Revolutionary Flows of Value in the Macroeconomy


In continuation from the last two essays looking at the macroeconomics  of class struggle (#1)  (#2) we will try to describe the process of revolution within the framework as developed so far.

The old acrimonious accusations between so-called “Reformist” and so-called “Revolutionary” positions are counter productive.

The reformist strives to improve certain conditions within the current society. A revolutionary strives for a complete transformation of society. In the context of the struggle against economic exploitation, a reformist fights for wages and benefits by organizing collectively and politically against capital, while the revolutionary organizes collectively and politically towards to abolition of capitalism.

Reformists argue the revolutionaries are unrealistic and divisive, while revolutionaries consider the reformists delusional and as simply serving to preserve capitalism.

In many cases, both are right.

Utopianism (#3 #4) is rampant among reformists, making& much of what is proposed among proponents of so-called “Alternative Economics” utterly nonsensical.

However, one must differentiate among those engaging in direct struggle for wages and benefits, that is, those who recognize and acknowledge class conflict, and those who, as Marx wrote, “want to improve the condition of every member of society, even that of the most favored. Hence, they habitually appeal to society at large, without distinction of class; nay, by preference, to the ruling class. For how can people, when once they understand their system, fail to see it in the best possible plan of the best possible state of society?” That is, those that “reject all political, and especially all revolutionary, action; they wish to attain their ends by peaceful means, and endeavor, by small experiments, necessarily doomed to failure.”

And conversely, certain kinds of nihilism and disassociation are rampant among revolutionaries. A tendency to mock and often even hold in contempt all those who are actively trying to improve the conditions of life within capitalism, sometimes with the extremely vulgar belief that to abolish capitalism we must not improve the conditions of life within it, or even actually celebrate its further decline, for only when the conditions become so miserable that they become unbearable will the masses rise up and abolish capitalism!

Thus, those trying to improve the conditions of life are actually counter-revolutionaries, and those remaining aloof and inactive are the true revolutionaries!

Just as much as Utopianism is to be rejected, this view, what we might call “Cataclysmism” must likewise be rejected.

Neither waiting for the collapse of the ruling class, nor appealing for their mercy will lead to communism. Social collapse is much more likely to lead to despotism and fascism than communism. Appeals will fail because the ruling class is compelled to protect their privilege by any means necessary, just as the workers are compelled to keep working. If they fail to do so, they lose their privilege, not to the working classes, but to competing elites.

Any realistic path to overcoming economic exploitation requires both reform and revolution.

Which brings us back to Macronomic Identities.

Our capacity to change society begins with what I have described as “The social capacity of workers to invest” and identified macroenomically as Iw.

If Iw is zero, we can not change society at all, because we are not able to retain any more wealth than is required for our own subsistence. Thus we would have no wealth available to apply towards organizing collectively or politically towards anything at all, only just enough to toil another day.

The working of the capitalist labour market will always push Iw toward zero, thus only through political struggle is Iw kept above zero.  Our revolutionary capacity depends on pushing for as much reform as possible, whatever serves to increase wage levels and benefits gives us more left over to invest towards revolutionary aims.

However, such reforms will not serve our purposes unless they come with revolutionary aims. Increases in wages and benefits are easily absorbed in capitalist consumption, often simply in increased rents, if not intentionally intvested in worker’s productive capacity.

We can understand flows between modes of production similar to the way that imports and exports are understood.

Returning to our basic macroeconomic identity, W + P =  C + I, if we want to factor in imports and exports we can say that W + P = C + I + N, wages plus profits are equal to Consumption plus Investment plus net exports, that us exports minus imports. This allows us to look at the macroeconomy of one country within a global context that includes other countries.

A country can increase it’s wages and profit above what it’s own consumption and investment can fund when it has a trade surplus because the consumption from other countries are funding wages and profits within the country. However, at the global level net exports must always be zero, so a trade surplus in one country implies a trade deficit elsewhere.

When a country has a trade deficit then N is negative, meaning that the country’s total wages and profits are below it’s consumption and investment. This naturally means that the country is building debt and thus, such a situation is not normally sustainable. The economy of the country with a trade deficit is shrinking relative to the economy of the country with the trade surplus.

We can look at intermodal economic flows in the same way.

We can define the capitalist sector of the economy with P + Wm = Cm + Ip + Nm, or profits plus wages of workers working for capital equals consumption of the output of capital (market consumption) plus investment derived from profit plus net intermodal consumption. That is, the “exports” from the capitalist sector to the communist sector minus the “imports” from the communist sector to the capitalist sector.

Whenever money earned in the capitalist sector is used to consume wealth produced in the communist sector, the net effect is that the capitalist sector shrinks relative to the communist sector, and vice versa.

Conversely, we can define the communist economy as Wc = Cc + Iw + Nc, that is wages of commons-based producers are equal to commons based consumption plus workers’ investment plus net intermodal consumption.

Of course, Nm + Nc = Zero.

Thus, economic reformism is only to be dismissed with it simply increases Cm and thereby does not change the balance of economic power, while a revolutionary must strive to push Nc above zero, for if it can be sustained as such then this means the inevitable disappearance of the capitalist sector.

To abolish capitalism and replace it with a commons based economy we need to build an intermodal trade surplus.

I’ll be at Stammtisch as usual at 9pm (#5).  Please come!










  1. Throcky

    What makes you assume that Iw will go completely towards the commons? A decent number of workers (especially those that get salaries) put their Iw towards stocks, bonds, real estate, and small businesses, which all return P. Also, if you count free software as a commons, then Ip doesn’t necessarily go towards the market. Publicly traded companies, including IBM, Google, Apple, Oracle, Intel, AMD, and SGI, do invest in free software development.

    Also, I thought a precondition for communism was the abolition of wage labor. What do you mean by “communism?” Are you referring to the “venture communism” described in the Telekommunist Manifesto?

  2. Dmytri

    Hey Throcky, you are indeed correct and in fact the next article in the series will be on the topic of intermodal capital flows. What I mean by Communism is Cm = 0. “Wages” as such is not so much the key metric for me as much as non-valorizing consumption. See these:

    Venture Communism is not a kind of society, like Communism, it is a form of class struggle, intended to achieve communism. Just as Venture Capitalism is not a mode of production, but a means of reporoducing capital and the social relations that go along with it, with venture communism I hope to contrinute towards the development of a means of reproducing common wealth.

  3. Golding

    This is heavy stuff ! Without attemptingl to analyse your thesis and views/opinions or seeking for a Utopian society would it be possible to lobby for fairness in dealings and have regulations to curb the greed evident in huge corporations who pressurise our governments. For example one huge financial corporation was fined circa $35m dollars for irregularities by the SEC in USA and tried to get Congress to pass a bill that would have netted them billions . The $35m was only 5% of their profits which did not hurt too much .They have done something similar in EU ! So can Capitalism & or Communism control this kind of behaviour ? It is only when Democracy is claimed by the electorate that there is any hope . Government by the people, of the people and FOR the people . A non political Citizen Assembly on Constitutional & Political REFORM to set the rules is the only hope for society to claim the future for generations to come otherwise it is the law of the jungle . Averice & Greed is rife to which can be added gross negligence of those privaleged to be elected to govern in addition to the corruption and blatant dishonesty prevalent..

  4. Dmytri

    Hey Golding, Communism extends democracy into the workplace and the even the home, as as the governemnt, which, along with teh elimination of private ownership of the means of production would make the kinds of activity you’re describing a lot less likely.

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