Economics for Social Democrats–but not for the Working Class, Part Three: The Health and Safety of Workers and an Economy Dominated by a Class of Employers Are at Loggerheads

Introduction

I was going to continue my next post in this series with a continuation of my critique of Mr. Stanford’s definition of money as “purchasing power,” but I came across a more directly political issue that should be addressed. 

I have already had occasion to take a critical look at both Jim Stanford’s views (see Economics for Social Democrats–but Not for the Working Class, Part One: Critique of Jim Stanford’s One-Sided View of Job Creation in a Capitalist Society and Economics for Social Democrats–but Not for the Working Class, Part Two: Critique of the Social Democrat Jim Stanford’s Theory of Money, Part One). I will further engage in critical analysis of his views by looking at a Webcast posted on YouTube titled Economics After COVID: The Need for National Reconstruction Planning (https://www.youtube.com/watch?v=XUSIxXvk8BE). The webcast has Mr. Stanford referring to the relationship between health and the “real economy.” 

The webcast is supposed to be an analysis of what the economy should be after COVID. Mr. Stanford’s analysis, however, fails to grasp the specific historical nature of the present economy, which is dominated by a class of employers. 

Mr. Stanford’s Continued Ahistorical Characterization of an Economy Dominated by a Class of Employers

I pointed out in another post (part one on the theory of money) how Mr. Stanford tends to identify production in general throughout history with the current economy, which is an economy whose primary aim is accumulating more and more money by means of exploiting workers (and by revolutionizing technological conditions). 

Since workers in such an economy are mere means for the increase of money (see The Money Circuit of Capital ), there is often a contradiction between the health of workers and the interests of employers (as I have often pointed out in my posts. See for example, Working for an Employer May Be Dangerous to Your Health, Part One, part of a series of posts on how the health of workers is often sacrificed for the benefit of employers). 

Mr. Stanford, however, treats the real economy as if it were some sort of pure labour process in general, producing use values that people need for their lives, or alternatively that the economy in the present is actually or really a socialist economy, where the purpose of work is to satisfy the needs of workers and others. Thus, Stanford says: 

The economy is not a thing in and of itself. The economy is what we refer to as the work that people do to produce goods and services and then how those goods and services are distributed and used.

This way of looking at the economy reminds me of an academic leftist, Jeff Noonan, who argued the following (copied from my post The Poverty of Academic Leftism, Part Eight: Class Harmony):

Instead, all members of the institution– faculty, librarians, learning specialists, lab technicians, students, support workers, and administration have the same goal—the advance of human knowledge and creativity in the widest and most comprehensive sense. If that claim is true, then it should follow that all the groups who together make up the university ought to cooperate (not without respectful disagreement) in the determination of the budgets, policies, rules, and goals that guide the institution’s mission. The best ideas emerge through deliberative and democratic argument—no one group knows best just because of the position they occupy in the hierarchy.

To which I responded:

This view is ideology in the worst sense of the term. In a society dominated by employers–including public-sector employers like universities, it is highly unlikely that such workers as “lab technicians, students and support workers” have the same goal–“the advance of human knowledge and creativity in the widest and most comprehensive sense.” Such a view may apply in a socialist organization, but to assume such a situation in universities, which function in a capitalist context, is bound to lead to inadequate policies and theories.

Consider support workers. I worked twice at a university library, once doing my practicum to obtain a library and information technology diploma from the Southern Alberta Institute of Technology (SAIT) at the University of Calgary main library, in the cataloguing department. At the University of Calgary, I noted that the work situation was characterized by a very hierarchical, top-down power structure. One worker commented that she would prefer a benevolent dictator to a mean one; of course, but why have a dictator at all? At least this worker recognized that there was a dictator–unlike Professor Noonan.

Stanford, like Professor Noonan, simply ignores the hierarchical and dictatorial nature of relations at work–as if that hierarchical and dictatorial structure did not form an integral part of the present economy.

A Real Trade-off Between the Health of Workers and the Health of an Economy Dominated by a Class of Employers 

As a consequence of his characterization (actually reduction) of the present economy to a pure labour process of producing social use values, he incorrectly claims that there is no contradiction between the health of workers, citizens, immigrants and migrant workers and the economy:

So, you can’t have an economy that is healthy if people aren’t healthy, and this false trade-off between the economy and public health was a giant self-inflicted wound in our response to Covid.

It is hardly a “false trade-off between the economy and public health”–because the current economy includes the sacrifice of workers for the benefit of the class of employers. 

Ironically, it is Stanford and not the conservatives whom he criticizes who fails to understand the real nature of the present economy. He states:

Doug Ford [premier or head of the provincial Progressive Conservative government of Ontario] , Jason Kenny [premier or head of the United Conservative provincial government of Alberta] and Erin O’Toole [leader of the official opposition party the Conservative Party of Canada] themselves implied that there was some kind of trade-off between public health and the economy.

For representatives of employers–and unfortunately for workers as well–there is definitely a trade-off between “the economy” (which workers do not control but, quite the contrary, the economy controls the workers) and the health of workers. The health of workers is secondary to the drive for accumulation of more and more profit and more and more money. 

Diverse governments of countries dominated by a class of employers have responded differently to the pandemic, in part at least, because of their divergent assessments of the impact reducing the employment of workers will have on the pandemic in the country. Obviously, the kind and extent of workers’ responses to the pandemic also have influenced governments’ responses. However, before the pandemic emerged, governments (and employers) were already involved in making decisions that jeopardized the future health of workers, citizens, immigrants and migrant workers. 

In a previous post (Working and Living in a Society Dominated by a Class of Employers May Be Dangerous to Your Health), I quoted Mike Davis in his work (2020) The Monster Enters: COVID-19, Avian Flu and the Plagues of Capitalism

But this time around there was little mystery about the identity of the microbe—SARS-CoV-2 was sequenced almost overnight in January—or the steps necessary to fight it. Since the discovery of the HIV virus in 1983 and the recognition that it had jumped from apes to humans, science has been on high alert against the appearance of deadly new diseases with pandemic potential that have crossed over from wild fauna. This new age of plagues, like previous pandemic epochs, is directly the result of economic globalization. … Today, as was the case when I wrote Monster fifteen years ago, multinational capital has been the driver of disease evolution through the burning or logging out of tropical forests, the proliferation of factory farming, the explosive growth of slums and concomitantly of “informal employment,” and the failure of the pharmaceutical industry to find profit in mass producing lifeline antivirals, new-generation antibiotics, and universal vaccines.

