Bourgeois reasoning is still microeconomic.

Scientific reasoning.

The theoretical inanity of Marginalism and its accounting emanations, including GDP.

The three accounting forms of GDP. The stationary and dynamic general equilibrium versus Simple and Enlarged Reproduction.

We now come to the so-called private intermediate consumption.

The ineptitude of the value chain is worsened by the treatment of internal and external, especially public, bureaucracies.

Things are a little more complex when we are dealing with public bureaucracy.

“Social surplus value”, Simple Reproduction (SR) and Enlarged Reproduction (ER) and public services.

If taxation is the public share which corresponds to the allocation of new resources created by the Community, what is its jute share?

How to integrate money and credit in national accounts?

Bourgeois ecology, ecomarxism and microeconomic and macroeconomic accounting.

Critical summary of Jacques Barraux’s critics and alternative indices.


The Gross Domestic Product is an economic indicator that everyone thinks they know without really understanding its definition or the serious flaws that stem from duly falsified economic Marginalist narratives. No equation, in particular of growth, or path of fiscal consolidation, based on it has any economic sense. But it serves to legitimize cooking recipes whose plausibility is adapted empirically by pseudo-Nobel prizes, of whom this is the only function. These high priests and their economic and political masters know perfectly well that the adjustments are always made on the backs of the peoples; it is, therefore, necessary to preserve their belief in the god “market”. It is a primitive, totemic and snarling monotheistic god, very inclined to sacrifice society to satisfy the pathological desires of his worshipers and their increasingly brutally exclusive « acquisitive mind ». We are far from the ethico-political, egalitarian and scientific monotheism, for example its Pythagorean and Socratic variant.

This presentation alternates theoretical presentations and comments which will provide a certain cultural background. It’s a choice of presentation. Hopefully it is the right one.

Summary :

1) GDP is calculated on value added. Value added is not surplus value. The latter is born of living labor which recomposes the inputs of the production function, capital and crystallized labor, into new products. Surplus value therefore has a price or exchange value expression which is based on a tangible support. The value added is mysteriously added to the cost of production (c + v) by the market as a reward for taking risks etc. So it remains suspended in the thin air in its “market price” tinsel without being able to give details on its genesis, nor to say on which tangible support – goods or services – it rests. GDP is entirely based on this nonsense.

2) The value added chain results in the incongruous subtraction of value added produced by the “intermediate sectors”. It is tantamount to pretending that the value added of the baguette would contain that of the farmer and of the miller. The taxman certainly does not make this error. It turns out that the value added of the farmer enters as the cost of production in the production function of the miller, and thus from the miller to the baker.

3) The exchange value or selling price of a product must include all inputs and, where appropriate, when it refers to an external division of labor, it must be based on different production functions which include their own production costs (c + v) and their value added or surplus value (pv). This is true for transport as well as for marketing and so on. And, of course, this is true for external bureaucracies.

The main external bureaucracy is based on the government civil service and public social services of universal access financed collectively by social security contributions and general taxation. Each of its activities has its production function, which also means that, based on the production costs, living labor will create value added or surplus value. In addition, mutualisation ensures that public activities are by far effective because they induce a greater specific productivity. These services, accessible to all at the same prices, induce a powerful macro-economic competitiveness of the Social Formation which strongly supports micro-economic productivity. It is the competitiveness which explains the rank of the SF in the World Economy according to the quality of its insertion.

The specific productivity of public bureaucracies is judged by the waiting time for obtaining a service, the satisfaction of the beneficiary citizens and the share of social wealth – badly calculated by the GDP – which is devoted to it. However, in a gross manner, the GDP attributes only the estimated costs to the public service and social services in terms of wage costs. Notwithstanding, the sectoral Multiplier of public services is very high because it is greater than 3 when public services are not provided by private companies motivated by individual profit. It is a nameless nonsense, but it is it which induces the attrition of the public service employees going hand in hand with the dismantling of social services, therefore the destruction of macro competitiveness and the laminating of the micro productivity which it supports.

4) Marginalism confuses money and credit, both private and public credit. Likewise, its confusion of profit and classic interest and speculative interest leads to the impossibility of distinguishing between real economy and speculative economy. The classic banking and financial interest based on fractional logic is always deducted from profit. It presupposes a legal separation between the 4 main pillars of the banking and financial world, namely deposit banks, commercial banks, insurance and credit unions.

Speculative interest, on the contrary, legally arises as legitimate economic profit by eliminating these distinctions. It follows that its sectoral productivity is unbeatable because it operates with little fixed capital but involving huge speculative flows. In this way, it determines all the relative prices of a given socio-economic system, which swallows up the real economy and employment. However, this speculation appearing as value added in the GDP, the equations which result from it will further favor this suicidal drift. We remember the ineffable OFCE advising Hollande to sacrifice the industry in favor of financial services, the industry being considered obsolete although there is no service, especially high-end, which is not based on the economy real, agricultural, extractive or industrial activities.

However, its financial services, which are as useless as harmful, already represent almost 9% of GDP and more than ¼ if you include all the FIRE, finance, insurance and real estate. Its impact on public debt is highly debilitating. For its part, public credit would generate almost no cost in terms of financing the public or para-public debt.

5) Marginalism, of which GDP is an accounting statistical expression, is incapable of conceiving the role of ecomarxism. This is based on the resolution of the problems linked to absolute rent and differential rent by the Law of Marxist productivity duly integrated in the Equations of Simple Reproduction – SR – and Enlarged – ER – or, in mainstream terms, of general stationary or dynamic equilibrium. Capitalist ecology is based on the fallacious concept of scarcity, even though Léon Walras knew that ultimately scarcity is socially constructed. On the basis of the precautionary principle which must preserve the health of the citizens, therefore a healthy environment, ecomarxism identifies the question of the environmental costs in a rational way, that is to say by calculating the cost of renewing raw materials, according to the existing data and their projections in the medium term. (Added June 17, 2020: the precautionary principle include a health aspect and an aesthetical aspect to preserve the beauty and diversity of the landscape.) This renewal is done either naturally or artificially, while considering the development of less expensive and massifiable substitutes which, if necessary, could reduce the human impact on the environment.

This is why, in total misunderstanding and in the thickest silence, we have been asking for years for the development of scientific statistics based on the scientific function production (c + v + pv = M) duly integrated in the Equations of SR -ER. Planning supported by public credit must be done on these perfectly understood foundation.

It is undoubtedly advisable to clear the ground beforehand before presenting the essential relevant reasoning of bourgeois economy and of scientific political economy, that is to say Marxist.

Bourgeois reasoning always focuses on microeconomics.

Bourgeois “economics” is a narrative constructed in such a way that one goes from plausible clichés to plausible clichés without the need for a logical sequence. It’s zapping in the same wavelengths. Since the “market” and the meta-magic of the “invisible hand” cannot be wrong by definition, the possible deviations of the theory from reality are always due to exogenous rigidities caused by the interventionist State, the labor market or external powers. We will nevertheless try to respect a certain logical progression in the presentation of these clichés.

The marginal utility is entirely one-sided and subjective. It is a narrative without tangible support, be it a good or a service. It does not allow the quantities produced and the prices to be given simultaneously.

Its production function is Y = f (K, L)

The market price is supposed to be given by the Supply and Demand curves. To plot the Supply curve, you have to give the Demand table in … price; and, conversely, for the Demand curve. To find the market price, we cross the two! It’s kind of visual, but nonetheless simply insane. We are faced here with an ex ante / ex post lethal contradiction.

The currency in circulation is tautologically assumed to be equal to the sum of goods and services. Furthermore, this childish tautology is supposed to flow from the supreme logic of supply and demand for money. (If money is a good like any other, and can therefore act as a general equivalent to evaluate the commensurability of goods between them, the question arises of knowing with which meter or universal equivalent do we measure this general equivalent?)

Inflation – in the singular for bourgeois economics – supposes the development of indices to find one’s way in the successive trial and error of the markets, including that of money. Eg CPI and PPI. But constant prices share the same ex ante / ex post biases as nominal prices given by the “market”

. In addition, the quantitative bourgeois theory of money puts money and credit – public or private – in the same basket. This gives the following tautology: the total production of goods and services, of which financial and speculative services, equals currency plus circulation. How much money and what speed of circulation? Mystery and gumdrop. This leads a Bernanke – PhD on inflation – trying to create hyperinflation with his QEs in the hope to have creditors pay for the US debt, particularly Chinese and Japanese creditors, only to find himself with the worst “credit crunch” in History, a messy outcome from which neither the FED nor the ECB no longer know how disentangled themselves.

Productivity is not calculable in Maginaliste terms. The marginal productivity of the last unit produced reproduces the ineptitude of the supply and demand curve disguised as an economy of scale. As early as the 1920s Sraffa criticized the logic of increasing and decreasing returns without succeeding in resolving the ex ante / post hoc contradiction that they harbored. Pareto tried to define the technical aspect, but he was unable to reconcile the technical composition of capital with the value composition.

Bourgeois logic emphasizes “value added”, the share of profit that the competition game – and risk? – is supposed to miraculously add to the “cost of production” expressed in terms of capital, i.e., raw materials, machinery, work organization etc., and labor, therefore wages. This production cost can be known in terms of quantity and price. The value added in price may well be given by competition on the market, but where does its material support comes from, namely the new good or service shaped by work? Mystery and gum ball, unless you read the explanation given in the chapter “The Last Hour of Senior” in Book I of Karl Marx’s Capital.

The general equilibrium is conceived as “the market of the markets” thus reproducing all the gaps and contradictions above. Macroeconomic data is believed to come from the optimum allocation operated by the –blind – invisible hand motivated by the maximization of individual profit. There is always a general ex post price equilibrium, but this equilibrium does not necessarily correspond to an quantitative equilibrium of the real goods and services that are necessary to ensure the stationary reproduction of the system or to ensure a dynamic equilibrium.
Marginalists argue that the invisible hand and the lure of individual gain ensure that where there is demand there will be supply. But this is only true for solvent claims. We all see that there is a large number of demands for essential goods and services which are not satisfied whereas, today, the neoliberal monetarists dismantle the public services which offer them at the best cost because of the mutualisation.

The State interventionism necessary to correct the “animal spirits” of capitalism – Keynesianism or regulation – therefore requires data on both quantities and prices. These statistical data, including GDP, are always provided empirically ex post. But this is what Koyré called a “Baconian empiricism”.

Suppose an accounting in terms of value added, bourgeois economists claim that in order to avoid counting the same thing twice, we must subtract the value added of intermediate productions. Jacques Barraux sums it up as follows: “The various interventions of the farmer, the miller and the baker are thus contained in the final price of the baguette” p 44. (1) We are thus swimming in the Marginalist puree of value added because, apart from the above criticism of value added, we cannot ignore the fact that the agricultural capitalist, the miller and the baker entrepreneurs must all make a profit, which is supposed to have the same rate , at least if we assume the mobility of capital.

This flawed logic of intermediate sectors in GDP is even more flawed when it comes to understanding the value and economic role of public services and public administrations. Having no market price, they simply disappear from value-added accounting, but the salaries they entail are recognized in accounting in the form of costs. Thus the universally accessible public health system cost 9% of GDP at its peak, that is to say before the neoliberal monetarist dismantling of it and it had a very strong Multiplier of 3 or 3.5. For its part, the private health system is included in the GDP although it is not affordable by the majority of people – 11 million French and Italian men and women now delay or renounce care – because its services have a market price and therefore a value added, of course and accounting value added…

Regarding prices, due to the bourgeois conception of money and the ineptitude of supply and demand curves, the nominal form or the constant price form is essentially fluctuating and indeterminate. And the method of Marginalist Indexes, for example taking a given year as the base 100, really doesn’t help.

As there is no theory of microeconomic productivity and macroeconomic competitiveness, no macroeconomic equation succeeds in predicting quantities, prices and jobs outputs. This is only approached by empirical cooking recipes which pass for modeling and which invariably turn out to be false as soon as the conditions of production and trade change. However, the characteristic of capitalism, a mode of production centered on productivity as the main form of extraction of surplus value, is to constantly change both domestically and globally.

In general scientific terms, productivity consists in manufacturing more of one given product or of a largely elastic product in the same working time with the same labor force intensified structurally by better machines and better organization of production, and therefore with fewer physical workers. The question arises of the « déversement » or reallocation – A. Sauvy – of the workforce thus freed up, in new or intermediate sectors. It arises all the more since these new and intermediate sectors are more and more capital intensive. Bourgeois theories, notably Marginalist as well as the resulting GDP, are entirely blind to the question; they limit themselves to reciting the creed of the flexibilisation of the labor market within the framework of the meta-magic of the invisible hand.

Finally, the logic of value added determined by supply and demand, including for money, which is blithely confused with public and private credit in the Fisherian magma of “income stream”, does not allow to distinguish between profit, classical interest which is deducted from profit and speculative interest erected legally and fallaciously as legitimate profit, a legal attribute which allows it to swallow up the real economy and to destroy industry and employment. However, financialization accounts for 9% of GDP in the banking and financial sector and more than 1/4 of GDP if we add insurance and real estate. Which is nothing but positive steroid boosting of the GDP in its race to socio-economic suicide. Greenspan, largely responsible with Treasury Secretary Paulson for the subprime crisis, spoke of “irrational exuberance” without taking any action to curb it, on the contrary. (See “Credit without collateral”, 2008, and “The Treasury and the FED”, 2008, in

B) Scientific reasoning.

I reproduce here the summary given in the Appendix of “The pseudo-economic science of the bourgeoisie = here is why we should quickly change economic paradigm”,

“APPENDIX: Book I of Capital begins with the analysis of the duality of all commodities in terms of their use value and exchange value, including the labor force traded on the market like any other commodity. This duality had already been analyzed before Marx. However, Marx was the only one to understand the specific characteristic of the use value of labor power – physical or mental: although Nature can produce use values, labor power, both crystallized labor and living labor alone is capable of producing other exchange values, including machines, work organization and even AI algorithms. If we erase this duality, the profit can no longer be explained in scientific terms. And that’s why the Marginalists invented the one-sided and fallacious concept of utility.

The scientific production function, therefore Marxist, is written: c + v + pv = p, where “c” is the part of the capital that enters into the product – the great American Marxist Paul Sweezy called it “used-up capital – plus” v “, labor power, plus” pv “, surplus value or profit, the sum of these three variables being equal to” p “, the product. The product” p “can be a Means of production (Mp) or a Means of consumption (Cn). The Marxist production function is the only one that can simultaneously supply quantities and qualities or exchange values ​​(or prices). It is the only one that leads to an understanding of productivity.

Here is a summary that speaks for itself. The initial conditions in t1 are given simultaneously in monetary form (EUR) and in quantitative physical form (p). We can easily translate into working time by assuming, for example, a working day equal to 8 hours, so that, in our example, 4 hours of production are enough to reproduce the salary, i.e. the labor force “v”, and the remaining 4 hours will produce the surplus value – “pv” – pocketed by the capitalist in the form of profit. (Addition: In my Book III, I call this distribution of the work day the “structure of v “; it is the basis for understanding the « social surplus value » corresponding to the epoch of redistribution, for example the Social State or the Anglo-Saxon Welfare State, which is realized in the three components of the ” global net revenue “of households.)

Here: pv / v = 1.

t1: c (80 EUR / 80p) + v (20 EUR / 20p) + pv (20 EUR / 20p) = p (120 EUR / 120 p)

The essential relationships which characterize the production function are:

A ) The organic composition of capital, that is to say the relation of labor to the total capital developed in this production process, hence v / C, where C = (c + v);

B ) The exploitation rate or the rate of surplus value which is written pv / v; and

C ) The rate of profit which is written pv / (c + v).

