In my last post I showed why I think a reduction in hours of labor would affect the “economy” the same way as a crisis brought on by the falling rate of profit does. The reduction of hours of labor has the effect of withdrawing a portion of the surplus labor time of the working class from exploitation and of reducing the time available to capitalists for production of surplus value.

However, so long as the labor time withdrawn from the capitalist does not reduce hours of labor below the duration necessary for the reproduction of the labor power of the working class, the working class should suffer no change in its material standard of living. The reduction only affects capital and has the same impact as a rise in the organic composition of capital. In this case, however, the rise in the organic composition of capital is achieved by a forcible reduction in hours of living labor imposed by the actions of the working class, rather than by an increase in the proportion of constant capital to variable capital resulting from a crisis of overproduction.

I think this is correct and would appreciate any input others might have on this question.

In my last post I deliberately left out the question of the role superfluous labor plays in this problem; however, in reality the efficiency of the employment of capital in the course of the labor day is not 100%. Some portion of the labor day is wasted, i.e., does not produce value and, therefore, does not count as productive labor time. The portion of the labor day that might fall under this heading has been calculated by various yardsticks by both bourgeois simpletons and by labor theorists. The estimate employed by Borsch-Supan is that wasted labor time amounts to anywhere from 10% to 30% of the typical labor day. On the other hand, labor theorists, employing different measures from bourgeois economists and even among themselves arrive at between 50% and 66% of the typical working day. My own calculation, based on a comparison of currency prices to commodity money prices, finds this wasted labor time now amounts to more than 90% of the labor day.

But the problem of estimating the amount of wasted labor hours is not a concern here — whatever the amount of labor time wasted, it does not fundamentally alter the problem, but only its degree of severity. The problem is that this wasted labor time produces no value even if it might result in an object for sale in the market.

In the case of a reduction of labor time, this fact means the social labor day before a reduction having a duration of 40 million hours (in the example I used) in reality may only be 20 million hours of productive labor. Of the total labor time available to capital for production of surplus value, 20 million is employed productively, while 20 million is wasted. A rate of surplus value of 100% in this case means 10 million hours for wages and 10 million more for profits; while the remaining 20 million hours of superfluous labor time produces neither wages nor profit.

Since the remaining 20 million hours of labor produces nothing, the wages paid out for this unproductive labor must be the product of the labor of the productive sector of the economy. Although 40 million hours of labor is expended, the value of the labor power employed for this purpose can be no greater than ten million hours. Ten million hours that has been set aside for wages must cover both productively and unproductively employed labor power; or, what is the same thing, the wages of one worker is now divided among two. In this way, the poverty of the working class increases even if nominal (paper currency) wages increase.

On the other hand, while the surplus labor time in my example may now amount to some 30 million hours, 20 million hours of this surplus labor time is wasted, i.e., it does not reenter capitalist circulation as capital. Thus, of the total labor time of society, 50% of this time and 66.7% of the surplus labor time is wasted in the example. It follows from this that the capitalist mode of production has encountered its historical limit in which the overproduction (or overaccumulation) of capital has produced a permanent excess mass of capital and a permanent excess population of workers, neither of which can be employed productively under any circumstances.

How does the presence of superfluous labor time affect my analysis of the impact labor time reduction has on profit?

This has to have an impact on the question under consideration: “How does a reduction of hours of labor affect profits?” According to Chris Harman, some labor theorists argue that unproductive labor has the effect of “reducing” the organic composition of capital.

“But the effect of unproductive expenditures is not only to lower the rate of profit. It can also reduce upward pressure on the organic composition of capital. This was an insight used by Michael Kidron to explain the “positive” impact of massive arms spending on the system in the post-war decades.”

In Kidron’s argument wasting labor has an effect similar to reducing the organic composition of capital. As an analogy, this idea might be useful, but it is also dangerous if pushed too far. The organic composition of capital assumes labor time is productively employed, but the superfluous portion of the labor day is not being employed productively. Ignoring this distinction is why labor theorists have ignored the pressing problem of reducing hours of labor for four decades.

But the difference between two different measures of Marx’s organic composition of capital implies a difference between two different levels of development of the productive forces; while unproductive labor increasingly becomes a problem as the level of development of the productive forces increases. In his book, Time, Labor and Social Domination, Postone has an extensive discussion of this. According to Postone, a capitalist economy with a very high rate of unproductive labor implies a very high level of development of productive forces, not a low one.

“With advanced industrial capitalist production, the productive potential developed becomes so enormous that a new historical category of “extra” time for the many emerges, allowing for a drastic reduction in both aspects of socially necessary labor time, and a transformation of the structure of labor and the relation of work to other aspects of social life. But this extra time emerges only as potential: as structured by the dialectic of transformation and reconstitution, it exists in the form of “superfluous” labor time. The term reflects the contradiction: as determined by the old relations of production it remains labor time; as judged in terms of the potential of the new forces of production it is, in its old determination, superfluous.”

