IS TIME MONEY? (On Marx's labour theory of value)
Or does Money simply exist to make Thievery seem Just?
Hey Folks!
It’s Reader Appreciation Day!
In this edition, I’ll be featuring Evelyn Brunswick, who has been my most prolific commenter of late.
In preparation for the coming Bitcoin halving, which is about two weeks away, I’ve been educating myself about economics, which was never a major interest of mine until I got obsessed with the work of David Graeber.
Before, I always assumed that the entire field of economics was mostly just of a bunch of bullshit invented to make thievery and extortion seem respectable.
Evelyn wrote:
I'm going to have to disagree with quite a bit of this, in particular one of your key comments which is that one of the principles of 'money' is 'limited supply'.
No, no, no and no again. This is precisely the myth the cabal tell people in order to keep them subjugated, poor, and dependent. Like 'sorry, poor people, but there's no money left, there's no magic money tree [despite the fact that we, the bankers, have something called a printing press] and so we can't spend money on public services for you.' Oh, we can find money for war, sure, but ending poverty? fuck that! Decent healthcare? Education? Fuck off. We're in charge here. Get back to work. Now believe everything we tell you about money.
The other great lie is the 'value' of money having to be unfixed and open to change (which is always due to speculation and arbitrary price increases). Remember the great lie about inflation is that it's somehow intrinsic to 'economics' as if there's no human agency involved. Sorry, but prices don't put themselves up - people put prices up. The price of everything is arbitrary.
'Everything is worth what its purchaser will pay for it'.
Dang. She’s got a point. What do you say to that?
In a more recent piece, I proposed defining money as “an elaborate system of disguised extortion characterized by a centralized ledger of circulating debt obligations, ultimately backed up by the threat of violence.”
Does my definition need to be revised?
DOES PRINTING MONEY TRULY WATER DOWN THE MONEY SUPPLY?
I’ll admit, I tend to think of “quantitative easing” as a watering-down of the money supply. I was actually thinking of writing something using the metaphor of Moe Syzslak watering down alcohol to talk about inflation.
Evelyn’s comment made me rethink those assumptions.
That assumes that there is a limited quantity of some finite substance. But money is imaginary. It can be created by decree. Money is fiat currency, and fiat means “by decree”.
Evelyn is absolutely right that there are indeed magical money trees - they’re called banks.
I had to the hit the books to come up with a decent answer to this. Fortunately, I had David Graeber’s The False Coin of Our Own Dreams close at hand.
My understanding of economics is highly influenced by Marx, because before David Graeber there was no anarchist equivalent to Marx’s analysis.
Leftist anarchists has long relied on Marx’s economic analysis while rejecting his political program.
Now that we have the work of David Graeber, there is no reason to keep relying on Marx’s outdated and deceptive system.
Let’s start with his theory of value.
Marx’s theory of value
The first thing one should probably say about Marx’s labor theory of value is that it’s not the same as David Ricardo’s. People often confuse them.
Ricardo argued that the value of a commodity in a market system can be calculated in terms of the “man-hours” that went into making it, and therefore it should be theoretically possible to calculate precisely how many people worked how long in the process of making it (and, presumably, making the raw materials, shipping them from place to place, and so on.)
In fact, Marx felt Ricardo’s approach was inadequate. What makes capitalism unique, he argued, is that it is the only system in which labor—a human being’s capacity to transform the world, their powers of physical and mental creativity— can itself be bought and sold. After all, when an employer hires workers, he does not usually pay them by the task completed: he pays them by the hour, thus purchasing their ability to do whatever he tells them to do during that period of time.
Hence, in a wage-labor economy, in which most people have to sell their capacity to work in this way, one can make calculations that would be impossible in a non-capitalist society: that is, look at the amount of labor invested in a given object as a specific proportion of the total amount of labor in the system as a whole. This is its value.
The concept makes much better sense if one bears in mind that Marx’s theory of value was not meant to be a theory of prices. Marx was not particularly interested in coming up with a model that would predict price fluctuations, understand pricing mechanisms, and so on…Therefore, he by no means assumed that price paid for something was an accurate reflection of its worth.