Now consider what happens when we introduce a productivity growth of ¼ for the same working time and the same real salary, that is to say the salary expressed in use value – therefore in equivalent number of « p » – but with fewer physical workers. Remember that productivity is a structural increase in the intensity of work. With productivity the v / C and pv / v ratios evolve in a proportionally inverse relationship. Here, the production of “p” goes from 120 to 150 p. We obtain:

t2: c (84 EUR / 105 p) + v (16 EUR / 20 p) + pv (20 EUR / 25 p) = p (120 EUR / 150 p)

From t1 to t2, v / C goes from 0.2 to 0.16. The pv / v rate goes from 1 to 1.25. The quantity of “p” produced goes from 120 to 150 p while the unit price shows an opposite evolution from 1 to 0.8 euro. (Addition: the rate of profit which is parametric remains the same but not the volumes pocketed by the more productive capitalist who conquers additional market shares. It is these volumes which set in motion the laws of motion of capital, that is, the tendencies to centralization and concentration.)

This elucidation of the Marxist theory of productivity is mine. No other theory is able to take productivity into account, let alone provide quantities and qualities simultaneously and consistently, especially when incorporated into the context of SR-ER Equations. No more than Pareto, bourgeois economists have ever been able to reconcile the technical composition and the value composition of the production function. In other words, bourgeois economists cannot reconcile micro and macroeconomics.

Now let’s take a quick look at Reproduction, which is general balance.

The production function c + v + pv = p already contains in itself the expression of the entire reproductive system since it must necessarily reproduce the Means of production (in “c”) and the Means of consumption ( in “v”). When this reproduction occurs in identical terms, Marx calls it Simple Reproduction (SR), traditional economists speak of stationary equilibrium. When it includes growth in t2 with respect to the initial conditions in t1, Marx calls it Enlarged Reproduction (ER), i.e. dynamic equilibrium. Since I have solved the problem of productivity, which does not alter the consistency of the SR-ER Equations although the conditions of production might change, we can illustrate our point with a simple example.

Suppose that the ratios v / C and pv / v are identical in the two sectors, in SI, the Mp Sector and in SII the Cn Sector. In this Reproduction framework, it is clear that we can add all the sub -sectors that we wish by subsuming them respectively under these two main sectors, which, as we have already noted, are already contained in the basic components “c” and “v” of the production function itself. Here is an illustration for t1:

SI : c1 (80 EUR / 80 Mp) + v1 (20 EUR / 20 Mp) + pv1 (20 EUR / 20 Mp) = p (120 EUR / 120 Mp) (M1) SII: c2 (40 EUR / 40 Cn) + v2 (10 EUR / 10 Cn) + pv2 (10 EUR / 10p) = p (60 EUR / 60 Cn) (M2)

Here are the SR Equations given in Book II of Capital synthesized by Bukharin:

M1 = c1 + c2 c2 = v1 + pv1 M2 = (v1 + pv1) + (v2 + pv2)

In my Synopsis of Marxist political economy, I clarified the problem of Enlarged Reproduction with the added introduction of credit, both classic and speculative.

Compare this with the Tougan-Baranovsky / Bortkiewicz quadratic system, the so-called simultaneous resolution. The variable c3, supposed to represent GOLD or a means of exchange, is introduced for the sole purpose of being able to formalize the problem in a quadratic system. This is one of the most astonishing example of the substitution of a model for the reality it claims to apprehend !!! Here it is:

c1 + v1 + s1 = c1 + c2 + c3 c2 + v2 + s2 = v1 + v2 + v3 c3 + v3 + s3 = s1 + s2 + s3

The third line is introduced only to allow a quadratic formulation, nothing else.

The theory of money.

Money is distinct from credit. The scientific theory of money is based on the salary masses, real and social, and on their rotation. The social salary mass is equal to the real salary mass plus the extra money supply issued to finance the maintenance of the workforce reduced to unemployment or inactivity. It more or less corresponds to the monetary aggregate M1 (and to a small part of M2). Consider the total production function, namely (SI + SII) at both t1 and t2 where productivity growth occurs. We have:

t1: c (80 EUR / 80p) + v (20 EUR / 20p) + pv (20 EUR / 20p) = p (120 EUR / 120 p)

Here, following Marx, we rewrite the total production function with (c + v) = 100 because it provides an immediate comparative expression of its determining relationships. In t1 we are in a situation of full employment, so that the social salary mass is not necessary since all workers receive a salary. In such a system, no “structural inflation” emerges. We have:

S = the money supply issued by the Central Bank = the real salary mass.

R = the number of rotations;

R = C / v + (pv / v) p in EUR = value in euros of the total product = S x R

In t2: c (84 EUR / 105 p) + v (16 EUR / 20 p) + pv (20 EUR / 25 p) = p (120 EUR / 150 p)

In t2, the increase in productivity provoked the emergence of the Reserve army of the proletariat – RA. Suppose that from t1 to t2 we go from 20 to 16 workers, so RA = 4 workers. Suppose, moreover, that the individual cost of maintaining this inactive population is equal to 50% of the salary received by the active population. We then have a real salary mass equal to 16 euros and a social salary mass equal to 18 euros. The rate of induced structural inflation – there are indeed many other forms of inflation, for example imported inflation – corresponds to the social salary mass (Ss) / the real salary mass (S), namely 18 EUR / EUR 16 = 1.125. The Central Bank will have the duty to issue and manage these money supplies as necessary. Without confusing them with credit.

With bourgeois theories, the case of money is treated like that of any other commodity, that is to say, it also displays the deadly logical contradiction contained in the supply / demand curves of the market. In addition, thanks to the circulation of money, the money supply in circulation is by definition equal to the sum of all the goods and services exchanged. No distinction is made between money and credit, the main bourgeois monetary aggregates, all managed by the Bourgeois Central Bank, being M1, M2 and M3. It is a most absurd tautology. Although it was then developed to take account of income and credit, thus leading to the various bourgeois monetary aggregates, it does not allow a distinction to be made between the quantity of money necessary and sufficient to allow all the economic exchanges supposed by the SR-ER Equations, and the quantity ” money ‘linked to speculation. It goes without saying that the great bourgeois economists are now forced to admit that they have no clue whatsoever about what inflation might be. (See “The FED finally admits: it doesn’t know what inflation is” in . Lately, the Central Bank of Banks, the BIS, has admitted the same ignorance. If they don’t know what inflation is, then they can’t know what a price is. However, ironically, controlling inflation remains the primary mandate of today’s central banks. But as Hobbes might ask: what is the value of “economics” for these people?)

In fact, bourgeois theories, including the Marginalist theory, are ontologically incapable of distinguishing between the real economy and the speculative economy. They cannot differentiate between profit and interest or between classic interest and speculative interest. Worse still, as the epigones of “efficient markets” assert without too many nuances, the less the regulation, the more speculation there is in the system, the more quickly equilibrium will be reached! With the end of the functional segregation of the banking and financial sectors – deposit vs merchant banks – in particular after the counter-reform launched by Volcker-Reagan in 1979-1981, then with the repeal of the Glass Steagall Act in 1999, we were introduced in the era of hegemonic speculation. Since 2007-08, central banks have printed about $ 15 trillion in the form of QEs and other cash. This deluge led to a dramatic expansion of the stock market and financial markets, but instead of the expected high inflation that was deemed necessary to cancel part of the American debt at the expense of foreign creditors and domestic workers, it created a structural “credit crunch”.

A word on money and credit management.

In the capitalist mode of production, the distinction is canceled and private banks, coordinated by the capitalist central bank, issue both money and credit. The issue is supposed to be determined by the supply and demand from the market. The capitalist central bank uses its main interest rates for strictly ideological purposes, namely to maintain a semblance of formal equality between all economic agents, despite their real size.

However, to be harmonious, the dynamic equilibrium must respect a proportional symmetrical growth in SI and SII. Possible mediation involves external balances, but it is a kind of mediation that must be closely managed. Since capitalist growth is driven by private accumulation choices, this proportional symmetry is never respected. Periodic crisis ensue, an expansion in some sectors being faced with a contraction in other sectors. This is the reality nestled in Keynes’ denunciation of the “animal spirits” of capitalism.

In a planned or partially planned economy, money and credit would be strictly distinguished. The role of money is to allow for all the exchanges necessary to ensure the circulation of goods and services within the framework of the SR-ER Equations, hence the real and social salary masses that we have discussed above and their rotations. The lower the inactive labor force, the lower the rate of “structural inflation”. Credit is necessary to ensure expanded reproduction and must therefore respect strict intersectoral symmetry. Of course, given that no Social Formation can prosper in self-sufficiency, it must therefore take account of external balances. This means that, in addition to the capital reserves available through institutional savings – public pension schemes or even sovereign wealth funds, etc. -, the credit should be managed by public banks in close collaboration with the Ministry of the Economy and Industry or, better still, with the Planning Commission. In this case, a periodic audit must be carried out to avoid corruption and the currency devaluation it induces. Indeed, the credit is intended to transform investments into real goods and services. Regular audits would monitor the smooth development of expected growth while preventing corruption.

Typically, about 60% of all investments in the real economy goes to the wage bill, thereby contributing to the Economic Multiplier. It is also clear that only the public central bank, and therefore a not for profit body, should be responsible for financing the public and parapublic debt. Letting private – primary – banks manage public debt is the main cause of its current uncontrollable trend of skyrocketing.

The most difficult problem to solve with public credit is that of the exchange rate, at least as long as only a few reserve currencies remain dominant. In general, the exchange rate should be dictated by the macroeconomic competitiveness of Social Formation (FS), knowing that macroeconomic competitiveness is crucial for the development of microeconomic productivity. In a world of asymmetric reserve currencies, capital controls linked to import-export needs are mandatory. Uncontrolled capital outflows quickly lead to financial dependence as well as external conditions imposed by institutions such as the IMF, London and Paris Clubs, etc. We all know the Chicago Boys’ recipes that have become common policies, including within the eurozone: They consist of deregulation and wall-to-wall privatization, while focusing on the export sector to win the foreign currency necessary to repay an ever-increasing public debt since it is often held by foreign private banks.

These capital controls can be mitigated by bilateral “credit swaps” between consenting central banks, in particular with the aim of preserving the independence of the SFs and reducing their external vulnerability. Such swaps make it possible to redirect and facilitate bilateral trade without having to accumulate hard currencies, in particular the US dollar. This is practical in times of trade war supported by a criminal resort to extraterritoriality and unilateral sanctions. Of course, this can also be achieved by direct administration of trade, for example oil against other commodities.

Our Giordano Bruno rightly denounced the “asinate e pedanterie” – stupidities and pedantry – in reference to the dominant narratives of his time. Things have gotten much worse today. It is high time to change the tune – sorry – the paradigm. ”

Relating this discussion directly to GDP, it will suffice to emphasize on the basis of my Synopsis of Marxist Political Economy, that all the companies, branches and sectors participating in the Social Division of Labor are based on specific production functions. As such, they all use living labor and therefore generate surplus value. This corrects the ineptitude of subtracting the value added of the so-called “intermediate sectors” from Marginalist GDP, a practice that greatly penalizes the contribution of the civil service and public infrastructures and services. However, this crucial contribution which is made in an extremely effective way due to mutualisation and to the absence of dividend payments to private shareholders, is at the basis of macroeconomic competitiveness. It suffices to compare the social costs and in terms of GDP of public and private health-care or pension plans. (see below.)
The theoretical inanity of marginalism and its accounting emanations, including GDP

In my Methodological Introduction and in my Synopsis of Marxist Political Economy I laid out the theoretical and historical demonstration of this assertion by providing the main lineaments of this ideological class fabrication. It goes back to the questioning of the theory of labor value exposed by classical political economy – Smith and Ricardo – which culminates in Karl Marx’s science of political economy. This challenge was the work, among others, of J.B. Say, Cournot, Leon Walras and the Austrian School. Under the aegis of Ludwig Mises, the latter was the main inspiration which motivated the attack on Keynesianism and on the school of European regulation. This real intellectual counter-reform was quickly embodied in the dominant economic theory known as the “synthesis” established in particular by Hicks, Samuelson and Solow. The Keynesians of Cambridge GB called it “bastard Keynesianism” since it fell back into the least scientifically founded biases of Marginalism that Keynes had tried to correct in order to save private property in spite of itself, by means of a few socio-economic understandings. 

The coming to power of Volcker in 1979 to the American Federal Reserve, that of Reagan to the presidency of the USA and that of Mr. Thatcher at 10 Downing Street in GB, marked the emergence of the political and academic hegemony of the neoliberal Marginalists, these neocons for whom, like Mises, Hayek, Friedman and others, were viscerally opposed to any form of intervention, even minimally corrective, by the State in the economy.

They were also viscerally opposed to any scientific approach especially in economics, science recognizing at all times, including in the time of Aristotle, that exchange value, which is the proper domain of economy understood as production and exchange of goods, must necessarily rest on a support, a use value, whether the latter is a material good or a service.

Since the exchange value of labor power refers to its use value, that is to say to its unique ability to transform other use values ​​- raw materials, machines, knowledge etc. – in new exchange values, classical political economy with Adam Smith had already concluded from this that the genesis of profit stemmed from the fact that the capitalist does not pay labor power at its fair value. The magnitude of profit cannot be explained by the remuneration of the capitalist’s work. Smith concluded “Capitalists like to harvest where they have never sown” (Wealth of nations, Ed. Sutherland, 1993, p 47) The exemplary citizen and great Walrasian economist Maurice Allais, was indignant in the 90’s to see that the salary scale had gone from 1 to 14 to 1 to 400 or 500, not hesitating to denounce these monopolists whom he called “bandits”. In fact, the genesis of profit remained unexplained until the unparalleled scientific contributions of Karl Marx.

To hide this class exploitation, the Marginalists of the Austrian School used all their influence in the highest circles of Power to evacuate the duality of economic value – use value and exchange value. Indeed, it is capable of being analyzed scientifically since this duality is objective and objectifiable – past labor and living labor. They never stopped substituting an entirely subjective “utility” for it.

I have already said elsewhere that this concealment strategy aimed at blocking the way to science implied a wall-to-wall contamination of all social disciplines. In his German ideology Marx explains how triumphant capitalism attempts to pose as the end of History in order to ward off its inevitable demise after having, like all other modes, exhausted its possibilities. Marginalism therefore tried to accredit the idea that the capitalist psychology aimed at optimizing the utility of goods existed everywhere and for all times. There would be no difference from this point of view between “primitive” societies, those practicing the potlatch, feudal societies, Western, Asian or African societies … We know that this was one of the faults of ethnology and of anthropology during the first half of the XX th century, a defect made worse through their interweaving with the information services of the colonial armies.

Even today, the social sciences are struggling to extricate themselves from these Nietzschean Marginalist and philo-Semite psychological falsifications. I refer, for example, to my definitive criticism of the rabbinic-Nietzschean charlatan falsifications of Freudianism and bourgeois psychology in the second part of my Pour Marx, contre el nihilisme – the pertinent chapter is translated in English here: .

As far as the “dismal science” is concerned, it suffices to take into account what is said above to understand all of infra-scientific ineptitude of the new versions of Marginalism. For example, theories a) rational choice; b) the flow of information; d) behavioral theories, including nudging.

