In a capitalist system, second only to the laws of nature, money drives the world around us. In our society, money is real world power, and a small capitalist class holds more of that power every day, while the working class has almost none.
When we look back over our history of plunder, slavery, and various other measures of unpaid labor, it is easy to see how capitalists have cheated workers, while offering back only crumbs of the wealth the workers created. Today’s capitalism no longer even offers the hope of crumbs. With automation driving the value of labor toward zero, the objective basis for money’s value has vanished. The consumer base is being destroyed by laborless production, and the system is left with no objective basis to function. In 2010, 388 people had more wealth than the bottom half of the world’s population. In 2016, only 62 billionaires owned that percentage of the wealth. The middle is being destroyed. In order to understand what is giving this ruling class so much power, we have to understand the nature of money itself.
Nearly 4,000 years ago, money was created as agricultural communities developed a division of labor. Division of labor meant an exponential leap in the number of goods that could be made and the innovations that could yield even higher rates of production. With the surplus produced through this division of labor, these ancient communities needed ways to trade with others that were more practical than simple barter, which depended on one trader’s needs precisely meeting another trader’s demands. The first forms of money ranged from tally sticks to cowry shells. Eventually most communities settled on precious metals, which could be exchanged in sizes and numbers that were equivalent in value to whatever goods might be needed at any given time. The concentration of wealth in geographic areas that benefited from trade created city states. City states, such as Athens, began standardizing the value of these traded metals by minting metal into coins.
Economists have generally agreed that money needed to represent a certain amount of labor being exchanged in the marketplace. The amount of labor necessary to mine, mint and distribute coins needed to be roughly equivalent to some percentage of the labor necessary to grow a crop, or to raise a cow being purchased with some quantity of that coin. Though forms have changed (and the convenience of paper and plastic have largely replaced the physical value of precious metals), money has historically been the commodity we use to trade labor and the products of labor.
At the same time, the value of money has represented some level of power—in the city-state, the kingdom, or the republic—that minted it. That means that State power and the political standing of a government affects the value of its currency. This is why the Confederate dollar famously became worthless after the American Civil War. This is also why, in 1971, the United States’ as a superpower was able to break with the gold standard, that had been the basis of its economic relations with other nations powers after World War II. The United States had enough political power to do what it wanted, and the dollar reigned supreme as the world’s currency.
Since the ruling class can no longer make the profit it used to make through production, capitalists keep the economy turning by keeping money in motion. More and more, money is being used for speculation. Capitalists gamble with money, in order to feed a hungry economic machine, with hopes of reaping new wealth out of a collapsing economy. This is the story behind the lending frenzy that led to the subprime mortgage crisis of 2007 and the recession of 2008.
This is also why the world stock market has seen twenty significant crashes since Black Monday 1987, while the markets only saw one such crash a decade in the sixty years before that event. Central banks (State banks) use methods like quantitative easing, printing more money, to make available at near zero interest rates to boost circulation and investment. Capitalists rack up debt and lower interest rates simply to keep money moving.
If we are to look back at money’s history, and concede that it once served a purpose supporting division of labor and social development, today we must recognize it serves a very different purpose. In this artificially maintained economy, where money contains less and less value, the illusion of money’s value falsely legitimizes a system that has rapidly evolved into fascism, as it fails to meet the basic needs of its people.
A 2016 LA Times story reported that since 2008, our government debt has doubled, reaching $59 trillion. Our total debt is up 40%. Student debt is up 130%. Also in 2016, the Bloomberg Commodity Index notes that the industry and energy sector is $3.6 trillion in debt. These are all signs of an economy in deep crisis.
But The New York Times’s Paul Krugman, representing the ruling class, argues that we actually need to incur more debt and spend more money to get out of the current crisis. Capitalist economists know that the only way the system stays operational is if it keeps moving. However, laborless production throws more and more workers out of the production process. This eliminates them as a market for the goods being produced.
Without workers being consumers with purchasing power, the capitalist system breaks down. Production without labor requires distribution and exchange without money. The electronic revolution has made a new society possible, a new cooperative, communist society where the social product is distributed to all according to need.
This Building Block article is one of a series that explains a basic concept of the revolutionary process, challenging readers to explore its meaning for political work in today’s environment.
January/February 2017. Vol27.Ed1
This article originated in Rally, Comrades!
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