Seems like Marx would have agreed with the statement “everything is worth what the purchaser will pay for it.”
THE MYTH OF FINITE MONEY
The next part is very interesting, because it think that this is assumption that most people are working from when they think of inflation of as watering-down of the money supply.
It might be better, then, to think of the word “value” as meaning something more like “importance.” Imagine a pie chart, representing the U.S. economy. If one were to determine that the U.S. economy devotes, say, 19 percent of its GDP to health care, 16 percent to the auto industry, 7 percent to TV and Hollywood, and .2 percent to the fine arts, one can say this is a measure of how important these areas are to us as a society. Marx is proposing we simply substitute labor as a better measure: if Americans spend 7 percent of their creative energies in a given year producing automobiles, this is the ultimate measure of how important it is to us to have cars.
One can then extend the argument: if Americans have spent, say, .000000000007 percent or some similarly infinitesimal proportion of their creative energies in a given year on this car, then that represents its value. This is basically Marx’s argument, except that he was speaking of a total market system, which would by now go beyond any particular national economy to include the world.
Hmmmmmmmm……… Sounds plausible enough, I guess. Indeed, I think this would be common sense to many people, including professional economists. I think most assume that there is a finite amount of economic activity in the world, and money is a represents the sum total of that activity.
Maybe that’s true on some level, but it makes less sense the more you think about it. How does this work exactly? What about all the people working under the table, for instance? In Mexico, that’s probably more than 50% of people.
Graeber continues:
As a first approximation then, one might say that the value a given product—or, for that matter, institution—has is the proportion of a society’s creative energy it sinks into producing and maintaining it. If an objective measure is possible, it would have to be something like this. But obviously this can never be a precise measure. “Creative energies,” however they’re defined, are not the sort of thing that can be quantified.
“Is everything is worth what the purchaser is willing to pay for it?”
I’m not sure that I agree with the statement that “everything is worth what the purchaser is willing to pay for it”. That might true for buyers, but things look a little different from a seller’s perspective. After all, you might find some sucker to buy an obviously fake gold chain, but what they paid for it doesn’t reflect the market value of that item. I would propose instead the price of something would be determined by what TWO people would be willing to pay for it.
If I have something that is in short supply, let’s say a Picasso painting, and it is auctioned off, we know for a fact that if the person with the highest bid hadn’t bought it at that price, someone else would have bought it with the next-highest bid. I would argue that the true market place of that painting is the second-highest bid. I’ll return to this thought in a moment.
Graeber continues:
The only reason Marx felt one could make such calculations—however approximate— within a capitalist system was because of the existence of a market in labor. For labor—in effect, human capacities for action, since what you are selling to your boss is your ability to work—to be bought and sold, there had to be a system for calculating its price.
There are cultural standards, then, by which labor can be reduced to units of time, which can then be counted, added, and compared to one another. It is important to stress the apparatus through which this is done is at the same time material and symbolic: there have to be real, physical clocks to punch, but also, symbolic media of representation, such as money and hours.
ACCORDING TO MARX, MONEY IS TIME
So, according to Marx at least, time really is money. Money is the sum total of all time (i.e. wage labour) which is circulating at any given time. If that were true, then money truly is finite.
Let’s return to the idea that the true market value of something is what two people are willing to pay for something. How does that apply to wage labour?
Surprisingly well, actually. We all know that some people’s time is more valuable than others. If you’re a corporate lawyer, you might be paid a thousand dollars an hour. If you’re you’re an anarchist philosopher, you get diddly squat. Why?
Well, because there are a lot of corporations willing to spend money on lawyers, the corporate lawyer can sell his time to the highest bidder.
If you are middle-aged, out-of-shape, and unskilled, things work differently. Your labour isn’t worth much, because an employer could could easily replace you.
There really is something to the whole logic of supply and demand. Things do work this way. Some people’s time is worth more than others. Like it or not, it’s true.