Forest destruction, whether by multinationals or desperate subsistence farmers, eliminates the barrier between human populations and the reclusive wild viruses endemic to birds, bats, and mammals. Factory farms and giant feedlots act as huge incubators of novel viruses while appalling sanitary conditions in slums produce populations that are both densely packed and immune compromised. The inability of global capitalism to create jobs in the so-called “developing world” means that a billion or more subsistence workers (the “informal proletariat”) lack an employer link to healthcare or the income to purchase treatment from the private sector, leaving them dependent upon collapsing public hospitals systems, if they even exist. Permanent bio-protection against new plagues, accordingly, would require more than vaccines. It would need the suppression of these
“structures of disease emergence” through revolutionary reforms in agriculture and urban living that no large capitalist or state-capitalist country would ever willingly undertake.

To treat the “economy” in its present structure as if it were some pure structure that satisfies human needs, over which some kind of superficial or artificial “superstructure” is imposed, as Stanford does, surely distorts the real nature of the economy in which we live. That social structure has led to immense gains in the productivity of labour–while simultaneously reducing humans and the rest of the natural world to mere means for the ever-increasing accumulation of money (and means of production). Furthermore, if that ever-increasing accumulation of money stops due to an economic crisis (itself a result of the development of a capitalist economy–as Michael Roberts (2009), in his book The Great Recession Profit cycles, economic crisis A Marxist view, argues), then millions workers are thrown out of work and the production of many commodities is reduced. 

Covid and the Trade-Off Between the Health of Workers and the Health of an Economy Dominated by a Class of Employers

Stanford’s words continue to ring hollow as he tries, in vain, to separate ‘the pure, good economy’ from the ‘bad, capitalist economy’–within the capitalist economy:

The best thing to do for the economy is clearly to keep people healthy and stop the pandemic and then rebuild and that means protection and that means income support and that means a plan to rebuild once we can back to work. It doesn’t mean sacrificing ourselves for “the” economy, which actually means just sacrificing ourselves for our employers and to even cut their pay.

Some representatives of employers surely did not know what was best for the capitalist economy–whether to shut down for as long as necessary until the number of deaths and infections were reduced, to leave parts of the economy (in addition to essential economic structures, such as food, hand sanitizer and mask production) functioning or to leave most of the economy dominated by a class of employers functioning. But “sacrificing ourselves for our employers” even in normal times is run of the mill. Why is it that there are, on average, over 1,000 deaths officially at work per year and more than 600,000 injuries in Canada (and many more deaths when unofficial deaths are included (see Working and Living in a Society Dominated by a Class of Employers May Be Dangerous to Your Health). 

Stanford reminds me of another social reformist or social democrat–an author whom Marx criticized long ago-Pierre-Joesph Proudhon. 

From Karl Marx, Capital: A Critique of Political Economy, volume 1, page 181, note 4: 

From this we may form an estimate of the craftiness of petty-bourgeois socialism [such as Proudhon’s], which wants to perpetuate the production of commodities while simultaneously abolishing the ‘antagonism between money and commodities’, i.e. abolishing money itself, since money only exists in and through this antagonism. One might just as well abolish the Pope while leaving Catholicism in existence.

Proudhon treated the market, exchange, commodities and money as permanent features of our lives, but he wanted to eliminate the contradictions that flowed from these social conditions. He generally treated exchange of commodities and money and money and commodities as if they could be treated independently of the class relation of employers and workers. 

Stanford, similarly, treats the production of use values within a society dominated by a class of employers as independent of or isolatable from the social contradictions that flow from their production as both commodities and as capital. This production of use values for our needs is somehow the “real economy” and is not subject to overproduction, underproduction, sudden surges of employment and sudden surges of unemployment–not subject to crises. Nor is it subject to exploitation and oppression; otherwise, it would be necessary to admit that the health of workers and the maintenance of an economy dominated by a class of employers are necessarily at odds with each other.  

But wait. When workers produce use values in a society dominated by employers, are they not subject to the power of the representatives of the employer (whether private or public)? Are not workers in such situations oppressed and, in the case of the private sector at least, exploited? (The question of whether workers in the state sector are exploited I leave open). It is illegitimate to treat work in a society dominated by a class of employers as if it were not–and that is what Mr. Stanford does.

Stanford seeks to ignore the integrated nature of exchange of commodities for money and money for commodities with the exploitation and oppression of workers, who are treated as mere means for the ever increasing accumulation of money (see  The Money Circuit of Capital).

By the way, informally I have been following the statistics on the number of infections and deaths on the website Worldometer for some time  (https://www.worldometers.info/coronavirus/). In general, on the weekends, when there are fewer workers at work, the number of infections and deaths decrease, and as the working week proceeds, the number of infections and deaths increase. Undoubtedly there are other factors at work here, but surely one of the factors is, on the one hand, the requirement by employers that their employees work and, on the other, the need for non-essential workers to obtain a wage or salary by working for an employer.  

Stanford’s denial that there is a trade-off between the economy and the health of workers, therefore, rings hollow. Before the pandemic, there was a trade-off, and during the pandemic there has been a trade-off. The health of workers is necessarily put in jeopardy if an economy dependent on a class of employers and the attendant economic, political and social structures is to continue to exist and expand. (The same could be said of the natural world in which we live and the response of social democrats or social reformers–see The Money Circuit of Capital, The British Labour Party’s 2019 Manifesto: More Social Democracy and More Social Reformism, Part One and Socialism and Central Planning: Mr. Gindin’s Analysis of The Political Situation of Workers in General, Part One.)

