The System

Fighting 9/11 Disinformation the Easy Way

Ecocide on the East Side: the Environmental Crisis in Eastern Europe

Yuppies In Moscow!?

Crisis in Ukraine

Runaway Planetary Warming

On Terrorism and the State

Clean, Sober and Obedient

In the Wake of the Exxon Valdez: World Capitalism and Global Ecocide

The Sick Planet

Occupy Needs To Target And Destroy The Ruling Money Fetish

The Global Fascist Terror State

Michael Hudson and Webster Tarpley Disseminate Disinformation

The Modern American Left Doesn't Get Capitalism

The Crisis of Value

9/11 In Context: the Strategy of Tension Gone Global

Retort's Response: Intellectual Dishonesty

Left Denial on 9/11 Turns Irrational

9/11 In Context: Plans and Counterplans

Established Left as Ideology Police

Henry the Great on September 11

9/11: A Desperate Provocation by US Capitalism

After Genoa: Reform or Revolution?

Socially-Responsible Investing: An Oxymoron


Occupy Needs To Target And Destroy The Ruling Money Fetish

by Jack Straw


After decades of passivity, the American social/political landscape erupted last fall with the Occupy movement. Suddenly it’s no longer hip to be square and apathetic. The deep global economic crisis which started in 2007, the deepest such crisis since the 1930s, has exacerbated the squeeze on the living standards of the vast majority and widened the already massive gap between the richest one percent and the rest of society to such an extent that an explosion was all but inevitable. So far, to its credit, the Occupy movement has successfully fought off attempts to incorporate it into the existing political apparatus. Yet the question remains how much change it can bring, in particular to the systemic dynamics which brought forth the global crisis to begin with. Its actions have managed to stave off some of the worst consequences for people, particularly by delaying or even preventing foreclosures and home evictions, and have brought back to the American public awareness the question of class. In shutting down the port of Oakland twice, the movement also demonstrated the potential of collective action to bring the present order to a halt. However, without challenging the very basic features of capitalism, in particular capitalist social relations and the fetishism of commodities which they are built upon, the movement is unlikely to amount to anything except a rearguard reaction which will fall by the wayside as it either gets destroyed and/or co-opted by the forces supporting the continuation of the essential features of the status quo. My focus is the web of class relations which underlie capitalism, because as former Monthly Review editor Ellen Meiksins Wood pointed out, while one can conceive of capitalism continuing without identity-based oppressions, even if this is highly unlikely, it’s impossible to imagine it lasting even a second without the underlying class system and commodity relations between people. I will first discuss commodity fetishism, then review the various analyses and programmatic suggestions within the Occupy movement, and end with my own suggestions.


The Ruling Money Fetish



The notion of commodity fetishism, in particular regarding money, is a key aspect of Marx’s analysis of capitalism, but one which has not been understood by critics of Marx, or indeed even by most “Marxists.” In fact, most Marx readers, friend or foe of his analysis, are not even aware of it.

First we need to clarify the meaning of a key word, value. It is a specific term in Marx’s critique of political economy and analysis of capital, not to be confused with subjective evaluations or with esteeming something. Political economists of the late 18th and early 19th Centuries developed the concept of value to denote a characteristic of a commodity, a good or service made for market exchange, around which its visible market price fluctuates, and theorized that value is connected with the labor required for the production of this commodity. A key reason why this concept, originally postulated by Aristotle, was re-created by Adam Smith and other political economists is that they analyzed profit and quickly realized that, once regarded from the perspective of society as a whole, rather than that of a single enterprise, profit cannot be explained as the difference between revenue and cost, as the result of selling above cost. If every enterprise was to sell at the average rate of profit, say 10 percent, what is one enterprise’s gain is a cost for other enterprises. This was deemed by them to be understandable by a 10 year old. Amazing how this knowledge has been lost.

In a major analytical breakthrough, Marx grasped that value is not the direct labor expended in producing a commodity, a good or service produced for exchange, but the socially necessary abstract labor time. Abstract labor time means that different forms of concrete labor, i.e., actual physical labor, are all equated through the exchange process. “Socially necessary” means the average amount of such abstract labor required to produce a given commodity under existing conditions of production. The price of a commodity is only an approximation of its value, and increasingly it has become an inaccurate representation as the global capitalist system has grown and become more complex.

Money is a representation of value, it isn’t itself value. It exists to facilitate commodity exchange. Originally, money did take the form of a value-bearing commodity, starting with wheat and other consumables, and later, precious metals, especially gold and silver. These, in particular gold, are stable, durable (so that unlike consumables such as wheat a given amount will not wear away, evaporate, blow away etc), dense and hence capable of easy transport, easily divisible, common enough to obtain readily yet rare enough to be special, and generally lack direct uses. They are also esteemed for their attractive appearances. Increasingly, commodity money was replaced by paper money which was deemed to represent precious metals. By the 1970s, any such pretense was dropped, and more and more even paper money has been replaced by electronic blips in mainframe computers. Nevertheless, money is still the representation of value.

The profits of all capitalist enterprises arise from surplus value, the excess of time spent by people around the world working in the production of commodities over the time equal to the value of the goods and services they need to survive as workers. Surplus value is produced globally, but realized by each enterprise via its market operation, a process which is hidden from view because on the market, only prices are detectable, not values. A much more thorough discussion of all this, including the impossibility of profit being the result of sale above cost. can be read in my previous article, “The American Left Doesn’t Get Capitalism,” as well as “A Crisis of Value” by Sander in Internationalist Perspective.

An illuminating discussion can be found in “Commodity Fetishism” by Fredy Perlman , an essay he wrote as an introduction to Essays on Marx’s Theory of Value by I.I. Rubin (1973). (References made to Rubin in Perlman's essay are to this book.) I’ll use quotes from the Perlman essay, which really can't be improved upon, followed by my comments:

“Marx's explanation of the phenomenon of reification, namely of the fact that abstract labor takes the ‘form of value,” is no longer in terms of people's habits, but in terms of the characteristics of a commodity economy. In Capital, Marx points out that relations among people are realized through things, and that this is the only way they can be realized in a commodity economy: ’The social connection between the working activity of individual commodity producers is realized only through the equalization of all concrete forms of labor, and this equalization is carried out in the form of an equalization of all the products of labor as values ’ (Rubin, p. 130). This is not only true of relations among capitalists as buyers and sellers of the products of labor, but also of relations between capitalists and workers as buyers and sellers of labor-power. It is to be noted that in the commodity economy, the laborer himself is a ’free, independent’ commodity producer. The commodity he produces is his labor-power; he produces this commodity by eating, sleeping and procreating. In David Ricardo's language, the ’natural price of labour’ is that price which enables laborers ‘to subsist and perpetuate their race’ ... namely to reproduce their labor-power. The worker sells his commodity on the labor market in the form of value, and in exchange for a given amount of his commodity, labor-power, he receives a given sum of value, namely money, which he in turn exchanges for another sum of value, namely consumer goods.”

Perlman means that money is the socially-accepted equivalent to a certain amount of value, since it itself contain value. It thus appears to people that they are not connected to anyone else when it comes to producing their survival needs, but that instead we are all individuals working for an ever-present thing called money, which we earn in turn for working, which can then be used to buy what we need. Our own collective effort as a species appears to us to be a collection of random acts done in pursuit of an abstract entity, money. which seems to be a part of nature, like water or the sun, seemingly a fact of human existence since time immemorial. This is very much not the case. Early humans lived by way of hunting and gathering. Tribes occasionally traded with neighboring groups, but this trade was incidental, did not involve survival essentials, but only temporary surpluses, and was not based upon quantitative measures of equivalence. Even as societies developed further and trade expanded and became regular, it involved a very small portion of the population, did not include much if anything of survival essentials, and was governed by custom and other forms of conscious social regulation, not by abstract market forces. Even the markets of medieval Europe were a marginal social phenomenon, involving few people, a very limited portion of total social production (luxuries, for the most part), and noncompetitive buying and selling governed strictly by custom.

