Fri Feb 21 07:52:54 MST 2003

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In einer eMail vom 19.02.2003 15:00:35 (MEZ) Mitteleuropäische Zeit schreibt 
BrownBingb at

> Thanks Philip. As I said , I had never thought this through
> completely every time this issue has come up over the years. I had
> forgotten the paradox of higher rate of exploitation, but lower rate
> of profit with increasing organic composition of capital ( I believe
> that's the increasing organic composition , c/v; still too lazy to
> go to the book, sorry).

The meaning of the Labor Theory of Value.

The term "labor" is a constitutive element for all modern societies in
two respects, namely, in an economical-structural and in an
ethical-moral sense.  Enlightened liberalism secularized and
integrated the Christian masochism of suffering. The Protestant work
ethic thus found its place in Marxism as a bourgeois
legacy. Similarly, the classics of bourgeois economics (and later,
Marx) incorporated the positive Protestant category of labor in their
theories. This was not merely a speculative theoretical postulate, but
rather the theoretical counterpart of the unfolding capitalist mode of
production.  In this historically limited conception, "labor"
(i.e. the expenditure of human energy for the purpose of social
(re)production) emerges as the substance of economic value. In turn,
the discernible form of the substance of value is money (the selected
"universal commodity"). That is, considered as objects of labor,
commodities are objects that "contain" value and have money prices.

This is a positive and internalized connection, from the standpoint of
bourgeois subjectivity. And in so far as Marx himself argues within an
affirmative context of modernization, this "positivation" shows up in
his work as well. When one reads the Marxian work in this sense, it
turns out to be a descendant of liberal ideology and classical
economics. This descendant kills its progenitor on the one hand, but
still carries its birthmarks on the other. It is exactly this
positivistic side of Marx which forms the "exoteric" Marx of the labor
movement and class struggle. The emphasis on surplus-value as the
capitalist form of "unpaid labor" and the implied, structurally
determined "exploitation" of workers by capitalists, recommends
somehow the need to claim "the entire value" for the "working class."
By the same token, value and "labor" as categories of form and
substance of capitalist society are "positivized" (made positive) into
ontological, transhistorical conditions of human existence.

Social contradiction thus dissolves into subjective relations of
intent, since the structural categories become a neutral, positive,
ontological, and silent a priori. Consequently, it seems that the
essence of capitalism is that one class is the subject of domination
and oppresses another class - the "working class", which is the
subject of labor - for the benefit of material wealth and well-being
of the "ruling class". However, albeit fuzzy and inconsistent in its
terms and presentation, the deeper dimension of the Marxian Theory
implies a totally different interpretation. In this reading, "labor"
suddenly no longer appears to be a positive substance but rather a
negative one; and accordingly, value represents the form of a negative
mode of social reproduction (Vergesellschaftung). The appearance of
labor as the substance of value is real and objective, but it is real
and objective only within the modern commodity-producing system. The
practical activity of society within the "metabolism of nature" (Marx)
has, in no other mode of production and mode of living, assumed the
substantial status of the socially-general (all-embracing) abstraction
of "labor" and dominated the whole process of reproduction in the form
of value.

Within this system, money is the tangible form of the appearance of
value, which is linked to itself. In the self-expanding movement of
capital, which breeds money out of money, money becomes to a
relentless and restless end-in-itself. But if "labor" is the substance
of value, and thus the substance of money, one therefore has to
describe labor too as an end-in-itself: it is the self-referring and
permanent alienated expenditure (Entäußerung) of human energy. The
mediating character of "labor" in the "metabolism with nature" and the
mediating character of money in the social metabolism of society
transformed into an end-in-itself and thus determine the actions of
the empirical subjects. It is precisely this tautological, systemic
self-reference that renders "labor" to "labor" and money to money.
Marx calls this paradoxical and irrational achievement of independence
of the means (or medium) the "automatic subject" of the modern age.