Further Evidence that the Health of Workers and the Health of an Economy Dominated by a Class of Employers Are at Loggerheads

Protecting Oneself from a Tornado Versus Having to Work for an Employer to Obtain Money

The seriousness of Mr. Stanford’s denial that there is a trade-off between the economy and the health of workers can be seen from a relatively recent event in the United States: the tornado that hit Mayfield, Kentucky. From the website  https://www.nbcnews.com/news/us-news/kentucky-tornado-factory-workers-threatened-firing-left-tornado-employ-rcna8581?cid=sm_npd_nn_fb_ma&fbclid=IwAR2oyQiJ3BH2KPYvP0NOPavpJwZw2W-zuoB7R2YEnOd2ES8TtBANVPvIjWM

MAYFIELD, Ky. — As a catastrophic tornado approached this city Friday, employees of a candle factory — which would later be destroyed — heard the warning sirens and wanted to leave the building. But at least five workers said supervisors warned employees that they would be fired if they left their shifts early.

For hours, as word of the coming storm spread, as many as 15 workers beseeched managers to let them take shelter at their own homes, only to have their requests rebuffed, the workers said.

Fearing for their safety, some left during their shifts regardless of the repercussions.

At least eight people died in the Mayfield Consumer Products factory, which makes scented candles. The facility was leveled, and all that is left is rubble. Photos and videos of its widespread mangled remains have become symbols of the enormous destructive power of Friday’s tornado system.

Kentucky Gov. Andy Beshear said Monday that 74 people were confirmed dead in the state.

McKayla Emery, 21, said in an interview from her hospital bed that workers first asked to leave shortly after tornado sirens sounded outside the factory around 5:30 p.m.

Image: Satellite images show the Mayfield Consumer Products candle factory and other nearby buildings before, on Jan. 28, 2017, and after, Dec. 11, 2021, the tornado struck.
Satellite images show the Mayfield Consumer Products candle factory and nearby buildings before, on Jan. 28, 2017, and after, on Saturday.MAXAR Technologies via Reuters

Employees congregated in bathrooms and inside hallways, but the real tornado wouldn’t arrive for several more hours. After employees decided that the immediate danger had passed, several began asking to go home, the workers said.

“People had questioned if they could leave or go home,” said Emery, who preferred to stay at work and make extra money. Overtime pay was available, but it wasn’t clear whether those who stayed were offered additional pay.

Supervisors and team leaders told employees that leaving would probably jeopardize their jobs, the employees said.

“If you leave, you’re more than likely to be fired,” Emery said she overheard managers tell four workers standing near her who wanted to leave. “I heard that with my own ears.”

About 15 people asked to go home during the night shift shortly after the first emergency alarm sounded outside the facility, said another employee, Haley Conder, 29.

There was a three- to four-hour window between the first and second emergency alarms when workers should have been allowed to go home, she said.

Initially, Conder said, team leaders told her they wouldn’t let workers leave because of safety precautions, so they kept everyone in the hallways and the bathrooms. Once they mistakenly thought the tornado was no longer a danger, they sent everyone back to work, employees said.

Anyone who wanted to leave should have been allowed to, Conder said.

Elijah Johnson, 20, was working in the back of the building when several employees wanting to head home walked in to speak with supervisors. He joined in on the request.

“I asked to leave and they told me I’d be fired,” Johnson said. “Even with the weather like this, you’re still going to fire me?” he asked.

“Yes,” a manager responded, Johnson told NBC News.

Johnson said managers went so far as to take a roll call in hopes of finding out who had left work.

Company officials denied the allegations.

Image: A rescue worker and a cadaver dog arrive at the Mayfield Consumer Products candle factory in Mayfield, Ky., on Dec. 11, 2021.
A rescue worker and a cadaver dog arrive at the Mayfield Consumer Products candle factory Saturday in Mayfield, Ky.John Amis / AFP via Getty Images

“It’s absolutely untrue,” said Bob Ferguson, a spokesman for Mayfield Consumer Products. “We’ve had a policy in place since Covid began. Employees can leave any time they want to leave and they can come back the next day.”

He also denied that managers told employees that leaving their shifts meant risking their jobs. Ferguson said managers and team leaders undergo a series of emergency drills that follow guidelines of the Federal Emergency Management Agency and the Occupational Safety and Health Administration.

“Those protocols are in place and were followed,” he said.

A 24-hour hotline is available as of Monday for employees to call about hazard pay, grief counseling and other assistance, he said.

Autumn Kirks, a team lead at the factory who was working that night, denied Monday afternoon on MSNBC that people’s jobs were threatened if they didn’t go in.

But another employee, Latavia Halliburton, said she witnessed workers’ being threatened with termination if they left.

“Some people asked if they could leave,” but managers told them they would be fired if they did, she said.

The first tornado warning passed without any damage, but several hours later, another warning was issued. Once the second tornado siren sounded sometime after 9 p.m. Friday, Conder and a group of others approached three managers asking to go home.

“‘You can’t leave. You can’t leave. You have to stay here,’” Conder said the managers told her. “The situation was bad. Everyone was uncomfortable.”

Mark Saxton, 37, a forklift operator, said that he would have preferred to leave but that he wasn’t given the option.

“That’s the thing. We should have been able to leave,” Saxton said. “The first warning came, and they just had us go in the hallway. After the warning, they had us go back to work. They never offered us to go home.”

As the storm moved forward after the second siren, the employees took shelter. The lights in the building started to flicker.

Moments later, Emery, who was standing near the candle wax and fragrance room, was struck in the head by a piece of concrete.

“I kid you not, I heard a loud noise and the next thing I know, I was stuck under a cement wall,” she said. “I couldn’t move anything. I couldn’t push anything. I was stuck.”

Emery, who was trapped for six hours, had several chemical burn marks on her legs, her buttocks and her forehead from the candle wax. She also sustained kidney damage, her urine is black, and she still can’t move her legs because of the swelling and from having been motionless for so long.

Employees who wanted to go home early said they were mistreated.

“It hurts, ’cause I feel like we were neglected,” Saxton said.

Mr. Stanford’s conclusion that there is no trade-off between the economy and the health of workers flies in the face of such tragedies. 

