ALDS part 7.4 --
The World for which We Fight / The laws of commodity production

Part 7 of the debate has been broken into five parts
for email distribution. Boldface and other formatting
has been removed or improvised. The best version for
reading can be found at: http://struggle.net/ALDS/part_7.htm

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. The Anarcho-Leninist Debate on the State
. Do you have ideas or do ideas have you?
. --------------------------------------------
.
. The debate question:
. ---------------------
. In the period immediately following
. a successful mass uprising against the bourgeoisie,
. should the form (or forms) of organization
. adopted by the proletariat to secure its ultimate liberation
. be understood to be a state?

. <>--<>--<>--<>--<>--<>--<>--<>--<>--<>--<>--<>--<>--<>--<>
. The World for which We Fight
.
. ALDS part 7.4 -- Ben Seattle -- March 20, 2004
. <>--<>--<>--<>--<>--<>--<>--<>--<>--<>--<>--<>--<>--<>--<>

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The anarchist economic program for
post-bourgeois society is nothing more
than a crippled form of capitalism
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I think that I have dealt with Daniel's first fantasy--which I
call "magic under bourgeois rule":

. (1) Under bourgeois rule--
. --a powerful "shadow economy" will
. develop and prove capable of providing
. for the material needs of the masses.

It is now time to deal with Daniel's second fantasy--which I call
"magic in the absence of a state":

. (2) Following the overthrow of bourgeois rule--
. --an exchange-based economy (in a society
. without a state) will evolve in the direction
. of fairness and equality.

The primitive forms of money (such as gold) that Daniel describes
(and the primitive forms of the regulation of the use of money
without a state machine to create and enforce rules governing the
circulation of money and capital) would represent (in comparison
to a modern economy) an enormous contraction in trade and in
every form of economic exchange. Simply put: far less goods and
services would be produced and far less hours would be spent
working productively. It would be extremely difficult to design
and manufacture complex goods and services because of the
intricate barter negotiations that would stand as a barrier to
all forms of exchange.

Economic life under such conditions could not in any way resemble
a modern economy--but would instead more closely resemble a scene
from the Mel Gibson movie: "Mad Max".

More than this--there is a deeper problem with the kind of
exchange-based economy that populates the imagination of Daniel
(and most other anarchist thinkers). Such an economy would be
ruled by "market forces" -- and what marxists call the "laws of
commodity production". These laws operate independently of the
will of individual producers and consummers. Without a workers'
state to rein them in--these laws would spontaneously lead to a
redivision of society into those with property and those
without--into rich and poor.

Such an economy as Daniel and other anarchists envision would
spontaneously evolve in such a way as to eventually recreate the
worst features of capitalism.

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The heart of the matter
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Now Daniel has challenged me to explain the laws of commodity
production.

I had not planned on trying to explain these laws since they have
been described well by Marx, Engels and many other thinkers and
(I had thought) were relatively well known. (In Appendix B I list
some of the interesting quotes I found using google to search for
"laws of commodity production".) There are many ideas today which
currently masquerade as "marxism" and which much be smashed up.
But the "laws of commodity production" are different--and these
laws remain without effective challenge.

Daniel's reply, however, has helped me understand both that:

(1) the laws of commodity production are not well known to many
or most activists today, and

(2) these laws are central to understanding why "magic in the
absence of a state" is a reactionary fantasy that stands as an
obstacle to the development of a movement for the overthrow of
bourgeois rule.

I will also add that, considering the importance of these laws,
my ability to describe them here is somewhere between piss poor
and completely inadequate. Since some explanation is necessary,
however, I will do my best (with my emphasis more on being easy
to understand than rigorous) -- and leave it to others who (if
this debate eventually gains wider recognition) can correct my
errors. What follows therefor represents my best effort to
describe these laws, in a concise and understandable way, for a
reading audience which includes young people in their mid-teens.

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The "laws of commodity production" for dummies
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The most obvious consequence of the laws of commodity production
can be summed up in the age-old saying:

"The rich get richer and the poor get poorer."

Why is this? Why does this always seem to happen?