Far from being the subjects of the story, the owners of capital and,
likewise, the managers, prove to be mere functionaries of the
"automatic subject," which operates beyond their aims. Incidentally,
the gratifications for the members of the so-called "ruling class"
seem to be almost derisory in relation to the strains they experience,
their "luxury" lags far behind that of all pre-modern elites, and,
moreover, has become more and more stupid and scanty along capitalist
development. This conception of the capitalist mode of production and
mode of living strongly suggests the notion of (objectified)
"utilization" of the capacity-for-labor, rather than the term of
"exploitation" (subjectively perceived, and sociologically
restricted).  Wage-labor is not withheld directly from its own social
product. Rather, the social production of wealth itself is
subordinated to the systemic restrictions of the monstrous

Following from the self-referentiality of the quasi-independent means
("labor") or medium (money), paradoxical "social relations between
things" (Marx) arise wherein the humans interact not directly but
remain primarily isolated from each other. Their social interaction
only takes place secondarily via the value-property of the labor
products. That is precisely what Marx called the fetishism of the
commodity form. The use of the natural and social resources does not
take place through the conscious mutual regulation by social
institutions in advance, but through the blind expenditure of
labor-energy for anonymous markets. This expenditure of abstract
labor-energy can prove itself to be socially coherent only a
posteriori, "behind the backs" of the acting subjects in a likewise
blind, objectified, and systemically conformed manner. Social
coherence is therefore never guaranteed (as is well known, Adam Smith
acclaimed this point with the topos of the "invisible hand," despite
the evident frictions of such blind social dynamics

With this fetishism, where the social dynamics appear to be dynamics
between things (which is the essence of the "automatic subject"), a
relation between form and substantial content is established that is
both real and hallucinatory. The concrete human activity of
transforming the elements of nature remains unsocial (a matter of
"business administration"), although it is from the beginning not
self-sufficient, but aimed at a context of universal and mutual
dependency. The merely secondary social validation through the market
necessitates two things: firstly, that productive activity is stripped
of every concrete character, i.e., abstracted to pure "expenditure of
human brains, nerves, and muscles" (Marx) in order to make the
qualitatively different activities and goods commensurable in the
exchange of commodities. Secondly, despite the fact that the real
process has gone by, the abstracted expenditure of human-social energy
now appears (in the particular quantification of the respective level
of productivity) to be a social property and substance of the products
and, in turn, this substance acquires its expression by the selected
"universal commodity" (money) in the form of money price.

However, since money as money capital represents the all-embracing and
self-referential element in the "valorization of value" (and to this
extend it represents the point of departure), the concrete activity of
the productive human relationship to nature takes place from the
beginning merely with regard to the abstraction, which has literally
become real in the property of value and money. Thus the reversal of
means and end has its correspondence in the reversal of concrete and
abstract; now the concretum is merely the expression of the
abstractum, instead of the inverse. Hence, the so-called "concrete
labor" and the correlated spectrum of the "use-values" represent not
the "good", need-oriented side of the system, but itself the mere
concrete form of appearance of the real abstraction, because the
concrete operation of production appears on the social level only as
the medium of this abstraction. Concrete labor stands not for itself,
but is subject to the dictates of the "valorization of value," and,
therefore, causes also irrational and destructive results on the level
of use-value in spite of the better judgement of all participants, who
remain fettered to the structural force of the system. Of course, the
value-property of the products, which serve as carriers of the
expended and abstract "labor-substance", is hallucinatory. This is
because, firstly, the aspect of abstract expenditure of human energy
of the producing activity can not really be removed from the
material-sensory character of "concrete labor". This process takes
place only in the "abstractifying" social unconsciousness as an
implicit automatism, albeit producing a material result: money. It is
through money that society encounters its own unconscious abstraction
as an independent, alienated power. Secondly, since it is a matter of
a living process, one can also not get hold of the producing activity
as abstracted matter sui generis in "congealed" form in the
products. The members of society who are socially isolated from each
other, and are being mediated by the products a posteriori, must thus
hallucinate their bygone respective "labor" as a property of the
products (and, moreover, with respect to the systemic feedback, they
must already start the respective activity of production under this
abstract and hallucinatory reification). Only a human being who grew
up with the categories of the commodity-producing society will
recognize the hallucinatory property of value/price in the first
place, for it cannot be grasped on the material level. However, this
fetishistic hallucination is not an arbitrary and accidental one: the
socially valid amount of labor fitting to the respective level of
productivity must actually be expended. The capitalist end-in-itself
gains firmness and the ability of reproduction only as a
socially-hallucinatory relation of past, actually expended quota of
labor (in concrete-sensory form).

