Critical Education Articles Placed in the Teacher Staff Lounge While I Was a Teacher, Part Thirty: Financial Literacy in the Context of a Society Dominated by a Class of Employers

When I was a French teacher at Ashern Central School, in Ashern, Manitoba, Canada, I started to place critiques, mainly (although not entirely) of the current school system. At first, I merely printed off the articles, but then I started to provide a summary of the article along with the article. I placed the summaries along with the articles in a binder (and, eventually, binders), and I placed the binder in the staff lounge.

As chair of the Equity and Justice Committee for Lakeshore Teachers’ Association of the Manitoba Teachers’ Society (MTS), I also sent the articles and summary to the Ning of the MTS (a ning is “an online platform for people and organizations to create custom social networks”).

As I pointed out in a previous post, it is necessary for the radical left to use every opportunity to question the legitimacy of existing institutions.

The attached article for the ESJ Ning is prefaced by the following:

Hello everyone,

I sent several articles to the ESJ Ning under one heading since they are all relevant. Unfortunately, I could only upload three of the articles.

It is prefaced with the following:

Chris Arthur, author of the article, “Financial Literacy in Ontario: Neoliberalism, Pierre Bourdieu and the Citizen, “ and grade 8 teacher in the Toronto District School Board, begins with a quote from the federal finance minister, Jim Flaherty, who attributed the 2008 world economic crisis to a lack of financial literacy. In 2011, the Ontario provincial government came out with a new grade four to grade 12 curriculum on financial literacy. The author argues that the curriculum reflects neoliberalism, with its fetishism for market solutions and for attribution of economic crises to individual ignorance rather than the structural and exploitative conditions of capitalism (with its characteristic employer/employee relation—a relation of subordination, or of superior and inferior). Rather than elaborating on that relation, though, he focuses on the reduction of financial literacy by neoliberalists to the level of conscious consumers of various financial services and products.

The author uses Pierre Bourdieu’s theory to criticize the new curriculum initiative. Bourdieu uses such terms as habitus, capital and field to analyze cultural phenomena, including schools.

Arthur immediately notes that the financial literacy curriculum categorizes children and adolescents by the false binary of financially literate/illiterate–according to the neoliberal definition of financial literacy/illiteracy.

He also describes some of the efforts by state officials to shift the burden of the present world economic crisis (begun in 2007) onto the backs of the working class, ranging from a cut in health insurance for 900,000 children in California to the wage-freeze of 350,000 non-unionized Ontario government workers and reducing funding for food  for the disabled in Ontario (while keeping tax cuts for corporations). The attack on social programs forms part of the neoliberal agenda of destroying what neoliberals consider to be “bad examples”: any economic supports that are not directly related to the market. The reduced space or “habitus” (subjective attitude), practices and field (environment) for social caring fosters intensifies an attitude of acceptance of austerity and rule of the market.

Equal inequality becomes the rule of the day; that is to say, differences that contradict the market (such as tenure in schools or unions) are to be eliminated in favour of equal subordination to the rule of the market and its attendant inequality.

The world economic crisis of 2008, instead of being used by the left as an occasion for challenging the rule of the market, has increased the neoliberal onslaught started by Thatcher and Reagan.

In view of the world economic crisis, the financial literacy curriculum, like so much else that occurs in schools and school bureaucracies, is replete with rhetoric about empowerment while actually disempowering children and adolescents. Children and adolescents are to learn about the various financial instruments, how they work and how they can use them—which is supposedly to empower them by making them financially literate. Such an approach may be useful for those who are going to use such instruments—although the ethics of using such financial instruments as credit default swaps is certainly questionable—but many will have no opportunity to purchase such financial instruments.  And many other financial instruments (the Manitoba Teachers Society and other teacher organizations do not seem to want to question the ethics of their own financial portfolios—there was no debate about this issue at the recent AGM) Is certainly open to debate.

Arthur agrees that teaching children and adolescents the uses of various financial instruments—and their dangers, but he also points out that it is necessary to teach how the capitalist system of production, distribution, exchange and consumption lead to economic crises. Unfortunately, Arthur does not elaborate on the crisis-prone nature of these relations.

Although the Marxian theory of crises is undoubtedly complex, two aspects of crises can be outlined: one aspect stems from the infinite nature of the capitalist economic process clashing with its own  condition of functioning on the basis of a surplus.

The following is taken from my article, “Stability and Precariousness in Dewey’s Philosophy of Education,” Education and Culture, 2007, 23 (1), pp. 50-51:

“The money circuit of capital consists of

M1 – C1(= MP + L) . . . P . . . C2 – M2, where

M1 = the money invested;

 – = an exchange;

 C1 = the commodities purchased for investment purposes (which consist of MP—means of production—

and L—labour power, or workers);

 . . . = an interruption in the circulation or exchange process;

P = the capitalist production process;

C2 = the commodity output, with C2 greater in value than C1;

and M2 = the return of the money invested, with M2 = C2, but greater in quantity than M1.”

