thesis #3 below, I will just quote a brief sketch of how not only the onset of crisis but resistance to capitalist counterattacks explain the failures of those counterattacks and the recurrence – or continuation – of crisis throughout this period.
“The Bretton Woods agreements had to be abandoned because restrictive Keynesian policies could not bring accelerating wage growth back into line with productivity. Popular resistance to the consequences of “automatic” exchange rate adjustments forced repeated central bank interventions to moderate both adjustments and consequences. The New York City fiscal crisis was the direct result of the successful struggles of both waged (especially public employees) and unwaged in that city whose gains undermined business control of the metropolis. The sudden tightening of US monetary policy at the end of the 1970s began the capitalist counterattack against global inflation, i.e., against the success of workers in defending real wages despite high unemployment and rising prices driven by jacked up energy and food prices. The quadrupling of oil prices in 1973-74 was the result of OPEC governments’ desperate search for greater income to cope with the rising demands of the oil-producing proletariat of those countries. The second great jump in oil prices at the end of the 1970s was triggered by the revolution against the US-installed Shah in Iran – a revolution that threatened to spread throughout the region and dramatically heightened regional governments’ needs for more revenue to cope with discontent. The international debt crisis of the 1980s – known in Latin America as the “lost decade” – although triggered by suddenly high interest rates and consequently impossibly higher debt repayment obligations – was rooted in all those struggles which had driven local capitalists and governments to borrow hundreds of billions of petrodollars to finance both concessions and repression. The speculative financial booms that burst in 1987 sending the stock market plunging and crippling the Savings & Loan industry in the United States was the result of financial deregulation that had been pushed through in response falling real interest rates caused by accelerating inflation, i.e., the continuing power of workers to push up money wages and force concessions in response to increased energy and consumption prices. The neoliberal policies of austerity and “structural adjustment” imposed on debtor countries such as Mexico were dictated by the International Monetary Fund as conditions necessary for the rollover of debt by creditor banks; those conditions mandated attacks on previous concessions to workers. Examples included: the demand for the de-indexation of wages, currency devaluations aimed at undermining real wages, the slashing of government expenditures that subsidized consumption, the privatization of state enterprises that by passing control to the private sector would sever previous deals cut between workers in those firms and the state, and the opening of capital markets to foreign investors to broaden the resources available to take advantage of the attacks on local labor forces and further subordinate local conditions to global capitalist needs. The opening of local capital markets to foreign investors – for both direct investment and “hot money” speculation – laid the basis for the Peso, Asian and Russian crises of the 1990s. The repeated failures of European governments to meet the monetary and fiscal targets agreed upon as necessary for monetary union were the result of widespread popular resistance to the required policy moves. The halting progress from the snake through the European ERM to monetary union was set back again and again by widespread grassroots opposition, both before and after the near failure of the Maastricht Treaty in 1992.”6 This sketch, I hope, will not only remind everyone of a history that capitalist politicians, policy makers and media do their best to drain from our memories, but will indicate how the protests unfolding in Greece, Spain and Portugal against the imposition of austerity measures – aimed at reducing standards of living to the point where people will accept to work at dramatically lower wages with far fewer benefits – are nothing new but an all too familiar story we have witnessed and participated in for many years.
Thesis #3: Marx’s labor theory of value, by providing a theory of the value of labor to capital, continues to provide insights into what it means to subordinate life to work and the roles money plays in that subordination. It also reveals the possibilities of rupture in both the roles of money and in subordination itself. The elaboration that follows provides a theoretical, and to some degree an historical, defense of Marx’s labor theory of value and its continuing relevance to our understanding of the current crisis and our thinking about strategies to be followed in dealing with it. This defense takes the form of a reinterpretation of that theory justified partly by logic and partly by appeals to experience. Although in my first comment on Thesis #1 above I associated myself with others who argue that the long crisis of the last forty years has been caused and perpetuated by working class struggle, many of those others do not share the interpretation that follows – as will become clear in the exposition.
The Labor Theory of Value As a graduate student in economics I was taught all of the usual reasons why the labor theory of value – whether that of Adam Smith, David Ricardo or Karl Marx – was inadequate to the needs of economists and why it had been quite reasonably replaced by a neoclassical microeconomic theory based on preference and marginalism. In the analysis of production, labor is reduced to a one-dimensional, purely quantitative variable inside a production function and in the analysis of labor supply to something to be avoided – where it is supposed that people only give up leisure and consent to work in exchange for money. All other aspects of labor were shunted out of economics and left to sociologists, psychologists and industrial engineers.
