The exchange value of post-scarcity: a solution to the three final contradictions of capitalism

a communist manifesto for the 21st century

A specter is haunting global capitalism—the specter of the virtual decay of wage labor. Wage labor is approaching this decay for material reasons, in the context of an automated industrial—as well as outsourced and automated post-industrial—economy in which it takes on an increasingly marginal, precarious role. But such events as the Great Resignation and the largest number of simultaneous strikes across the United States of America, the so-called heart of capitalism, since the year 2001[1]—the direct results of decades of unmitigated class oppression—are signs that workers are both forced and emboldened to refuse labor as such, in the intertwined contexts of real wage deflation and the complete deterioration of centuries of hard-earned rights. But also, crucially, that they either know, or are empowered by the forces of history to express, that the aforementioned disappearance or wilting-away is at hand. It is important to note here that this argument does not yet refer to labor as such—which is a universal historical category—but wage labor, which is a particular historical category; one that arose through the end of feudalism, and the creation of a landless workforce required to sell its labor on the market in order to survive, approximately 300 years ago. It is further important to note that it is disappearing not because, overnight, we can decide to stop working until yet larger demands are met, which would constitute a general strike that ought to be our number one priority concerning the international organization of labor and climate change, but because the productivity gains of automated production and distribution, 1) ought no longer require interminable hours of human labor structured around the outdated 1908 work week, and 2) soon will not require, in a concomitant development, even part-time wage labor in many cases. Yet, as those productivity gains have risen massively over the past four decades,[2] real wages have dropped, and work hours have risen. What is the solution to this? It is, in fact, the further development of two other atomic units of capitalism: not wage labor, but the combination of the transformation of surplus value and exchange value, both.

This is where it is vital to expand upon the second—since the obviousness of the first will slowly become apparent—one that does not haunt capitalism, in fact, but is the current ghost in the machine, requiring a return (though it was never there) into the hands of the people: a mechanism of liquidity that, since 2008, has proved itself to be both unprecedented and virtually unlimited, at least where the needs of the bourgeois class are concerned: central bank policy. Today’s financial capitalism is kept alive, not just breathing but thriving, by central banks across the globe. However, historical observation confirms that financial and so-called “financialized” capital is not an aberration in the development of industrial capitalism. Indeed, it is the natural conclusion of the shareholder model of the corporation, which has historically meant that businesses serve the interests of a very few owners and traders of their stocks, since the founding and violent expansion of the first joint-stock corporation, the East India Company, in 1599. The fact that a greater proportion of these stocks are now owned and traded by private equity firms in the virtual monopolization of cross-company interests across industries exacerbates the issue further. Indeed, studies show that when US airline companies now “compete,” prices can go up: a complete subversion of market logic, if the laws of capitalism are to be taken seriously.[3] It is important first to note that the aforementioned first prototype of a multinational, the East India Company, expropriated the entirety of the lands that today fall under the nation states of India and Indonesia, with its reserve army of 200,000 soldiers. Within three years of the creation of the EIC, the markets of India were gone. This type of corporation, then, is as old as Hamlet, and its foundational place within the context of capitalist “competition” belies the innate tendency of the joint-stock company towards unparalleled violence and single-market monopoly. The corporate lobby or revolving door, as well as the demands of private equity firms, are today no less violent; although where in the past the invasion of entire countries was deemed necessary for the control of supply—take the worst international atrocity of the 21st century, the Iraq War—today it is enough, for the most part, to effect control over a changing set of major assets through price speculation and debt bondage.

1)

It is very important to note that claiming this system—which today is said to operate predominantly via “soft power”—is barely kept alive by the aforementioned central bank policies, would be to make the greatest mistake of all: as previously stated, it’s thriving. The ECB today lends money at negative interest rates across the Eurozone, supposedly to prop up spending, and a similar picture is true in the USA. But instead of taking “undue risks”—the textbook core of dynamic, functioning capitalism—banks lend this money to corporations that stand merely to multiply it, who then buy back their own stocks, making their CEOs and shareholders the wealthiest humans in recent history.[3] No new businesses are created, nor are struggling ones given a second chance; zero lives are improved in the real economy, and the crisis that began by indebting potential homeowners in 2008 continues to pay off the very financial interests that created it. And out of the anti-capitalism of central banking policy emerges the first factor contributing to a transformation in exchange value.