We see that all of them are trying to correct the initial defect concerning the postulate of the diachronic and synchronic identity of capitalist subjectivity, the calculation of the joys and pains of the “acquisitive mind”. Until the 1980s, Marxism and the theories which were close to it strongly countered this obscurantism of another age. Then, the dangerous disappearance of the disciplinary plurality was imposed by an academic discrimination without precedent since the end of the Second World War; it also affects the selection of the holders of tenures and of university chairs, as well as the the control of the subjects of theses and publications. Yet I have the right to say that a pitre like Jean Tirole must necessarily use all his prestige to prevent plurality in the discipline since he simply does not know what a scientific function of production is, without even mentioning what a microeconomics without macroeconomics could eve be. It’s much worse than the famous controversy between Cambridge UK and Cambridge USA over the production function, a controversy that was carefully carried out within the same pro-capitalist mind set.

The fact remains that the development of cognitive sciences no longer allows such uniform and falsified postulates. Empirical experiences and comparative methodology have gone through that. For example, in the context of discussions between determinism and indeterminism, therefore causation, Simon and Cyert had pointed out that very often a given problem allowed more than one single solution or outcome; the choices are between “trade-offs” often involving complex strategies that go beyond optimizing financial profits. Better still, following Marx, there was a strong development of theories of comparative modes of production. I have shown that this applies profitably to the comparison of the epochs of redistribution of the CMP.

For example, the falsifications of Irving Fisher were aimed at eliminating the various incomes – salary, profit and rent – in the only magma of its “income stream” to dissipate the class struggle. In doing so, we present all citizens as investors coming from the same psychology of maximizing pecuniary gains, as much the workers, the housewife, as the bosses and managers, as the rentiers and the farmers. We thus forge a structure that can support a supposed logic of this “investor” who is supposed to have to constantly calculate his risks and choose the temporality of his investments according to a falsely obvious rule dictated by marginal utility, namely that a long investment is riskier and therefore will require higher interest rates. However, if the credit were public, the cost of its issue would be almost zero, limited to the statistical estimation of the financing of administrative costs of the central bank – which will include provisioning for debt. In this context, no difference in rates on the short, medium or long term would not emerge. At most, appropriate rules would have to be put in place to ensure the translation of public credit, which is an anticipation of real growth, into a verifiable expansion of the real economy; this would be done by regular audits to prevent soaring costs and corruption.

We can of course use the cognitive sciences to obtain the desired outcomes. This is not new and refers to the kind of marketing that took place with the emergence of the middle classes and their consumption. Veblen turned it into an overall strategy of social control by planning the jealousy maintained between neighbors belonging to the same income class or to substantially similar classes. It was only a “lower and upper middle class” form of suburb Darwinian leapfrogging but which became very effective thanks to the consumerist siren songs carried throughout the day by new mass media, radios, posters, newspapers and magazines , cinema and TV. The fetishism of the commodity took the form of the desire for consumption itself as an expression of the personality of individuals, a desire stimulated socially in a subliminal way by the status conferred by the financial possibility to consume. Owning a car, washing machine, or television in the 1950s and 1960s was presented as a sign of accomplishment, as was later the desire to go into debt to acquire a satisfactory suburban home or lodge thus to falling prey to the surge of social adrenaline encouraged by Greenspan and other pitres of this kind. (“Irrational exuberance”). The nec plus ultra being of course to follow the pitre Tirole in his rantings on the « imperfect competition » aimed at preserving the interests of the Gafam and other transnational companies by creating fallacious processes supposed to protect the consumers. These processes are as juicy and democratically interactive as their venal processing of data collected by cookies and other means of tracking. No agreement on this collection, no services. By authorizing the collection and tracing of data, however, we expose ourselves to the worst form of commodity nudging which consists of receiving lots of advertisements on the subjects that were the object of innocent internet research – B&B, books etc. These data are often processed and marketed by companies like Cambridge Analytica. This kind of interference increases in election time by positive reinforcement or anxiety-provoking messages to topple allegiances and votes. (Remember the antics of Diebold ?) We are not far here from a digital form of the experiences of a Philip Zimbardo.

On the other hand, nothing is said about regressive monetarist neoliberal taxation, about tax evasion and tax rulings. The results of this behavioral science are still below the ineffable Antitrust created in its time to legitimize the Big corporations – Means, 1920s – and their sprains in the free market and competition. Basically, all of this brings us back to American behaviorism which is still rampant in all sciences, including in “dismal discipline”. Modern economists have invented nothing on this subject, it suffices to verify, for example, the economic science of a Boulding or similar academics in the 1950s and 1960s… The great filmmaker Alain Renais had presented a masterful criticism of this behaviorism in his masterpiece “Mon oncle d’Amérique ”.

Of course, recurrent crises always put these consumer aspirations in danger, especially when basic needs, including public health-care and the education of children, are no longer met. The vision of a gradual exit from the top or alternatively a regressive one from the bottom of the social quandary suddenly becomes a key issue in the class struggle. The ruling circles then carefully adapt their behavioral sciences, insisting that beyond $ 75,000, the marginal utility of additional acquisitions decreases, except for derivatives, of course; at the same time they preach socio-economic disincentive to the masses in the name of ecology without, of course, ever demanding the equality of the ecological footprints; and, of course, this is done by carefully silencing the need to rebuild the Welfare state by sharing the socially available work among all those able to work, which is the only authentic way to share the socially produced wealth, in addition to a return to a republican and progressive taxation. Let us note in passing that never in the course of history has the speculative economy been so disconnected from the real economy. The Covid-19 crisis has put millions of workers at full or partial unemployment, definitively ruining Social Security systems based on social contributions, at least in the absence of the immediate launch of major public works financed by public credit . On the other hand, during the confinement the richest won several hundreds of billions more on the stock market!

Finally, we are entitled to wonder what is the use of the flow of information if this information is based on such subjective bases, including in the form of Marginalist statistics, including GDP. Amartya Sen, PhD at Trinity College, Cambridge, has always amused me by claiming that this superiority of information treatment – deemed “democratic” in an India where ½ billion Dalits have an average longevity of 40 to 42 years and whoare today forced to work 72 hours a week… -, gave India an incomparable advantage over China in terms of economic development.

In short, it will have been understood that these adjustments among the mute of the seraglio are only made at the margin, within the same falsified paradigm. They therefore have no bearing on concrete reality. They in no way affect my ontological criticisms of the one-dimensional value added and of the problematic role of the invisible hand.
Of course, the resistance to this ridiculous amputation of reality was very great. The historic German bourgeois school, notably with Schmoller, rightly objected that a purely subjective concept could not be the object of any science and particularly of no quantitative science. In France, Bachelier was turned away by Poincaré and Léon Walras by the University, the latter having to go abroad to Nietzschean economists in Lausanne to be able to pontificate at his ease. To tell the truth, to the delight of a Jules Ferry, who according to his own admission understood nothing about economics but was enthusiastic about a pseudo-mathematical version supposedly less comprehensible to the working class … a ridiculous drawback that the “dismal science” taught in universities is cultivating laboriously, for example lately with a pathetic Tirole putting its mathematical training at the service of very shady behavioral whims, while seeking to evacuate the macro-economy in favor of a single micro-economy at the service of transnational corporations and their “global private governance. ”

I already said that the pitre Tirole is the man of three big ideas quickly transformed into three big disasters. Thus, financial deregulation led to the subprime crisis, the Single contract led to the Italian Jobs Act and to the French Loi Travail, and his theory of imperfect competition considered from the point of view of the consumer led, for its part, to regulation of the GAFAM from the point of view of the satisfaction of consumers and other users in order to preserve their inexplicable fiscal privileges. If Tirole is working on a fourth big idea, we can already imagine the damage…

GDP is the purest offshoot of this utilitarian amputation of economic reality. This defect is extremely debilitating. The current reality proves once again that it is all the more so since the “animal spirits” – Marginalists, neoliberals-monetarists – rightly denounced by Keynes – are dominant. This was the case during the 1920s and 1930s before FDR and the New Deal, and it is again the case today.

We will see that regardless of the choice we make of the three accounting measures of GDP, these accounting measures are all based on the flawed Marginalist production function which eliminates the duality of value thus always leading real societies to deadlock. This is even more true when the regulatory intervention by the State and of the legal framework is minimized.

In fact, modern statistics were originally based on the influence of Keynesianism – and indirectly on that of German war planning during the First World War as well as on Bolshevik planning. This indicative and incentive planning that followed World War II in the West was very effective but nevertheless ontologically incapable of eliminating the cyclical and structural crises of the capitalist mode of production. Thus, when the success of the Gatt and the expansion of the MNC perverts the necessary coherence of the national – or supranational – Social Formations and when the extroversion of the Economic Multiplier, added to the increasing privatization of infrastructures and public social services, reduced to nothing the effect of internal stimulus policies focused on internal demand – pump priming, to put it simply -, then the monetarist neoliberals finally had their heyday. Today, their narrative cycle ends with an unprecedented speculative bubble and an unmatched economic depression that is already beginning to make the memory of the Great Depression of 1929 fade. The health crisis caused by the Covid-19 was only a powerful trigger.

The scientific production function is written: c + v + pv = M, let “c” be the constant capital used in production, “v” the variable capital therefore the labor force, “pv” the surplus value at base of profit and “M” the product of the immediate production process.

All three definitions of GDP remove the reference to capital and therefore, in the wake of the unequivocal and subjective utility imagined by the Marginalist theory, they remove the essential economic ratios and their mutual relationship, namely that between the organic composition of capital – v / C where C = c + v – and the exploitation rate – pv / v. In this way, it is impossible to understand microeconomic productivity and macroeconomic competitiveness.

In addition, it is necessary to underline the rigging operated by J. B. Say against Ricardo, who had come up with his paper currency theory. It consists in anticipating the Marginalist mutilation of the duality of value by only evaluating the labor force in simple monetary terms. In so doing, it is transformed into a factor of production like any other, despite the fact that the worker must renew himself in production and in reproduction within his household, being a member of a species dependent on sexual reproduction. This liquefaction of labor power supported by a monetary theory, also subjective and unambiguous which confuses money and credit, leads to the fact that no bourgeois economic theory, even less the Marginalist variants, is capable of reconciling quantities – use values – and quality or price – exchange value.

Schumpeter mischievously transformed this methodological flaw into an ontological dichotomy, therefore pushing the crucial topic beyond discussion, but he himself remained very pessimistic about the future of the capitalist mode of production, and consequently of the capacity for its own ontological falsification to impose itself. Schumpeter knew perfectly well the laws of motion of capital synthesized by Lenin as theheavy tendencies to the centralization and the concentration of capital, he also knew perfectly well that his “creative destruction” was never nothing other than a rearguard battle.

France had a case of a classic Walrasian economist, a great Republican citizen and the only Nobel Prize in economics to have won this distinction in my opinion, namely Maurice Allais. He had in mind the distinction between social economy and “economics” that Auguste Walras had pointed out to his son Léon. For Mr. Allais, the Marginalist equations had to be informed by social priorities.

In fact, as long as the tariff protections and the functional separation of the banking system into 4 pillars also making room for public credit remained, one could have the impression that the Marginalist equations – supply and demand curves, economy of scale etc. – remain close to reality with only a few successive adjustments. The end of the Gatt putting an end to this coherence, as a good Republican citizen Allais set out to illustrate the disorganization that followed – the “Fracture of 74” – to better support his request for re-stabilization of the system to a higher level through EU Community Preferences.

In Note ** of my Keynesianism, Marxism, Economic Stability and Growth, freely accessible in the Livres-Books section of , I showed the flaw in this reasoning, particularly with regard to the critiques levied by Allais on the management of the labor market through “social management” policies, which led him to question the RTT. In fact, Community Preferences would stabilize the socio-economic system but without dissipating the capitalist contradictions which marginalism aggravates, as we have seen above. This is especially true for the labor market since Marginalism is incapable of conceiving of the effects of productivity while relying on the meta-magic of the “invisible hand” to restore equilibrium. So that a new definition of anti-dumping based on the “global net revenue ” of households, therefore on the RTT, would allow the rehabilitation of social contributions and of the tax base, thus strengthening productive consumption and that of households against the tendency to overproduction.

We have known at least since Beveridge that social services have a strong countercyclical stabilization impact. A new definition of anti-dumping supporting the RTT would allow the return to indicative and incentive planning à la française, therefore to social prosperity. As Social Affairs is an exclusive area of ​​competence of the EU member states, it is possible to anticipate the international adoption of this new anti-dumping with a low import surcharge. Its rate would be calculated to supplement the social contributions otherwise sacrificed by the current wage deflation.

On these subjective, liquefied and unequivocal Marginalist bases, bourgeois theories are incapable of differentiating interest – classic or speculative – and profit and therefore real economy and speculative economy. Worse, the theory of “capital efficiency” turns this deadly pitfall into dogma by taking for granted that speculation accelerates the mobility of capital and therefore hastens the return to equilibrium. On this account, neither cyclical crises nor structural crises should exist except, non-falsifiable proposition as would say the other pitre and Austrian subjectivist Karl Popper, by pretending the persistence of barriers hampering the freedom of capital. It seems that despite the current definition of anti-dumping, the barrier that this fine theory runs up against, which in its time worked shoulder to shoulder with Nietzschean philo-Semite fascism, remains the unbreakable duality of the workforce , whether in its individual human form or in its social form itself, despite the contrary wishes of a Thatcher for whom “society did not exist”, the individual existing only and still only when he exhibited the “mentality acquisitive “appropriate.

It will therefore be understood that all economic equations based on such Marginalist statistics, in particular the national accounts embodied in GDP, can only lead to a chronic misallocation of Community resources. The same goes for the so-called tax consolidation paths and their spending reviews based on these bourgeois Marginalist nonsense. For example, Public Health-care costing just 7% to 9% of GDP has a very high Multiplier but is not assigned “value added” because it has no “market price”. But GDP calculates it as a cost – wages paid – weighing on State spending; on the other hand, the private health-care system often out of reach of citizens and the ruinous speculative sector which ruins the economy and society, are said to add significantly to the GDP. Ditto for pension plans, public and private, etc.

It is on the basis of these nonsense – the ratio public debt / GDP – that the “spending reviews” of austerity induced by the neoliberal monetarist public policy set out to materialise a primary surplus, that is to say from the tax revenues excluding the financing of public debt. This being owned by private capital – now speculative – it is therefore the subject of all priorities according to the prescriptions of the Chicago Boys who prescribed the Pinochet regime to sacrifice everything to export and thus earn the foreign currency necessary for financing the debt. However, the logic of the primary surplus supposed to finance and to decrease the level of public debt has a strong depressive socio-economic impact – cuts in social spending, in particular. It is now running up against the fact that the public debt, which is emerging above all from the gigantic tax expenditures and other capital exemptions as well as from the now recurrent rescue of speculative finance, continues to increase. In short, a snake that bites its tail …

It is therefore advisable to pour these national accounts – and its counterpart company accounting – to the heap of manure of History as well as all the system of international Marginalist accounting – SNA – which is increasingly harmonized on the American system. It is urgent to develop real scientific accounting systems on the basis of the scientific production function duly reintroduced by me in the Equations of Simple and Enlarged Reproduction of Karl Marx as proposed in my Synopsis of Marxist Political Economy, 2013.

Let’s see this in detail. We will first review the three accounting forms of GDP – value added, production and consumption – to bring out not only the theoretical and accounting inanity, but above all the dangerousness of the economic growth equations based on it. Then we will examine the ingenious modifications proposed to correct an uncorrectable GDP.