Wages are determined by the tolerance of workers. If an employee is happy with what they’re being paid, they’re not likely to go out of their way looking for another job. If they aren’t, they may quit. Do you see how this is kind of similar to an auction? This is what people mean way they talk about market value.
The market does operate according to a certain logic, which has everything to do with buying and selling, which is largely determined by supply and demand. This much is true.
So, does my Moe Szyslak analogy work? Well, by definition, inflation is an increase in the price of living. If the price of living goes up and wages stay the same, hence that person is earning less. Hence inflation impoverishes working class people.
Is that a bug of the system, or a feature? Could it be both?
But none of this means that the total amount of money there is in an economy derives its value from wage labour. Indeed, the whole process of how time is supposedly transformed into value seems quite mystical. Maybe I just don’t understand how that works yet, but I’m guessing that it’s simply not true.
I think what money actually measures is what people will put up with. You know that famous Frederick Douglass quote?
Power concedes nothing without a demand. It never did and it never will. Find out just what any people will quietly submit to and you have found out the exact measure of injustice and wrong which will be imposed upon them, and these will continue till they are resisted with either words or blows, or with both. The limits of tyrants are prescribed by the endurance of those whom they oppress.
If you think about it, that makes sense, doesn’t it?
My conclusion is this: printing money does not literally dilute the value of money, but it impoverishes the working class, so the result is the same.
As for there being a limited supply of money, I think I’m technically right, although that supply isn’t limited by the amount of goods or services being traded, or by the sum total of “time”. Rather, the limits to the supply of money are determined by the decree of the international banking cartel that was created by the Brettons Woods system at the end of World War II.
In every country but Iran and North Korea, the supply of money is limited by a single institution - the Bank of International Settlements, the central bank of central banks.
Let’s have another look at my proposed definition of money:
“An elaborate system of disguised extortion characterized by a centralized ledger of circulating debt obligations, ultimately backed up by the threat of violence.”
Does it need to be changed? I think it stands, but I also see an easy way to improve it.
“An elaborate system of disguised extortion characterized by a centralized AND ALTERABLE ledger of circulating debt obligations, ultimately backed up by the threat of violence.”
If other words, the whole game is rigged.
This is why I like your articles and end up being prolific (feel free to shut me up, btw) - it's because you provoke my brain into working, which is greatly appreciated.
I love this Douglass quote: "Power concedes nothing without a demand. It never did and it never will. Find out just what any people will quietly submit to and you have found out the exact measure of injustice and wrong which will be imposed upon them, and these will continue till they are resisted with either words or blows, or with both. The limits of tyrants are prescribed by the endurance of those whom they oppress."
And of course, the tyrants must've pinned that in big letters to the wall of their dark, smoke-filled Chamber of Conspiring.
This is a real key quote this. And I think since 9-11 they have been pushing this limit consciously further. I have actually thought that this was in fact a hidden part of the reason for 9-11 - see if we can get away with something blatantly obvious without provoking a final revolution. And they did get away with it. In your face obvious controlled demolition, but the big lie worked. No revolution. (in my parallel world story, the divergence in the timeline was because they didn't get away with it - it's a fascinating comparison or what-if question).
Same thinking applies to people in early 2003, when, in London, for example, some 2 million people marched in London against the impending invasion of Iraq - they made some pretty speeches, waved some banners around, but then obediently went back home again, despite having all the numbers necessary to quickly take back control over the entire country, the central bank, city of London and so on. So when they didn't, they essentially told the cabal 'go ahead, go and genocide a million people in Iraq because as you can see, we the people aren't going to stop you. We might go on a march, you know, but you need have no fear of revolution'.
So the cabal took that to heart and have kept pushing that limit. And they are still doing it now. Especially when it comes to almost constant inflation and devaluation of money. Like they do the 'global financial crash' and then convince the people to accept over a decade of restriction of the money supply, which they continue 'because covid' and then 'because Ukraine' (next it will be 'because climate change' or something - they will think of something).