Only under capitalism did markets grow to involve the population at large and the majority of social production, including survival needs. This was not the result of gradual evolution of trade, but of the forceful imposition of the Enclosures in late medieval England and similar steps subsequently taken by ruling elements around the world, leading to the forced separation of the vast majority from the means of directly producing their survival needs. This dispossessed population had no way to survive besides selling its labor power, its ability to perform work. Thus was born the working class. Again, see “The American Left ....” and in particular the article referenced there, by Ellen Meiksins-Wood, “The Agrarian Origins of Capitalism.”

“What the worker receives in exchange for his alienated creative power is an ‘equivalent’ only in a commodity economy, where man's creative power is reduced to a marketable commodity and sold as a value. In exchange for his creative power the worker receives a wage or a salary, namely a sum of money, and in exchange for this money he can purchase products of labor, but he cannot purchase creative power. In other words, in exchange for his creative power the laborer gets things.”

This interaction between wage labor and capital, the most basic social relation of capitalism, appears to people in today’s world to be a timeless feature of human society. Any notion that we haven’t always lived like this is not ever entertained seriously, and even if it is brought up, it is quickly dismissed as irrelevant, “This is the way the world is now, it’s too complex to be otherwise.” Without the large class of dispossessed people, who essentially possess nothing except the ability to perform work, however, capitalism and the universal market, which were created by mass dispossession, and on which everything is available for sale, could not continue to exist.

“In a commodity economy, people relate to each other only through, and by means of, the exchange of things: the relation of purchase and sale is ’the basic relation of commodity society’ (Rubin, p. 15). Production relations among people are established through the exchange of things because ’permanent, direct relations between determined persons who are owners of different factors of productions, do not exist. The capitalist, the wage laborer, as well as the landowner, are commodity owners who are formally independent from each other. Direct production relations among them have yet to be established, and then in a form which is usual for commodity owners, namely in the form of purchase and sale’ (Rubin, p. 18). It is on the basis of these reified social relations, namely on the basis of production relations which are realized through the exchange of things, that the process of production is carried out in the capitalist society.”

People in a tribal society do not exchange items with each other, least of all do they buy or sell labor power, the ability to perform work. Even in subsequent societies, most of the relations between people did not involve buying or selling, as the vast majority of the population consisted of subsistence farmers who directly produced their survival needs. Relations between feudal landlords and serfs, or between slaves and slave owners, were direct relations, unmediated through the exchange of things. Exchange relations became the dominant form of social relations only in capitalist society, and this happened only within the last few centuries. Even in Europe, particularly Russia, land was “owned” communally in many parts, or was simply common land owned by no one, the original “commons,” till the late 19th Century.

“[S]uperficially, it seems that capital, a thing, possesses the power to hire labor, to buy equipment, to combine the labor and the equipment in a productive process, to yield profit and interest, ‘it seems that the thing itself possesses the ability, the virtue, to establish production relations.’ (Rubin, p. 21)

Conservatives, liberals, “progressives,” and even many if not most “Marxists” and “anarchists,” thus speak of means of production and money pools as “capital” as if being capital is an inherent, ahistorical feature of these things, instead of a result of social relations of production specific to capitalist society. Capital is simply money as well as means of production and raw materials which are regarded as money equivalents and are combined with human labor to produce commodities for sale on the market, with the aim being the achievement of a greater sum of money or its equivalent than that which existed in the beginning of the process. Something becomes capital only if it is used by people for a specific purpose. Capital is a social relation, a process whose aim is the production of profits, not a thing.

“Capital is a thing [Perlman here speaks of how capital is perceived in current society] which has the power to yield interest, land is a thing which has the power to yield rent, labor is a thing which has the power to yield wages, and money ‘transforms fidelity into infidelity, love into hate, hate into love, virtue into vice, vice into virtue, servant into master, master into servant, idiocy into intelligence, and intelligence into idiocy,’(Economic and Philosophic Manuscripts of 1844, Karl Marx) or as American banks advertise, ‘money works for you.’ Rubin states that ‘vulgar economists ... assign the power to increase the productivity of labor which is inherent in the means of production and represents their technical function, to capital, i.e., a specific social form of production’ (Rubin, p. 28).”

Capital, a relation of production established between human beings, thus not only appears to become a thing, a material entity, but one which appears to have powers greater than that of human beings.

A thing which possesses such powers is a fetish, and the fetish world ‘is an enchanted, perverted, topsy-turvy world, in which Mister Capital and Mistress Land carry on their goblin tricks as social characters and at the same time as mere things.’ (Capital Volume III) Marx had defined this phenomenon in the first volume of Capital: ‘... a definite social relation between men ... assumes, in their eyes, the fantastic form of a relation between things. In order, therefore, to find an analogy, we must have recourse to the mist-enveloped regions of the religious world. In that world the productions of the human brain appear as independent beings endowed with life, and entering into relation both with one another and the human race. So it is in the world of commodities with the products of men's hands. This I call the Fetishism which attaches itself to the products of labour, so soon as they are produced as commodities, and which is therefore inseparable from the production of commodities. This Fetishism of commodities has its origin ... in the peculiar social character of the labour that produces them.’(Capital, Volume I).

The forces of production ‘alienated from labour and confronting it independently’(Capital, Volume III) in the form of capital, give the capitalist power over the rest of society......

[T]he subject of the theory of value is labor as it is manifested in the commodity economy: here labor does not take the form of conscious, creative participation in the process of transforming the material environment: it takes the form of abstract labor which is congealed in commodities and sold on the market as value.

'The reification of labor in value is the most important conclusion of the theory of fetishism, which explains the inevitability of 'reification' of production relations among people in a commodity economy‘ (Rubin, p. 72). Thus the theory of value is about the regulation of labor; it is the fact that most critics of the theory failed to grasp.”

This is an aspect of any society organized around money which cannot be reformed, be it by changing the people who are the managers, or by making management more democratic and widespread, or by altering the money system while maintaining exchange as the basis of all human productive activity. Marx did not write Capital to advocate a better management system for capitalism (something “leftists” and even many “Marxists” seem to think), but to demonstrate the need to get rid of the use of value to allocate human labor power and other resources and to institute direct, conscious regulation in its place.

“Marx was perfectly aware of the role of supply and demand in determining market price, as will be shown below. The point is that Marx did not ask what determines market price; he asked how working activity is regulated........

[E]conomists did not replace Marx's answers to his questions with more accurate answers; they threw out the questions, and replaced them with questions about scarcity and market price; thus economists ‘shifted the whole focus of economics away from the great issue of social classes and their economic interests, which ha[d] been emphasized by Ricardo and Marx, and centered economic theory upon the individual.’

Even theorists whose primary aim was not the celebration of capitalism have interpreted Marx's theory of value as a theory of resource allocation or a theory of price, and have underemphasized or even totally overlooked the sociological and historical context of the theory.”

This brings us to the project at hand, the complete jettisoning of capitalist society. Under capitalism, the main focus of human activity becomes the earning of the general equivalent, the legal tender, and its subsequent spending to provide the material necessities (and sometimes, luxuries) of life. The quest for the grand fetish structures everything concerning how we live. Any enterprise operating on the market is essentially competing for a share of surplus value extracted on a global basis from a population of wage slaves, and has to scramble to obtain enough of a share to enable it to operate as an enterprise. Placing eco-activists, “progressive” luminaries or union members on the board of a company or making them bank managers doesn’t change this fact. Even worker-owned enterprises end up acting pretty much the same as other business entities, as noted in an article by Louis Uchitelle in The New York Times July 7, 1996. The profitability requirements of capital ultimately trump whatever other feelings and desires its managers may have, even if one’s name is not Trump. The fact that in order to satisfy our material needs we relate to each other not directly but through the mediation of value is the core problem facing us.

