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<nettime> The Macroeconomic Identity of Communism
Dmytri Kleiner on Tue, 17 Apr 2012 23:19:16 +0200 (CEST)


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<nettime> The Macroeconomic Identity of Communism



The Macroeconomic Identity of Communism


Travels have kept me from posting a new article here in quite a while,
however despite the long break, I'd none the less like continue
the train of though from the last article, "It's The Macroeconomy,
Stupid." /1/

In that article, I start by explaining that a macroeconomic identity,
as an accounting identity, an equality that must be true, no matter
what the values of its variables are. I use these economic identities
to develop the argument that the goals of the economic elite are not
to maximize the level of productive output of the whole economy,
but rather to maximize their share of total wealth, at any level of
economic output.

This point of view explains the seemingly inexplicable austerity
programs being inflicted world wide. Cutting public spending in
response to a private debt crisis looks like economic insanity.
Understanding that the goal of the economic elite is increasing their
share of wealth not the total economic output helps unveil the logic
at work.

Class struggle is not a struggle over how much output the entire
economy produces, but over the relative portion of wealth that is
retained by the contesting classes. The classes that are able to
retain the greater portion are able to impose their interests over the
others. The class conflict is won by the classes that retains the most
wealth.

The proposed macroeconomic identity X = C + Ip â Iw is an expression
of the concentration of income, Income concentration is equal to
Consumption (C) plus Capitalist Investment (Ip) minus The social
capacity of workers to invest (Iw).

This expresses what is really being contested. The owners of the mains
of production essentially want Iw to be as close to zero as possible,
because that portion of worker's income does not flow back to capital
and thus does not reproduce it.

So, if the Capitalists want Iw to be driven down 0, what should the
workers' want? What would these variables look like under communism,
a society where the working classes retained the entire product
of their labour? Well, to start with, a society that did not to
pay tribute to owners and rulers would not necessarily engage in
market transactions at all, producing and sharing would likly take
generalized and gift forms. However, lets stick with the theoretical
and imagine we can express what the value flows might look like, if
they where measurable.

Starting again with the identity P + W = C + I, profit plus wages
= consumption plus investment, Kalecki broke down C as Cw and Cp
to distinguish the consumption of Capitalists from the Consumption
of workers. This, however, assumes that no other relevant mode of
production exists.

Somewhere, Marx argues that a capitalist commodity can not properly be
considered produced until it is consumed. That is, since capital makes
commodities. not to fulfill needs or wants per se, but to increase
capital, the production cycle is not complete until the product has
been consumed and thus created profit. This is sometimes referred
to as Valorization. The C in the above identity represents capital
valorizing consumption.

However, what about the production that results from what we define
as Iw, the social capacity of workers to invest? In order to change
the structure of wealth, workers' must prevent this income flow from
valorizing capital and becoming profit, it must instead return to
workers.

Thus, for our purposes, P + W = C + I can not be expanded simply as P
+ W = Cw + Cp + Iw + Ip, because it is not interesting to us whether
consumption is by capitalist or by workers, but whether the proceeds
of such consumption become profit or flow back to workers. So, let's
replace workers's consumption (Cw) and capitalists consumption (Cp)
with a different breakdown; commons-based consumption (Cc) and
market-based consumption (Cm).

Now we have P + W = Cc + Cm + Iw + Ip. We can now separate this out
further to reflect the economic power of capital vs the economic power
of labour, using P = Cm + Ip and W = Cm + Iw. And thereby derive a
rate of exploitation: E = Cm + Ip / Cm + Iw.

Just like Iw represents the social capacity of workers to invest, and
thereby the dissolution of capital, it's counterpart Cp represents
that portion of surplus value that is retained by capital but not
invested in production. So just as Capitalists need to drive Iw toward
0 in order to maintain their class power, Communists need to push Cp
towards zero in order to abolish class.

To imagine a macroeconomic identity for communism, when no ready
means of measuring totality of I or C would exists as people would
not produce and share for exchange value, thus the ultimately measure
would be what did not exist: The need to measure exchange values in
order to calculate profit.

Thus, the macroeconomic identity of communism is simple: Cm = 0.

We have achieved communism when everyone can get everything they need
without vaporizing any private capital. Which brings us back to how we
can get there, and counter-politics, venture communism and insurgent
finance, I will continue this theme over the upcoming weeks.

In the meantime, I look forward to being at Stammtisch /2/ tonight
around 9pm, please come by if you can.

/1/  http://www.dmytri.info/its-the-macroeconomy-stupid/
/2/  http://bit.ly/buchhandlung

You can find a sharable version of this article online here:
http://www.dmytri.info/the-macroeconomic-identity-of-communism/


--
Dmytri Kleiner
Venture Communist





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