The Marxian analysis of the capitalist deep structure, with its
immanent fetishism, reveals the negative character of the
labor-substance and its value-form. This crucial point has been
ignored bashfully by the Marxism of the labor movement, and has been
dismissed by the official economic science as "philosophical
nonsense". In the context of the rejection of the Marxian Theory,
academic science even discarded the doctrine of the beourgeois
classical economists, who regarded the expended amount of labor as the
content of economic value. The dominant consciousness kept only the
ethically repressive meaning and moral of the positive term of labor
and thereby protected itself through ignorance against the discovery
of their own irrational constitution, which lurks in the Marxian term
of fetishism.  Economics became the superficial theory of marginal
utility, or the theory of subjective value. Within this theory – the
foundation of today’s mainstream economics - the term of value is
entirely dissolved into the appearance of price and, in turn, price is
reduced to the purely subjective utility-calculations made by market
participants (whose existence and constitution are assumed a
priori). This post-classical theory does not really intend to and is
not able to explain anything. Rather, its purpose is to bring the
calculations of the market subjects into a systematic and computable
form. Within the social sciences, mathematics appears on the scene at
the point when the critical impulse has been lost and when one tries
to bring the description of the social context, which lacks a
theoretical explanation, back under control.

However, the proposition that price can be reduced to subjective
calculations of utility and that it has nothing to do with some sort
of an objective substance of value, is plausible only in unusual
situations, outside the implicitly assumed social relations. For
example, in the famous idea of the "glass of water in the desert,"
whose marginal utility would rise to infinity. But examples of that
sort are silly since they are not part of the ordinary performance of
social-economic actions and can therefore not be considered to be the
subject of economics. Within the real society of a commodity-producing
system the explanatory power of the marginal utility calculations of
use-values is practically zero. This is because, although market
participants evidently weigh their subjective utility against the
respective money price, they do not do this independent of social
conditions; rather, they do this under objectified conditions, which
are forced upon them and (a priori) influence their calculation in an
unconscious manner. The theory of subjective value (price) confuses
cause and effect here. Normally a certain good is disposable on a
larger scale because the respective productivity has increased, i.e.,
the objective value of the single commodity (the expended amount of
labor per good) has decreased through the diminution of its
labor-substance. The subjective calculation of utility thus only
follows, at best, the development of social productivity regarding the
expenditure of labor.

However, the perception of smaller or greater utility in relationship
to the level of human needs in no way regulates the production of
goods. For instance, assume a growing mass of unemployed and
recipients of welfare, people who are not able to buy certain desired
and necessary goods: an increase in their subjective calculation of
utility concerning these goods by no means causes a rise in prices of
these goods; they are on the contrary more likely to fall, because
demand decreased as a result of missing purchasing power, in spite of
an increased social need. It is pure cynicism to attribute this fall
in prices (consider a deflationary shock, for example) to a decline in
marginal utility of the goods, due to a saturation of the
corresponding needs. On the other hand, a lack of demand will not lead
to any arbitrary decrease in prices below the objective
labor-substance (according to the level of productivity), rather, it
will precipitate a shut-down in production regardless of the
unsatisfaction of (even vital) needs and an abundant capacity of

The theory of marginal utility, or the theory of subjective value,
together with their various extensions in the twentieth century,
wholly ignore that the capitalist order of society is not determined
by the subjects of circulation, but by the irrational end-in-itself of
production. The capitalist inversion of means and end, which Marx
analysed, enforces firstly, that humans can in no way appear on the
demand side of the goods markets without having previously sold their
own skin in the labor market in the name of the systemic
end-in-itself. Secondly, and following from this, the goods market is
not at all the place where the calculations of use-value-utility made
by independently producing subjects meet. Rather, the market,
apparently being the place of the "freedom" of buying and selling,
represents nothing but the sphere of the "realization of
surplus-value," i.e., the reconversion of the expended quota of labor
into the form of money capital. The goods market is in this respect
only a pass-through for the ceaseless pulsating capitalist
end-in-itself, and is far from being constituted by a sum of
subjective calculations of utility. The exact opposite is the case:
these calculations of utility are bound to the realm of the
pre-existing capitalistic law of the system. The term of utility
itself is determined by that, not by the sense of well-being and the
satisfaction of needs of the market participants.