Protecting Oneself from Dangerous Working Conditions Versus Having to Work for an Employer to Obtain Money

The same could be said of the Westray Mine deaths (really mass murder) in Nova Scotia, Canada, in 1992. What was the Westray Mine Mass Murder? From Tom Sandborn (2016), Hell’s History: 
The USW’s Fight to Prevent Workplace Deaths and Injuries from the 1992 Westray Mine Disaster Through 2016. page 23: 

… the lethal disaster had been made inevitable by Westray management negligence, corner cutting and speed-up, as well as by company decisions to ignore and/ or disable crucial safety equipment. One of the disabled sensors, attached to a machine called a “continuous miner” in the mine’s Southwest 2 tunnel, was supposed to detect methane levels
as the explosive gas was released from the coal face by the machine’s excavation. Instead, the unmonitored level of methane reached a critical level and a spark from the machinery ignited it. The methane explosion drove fine particles of highly flammable coal dust (which should have been regularly ventilated out of the mine and/or “stone dusted” with ground rock to make it less volatile, but was neither properly ventilated nor stone dusted), into the air and created a secondary explosion that drove a fireball through the mine’s tunnels, killing the 26 men on the night shift in less than a minute.

The “real economy” (material production through concrete labour) was not separated from the process of pursuing profit, and workers well knew that: 

Alan Doyle has bitter memories about the dangerous practices encouraged at Westray.
“That mine was a place called hell,” he told me in 2016. “It was run through intimidation. The inspectors were led around by the nose and mainly ignored. Once an inspector caught them with a bulldozer underground with unshielded sparks coming off it. Once the inspector left the mine, the foreman ordered Robbie to take the dozer back underground ‘… if he wanted to keep his fucking job.’”

Workers, more or less consciously, understand that there is indeed a trade-off between the “economy” (dominated by a class of employers) and their own health; otherwise, they would not fear being fired for complaining. This is economic coercion (see my critique of John Clarke, a Toronto radical, who refers to economic coercion as a necessary feature of capitalism and then ignores this fact in his own definition of social problems and social solutions    “Capitalism needs economic coercion for its job market to function” (Ontario Coalition Against Poverty: OCAP)).

As I wrote in another post (The Issue of Health and Safety in the Workplace Dominated by a Class of Employers): 

…a study from a skills and employment survey in Britain (Fear at Work in Britain. Gallie, Feldstead, Green, & Inanc, 2013) found that workers’ feared job loss, unfair treatment and loss of job status; available historical statistics for the first two categories show that such fears have increased. In addition, when I took a health and safety course at the University of Manitoba in the early 1990s, the instructors (both government employees and trained in the science of occupational health and safety and inspectors themselves) implied that workers often would not complain because of the economic climate of high unemployment.

Mr. Stanford’s separation of the real economy from the actual economy is a figment of his own social-democratic imagination. His economics is–for social democrats and social reformers, not for workers.

I pointed this out when criticizing Stanford’s purely exchange theory of money, which involves no connection between the purchasing power of money (and the power of those who hold it) and the work or labour process (see Economics for Social Democrats–but Not for the Working Class, Part Two: Critique of the Social Democrat Jim Stanford’s Theory of Money, Part One). 

Marx’s dual theory of labour (concrete labour producing use values and abstract labour producing value, which needs to be exchanged for money in order to be or function as value) is much superior for workers to the “economics” offered by Mr. Stanford. Marx’s dual theory of labour connects abstract labour to value and hence money while also distinguishing this process from the concrete labour process of producing use values–but there is no separate existence of the two aspects of labour in a capitalist economy. The money economy and the labour process are necessarily related in a society dominated by a class of employers.

By denying that the economy dominated by the class of employers can be divorced from the “real economy” (concrete labour), Marxian economics acknowledges the experience of workers–that their health and safety and the economy are often at loggerheads. 

Conclusion

A pattern seems to be emerging of a social-democratic or social-reformist trick that covers up the real social world in which we live. Mr. Stanford flies to the “real economy” (a fantasy economy that does not exist in a society characterized by the domination of a class of employers and the associated economic, political and social structures and institutions) to hide the fact that workers’ health is often sacrificed for the benefit of both individual employers and for the benefit of the class of employers. There is a real trade-off between the health of workers and the “economy”–as an economy dominated by a class of employers. 

There is no such thing as a “real economy” separate from a class economy in a capitalist system. To view such a real economy as somehow existing now is to assume that we need not radically transform the economy at both the macro and micro levels. Why bother if the real economy somehow already exists? 

Since there is no such thing as a separable “real economy” in a capitalist economic and political system, unfortunately there is a definite trade-off between the health of workers and the health of an economy dominated by a class of employers. 

Of course, if the economy or the life process of workers producing their own lives were to be under their control, this trade-off would be abolished since the lives of workers would be the priority. The production of use values to satisfy the needs of workers-citizens would not then lead to such a trade-off. However, it is illegitimate to assume that such an economy exists in the present; by making such an assumption, Mr. Stanford, like his social-democratic or social reformist comrades, can then avoid the conclusion that the primary task is to abolish the conditions that prevent such an economy from arising.

This is a key trick or method of social democrats or social reformers everywhere. They assume a situation in which what ought to be the case in fact actually is the case. Stanford assumes that the “real economy” somehow purely occurs–as if how workers produce in this society independently of how they are oppressed and exploited and, similarly, how what they produce is distributed and consumed is independent of the capitalist market system. 

Of course, it should be the aim of a socialist movement to produce a society where what is produced, distributed and consumed assumes a form worthy of human beings. However, Stanford, by assuming that what may arise in the future exists in the present, eliminates any need for struggling for achieving that goal in the present. If a pure human (and humane) economy can somehow exist in the present, then why bother aiming for the realization of such an economy in the future (with action in the present to achieve such a goal)? 

Mr. Noonan, similarly, assumes illegitimately that the abolition of class relations at the university is already an accomplished fact.

This trick does a great disservice to the working class. 

The social-reformist or social-democratic left do not seem capable of dealing with the real lives of workers, where their health and welfare are often sacrificed for the benefit of employers. 

As Jack Nicholson said in the movie A Few Good Men–“You can’t handle the truth!” Mr. Stanford and his social-democratic or social-reformist followers cannot handle the truth.

 

Economics for Social Democrats–but Not for the Working Class, Part Two: Critique of the Social Democrat Jim Stanford’s Theory of Money, Part One

Introduction

In an earlier post, I indicated that Jim Stanford’s view concerning the creation of jobs reflects a social-democratic or social reformist position (see Economics for Social Democrats–but Not for the Working Class, Part One: Critique of Jim Stanford’s One-Sided View of Job Creation in a Capitalist Society). In this post and subsequent posts, I will begin to look in more depth at Mr. Stanford’s economic views. It is all the more necessary since the main title of his major book is Economics for Everyone. His book is most definitely not for everyone since, although it appears to be for the working class, it ultimately opposes their interest as a class to struggle for the abolition of capitalism. Furthermore, despite the subtitle of his book, A Short Guide to the Economics of Capitalism, it certainly does not express the nature of capitalist society adequately. 