The roots of the growing crisis of global capitalism lay in the very functioning of the process of capital accumulation. Individual enterprises increasingly replace human labor, the only source of surplus value, by machinery to enhance competitive price advantage due to the productivity gain. The subsequent overall result is an increasing inability of global capital to extract enough surplus value on a global scale to enable the continuation of capital accumulation. Money systems and market interactions are a feature of commodity circulation, an important part of the cycle of capital accumulation, as what is produced needs to be sold if profit is to be realized. But circulation is not where the basic cause of the capitalist crisis is located. Market phenomena are merely a surface reflection of the deeper dynamics which take place in production. Taking action in the realm of circulation at best has indirect, impossible-to-predict effects on these deeper dynamics. The process of ever-increasing insufficiency of the extracted surplus value to support capital accumulation is known as the tendential fall in the rate of profit. It is not directly measurable via the indices of the realm of circulation, such as profits measured in terms of prices. It can only be detected indirectly, as when crises erupt.

Better regulation of financial institutions, supposedly better ways of measuring value (an impossible goal), moving towards a more equitable distribution of wealth (expressed in monetary terms), a wider distribution of social decision-making power, ... none of these even touch this fundamental design flaw. Higher taxes on the rich, be they on income, or on speculative activity (e.g. the Tobin tax), perversely imply that the rich would have to be enabled to make lots of money, so they can be taxed. The idea frequently expressed by “progressives” and even radicals that “there is plenty of money” for various social programs betrays a deep fetish, as i money is something like the rain which humans capture and use and just needs to be shared in a more just way, as if money is a resource instead of a representation of a social relation. Same thing with the slogan “money for _____, not for war,” which totally obfuscates the fact that the only reason that the US government has money available is because its overwhelming military force ensures that US capital gets first dibs on globally produced surplus value. “Progressives” love to spout all about how nonmilitary spending is more effective at creating jobs, as if the whole point of the system is to create jobs, as if getting a job in order to buy stuff is a vital aspect of being human. As if even nations which are not overtly militarized don’t have economic structures which depend upon a global structure resting on dispossession and exploitation, a structure which requires massive force in order to be sustained.

In addition, the world today faces two other growing crises which cannot be reformed away, namely the destruction of the world’s ecosystem, including climate destabilization, and the depletion of critical resources, in particular oil (peak oil), water, topsoil, and critical metals and minerals. A system which requires endless exponential growth, as does capitalism, cannot solve these crises. These are all facts which the movement needs to face.

None of this should be taken as my advocating that people not resist austerity and repression in all forms, be it wage and service cuts, speedups, laws making workplace organization more difficult, elimination of safety and environmental regulations, cutbacks or wholesale elimination of programs in education, or social services, home foreclosures and evictions, militarization of life, the war on (some) drugs, attacks on civil rights or reactionary cultural agendas, such as attacks on women’s reproductive rights. All these simply have to be understood in the context of the overall crisis of the system. A patient requiring drastic surgery could of course use band-aids, transfusions, and other temporary measures, but these should not be confused with the actual cure, which becomes increasingly imperative with time. The hour is way too late for band-aids.


What Not to Do: Bad Directions for the Movement



Some people have attempted to push the movement into becoming a part of the effort to reelect President Obama in 2012. Given how blatantly the Obama administration has pursued policies favorable to the corporate ruling apparatus, it’s no surprise than these attempts have generally been unsuccessful. Others are more subtle, calling for the movement to push Obama into “doing the right thing,” i.e. implementing a “green New Deal” with emphasis on “alternative energy,” education and housing while making the US more ‘competitive” internationally, while focusing primary blame for bad policies upon “reactionary Republicans” and “the mess they left behind.” This has been the program pushed by the likes of filmmaker Michael Moore, former Secretary of Labor Robert Reich, former Obama jobs adviser Van Jones, writer Naomi Klein, “independent” senator Bernie Sanders, “left” members of the Democratic Party such as media critic Norman Solomon, “progressive” media figures such as Democracy Now’s Amy Goodman and The Nation’s Katrina vanden Heuvel, and “progressive economists” such as Mark Weisbrot and Dean Baker. In many situations, these people have managed to put forth lists of “demands” as if these was being backed by Occupy. These policy suggestions could easily be backed by many in the Democratic Party.

One such list was in a leaflet titled "Occupy Wall Street/the 99%ers 10-POINT PLAN!" The points include:

1. Campaign finance reform and repeal of corporate personhood (not really all that important, as its absence has not prevented large capital's overwhelming dominance everywhere else in the world!)

2. Eliminate Bush tax cuts, with the claim that if the rich are made to pay what they did under Clinton, then "you start to heal [the "economy"], albeit slowly.’ As if things were good before 2001. As if the Clinton-era "prosperity" which so many "progressives" talk about wasn't based upon the hi-tech stock market bubble and the looting of Eastern Europe, Asia and Latin America, as if it didn't fall apart in 2000, before Clinton left office, though the effects didn't become visible till after Bush took over...

5. Jobs, Jobs, Jobs. Government subsidized jobs, guaranteed annual wages, .... To be paid how? And to make more people wage slaves?

6. Renewable energy, to be developed by government, universities, "our allies in other countries, private industry, and former defense contractors." Not so subtle here about the intended beneficiaries.

All these demands and similar ones, which are aimed at restoring an era, supposedly from WWII to Reagan’s election in 1980, during which US living standards rose and distribution of wealth was not as extreme as it is today, are operating under the illusion that history is one big cycle, that the past can be repeated ad infinitum. From 1945 to around 1970, global capitalism benefited from the reconstruction of the world industrial apparatus, after much of it was destroyed during WWII, and the US in particular benefited from the restructuring of the world market with the dollar being made the reserve currency, institutions such as the IMF and World Bank created to facilitate international capital coordination, and much of the not-yet-industrialized world being made into a virtual US colony, as well as from vastly increased permanent military spending (the “military-industrial complex” was born in the late 1940s) and massive expansion of credit. Such measures are no longer available. By 1970, a global economic crisis began manifesting itself again. It took the form of "stagflation," meaning high inflation rates alternated and increasingly coincided with high unemployment and low growth rates. All this happened before Ronald Reagan took office and pushed through his tax cuts, a step which the “left-progressive” consensus currently pushes as the point at which the crisis begun.

Other analyses from a variety of perspectives which explain why the “golden” era cannot be brought back, both because of the capitalist crisis as well as the ecological and resources crises, include “The Social Democratic Illusion,” by Emmanuel Wallerstein; “Two Sides of Austerity,” Endnotes (from the UK), October 2011 (of this group of articles, this one comes closest to my perspective); “Becoming Legion: Are the Occupations a Brief Preoccupation or the Sign of a World-Altering Transformation?” by Ellen LaConte; “Economics Pre- and Post- Copernican,” by Erik Lindberg; and “Erasing/Seizing Wealth of "The 1%" Cannot Create Real Middle Class or Solve Sustainability Crisis,” by Jan Lundberg.

Other tendencies in the broad social movement for change, such as the Transition Cities movement, correctly sense that society needs to be decentralized, localized and democratized to both deal with the various interrelated crises mentioned above. For the most part, however, those promoting this perspective still believe that such a change can be made within capitalism, that hope lies with local currencies, “slow money” and investment targeted at small, locally owned enterprises. They need to be asked where profits come from under such arrangements. Again, the all-encompassing market and capital investment aimed at profitable operation (i.e. accumulation) require a populace composed largely of dispossessed people who have to sell their labor power to survive and a global operation of surplus value extraction.

