Commentary on Political Economy

Saturday 27 August 2011

Gold Standard and Labor Standard - A Reflectionon the Theory of Capitalists

When we say "capitalist theory" or "the theory of capital" we can mean this in the subjective genitive (the theory of how capitalism operates in reality) or in the objective genitive (capital's theory of how capitalism works). There is a bourgeois theory of capitalism that works on two levels. One is to provide a broad theoretical framework for the way in which capitalist society functions - and this theory is predominantly concerned with the idea of "equal exchange" between living labour (workers) and the owners of dead objectified labour (or social resources), trying to hide the "political nature" of this "exchange", because no-one would ever believe that a human being could "sell" her or his "living activity or labour" in exchange for the past, objectified pro-duct of that living labour!

The other part of the theory is concerned with the "statistical and practical, institutional and political" regularities of the functioning of capitalist industry and society: this branch we can call collectively "econometrics" or "finance theory" or "industrial sociology" or "business management" and so on.

If you look through the history of bourgeois economic theory, you will see how the "theoretical" part of "capital's theory" has always been aimed at rationalising and justifying the "practical" operation of the command of capital (dead labour) over living labour (workers). In other words, given a certain "reality" of capitalist practice of command, the theory has been "adjusted" continually to allow for the "trans-formations" of that command, for its meta-morphoses.

There is a "space", then, a space both theoretical and practical, and a "time" in which bourgeois theory correctly describes what is happening "in reality". But then there are times - we will call these "times of crisis" - when, as is happening right now, capital no longer has a "realistic theory" of what is happening because the theory no longer "correctly describes" a reality that is changing too quickly for it to understand. THAT is the time when OUR theory has to come into operation to challenge practically, politically as well as theoretically, the "self-understanding" of "bourgeois economic theory". In the next intervention we will look at the discussion over the Gold and Labor Standards as an illustration of how this works.

In the meantime, if you wish to look at how "confusion" reigns in the propounders of bourgeois theory, you may wish to look at these two "revisionist" accounts, one from Paul Krugman and the other from John Kay:

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