For example, Mr. Stanford’s definition of money has little to recommend it since it fails to explain to workers how money (and hence prices) confers upon employers the power to direct workers’ lives. Marx’s theory of money, by contrast, is designed to do just that.

The following necessarily involves a theory of money, and it is not easy.

Stanford’s Inadequate Definition of Money Has a Historical Antecedent

Let us look at one of Mr. Stanford’s references to money (related to prices) in his book. Page 189:

Very broadly, money is anything that allows its holder to purchase other goods and services. In other words, money is purchasing power.

Mr. Stanford’s identification of money with “purchasing power,” interestingly enough, already had been expressed by a nineteenth-century author, Samuel Bailey, whose theory Karl Marx criticized. From Elena Lange (2021), Value without Fetish Uno Kōzō’s Theory of ‘Pure Capitalism’ in Light of Marx’s Critique of Political Economy, pages 225-226:

… this position echoes Bailey’s identification of money with ‘power of purchase.’  [Quoting Bailey] ‘If the value of an object is its power of purchasing, there must be something to purchase. Value denotes, consequently, nothing positive or intrinsic, but merely the relation in which two objects stand to each other as exchangeable commodities’. Although we will return to this, Marx’s critique of the notion of money as ‘power of purchase’ presents a useful summary of the previous discussion, namely the inability of a formal, functionalist and nominalist theory of money to explain money’s function of general social exchangeability, or, which is the same, the measure of value. ‘Power of purchasing’
hence does not explain the logical significance of money, but presents a tautology. It is well worth quoting the passage at length: [from Marx]

[Bailey’s] entire wisdom is, in fact, contained in this passage. ‘If value is nothing but power of purchasing’ (a very fine definition since ‘purchasing’ presupposes not only value, but the representation of value as ‘money’), ‘it denotes’, etc. However let us first clear away from Bailey’s proposition the absurdities which have been smuggled in. ‘PURCHASING’ means transforming money into commodities. Money already presupposes VALUE and the development OF VALUE. Consequently, out with the expression ‘PURCHASING’ first of all. Otherwise we are explaining
VALUE by VALUE. Accurately expressed it would read as follows: ‘If the value of an object is the relation in which it exchanges with other objects, value denotes, consequently’ (viz., in consequence of the ‘if’) nothing, but merely the relation in which two objects stand to each other as exchangeable objects’ (I.e., [pp.] 4–5). Nobody will contest this tautology. What follows from it, by the way, is that the ‘VALUE’ OF AN OBJECT ‘DENOTES NOTHING’. For example, 1lb. of COFFEE = 4 lbs of COTTON. What is then the value of 1lb. of COFFEE? 4 lbs of COTTON. And of 4 lbs of COTTON? 1lb. of COFFEE. Since the value of 1lb. of coffee is 4 lbs of COTTON, and, on the other hand, the value of 4 lbs of COTTON = 1lb. of COFFEE, then it is clear that the value of 1lb. of COFFEE= 1lb. of COFFEE (since 4 lbs of COTTON = 1lb. of COFFEE), a = b, b = a, HENCE a = a. What arises from this explanation is, therefore, that the value of a use value = a [certain] quantity of the same use value.

The problem with Bailey’s and Stanford’s characterization of money is that nowhere do they explain why a specific thing called money has this power to purchase at all, and how this power to purchase is different from (and yet related to) other things that are on the market (call them commodities–products of labour that are produced for sale). Other commodities do not have “purchasing power” directly–whereas money does. Why is that? Is there a connection with the purchasing power of money and the lack of purchasing power of all other commodities? 

If money is the power to purchase, then what it purchases, by implication, is not money and lacks purchasing power. Hence, money has a monopoly of power over purchasing, and all other commodities lack this direct power of purchasing.

At one pole, there is money, with its monopoly power of purchasing commodities directly, and at the other pole are commodities that lack this power of direct purchasing power. What explains this situation? Mr. Stanford does not address the issue since he is undoubtedly unaware of the problem. For him, the purchasing power of money is simply given rather than something to be explained. 

[As an aside, this definition is obviously inadequate even from the point of view of workers’ everyday experience. For instance, I use my Royal Bank Westjet Master Card to purchase almost everything (in order to accumulate Westjet dollars to be used to see my daughter, Francesca. 

Although my credit card has purchasing power and thus falls under Stanford’s definition of money, obviously the day of reckoning will arise if I do not transfer my deposit funds to pay off my credit card. From this point of view, the deposit funds are money, but not my credit card.)

Stanford’s Distortion of Marx’s Labour Theory of Value Related to Ignoring Marx’s Theory of the Commodity, Value Form, Money and Prices 

This lack of an explanation of the unique monopoly power of money goes hand in hand with a distortion of Karl Marx’s theory of value and commodities. Mr. Stanford reduces Marx’s theory to the so-called theory that labour in general, and only labour, produces value. From his book (2008) Economics for Everyone: A Short Guide to the Economics of Capitalism, page 54:

An economic underpinning for this fightback was provided by Karl Marx. Like the classical economists, he focused on the dynamic evolution of capitalism as a system, and the turbulent relationships between different classes. He argued that the payment of profit on private investments did not reflect any particular economic function, but was only a social relationship. Profit represented a new, more subtle form of EXPLOITATION: an indirect, effective way of capturing economic surplus from those (the workers) who truly do the work. Marx tried (unsuccessfully) to explain how prices in capitalism (which include the payment of profit) could still be based on the underlying labour values of different commodities. [my emphasis] 

Mr. Stanford’s evident distortion of Marx’s theory comes out even more clearly from the following passage (page 71): 

For simplicity, the classical economists adopted a labour theory of value. In this theory, the prices of producible commodities reflect the total amount of labour required to produce them (including both direct labour and the indirect labour required to produce machines and raw materials used in production – a complication we’ll discuss in the next chapter). Marx realized this simplified theory was wrong: prices under capitalism must also reflect the payment of profit. But he was politically committed to explaining prices on the basis of their “underlying” labour values, so he undertook a complicated (and ultimately unsuccessful) attempt to explain prices on the basis of labour values  [my emphasis]. Neoclassical economists, responding to Marx, tried to provide an intellectual and moral justification for the fact that profits are paid on capital investments by attempting to show that capital itself is actually productive. These efforts, too, were unsuccessful.