A somewhat different perspective, one which appears on first look to be a more radical critique, is presented by self-described “socialists,” who advocate measures such as the government takeover of large corporations, in particular banks, and the encouraging of “economic democracy” via the creation of more worker-owned enterprises and co-ops, including the assumption of the ownership and management of existing businesses by their workers. One prominent exponent of this viewpoint is Richard Wolff, an economics professor from The New University in New York, who describes himself as a “Marxist economist,” apparently without realizing how this label is an oxymoron, given Marx’s own explicit antagonistic words regarding political economy and the so-called science of “economics” which replaced it in the late 19th Century in an effort to obfuscate the Marxian critique out of existence. For a discussion of political economy, Marx’s critique of it, and “economics,” see my article “Michael Hudson and Webster Tarpley Disseminate Disinformation”

In early 2011, Wolff delivered a talk in the San Francisco Bay Area, excerpts of which were played on KPFA’s Morning Mix March 2, 2011. He contended that the economic crisis is the result of the last 30 years (i.e. since 1980) of American capitalists junking their supposed historical practice of constantly raising wages and instead resorting to computerization and the exporting of jobs, out of greed for bigger profits. He claimed that American capitalism was uniquely prosperous from 1870 to the 1970s because American businessmen, faced with a "labor shortage," always increased wages, enabling US workers to spend more money and facilitate high economic growth rates and prosperity.

This notion is a combination of stupidity and barefaced lying. American wages did not experience a constant rise during the mentioned period, and neither was prosperity the norm. There were many sharp economic downturns, during which wages fell. In fact, American workers were the least organized and most exploited in the capitalist industrial world till the 1930s. During the early 1910s and 1930s, of course, there were global economic crises, particularly affecting the US, during which conditions were quite abysmal and "growth" was noted in its absence. In the 1920s, before the '29 crash, inequality was in fact as extreme as it is today.

The one period which featured regular wage growth was the post WWII era, till around 1970. And this was the result of a unique set of circumstances. See above for a discussion regarding this period and other articles i referenced regarding the closing of the doors on any possibility of reclaiming the post-war era. Wolff also left out the fact that the crisis in fact started in not in 1980, but in 1970, well before Reagan became president and instituted tax cuts, and before globalization and the exporting of jobs.

Wolff stated that the way out is "Marx's idea" that the workers own the means of production, by which he literally meant that they own enterprises operating on the market. This is an idea which Marx poured scorn on many times. See for example Critique of the Gotha Program. But how many listeners know this?

In an online discussion with Prof Michael Hudson posted around the same time, Wolff said: "I think the issue here is a kind of class war, but not the way people think about it. If you go back to the 1950s and '60s in the United States, . . . the proportion of the government's revenue coming from corporations as opposed to individuals was much, much higher than it is today..... So over the last 50 years, we've shifted the burden of taxes from corporations to individuals and among individuals from the richest to the rest of us. That's a class war. That's a class war that's been fought for 40 years in this country in which the middle and lower classes have consistently lost. You don't have to be a revolutionary; you just have to suggest here that you should to go back to what we used to have in the '50s and '60s in the way of a fair tax system; and I might remind people that in the '50s and '60s with those higher tax rates, we had a faster rate of growth in the United States than we have today and we had far lower unemployment than we have today. We ought to do that, just undo the class war that the middle and lower income groups have lost, and then we would be able to put a major dent in our so-called deficit and have a fairer tax system at the same time." Once again, Wolff is either ignorant of or is lying about what was going on in the US and the world economy during the ‘50s and ‘60s, as well as about the return of the crisis in 1970

On KPFA's Sunday Morning show on April 17, 2011, host Philip Maldari interviewed Wolff, who reiterated his “raise taxes” rap. He then claimed that European politics were far superior to American ones, which is why supposedly conditions were better over there. Maldari pointed out that the largest economies in Europe were run by conservative parties. Wolff countered that there were several nations run by "socialists," mentioning Greece and Portugal. An obviously disturbed Maldari blurted "Oh no, don't say Portugal." Even he was aware of the then-recent descent of Portugal into bankruptcy and appeal to the EU for rescue, as the class conflict was heating up. But apparently he thought Greece was different, or thought listeners didn't know that Greece was in similar straits, as was Spain, which was also run by a "socialist" party. The crisis in those countries has continued to worsen, and in fact the “socialists” are no longer in power, though they continue to support severe austerity policies designed to obtain “rescue loans” from the IMF and the European Central Bank.

Wolff repeated his contention that from the 1870s through the 1970s, the US economy rested upon workers being paid high wages, and this time added that this was because otherwise the workers would have run off to free land, and that this high wages regime made for steady economic growth. But the land was never free. Even back in the 1860s it may have been cheap but required lots of work, and the railroad companies, which got the best and the most land, together with banks and wholesale grain companies soon made the farmers into virtual wage workers. This resulted in a second set of enclosures (the first being the forceful taking of the land from the indigenous inhabitants) by the 1880s, and the Populist rebellion in farm country. And, seriously, were workers really somehow capable of running off from their jobs and farming? This wave of enclosures picked up after WWI and even more after WWII, it's the main reason for the black migration from the South (with more than a few white farmers joining in).

In October, 2011, Wolff was out with a new speech which he delivered in another Bay Area appearance, as well as to various Occupy sites, and excerpts were again played on several KPFA programs. In it, Wolff asserted that FDR cured the Great Depression with a massive public works program, and that he financed it entirely by taxing the rich, instead of debt expansion. In fact, US government debt doubled between June 30, 1933 and June 30, 1940, from about $22 billion to $42 billion, at that point it was by far the largest such expansion in US history except for WWI. As for the Depression being cured, unemployment was still in double digits in 1940, was 9.9% in November 1941 (on the eve of Pearl Harbor), in spite of massive expansion in military production as the US was producing weapons and munitions for the "Allies" and massively expanding its own armed forces. Also in November 1941, the inflation rate hit doubt digits, and had been going up steadily, a consequence of debt expansion. And the Roosevelt administration also begun in 1937-8 the pursuit of a massive exports drive, pushing US exports in markets in direct competition with exports from other industrial nations, especially Germany and Japan. This trade war escalated into WWII. Wolff thinks the same policies of massive public works spending financed by taxing the rich can work today. Of course, no one asks him how the rich can be taxed unless they are making a lot of money.

On December 27, 2011, Dennis Bernstein, host of KPFA's Flashpoints, interviewed Wolff about "the economy in 2011." Wolff reiterated his absolutely nonsensical analysis of the crisis as being the result of insufficient consumption ability on the part of the working class (aka "under-consumptionism"). He presented this notion as being the core of Marx's crisis theory. Never mind that Marx totally shredded the notion countless times, including this classical passage: “It is pure tautology to say that the crises are provoked by a lack of effective demand or effective consumption. The capitalist system does not recognize any forms of consumer other than those who can pay, if we exclude the consumption of paupers and swindlers. The fact that commodities are unsalable means no more than that no effective buyers have been found for them, i.e. no consumers. If the attempt is made to give this tautology the semblance of greater profundity, by the statement that the working class receives too small a portion of its own product, and that the evil would remedied if it received a bigger share, i.e. if its wages rose, we need only note that crises are always prepared by a period in which wages generally rise, and the working class actually does receive a greater share in the part of the annual product destined for consumption. From the standpoint of these advocates of sound and 'simple' (!) common sense, such periods should rather avert the crises. It does appear that capitalist production involves certain conditions independent of people's good or bad intentions, which permit the relative prosperity of the working class only temporarily, and moreover always as a harbinger of crisis." (Capital, Volume II).