Regarding the inanity of the equations and the consolidation paths induced by the GDP, it should be noted that not only Rogoff, Akerlof, Stiglitz and others such servi in camera are involved. This danger increases with the financialization of the economy. Indeed, as it has already been demonstrated in my Synopsis the hegemony of speculative finance penalises the real economy, pushes for outsourcing and destroys employment, in particular full-time employment paying social contributions and taxes various. In October 2014, a year before in the United States, the GDP was further modified to include an assessment of drugs, prostitution, tax evasion, certain armaments and certain intellectual property rights related to ICTs. These additions are of course artificial, but they further aggravate the Marginalist biases of the GDP. Above all, none of these new assessments contributes to reversing what is no longer a “jobless economy” but a “jobs destruction economy” going hand in hand with the rampant precariousness of the workforce. Of course this is all the more damaging in the context of neoliberal monetarist fiscal consolidation paths. We will conclude with a brief presentation of the scientific statistics to be developed on the basis of the scientific production function and of the Equations of Simple and Enlarged Reproduction by including the scientific – therefore Marxist – quantitative theory of money and credit.

The three accounting forms of GDP.

In September 1975 Jacques Barraux published a brief summary article on GNP in the Revue Economia, N 15, pp 44-47. This is the best summary on the subject, at least to my knowledge. It hasn’t aged a bit. Some elements such as finance were added but the essential was already said from an ordinary but rational economic perspective. We will then see that this Marginalist bourgeois accounting is so deeply flawed that it cannot be usefully corrected. Jacques Barraux underlines that the GDP, that is to say the GNP from which it is necessary “to subtract the operations carried out abroad by the national economic agents and to add the operations carried out on the national territory by the foreigners”, is one of the major economic aggregates. He presents the following sequence:

INDUSTRIAL PRODUCTION + banking services + public administration + salaried households + private administrations = GNP, the Gross National Product

GNP – depreciation = PNN, the National Net Product, ie (GNP – national operations abroad + operations of foreigners on national soil).

PNN + subsidies – indirect taxes = RN, National Income

RN – direct taxes = National Disposable Income

Today’s GDP is often in the headlines because it is perceived as a common scale capable of indicating the international rank of one country in relation to the others. Its three canonical presentations are as follows (1):

1 ) Seen from the investment side:

GDP = C + I + G + X – M (i.e. final consumption of households plus business investment + government spending minus exports plus imports)

2 ) Seen on the income side:

GDP = wages + profits + interest + taxes – subsidies

3 ) Seen from the production side:

GDP = Σ (Yi – ICi) + taxation on products – subsidies for products. (or for each industry i, output Y minus intermediate consumption, the terms of the equation being given in value added.)

The key word in all these three forms is “value added”, which is confirmed by the concept of “intermediate consumption”. These concepts come straight out of the Marginalist conception of utility, marginal utility – the satisfaction provided by the last unit – and marginal productivity, the cost for the last unit produced.

What is “value added”? Unlike the “surplus value” whose support is the “surplus labor” of the labor force, the value added, or what is commonly called the profit, that is to say the share of the exchange value resulting from the process of production which is added to the cost of production – in capital and labor power – is entirely subjective and frankly undefined.

For classical political economy – Smith, Ricardo etc. – the genesis of profit, greater than the legitimate remuneration of the owner of the Means of production, remains a mystery. The risk reward theory convinces no one, if only because the legal framework can theoretically remove it, for example the fair Thomistic price or the extremely stable exchange value resulting from Soviet planning, especially for foodstuffs, such as bread. . . As a good Physiocrat, Adam Smith appealed to ethics to preside over the redistribution of socially created wealth. (3) Since its genesis is unknown, its magnitude can only be empirically ascertained ex post, and this in terms of market prices, themselves oscillating…
The Marginalist production function, that which is found uniformly in mainstream textbooks – which are not worth the paper on which they are printed – does not do any better, but it invents a subjective narrative “fuzzy” logic and then pretends that it is scientific.

The mainstream production function is written Y = f (K, L) where the product Y is a function of K capital and L labor. Which, in itself, means absolutely nothing in terms of value added or profit, unless you cross the supply curve and the demand curve supposed to give you the sale or market price, of which the production cost is deducted.

For scientific economics – therefore Marxist – things are clear: the labor force costs to reproduce as such, including in the household, what it costs socially to reproduce it. This is what the capitalist pays to employ it: wages thus compensate for past labor, that is to say, reconstituted and ready to operate again as living labor. But only the capitalist fixes the duration and the intensity of the exercise of living labor within the immediate production process. Thus if it costs 4 hours to reconstitute the exchange value of the salary and the legal duration of the working day is 8 hours, the production of these other 4 hours, therefore of the employee’s extra work, will be pocketed by the capitalist in the form of surplus value – or, if you want « value added » – which, when compared to the cost of production – capital and labor – gives the rate of profit. In a system of production-reproduction thus scientifically understood, there is nothing ex post, since the genesis of profit is known with reference to the ratio of the organic composition of capital (v / C) with the exploitation rate of work (pv / v). Of course, there can be all kinds of epiphenomenal interference through competition, monetary management, natural and social upheavals, etc.

It is quite different with bourgeois economic theories. The genesis of successive bourgeois and major Marginalist economic falsifications, exposed in my Methodological Introduction, tells us that the initial objective consisted in eliminating the duality of the commodity and in particular that of the value of labor power, to better conceal the class exploitation. On the basis of the Marginalist subjective “utility” “the calculation of joys and pains ” – Menger – linked to the use of goods is based on a consciously false but plausible reasoning, that of the determination of the fair market price by the game of supply and demand supposed to relate the marginal utility felt by consumers and the marginal productivity which confronts producers.

It is a theater of the absurd worthy of the pitres of the Austrian School and in particular of the Jewish-Austrian fascist Ludwig Mises who was adviser to the Austrian chancellor before his flight at the time of the Anschluss. Of course, the term “pitre” is used here in the full sense given to it by my theory of Marxist psychoanalysis exposed in the second part of my Pour Marx, contre le nihilisme which presents, for the first time, the definitive criticism of the bourgeois psychology and in particular that of the charlatan Sigmund Freud. This term, which refers to everyone’s inner forum of consciousness, is more objective than that of “acted” 0 in French « agi » – which remains vague and full of innuendo not scientifically elucidated. The most comical thing is that this Marginalist theater of the absurd leads and encloses all bourgeois theoreticians in the lethal ex-ante / ex-post contradiction that the pitre Böhm-Bawerk wanted to attribute to Marx by claiming that Book III of Capital – the production price – lethally contradicted Book I – the law of Marxist value.

Already in my Tous ensemble – 1998 – I had unraveled this falsification and restored the scientific nature of the incomparable work of Karl Marx. Here, if we take care, it very quickly appears that the fair market price obtained by intersecting the curve of the Supply with that of the Demand is of such childishness that one cannot help but recall the expression of their Grand Master Nietzsche. In his Thus spoke Zarathustra, while trying to warn his falsifying disciples not to end up believing themselves in their own stupidities intended for the populace of neo-chandalas, Nietzsche punctuated his warnings with loud braying “Hi-han! Hi Han! ”

In fact, to draw up the Supply curve, we must first supply the Demand tables in … price! Then, conversely, to draw up the Demand curve, we must provide the Supply tables, always in price. Then we cross the two curves and Voilà ! the fair market price (hi-han!). You can then move the curves to the right or left but, unfortunately, not alternately. I also pointed out that the axiom that pretends that “where there is a demand there will always be a supply” is a nonsense visible to everyone and anyone who is not blinded by their ideological faith. This is only true when the demand is solvent. Who does not see that, in the supposedly advanced society of the rich countries, many elementary and essential needs of the citizens are not or no longer ensured because of the logic of wage deflation induced by monetarist neoliberalism and by its definition of anti-dumping which was calculated to be contrary to labor rights and compliance with environmental criteria.

Already in his Parisian Manuscripts of 1844, Marx noted that the oscillations of supply and demand due to the regime of capitalist competition canceled each other over the medium and long term so that the market price oscillates around a different axis , namely the exchange value. The fact remains that the market price is never anything other than an ex post microeconomic accounting construction that bourgeois statistics struggle to pin down, including with the use of “constant prices”. The latter do not change the ontological and methodological contradictions of the evaluation of the “utility” or price of goods, they do nothing but serve to stabilize things apparently by giving a useful starting point for comparison, for example a year of departure or a basket of consumption, the CPI. (4)
Let us now refer to the function of scientific production – therefore Marxist. It immediately brings out all the ineptitude of the logic of value added included in the statistics of the big bourgeois aggregates, including of course the GDP.

The scientific production function is:

c + v + pv = M

The surplus value pv can be defined by rigorous relationships stemming from the production function, the organic composition of capital and the rate of surplus value. The value added mysteriously brought about by the “market” can only be so in appearance and always in an ex post manner, either in nominal or constant prices. The organic relationship between the cost of production (c + v) and value added is nonexistent and depends only on the market … including that for investment.

To judge the other components entering into the GDP, we must now analyze the logic of general equilibrium, that of productivity and that of the so-called misleading intermediate consumption and the role of administrations and public services. The external balance sheet will then be taken into account in terms of the insertion of the Social Formation into the World economy. It will be seen that not only is the GDP fallacious, but all the equations – of growth, for example – or paths – of fiscal consolidation, for example – based on this same logic inevitably generate recurrent crises. Above all, it leads to economic catastrophe when this logic is placed under the hegemony of speculative finance.

The stationary and dynamic general equilibria versus Simple and Enlarged Reproduction.

With bourgeois theories it is the “market of the markets” which is supposed to give the optimum general equilibrium thanks to the operation of the “invisible hand” by which the general interest would emanate from the frantic search for the greatest individual profit. In particular this Marginalist conception of Walrasian origin suffers from all the ontological and methodological flaws specific to the “logic” of Supply and Demand. It is, for example, impossible to say what stationary equilibrium is. Intuitively, it is a general equilibrium that would reproduce the starting conditions in the same way. But to do this he must rely on the meta-magic of the “invisible hand” which is by definition blind. However, this always leads to a disastrous allocation of Community resources for the benefit of a few, according to the “animal spirits” who stir up “the acquisitive mind”. This is why the capitalist mode of production will always present an equilibrium, but it will always be ex post, so it will be a kind of equilibrium of cemeteries made of “booms and busts”, recurrent cyclical crises and sometimes much more serious structural crises. This is why in his General Theory of Employment, Interest and Money – 1936 – Keynes set out to demonstrate what, according to him, were the necessary interventions of the State in the economic sphere to regulate the course and ensure full employment.

With such an intervention it may seem that equilibrium can be maintained or at least approached empirically. This is also the reason why bourgeois statistics took off under the pressure of Keynesianism and the school of European regulation which was behind the successes of post-war planning, in particular indicative and incentive planning, known as French-style planning. Of course, things are not so simple. Keynes wanted to save the capitalist mode of production in spite of himself, he was therefore ready to correct its excesses, even going so far as to borrow from Paul Lafargue the 15-hour week. But these corrections did not change the class nature of capitalism, expressed by private property. So he kept the logic of marginal utility and marginal productivity, an error that proved fatal to him.

Indeed, on this basis, the balance is made fictitiously in terms of price by completely ignoring the real support – good or service – behind this price. In this way, investments will go sheepishly in the more profitable branches causing their speculative over-expansion to the detriment of other branches which will undergo contraction. By definition, the invisible hand will be insensitive to this poor allocation of resources. But stationary general equilibrium – let alone dynamic general equilibrium – cannot be achieved solely in terms of price. Tangible goods and services that are part of the cost of production must also be reproduced as tangible goods and services necessary for production. However, no bourgeois theory is able to reconcile quantities and prices simultaneously and coherently, any more than microeconomics with macroeconomics. Crises, by purging the system repeatedly – roughly every 7 years – recreate the conditions for a fresh start, at least before the hegemony phase of speculative finance and its series of bailouts.

But of course, the crisis is not ontologically part of bourgeois economics, it is considered an impossibility. This ineptitude is raised to dogma by the theory of “efficiency of capital”, so that the servi in camera of capitalism get away with a pirouette by claiming that these gaps between theory and reality are due to all kinds of rigidities in the markets. The less obtuse like J. Galbraith engage in interesting historical studies while trying to update state interventionism in, say, a Keynesian spirit. (5)

The dynamic equilibrium envisioned by bourgeois theories is even more wobbly. We know that Harrod, the first biographer of Keynes though coming from Oxford, tried to revitalize the stationary system of Keynes by adapting to his own ends the practice of Soviet planning then subverted by “marginal socialism” imposed in the USSR by the revisionists Khrushchev and Liberman . (6) This resulted in a better empirical appreciation of the inputs necessary to obtain the desired outputs, but this could only be done very empirically.

The pitfall of all bourgeois theories in this matter is due to the absence of a theory of productivity, an absence further aggravated by the impossibility of simultaneously dealing with quantities – the supports in terms of use values – and prices. This had been recognized by certain theorists from Lausanne, in particular Wilfrid Pareto. He attempted to deepen the logic of marginal productivity which, at best, led to the quibbles of increasing and decreasing incomes and to economies of scale, which are never more than a repetition of the supply and demand curves. Nevertheless Pareto made no secret of the fact that, if the technical composition of capital could be measured empirically, bourgeois theory did not allow technical composition and value composition of capital to be reconciled.

Only the Marxist theory, which I restored, is capable of doing this while inserting productivity in a coherent manner in the Equations of Simple Reproduction – SR – and of Extended Reproduction – ER.

Robert Solow tried to trick the question. At the time, he surreptitiously adopted Stalin’s position that it was always necessary to introduce the greatest productivity available, even if it meant readjusting the Reproductive Equations. Stalin operated with a precise Model, the Model of Simple Reproduction as presented in Book II of Marx’s Capital. This modeling remained perfectly consistent, including in its dynamic version, as long as the systemic conditions remained the same, namely the organic composition of capital – v / C – and the corresponding rate of extraction of surplus value – pv / v – . In solving the productivity problem – the two ratios change inversely and proportionally – the patterns of SR and ER remain perfectly consistent. SR with identical ratios in both sectors is no longer to be considered as a special case. At least Stalin had at his disposal a heuristic model which made it possible to reconcile quantities and exchange values. With the introduction of productivity, he only had to rebalance things empirically on the basis of the initial scheme. This was made easier by the fact that the salary scale was very narrow – the differences being limited to material emoluments – and that the national accounts insisted on quantities, or Net Material Product.

None of this was available to bourgeois theorists, at least to those who did not rely on corrective State interventionism and indicative and incentive planning. But here again, as we have seen, the logic of marginal utility and the invisible hand led to inevitable cyclical crises due to the non-optimum private allocation of resources.

The case of Robert Solow, pseudo-Nobel Prize winner for his inept article from 1956, is emblematic. As a good neoliberal synthesis economist – bastard Keynesianism, according to the expression of Cambridge, UK – he evacuates State interventionism in favor of a razor-hedge equilibrium – obtained by removing the determining variable among all the others Keynesian socio-economic variables, i.e., the search for full employment. Its production function then becomes Y = f (K, L) where K is capital and L is labor but not necessarily at full employment. In a brutal Malthusian fashion, Solow poses tht the equilibrium is achieved on the razor’s edge by adjusting the labor supply and wage via the tendency towards the physiological threshold. Of course, such a threshold does not exist since it depends on the civilizational conditions of the society in question, what Marx called, in the classical sense of the term, its “moral” conditions. Thus the ½ billion Dalit comrades in India – today reduced to 72 hours per week … – have an average longevity which varies between 40 and 42 years. In the XXI Century…

The case of Solow worsens all the more since he posits as a condition for economic dynamism the introduction of the most advanced technology, but it is forced to do it exogenously because he is not able, in the framework of marginalism and its own version of this falsified ideology, to give the price of this introduction. However, technology is not only part of the technical composition referring to economies of scale, it is also traded on the market. But basically, Solow like all pseudo-Nobel laureates of “dismal discipline” did what was expected of him, that is, he reaffirmed the essentials of the Marginalist catechism – that is, the original falsification – while offering plausible recipes to preserve, from time to time, the plausibility undermined by historical evolution. Indeed, as modern cognitive science teaches, wanting to substitute perception for reality always comes up against an impossibility due to the gaps between the two, gaps which manifest themselves either incrementally or by brutal shock – ex., structural crises .