In the end, the relevance of this long controversy is not entirely clear. Productive human effort (“work,” broadly defined) is clearly the only way to transform the things we harvest from our natural environment into useful goods and services. In this sense, work is the source of all value added. For society as a whole, just as for that lazy teenager, if we don’t work, we don’t eat. Nothing else – not alien landings, not divine intervention, and not some mystical property of “capital” – is genuinely productive. Under capitalism, profits are paid on capital investments. These profits reflect a social institution called “private ownership,” not any real productive activity or function. (In fact, as we’ll see, it’s not even possible to clearly measure capital, let alone to prove that it is productive.) Because of this institution of private ownership of capital, profits are reflected in the prices of various goods and services (and hence also in GDP).

We can accept that human work is the sole driving force of production while simultaneously recognizing that prices (and things that depend on prices, like GDP) depend on other factors, too – namely, under capitalism, profit.

There are a couple of points worthy of notice in this passage. Firstly, Mr. Stanford’s view that labour is a primary but not exclusive determinant of value (and price–for him there is really no difference between them since he reduces money to purchasing power) is somewhat similar to David Ricardo’s nineteenth century theoretical position, which held a 90 percent labour theory of value, so to speak since Ricardo argued that it was labour mainly but not exclusively that formed the value (and price) of commodities. . Ricardo (1821/2004)  wrote in his On the Principles of Political Economy and Taxation (page 30):

SECTION IV

The principle that the quantity of labour bestowed on the production of commodities regulates their relative value, considerably modified by the employment of machinery and other fixed and durable capital.

In the former section we have supposed the implements and weapons necessary to kill the deer and salmon, to be equally durable, and to be the result of the same quantity of labour, and we have seen that the variations in the relative value of deer and salmon depended solely on the varying quantities of labour necessary to obtain them,—but in every state of society, the tools, implements, buildings, and machinery employed in different trades may be of various degrees of durability, and may require different portions of labour to produce them. The proportions, too, in which the capital that is to support labour, and the capital that is invested in tools, machinery and buildings, may be variously combined. This difference in the degree of durability of fixed capital, and this variety in the proportions in which the two sorts of capital may be combined, introduce another cause, besides the greater or less quantity of labour necessary to produce commodities, for the variations in their relative value—this cause is the rise or fall in the value of labour.

Secondly, like many reformists (as well as some self-proclaimed Marxists), Mr. Stanford identifies Marx’s labour theory of value as either identical to or merely a variant of Ricardo’s labour theory of value. Ricardo identified labour as such or general labour (which was performed in prehistoric times, in ancient Greece, in feudal Europe, etc.) as the main determinant of the value of commodities. Labour as such is what Mr. Stanford calls “human work is the sole driving force of production.”  Mr. Stanford implies that this is supposedly Marx’s position. Such a view is a complete distortion of Marx’s theory–since it lacks any relation to Marx’s theory of commodities, value, use value, money (and hence prices).

It should be pointed out immediately that Ricardo had a labour theory of value but failed to connect his labour theory of value to the existence of money and its monopoly power of immediate purchasing power. The same applies to Mr. Stanford’s own reference to the purchasing power of money, on the one hand, and his attempt to partially dissociate prices from labour on the other (we cannot even talk of “value” in relation to Stanford’s theory since for him there is really only prices). 

If money is purchasing power, or the capacity to immediately be exchangeable with other commodities (with the other commodities lacking this power), then a theory should be able to explain how and why and through what means money has this power. From Capital: A Critique of Political Economy. Volume 1:  page 186: 

The difficulty lies not in comprehending that money is a commodity, but in discovering how, why and by what means a commodity becomes money.

In terms of the structure of the first two chapters of volume one of Capital, Samezo Kuruma (2018), in his Marx’s Theory of the Genesis of Money How, Why, and Through What is a Commodity Money? has this to say (pages 54-55): 

Marx analyses the how of money in the theory of the value form [in the third section of the first chapter of Capital, and the why of money in the theory of the fetish character [the fourth section of the first chapter of Capital], whereas in the theory of the exchange process [chapter two of Capital] he examines the question of through what. …  Marx’s indication of these three difficulties clearly suggests that he managed to brilliantly overcome them, but no hint is provided as to where this is carried out. My view is that Marx answered the questions of how, why, and through what, respectively, in Section Three [of chapter one of Volume 1 of Capital], Section Four [of chapter one of Volume 1 of Capital], and Chapter Two [of Volume 1 of Capital]. So the three problems in the sentence are listed in the order that Marx solves them in Capital.

Incidentally, Marx does not pose these three problems as a sort of logical schema or in some frivolous manner; they are realistic problems. Without solving each, an adequate understanding of money is not possible. Indeed, earlier political economy slipped into a variety of errors by failing to solve those problems.

Marx’s explanation of the purchasing power of money lies, on the one hand, in the specific nature of the labour that results in the existence of money as a monopoly power–abstract labour or general human labour or universal labour without distinction. This general social labour, unlike earlier societies, does not find its expression in the immediate results of the production process (the process of producing our lives as human beings).

The reference to the immediate results of a labour process that does not result in a social product directly means that it can only be expressed indirectly or through a process of mediation–the exchange process. Contrary to Stanford’s characterization of Marx’s theory of value, the kind of labour is therefore historically specific and not some general social labour that exists and acts as or functions exclusively as social labour regardless of  the kind of society. Stanford, however, presents Marx’s labour theory of value as just that: as ahistorical. 

Abstract labour is a kind of negative labour–it is not social labour as workers work concretely or materially, and it is this labour which produces the value of a commodity, say beer, and not the labour which produces the beer as beer concretely.