This is the fact that central banks can no longer be said to merely serve their own inflation and unemployment mandates, but that additionally, they serve a thoroughly non-independent role in wealth-creation for the very rich. They demonstrably serve the powerful interests of the new capitalist economy: the virtual market-share monopolies of private banks and equity firms. Thus, talking of central bank independence where the nation state’s relationship to its private economy is concerned is a contradiction—if in basic legal terms, as opposed to metaphysical ones—that ought to be seized upon, with utmost care, for the common struggle of a new international. Here, private banking and equity play a further, wholly detrimental role. In times of crisis, they are given the liquidity to keep the stock market lucrative. The very banks and firms that are able to crash the system overnight through speculative selling (or shorts), receive the liquidity to prop it back up—whether it be from the Fed, the Bank of England, or the ECB. This is the only reason all of the US’s major indexes—the NASDAQ, Dow Jones 30, and S&P 500—reached historic highs during the COVID-19 pandemic, when the Fed pursued its easing and injection policies. As an example of just the type of attitude this has created among traders, we must look no further than Britain’s reaction to its greatest real economic slump in recent history, with a crash of approximately 20% in GDP growth for the first 7 months of 2020.[4] On the same day, the London Stock Exchange or FTSE100 index, rose by more than 2%.[5] However, it would be concerning enough if the picture was one of mere disconnect between financial markets and the real economy. But the power of the speculative engine does not stop there. During the same crisis, private investors put their money into driving prices up in areas of the economy that were already hit hard, buying up to 80% of transport capacity in futures, worsening the supply chain problem that began with COVID-19, for the foreseeable future.[6] Meanwhile, disruptions in supply and shipping have meant that food prices have risen more than 30% in the past year.[7] Going forward, the price of shipping is not set to ease, as a direct result of these speculative purchases.

The reality, therefore, is that the Fed’s Main Street program has failed to help the real economy, as well as ordinary American citizens—in part because banks did not lend, even with the lowest interest rates in recent history, if not the entire history of capitalism; a sign once again of the drying up of capitalist risk in favor of capitalist hoarding. Meanwhile, the Fed’s “lender of last resort” or injection program to private banks has meant that speculators have been free to shape this very economy in their favor, where their current interests lie in shipping costs remaining incredibly high. And this has exacerbated inflation and jeopardized the problem of access to food across the world.[8]

We have discovered, therefore, that in this internal contradiction of so-called central bank independence, the ECB, Bank of England, and Fed policy all consist of the regular, unprecedented, and unchecked injection of liquidity into the hands of the speculative economy. Very little, if any, of this money goes into the hands of ordinary citizens and consumers. And moreover, it is not invested in the real economic market, which would require enterprise and risk-taking.

Therefore:

a) Central banks are not independent, but beholden—especially in times of crisis, but also in a post-2008 “new normal”—to the private banking system that uses the same crises to sell and buy back assets on their own portfolio, as well as lend to private corporations to do the same.

b) Central banks’ support of these interests means that these interests are no longer required to engage in markets, risk, enterprise, or orthodox capital accumulation in any sense of these terms.

c) These interests’ modus operandi, therefore, results in them finding new ways to raise prices—either via collusion or futures trading—in order to shore up profits, often at the expense of the real economy and working citizens across the world.

Therefore: a) central banks pump unchecked liquidity into the hands of private interests; b) - c) for these interests to then directly jeopardize the market for business owners and consumers in order to increase the profit margins of large corporations and asset owners.

The fact that the ECB and Fed’s very same policies had previously resulted in below-endeavoured inflation for the market, combined with overvaluation of the stock market and its historic highs during a time of crisis, are clear signs that these banks were failing by their own inflationary targets, i.e. one of their only constitutive mandates. Ironically, their dangerous lending policies have in fact exacerbated inflation for the people at the worst possible moment, during a time of international crisis.

It is only by discovering this internal contradiction that we can push central banks across to the world to finally serve their proper purpose. But the deeper insight that arises from their behavior should not pass us by. What, indeed, does it say about money, that it can create valuation that is non-economic? In other words, if we are already using money as mere exchange value, skipping capital accumulation—M-C-M—or relying on it only insofar as more liquidity can rescue it, then have we not already rescued exchange value itself from the greatest myth at its origin, one that arises from its root as a valuable commodity that contained use value as well as exchange value? This first real contradiction is the pure realization, in real economic terms and praxis, that money is the only commodity whose use value is its exchange value. It is, therefore, properly not a commodity—anymore—but a link between commodities; the possibility of their exchange on the market, with no other relationship to them outside a mediating role, wherein its first injection, as well as into whose hands this injection passes, is metaphysically irrelevant, if politically vital. This means that it is introducible at any stage in the process of production, and requires neither justification nor “debt” in its creation. It is correct that many central banks still lend using debt; but the necessity of debt is further eliminated through the concept of negative interest rates, via which injection depends not on returning value to the lender, but the lender creating more value in the future.