1. We start our explanation by considering a commodity and
asking:

. What is a commodity anyway?

A commodity is anything which is created for the purpose of sale
or exchange.

The most important thing to realize about a commodity is that it
has a dual nature. On the one hand it is a thing-in-itself with a
potentially infinite number of characteristics. On the other
hand, as a commodity, we will see that it can be reduced to a
single number.

A tree in a rainforest, for example, can be home to hundreds of
different species of plants and animals, and be part of extremely
complex ecosytem created by thirty million years of evolution.
Or, chopped down, the tree can be used for furniture or to build
houses. Or children can use the tree to build a tree house. The
tree has a potentially infinite number of properties related to
science, education or human comfort and shelter. But when sold on
the market--the tree is reduced to single number measurable in
dollars.

Or consider a slave on the auction block. Maybe the slave has
some rare qualities: for example some kind of deep connection to
his fellow slaves. Maybe the slave is in possession of courage,
patience and determination in sufficient amount to shake the
entire ancient world. Maybe the slave is named Spartacus? But on
the auction block the slave is reduced to a single number
expressed in Roman coin.

And this is one way of understanding the problem with the system
of commodity production: when you reduce anything to a single
number you make it less than it really is. This is particularly
true when the commodity is human labor power. When reduced to a
single number--human labor power--infinite in its potential and
characteristics--becomes, in one way or another, enslaved.

Over the course of thousands of years of human struggle and
history the system of commodity production amplifies this simple
contradiction embodied in the dual nature of the commodity. The
result, on the one hand, is the development of civilization:
modern economies and modern technology. And the result, on the
other hand, is the bourgeois domination of society, the bourgeois
state and unending imperialist war.

We will return to this when we discuss (see below) the nature of
what economists sometimes call "externalities" -- which are
manifestations of things which are certainly real but are not
measurable by the economic system.

But we are getting ahead of ourselves. Let's go back to the
beginning--to earlier human society.

2. We now consider the exchange of commodities: say a pound of
fish for four pounds of bread.

This immediately brings us to these questions:

. What determines the exchange ratio (ie: why four
. pounds of bread for a pound of fish and not three
. pounds of bread) ? Are these exchange ratios
. determined by a state or some kind of authority?
. Or do these exchange ratios develop spontaneously?

The labor theory of value holds that the exchange ratios
spontaneously (ie: by the independent actions of large numbers of
producers in competition with one another) tend toward an
equilibrium in such a way that equivalent amounts of necessary
labor are exchanged. In the example above the exchange ratio
suggests that it takes as much labor to create four pounds of
bread as one pound of fish.

(Note: for the sake of simplicity I am leaving out discussion of
secondary issues such as more highly valued skilled labor--and
the compound labor involved in things like building fishing
boats, learning navigation and so on--and reducing matters to
uniform abstract average hours of socially necessary labor.)

The exchange ratios that develop are enforced (without the
necessity of any external controlling force) by the actions of
the market (ie: supply and demand and competition, etc) which
create shortages (or other symptoms of disequalibrium) when these
ratios are violated.

For example if I as a fisherman want to trade a pound of fish for
ten pounds of bread--I will find a shortage of farmers willing to
make the trade--because they will understand that they can find
other fishermen who will make them a better deal.

(And this equilibrium price is automatically self-correcting: If,
for example, I could somehow talk a bunch of dumb farmers into
giving me ten pounds of bread for each pound of fish--then bread
would eventually become more scarce in relation to fish--and
other, smarter farmers would be able to take advantage of this
shortage and maybe trade three pounds of bread for a pound of
fish--until the shortage is overcome and the equilibrium price
re-establishes itself.)

Note: The key principle to be understood here is the concept of
self-organization. A process is said to be self-organizing if it
develops out the spontaneous actions of large numbers of
independent component parts. Our galaxy, our solar system, the
earth--and all the life on it--are the result of self-organizing
processes. Religious fundamentalists do not like this idea
because they want to think that life can only be the result of an
all-powerful central directing authority (sometimes with a white
beard). In a similar way many anarchists, as we shall see, have a
problem with the development of things like money--which they
imagine must have been somehow willed into existence by an
external authority they call the state. But we are getting ahead
of ourselves--let's go back to the days before money, before the
state--to the days of simple commodity exchange.