Let’s related this to GDP. We already know the inadequacies of value added compared to surplus value. Now we realize that no theory of bourgeois growth can be predictable or valid for want of being able to reconcile quantities and prices and for failing to offer a theory of productivity capable of reconciling them in a dynamic context.

We now come to the so-called private intermediate consumption.

Bourgeois economists and statisticians subtract the value added from the intermediate sectors with the seemingly laudable intention of not counting certain value addeds ​​twice. This leads to a crippling falsification of reality. Already the value added, which is always given ex post because it oscillates constantly according to the moods and groping of the market, remains dangerously suspended in the air like a whimsical reality without substantial body. This follows from the univocal subjective nature of marginal utility. It is supposed to be the surplus mysteriously added by taking risk to the cost of production – c plus v plus the labor income of the owners of the Means of production (Mp). But as Marx explains in “The Last Hour of Senior”, the definitive criticism anticipated by Marx against marginalism in Book I of Capital, in the sale price of a good or service we can determine the share material and the price of the cost of production, on the other hand, we would be hard pressed to say on which medium the value added rests. This is arithmetically silly since, as Marx points out, there is necessarily a sign of equality between all the inputs in the production process and the product of this process. This equality is that of the scientific production function.

Let us note pva the share of surplus value or value added which compensates the owners of Mp and pvb the remaining value added realised on the market; we would have: c + v + pva = c + v + pva + pvb !!! Böhm-Bawerk, Mises, Menger were aware of their falsifications, the fact remains that this childish stupidity is the basis of all textbooks and all pseudo-Nobel Prizes in “dismal discipline”. The same problem in its more relevant version does not ask if A = A but rather – with Aristotle and Marx, etc. – how A = B, or how a tripod can be exchanged for a bed, the exchange involving commensurability determined by a common measurement standard despite their different nature.

The treatment of value added in the intermediate sectors is even more disastrous. If we analyze the function of scientific production: c + v + pv = M, it exhibits the result of an internal division of labor, the culmination of the modern fragmentation and recomposition of tasks that goes from Adam Smith’s “pin factory” to Taylorization to the current micro-Taylorization often placed under real-time online control. In the end, this division of internal labor leads to the internal norm which defines the organic composition of capital (v / C) and its relation to the rate of exploitation of labor (pv / v), the two being linked by a ratio of inverse proportionality. This is, moreover, why Marx abandoned the Smithian empirical Baconian concepts of “simple labor” and “complex labor” – addition of simple labors – for the concepts of “abstract labor” and “labor socially necessary for reproduction”. In capitalist competition, it is this standard that will make the difference between enterprises.

The economic sectors define the social division of labor. By following and correcting Quesnay, Marx defines two main sectors, Sector I of Means of production (Mp) and Sector II of Means of consumption (Cn). Between them they sum up the whole economic system of production and reproduction for the simple reason that they correspond to the inputs c and v of the production function. Of course, a modern economy involves several million different goods and services, but they can all be included in industrial and economic branches, which are all subsectors subsumed either in Sector I or in Sector II. The « filières » refer to a transversal organization therefore to another level of organization – statistics – which is based on this specific productive and reproductive nomenclature. To be well managed, they imply a scientific statistical system giving simultaneously quantities and prices, something which bourgeois statistics are ontologically incapable of doing, except in a very empirical and ex post manner.

Let’s take Barraux’s example and assume a system with a company producing and selling baguettes. The agricultural entrepreneur and the milling entrepreneur act here as “intermediate sectors”. Their value added will be deducted from the calculation of the “final” value added. We thus ignore the fact that we are dealing here with three capitalist entrepreneurs each forced to extract a rate of profit that the mobility of capital – the essential aspect of the regime of capitalist competition – will make identical in the medium and long term – or more precisely over the duration of the reproductive cycle. However, the value added of the farmer becomes a cost of production for the miller and likewise by passing from the miller to the baker and finally to consumption. The shaky logic of final value added thus removes the essential relations of production-reproduction – the relation cost of production / production of the new value – and thus gives a distorted image of reality. We cannot treat the social division of labor as an internal division of labor having only one organic composition of capital (v / C) and one rate of labor exploitation (pv / v).

Let’s illustrate first what happens when we consider added value or surplus value in abstraction of costs (c + v)

  1. A) marginalism (chain)                          B) scientific (sub-sectors)

Farmer: c1 + v1 + pv1 = M1                         Farmer: c1 + v1 + pv1 = M1

Minotier: c2 + v2 + pv2 = M2                       Minotier: c2 + v2 + pv2 = M2

Baker: c3 + v3 + pv3 = M3                          Baker: c3 + v3 + pv3 = M3

———————————————————- ———————————————                                                     Final value added = (pv3)                             Total surplus value = (pv1 + pv2 + pv3)

In case A) Marginalism, the added value manifests itself at the end of what is wrongly called a “value chain”. Of course, the taxman does not follow this logic, it does not just tax the baker. As the value added of the miller is added to its cost of production to form the selling price of flour, this selling price appears as a cost in the production function of the baker. His own added value seems to him to be added in addition to his own remuneration as an entrepreneur by the simple immaterial game of the market – in reality by the extra work of his workers mediated by the market within the CMP. (7)

The “value chain” leads to a finished product at the end of the chain, but its specific added value does not represent the new production of value of this system – or subsystem. To have this sum – which is what GDP claims to measure annually – you have to consider the addition of all the capital gains of the sub-sector or the sector. The term intermediate sector is moreover confusing because it is strictly speaking about companies or branches included in the same sub-sector.

The case B) scientific, illustrates well the difference between “the value added chain” based on the meta-magic of the “market” and the taking into account by the aggregation of participating companies in the creation of a sub-sector or in an economic sector.

Let us now illustrate according to the logic of new production. In the example we took from Barraux, the new productions are wheat, flour and baguette. In reality, the “value added chain” in GDP accounting confuses new production and value added and only takes into account the market price of the finished product at the end of the day. The finished baguette product would include in its specific production cost a percentage of the production costs (c + v) of the farmer and the miller – noted respectively (c + v) / x and (c + v) / y – plus its own added value – supposedly extracted on the market, hence without any use value support.) This would give us the following chain:
Farmer: (c1 + v1) / x

Miller: (c2 + v2) / y

Baker: c3 + v3 + pv3 = M3

1 ) We imagine tremendous accounting quandary faced in defining these percentages since they must enter into the composition of the cost of production of the baker of which they form only a part. If we assumed that all of the production costs (c + v) upstream fall into the production cost of the finished product at the end of the chain, we would obtain the following arithmetic contradiction:

c3 = (c1 + v1) + (c2 + v2)

So (c1 + v1) + (c2 + v2) + v3 + pv3 = c3 + v3 + pv3

Such an equation can only be given ex post and obviously it would only constitute an isolated special case. And this will be more the case if the transfers were made only by percentages since these chains are in reality what the French call « filières » and are therefore cross-woven transverse compositions.

2 ) The subtraction of the added value from the intermediate sectors is an ineptitude since the surplus value has a real support in terms of use value – here, wheat or flour – and therefore enters as such in the production costs of the entrepreneurs of the chain and not only in the one that forms the last link of that chain. In addition, this transfer to production costs is directly effectuated by the producer himself through reinvestment in constant capital or variable capital and most often indirectly, due to the social division of labor, through exchange – for example wheat for machine and fertilizer etc – with a partner in the chain.

3 ) The value chain – we dare not say added value any longer because it is about new productions – is completely wacky because linear. However, it must enter a reproductive circuit. This circuit refers to the Equations of RS-RE, it cannot be ensured by the meta-magic of the “invisible hand”. In fact, whether there is economic growth or decline, the social demand necessary for price formation – if you want, global supply and demand – supposes an underlying RS structure. Marx already said this in his Parisian Manuscripts of 1844.

If we develop all of these circuits for a specific Social Formation, that is to say the sectors and cross-cutting sectors that we mentioned above, we would redo the analysis that Marx made of the Tableau de Quesnay, tracing all the exchanges of production and consumption occurring within given geographical and temporal limits, in particular the “annual revenue” of Sismondi which will be transformed for Marx in the temporality of the complete cycle of reproduction given by the Equations SR-ER. (For a graphic illustration of the complexity of the analysis and the recomposition of the Tableau by Marx, see Œuvres, Economie II, La Pléiade, 1968, p 1514.)

4 ) Consequently, we must consider the complete circuit of Reproduction and not a simple chain. The SR-ER Equations then show precisely what happens to the “added value” which, finally having a support, becomes a surplus value.
In fact, everything becomes clear when you consider the Equations of SR-ER, that is:

SI : c1 + v1 + pv 1 = M1

SII: c2 + v2 + pv2 = M2


Social capital: (c1 + c2) + (v1 + v2) + (pv1 + pv2) = (M1 + M2)

Where, in terms of real quantities and exchange values the equilibrium given by Simple Reproduction or SR, is:

c2 = (v1 + pv1) M1 = c1 + c2 M2 = (v1 + pv1) + (v2 + pv2)

If I were to use the chain logic in this reproductive framework, I would obtain c2 = v1 instead (v1 + pv1). Suddenly, the arithmetic absurdity is obvious, because M2 which must be equal to (c2 = v1 + pv1) + v2 + pv2 would only be equal to (c2 = v1) + v2 + pv2.

This is the micro and macroeconomic difference between the added value floating in the rarefied Marginalist ether and the scientific surplus value. In the parametric framework of the SR-ER Equations, one cannot cheat.
Of course, Barraux’s value chain can be integrated into the SR-ER Scheme as an activity – agricultural or industrial – in the various sub-sectors subsumed in the two main Sectors, SI of MP and SII of Cn.

As we will see later, the same goes for public or private bureaucratic activities.

(In the Equations SR-ER we can also divide pv into pva and pvb, where pva = compensation or consumption of the capitalist and pvb the share of profit pv reinvested in production, which will make it possible to switch to Enlarged Reproduction or ER. In this case, to maintain a harmonious balance, Reinvestments must respect the underlying SR Equations, that is to say be “symmetric proportionality” given by SI and SII. This will become all the more important when introducing public or private bank credit driven by the blind “invisible hand” of the market, which is ontologically incapable of respecting this condition this leading to over-expansion accompanied by sectoral contractions, that is to say the cyclical crises of the CMP. Structural crises are due to the exhaustion of the effect induced by waves of massified technologies, both in the new sectors and in the intermediate sectors. Productivity liberates part of the workforce, hence the CMP must, in general, use the general Reduction of the Working Week to rebalance things, however reluctantly it does it. The CMP is also a historically bounded mode of production, so that only the peaceful or revolutionary transition, or transition to ever more advanced forms of “social surplus-value”, can resolve its ontological inability to reconcile the constant development of productive forces with that of production relations. This is why Marx claims that the CMP forges its own gravediggers.)

The production function of social capital is the sum of the production functions of the two main ones, Sector I and Sector II. On this macro-economic basis, we have all the information from the system, both the social production costs and the total value added extracted. Better still, by respecting the necessary relationship between the organic composition of capital (v / C) and the rate of surplus value (pv / v), it is enough to know the production costs to predict the surplus value that will be extracted while and as long as the parametric conditions of the system are not changed. Of course, changing these parameters can be more easily managed on the basis of planning based on the SR-ER Equations.

As we indicated at the beginning of this test, in a given SR System – stationary system – everything will remain consistent as long as the v / C and pv / v ratios remain the same. I have demonstrated – for the first time publicly in my Tous ensemble 1998 – that by respecting the Law of Marxist Productivity, the System remains consistent with all the changes in v / C and pv / v that we want, but of course respecting the inverse proportionality relationships between these two essential ratios. It follows that the rate of profit remains the same but, of course, the volumes of profit change – this parametric identity of the rate of profit is here an organic consequence of the law of value, but, of course, this rate is also given epiphenomenally over the medium and long term by the mobility of capital in a regime of capitalist competition. It is volumes that are the driving force behind the laws of motions of capitalism, namely the tendency towards centralization and concentration of capital. We can recall the useful description proposed by Stephen Heymer: the Capitalist Mode of Production transited from the individual and family business, to the national business – the Big corporations highlighted by Means during the 1920s -, followed by the Multinationals, themselves followed by the globalized and stateless Transnationals which now dream of establishing their “global private governance” with the support of an imperial army assisted by private mercenaries.

It suffices now to refer to the distinction above between “value added chain” and sum of surplus values in the aggregates formed either within the sub-sectors or within the sectors. In addition, as demonstrated in my Book III, when we want to judge the quality of the insertion of a Social Formation in the World Economy, it is necessary to refer to the social capital which results from the sum of the functions of production of the two sectors SI and SII. It is therefore necessary to speak of a “value scale” calling into question the competitiveness of SFs and not of a purely micro-economic “value added chain” which, with all the problems disclosed above, refers at best to the internal organization chart of global Multinationals and Transnationals and partly to foreign trade.

In the Marginalist logic not only the genesis and the sum of the new annual productions – value added – are concealed but the founding logic of the CMP, its properly revolutionary aspect, namely productivity, is completely concealed. Any capitalist economy would cease to be so without the continuous accumulation of capital through competition among capitalists conducted on the basis of the search for the greatest possible individual productivity. Wanting to manage the CMP on the basis of concepts like value added, which inform GDP statistics, then clearly appears as a meta-magic belief ideologically served to both the masses and the capitalists themselves who end up believing in their own narrative.

Already in his two articles from the 1920s, Piero Sraffa had demonstrated the futility of thee reasoning about increasing and decreasing returns. Basically, there is the ex ante / ex post methodological problem of drawing up the curves, but these contradictions also reveal the impossibility of these Marginalist schemes to properly differentiate between microeconomics and macroeconomics. The bottom line is that in this logic of economies of scale, the technical aspect of production is revealed when we look at things from a quantitative point of view. Thus Pareto will insist on the technical composition of capital leading to an optimum of production. Capitalist entrepreneurs – and indeed all entrepreneurs – do approach this optimum in a practical way, from the “pin factory” to present-day Taylorism and micro-Taylorism. But no one is able to coherently combine the technical composition and the value composition of capital. Only my restitution of the Marxist theory of productivity reinstated in the Equations and the SR-ER can.

Productivity is the heart of capitalist competition. Scientifically understood, on the basis of the parametric rate of profit, it allows to identify the volumes of profit which induce the laws of motion of capital. And therefore also the dynamics of the production-reproduction of the system. Robert Solow, one of the main representatives of the “neoliberal synthesis” or “bastard Keynesianism”, tried, as we saw above, to reintroduce the theory of capitalism without State intervention, in particular for what concerns the regulation of the level of employment and of working conditions. We have already said what to think of its razor-hedge equilibrium established on a brutal neo-Malthusian basis which produces a physiological threshold that does not exist. But this is not the most serious concern: in the same article of 1956 which earned him the pseudo-Nobel, he feels obliged to introduce technology, therefore productivity but he is forced to do it exogenously. Yet technology has a market price … In short, it is another version of Marginalism that is worthless.