Wolf lamented the complete absence of any "progressive" members of the elite who can see how the growing wealth inequality is destroying the system. He again claimed that this is a unique feature of the last 30-40 years, whereas previously American workers have uniformly seen their wages rise as their productivity rose. He added that he'd like to see the Occupy movement change its direction, hinting that it should emulate the 1930s movement, as if that's even possible, i.e. as if a New Deal could be implemented today under the conditions of mass indebtedness and US global decline. This harkens back to an interview of Wolff by the Greek daily Avgi, June 6, 2010, in which he stated concerning state funding cuts, “Particularly hard hit are public educational institutions, which compromises the ability of the US to compete in the long-term, since the majority of the US skilled labor force is trained through public higher education.” When all is said and done, Wolff wants to help the elite save the system, to enable the US to better compete on the world market, as if this would benefit anyone and anything except capital.

A new and somewhat different approach is now being promoted by people such as Professor Michael Hudson of the University of Missouri, Kansas City and affiliated analysts, such as lawyer/writer Ellen Brown. Under the label “Modern Money Theory,” they are pushing the idea that nations should simply create new “debt-free” money to pay all bills, all debts, allow economic expansion and full employment while eliminating all vestiges of the crisis, which they see as a strictly financial phenomenon. This, i will show, is merely putting new clothes on the fetish and painting it in new colors.

I have previously analyzed Hudson’s work in both “The American Left...” and (more thoroughly) in “Michael Hudson....” I should add something i failed to catch which he said during his interview on KPFA’s Guns and Butter on February 10, 2010. He responded to host Bonnie Faulkner's question to explain the labor theory of value by making it to be simply a calculation of production costs, whereas the theory of price is supposed to account for the difference between production cost and selling price by taking note of interest, rent and other non-productive expenses. He thus made value and price to be the same thing, and includes in production cost the profits of capitalists engaged in production, as if industrial capital is simply entitled to a profit by its very act of investing. This in no way explains where profit comes from. Furthermore it is a subtle legitimation of capitalism. Hudson also talked of Marx's analysis of primitive accumulation as being about military conquest and insider political dealing. He totally left out the Enclosures, the process Marx considered to be the most essential factor of primitive accumulation, which has made capitalism possible.

Since my article on him, Hudson has appeared several times on “progressive” media. On July 13, 2011, he was on Guns and Butter. His presentation revolved around the notion that finance is a new form of warfare. Hudson repeated his contention that the "global economy" has been hijacked by a financial elite which is milking it strictly to enlarge the personal fortunes of its members, to the detriment of everything else. During the program, he stated that society produces a surplus which properly goes to pay worker salaries, to investing, and to fund social benefits, but which is being siphoned away by this elite. It is as if this surplus is merely an aspect of the very nature of human society. In fact, this is not material surplus, but surplus value which takes the form of money. This requires the coerced extraction of surplus labor out of the part of the world's working population which is engaged in the production of goods and services(which itself requires the separation of this population from the means of producing their own survival needs directly) and the destruction of the ecosystem as everything natural and living gets turned into dead commodities. And this process is wracked with crises, in fact its very structure embodies an inherent tendency towards crisis, which we are seeing in action today. Thus Hudson is obscuring the injustice at the heart of capitalism.

On July 22, 2011, Hudson was on Democracy Now. He discussed the then on-going negotiations over the US budget. He went where he has not gone before in terms of stupidity and lying. As before, he asserted that there is no crisis whatsoever going on, just attempted robbery by the financial elite, but this time said the US borrowing limit is meaningless, it's always been routinely raised, no reason why it couldn't be raised again aside from an attempt to create a false crisis. It's as if it doesn't matter that at this point, total US debt is about to exceed the total GDP, as if debt can be expanded forever, with no limits. He also asserted that debt should be expanded at a time of a downturn, since this is how recovery and renewed economic growth are attained. "That’s why the economy needs a budget deficit to grow. When the government runs a budget deficit, that puts money into the economy and helps us recover from the recession. That’s pretty obvious."

This shows Hudson is hanging on to Keynesian orthodoxy and illusions, facts of the last 40 years be damned. Keynes's ideas were shredded quite well by Paul Mattick over 50 years ago. See earlier in this article. Hudson also repeated an assertion frequently made about Clinton running a budget surplus. Actually, the US ran a surplus in the late 1990s only because of the hi-tech stock bubble and the looting of the treasuries of Eastern Europe (especially Russia) and eastern Asia in wake of their meltdowns in 1997-8. The bubble blew in April 2000, but the effects were not clearly visible till after Clinton left office on January 20, 2001.

On August 2, 2011, Hudson was back on Democracy Now. Regarding the new budget deal, he asserted: “That means that the government is going to be sucking money out of the economy. Normally, government is supposed to provide the economy with money, provide it with purchasing power. By government running a deficit, this is what, traditionally, for 5,000 years, in every country, has supplied money.” What amazing nonsense. As if capitalism has been around for 5000 years, as if money then is money now, as if every society since then has been structured by the market. “And now the government isn’t going to do it. There’s a kind of junk economic belief that governments shouldn’t run a deficit, and yet it’s by running a deficit that an economy expands. That’s what injects the purchasing power in it.” More Keynesian mind rot. We can see how “well” Obama’s $700 billion stimulus package has worked out.

On September 14, 2011, Hudson was back on Guns and Butter, an interview taped apparently before September 7, as he referred to an "anticipated ruling" on that date by the German supreme court about the on-going bailouts. The topic was "debt deflation in Europe and the US." Somewhere in the middle, Hudson set about explaining the framework of his analysis. He has claimed in the past to be a political economist and even Marx-friendly (while identifying Marx, a trenchant critic and foe of political economy and capitalism as a political economist and a fan of capital, a complete falsehood). But on this show he was strictly a know-nothing economist. The basis of the economy, according to him, is that people work in jobs and make money and then go out and buy the stuff that was produced by businesses, which then use money to make more stuff and hire more workers who buy more.... What an incredible piece of nonsensical circular reasoning. Workers and businesses just sprout out of nowhere? And the businesses make a profit by earning more on sales than their costs? And all production is intended for consumption, yet accumulation happens anyway? This is as bad a voodoo economics as anything ever spouted by the Reaganites or any of the other brands of apologists.

Hudson asserted that Europe is in much better shape than the US because it did not suffer a mortgage crisis which affected banks, except for Ireland. Right, apparently there is no housing bubble in Spain, no matter all the equivalents of savings and loans institutions which had been going under. Likewise, no problem with the banks owned by the various German states, or all the large private German banks which have run into similar trouble, such as Hypo Real Estate. He also sang the praises of the German economy and its export boom. Too bad that stats even then were showing the German GDP is back to near-zero growth, due largely to a drastic drop in exports. This trend has worsened since. He kept asserting that European plans for consolidation of decision making combined with bailouts is something being pushed by "right wingers," when in fact the German Social Democratic Party is more solidly in support for such steps than the right wing ruling Christian Democrats.

In addition, he proposed knocking down mortgages to fit the new lower home values, thereby wiping out large amounts of debt, so that "the top 1% gets its share of wealth knocked down towards its more traditional level," and the US economy can get back to competing for its share of global markets. A share of 39% is apparently OK (that's what he said) but much higher is bad. Debt write-offs do nothing about the basic root of the crisis, which lies in production, not in circulation, specifically the production of surplus value. Global competition under such conditions leads to one thing: war. Plus, growth nowadays also faces the planet's physical limits, which he completely fails to acknowledge. Yet even within the limits of existing social conditions, his solution is ludicrous. If debt can be ordered to be written off, why would anyone lend again, especially when there are other options for investment?

On February 29. 2012, i tuned in to Guns and Butter and i thought i was hearing Michael Hudson again. Well, turned out it was former bank regulation official William Black, but the analysis sounded almost the same as Hudson's: "we" need to better regulate banks, break up the big ones into smaller, "more efficient" units, root out corruption, and the system can be made to work once again. The words may sound "radical," yet the implicit message is anything but. It is that there is nothing essentially wrong with the capitalist system which some honest and vigorous regulation cannot cure. This turned out to be just the first part of what has become a series of shows about Hudson and company and their pushing of Modern Money Theory. Black is now at the University of Missouri, Kansas City, like Hudson.