3. Things become more interesting when one of the commodities
being exchanged is labor power.

This immediately brings us to this key question:

. How many pounds of bread will a worker earn
. in exchange for a day's labor?

The labor theory of value holds that we can calculate the
exchange value of the worker's labor the same way we can
calculate the value of any other commodity--by asking: how much
labor is required to create it?

So to calculate a worker's wage--we need only ask: how much labor
is required to create the worker?

So we can (in essence--I am simplifying a bit) calculate the
exchange value of a day of labor by:

(i) first calculating how much total labor is required to raise
and maintain the worker (ie: the socially necessary labor
required to grow all the food he eats over the course of his
lifetime, the clothes he wears, the hut he lives in, etc) and

(ii) then dividing this total amount by the total number of days
the worker works.

The result of the above calculation will be the equilibrium
toward which the daily wage will tend. This equilibrium will be
determined by spontaneous "market forces" (such as competition)
in the absence of external authority. Workers who try to get a
higher wage than this will find little demand for their labor.

4. This immediately introduces the matter of surplus value.

For example, if a worker needs to eat 20 thousand pounds of bread
in the course of his lifetime but in that same lifetime of labor
can create (ie: raise the wheat, bake the bread) 50 thousand
pounds of bread--then the worker will, over the course of his
lifetime create a surplus value of 30 thousand pounds of bread.

Note: In order to keep this example as simple as possible I am
ignoring the fact that the amount of labor required to maintain
the life of the worker will depend on the worker's level of
material well-being -- which itself is a product of the social
system (ie: feudal or capitalist, etc) and the history of
workers' struggle. So in the above example our imaginary worker
must do without clothes or shelter--or any food other than
bread--so he is a naked, homeless, vegetarian worker. If the
example were more realistic then the particular numbers used
might be different--but readers will get the general idea: the
worker can create more wealth than he needs to live and
reproduce.

5. From this simple example--alert readers will note that the
concept of inequality has been introduced--even though all
exchanges have been of equals. What is the source of this
inequality?

The source of the inequality is the only commodity that has the
"mysterious" quality that it creates more than it costs to
buy--and for this reason is the source of all wealth: the
workers' labor.

(Note: For the sake of simplicity I leave out the fact that
nature is also a source of original wealth: for example fertile
land, petroleum, etc.)

The labor theory of value helps us understand that even in the
absence of a state (or any kind of central authority) "market
forces" and competition will act in such a way that workers will
receive in exchange for their labor only enough to live on and
reproduce future workers.

Simply put: The worker's daily wage will (by the operation of
market forces) be based on what he needs to survive and
reproduce. But on a given day the worker can create more wealth
than this. The amount by which the workers' daily production
exceeds his daily wage (the surplus value) will belong to the
owner of the outfit that employs the worker. (And, as we shall
see, this surplus value will eventually accumulate and become the
original source of capital.)

The consequence of this can be seen when technology allows for an
increase in the productivity of labor. If the worker can use
technology to create twice as many pounds of bread--this doesn't
necessarily mean that he will receive more bread in exchange for
his work: his wages tend toward an equilibrium that is based on
what he needs to live.

6. As commodity exchange develops a greater variety of complex
goods and services are created--and economic exchange becomes
greatly facilitated by the emergence of a special commodity which
has a widely recognized value--and for this reason is easy to
exchange for all other commodities.

This special commodity is known as the money-commodity.

Probably the best example of an early money-commodity was the
number of animals that a tribe owned. Cattle could be exchanged
for all kinds of goods. And a tribe that had a lot of cattle, for
example, was a wealthy tribe.

More than this--the development of a money-commodity made
transactions possible that would otherwise not have been
practical. For example a trader with a fifty pound bronze ingot
from a distant land might trade the ingot for several local
cattle which could then be traded for goods with people who had
little use for the bronze (because they lacked the technology to
work with it).