The purpose of the process is to maximize M2 in relation to M1—the rate of profit.

 R

What happens if the rate of profit is expected to be too low by investors? Will they invest or not? If not, then M1-C1 (=MP +L) will not occur; unemployment will be the result. Production will decrease even if, physically, there is the capacity to produce a sufficient amount for everyone’s needs. The condition for continued investment (and hence continued employment since the function of money capital in a capitalist society is to unify workers and the means of production, which have been separated socially) is the expectation that there will be a greater amount of money at the end of the process than at the beginning; otherwise, the money will not be spent in the form of investment.

So, the tendency in a capitalist economy is towards an infinite process of growth (regardless of consequences and limitations), with unemployment and economic (and social and political) crises when that infinite process is interrupted.

That is one reason for the crisis-prone nature of capitalist economic relations.

Is this situation an expression of a just economic (and legal and political) system?

If we take a look at the money circuit of capital, and disregard the exchange process, we have:

M1…P…M2. Production is a means for the increase of money. Since human beings are part of P, they too are part of the means for the increase of money.

Is being treated as a mere means for an increase of money an expression of a just world? Do we raise children and adolescents so that they can become means for an increase of money?

Such things are not taught in schools. Why not? Indeed, when economics is taught at all (only in the upper grades), it is taught on the basis of what is called neoclassical economics, or supply and demand economics.

Marxian economics includes the interaction of supply and demand, but only at the end of a very long process of economic reasoning. (See the attached article by Photis Lysandrou, “The Market and Exploitation in Marx’s Economic Theory: A Reinterpretation,” for further details). Lysandrou notes that Marx employs a method that initially shows a “thin capitalist market,” which Marx “thickens” as he proceeds in his analysis of capitalist production, exchange, distribution and consumption. In volume one of Capital, Marx begins with the assumption that the only thing that is exchangeable is what is produced (commodities) in a capitalist society. He begins, in other words, with an impossible capitalist world since many objects, including workers, must be commodities, or things sold on the market. Capitalists cannot decide how to produce but only what to produce, initially (the techniques of production are common within particular capitalist industries and between capitalist industries).  Values, which express the amount of labour socially required to produce commodities, are equal to the prices on the market in such a situation.

 Scientists often use such “thinning” of complex relations in order to isolate key conditions that they are researching.

The advantage of this method is the isolation of the capitalist production process and the reduction of all class relations to the relation of the immediate capitalist and the employees under her/his control.

Another advantage of this method is the isolation of a theory of commodity money (whereas modern neoclassical monetary theory lacks a consistent monetary theory. (See the attached article by John Weeks, “The Theory and Empirical Credibility of Commodity Money.” See also the attached article, “Teaching Macroeconomics by Bringing Marx into the Classroom,”  by Mark Lautzenheiser and Yavuz Yasar.)

 Marx then assumes that workers are commodities. Capitalists exist, but what they own is then considered for the moment to have no cost of production. Marx then shows that the class relation between capitalists and workers results in a surplus of value; the exploitation of the workers is the source of the capitalists’ profit.

Let us dwell on this issue for a moment. If the source of capitalist profit is the excess work of workers beyond their wage (or salary), then is this just? According to modern legal relations, it is perfectly just. So, following and respecting the law involves the exploitation of workers?

Marx shows  further on in Capital that when capitalists reinvest the surplus value and obtain a further surplus value from that reinvestment, they eventually are using money that only came from workers (since capitalists must consume part of the surplus value or profit that they receive, they use up their original investment but still retain the original amount invested that is now pure surplus value).  In other words, when viewed as a continuous process of capitalist production and accumulation, workers must subordinate their will not only to the results of their own production. Is this situation just? According to modern legal relations, it is perfectly just.

Of course, even if this situation is unjust, workers may follow the laws—but without any longer believing in them. They may follow the laws because they fear retaliation—but not because they consider the laws to be just.

Some—even those sympathetic to workers–have argued that Marx’s argument that it is only workers who can produce a surplus value is mistaken. There could be, for instance, an exploitation of steel theoretically. For a counterargument to this view, see the attached article by Kiyoshi Nagatan, “Capitalist Exploitation and the Law of Value,” in which the author argues that steel is produced in a capitalist environment whereas workers are not, with the consequence that steel exploitation makes no sense at all.

Marxian economics then drops certain assumptions in order to incorporate more and more differences and more and more conditions of exchange—a thickening of the objects that are objects of exchange. Thus, in the third volume of Capital, Marx drops the assumption that capitalists’ means of production are not commodities. He then explores this situation and its consequences. He then drops the assumption that the capitalist in the sphere of production sells the commodities produced. A commercial section of capitalists arises; wholesale and retail services are then allowed to be treated as commodities. The commercial capitalists share in the surplus value produced by the workers in the production sphere—a process which obscures the source of surplus value. He then drops the assumption that the money used by the capitalist in production is owned by that capitalist. The category of interest arises, and money becomes an object of exchange. The moneyed capitalists share in the surplus value produced by the workers in the production sphere—a process which further obscures the source of surplus value. (Marx refers to the process M1-M2 as a process of extreme fetishism since it appears as if money had the power to increase itself from itself without any human action at all apart from the act of lending it out. This fetishism forms the basis for speculative fits of fantasy—such as the recent economic crisis.) Marx then drops the assumption that the land used by the capitalist in production is owned. The category of land rent arises, and land becomes an object of exchange. The owners of land share in the surplus value produced by the workers in the production sphere—a process which further obscures the source of surplus value.