The Tendency of the Rate of Profit to Fall and the Law of Breakdown of

It is quite obvious what drives the ideologists of economics in their
denial of the objective labor-substance: the problem of substance must
be disposed of because capitalism has the immanent tendency to make
this substance superfluous and obsolete, and by doing so, destroy
itself. From the point of view of a consciousness that is only able
and willing to think within the bourgeois categories of form
(circulation, commodity exchange, and its "relationalities") the pure
form remains and has to be eternalized, in whatever
pseudo-emancipatory illusions. The substantial content is veiled
ideologically in order to avoid the recognition of the catastrophic
potential of its actual dissolution (and hence the inevitable
obsolescence of commodity exchange and its forms of consciousness). It
is nothing but the strongly acclaimed mechanism of competition that
drives the capitalist dynamic and expresses the immanent systemic
contradiction through which capitalism ruins its own fetishistic
substance. This competition among isolated businesses, which is
brought about by the mediation of anonymous markets, necessitates a
permanent increase in productivity, which, in turn, can only be
obtained by the substitution of "scientific-technical agencies" (Marx)
for human labor.  This means that the single commodity constantly
loses value because it represents less and less "labor-substance."
Thus one can extrapolate an absolute endpoint whereupon the entire
social labor-substance is at such a marginal quantitative level that
the hallucinated value-property of the products degenerates and
becomes absurd.

In the past, the capitalist mode of production was only able to
reproduce itself by means of a steady expansion, and in this,
temporarily solving its logical inner contradiction. The less value
(i.e., labor-substance) a single commodity could represent, the more
commodities had to be produced and sold.  The breakdown of the system
was deferred as long as the quantity of produced goods expanded more
rapidly than the labor-substance per commodity decreased.
Consequently, it was necessary to stuff the world with commodities and
to condition people to organize their lives in the form of a ceaseless
production of commodities and a steadily increasing consumption of
commodities. However, the capitalist development was all but
smooth. On the contrary, within the horizon of the history of
capitalist prevalence the expansionary development faced serious
stoppages; but each time it was able to get under again.

That is precisely the level where the famous Marxian "law of the
falling rate of profit" is located. The rate of profit is the ratio of
business profit to capital advanced. At the end of one turnover of an
individual capital all costs must be covered and, additionally, a
surplus has to be obtained.  Capital advanced consists of two
different components: costs of constant capital (structures, machines,
raw material) and costs of variable capital (i.e., wages). The value
of the constant capital is only reproduced in the process of
production. Expressed in terms of the fetishistic hallucination, the
substance of value is, so to speak, transferred to the products (e.g.,
through the wear and tear of machines used for production). Hence,
surplus value can only stem from the share of living labor, which
creates additional substance of value above its own reproduction
requirements, and in doing so, nourishes the social machine.

But as the substance of value in a single commodity decreases with the
substitution of scientific-technical units for workers, the rate of
profit of an individual capital logically falls by the very same
process: the share of those "dead" components, which are merely
reproduced and which do not create an additional substance of value,
steadily increases; and the share of capital laid out for "living
labor" (wages), which is the sole source of surplus-value, decreases
accordingly; hence the ratio of profit to total capital advanced
necessarily has to decrease too. In other words, an ever-larger amount
of capital is necessary to obtain the same profit.  However, as the
term indicates, the "tendency of the rate of profit to fall" is merely
a relative concept and does therefore in no way-- like it is often
falsely assumed-- provide the argument for an absolute barrier of the
capitalist mode of production. The decreasing rate of profit is only a
way in which the capitalist self-contradiction expresses itself in the
compensating expansionary movement. The diminution in the substance of
value of a single commodity is compensated (and over-compensated) by
the production of additional commodities. In the end, more substance
of value is produced than in the previous period (i.e., the mass of
profit rises). In other words, the fall in the rate of profit is
compensated (and over-compensated) by investing additional money
capital to such an extend that the increased capital yields a higher
mass of profit, despite the decline in the rate of profit. Hence the
(relative) rate of profit can fall, but the (absolute) mass of profit
can nevertheless increase.