As primitive economies developed the money-commodity evolved in
order to facilitate this development. For example not all cows
are the same size and in the same state of health--and it is
awkward to trade something for half of a cow. But when silver or
gold became the money commodity--these kinds of fractional
transactions became much easier.

As exchanges continued money evolved to become a "thing in
itself" which traders would seek to accumulate--rather than
simply a universal commodity used to facilitate the exchange of
other commodities.

7. As the economy continues to evolve it becomes necessary to
rent money for a temporarily period in order to facilitate more
complicated transactions (ie: I will use the money I borrow to
buy seed and tools--and then pay the money back after I grow the
crop).

Just as other commodities (like a hoe or a wheelbarrow) might be
rented in exchange for money--so was money also rented in
exchange for an amount of money that was paid on top of the
return of the original amount. This money that was paid for
renting money is called interest and the money that is rented
(and which increases in value when the interest is added to it)
is called capital.

8. Money (and capital) continue to evolve in order to make
possible a more complex and powerful economy where workers use
tractors and computers rather than digging sticks and clay
tablets.

Money evolves into more abstract forms such as credit accounts
and complex securities such as derivatives.

* * * * * *

9. At this point we have covered thousands of years of human
economic development and must note that money was not the only
thing that was needed to make possible increased trade and the
circulation of capital.

10. The ability of workers to grow more food and create more
goods than needed for survival probably emerged about the time
that metal tools were invented--because such tools increased the
productivity of human labor.

From the time that a worker (whether as slave, serf or wage
worker) could create more in a day than he needed to survive--his
work created surplus value--and led to a division in society
between those with property and land and those with none (ie:
between rich and poor).

11. The state was developed historically as a tool, a machine, to
protect the class interests of the propertied class which emerged
from the economic division of society.

The state also served an important secondary function: it
provided a means for the ruling class to resolve their internal
disputes and help organize the life of society.

In particular, the evolution of the modern economy (and money,
capital, etc) required the development of a complex state machine
to make and enforce the common rules which regulate (ie: make
possible and make safe) the flow of investment and capital.

12. The modern bourgeoisie (ie: the class attached to the
circulation of capital) emerged in Western Europe roughly in the
period between 1400 and the mid-1800's. During this period the
capitalist mode of production--and the bourgeoisie--became an
increasingly powerful social force and removed one barrier after
another to the expansion of capital before finally pushing aside
altogether the previous ruling class (ie: the feudal aristocracy)
and creating the modern bourgeois state.

* * * * * *

13. As capitalism continues to expand there is a gradual
consolidation as larger enterprises gobble up smaller ones. One
company outcompetes its rival companies (ie: figures out how to
make stuff cheaper or better by squeezing the workers harder,
using new technology, or improving its products or methods--and
drives its rivals out of business and absorbs the best part of
their workforce, assets and customers). This consolidation takes
place at all times but is accelerated during the period of
economic contraction that follows a period of economic expansion.
The larger enterprises often enjoy better access to capital,
economies of scale and all the efficiencies that emerge from the
division and specialization of labor.

Eventually the consolidation reaches its logical
conclusion--where all the enterprises in an industry unite into a
single combined enterprise called a trust. This stage of
development is sometimes called monopoly capitalism and it was
attained in Western Europe and the US in the period around 1900.

(Note: modern bourgeois states often restrict--or even refuse to
allow--the final act of consolidation--because the combined
enterprise would then in a position to charge monopoly rent which
would then have to be paid by other sections of the bourgeoisie.
These anti-trust policies therefor work for the benefit of the
bourgeoisie as a whole by reducing the economic distortions that
would otherwise be created by monopoly rent.)

The period of monopoly capitalism is also the period of modern
imperialism (as opposed to earlier forms of imperialism)
characterized by a great expansion of the export of capital, the
completion of the division of the world market and world wars
between opposing blocks of imperialist nations.

* * * * * *

14. I should probably add one other "law" which comes to dominate
any economy based on commodity production. That is the existence
of what economists call externalities. An externality is any kind
of "non-economic cost" associated with the
production-distribution-consumption process which is inflicted on
the masses.