I note that both Hicks and Sraffa are no more able to properly introduce productivity. Hicks is the one who tried to preventively restore Marshall’s Marginalism with other instruments, including the simultaneous resolution of the equations dating back to Bortkiewics and Tougan-Baranovsky. (8)

It doesn’t solve anything. Hicks was probably the main inspiration after Pigou for the reaction against the rapprochement of economics and social economy. We know what this approach owes to the advice of Auguste Walras to his son Léon expatriated in Lausanne and very infatuated with making Marginalism a theory that could formally claim the status of science with the implementation of simple algebra. We also know that Schumpeter, partly trained in the Vienna School, was more cynically lucid. He knew that the CMP, like all the other modes of production, was historically limited, in this case by the laws of capital motions – centralization, concentration – paradoxically imposed by capitalist competition – and, I add, by the difference between rates of profit and volumes.

To delay this inevitable outcome, Schumpeter proposed two avenues. The first consisting of a falsification which could only succeed thanks to the university selection of professors and students. It simply consists in declaring authoritatively that the dichotomy pointed out by Auguste Walras is an ontological and methodological fact of the discipline. Therefore out of discussion. The second avenue is that of the very misunderstood Schumpeterian “creative destruction”, which is only a vulgar implementation of the rabbinic-Nietzschean method of forced « return » to block and reverse the historic march towards Human equality and emancipation. So we had toothless anti-trust laws, the capitalists at the head of big firms having only a minimal propensity to do hara-kiri when they can make people pay for their damage instead. But we note that since the coming to power of the neoliberal monetarists to the FED and to the American presidency in 1979-1982, the “creative destruction” worked perfectly against the revisionist Marginalist socialism practiced in the East and in the Eastern State enterprises, which became the New Frontier of Western capitalism. In addition, the dismantling of public enterprises and public services everywhere in the West was accelerated.

Hicks, for his part, had tried to take advantage of Tougan-Baranovsky’s simultaneous resolution to broaden the foundations of Marshall’s marginalism. It enjoyed great popularity in England and among the ruling classes because of the Marshallian visual diagrams of supply and demand curves. The Anglo-Saxon proverb says that a picture is worth a thousand words. Hicks sought to generalize Marshall’s theory, restricted to two commodities, capital and labor, to three and then to n commodities. Labor thus becoming a factor like any other, all could be reconciled by simultaneous resolution. According to his own accounts, in his book published for his misfortune after the publication of the General Theory of Keynes in 1936, that is to say during the Depression, he could not take into account either the income structure or the inflation. Even more serious in my opinion, like all the others using this fake “model”, he had to introduce a rate of profit exogenously.

This is also the major problem with Sraffa’s attempt to use simultaneous resolution to rehabilitate the labor theory of the value proposed by classical and Ricardian political economy. He tried to come up with some tricks while warning his readers that his theory exposed in his main theoretical work “Production of commodities by means of commodities” was only a prolegomena in his attempt to restore the classical labor value of Ricardo. Already in my Tous ensemble I have shown that this attempt consisted in taking over Marx without insisting on the exploitation of labor power, therefore on unpaid surplus labor which is the tangible support of surplus value, therefore of profit. Indeed, Sraffa’s secret is that he wanted to translate the Marxist concept of “socially necessary labor ” into the basket of consumption necessary for the reproduction of the worker, that is, all the goods necessary to produce other goods. This was hopeless because Marx’s labor power rests on the duality of the commodity which translates in the case of the worker into both living labor and into past or crystallized labor. Without this distinction primordial, the genesis of profit is concealed to such an extent that poor Sraffa was forced to provide a rate of profit exogenously to resolve his matrices. (2)

To summarize: no bourgeois economic theory accounts for the productivity which is at the very heart of the laws of motion of capitalism since it defines the method of extracting capital gains, therefore volumes of profit. The Marginalist microeconomic production function leads to value added, the genesis of which is neither known nor defined. The value-added chain, by subtracting that of the so-called intermediate sectors, is perfect nonsense. Yet, it is on these concepts that Marginalist statistics are based.

The ineptitude of the value added chain is worsened by the treatment of internal and external, especially public, bureaucracies.

We have already stressed that the concepts of ” simple labor ” and ” complex labor “are empirical concepts developed by Adam Smith. Marx replaced them with the scientific concepts of “abstract labor” resulting from the internal division of labor of enterprises and of “socially necessary labor” which is its macroeconomic counterpart. The same goes for the sad Smithian concept of “unproductive work”. This concept appears mainly in Books II and III of Capital which, as we know, are often preliminary drafts retained by Kautsky and other renegades of the genre. The fact remains that in these drafts Marx also specifies that these so-called unproductive works are indirectly productive, for example the work of teachers participating in the training of the workforce. In this case also it is advisable to read Marx in a scientific way instead of doing it like catechism seminarians. This is essential for designing the treatment of various bureaucracies.

We already have demonstrated the error made in this area by demonstrating the respective roles of the internal division and the social division of labor.

Any large or small company has an internal bureaucracy, which refers to the management of the company – accounting, human resources and R&D etc. This internal division contributes to the formation of the internal norm which refers to the relationships between the organic composition of capital – v / C – and the exploitation rate – pv / v. This internal norm plays into the competition that leads to the emerging standard for the industry and for the subsector. Of course, each company will try to increase its productivity at the expense of its competitors. For an identical duration of work it will produce more of a certain product – or of a product with a very high elasticity – which will have a proportionally lower unit price, and this for the same rate of profit imposed by the system of Equations SR-ER . However, with products costing less, the company will conquer new markets allowing it to garner greater volumes of profit and thus to gain an advantage through centralization and concentration of capital, both horizontally and vertically. This trend does not necessarily imply gigantism because it is reconciled with the territorial distribution of subsidiaries responding to a parent company, something that is not negligible for national and territorial planning.

If one thinks of this internal division labor in terms of fractions of the immediate production process according to a Taylorist logic, the productivity of the internal bureaucracy would not differ from that of the assembly line or the workshop. Of course, these are services that are produced rather than goods, but they are just as tangible. They can be standardized. In fact, Standard Operating Procedures or SOPs are the foundation of any efficient bureaucratic system. They allow the streamlining of work and the empowerment of decision-making processes, in particular for the evaluation of leaders at all levels. As such, the effectiveness of SOPs can be rigorously quantified without compromising flexibility in implementation. I refer here to the great classic in the matter Group think – 1972,1982 – by Irving Janis. New technologies will reformulate existing SOPs and make them more productive. Ultimately, the contribution of internal bureaucracy will be found in the company’s v / C and pv / v.

Today, we are witnessing a strange paradox, that of outsourcing or delocalising certain internal functions of the enterprises. This trend would have no reason to be outside the current definition of anti-dumping imposed by the WTO and incorporated into all free trade treaties. This definition ignores deferred wages – social security contributions – and the taxes area – levied on and out of the gross pay slip – so that it relates only to the individual capitalist wages in a global competitive race to the bottom. It also ignores the most minimal environmental criteria to say nothing of the precautionary principle. This is despite the fact that the worker, member of a sexually reproducing species, must reproduce as such in a household, and can in no case be treated as a factor like any others, namely one whose specific market should tend to remove all rigidities. This is why outsourcing or delocalising is done to peripheral regions and developing countries. As far as tasks related to office automation and call centers are concerned, the working language can sometimes play a role.

However, at the outset, with the emergence of the Volcker-Reagan counter-reform, the objective was to bring was to brake the unions. Reagan’s first act was to fire all the air traffic controllers on strike, an action quickly followed by the questioning of the Cola Clause on wage indexation. Before that, the practice was for strong unions to negotiate their collective agreements, thus defining the main parameters – individual pay, social safety nets, security norms etc. – which were then widespread throughout the economy, at least within the largest companies. But it is notoriously difficult to unravel social and union conquests once they have been granted, since they then embody class alliances or, at least, a precise constellation of the social forces involved.

After the Reagan’s and Thatcher’s blows – against dockers and miners – the attacks were sustained but in a side-way fashion. Two main strategies were used to weaken the unions and the workers: a) outsourcing which induced a change of boss for the outsourced tasks and therefore the abolition of existing union contracts; b) change of ownership, or even privatization in the case of public enterprises. Which went hand-in-hand with the privatization trend, with LBOs, etc. led by unscrupulous investment funds or private pension funds that gave themselves the mandate to restructure existing enterprises to quickly bring them into line with global free trade.

Note, however, that this a-social and a-union reorganization through the outsourcing of internal company functions follows the general logic of capital accumulation and leads very quickly to mergers. Here too, competition generates centralization and the concentration of capital through the quest for the highest productivity. When we move to a more productive organic composition of capital or v / C, then, for the same working time, the same labor force – abstract labor – employed with more productive machines and better work organization will produce more and at lower unit cost; however, this same labor force , estimated at what it costs to reproduce it, will mean fewer physical workers.

Things are a little more complex when we are dealing with public bureaucracy.

For a conformist treatment of Public Administration – PA – I refer to this link: . The whole discussion revolves around an evaluation of the relationships of PA to GDP by questioning its market and non-market contributions. However, the discussion remains confined to the Marginalist parameters of GDP, calling into question only the accuracy of the PA accounting assessments in terms of costs or added value. In these two accounting versions, the two are equalized by definition since for PAs we will only take into account the cost represented by the wage bill and by the amortization of fixed capital – buildings etc. Of course, if we consider the work of bureaucrats as unproductive work, it will not be possible to treat the PAs as a market sector contributing to national wealth in terms of added value. Both PAs and private bureaucracies generate surplus value.

Contrary to some libertarian or left-wing critics, bureaucracy is no more an indication of alienation than any other aspect of the social division of labor. It does not necessarily lead to Kafkaesque processes. This depends on the production relationships put in place. For example, after World War II, the anti-Nazi-fascist class alliance presiding over the socio-economic reconstruction of our societies, the bureaucracy was professionalized by the generalization of specific diplomas and by the parallel development of administrative schools at least before the hegemony of the neoliberal monetarist public policy. Above all, it obtained the right to organize, which was a considerable step towards the democratization of its functioning. Likewise, ombudsmen and prud’hommes were strengthened to counter bureaucratic arbitrariness. This logic could be pursued by the establishment of what I have called “democratic control instances “, for example committees for complaints against police or administrative violence, formed by bureaucratic and legal representatives but with a majority of citizens’ representatives.

There is no denying that bureaucracy does transform into some kind of permanent government. It has an institutional memory, a stability of personnel who are largely protected from political changes, except at the highest levels. Above all, it is based, at least in the more efficient and less corrupt countries, on qualified personnel trained in specialized administrative schools. This staff is then able to collect and process information, to articulate it in different scenarios, thus allowing decision-makers and sometimes citizens to be duly informed when making their decision in the most rational way possible, although necessarily within their own worldview. This is why bureaucracy is a necessary tool for the exercise of democracy, in the same way as national education, in particular socialist democracy which includes socio-economic democracy exercised first and foremost through planning. The challenge is therefore its democratization. This implies, as we will see, the procedures and methods used to collect and articulate information and make up the essential statistical tools, for example national accounts.

We will come back to these issues which lead us to wish the substitution of Marginalist statistical narratives by real scientific statistics.

We must first show the incomparable efficiency of the public bureaucracy understood as a government administrative public service at the various levels or even as specialized public services such as education, health, public pensions, unemployment insurance, transport , roads and bridges-and-carriageways etc.

From a rational point of view, these services respond to exactly the same basic economic logic, the highest possible productivity. As such they can be formalized as the production function of public enterprise, a production function like any other and as such to be integrated into the Equations of Simple or Enlarged Reproduction – either general stationary or dynamic equilibria. In fact this constitutes their extreme strength, which manifests itself in the macro-economic competitiveness on which the micro-economic productivity of businesses and cooperatives, whether private or public, is based.

We will come back to it. It is incumbent upon us to show beforehand the economic differences which distinguish public enterprises from private bureaucracies, internal or external. The latter offer fee-based services to customers who must pay individually to enjoy these services. The calculation of productivity here remains the same as for any other good. Public enterprise is the highest manifestation of the social division of labor, that which best meets the general interest. Of course, the fathers of classical political economy, including the Scottish inventor of the “invisible hand” of the market Adam Smith knew this. Smith precisely defined the general interest in the society of his time, to the point that he had already conceived the relevant tax principles congruent with a conception of tax justice which remains at the heart of the discipline, although it is de facto violated day after day by the neoliberal monetarist public policy and its monstrous tax expenditures that follow an unfortunate tendency towards a increasingly regressive flat tax regime. For Smith, the State should ensure the general interest and therefore the administrations and infrastructures that this supposes, for example the development of national security, roads and railways. For this the State must have the power of the purse to finance them. And as the railways served the metallurgy and the steel industry more than the ordinary citizen, these industries had to contribute more to their development.

Apart from the question of fiscal justice, the social division of labor by the bureaucracy and the public services provide services at a lower economic cost, simply by the effect of mutualisation which is the uncompetitive public expression of centralization and concentration of businesses. In addition, this non-competitive pooling of costs ensures better competition between businesses in general.

This is a crucial point. Indeed, before the destructive emergence of neoliberal and monetarist public policy, the march towards the democratic rule of law led to the regulation of the law of the jungle of competition denounced by the capitalists themselves as “unfair comeptition”. It was also in the name of the bourgeois democratic norms of competition that industrial democracy developed – for example R Dahrendorf – embodied in modern labor relations. These ensured the representation of workers and to some extent their safety at work, but above all they ensured “a plain level field” for all capitalist competitors. In fact, American collective agreements took off with the development of the industrial unions – CIOs – which gave a new lease of life to the working class that had fallen into the hands of the old Gomperist AFL. They were defended by the New Dealers against the conservative rearguards. For the New Dealers, it was a question of creating counterweights to the power of the “Big corporations” while creating means to stabilize labor relations for the duration of collective agreements thus ensuring a better productive climate and better results.

The fact remains that if public activities can be related to ordinary microeconomic production functions (c + v + pv = M), if they use SOPs as one of the main aspects of their Tayloric calculation leading to the quantification of their benefits and their efficiency, their specific productivity is not immediately materialized by profit volumes, it is instead valued according to specific criteria, namely, according to the public allocations made available and according to the time of execution of the tasks – for example the length of waiting time in the queues necessary to obtain the service and the satisfaction of users and beneficiaries as citizens.

Let us refer again to the scientific production function: c + v + pv = M

For the public service and social public services, taxation ensures c and v, the production costs, but the v / C and pv / v ratios mean that the living work of public services produces a surplus value which is expressed in value of exchange and in use value. And this translates into a lower cost of standardized public services thanks to mutualisation – that is to say thanks to the public form of rationalization by centralization and concentration respectful of territories – and also thanks to a very high economic Multiplier, at least when public services are offered by the public. The Multiplier decreases sharply when private companies do so on public funds, as proved by Obama’s Stimulus Plan, especially for highways and bridges, for sewers, transportation, education and health services. Marginalism and Marginalist GDP eliminate this Multiplier in a totally inept and anti-economic fashion and push for privatization to commodify them and thus give them a market price, an « value added ». Of course, these increases in GDP are destructive of the real economy and of full-time employment.

