To explain the impact a reduction of hours of labor has on the state, it is first necessary to explain three interrelated phenomena that, while not explicitly assumed by Marx in Capital Volume 3, chapter 15, nevertheless can only be explained based on that text. Taken together these three premises amount to the breakdown of production based on exchange value.

These premises are:

A growing mass of superfluous labor time within the mode of production; a growing divergence between the values and prices of commodities (i.e., inflation); and a growing mass of state debt that cannot be repaid.

With regards to point 1, we have already spoken of the empirical work of both labor theorists and bourgeois simpletons that point in the direction of a significant mass of unproductive labor time within the so-called economy. However, this observation immediately runs into a problem for labor theory: superfluous labor cannot exist on the premises Marx assumes in Capital, yet it has to be explained based on those premises.

In Capital, Marx assumes the mode of production adapts the mass of production to the scale of production, As the scale of production increases, the total labor time of society is forcibly adjusted “so that it does not exceed the average social labour-time required for the production of the commodities.” Thus, the very idea there can be significant amounts of superfluous labor time in the economy runs into the problem that, on the premise Marx assumes in Capital, superfluous labor time should not exist. This is not a defect of labor theory, but simply requires us to explain superfluous labor time rather than simply assume it.

Under what conditions might the labor time of society exceed the socially necessary labor time required for production of commodities? Marx provides no direct answer to this problem, because he is not considering it in Capital. A growing mass of superfluous labor time within society clearly violates the law of value, yet no labor theorist has seen fit to explain how such a violation can occur. To put it simply, the existence of superfluous labor time can only be premised on conditions where the law of value no longer holds sway over society, but this premise also suggests labor theory is no longer a valid description of how society reproduces itself. Since the existence of superfluous labor means the labor time expended on production of commodities exceeds the labor time socially required for production of commodities, this conclusion is impossible to sidestep.

Marx, however, does provide us with a hint for when this condition must emerge — absolute overaccumulation of capital:

“There would be absolute over-production of capital as soon as additional capital for purposes of capitalist production = 0. The purpose of capitalist production, however, is self-expansion of capital, i.e., appropriation of surplus-labour, production of surplus-value, of profit. As soon as capital would, therefore, have grown in such a ratio to the labouring population that neither the absolute working-time supplied by this population, nor the relative surplus working-time, could be expanded any further (this last would not be feasible at any rate in the case when the demand for labour were so strong that there were a tendency for wages to rise); at a point, therefore, when the increased capital produced just as much, or even less, surplus-value than it did before its increase, there would be absolute over-production of capital; i.e., the increased capital C + ΔC would produce no more, or even less, profit than capital C before its expansion by ΔC. In both cases there would be a steep and sudden fall in the general rate of profit, but this time due to a change in the composition of capital not caused by the development of the productive forces, but rather by a rise in the money-value of the variable capital (because of increased wages) and the corresponding reduction in the proportion of surplus-labour to necessary labour.”

To be sure, many labor theorists, like Simon Clarke, reject this passage from Marx’s Capital as “a purely hypothetical case, based on ‘the most extreme assumptions that might be made'”, not an accurate description of the process of capitalistic reproduction. However, in both Postone’s work, (see page 374 of his book, Time, Labor and Social Domination) and in the writings of Robert Kurz the idea is firmly demonstrated as a necessity, and more than a few labor theorists have asserted empirical evidence for superfluous labor within the mode of production.

Assuming Marx argument regarding absolute overaccumulation in volume 3 is not hypothetical, labor that is superfluous to the production of commodities must emerge at the point where no mass of additional capital adds to the mass of surplus value that can be employed as additional capital. At that point in the development of the productive forces, “there would be a steep and sudden fall in the general rate of profit”.

Thus, whatever causes the emergence of superfluous labor time must be secondary to a crisis brought on by absolute overproduction; which is to say, the routine expenditure of labor time in excess of that required for the production of commodities (superfluous labor time) must begin with this expenditure having already occurred historically. At that point society would be confronted with the fact that further extension of hours of labor must be entirely superfluous to its material needs. At the same time, society must be confronted with the situation that the extension of hours of labor beyond its socially necessary limit has become “a condition – question of life or death – for the necessary”, that is, for the production of value. (Marx, Grundrisse.) Which is to say, at some point the buying and selling of labor power must run into the problem that it can continue only if the labor power is to be employed unproductively. Essentially, the production of surplus value by one section of the population of workers is made dependent on the unproductive consumption of this surplus value by another section.

Since at least Rosa Luxemburg, the state has been implicated in this problem by labor theorists. In this perverse relationship, capital employs labor power for the production of surplus value, while the state employs labor power to consume it unproductively. On the other hand, the production of value and also surplus value and exchange relations have not been overthrown. Although, as Marx predicted in the Grundrisse, “production based on exchange value breaks down”, exchange continues to appear as the basis for economic activity. Production based on exchange value has broken down, but exchange relations continue.

Since there is no longer the exchange of values, a commodity can no longer function as the medium for circulation of commodities. Production under these circumstances is still the production of values, but the circulation of these values is no longer determined by their exchange value. And the reason for this is simple: if the circulation of the commodities were determined by their exchange value, there would be no profits.

According to Marx, “capital consists of commodities, and therefore over-production of capital implies over-production of commodities.” In a condition of general over-production, the market is saturated with over-produced commodities. The commodities that have been over-produced cannot be sold at a profit, and must even be sold below their values. In other words, the exchange value that expresses the value of the commodity has fallen below the socially necessary labor time required to produce it.

This exchange value, according to Howard Nicholas, expresses not the labor time required to produce the commodity, but to labor time required to reproduce it after it has been consumed. (See chapter 2 of his book, “Marx’s theory of price”) It is prospective labor time, in that it establishes the new maximum of socially necessary labor time that can be expended on reproduction of the commodity. If this prospective labor time now falls below the minimum required to produce the commodity at a profit, profit can only be secured by paying more for the commodity than its value.

However, on this premise commodity money can no longer serve as the medium for the circulation of commodities. Commodity money suffers the ‘defect’ that it can only express the value of the commodity as some quantity of exchange value. But, if Nicholas is correct, this exchange value has now fallen below the minimum necessary to produce the commodity at a profit. To produce a commodity at a profit, it must sell above its exchange value — a condition impossible on premise of commodity money.

Thus the emergence of superfluous labor time has implications for the relationship between the values and prices of commodities — the emergence of superfluous labor must be expressed in a growing divergence between the values of commodities, as expressed in exchange value and, therefore, in the prices of these commodities denominated in some commodity money, and the prices of the same commodities in some token that now serves a medium for the circulation of these commodities.

I will discuss this implication next.