The classic example of an externality is pollution. If a factory
can get away (as it often does) with polluting the air or water
or soil--then the factory owners do not pay for this pollution:
the masses do--in the form of decreased health.

The economic weightlessness of externalities despite their impact
on the health and safety of workers is reflected in the simple
fact that a ton of coal sells the same with or without a miner's
blood on it.

Other examples of externalities may include: (a) the
social/medical cost of unhealthy products like tobacco and greasy
fast foods (b) the social cost of advertising which attacks the
inner-world and self-concept of the viewer (c) the social cost,
to future generations, of the wholesale extinction of entire
ecosystems as rainforests are chopped down for valuable wood or
farmland and (d) in a far more general sense--the enormous social
cost of imperialist war or of keeping the masses ignorant and
passive as is required for the maintenance of bourgeois rule.

Externalities are inevitable in any economic system in which the
value of anything that is created can be reduced to a single
number (ie: the exchange value in terms of money) because the
real cost and real value of anything that is created can only be
correctly understood across multiple dimensions such as: (a)
consumption in the present vs. investment in the future, (b)
local vs. international development, (c) impact on ecosystems,
etc. For example:

(a) A decision to change the way nutritional information is
labelled on food may have an initial cost in dollars but in the
long term lead to an improvement in the health consciousness of
millions of people.

(b) A decision concerning whether to build a factory next to
other similar factories--or in a distant location such as
Bangladesh--may impact opportunities for training, education and
development in Bangladesh that outweigh the savings realized by
building the factory next to already existing infrastructure.

(c) A decision to build a factory where a rain forest currently
exists might harm an ecosystem representing a treasury for future
generations--and this harm would tend to outweigh the dollar
value of whatever is saved by building the factory on that
location.

Externalities also existed in many forms in the former Soviet
Union. Not only did Soviet factories produce notorious amounts
of pollution--but a factory charged with creating X tons of bolts
might, for example, fulfill its quota in the easiest way by
making the bolts in the sizes that were the cheapest to
produce--rather than in the sizes that were needed for the
economy: resulting in shortages of some items and oversupplies of
others. Externalities exist whenever any producing unit has an
incentive to "look good" rather than "be good".

* * * * * *

At this point I will end my description of these laws (and,
again--my apologies to readers if I have inadvertantly mutilated
these laws out of ignorance). In a certain sense I have simply
described history--because the operation of these laws has shaped
history. Empires and civilizations have emerged and fallen as a
result of the operation of these laws. In the final chapter of
Engels' "The Origin of the Family, Private Property, and the
State" (titled "Barbarism and Civilization") Engels notes: "These
economic laws of commodity production are modified with the
various stages of this form of production; but in general the
whole period of civilization is dominated by them."

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Anarchist thought is rooted
in the Enlightenment of the 1700's
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Where does the idea come from that we can somehow build a fair
and just society on the basis of a market economy? This idea
originates in the 1700's -- from a period in the history of
thought called the Enlightenment. The Enlightenment was a period
in which the rising bourgeoisie was engaged in ideological
preparation for taking power from the feudal aristocracy--who
justified their rule with talk of "the divine right of kings" and
who imposed innumerable restrictions on the expansion of capital.

Many thinkers, including Adam Smith (the patron saint of
capitalist ideologues) thought that, freed from restrictions and
interference by the state, the "invisible hand" of the market
would help bring about a world of fairness and equality.
Capitalist development, however, went in a different direction:
leading to the larger corporations squeezing the life out of the
smaller corporations--and the workers. But today many continue to
believe that capitalism could somehow have developed in a
different direction--if only the interference from the state had
been restricted.

Daniel notes that he supports the ideas in Rousseau's "Social
Contract". But Daniel is not alone in finding his roots in the
Enlightenment. The most famous anarchist in the U.S., Noam
Chomsky, turns out to be something of a fan of Adam Smith. And
the view that capitalist development could lead to a world of
fairness and equality appears to have been used by Thomas
Jefferson (as a representative of the aspirations of small
farmers in the early U.S.) against Alexander Hamilton (who
represented the emerging manufacturing class).