I never tire of emphasizing these obvious facts, namely that in the 1970s, when public services were still strengthening without yet undergoing the debilitating assault of rampant or open privatization, European public health-care, universally accessible and well distributed over the territory, did cost only 9% of a GDP that had not yet undergone its current over-financialization and was therefore better reflecting the real economy. For its part, the American private healthcare system wasted 15% of the GDP, leaving 47 million citizens without any medical coverage. At the time the British, justifiably proud of their NHS, gently mocked the American private system, to encourage Americans to do better, which earned us a comic masterpiece featuring a hilarious Peter Sellers in the movie “Where does it hurt? ” (I don’t understand why it is no longer available on Youtube …)

The rampant privatization of the system has put the public health service on its knees, producing two paradoxical results: a) at least 11 million citizens must today postpone or give up healthcare, both in France and in Italy, two of the three large Eurozone countries; b) the total share of public and private expenditure on health-care increases and the private share – ticket and pricing of care – having a market price and therefore an “value added” is considered to contribute positively to the GDP. The government’s accounting logic – budget allocation for GDP growth … as well as the logic of health-care structures subject to a kind of profitability estimated illogically in micro-economic market terms, does the rest. Clearly, the management of bed stations to optimise profit become the priority rather than the possibility of taking the time necessary to care for the sick. All this with a sustained war against generic drugs and the imposition of the logic of Big Pharma instead of the establishment of a real public Pharmacare. (9)

The same reasoning applies to the public, mutualized pension scheme structured to embody the principle of social solidarity. A few years ago, GM in bankruptcy had to be saved by the Federal government and by various other States for a simple reason: robotization, added to the automation of the 70s and 80s, had reduced its active workforce drastically, so that she was no longer able to honor her in-house pension schemes. In fact, a small part of this bailout could have restored the solidity of Social Security, while a simple slightly more progressive taxation could have made it possible to expand its services, thereby increasing the macro-economic competitiveness of the American Social Formation.

All this flawed socio-economic reasoning is sacralised by the neoliberal monetarist public policy. Its war cry is cutting public spending, although no one has ever been able to explain why it should hover around 20-25% rather than 50% or 55% or more. Of course, it depends on the more or less virtuous circuits of savings and wealth. For example, from 1929 to 1933, the government of Hoover, put under the banner of “rugged individualism”, spent more on useless ad hoc measures of social assistance than did the New Deal with its embryonic Social Security and its big public works. The first institutionalized part of the savings to serve the general interest on the basis of the development of “deferred wages”. The latter, including the Tennessee Valley Authority, created jobs while developing the macroeconomic infrastructure on which the American microeconomics is still based today. This Authority also provides the first major statistical series on the labor force; it was she who noted that a worker unemployed for more than two years would incur physiological and vocational training shortcomings, thus becoming, for all practical purposes, unfit for work. This lesson was retained in the formulation of public unemployment insurance systems. In addition, these data were used to inform emerging modern statistics, for example that of Kuznets.

Initially, the neoliberal monetarist argument was summarized by Laffer’s Curve. As everyone knows, it was drawn on a napkin after a good meal. It claims that the weight of the State produces a “crowding out” that curbs the profitability of private investment. (No one is talking about the real “crowding out” caused by speculative finance, but everyone, in particular the small and medium-sized businesses without large cash flow, knows what to expect regarding the incredible “credit crunch” which makes their access to credit difficult if not impossible.)

The Laffer Curve embodies the operational simplicity of Reaganian monetarism in its infancy. The weight of the government and of the State was denounced as a stifling factor of private initiative and as an obstacle to the proper functioning of the “market” in determining the right price. It was therefore necessary to deregulate and privatize. Enron’s bankruptcy illustrated the results to be expected from this ideological rough cookie-cutter reasoning. (10) We realize today that the destruction of public services is part of the rearguard fight in favor of the accumulation of capital imagined by Schumpeter’s “creative destruction”, but as it was noted in Tous ensemble this amounts to sawing the branch on which one is comfortably seated.

After advancing in the dismantling of the state and its public services, monetarist neoliberalism put the tax system under control. The logic of the flat tax under the guise of the trickle-down theory was then imposed. Economist John Galbraith, raised on a farm in southern Ontario, bluntly called it “horseshit” since, in his opinion, it amounted to feeding the horse to feed the birds … George Bush Sr., informed by his position in the American security establishment did not hesitate to speak of “Voodoo economics”. This drift led to a budgetary practice which is today consolidated in the West. It consists in granting to the enterprises and to the richest princely exemptions from taxes so that the State budget always appears to be bordering on the red, while letting slip the public debt and the weight of its financing. This is then used as an excuse to legitimize austerity measures to the masses told to sacrifice their wellbeing to clean up public finances. These social expenditures or tax expenditures now involve gigantic but hidden sums. They always increase preventively when the slightest surplus shows up, for example the 20 billion worthless CICE in France that could have financed a new Reduction of the Working Week – RTT – or the recent cuts in unemployment insurance.

These tax expenditures in France and Italy amount to around 300 to 350 billion euros per year. They are added to tax evasion and tax rulings involving roughly similar sums. Official reports estimate them to be less than a hundred billion. Indeed, the beauty of this policy for their proponents is that once this social spending has been granted, it gently disappears from budgetary and media radars – for example recently the CICE, which is now made permanent. Of course, the economic value of these tax expenditures is worth what Marginalist growth is worth in times of hegemonic speculative finance. They do not replace direct subsidies and are now translating into a financial and stock market orientation for investments that turn unproductively on themselves, as illustrated by the tens of billions of monthly buybacks in the West.

Of course, it is these tax expenditures, epitome of regressive taxation anchored in the VAT, which are at the origin of the grotesque enrichment of the richest 1% – and even 0.01% – to the detriment of a structure of revenues better balanced with regard to internal demand. To make it brief let us note only that the inanity of the Wealth Effect which Pigou had tried to to oppose to the General Theory of Keynes. Concretely, it took the form of Greenspan’s House Effect which brought directly to the subprime crisis and today to the total disconnection of the speculative economy with the real economy, so that neither the FED nor the ECB can renormalize the monetary policy of the Central bank engulfed by monetarism and, indeed, they are forced to continue their drift and to amplify their liquidity issues. This will inevitably lead to a dramatic “correction”.

In terms of fiscal policy in the strict sense, this neoliberal logic of deregulation, privatization and tax expenditures aggravated Laffer’s indigestible narrative when Robert J. Barro added his badly cooked narrative of Ricardian equivalence. In short, it would be more profitable, in terms of GDP growth, to lower taxes, especially for higher the brackets, and thus benefit from the “trickle down effect” rather than intervening directly in the sphere economic. Referring to what we said above about the definition of GDP and the Marginalist growth it implies and the difference illustrated by the public health-care system versus the private health-care system, we already know what is at stake. It turns out that Obama’s stimulus plan once again illustrated empirically a known fact: public services offered by State-owned enterprises have a much higher Multiplier. For example, for bridges, roads, health-care, education and social housing. On the other hand, Trump’s stimulus plans, especially focused on lowering the taxes of the wealthiest, have the opposite effect both for the economy which is increasingly eaten up by financialization and stock marketisation and for the structure of income. Thus the vast majority of American workers have an income hovering around $ 16,000 with only $ 1,000 in personal savings. Income inequality is such that the median American income of more than $ 50,000 hides more than it reveals… (11)

From a strictly theoretical point of view, it is obvious that the sad confusion committed by Barro and by all the monetarist neoliberals after him goes far beyond the confusion between Generic Multiplier and Sectoral Multipliers. Indeed, the neoliberal monetarist bias embodied by the GDP, which today strongly influence by an over-financialization, diminishes the beneficial work of Multipliers to such an extent that the additions to GDP growth through privatization – eg health-care or pensions public systems – do not allow to counteract the underlying economic downward spiral. Without taking into account the strictly social cost in health terms, of the deterioration of the general epidemiological framework and the impoverishment of the population, in particular the youth and the elderly, the latter often forced into precariousness after 54 years on average.

This undermining of the domestic operation of the Multiplier in the sectors of activity still little affected by the GATS – free trade in services – is added to that caused by the outsourcing of the Multiplier which increasingly destroys socio-economic coherence of Social Formations and their planning ever since the Uruguay Round. This trade agreement paved the way for the generalization of free trade treaties and the current definition of anti-dumping – anti-labor code and anti-environment – currently enshrined by the WTO.

In addition, Reagan’s Star Wars and the current and illegal Doctrine of the neo-crusader preventive war oblige, is added the weight of the military expenses. Here we are bordering on a ridiculous situation which has no equivalent except the American refusal to submit their armed forces and their governments to the jurisdiction of the International Criminal Court, while claiming to defend “democracy” by bombing everywhere on the Planet. Indeed, although military spending has a very weak economic multiplier, the neoliberal monetarist crusaders, use them as direct grants for R&D and for the military-industrial complex, which today includes cybersecurity. They are dead set to preventively destroy all their economic and military rivals, starting with the 66 Muslim countries in order to build the Temple of exclusivity by destroying Al Aqsa which is considered as their Third Holy Place by nearly 1.2 billion Muslims. These direct US military procurements are considered

as part of national security and therefore exempt from trade rules endorsed by free trade treaties and the WTO. The absurdity here is the inability of largely vassal governments, such as EU member States, to impose reciprocity in this area.

“Social surplus value”, Simple Reproduction (SR) and Enlarged Reproduction (ER) and public services.

Recall the Canonical Scheme of RS from Book II of Capital and the Equations of RS preserving the stationary equilibrium.

SI: c1 + v1 + pv 1 = M1

SII: c2 + v2 + pv2 = M2


Social capital: (c1 + c2) + (v1 + v2) + (pv1 + pv2) = (M1 + M2)

Where Marx’s Simple Reproduction Equations (RS) as formalized by Boukharine are:

c2 = (v1 + pv1) M1 = c1 + c2 M2 = (v1 + pv1) + (v2 + pv2)

We can very well make our argument based on this Diagram since we have shown above that the introduction of productivity in a sector does not change anything as far as systemic coherence is concerned. Likewise, we have shown that Enlarged Reproduction is based on the underlying SR. Simply, in the case of ER, it will be necessary to modify the allocation of surplus value, by splitting pv = pva + pvb, where pva = consumption of the capitalist and pvb = the part intended for reinvestment which will be distributed over constant capital – c – and on variable capital – v – according to the ratio provided by the existing v / C. I then showed that the underlying SR implies that, taking into account the respective proportions of SI and SII, a harmonious growth dynamic requires the planning of proportionally symmetrical reinvestments, which the ” invisible hand ” cannot do, an incapacity that leads to cyclical crises.

Contrary to the wobbly logic of value added, the new surplus value (pva + pvb) as well as the wage – v – are produced by the living labor that the worker will produce, appearing in the organic composition as v, or crystallized labor force, ready to be re-used. The extraction of the value added in this context will be done according to the pv / v ratio.

Therefore, all organized activities of any type whatsoever, manufacturing, office, transport, marketing etc. will generate the same parametric profit rate since they implement a specific production function involving an organic composition and an exploitation rate. The concept of unproductive work is an empirically primitive concept which comes under Adam Smith, it has no place in Marxist logic, once the unfinished drafts included by Kautsky and others in the publication of Books II and III of Capital are corrected. No more than the concept of “simple labor” which must be replaced by that of abstract labor and socially necessary labor. The same goes for the so-called « tendency of the rate of profit to fall » resulting from drafts at the investigation stage – as opposed to the exposition which supposes a finished research – that form a chapter of Book III immediately followed by another investigative chapter on counter-tendencies. I have shown that all the lamentable epigones of the tendency of the rate of profit to fall, confuse rate with the volumes of profit in a given parametric system, and are, at best, children of catechism who do not understand much about Marxist science.

We can therefore include all organised economic activities without exception but according to their specific production function in their sub-sector, multiply these sub-sectors according to needs and include them either in Sector I of MPs or Sector II of Cn.

Obviously this applies to the public service and social services. What about the smoky question of private activities creating value added when the public service and public services would only have costs? This ideological blindness has its roots in the domination of private property, which regulates the allocation of the resources of the Community for the benefit not so much of the whole Community but for the benefit of the owners of the Means of production.

It is a blindness which ignores the fact that the “market can never completely ignore the society in which it is part. Adam Smith already pointed to the necessary mutualisation under the aegis of the State to ensure the general interest in terms of “livelihood” of the people – term borrowed from Karl Polanyi -, of national infrastructures and national security. The taxation which pays for the public service and public social services – universally accessible, of better quality and offered at lower cost thanks to public mutualisation – is only a modification in the general interest of the allocation of resources, that is to say of the social surplus value ».

Besides, when Marx is led to imagine the allocation of resources under a socialist regime in his Critique of Gotha’s program, what does he do? He imagines all the surplus value going into Social Funds which are then distributed by planning – the Equations of SR-ER with all the necessary sub-sectors and sectors – according to the economic and social priorities decided jointly through the processes of “socialist democracy”, including the equality enshrined in the socialist Constitution which confirms the common possession of all the Means of production. All that remained for Marx was to anticipate the transition to socialism in two major phases, the first a socialist phase in which the rule “From each according to his abilities, to each according to his labor” would prevail, the second the communist phase according to the rule “From each according to his abilities, to each according to his needs. ”

If taxation is the public share which corresponds to the allocation of new resources created by the Community, what is its just share?

In a socialized and planned mode of production, all surplus value belongs collectively to the people who decide on its allocation according to the socio-economic priorities established by socialist democracy. This naturally gives pride of place to the socio-economic decision-making processes which today come under the tyranny of private property and of the bourgeois State. Socialist democracy is easily defined as « The government of the people by the people themselves, at all decision-making levels ».

In a capitalist regime, this will depend on the definition of the general interest. However, the neoliberal and monetarist idea that the size of the State must be minimum makes no sense since it forgets that production and trade are social relations and not mere economic equations. In addition, the capitalist mode of production knows a historical evolution which determines its epochs of redistribution, this evolution is done within and under the constraint of the International Division of Labor so that no Social Formation can neglect the level of its macro-economic competitiveness compared to other competing SFs, nor especially the strengthening effect that macro-economic competitiveness exerts on micro-economic productivity. It is understood that no FS can live very long beyond its means – external balances, debt financing. This is why the epochs of redistribution of the capitalist mode of production progress secularly towards an increasingly greater socialization of the processes of production and exchange. Keynes recognized this so well that in theorizing State intervention in the economic sphere, he envisioned the need to shift to a 15-hour labor week to better share productivity and competitiveness gains. ( )

In my Keynesianism, Marxism, Economic Stability and Growth, 2005, I demonstrated the transition from classic liberal capitalism to the European social State – stemming from the Resistance to Nazi-Fascism – taking the form of the Keynesian State or Welfare State in the Anglo-Saxon World. The neoliberal monetarist regression is only a parenthesis in the secular march towards more socialization of production and trade, although the question always remains: will we be dealing with a more democratic socialization or a new philo-Semite Fascist regression? The choice always remains between socialism or barbarism.

In my Methodological Introduction – I showed the importance of the Four Books of Karl Marx’s Capital to understand the transitions from mode of production to mode of production and within the same mode, from epochs of redistribution to epoch of redistribution. Everything revolves around the labor force exploitation ratio – Book I. On this basis emerges the systemic structure of reproduction given by the Equations of SR-ER – Book 2. The historical form – the epochs of redistribution – of this reproduction system is determined by the class struggle, that is, by the broad legal relationships including the State and its Apparatuses – Book III. Finally, Book IV was intended to provide the history of the discipline of Political Economy, namely its slow historical and individual transition from the method of investigation to the method of exposition.

It suffices to examine the rate of the labor force exploitation which take the form of the employment contract and its norms. Indeed, the norms of the extraction of surplus value always impose themselves de facto – on the medium and long term – or legally by taking into account the duration, the conjunctural intensity – a big momentary push – , structural intensity or microeconomic productivity and “social surplus value”. For each mode, one of its forms is dominant. All pre-capitalist modes of production are based on the extraction of absolute surplus value through the length of the laboring day; in these modes, technical progress is slow, although powerful, for example, the transition from raw to cooked, the domestication of animals, that of cereals, looms, water and windmills, etc. The revolutionary aspect of capitalism is based on the dominance of productivity. Socialist and communist modes of production will be based on the increasingly hegemonic development of “social surplus value”, powerfully supported by the optimum macro-economic competitiveness organized by planning, therefore through democratic and collective ownership and use.