The actual technical development of society may be sufficient to pass over to the higher stage of communism immediately, but this historical movement is being forestalled by massive waste of social labor time. In the example I gave above, two thirds of the surplus value produced does not reenter capitalist production; the portion of the labor day that reenters capitalist production and allows expansion of the total capital is only the portion that can be employed productively as capital. The remaining portion cannot be employed productively and must be wasted.

Postone does not propose a solution to the ever increasing quantity of unproductive labor time being expended by society, because, I think, he is looking for a political solution to the problem. So far as I know, I am the only person who has proposed superfluous labor time can be addressed only if hours of labor are reduced.

Why is the reduction of hours of labor not a “political solution” to the problem? In the definition I gave for unproductive labor, I stated this labor time produces no value; the labor time expended does not add either to the wages of the working class nor to the profits of the capitalists. Rather, it consumes a portion of the employed labor power and a portion of the constant capital produced without producing anything in return. The poses a question for theory:

Since superfluous labor time is not replaced by a new value, how does this unproductive consumption pay for itself?

Leaving aside credit, in labor theory no person can buy without having first sold a commodity. And even if we include credit, where someone buys on credit without having first sold, the debt must be paid at a later time and can only result from the debtor selling a commodity and paying her debt. In labor theory, therefore, we must always account for money in the hands of the person buying. It cannot just appear in her hands by magic, but is premised on sale of a commodity.

There is only one exception to this rule, so far as I know: the state. Marx passed away before completing his analysis of the capitalist mode of production and without integrating a theory of the state into it. To my knowledge this area has not been adequately addressed by labor theorists since his death. Yet, in recent times, we find the question of state expenditures is intimately bound up with the problem of superfluous labor time in society.

The state is implicated in the problem of superfluous labor, first and foremost, by the role military expenditures play as a form of congealed superfluous labor time. It is further implicated by the fact that all present national states place continuous expansion of hours of labor as the number one economic policy priority. The term “economic growth” has no meaning except the constant expansion of hours of labor. Finally, it is implicated because the labor time expended by the state does not appear in the market in the form of commodities for sale. As Marx made clear in Capital, the production of value requires “a product must be transferred to another, whom it will serve as a use value, by means of an exchange.”

In Capital Volume 3, Chapter 15, Marx suggests the emergence of superfluous labor as a permanent part of the so-called economy results from the fact that overproduction has become a permanent feature of capitalism. Marx states this overproduction is not overproduction in any absolute sense, but only in so far as the newly produced means of production serve as capital; which is to say, the barrier imposed on the productive employment of surplus value only exists insofar as the surplus is employed for the self-expansion of capital.

Which means there is no such barrier on the unproductive employment of the surplus except the availability of sufficient surplus for unproductive purposes. The surplus capital, having no productive use, can be made available as loaned money for unproductive purposes — the excess capital can be siphoned off, (to use the phrase coined by President Truman’s national security advisers), to finance a permanent, open-ended and ongoing expansion of the military. As Truman’s advisers stated,

“With a high level of economic activity, the United States could soon attain a gross national product of $300 billion per year, as was pointed out in the President’s Economic Report (January 1950). Progress in this direction would permit, and might itself be aided by, a buildup of the economic and military strength of the United States and the free world; furthermore, if a dynamic expansion of the economy were achieved, the necessary build-up could be accomplished without a decrease in the national standard of living because the required resources could be obtained by siphoning off a part of the annual increment in the gross national product. These are facts of fundamental importance in considering the courses of action open to the United States.”

But here the argument runs into the barrier that the unproductive employment of the loaned money produces nothing with which to repay the loan. The ideal debtor in this instance would have unlimited capacity to take on new debt and to repay it despite producing nothing of value — a condition that might exist if commodity money had already been removed from circulation subsequent to a breakdown of production based on exchange value and replaced in circulation by valueless state issued tokens.

This answer, however, runs into a logical problem raised by the so-called modern money school: If there was a debtor that had the capacity to repay unlimited debt without producing anything simply by counterfeiting its own currency, why would it borrow in the first place? Why would it not simply use this unlimited capacity to buy anything it wanted without accruing debt? The modern money school, featuring such ‘brilliant thinkers’ as L. Randall Wray; the self-proclaimed ‘debunker’ of labor theory, Steve Keen; and Warren Mosler, cannot get it through their heads that the aim of capital is its own self-expansion, not the buying and selling of commodities.

The question to be determined is not whether the state has the capacity to counterfeit its currency and purchase excess capital, but can it do this in a way that adds to the expansion of the national capital. In reality the state has no need to borrow or counterfeit its currency, since it has the power to tax the excess capital out of existence. Moreover, the state could back this up by reducing hours of labor in a timely manner to prevent the future build up of unproductive capital. However if the state took these two measures it would not be a capitalistic state, a state that is the ideal embodiment of the national capital; and which has, in the aftermath of the breakdown of production based on exchange value, assumed all the functions of the capitalist class.

But there is an additional ‘benefit’ to financing the state through debt: As we will see next, simply by running sustained deficits, the fascist state can essentially fund its operations with the excess capital produced anywhere within the world market. The surplus value of productively employed capitals in China, Germany, Japan and a host of other countries can then be siphoned off to finance, among other things, unproductive US military operations.