So how do we make sure that central banks can serve the real economy? In Europe, there is already a possible mechanism for this. As put forth by the ex Finance Minister of Greece, Yannis Varoufakis, the European Investment Bank in Brussels is perfectly capable of issuing bonds for the creation of funds, say, for a European clean energy initiative. And if need be, these bonds can be supported or even bought by the ECB, if QE is necessary at any point. This, in principle, even maintains central bank “independence,” and is moreover much more transparent in nature than liquid injection and shadow banking, wherein private banks and corporations can take advantage of ECB policy with next to no accountability.

2)

The second contradiction of capitalism is, in typical Marxist terms, both the most liberating and the most dangerous: the disappearance of wage labor. It concerns the process and telos of industrialization and automation, including mechanization and AI. One of the results of efficient industrial farming and resilient crops is that we grow enough food, today, to feed the world population 1.5 times over.[9][10] And yet, even for countries that are net agricultural exporters, like the US, agricultural labor makes up a nearly negligible percentage of GDP. What does this mean? It means that if the US were still an economy that relied on agrarian labor, it would operate at a surplus, and at the same time, most of its population would either live in poverty or starve. This is because their labor would not be required. It is a tautology, however: the more those jobs that are necessary for our survival are done by machines, the less we need to work in order to survive. But the result of this reality is nearly catastrophic. Currently, we believe—an ideological belief that was first created, perhaps as a historical necessity, with the Enclosure Laws and industrial labor—that every individual must sell their labor power on the market in order to survive; the unsaid logic behind that being that they thus create the very fruits of their survival, as well as the survival of the new economic order as a whole, whose added industrial goods therefore have a market. At the same time, we operate a system of global surplus that today is threatened by both real and artifical shortages that ought to be temporary but will not be unless we resolve the issue of wages and job quits, and that has the power—with smart policy—to exceed its previous levels or at least distribute them better, but in which both necessity and demand for industrial labor are at historic lows. What could go wrong? At best, we could invent newer and newer types of labor, attempting to sell unheard-of services to a populace in order to merely eat a portion of the goods we are producing in unprecedented numbers, the rest of which ought then to go into the chopper; at worst, we could get serious and accept that we ought to starve, because there is no need to sell our labor on the market at all.

This is no contradiction that capitalism can either resolve or survive, because simply put: it depends on wage labor. In fact, short of resolving the first contradiction—the one around exchange value—the second is insolvable and bound to result in complete misery. Moreover, it has been discovered as statistically relevant by economists who have studied wealth and income over the vastest periods covered by economic data. The French economist Thomas Piketty has shown, through his study of capital in the 21st century, that in the long run, the rate of profit exceeds the rate of growth (or r>g). But what does this mean? And moreover, why is it true? There are numerous reasons why the rate of profit has risen, as Piketty tells us, chief among them the falling ratio of net revenues going to employee salaries vs. management, bonuses, CEO pay, dividends, etc., as well as falling taxes for higher income brackets and capital. But the second, perhaps more crucial reason, is rising productivity gains. And it is by analyzing the combination of these two facts that we can start to take a guess at why r>g, or why, as the rate of profit has risen, growth has stagnated. And this leads us right back to our first point.

If, indeed, the distribution of the amount of revenues going to the worker have decreased across the board, then one other thing has decreased across the board: buying power. And if buying power has decreased, showcased clearly by the lack of real wage inflation, then it is hard to conceive of the rate of growth increasing. This is merely a symptomatic assessment of the point made in paragraph one of this section, but it is a crucial reiteration of it in strict economic terms. If an increase in the rate of productivity means that the rate of profit rises, while the return of productivity for labor decreases and growth falls, then the real economic result is a population that overproduces, yet cannot purchase, in many cases, even the means of its livelihood. The capitalist promise of a feedback loop of such productivity leading to greater prosperity is revealed as inherently duplicitous and contradictory. Not only does increased productivity mean a drop in real wages over the long haul (the true meaning behind r>g), but it means that work itself is endangered, while historically less of it than ever is required to maintain the living standards of billions. Work, even in industrial nations where less of it is required to feed the entire nation and more, is able to buy less and less of the fruits of that production.