On the other hand, a definite kind of labour, concrete labour, produces a definite kind of  use value, say beer. But the result of this concrete labour, since it is linked to abstract labour, is a commodity that is not yet social in its concrete form of beer. A further process–the exchange process–is required to convert the beer into a form where it can function as “purchasing power”–by being able to be converted into any form of commodity–money. 

At one pole is the commodity, beer, which lacks “purchasing power,” and at the other pole is money, which monopolizes purchasing power. 

I will elaborate on this in the next section.

Mr. Stanford, therefore, does not have a theory of money that links money to a specific kind of production. His theory of money as purchasing power, like Bailey’s theory, is an exchange theory of money. Marx, on the other hand, had a production theory of money that referred to a specific kind of society. That theory, however, cannot be characterized as merely a labour theory of value; Marx in fact had a dual or twofold theory of labour.

Marx’s Dual or Twofold Theory of Labour and Commodities

This labour that is connected to the monopoly purchasing power of money is not general labour that human beings have performed throughout history, but labour that is organized in a specific way–as I pointed out in one of my published articles, Dewey’s Materialist Philosophy of Education: A Resource for Critical Pedagogues? In pages 259-288, The European Legacy, Volume 11, Issue 3, pages 274-275: 

Marx provided a systematic logical critique of present capitalist society (the contextual basis for the functioning of schools), on the basis of a dual theory of use or a dual theory of labour. It is this theory which provides the ground for his analysis and critique of capital as well as his subsequent account of the history of the emergence of capital. It is an understanding of capital logically via the twin concepts of concrete and abstract labour, and their further development, which constitutes his critique; an understanding of the coming into being of capital presupposes this logical determination.

Marx relied on Aristotle’s distinction between the use of shoes as shoes and the use of shoes as a means for obtaining another commodity (as a means of exchange):

Take for example, a shoe—there is its wear as a shoe and there is its use as an article of exchange; for both are ways of using a shoe, inasmuch as even he that exchanges a shoe for money or food with the customer that wants a shoe uses it as a shoe, though not for the use peculiar to a shoe, since shoes have not come into existence for the purpose of exchange.

Both are uses of shoes, but they are not the same kind of use. Marx expanded the idea of the dual use of things to include labour in capitalist society. Labour in capitalist society has a dual use which constitutes a contradictory dynamic that develops the material production process, while also tending to undermine the material production process through crises. Marx evidently considered that a dual theory of the use of things or a dual theory of labour was central for a critical understanding of capitalist society:

[London], August 24, 1867
The best points in my book are: 1) the two-fold character of labour, according to whether it is expressed in use value or exchange value. (All understanding of the facts depends upon this.) It is emphasised immediately, in the first chapter.

Marx reiterated the importance of the two-fold character of labour for his critique of capitalist society a few months later:

[London], January 8, 1868

It is strange that the fellow [Eugen Duhring] does not sense the three fundamentally
new elements of the book:
. . . 2) That the economists, without exception, have missed the simple point that if the commodity has a double character—use value and exchange value—then the labour represented by the commodity must also have a two-fold character, while the mere analysis of labour as such, as in Smith, Ricardo, etc., is bound to come up everywhere against inexplicable problems. This is, in fact, the whole secret of the critical conception.

It is Marx’s argument that social labour, in the form of abstract human labour, has distinctive characteristics which oppose it to human labour as concrete labour. It is only through being connected to other labours indirectly that it becomes social labour. The concrete labour that is performed has no direct connection to the labour of other people. To put it another way, the material process of life and the social process of life, which form a unity in the case of human beings, since human beings are both material and social beings, is sundered in capitalist society.

This situation can also be expressed in terms of parts and wholes. Each capitalist unit is a part of the total division of labour. However, this part is quite curious. It is a part that does not function as a part qualitatively while human labour is being expended. The labour being performed is not social labour, connected to other human labour and determinate needs. It needs to become a part only after the micro-production process is at an end, if it is to count as a part of the whole.

Since concrete labour is not social labour as it is being performed, and since the latter is not expressed immediately in concrete use-values, the possibility arises that the amount of concrete labour does not translate into the same amount of social labour. This possible non-identity has major implications for the structure of human life: a dynamic quantitative process is built into production. The quantity of labour required to produce output becomes a concern because the mere expenditure of concrete human labour does not necessarily suffice to meet standards set by the general level of productivity in a particular industry. If those standards are not met, the capitalist firm cannot in the long run reproduce itself. For the capitalist firm to survive, an external pressure is brought to bear on producers to meet that standard. The peculiar character of the part of a whole in capitalist production is thus that the quality of functioning as part of total social labour is transformed into a purely quantitative form. The specific quality of social labour in capitalist society is the priority of its quantity over its concrete quality, or abstract labour over concrete labour.

There is further evidence that Marx considered the twofold character of labour to be of major importance. Ironically, Marx explicitly underlines its importance by providing a separate heading for it in the first chapter and emphasizing its importance for his critique of political economy (Capital, Volume 1: pages 131-132):  

2. THE DUAL CHARACTER OF THE LABOUR EMBODIED IN COMMODITIES

Initially the commodity appeared to us as an object with a dual character, possessing both use-value and exchange-value. Later on it was seen that labour, too, has a dual character: in so far as it finds its expression in value, it no longer possesses the same characteristics as when it is the creator of use-values. I was the first to point out and examine critically this twofold nature of the labour contained in commodities. As this point is crucial to an understanding of political economy, it requires further elucidation.

This dual character of labour produces a commodity–a contradictory unity of use value and value, and this is linked to the nature of money.

The Dual or Twofold Character of Labour and Commodities, on the One Hand, and the Nature of Money (or the Form of Value) on the Other: Or How a Commodity Becomes Money 

Marx’s dual theory of labour is related to Marx’s dual theory of commodities. Commodities have two essential aspects to them: they are both use values and values, and concrete labour produces use values whereas abstract labour produces the value of the commodity. 

This nature of commodities as involving two essential aspects is not, however, immediately expressed in the commodities themselves. It is only concrete labour that is expressed in the use value of the commodity as the specific kind of labour that produces the specific kind of commodity, such as beer. The concrete labour which we performed in the Calgary brewery where I worked, for example, resulted in the concrete beer as beer. Simultaneously, the social nature of the labour performed, as forming part of the total labour of society within a division of labour, is not social labour in its immediate form as beer.

