Theft or exploitation?- a review of Stolen by Grace Blakeley — Michael Roberts

I think that there are at least three things going on, first involving property as theft through forcible enclosure of the commons, regardless of whether this is made legal by institutions controlled by the thieves as a veneer. 

Secondly, I believe that the classical view of value as produced by labor is essentially correct, regardless of the controversy over the statement of it, which is largely semantical. These differences led to distinctions that distracted enough from the actual issue to allow the neoclassical identification of value and price and the marginalist theory of value creation implying just deserts based on relative marginal utility, productivity, and contribution. 

The marginalist model assumes relatively free markets in everything, which is unrealistic. The standard retort is "government." Of course, it is true that "government" is a key factor owing to the asymmetrical distribution of power based on institutional arrangements that the ownership class, including the top managerial class, controls.

This veneer of legitimacy enables the extraction of surplus value from workers along the lines that Marx set forth. This was a characteristic of the transition from the agricultural age in which feudalism workers were either slaves or serfs and the beneficiaries were the landlords.  After the transition to the industrial age characterized by the dominance of industrial capital, workers were supposedly "liberated" from unpaid work in the case of slavery or underpaid work in the case of serfs and tenant farmers. Marx attempted to show how surplus value was still expropriated through creation of surplus value in monetary production and its distribution to the owners of the means of production, the capitalist class.

Michael Roberts' post is a short view of UK political scientist and economist Grace Blakeley's new book, Stolen, which focuses on financialization. The so-called profit created through financialization is different from the first two factors, enclosure of the commons and extraction of surplus value.

This third factor is rent extraction after enclosure and the subsequent legal institutionalization of private property and also after the expropriation of surplus value in the monetary production process. The rent extracted by finance is in addition to the former two, redistributing income upward. Michael Hudson is the go-to economist on this subject, and he is a Marxism economist if not a "Marxist," where "Marxist" signifies an ideologue. Similarly with David Graeber, the author of "Debt: The First 5000 Years."

So it is necessary to distinguish all three factors in exploring inequality as apparently excess skewing of distribution toward the top, exceeding reasonable individual contribution given a social environment in which the relationships of elements of the system are as important in analysis as the elements and may be more significant at the macro scale.

This is the basis of economic rent — land and natural resource, rent from real goods production in a monetary production economy,  and financial rent from finance and fintech — and it should be taught in Econ 101 rather than using wildly unrealistic gadgets as teaching tools to promote an ideology that underpins the status quo. The newly published MMT textbook is a good start in this direction, laying down the basics needed for correct analysis of how a modern monetary economy operates in tandem with finance, along with its opportunities, challenges, and limitations and constraints.

Michael Roberts Blog — blogging from a marxist economist
Theft or exploitation?- a review of Stolen by Grace Blakeley
Michael Roberts

Peter Cooper — Productive and Unproductive Labor in a Macro Context

As is well known, Marx and the classical political economists before him made a distinction between productive and unproductive labor. Marx’s distinction is somewhat differed from Smith’s. For Marx, labor is productive when it is: (i) directly productive of surplus value; and (ii) exchanged directly against capital. I remain unsure how applicable the distinction is to a state money system. Some of my misgivings are explained in an earlier post. The uncertainty has held back an attempt to explore connections between Marx and Modern Monetary Theory (MMT). To get around this, here I proceed on an as if basis, by assuming for the sake of argument that the distinction is meaningful....

heteconomist
Productive and Unproductive Labor in a Macro Context
Peter Cooper

Bill Mitchell — Inclusive growth means poverty reduction and declining income inequality

I am doing some work on the way technology can be chosen to maximise employment in the pursuit of advancing general well-being. This is in the context of some work I am doing on advancing what is known as ‘relative pro-poor growth’ strategies in Africa via employment creation programs and draws on my earlier work in South Africa on the Expanded Public Works Program. In the current work, I have been assessing ways in which the Labour Intensive Public Works program in Ghana has been deployed to serve this purpose. The problem one confronts when working as a development economist in less well-off nations is that the institutional bias promoted by the IMF and the World Bank is towards advancing, at best, what we term ‘absolute pro-poor growth’. But that sort of agenda typically fails to strengthen other aspects of a strong civil society because it is almost always accompanied by rising inequality which continues to concentrate power and influence at the top and leads to resources being disproportionately expropriated by the wealthy (and usually foreign) classes. Institutions such as democracy, justice, law and order and causes such as environmental sustainability are then compromised....