However, having been involved in the civil rights movement, I could not help noticing how it had been motivated not only by the desire to vote but by black revulsion against being consigned to the worst jobs at the bottom of the wage hierarchy or to unwaged domestic labor – made onerous and lengthy by the lack of resources – in Southern shacks or Northern tenements and ghettos. Having been involved in the anti-war movement, I could not help noticing how the struggles of Southeast Asian peasants for independence – from colonial or neocolonial masters – were motivated, in part, by the desire to escape not only exploitation but the associated drudgery of plantation and other forms of imposed labor. Having been involved in the struggles of students I couldn’t help but notice that our part of the anti-war movement grew out of and continued to elaborate the revolt against work in schools – against the imposition of pre-determined curriculum – and for the creation of spaces and time where we could study what we felt we needed to investigate. As the feminist movement erupted in the late 1960s and early 1970s, I could not help but notice that women were not only demanding equal wages and freedom from violence, but also access to less alienating jobs and escape from the endlessness of isolated domestic labor. All these experiences suggested the gross inadequacy of the very limited mainstream economic analysis of labor. Where to turn?
On the one hand, I might have migrated from economics to another field, say sociology, where labor was analyzed in greater depth, but what I knew of that field seemed more dedicated to helping capitalists manage worker alienation and discontent than contributing to struggles against work. Or, there was always philosophy; studying Sartre had led me to Hegel who had confronted the role of labor, if not the struggle against it. But the more progressive voices in that field in the United States at that time – listened to by those in the student movement and counterculture – either largely ignored work, e.g., the chorus of voices celebrating various Eastern religious philosophies, or read work more through the theoretical framework of Freud than of Marx, e.g., Herbert Marcuse in his Eros and Civilization (1955) and in those days Freud was increasingly under attack by feminists as an apologist of patriarchy. The eventual translation and diffusion within the United States of the writings of various Continental philosophers – by, for example, the journal Telos – was dominated by phenomenology, critical theory and structuralism – especially in the pernicious form purveyed by Louis Althusser (et alia) who not only ignored workers’ struggles but dismissed Hegel, and Marx’s use of Hegel as unscientific wastes of time. Marx’s own writings, which I would later discover did include considerable treatment of workers’ struggles against work, were largely ignored at the time.
The overtly “Marxist” thinkers in the US who were best known by participants in the New Left because they repeatedly addressed many of the issues that concerned us, such as the Vietnam War, imperialism and struggles in the Third World, were those associated with the journal and publishing house Monthly Review. Unfortunately, neither founder Paul Sweezy nor his co-author, economist Paul Baran paid little attention either to labor per se or to the labor theory of value. Sweezy gave a summary of one traditional Marxist interpretation of the labor theory of value in his Theory of Capitalist Development (1942) but then went on to adopt a theory of surplus quite different from Marx’s, namely Paul Baran’s, who had laid it out in his book The Political Economy of Growth (1952). Sweezy and Baran collaborated to produce Monopoly Capital (1966) which was theoretically based on their non-Marxist theory of surplus and a very Frankfort School preoccupation with the irrationality of capitalism. That said, Monthly Review Press did produce an American edition of Ronald Meek’s Studies in the Labor Theory of Value (1955) and, much later, Harry Braverman’s Labor and Monopoly Capitalism (1974).
Let me comment briefly on Sweezy and Meek’s treatments of the labor theory of value – both of which are rooted in the work of earlier orthodox Marxists, much of whose work was not available in English during most of the post-WWII period.7 In Sweezy’s case the key moment of his analysis is his explanation of the reasonableness of the concept of “abstract labor”. Drawing on Marx’s comments in the Contribution to the Critique of Political Economy (1859), he points out that the abstractness of labor corresponds to the rapid change in job structures and high mobility of workers from one kind of labor to another. This is the situation in which, and here he quotes Marx, “the abstraction of the category ‘labor,’ ‘labor in general,’ labor sans phrase, the starting point of modern political economy, becomes realized in practice.” After a brief discussion of the measurement of value in terms of “socially necessary” labor time, and the “problem” of reducing skilled labor to simple labor, Sweezy then goes on to make an argument that will soon allow him to abandon Marxist value theory completely, namely that the correspondence between values and prices depends on competition. Once he and Baran perceive that capitalism has passed from a “competitive” stage to a “monopoly” one, neither this, nor much else in Marx’s core theory remained relevant.
Meek’s treatment of abstract labor paralleled Sweezy’s, drawing on the same sources but with somewhat more use of Volume One of Capital. His analysis of the “reduction problem” is similar, as is his emphasis on the role of competition. His interpretation leads him to equate abstract labor with simple labor, as can be seen when he writes, “Marx, then, defined the value of a commodity at any given time and place as the amount of socially-necessary simple labor required to produce it . . .”