The March 7, 2012 show featured comments from the opening session of a late February conference in Rimini, Italy, regarding Modern Money Theory(MMT), whose aim was to present alternative economic policies for austerity-wracked Europe. First on was Stephanie Kelton, another Hudson colleague from the University of Missouri, Kansas City and a very prominent exponent of MMT. She sounded very much like Hudson. Within minutes, she concluded her remarks, and followed by..... Michael Hudson. A transcript of the show was posted at Hudson’s website. All the quotes of Kelton and Hudson appear here as posted at the URL. I will start with Kelton’s remarks.

“Modern Monetary Theory is a revolutionary way to think about the way a modern capitalist economy works..... It is the key to understanding how a modern economy can achieve what has for so long been unthinkable: full employment for all people with stable prices.......

What is money? All money exists as an IOU. It’s a debt. When we say, ‘I owe you,’ we mean two people are involved in every monetary relationship. The ‘I’ is the debtor. The ‘U’ is the creditor. I Owe You. IOUs are recorded in what we call the money of account.....

The money of account is something abstract, like a meter, a kilogram, a hectare. It’s not something you can touch or feel. It’s representational, something only a human could imagine. In any modern nation the money of account is chosen by the national government. MMT emphasizes the state’s power over money. This is not something new. It dates back as far as Aristotle. You can find it in Adam Smith and in the work of John Maynard Keynes.”

Thus, money is debt, but debt is ... an amount of money owed by one entity to another? Can we say “circular reasoning?” All this simply assumes the existence of money, indeed its existence throughout history, as if money has always been the same thing. Such analysis completely ignores what money represents: a given quantity of value. The word “value” does not appear once, let alone is it defined as being a measure of abstract socially necessary labor time. Aristotle indeed discussed value as being implicit in the very fact that two items can be exchanged for one another, an act which infers they have some quality which is equivalent. He never fully explained what the basis of value is, this task fell to the political economists and eventually to Marx’s critique of political economy. Kelton’s perspective is taking commodity fetishism to a new height.

“As long as the state has the power to enforce its tax laws, the people will need the government’s money. The currency will have value. People will work to sell things—goods and services—to the government in order to get government money. Whatever the government accepts in payment to itself becomes the ultimate, ‘definitive,’ money in the economy. It is the only way to settle a debt.”

“Value” here is used as “having the ability to be exchanged for something.” This has zero connection to the real meaning of value. Again, money, debt and all these feature are simply assumed to be an inherent part of human society. Kelton’s reasoning, again, is circular: money becomes money.

“The U.S. government taxes in dollars. It spends in dollars. And it controls its own currency. Why is this important? What are the benefits of issuing your own currency? They are extraordinary.

The government, when it issues its own currency, and goes into debt in that currency can always pay its debt, can never go broke, can never run out of money. It can afford anything that is for sale in that currency. It doesn’t need to borrow its own currency. And it can set its own interest rate. It does not have to pay what markets want. It does not become a victim to speculation, to bond vigilantes. It has additional policy space. It can do things for its economy and for its people that a government that does not have a sovereign currency cannot do.”

The fetishism involved here again reaches new heights. Money is apparently whatever a government says it is, with absolutely zero connection to anything in the real world, particularly to the relations of production between human beings and between them and the means of production, of which money is but a representation. One can easily see where this will go: every government will strive to make its own piece of the puzzle function as smoothly as possible, regardless of the effects upon other governments. It is all out war between various national capital entities.

“Think about what the hierarchy would look like under a gold standard. Many governments operated under gold or silver or both for some period of time in our world history. Under a gold standard, the government promises to convert its currency into gold. In that situation, what sits at the top of the pyramid is not the state’s currency, but the gold reserves. This means that the government must be careful about how much it spends. If it spends too much of its own currency, it can jeopardize the entire system because it may not be able to convert currency into gold as promised. You have to limit your spending and limit what you do with your policies. Governments operating under a gold standard do not have sovereign currency.”

Gold was simply a useful commodity which could be used as a general equivalent to all other commodities, given its material nature. See earlier in the article. It was like all other commodities the product of abstract labor, which allowed certain quantities of it to be equalized to certain quantities of other commodities. Making other materials money, or making money completely immaterial, does not do away with the basic nature of exchange, which tends towards the exchange of equal values. One doesn’t need to fetishize gold, like Ron Paul and his followers, to see how focusing on one particular form of money misses the main point.

“The hierarchy in a country that operates fixed exchange rates places someone else’s currency at the top. You also lose control of your interest rate—something that’s crucial to retain control of—if a country is going to have a sustainable debt and full employment.

The euro is not a fixed exchange rate system, but it’s not a sovereign currency either...... A sovereign government should be in control of the currency that sits at the top of its pyramid. If it gives up control of the sovereign currency, it also gives up the power to set reasonable policy in its own country. It hands over that power to the bond markets who, ultimately, decide how much can be spent—what can be done.

Abba Lerner was an economist, a contemporary of John Maynard Keynes. He saw this very clearly. He said:

‘‘By virtue of the power to create or destroy money by fiat and its power to take money away from people through taxation, [the State] is in a position to keep the rate of spending in the economy at the level required [for full employment].’

“The problem with the euro is that it cannot be created at will.“

This is quite an appalling display of a belief in absolute state power and in money as being the essence of human productive activity, rather than a poor representation of it in a society marked by division into separate producers who are connected only via fetishized symbols and symbolic activity. This is post-modernist Keynesianism, a belief that nothing is real except the symbols, that everything is determined by the “text,” constructed by a fetish created to facilitate an exchange which in fact is made necessary only because of the division of society into antagonistic interests. A process whereby every state pursues policies intended to benefit itself is a recipe for trade wars and their logical outcome, military conflicts.

Kelton was followed by Hudson, whose remarks took up the rest of the show. “What you have today is a new kind of a war. It’s a financial war. You can get by privatization and financialization what armies used to get by force of arms. This is not the class war that people spoke of a hundred years ago. It is a financial war. And it is a war that classical economists warned against. 300 years of classical political economy sought to get rid of landlords and bankers. A hundred years ago people spoke of technology. Nobody believed that the vested interests could fight back. But they did fight back in the way that parasites do in biological nature.”

As i discussed in my previous article about Hudson, he openly lies about what political economy was about. He then takes some more shots at the financial sector, whose machinations he deems to be the reason for the crisis.

“Central banks create money, you can say. And commercial banks create credit. The last three years since September 2008 have seen the largest money creation and credit creation in history in the United States. And, yet, prices have not gone up at all. That is, consumer prices have not gone up since 1980. Wages in the United States have drifted downwards for 30 years. And consumer prices and commodity prices have been stable.”

The claim regarding prices since 1980 is patently false. Just look at education costs, rents,... The claim regarding the period since 2008 is true only if one isolates the US from the rest of the world. Globally, the massive expansion of money and credit by the US Federal Reserve, also known as Quantitative Easing (QE), has been a key reason for destabilizing monetary flows, large rises in the prices of raw food commodities and energy, and for inflationary pressures elsewhere in the world. It has been a key method for the American ruling elite to export the worst symptoms of the crisis, foist them off onto other nations, particularly US trade/political rivals such as the EU, China and Brazil. See comments by Brazil’s president Dilma Rousseff to Obama on April 10, 2012, regarding this matter. In fact, even in the US, certain prices, specifically food and energy, have gone up a lot. Government statistics leave out these factors because they are deemed “volatile.” A generally good analysis (even if a faulty conclusion) of QE can be read here.