I was greatly helped in understanding this by an article written
by some former comrades of mine: "On the Anarchist outlook of
Noam Chomsky". The article (despite its faults--such as the
typical "marxist-leninist" fetish on centralization as the
supposed solution to all problems) is extremely valuable and
illustrates the bankruptcy of both the anarchist ideology and the
article's authors. Watching representatives of these two
competing bankruptcies debate is like watching the Monitor and
Merrimac (the original ironclad ships of naval warfare) which,
during the U.S. civil war, spent an afternoon bouncing shells
harmlessly off of one another's newfangled iron plates. The
revolutionary movement is full of squabbles like this in which
both sides are wrong and each side can take comfort in the
obvious bankruptcy of the other. (The best example of this is the
eternal struggle of the reformists and sectarians against one
another--but that's a story for another day.) I have excerpted
some of the most valuable passages of this article (together with
my criticism of it) in Appendix C.

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The laws of commodity production
spell doom for anarchist daydreams
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Let's now consider the collision between the laws of commodity
production and Daniel's 2nd fantasy (ie: magic in the absence of
a state).

First and most important: The various evils of the capitalist
system (exploitation, the domination of the bourgeoisie,
imperialist wars, etc) which Daniel and other anarchists want to
eliminate are inseparable from any economy which is based on
commodity production. This means that these evils cannot be kept
out of the exchange-based economy that Daniel and other
anarchists envision.

Daniel and other anarchists imagine that these evils are the
product of a state. But the operation of the laws of commodity
production show that it works the other way around--the modern
state is itself the inevitable and necessary product of commodity
production which (1) splits society into rich and poor and (2)
requires regulation of the complex and finely tuned circulation
of capital.

Daniel has a particular pet scheme to avoid the evils of
capitalism: in the world that Daniel imagines there will be a
money-commodity in the form of gold--but no "currency". Daniel
calls currency an "infamous third item" which is used to define
the value of other items and destroy "the level playing field"
and which therefor makes exchange "assymetric" (ie: unequal).

I will not spend too much time on Daniel's particular pet scheme
(because I think that other anarchists have other pet
schemes--and I want to expose all these silly schemes). So I will
simply note that Daniel is very confused:

(1) Gold is a form of currency. Gold fullfilled this role for
centuries.

(2) Any restriction that Daniel thinks could be applied to the
exchange of gold--would not hold up any better than certain
branches of the Muslim religion which attempt to ban interest. At
most Daniel's restrictions would amount to a 'speed bump" which
would be swept away immediately as it became clear that these
restrictions would create a barrier to the development of
commerce, trade, manufacturing and services. Real money would
rapidly evolve (from gold or from anything else) to meet the
needs of a modern economy for trade, production and jobs.

(3) Daniel (and other anarchists) are confused concerning where
inequality enters the picture in their impossible fantasy of an
economy based on equal exchange.

Inequality enters the picture as soon as human labor power
becomes a commodity and is bought or sold or traded or exchanged.

As the source of all wealth human labor power has the unique
property that it can produce more than it costs--ie: it can
create more wealth than is required to create it.

Exchanges involving labor will always be unequal--because the
exchange will occur at the level of what it costs to feed and
maintain the worker--but the productive output of the worker will
always exceed that level.

For purposes of discussion we can consider human labor power to
be living labor and we can call the products of past human labor
power to be dead labor. Inequality enters the picture whenever we
exchange living labor for dead labor. In any such exchange living
labor is enslaved by dead labor. That is the origin of the
problem.

. --------------------------------------------------
. The exchange of living labor for dead labor creates:
. (1) surplus value,
. (2) exploitation,
. (3) profit,
. (4) externalities,
. (5) the eventual cleavage of society into rich and poor,
. (6) the class domination of the bourgeoisie and
. (7) the emergence of the modern state.
. --------------------------------------------------

It is really as simple as that.

If we want a society without exploitation, class division or a
state--then we must recognize that all essential labor in this
society will be voluntary labor. This is why the ultimate goal of
humanity must be an economy in which everything is created in
order to be given away for free.

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Next: Why does shit stink?
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