The advantage of this method is the exposure of the class nature of capitalist exploitation. Although workers produce surplus value, the very sections of the capitalist class tend to receive that surplus according to the investment level regardless of the proportion of capital invested in machines, etc. and workers. Consequently, exploitation is a class affair, where particular employees are collectively exploited by a class of industrial capitalists, commercial capitalists, money capitalists and land owners—but it is this collective exploitation which also hides the exploitation since the various forms of surplus value (industrial profit, commercial profit, interest and rent) appear to be independent of the labour of the workers. Under such conditions, the value of what is produced and its price diverge or are no longer equal and generally cannot be equal—when techniques of production within and between industries are taken into account as inputs that themselves can assume the form of a commodity.  For an analysis of this issue, see the attached article by Gustavo Indart, “Marx’s Law of Market Value.”  Indeed, the price of commodities, under these conditions, are not equal to their value since the tendency towards an equal rate of profit per unit of capital invested results in the capitalists setting prices that reflect the inclusion of the distribution of the surplus value according to the proportion of “supplementary” capital invested by the total set of relations that assume the form of exchange relations between different sets of capitalists. These prices are called prices of production.

As Lysandrou argues, Marx had to strip the market to a “thin” level in order to expose the exploitation characteristic of the capitalist economic structure.

It is only after thickening the market in volume three of Capital that Marx then considers inequalities in supply and demand (up to here it has been assumed that they equal each other). (In fact, in volume two of Capital, Marx outlines an analysis of supply and demand as being equal under a two-class model (his models of simple and expanded reproduction). See the attached article on the reproduction schemes by K. Naqvi, “Schematic Presentation of Accumulation in Marx.” Demand comes into the picture after the class structure of the capitalist economic system has been analysed. The interaction of supply and demand on a class basis contrasts sharply with the immediate interaction of supply and demand on an individual basis characteristic of neoclassical economics (see the implied critique of the reduction of economics to the individual level in the attached article by Ben Fine and Dimitris Milonakis, “ ‘Useless but True’: Economic Crisis and the Peculiarities of Economic Science.“)

(As an aside, Fine and Milonakis point out, the governments of the world provided a bailout of $8.4 trillion to the banks—an amount that Oxfam indicated would have provided the one billion poorest peoples with sufficient wealth to lift themselves out of extreme poverty for the next 50 years. Such is global justice under the rule of the capitalist economic structure.)

I will not further refer to Arthur’s article since it has served its purpose; in fact, Arthur’s article lacks a characterization of Marxian economics and therefore fails to present what a more adequate form of financial literacy would entail.

 Financial literacy is certainly lacking in schools, but the question is:  Which kind of financial literacy? Arthur merely refers to Marxian economics without really outlining its nature. This essay has tried to do so by outlining how Marx proceeded to analyse the capitalist economic structure.

Why is it that schools do not include a characterization of the capitalist economic structure according to Marxian economics? Are schools essential institutions for the indoctrination of future employees? Can anyone imagining the struggle that would be required to have Marxian economics taught in schools—even on an optional basis—in Manitoba high schools?

Do those in power really want children and adolescents to understand the capitalist economic structure? Or do they want them to understand, at best, only the surface appearances, such as wages, profit, interest, rent, derivatives and so forth?

Is it just for children and adolescents to be ignorant of the nature of the capitalist economic structure? Does such ignorance not serve the class of employers? Does it not confuse children and adolescents when they are faced with the experience, once they are of age, when they experience the life of an employee?

If the capitalist economic structure is unjust, should not those who claim to be interested in equity and social justice issues address this injustice?

When the ESJ chairs had a workshop on human rights, I asked how human rights pertained to employees since employees must, to be employees, abandon many of their civil rights. The response of the presenter was interesting: we can choose our employer. Yes, we can choose our employer (if there is demand by the particular employer, of course), but we, the working class, cannot choose to have no employer. The fact that we may choose, within very restricted limits, an employer, does not justify the daily suspension of our civil rights. That daily suspension of our daily rights, if extended beyond the walls of our place of employment, leads to fascism and totalitarianism. Is this possibility equitable and just? How a person concerned with human rights could so blithely use the fact that we can, within fairly restricted limits, choose an employer to justify the daily suspension of civil rights shows the extent to which the ideology of the capitalist economic structure has a hold on people.

Should not the chairs of Equity and Social Justice address this issue? Or should they simply ignore it? Should not the Standing Committee of the Equity and Social Justice Committee address this issue? Or should it simply ignore it?