Since a social process emerged that resulted in the performance of labour that is not immediately social in nature (a negative process, if you like), another process is required to express the social nature of the labour performed–a process of exchange. 

From Capital, Volume 1, page 165:

Objects of utility become commodities only because they are the products of the labour of private individuals who work independently of each other. The sum total of the labour of all these private individuals forms the aggregate labour of society. Since the producers do not come into social contact until they exchange the products of their labour, the specific social characteristics of their private labours appear only within this exchange. In other words, the labour of the private individual manifests itself as an element of the total labour of society only through the relations which the act of exchange establishes between the products, and, through their mediation, between the producers. 

Since the concrete labour performed is not social labour directly but only indirectly, its social nature can only be expressed indirectly–through another, different commodity, in the use value of another commodity. However, merely expressing one commodity, say beer, in another commodity, say in steel, would not express the general social nature of the labour that produces value. To express adequately abstract labour and value, it is necessary that the internal opposition of the commodity between the concrete labour and concrete use value, on the one hand, be completely contrasted with abstract labour and value on the other in an external form–ultimately in money as the unique commodity that has the monopoly power of being able to purchase any commodity. This monopoly power of money necessarily excludes such power attaching to the other commodities. Capital, Volume 1, page 161:

Finally, the last form, C [practically, the money form], gives to the world of commodities a general social relative form of value, because, and in so far as, all commodities except one are thereby excluded from the equivalent form. A single commodity, the linen, therefore has the form of direct exchangeability with all other commodities, in other words it has a directly social form because, and in so far as, no other commodity is in this situation. 26

26. It is by no means self-evident that the form of direct and universal exchangeability is an antagonistic form, as inseparable from its opposite, the form of non-direct exchangeability, as the positivity of one pole of a magnet is from the negativity of the other pole. This has allowed the illusion to arise that all commodities can simultaneously be imprinted with the stamp of direct exchangeability, in the same way that it might be imagined that all Catholics can be popes. It is, of course, highly desirable in the eyes of the petty bourgeois, who views the production of commodities as the absolute summit of human freedom and individual independence, that the inconveniences resulting from the impossibility of exchanging commodities directly, which are inherent in this form, should be removed.

Money is the form of value–the expression of value, or the expression of the general nature of the labour that is not directly social. The internal opposition of abstract labour and concrete labour, and value and use value, finds expression through the external opposition of all commodities on the one side expressing their value in one commodity–money.

Stanford’s definition of money as “purchasing power” simply fails to address “how, why and through what means” something can serve as money or purchasing power of commodities. 

Obviously, not all social labour is expressed in this form; when I cooked for my daughter, my cooking was social in nature but it did not assume a form different from the concrete result. In a capitalist society, by contrast, the social nature of labour assumes–and must assume–a form external to the concrete use value produced by concrete labour. 

Political Implications of the Monopoly of the Purchasing Power of Money

The connection between a specific character of social labour and money has political implications since such a connection expresses a kind of society that necessarily escapes the control of the workers and in fact leads, ultimately, to the control over them of their own products. 

To treat Marx’s theory as purely an economic theory without any political implications, of course, is useful for both academics–and for the class of employers. 

Elena Lange(2019) has addressed this issue by noting that Marx’s theory is a theory of fetishism and not just a labour theory of value in her article “The Transformation Problem as a Problem of Fetishism,” pages 51-70, in Filosofski Vestnik, Volume 40, issue Number 3, page 52: 

For Marx, lacking in the classics, and strangely ignored in Marx‘s modern interpreters, the distinction between abstract and concrete labour is the crucial critical heuristic to clear the path to a thoroughgoing critique of the capitalist relations of production and its inverted self-representations. This distinction is directly reflected in the formulation of the labour theory of value, by determining the social substance of value as abstract-general human labour and distinguishing it from concrete labour as manifested in the commodity’s use-value.  This conceptualisation equally allowed Marx to pierce the problem of form and content – the problem of fetishism.

Mr. Stanford, by assuming as a fact the direct purchasing power of money rather than explaining it, misses the connection between the monopoly of the purchasing power of money and the lack of social power of all other commodities–including workers (after all, there is a market for workers, is there not?). 

The nature and implications of this connection between the production of commodities (a contradictory unity of use value and value) via abstract and concrete labour, the expression of the value of a commodity in money and the fetishism of commodities will be addressed in another post in this series, however. The next post in this series will look at how the exchange process escapes the control of the participants in the exchange process 

Conclusion

Mr. Stanford’s definition of money as purchasing power is definitely an inadequate definition of the nature of money since it excludes the conditions for something to be money: concrete labour cannot be directly social labour. His interpretation of Marx’s so-called labour theory of value is also definitely inadequate since it excludes any consideration of the dual nature of labour and commodities in a capitalist society; in effect, he treats Marx’s theory to be a variant of Ricardo’s ahistorical theory of all labour throughout history somehow producing (exchange) value. Ricardo’s labour theory of value has little connection with the necessity for money to arise, on the one hand, and the monopoly nature of money (and the simultaneous exclusion of other commodities) on the other.   

Mr. Stanford’s definition of money as “purchasing power” has also a parallel in Ricardo’s theory in that both fail to connect their theory of money to capitalist production. 

Stanford’s view, similar to Ricardo’s view, that somehow labour is more or less the primary cause of the quantitative price of commodities but not the exclusive cause once “capital” (meaning machinery and other means of production that last longer than one year) fails to engage in any inquiry into the peculiar kind of labour (really a kind of organization of  social labour) that needs to be expressed in something other than the immediate use value (such as beer) which is produced. 

 His reduction of Marx’s theory to Ricardo’s theory leaves Mr. Stanford’s theory of money without any connection to the purchasing power that money has–a power that ultimately is exercised over the working class. The twofold or dual nature of labour necessarily involves the expression of the nature of abstract labour as value in the form of money, which excludes all other commodities from being money; purchasing power on one side necessarily involves a lack of such a power on the other side. 

Mr. Stanford’s economics for everyone–is it really for the working class? 

The connection between a specific character of social labour and money has political implications since such a connection expresses a kind of society that necessarily escapes the control of the workers and in fact leads, ultimately, to the control over them of their own products. That connection will be explored in another post.