This merely relative character of the fall in the rate of profit also
shows up in the "counter-acting tendencies" that Marx noted, the
reduction in the value of the so-called "constant capital" (i.e., the
"dead" capital in the form of means of production) being the most
important one. If the increase in productivity within the production
of the means of production (e.g., capital goods) exceeds the average
increase in productivity, then the goods of constant capital will
cheapen faster than the diminution in the ratio of workers employed
per amount of capital. Consequently, the decline in the rate of profit
can come to a halt or can even be reversed (rising rate of profit), in
spite of the increasing ratio of the "material-technical mass" of
constant capital to the profitably applicable workers. But since
capitalist categories always refer to the real abstraction of the
substance of value, the only thing that is of importance is their
relative magnitudes. Hence, if a faster price-reduction in constant
capital can stop the fall in the rate of profit, it is at the same
time part of the reduction of a single commodities’ substance of
value, because this reduction is valid in the production of
consumption goods as well as in the production of the means of

What happens in a crisis is not primarily an intensified fall in the
rate of profit, but above all a fall in the absolute mass of profit,
which means that the compensating expansionary movement and hence
production itself comes to a halt on a large, social scale. The
relative aspect of these crises is that they are temporarily limited
and relate to a particular constellation of capitalist development,
the latter not yet having reached its final state.  Marx foresaw the
abstract possibility (and, in the Grundrisse, the logical endpoint) of
a hopeless constellation, within which the compensating expansionary
movement cannot get under again; the absolute mass of profit falls
without limit, and the majority of people are put out of the running.
This is because at a certain stage of the scientification of
production (which includes a degree of substitution of technical units
for workers) the underlying production of "substance of value" is not
feasible anymore on a socially substantial scale.

At this point the degeneration of the substance of value is
transformed from a relative (fall in the rate of profit) into an
absolute (fall in the mass of profit) status, which becomes apparent
by a broad shut-down of production and persistent large-scale
unemployment. If the capitalist form-relations of general commodity
exchange, labor market, and "earning a living/making money" are
maintained, then the absurd situation of an impoverishing society
would evolve, in spite of the fact that all material factors necessary
for the production of wealth are disposable to an even superabundant
extent.  Nowadays, the Third Industrial Revolution (microelectronics)
is pushing forward towards this absurdity with rapid strides. What
Marx had grasped only as an abstract, and remotely distant "finite
logic" appears in social reality in the shape of the new potentials
for rationalization and automatization, which begin to take effect
after a long period of incubation (the first debates on this issue
took place in the 1950s and 60s), although they are not exploited for
a long time yet. The structural mass unemployment (other typical
phenomena are dumping-wages, social welfare, people living in dumps,
and related forms of destitution) indicates that the compensating
historical expansionary movement of capital has come to a standstill.
The reason why this standstill appears only on the social level (and
not as an implosion of the mass of profit)-- that is to say, the
reason why the illusion emerges that capital accumulation is possible
without a corresponding labor-substance-- is because expanded
reproduction in the real economy (i.e., production and sale of goods
under the expenditure of socially valid labor), which has ceased to
keep going, can be simulated by the credit system and by the
disconnection of the speculative financial markets for some period of
time. Credit (i.e., the mass of the savings of society which are
collected by the banking system and lent for the purpose of production
or consumption in exchange for interest payments) is quite a normal
capitalist phenomenon, but its importance has grown as the capitalist
expansionary development accelerated. Credit implies the usage of
future money revenue (and, hence, of a future employment of workers
and the future creation of substance of value) in order to maintain
the present operation. The development of credit since the beginning
of the 20th century, and likewise the "un-substantiation" of money
through the disconnection from the real substance of value (i.e., the
end of the gold standard), already indicated the immanent barrier of
the process of valorization, which comes to the surface today.