From a certain point of view, perhaps they have exhausted the people both mentally and physically to such a degree that 'all the fight has gone out of them'. I don't know. But it's not good.
I think part of our hope has to be that if we were to form out of the way, self-sufficient, small scale communes they would leave us alone, rather than perceive us as any threat. That way, we could indeed preserve some ancient truth about humanity for the generations which will come after the end of the New World Order phase of human history. Because even if it does last 500 or a thousand years, it will come to an end.
And it will be vitally important for the people who come after to remember the truth about history, and why it happened, and why we did all this and why we resisted. And that we were the good guys. And that we mattered. So they can have an immunity and prevent it from ever happening again.
Gardening break!
As you are probably aware, I hate Marx. I think he was what we would now call a 'cognitive infiltrator' - i.e. an agent of the very people (bankers and industrialists) responsible for everyone's woes and exploitation and oppression and so on. Marx's intention, then, was two-fold - 1/ take possession of 'genuine socialism' and twist its definition to something else (totalitarian 'communism') whilst destroying the genuine socialist thinkers, and 2/ misdirect workers' anger at the wrong target.
Thus, Marx presented as a 'structuralist' - which removes human agency from consideration. To put it more accurately, Marx's entire argument boils down to 'because capitalism'. This is one of those examples of 'the big lie'. Because this presupposes that 'capitalism' (or any 'system') is some kind of conscious, decision-making, intelligent agent. As if it's some rogue AI or something. I call BS on this one.
Example: if 'capitalism' was responsible for setting 'wages' (as measured per hour of work, say), then there would be zero purpose in people striking for higher pay. It's not 'capitalism' which sets their wages, it's the factory owner. In the same way it's not 'the system' which sets the value of the currency unit (measured against a good or service) it's the people who own the money supply (the banks - which Marx conspicuously avoids mentioning) - again, it's not actually 'the bank' which does this - because a 'bank' is not a conscious entity capable of making a decision. Same goes for 'the commodities market' or 'the stock exchange' or whatever. It's the conscious decision-making people within the bank or the markets.
Marx really, really doesn't want people to realise this - because as soon as people do realise it, the solution becomes blindingly obvious - remove those exploitative people from 'the bank' and replace them with benevolent people. By citing 'capitalism' Marx is misdirecting anger at 'business owners' - but most small business owners are entirely at the mercy of the bankers who set the currency value - a good businessman would pay the workers well and treat them well and produce good quality stuff at an affordable price. It's the machinations of the bankers and the commodities market people who prevent them from doing this.
Here's the really good quote from the article: "The concept [theory of value] makes much better sense if one bears in mind that Marx’s theory of value was not meant to be a theory of prices. Marx was not particularly interested in coming up with a model that would predict price fluctuations, understand pricing mechanisms, and so on…Therefore, he by no means assumed that price paid for something was an accurate reflection of its worth."
See? He really, really doesn't want you to think about how important 'price' actually is - let alone 'who decides the price?'. Because that, ultimately, is the most crucial point. Marx consistently stops at this stage and doesn't take his argument to its logical conclusion. Instead, his final point is always 'because capitalism'. As if that settles it! Ironically it's like your recent article about science - equivalent example would be 'because the big bang'. Whenever so-called scientists (Einstein, Bohr and so on) run into some difficulty they arbitrarily add some 'constant' or whatever mechanism is necessary to make the equations add up ('renormalisation' it's called). Marx follows the same deceit.
This is why today so-called 'economists' studiously avoid talking about 'human agency' in economics. Instead they have to come up with ever more absurd, and deliberately obscure and complicated 'theories' to explain this or that 'economic mechanism'. Because if the people were ever to realise what a massive scam the whole thing is, designed solely to maintain social control, then sheer weight of numbers would ensure the success of the revolution.
Maybe to help with my scything I should commission someone to make me a thousand little busts of Marx's head*, maybe the size of a golf ball, then position them in a grid all over the garden, so each time I scythe...
*Versions other than Marx also available; contents may not match the description on the outer packaging. No refunds.