“Under industrial capitalism, the idea was that credit would be created productively to fund capital investment that would employ labour. That is not what is occurring today. When commercial banks create credit, it is [to] create claims on wealth. It is [to] create mortgage debt. It is [to] create corporate debt. It is to create personal debt, and student loans, and credit card debt. This is what makes commercial bank credit creation different from the central banks’ creation of money.”

More mystification of how things were back during the good old days, when industrial barons ruled the day. The capitalists were not motivated by the idea of creating jobs, not then, not now, not ever. Their motivation was and is the accumulation of capital by any means necessary.

“When central banks create money, they do so for a long-term public purpose. They fund government spending and capital investment and public infrastructure. In most countries in the world, public infrastructure, roads, communication systems, railroads, water and sewer systems have all taken a capital investment that is larger than all the manufacturing capital investment....... There is a formula, MV = PT. It means an increase in the money supply increases the price level. But the price level that the textbooks talk about are only consumer prices and commodity prices. Nowhere in the textbooks do you find a relation between the credit supply and asset prices, real estate, stocks and bonds.”

More mystification. All the infrastructure investment was done in order to facilitate accumulation, not for some noble “public purpose.” The flow of capital into financial speculation is the result of falling profit rates in production, the long term tendency which is inherent in capitalism due to its very structure. See earlier in this article.

“In the textbooks there are happy pictures about banks lending to industry to build machines and factories with a smokestack coming out and employing labour. But this is a fiction; this is not what occurs in practice. All of the increased capital investment in the United States economy comes from the retained earnings of corporations—not from banks. Banks do not lend to bring new capital investment into existence. They lend against mortgages, against capital in place, against real estate, against assets that already exist—not to create new assets.”

This is an invented reality. The idea that US industrial corporations have been strictly self-financing is totally unsupportable by facts. See for example the following article dealing with non-financial corporate debt.

“So, when we talk about government money. We [, we] talk about government spending that is, indeed, to spur the economy, to spur economic growth, to spur new investments. The function of government investment and government central bank money creation is very different from the private banks. The government money is, indeed, debt, the lira that you have in your pocket are debt. Paper currency is debt. But it’s debt that nobody ever intends to be repaid because, if government currency is debt, than to repay it would mean that you would not have any currency left in the pocket. The commercial debt is expected to be repaid; and it bears interest.”

Again, money is debt, and debt is... an obligation to pay money. What a wonderful circle.

“There is a political aspect to all of this technical discussion of money. The political aspect is if governments create money, then they’re creating a mixed economy—a mixed economy of private and public capital investment. This is what made all of the countries of Europe and the United States rich. The government investment in the public infrastructure that has been able to be supplied to the economy at cost; so, you get to drive on most roads for free; you get to use this huge capital investment in infrastructure for free. But if governments are not allowed to create their money, then all of the credit the economy needs is created by the commercial banks. And when the commercial bank credit creation leads to debt deflation and the government cannot finance the deficit to pay the interest, then the commercial banks say: Alright, sell off and privatize your infrastructure. This is what we’re seeing in Greece today, in Ireland. You’ve seen it in Iceland. What you are seeing is a financial grab of infrastructure that is taking place by the ability of commercial bankers to prevent the central bank from creating credit.”

Utter rubbish. What has made the ruling elites of Europe and the US (not the nations as a whole) rich is surplus value extracted from wage slaves engaged in commodity production, both domestically as well as around the world. Government spending is simply a deduction from surplus value which is then redistributed to sectors where state managers believe it can facilitate generalized capital accumulation. See earlier in this article for Paul Mattick’s critique of Keyens.

“So, in the United States, the real economy of production and consumption has actually declined over the last 30 years. All of the growth in the economy is overhead to the rentier sector—to what we call the FIRE sector: Finance, Insurance, and Real Estate, which now should include the legal system and the monopoly system. So, almost without the textbooks or anyone noticing, what used to be analyzed as industrial capitalism has turned into finance capitalism. And this finance capitalism has not been the kind of finance that was imagined a hundred years ago. It is not financing of industry. It’s financing of economic parasitism and overhead. And all of this is presented as if the way to get rich is to go into debt—to borrow—to buy assets that are being inflated in price...... Foreclosure time arrives and, so, financial capitalism turns into a bubble economy because the only way that banks can avoid default and a break in the chain of payments is to lend more money.”

The terms “industrial capitalism” or “finance capitalism” are misleading. Capitalism is one system in which the dominant social relation of production is capital. The one and only real goal of capital is self-reproduction at an enhanced level, i.e. capital accumulation. This was always and still is being done only via the extraction at the global level of surplus value from wage workers involved in the production of goods and services. This extraction process is still the base which capital accumulation everywhere and in every sector depends upon, regardless of what particular business pursuits particular chunks of capital are invested in. When profit rates on production have dropped, capital has always flowed into speculation. The extent to which capital is increasingly tied in speculation and reliant upon a relatively ever-shrinking base of production is unprecedented. But this is a quantitative change, not a qualitative one. The likes of Hudson wish for you to believe that if financial capitalists are curbed or even eliminated, and the state were to create massive new amounts of “debt-free currency” (i.e. massive “printing” of money) to finance infrastructure development and enable industrial expansion, prosperity and full employment can all be attained. He wants to push the expansion of industrial production at a time when just about every industry in the world market is experiencing overcapacity, an apparent excess of production capacity relative to the ability of the market to absorb what is produced. This is how the shortage of surplus value manifests itself in the world of appearances, but it isn’t itself the problem. This cannot be cured by enabling increased purchases of the produced goods and services.

The March 28, 2012 Guns and Butter episode featured more remarks by Kelton and Hudson. Speaking first, Kelton went at length about how not having a job essentially robs a person of their humanity, as if wage labor is in our genes, or even has been a feature of human society for very long. . She stated that governments can basically ensure full employment and righteous functioning of capitalism by injecting the correct amount of fiat money into the market, that there are no limits on keystrokes (for creating money via computers), just as there are no limits on how many points can be scored in a certain sports game. As if points, which are not equivalent to anything, are the same as money, which is a representation of value, used in a strict political economic sense, i.e. the abstract socially necessary labor time to produce a good or service intended for market exchange. Again she presented the theory of Keynes to support her contentions.

Hudson followed. The transcript can be read here. “And in all the textbooks there was what was called Say’s Law; workers had to be able to buy the results of what they produced. And this was a circular flow, the circular flow between producers and consumers. And this idea goes all the way back to the French Physiocrats, just before the French Revolution, who created economics and account keeping......

So, the idea was that all of this increased production had to increase consumption. So, the idea was, as a variant of functional finance, that production creates its own market for consumption by paying workers, who’d then buy the products they produce. So, the question is: Why hadn’t this occurred? With all of this productivity since the end of World War II and, especially, since 1980, why aren’t you all rich and enjoying a leisure economy?........

Well, obviously, what has happened is that what was then applauded as the post-industrial economy has become the financialised economy. The reason you are working so much harder than you were before is because you are paying off your debts. You’re not buying the goods and services that you produce. You’re paying the banker because you can only maintain your consumption standards and keep on spending what you produce if you borrow to do it. That is the euro plan for you. That is how the euro plan is replacing industrial capitalism with finance capitalism.

Wages and living standards have not risen. All of the gains have been siphoned off by finance. When they call for austerity, it is not the fat that they are cutting—the fat is the financial sector—it’s the bone; it’s the industrial sector. So, the post-industrial economy means deindustrialization. It means unemployment for you. And unemployment means lower wages.”

From the previously-cited Mattick article on Keynes: “Economic stagnation and large-scale unemployment was at the center of Keynes’ interest. Traditional economic theory was bound to the imaginary conditions of full employment and to Say’s ‘law of the market’ — to the belief, that is, that ‘supply creates its own demand.’ Like Say, Keynes saw in present and future consumption the goal of all economic activity, but, in distinction to the French economist, he no longer held that supply brings forth sufficient demand to maintain full employment. The refutation of ‘Say’s law’ is hailed as the most important aspect of the Keynesian theory, particularly because it defeats this ‘law’ on its own ground by showing that just because of the ‘fact’ that production serves consumption, supply does not create its own demand.

