Home > political-economy, shorter work time > VII. Superfluous labor and the collapse of capitalism

VII. Superfluous labor and the collapse of capitalism

If we now return to the definition of depression offered by the wiki, we can see how inadequate it is:


Considered a rare and extreme form of recession, a depression is characterized by its length, and by abnormally large increases in unemployment, falls in the availability of credit— quite often due to some kind of banking/financial crisis, shrinking output and investment, numerous bankruptcies— including sovereign debt defaults, significantly reduced amounts of trade and commerce— especially international, as well as highly volatile relative currency value fluctuations— most often due to devaluations. Price deflation, financial crises and bank failures are also common elements of a depression.

The definition is not only inadequate; it contains assumptions about both depressions and recessions that are misleading and altogether an obstacle to understanding the current economic disturbance we call the Great Recession.

The writers of the entry classify a depression as a particularly severe variant of recession, when, in fact, it is an altogether different animal. By contrast, we have shown that a depression can take place with few or none of the symptoms of a recession. Moreover, we have shown that a recession is merely a monetary event, which can take place even when there is no depression. Finally we have shown that a depression can be distinguished from a recession by the two measures of economic activity.

Recessions affect the dollar measure of economic activity.

Chart 1: United States GDP (Dollars) 1929-2009

While depressions related only to the gold measure of economic activity.

Chart 2: United States Gross Domestic Product (Gold) 1929-2009

However, the most important distinction between a depression and recession can be seen not when we compare depressions to recessions, but when we compare the two measures of the economy to which they refer.

Chart 3: US GDP in Gold (yellow) and Dollars (green) as a percentage of 1929 levels

The considerable and growing discrepancy between the two measures of GDP is the distinguishing feature of post-Great Depression economics, yet it has received little or no attention from economists. It is present in the GDP of every nation, and in the measure of global GDP itself. It is a discrepancy between the purely monetary measure of GDP and real GDP — as measured by gold.

For the United States, it begins with the simple devaluation of the dollar against gold, from $20.67 per ounce to $35 per ounce in 1933, which remains unchanged until 1971. This is followed by the financial crisis of 1968-1971 which ends in 1971 with the default of the United States on its debts, the complete debasement of the dollar, and unchecked loss of dollar purchasing power over the next four decades.

The growing difference between these two measures of economic activity can be seen in chart 4, which visually present the gold measure of GDP as a percentage of the dollar measure of GDP. We believe the ratio between the gold measure of GDP to the dollar measure of GDP is the amount of socially necessary labor time performed in the economy.

Chart 4: United States: Gold measure of GDP as a percentage of the Dollar measure of GDP (1929-2009)

The difference between the dollar measure of activity and the gold measure of this activity is the amount of purely monetary, or superfluous, economic activity in the economy. The amount of superfluous labor contained in dollar denominated GDP, therefore, can be estimated, and would be the simple inverse of the percentage of socially necessary labor time as measured by gold.

Chart 5: Superfluous labor as a percentage of dollar GDP (Estimated)

From the writer Moishe Postone we quote this excruciatingly long excerpt of what he has to say on the subject of superfluous labor:

In a passage from the Grundrisse quoted at the beginning of this work, Marx states:




In Postone’s analysis, the need to reduce hours of work makes itself felt first in its negative form as superfluous labor. However, we have argued that superfluous work — work of no economic value whatsoever — owes its existence solely to the need for an ever larger market to absorb the ever increasing excess output of industry, in order to ensure the recovery of the costs of production and profits.  The potential for free time, therefore, as a practical matter, rests on precisely the same conditions as those under which it becomes impossible to further expand the market for the ever increasing excess output of industry.

Curiously enough, these conditions are not found in a depression, but in a recession. Once a depression has concluded its work in reducing to a minimum the amount of necessary work performed in the economy, a recession event emerges that initially appears mild — and is altogether the same as a recession in that it merely reflects the monetary measure of economic activity.

However — and this is why it matters to you and your family — this recession is simply the trigger of a far more significant event: the irrecoverable collapse of the economy itself. In this event, all at once and without warning, all the superfluous labor within the economy is converted to free time in the most disorderly and catastrophic manner imaginable.

  1. Threecrow
    August 31, 2010 at 12:08 pm

    You do realize that you have a Diss going on here Doctor, don’t you?

    • charley2u
      August 31, 2010 at 1:25 pm

      No, I didn’t. Who is dissing whom?

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