When automation is complete, wage labor—labor sold to buy its livelihood—will become almost entirely defunct. And yet it will need to feed itself. It still needs to feed itself. We could wait around for it to continue to develop a potentially endless list of products and services nobody needs, as well as a litany of online or IRL hustles, or we could liberate it to advance the process of the efficiency of production and services even further. The only way to do this is to exploit exchange value in its pure form, via both government-created and subsidized labor, and increasingly, a rising universal basic income.

In section 1, I gave an example as to how existing institutions can help with this. However, not all nations have them in place, nor can all of them achieve the central banking activities necessary to do so. The subject of a new reserve currency for non-fiat nations will be treated in a different pamphlet; for now, it is of the essence to put forth the material realities that would transform the system, since the question of the relationship of one form of exchange value to another is a complex and highly abstract topic that requires a dissertation of its own. Although its basic solutions would be simple; they would only, just as in the points discussed here, require immense political will.

Let us then sketch out a precise list of objectives that in tandem would resolve the main two contradictions we set out, which cover three of the basic units of capitalism: wage labor, surplus value, and exchange value. In order to finish off any conclusive argument, we must also address a development that—admittedly in grand style—we asserted is inevitable to shareholder capitalism: 1) market monopolies, and 2) the consolidation of market monopolies in the hands of equity firms that then carry out price collusion that is both anti-market and detrimental to the consumer. However, it is entirely logical that in a system in which the true owners of capital are the shareholders of a company—individuals who own its stocks—those shareholders are likely to increase the success of their respective shares by controlling the market, including prices, as well as using their "too big to fail" nature to make collective demands from the political system especially when things "go wrong"—but also as expected liquidity in the post-2008 new normal—from public institutions that are supposed to be independent, like central banks. Because these large private banks fall under the category of “too big to fail,” they are the first clients of the Fed as “lender of last resort.” We have already discussed why this type of policy does not work, as well as how to fix it.

But how to address shareholder capitalism at its root? To do so, one would, of course, need to tackle the very logic of tradeable shares, whose tendencies are not only to shore up profits from productivity gains, but to effect virtual monopolies on the market by achieving cross-company organization at the top, as well as virtually endless political influence.

Simply put, there is one way to end this: to have a majority of every company be owned exclusively by the people who lead them and work at them. In order for this to happen, it is necessary that the majority of a corporation’s shares be distributed equally among its workers. Workers would then have the opportunity to cash out whenever they like. The CEO, if a majority owner, would be required to distribute their own shares. If they are not because they “cashed out” at one point, one way to reclaim a worker’s would be to: 1) have them sell their own savings and assets in the exact amount of the original share sales, as well as: 2) have the company sell none-productive assets and savings, since even under capitalism, there is no argument whatsoever for a company to save. These failing, as they are likely to, buybacks would have to be effected through a wealth tax or government liquidity via the issuance of bonds under a still-existing, “lender” central bank. If 2) is effected, and the company is ever strapped for cash, the company can borrow, which is what historically-low interest rates are for. (The end-goal would be to abolish interest rates as a whole, since they are totally meaningless when we understand money as the system gradually demands us to in order for its basic survival: as exchange value alone.) The end-goal, however, must be reached at all costs, with a deadline set for the "return" of more than half of company shares to its workers and employees. What must then be introduced is a "one share-owning worker, one-vote" system for workers and managers of the corporation.

This practice would create equity in the distribution of the company’s revenues, since this central question would be voted on by the workers. Under normal capitalism, whatever that is—let us say, the capitalism of the day—the ethical dilemma would be sure to come up concerning the question of a universal reinforcement income, by which we mean a type of “wage correction” in the context of increasingly precarious and underpaid labor. With the one share-owning person, one-vote system, company revenues would be sure to be invested equitably among its employees, and the question of whether the government should step in to cover the rest of a minimum salary, as well as to what extent, become a more transparent one. The minimum salary would be calculated in order to cover all living costs comfortably—but not luxuries, which would incentivize companies to remain competitive—according to the city or county with the highest cost of living. In the case of freelance work in which the individual is self-employed, the extent of their reinforcement income would be calculated based on a monthly average of income, taking the month with the lowest income out of the year as benchmark. A similar income, as a universal basic income, will cover wages for the unemployed.