“Almost seventy-five years earlier [before Keynes’ article, which was published in 1935], Marx had already pointed out that only an accelerated capital expansion allows for an increase of employment, that consumption and ‘consumption’ under conditions of capital production are two different things, and that total production can rise only if it provides a greater share of the total for the owners and controllers of capital. The ‘dull and comical ‘prince de la science’, J.B. Say,’ Marx did not find worth overthrowing, even though ‘his continental admirers have trumpeted him as the man who had unearthed the treasure of the metaphysical balance of purchase and sales’ (A Contribution to the Critique of Political Economy, Karl Marx) For Marx, Say’s law of the market was sheer nonsense in view of the growing disequilibrium between the profit needs of capital expansion and the rationally considered productive requirements of men, between the ‘social demand’ in capitalism and the actual social needs; and he pointed out that capital accumulation implies an industrial reserve army.”

Thus, whereas Keynes rejected Say’s Law, and thought government intervention could fill in the gap between production and consumption, Hudson appears to accept it, with the caveat that it would work if only the speculators and the financial sector were severely curbed, the government were to print money with no restrictions and industrial capitalism was to be brought back. It’s as if the accumulation needs of capital can be infinitely accommodated with no problems. Hudson, who has claimed to be the heir of political economy and indeed of Marx, once again reveals himself as a fraud of the first degree.

The steps Hudson proposes would do nothing about the constant scramble by units of capital seeking surplus value for their capitalization needs inherent in capitalism at every stage, and in particular nothing about the increasing insufficiency of the globally-extracted surplus value to enable this accumulation to proceed, which greatly worsens the scramble. Instead of international prosperity and full employment, a far more likely outcome is a war of all against all, as every nation seeks to reflate and drive down the value of its currency to gain trade advantage over all others. Those nations in a position to do so will export the effects of the massive increase in money supply to others for as long as they can, as per QE, till the inevitable retaliation results. Those which cannot do so will have to adopt strict trade and capital controls, and place their populations on a virtual war footing. It is very illustrative to note that Hudson and his minions frequently talk of how the US (or whatever nation they happen to be speaking at) can once again become “competitive” on the world market, as if global competition is a good thing.

As long as the money fetish continues to rule, as long as the production relations of capital remain intact, there will be no respite from the crisis, and in fact such measures will worsen the crisis and hasten the recourse towards global war, the only thing which ended the other two global capitalist crises in history, the one in the early 1910s and the one in the 1930s. And the MMT crowd completely fails to deal with the fact that the world is facing increasing shortages due to depletion of vital resources and also the consequences of the destruction of the ecosystem. Hudson and his MMT sales people are pulling a real fast one upon the world, and it’s a shame to see supposed “progressives”/”leftists” participate in marketing this scam to a vulnerable audience eager for some solution to the growing global depression, one which somehow will allow them to keep present social/economic arrangements, in which they are invested, basically intact.


De-monetize, De-commodify, De-Enclose



All the strategies i reviewed involve maintaining the money fetish and attempting to manage it somehow. This has clearly been shown to be impossible, so we should stop wasting our time trying. There is no reason for doing so aside from the conviction that humans are incapable of relating to one another in any way except through mediating fetishes. The allocation of social labor on the basis of mutually antagonistic interests which have to be mediated via objects, real or imagined, inherently leads to conflict. It is increasingly impossible to carry on in this manner on our depleted planet. The ages-old human way of allocating social labor on the basis of cooperation, direct satisfaction of needs and direct, participatory decision-making is the only logical way, indeed the only viable way, for our species to proceed any further.

The Occupy movement should begin to move towards eliminating money and begin confronting the essential features of the dominant social order, while also dealing with the ecological and resources crises. Already, some efforts have been made to occupy vacant structures and use them as community centers. Similar initiatives have been made concerning housing, though in many cases this has taken the form of helping people force a bank to adjust mortgage terms, not of challenging the private property form. Such efforts should be escalated and taken to their logical conclusion. Housing should be made available for free, rather then as a commodity which one buys or rents. Vacant lots should be occupied and turned into food gardens. An interesting initiative on this matter is the occupation of the Gill Tract, a lot of land in Albany, California, used by the nearby UC Berkeley for years for agriculture research, which on Earth Day (April 22) 2012 was occupied by community activists and students whose goal was to turn it into an urban farm. This initiative received a supporting message from Brazil's MST, the movement of the landless, which has been pursuing such tactics over the last couple of decades. The key aspect of the Enclosures was the separation of the masses of people from the means of producing survival needs, especially food. This is why people are forced to work for a wage under demeaning and often dangerous conditions: they have to, if they wish to eat. The more we produce of our necessities ourselves, the less power capital has over us. This should be extended to all other facets of life, ASAP. A key aspect of this can be the occupation of workplaces by workers who then begin to use the occupied facilities to satisfy the needs of the local community.

Efforts at establishing non-market societies have taken place many times before. A good overall review of history is provided in Communalism: From Its Origins to the Twentieth Century by Kenneth Rexroth. During the English Civil War in the 17th Century, groups such as the Levelers and the Diggers occupied land collectively in order to resist the Enclosures which were then being drastically stepped up, and even propagandized about the possibility of a communitarian society based upon sharing. See the classic The World Turned Upside Down by Christopher Hill. In the US in the 18th Century, a large community made up of indigenous people as well as runaways from the British colonies, both African slaves as well as previously enclosed Europeans, was established in the Great Dismal Swamp of the backwoods of Virginia and North Carolina, and functioned along lines which could be regarded as quasi-anarchist. See Gone to Croatan by James Koehnline

A good review of movements with this goal in more recent history is Non-Market Socialism in the Nineteenth and Twentieth Centuries, edited by John Crump and Maximilien Rubel. One notable instance was the Russian Revolution during its more radical phase, i.e. the period between the czar's overthrow and the Bolshevik takeover of state power. Workers had to take over factories which were abandoned by owners who fled the country. This led to a widening production web run by the workers via workplace committees in conjunction with directly democratic organs of mass participation and decision-making, the soviets (“councils” in Russian), drawing in not only working people but the many soldiers and sailors who had rebelled against the Czarist authorities. This was totally outside the Bolshevik party which later came to assume state power and in the process took away power from the soviets and committees. Another is the Spanish Civil War, in the early stages of which workers took over the factories of Catalonia, then the nation’s industrial center, and the farms of Aragon next door, and ran them as federated anarchist collectives, often outright abolishing money and allocating work and products via planning and directly-democratic decision-making carried out via mass assemblies. Their worst enemy turned out to be not Franco’s fascist army, but the Stalinist/”liberal” government in Madrid with which they were supposedly allied (this article takes note of peak oil). In 1968, a student strike at a campus in suburban Paris mushroomed into a nation-wide general strike, during which most workplaces were occupied by the workers, who in some cases began running the factories on the basis of direct use, in the reconfiguration of much of social space, and the re-emergence of the notion of direct democracy in the context of abolishing capitalism.. There have been instances even in the US.

Given that our situation is different, these experiences should by viewed as rough drafts rather than blueprints. I’m sure many a reader would react at this point by saying “all this stuff is hopelessly utopian.” Well, when one is riding in a car, and the engine is starting to throw rods, the transmission gears are obviously ground down, the drive shaft is cracked, etc., what is utopian is to think that a change of drivers, or a change of oil, or a new coat of paint will enable the car to keep running. It doesn’t matter if the car’s occupants aren’t ready for a fundamental change, they are the ones who need to “get real.”

posted May 15, 2012



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