The compensating expansion, and thus the steady increase in the mass
of profit (usually alongside a falling rate of profit), could
nevertheless continue as long as the corresponding future money
revenues were really obtained on the basis of the real substance of
value (including payments of interest). But this was made and is being
made increasingly impossible by the Third Industrial Revolution. As a
consequence, the run into credit becomes stronger and a more and more
common phenomenon. However, the crash into a general financial crisis
must then be the more abrupt and grave if the real substance of value
can not be obtained. The financing of state consumption by dept has
already arrived (on a world-scale) at the limit of simulative
reproduction; but also private mass consumption financed by debt and
the pillage of savings, inheritances, etc., for the purpose of
consumption, the reduction of hidden reserves within firms, the steady
decline in the equity base -- and, above all, the creation of
"fictitious capital" through the unparalleled skyrocketing of share
prices (in relation to the growth of the real economy)-- show that the
simulated perpetuation of the capitalist expansion starts to reach its

The grotesque illusion of an eternally processing form without
substantial content, which arose in the ongoing epoch of "casino
capitalism" and "life on tick," could indeed assume the appearances of
plausibility. But this plausibility comes only because the breakdown
of the disconnected, unsubstancial financial superstructure
materializes only after a certain period of incubation. The maturities
of the credit system range between one day and several years or
decades. In addition, debts can temporarily be restructured. And, the
bubble of the seemingly limitless swelling of stock values needs an
external trigger to face its inevitable burst. However, as the
realization of the imminent "devaluation of value" proceeds the
fetishistic end-in-itself of the entire mode of production is
disclosed-- and history reveals the ridiculousness of the current
theoretical reflection and common sense thinking, as well, and their
"relational" forms of the all-embracing commodity exchange.

Utopia and Planned Economy

It is no accident that the positivistic, historic labor movement did
not strive to free the production of wealth from the restrictive (and
in its consequences, absurd) "labor" and its value-form. Far from it,
the Labor Movement wanted the putative "liberation" of the fetishistic
substance itself ("liberation of labor") and "just participation" in
the gains of the irrational expenditure of human energy. This major
social movement thereby became unintentionally the promoter of the
capitalist mode of production: it promoted the advancement and
generalization of the then undeveloped capital relation against the
resistance of its narrow-minded representatives. Thus the Marxian
"Class Struggle" turned out to be an immanent form of movement of
capitalism itself and not its transcending movement of abolition
(Aufhebung) (as Marx thought).

The labor movement became the subject, and at the same time, the
idiot, of the modern commodity-fetishistic system. It "positivized"
the abstract labor-substance, the general value-form of social
reproduction, and the other structural categories of the capitalist
society, appropriated them, and blew them up into ontological human
conditions of existence. Just as with labor market, money-wage, and
commodity exchange, other bourgeois institutions-- like the state
machine (abstract administration of humans), nation, economics,
business administration, secret service, immediate family,
automobilization, etc.-- were adopted and equipped with a "socialist"
charge.  Characters like Blair, Schröder, Clement, or, on the other
side of the world, Gorbatschow, Jelzin and co., represent nothing but
the final stage of this historic misunderstanding. From this immanent
point of view the notion of crisis could not be broadened
theoretically to an absolute, hopeless decline of the substantial
production of "value," because then the whole construct of the
positivistic self-conception would have been obsolete. The labor-moved
ideology was downright naively optimistic with respect to the
perpetuation of the labor-substance, considering the latter to take
even socialism far into the future.

This reduced conception of capitalism necessarily influenced the
imaginations about a post-capitalist society. Marx rarely disclosed
his opinion that labor-substance and value-form must disappear
together with the abolition of the social fetishism. Apart from that,
he insists more or less throughout his entire work on a substantial
ontology of "labor"-- in particular, with respect to socialism. The
abolition of the fetish-form remains relatively obscure, vaguely
expressed in the idea of an "association of free humans".  The labor
movement, eventually, totally abandoned the latter idea. It fell back
into the social form-unconsciousness and took the role of an agent for
modernization. Socialism was reduced to the idea of state-planned
social quota of labor. The putative social planning "in advance" thus
paradoxically referred to the fetish-category of a social process "a

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