Before we summarize the results of our manifesto, we must address a question that has likely been on every reader’s mind: whither inflation? This brings us to our third contradiction, summarized with the empirical observation that begins the next paragraph:

3)

Inflation—the increase in the price of a good—is only a material necessity under scarcity, or the rise in the price, i.e. further scarcity, of other goods needed in order to make it. Inflation as a result of “money supply” is not the best principle to uphold in the future, since there is nothing logically apparent to it. And moreover, in the above contexts sketched out—wherein the problem is not scarcity per se but a dangerous (even voluntary, as we've seen) drop in necessary labor or buying power—it creates the self-fulfilling prophecy of money supply as inflationary, despite the fact that conditions are essentail for subsidies or reinforcement income. It therefore risks counteracting—or indeed scrapping, as has happened with Build Back Better in America—the vital effect of increased liquidity as a constructive force (that can indeed add to supply), plunging the system into, this time, a synthetically exacerbated supply and demand shortage. We must further realize that artificial “scarcity,” either through the withholding or destruction of surplus, will always be a capitalist incentive. This is simply another reason why the one share-owning person, one-vote system needs to be put into practice, along with government-ensured reinforcement wages, since they would highly disincentivize corrupt pricing practices, but incentivize greater production and its sharing of increased revenues.

Furthermore, many critics of large spending do not realize the essential problem we have identified here, that the falling need for wage labor itself threatens supply, precisely when supply can operate at its highest potential. This is a huge issue today, as some essential industries are seeing walkouts from their workers—either in strikes or resignations, as we have mentioned at the beginning of this piece—rightfully. For all the reasons sketched out, their wages have not kept up with inflation, and these jobs remain repetitive, their hours long and unforgiving. It will also become essential for government to make sure these industires, particularly those important to livelihood, are kept alive through subsidies, unionization, and nationalization if labor conditions aren't met.

In the case that we implement the above (and below-summarized) policies, it is absolutely crucial to bear all the economic observations we have sketched out in mind. If we don’t, we risk making empirical errors of judgment, including collective ones. Unfortunately, there is no recipe to historical consciousness: it is a slow and gradual process in which material conditions grow to reinforce particular prejudices at the expense of others, where in hopefully the overlap between fact and prejudice increases as time marches on. However, the better those conditions become through sensible planning, the easier it is to accept the consciousness at the root of that planning—socialism—and reject the superstitions of the past.

a) Gradual, collective ownership of company shares, with a system of “one share-owning person, one vote” in all company decisions, including the distribution of revenues.

b) The instatement of a universal basic wage reinforcement that comfortably covers living costs, to make up for any existing deficit in income despite the equitable distributions set out in a), as well as a universal basic income in the case of unemployment.

c) The seizing upon central bank liquidity in order to achieve b), through the creation of government bonds in the short term, but injection upon finely and transparently calculated fiscal necessity in the long-term (as specified in section 3) into government treasuries. This is all in addition to taxes, better capital taxes, better estate tax law, and a wealth tax if necessary.

d) The creation of new jobs in order to: 1) Fill the gap created by outsourcing and automation, and 2) In the creation of green jobs, healthcare needs, education, infrastructure, and so on.

[1] https://time.com/6105109/workers-strike-unemployment/ [2] https://www.bls.gov/lpc/prodybar.htm

[3] https://www.gao.gov/assets/gao-14-515.pdf [4] https://www.forbes.com/sites/chasewithorn/2020/12/16/the-worlds-billionaires-have-gotten-19-trillion-richer-in-2020/?sh=4eb1b14d7386 [5] https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpfirstquarterlyestimateuk/julytoseptember2021 [6] https://diem25.org/something-remarkable-just-happened-this-august-how-the-pandemic-has-sped-the-passage-postcapitalism/ [7] https://www.youtube.com/watch?v=Y3ktM0_Chpc [8] https://www.bbc.com/news/business-59172665 [9] https://www.worldbank.org/en/topic/agriculture/brief/food-security-and-covid-19 [10] https://foodfirst.org/publication/we-already-grow-enough-food-for-10-billion-people-and-still-cant-end-hunger/ [11] https://news.un.org/en/story/2019/10/1048452