Bill Mitchell – billy blog
Inclusive growth means poverty reduction and declining income inequality
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

See also

Could this possibly be the result of natural spontaneous order resulting from market competition and personal initiative so that everyone receives their just deserts based on their productivity? Or is the result of asymmetry and bias? If the later how does that arise. Is it solely the result of government as some claim, or it is owing to the asymmetrical power that increasing wealth as ownership of real and financial assets conveys?

Michael Roberts Blog
The top 1% own 48% of all global personal wealth; 10% own 85%
Michael Roberts

David F. Ruccio — Inequality and immiseration

"Immiseration" has a nice quality to it and is less emotionally loaded than "exploitation," which is now associated with "Marxism" in the pejorative sense in capitalist countries like the US.

It’s clear that, for decades now, American workers have been falling further and further behind. And there’s simply no justification for this sorry state of affairs—nothing that can rationalize or excuse the growing gap between the majority of people who work for a living and the tiny group at the top.

But that doesn’t stop mainstream economists from trying...

Are mainstream economists capitalist shills or are they just clueless about reality? Or maybe both.

American workers are getting relatively less of what they produce, which means more is available to distribute to those at the top of the distribution of income.

That’s what mainstream economists can’t or won’t understand: that workers may be worse off even as their wages and incomes rise. That problem flies in the face of every attempt to celebrate the existing order by claiming “just deserts.”

There’s nothing just about the relative immiseration and growing inequality faced by American workers. And nothing that can’t be changed by imagining and creating a radically different set of economic institutions.

Economists operate in terms of the institutional status quo and those stepping out of line are marginalized a "heterodox," or "Marxist." The economics department at Notre Dame, where David Ruccio taught for many years, was recently reorganized to diminish if not entirely excluded heterodox teaching. This is also an institutional problem and it is closely connected with the larger institutional issues in which contemporary capitalism is embedded and imposed on workers (labor) and the environment (land).

The economics profession needs to be address these issues to remain credible.

 

Occasional Links & Commentary
Inequality and immiseration
David F. Ruccio | Professor of Economics, University of Notre Dame

Robert Paul Wolff — The Connection Between Expropriation and Exploitations, Part Two

… “Clearly,” I said to myself, “workers in a capitalist economy are getting the short end of the stick, but Marx’s explanation, invoking the distinction between labor and labor-power and all the rest, is wrong. So what is the explanation? What is more, how can we capture in our explanation the central feature of capitalism to which Marx devotes so much time in the opening chapters of Capital, namely its mystification of what is going on?”

So I went back to Marx’s text and looked again. And there it was, as plain as day. The workers in a capitalist economy get only a portion of what they produce by their skill and labor, because by a long historical process of expropriation, they have been denied ownership of their own means of production – of their tools, of their machinery, even of their skills – until all they have left is their labor, which if they wish to live they are compelled to sell in the marketplace as though it were a commodity whose natural price is the cost of its reproduction. Why don’t farmers get to eat all the food they grow, after setting aside what is needed for seed? Because they do not own the land and the farm tools. Why don’t factory workers get to wear the clothing they make or to sell it to buy the food they need? Because they do not own the wool or the cotton or the thread or the machinery with which they turn these materials into clothing.