Now, for me there were two striking things about both Sweezy and Meek’s presentation of Marx’s theory: first, the total absence in their discussion of abstract labor of class struggle, and second, a similar absence of any substantive discussion of Section Three of Chapter one of Capital that deals extensively with the form of value.8 In short, I found little in either author’s treatment of the core concepts of Marx’s labor theory of value that addressed the struggle against work.
Nor were the various Marxist-Leninists (Stalinists, Trotskyists and Maoists) who critiqued Baran and Sweezy’s deviations from Marxism any more illuminating.9 Nowhere in the Marxist literature to which I had access did I find much help in determining whether there was anything of use in Marx’s analysis of labor and his labor theory of value that would help understand the struggles against work I had observed and participated in. So I settled down to examine his writings on my own.
The result was a rather short manuscript, first drafted in 1974 and revised until publication in 1978 as the book Reading Capital Politically. In it I set out the results of my researches in the form of a reinterpretation of Chapter One of Volume I of Capital – albeit a reinterpretation that drew upon other texts, both within Capital and elsewhere. The overall conclusion of my readings, and of the book, was that Marx’s labor theory of value can be read as a theory of the value of labor to capital – as its fundamental means for the organization and domination of society. Unlike the usual readings of Marx – pretty much since Engels’ Origin of Family, Private Property and the State (1884) – that have interpreted him as celebrating labor as the defining trait of humankind, as believing (in a manner roughly paralleling Hegel’s treatment in the Phénoménologie) that only through labor could workers achieve working class self-consciousness, as having argued that only through struggle could self-conscious workers liberate their work and themselves from alienation and exploitation and achieve an eventual communism realized as a society in which everyone finds self-realization through un-alienated labor – I argue that while Marx saw labor as the fundamental means of capitalist domination and working class struggle as the only means of ending and getting beyond that domination, liberation would involve not just the coming-into-being of a free homo faber but also of human beings who would no longer be defined solely by their work but for whom work would only be one of many potentially fulfilling means of self-realization. This interpretation, while sharing some elements of more traditional Marxisms, refocuses our attention on struggles against work and for the liberation of time and energy for activities of individual and collective self-valorization – in a manner I find consistent with what I have experienced within various social struggles and have observed elsewhere.
It is my argument that if we bring to bear much of what follows in Capital on our reading of the methodical but abstract exposition of his labor theory of value in most of Chapter 1 of Volume I – beginning with “abstract labor” and ending with the “money-form” of value – we discover how all of the characteristics of value being analyzed are also characteristics of the antagonistic class relations capital is able to imposeand are therefore resisted, challenged and often ruptured by those capital seeks to dominate through the imposition of work. One result is to see how, within capitalism, money embodies all the essentials of those antagonistic relations and therefore, becomes a terrain of struggle as capitalists try to use money to manage and expand their social order while workers resist that usage, often subverting money for their own purposes while seeking to escape that order.
Chapter 1, of course, is only the beginning of Marx’s analysis of the nature of money and its roles in the class struggle. Although most of Marx’s analysis in all three volumes of Capital is carried out in terms of value, Chapters 2 and 3 of Volume I elaborate his exposition of the money-form of value, especially its role as universal equivalent and universal mediator, Chapters 19-22 of Volume I deal with how capital seeks to use the money wage to both hide and increase exploitation, Chapter 31 of Volume I briefly treats the role of the state in the capitalist manipulation of money, Volume II situates money within more detailed circuits of capital and Volume III discusses the money-form of surplus value – profit – while providing the beginnings of an analysis of one domain specializing in the capitalist manipulation of money, and through money of the class relation: the financial sector. Beyond Capital, of course, there are the many other places – especially his journalism – where Marx recorded his own extensive tracking of the capitalist use of money and its class role in the various crises of his time. Here I will only focus, briefly, on some aspects of his analysis in Chapter 1 of Capital that I think are particularly important in understanding class struggle – in order to clarify my analysis of the current use of “financialization” within the class struggle of our times.
Before I lay out what I think are some of the most important ways in which the relations being analyzed in Chapter 1 are also relations characteristic of the class relation, I want to make one final preliminary comment. Although I refer to my reading of Marx as an “interpretation”, I do not pretend that this interpretation tells us “what Marx really meant.” One reason for this is because I am no Marxologist; a great many of Marx’s texts – now available in the MEGA – are inaccessible to me because I do not read German. A second reason is that I have come to agree with those who argue that there is no such thing as definitive interpretations.