How, I asked, can we capture this situation in a set of formal equations that explains exactly how the workers are getting screwed and simultaneously explains why in a capitalist economy it seems as though the workers are getting a fair return for their labor? Here is what I came up with:

The Philosopher's Stone
The Connection Between Expropriation and Exploitations, Part Two
Robert Paul Wolff | Professor Emeritus, University of Massachusetts Amherst

Robert Paul Wolff — The Connection Between Expropriation and Exploitation, Part One

In this lengthy essay, I will explain the relationship between the claim that capitalism arises through the expropriation of workers, and the claim, specific to Marx’s economic theory, that capitalism rests on the exploitation of the working class. The term “exploitation” in Marx’s writings has a specific technical meaning which I shall explain in good time, but we should start by recalling that “to exploit” has two distinct and yet related uses in common speech. To exploit something means to use it for some purpose. “In his architectural designs, Frank Lloyd Wright exploited the particular physical and scenic characteristics of the site on which a building was to be constructed.” To exploit someone means to take advantage of that person for one’s own purposes. “Trump exploits contractors whom he hires on his construction projects by using the expense of legal proceedings to get out of paying the bills he has run up with them.” The first usage has no obvious normative implications. No one save a Mother Earth enthusiast would blame Wright for exploiting nature in his designs. The second usage at least prima facie does have normative implications. Marx deliberately plays on this ambiguity in Capital.

The Philosopher's Stone
The Connection Between Expropriation and Exploitation, Part One
Robert Paul Wolff | Professor Emeritus, University of Massachusetts Amherst

Robert Paul Wolff — Marx Without Marx, or He Who Must Not Be Named

Good one from Robert Paul Wolff today. Professor Wolff looks at primitive acquisition as the basis of expropriation of the commons, which led subsequently to further levels of expropriation based on class power.

The regular commentator who goes by the internet handle TheDudeDiogenes writes: “I have been wrestling with the concept of exploitation/surplus labor for a while now; my issue is, if the Labor Theory of Value is false (as you hold, and I think so do I, though perhaps based on misunderstanding), then what, precisely, does exploitation consist in? How can surplus labor be extracted from the laborer if the LTV is false?”

When I replied by referring to a paper in which I answer the question mathematically, he said, “I am neither good at nor fond of maths (though I value highly those who do understand them), and my intellectual interests are often more "big picture", but if you could write a post for a humanities semi-expert but mathematical novice, I would surely appreciate it!”

This request was seconded by two other readers, which in my rather parochial world constitutes a tsunami of demand, so I shall make an attempt. There are two ways in which I can respond. 

The first way, which is most natural to me, is to render my mathematical treatment of this question in plain English, leaving the formal proofs for the cognoscenti. This way has the great virtue of preserving one of Marx’s deepest insights, the mystified character of capitalist relations of production, which in my judgment is one of the greatest intellectual achievements of modern social theory. 

The second way is to justify the use of the concept of exploitation to characterize capitalism without referring either to Marx or to the Labor theory of Value. This way has the virtue of circumventing the sectarian squabbles that have absorbed so much of the energy and time of those who proclaim themselves Marxists – no labor/labor power distinction, no tendency of the rate of profit to fall, no negative labor values with positive prices [pace Ian Steedman], and all rest. [I say this, of course, as one who wrote an entire book offering my take on these urgent issues.]

After some reflection [not aided by a morning walk – rain today], I have decided to adopt the second course first. If, when I have finished, anyone has the stomach for more Marx shtick, I will attempt the first. With that said, let me begin.

[I have broken up the paragraphing for online readability.]

The Philosopher's Stone
Marx Without Marx, or He Who Must Not Be Named
Robert Paul Wolff | Professor Emeritus, University of Massachusetts Amherst

Michael Hudson — No to currency slavery

Western support will allow more IMF and European lending to prop the Ukrainian currency so the Ukrainian oligarchs can move their money safely to British and US banks, economist and author Michael Hudson told RT’s Truthseeker.

No to currency slavery

Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, and Distinguished Research Professor of Economics at the University of Missouri, Kansas City