This transition to “social surplus value” began with the Welfare state. The “structure of v”, initially limited to individual wages only, changed to incorporate deferred wages, taxes etc. This happened first to take into account the fact that the laborer is not a disembodied production factor like the others but a member of a sexually reproducing species having to reproduce her/himself as such in a household. Next, to take into account the tax revenues necessary to finance State intervention in the economic sphere. From the perspective of the epochs of redistribution, this “structure of v” therefore takes the form of what I have called “the global net revenue ” of households, including net salary, deferred salary and the share of taxation which comes back to households in the form of access to public infrastructures and social services. Deferred wages also imply an institutionalization of savings involving considerable sums; as shown by the attempted Macronian reform aimed at the privatization of public pensions or by the creation of public pension plans in the aftermath of the Second World War or by the proposal of Rudolf Meidner’s Workers’ Fund taken up in my Tous ensemble, this institutionalization constitutes a formidable challenge for class struggle. In addition to the considerable sums at stake, it is the vision of the desired epoch of redistribution which is at stake with these reforms.

The return to philo-Semite Nietzschean barbarism takes the form of a regression towards the sole net individual salary, sacrificing in particular deferred salary, the protections of the Labor Code and minimal environmental criteria on the altar of monetarist neoliberalism ratified by the current definition of anti-dumping – on anti-dumping, see my Appeal in this same site. What is at stake is indeed an attempt to resolve the contradictions of the capitalist mode of production. These oppose the evolution of the productive forces – overproduction – to the relations of production – under-consumption – by forcing a return out of classical liberal democracy and its competition law towards a State neo-corporatism, today under the hegemony of speculative finance. This attempted return tries to restore, against the march of History towards ever more human emancipation, the archaic phantasms of the pre-liberal capitalist exploitation of Man by Man imposed by self-appointed leaders placing themselves beyond Good and Evil. It is indeed an attempt to return to society the new domesticity and new slavery as denounced in my Pour Marx, contre le nihilisme which is in question.

How to integrate money and credit in the national accounts ?

Before the emergence of the “universal bank”, it was perfectly normal to classify the 4 pillars of deposit banks, investment banks, insurance and savings banks as different sectors. This is valid both from the point of view of value added and of surplus value and remains, of course, valid for real estate. The changes initiated under Reagan found their fulfillment with the legal repeal in 1999 of the Glass Steagall Act – 1933 – which had established the functional segregation of these 4 pillars.

We know that the inclusion in the GDP of the new “financial sector” accounts for more or less 9% only for finance, 8% for insurance and a similar but fluctuating percentage for real estate. (12) In addition to all the shortcomings of value added accounting, including the treatment of the so-called intermediate sectors, it should be emphasized that the gigantic weight of shadow banking and various other black pools is not taken into account, although it weighs all its weight in the management of the effective risk of the sector – and of the rescues on public funds – and, consequently, on the speculative management marked with the seal of the austerity of the fallacious ratio of the public debt to GDP.
However, it is necessary to determine how money and credit are integrated into the economic structure given by the Equations of SR-ER. I refer here to my Synopsis. In short, in a situation of full employment, the currency corresponds to the real salary mass (v). This mass is necessary and sufficient thanks to its rotations to ensure all the exchanges involved in the SR-ER Equations. Monetary support to the inactive labor force is added to it to give the social salary mass. The ratio of the latter on the former gives the rate of structural inflation, which is the main form of inflation although there are others, for example imported inflation.

As a sector, that of money is crucial since the sovereign power of the State ensures the legal circulation – legal tender – of money which allows trade while the management of the salary masses, real or social, as close as possible to reality will ensure price stability, therefore economic predictions. However, in terms of size, the sector of production and issuance of money is small.

The problem consists in knowing how to integrate credit and for that it is necessary to distinguish public and private credit and classic or speculative interest rates.

Take the case of conventional private credit. Classic interest is deducted from profit. By treating the classic banking sector as a sector, its production function produces a surplus value and therefore a rate of profit which will be identical to the parametric rate of the system due to the mobility of capital. But interest is, by definition, lower than profit, because interest is relative to the role played by the investment bank which consists in lending to companies to enable them to anticipate investments going beyond the reinvestment rate internal.

The rate of profit is functional to the specific banking production function. The two are reconciled by the volumes emerging from the fractional system. And that’s exactly what bank accounting says. In such a context, the volume of bank loans is directly linked by the prudential ratio to economic activity, these loans multiply in times of prosperity while their size is reduced in times of crisis. However, these investments being made according to the logic of the optimization of the individual profit and according to the allocation made through the invisible hand, the investments will preferably go in the activities considered most profitable, in reality to those in speculative expansion. The expansion of certain sectors will this happen in parallel with the contraction of other sectors. This leads to the purges necessary to restore balance through structural crises. John Galbraith has written a beautiful story of these crises, starting with the crack linked to the Dutch tulips.

With the hegemony of speculative credit, conventional interest is giving way to speculative interest which legally pose as a legitimate rate of profit. Financialisation no longer follows the logic of external bank lending, the logic of investing in autonomous companies to supplement their reinvestment rates. This is aggravated by deregulation, and the instruments and vehicles it induces, both derivatives and various investment funds. In this way, mediation by conventional interest, linked to real economic dynamics, disappears and it is the direct intrinsic productivity (v / C and pv / v) of the deregulated financial sector that will influence the whole system, both the relative prices as well as the profit volumes flows. This sectoral productivity, which is in fact fictitious, is based on very little fixed capital, and we know that depreciation of fixed capital implies a medium and long term in contradiction with short-term speculative profits. The real economy and jobs are brutally swallowed up.

We will remember the classic Marxist nomenclature distinguishing merchant capital, banking capital, industrial capital and financial capital. I refer here to Marx’s historical writings on France – for example Philippe Egalité representing industrial capital linked to the building of the railroads etc. – as well as analyzes by R. Hilferding and especially by Lenin concerning financial capital. Then we had the internationalization of productive capital – Ch. Palloix etc. Today we are experiencing the end of the cycle of speculative capital hegemony closely linked to the monetarist neoliberalism triumphant in 1979-1982.

We have already said how the deregulation of the 4 pillars went hand in hand with the privatization of central banks and with the globalization process including the stock market Big Bang so dear to Thatcher and the City. This led to the end of the internal coherence of the Social formations, therefore of the positive action of the Internal Multiplier as well as the subservience of public debt to hegemonic speculative finance. In these conditions, in light of what was said above, it is obvious that the growth equations and the fiscal consolidation paths based on such accounting – public debt / GDP – will inevitably bring disaster because it induces the destruction of the economy real and full-time employment.

All these problems disappear as if by magic through the use of public credit. The facts demonstrate this very clearly. At the end of the Second World War, the reconstruction implemented colossal efforts leading to what Jean Fourastié called Les Trente glorieuses. However, indicative and incentive planning based on public credit was done with recourse to a public and para-public debt contracted at a very low cost of financing and of a magnitude always congruent with the function of public credit, i.e., its anticipation of real growth. (see Note that it does not even bother to give the weight of debt in GDP before the mid-1970s!)

Bourgeois ecology, ecomarxism and microeconomic and macroeconomic accounting.

Bourgeois ecology is part of the capitalist micro-economy. Nature is perceived as a free field of exploitation determining the costs of production. It has no place in the GDP accounting. The reduction in production costs brought about by competition, either by the frantic exploitation of existing raw materials, or by the better use of these inputs induced by productivity growth – the deepening of the organic composition of capital – is necessary for the profit extraction in a framework of capitalist competition.

Everything is spoiled again here by the intervention of the shaky logic of supply and demand that we denounced above. With regard to Nature, considered to be subject to imperial and private property, the supply of raw materials is supposed to be based on scarcity. This is done by ignoring the footnote, then cancelled from the following editions, which appeared in the first edition of the book by Léon Walras Elements, according to which, ultimately, scarcity is socially produced. All bourgeois economists thus give the canonical examples of air, abundant and free, and diamonds, rare and expensive. Too bad if the industry can now produce artificial diamonds at a lower cost. But this shows once again the inanity of the value added – here of the profit – mysteriously released by the “market” without the least support in use value and especially without referring to the essential ratios of the organic composition of the capital v / C linked to the rate of extraction of the capital gain. (13)

Once the scientific function of production (c + v + pv = M) has been restored in the SR-ER Equations, since the micro-economy depends on macro-economic parameters, we realize that ecology is experienced as a barrier to free market. This is why bourgeois ecological standards can only be external to the logic of the economic system since they must always maximize profits. In fact, bourgeois ecological narratives are always on the side of the norms imposed on individual consumption according to a biased calculation because it is unequal in its implementation of the average ecological footprint

The ecological gospel of bourgeois “economic science” is that of the disincentive to consumption by higher prices, that is to say by an extremely regressive logic since an increase in the price of fuel will greatly burden the budget of a Yellow vest – Gilet jaune – but much less that of a supposed member of the « elite » who will absorb it without even realizing it, without even having to count on the abolition of the ISF in France for instance. To add insult to injury, this logic of disincentive to consumption goes hand in hand with the logic of so-called ecologically virtuous consumption through income tax exemptions. This knowing that, today, already a good half of employees do not earn enough to pay income tax, or in any case not enough to make these exemptions worthwhile … These exemptions aggravate and serve to legitimize the perverse effects of the privatization of public enterprises – water, electricity, etc. – which transform users into customers.

Today the Nietzschean philo-Semite narration of global warming, supposedly due to CO2, which on the contrary is beneficial to vegetation, and the Green New Deal in all the versions that this narration gives birth to, represents only a shameless way of instrumentalizing fear and the good will of the citizens in order to transfer hundreds of billions of euros to the capitalists and in particular to the large transnational corporations and to speculative financial capital. (Climate and indoctrination, March 2029, Now, Jancovici informs us that it would take one Covid-19 per year to meet the target of 2 degrees set by the Paris Agreements …) The real environmental priorities are discarded. They are all the more so since short-term capital does not allow capital to be mobilized in long-term infrastructural projects which would instead require recourse to public credit.

So we privatize water and neglect its purification; we privatize the collection and treatment of waste, the logic of which remains subject to profitability – for example, in my city, the management of a ton of urban waste by the public sector would cost around 80 euros per ton; privatization leads to costs to the municipal budget greater than twice this amount and still rising … For example, the issue of recycling various forms of plastics would require planning both upstream and downstream. The necessary infrastructure is neglected – dikes, pipes, river margins, sewers, etc. – and this is done while refusing to limit cementing, including that of sea coasts and river margins. We prefer a capitalist productivist agriculture regulated by financial derivatives rather than the return to food sovereignty – before Reagan the US had an Ever Green Granary implementing stabilization policies – Food sovereignty would allow so-called productivist agriculture in so far as it is necessary for the production of quality agribusiness; it would do so without excessive use of pesticides and respecting the rotations necessary for the preservation of land going hand in hand with organic farming, both family and cooperative. (14)

Ecomarxism combines micro and macroeconomics by integrating the production function in the SR-ER Equations. This coherent integration presupposes the resolution of the problems of absolute rent and differential rent, that is to say the demonstration of the Marxist law of productivity which does away with the fabrication by Böhm-Bawerk et al., of the false problem known as the transformation of values ​​into prices of production. The first publication of this demonstration appeared in my Tous ensemble – 1998- (freely accessible in the Section Livres-Books of On this basis, it is possible to conceive the social costs of responsible environmental policies in a harmonious society that would be duly aware that Man must reproduce within Nature and within Society. Society unites within the Overall Dialectic, the Dialectic of Nature and the Dialectic of History – see my Methodological Introduction, same site.

The rule should therefore be that of the precautionary principle focused on protecting the health of citizens. This implies public hygiene standards, sanitary standards, the harmonization of City / Countryside relations by agricultural and urban zoning, and for the latter the designation of industrial, commercial and residential zones as well as the designation of Seveso zones. None of this appears or can appear in a GDP based on Marginalist value added.

It then becomes obvious that the social costs of raw materials, that is to say, of the exploitation of Nature, must respect their natural or artificial cycles of reproduction. For example, peak oil is not yet on the cards, but assuming it does, the cost of reproducing stocks should be included – for example biofuels, algae etc. – as well as the research and development of massifiable substitutes. The resource in the process of depletion would thus be protected and reserved for uses that do not allow for elasticity, for example here pharmaceuticals, certain polymers and so on. Likewise, the construction of power plants or the opening of mines should include the cost of decommissioning, which nuclear power plants now do.

The anti-dumping would thus acquire its authentic logic without referring us to a debilitating carbon taxation which would surreptitiously reintroduce a tariff logic within the framework of a system based on a kind of free trade regime placed under the sign, today entirely bankrupt, of asymmetric interdependence. Besides that, this carbon tax penalizes CO2 which is beneficial for vegetation and agriculture – without contributing anything to global warming since CO2 follows and does not precede it – does hide the other real pollutants, harmful to human health like sulfur dioxide, nitrogen oxide and fine particles. To make things worse, it makes ordinary citizens pay the price for these malicious policies. In addition, it has the potential to ruin the Social Formations which have fallen slaves of these narratives by causing the structural increase in production costs, knowing that any traditional or new economic activity – data farms, etc. – is extremely energy intensive, since it is all about transformation. In the same way, the modern conception of the life cycle of products, both upstream and downstream, would include the cost of recycling under the best possible technical and environmental conditions.

This socially conscious accounting is perfectly quantifiable by planning as and when knowledge becomes available – i.e., natural resources that are naturally or artificially available. It can only be a blind spot for bourgeois economic theories, in particular Marginalist, and therefore for the resulting GDP.

Critical summary of Barraux’s critics and alternative indices.

The events of 1968 symbolically signified the questioning of the foundations of the epoch of redistribution put in place by the construction of the Social State stemming from the projects devised during the Resistance. Accounting naturally becomes an issue. It became all the more so since the Arab-Israeli War of 1973 which caused an unprecedented surge in the price of oil. This impacted the entire structure of the production costs of the West, which was increasingly plagued by growing consumerism that was increasingly challenged. In his Anti-economique Guillaume supported his questioning by emphasizing funny paradoxes; for example, monster traffic jams at Place de la Concorde causing increased fuel consumption would lead to an increase in GDP. At the same time, the feminist movement demanded equal pay for work of equal value as well as the remuneration for domestic labor, pointing out that the latter contributed ¼ to 1/3 of GDP, for free – see Louise Vandelac, Du travail et de l’amour : Les dessous de la production domestique, 1985 ) The end of the Gatt and the establishment of neoliberalism is analyzed from its very beginning in my “The socio-economic consequences of Volcker-Reagan and Co.”, March 1985. (see Another America is possible, Feb. 1, 2017, in .)

The superb synthesis proposed by Jacques Barraux dates from September 1975, therefore from a period of deep questioning. However, it is not able to go to the heart of the subject, namely the difference between value added and surplus value and that of the invisible hand versus the Equations of SR-ER. What is curious is that the same questions are not squarely in the spotlight today when we have all the elements for the production of scientific statistics.

Barraux first underlines that the GNP – prevalent in its time – like all the other large accounting aggregates – was the result of conventions and an attempt at international harmonization under the aegis of the UN, on which other organizations like the OECD, the EEC, etc., aligned themselves. I note that this alignment was made increasingly in favor of the neoliberal monetarist American choices, except with regard to the treatment of certain categories of debt put either on or off the budget. These conventions ratify 1) the valuation according to the market price, thus ruling out non-market use values, domestic work, gardening or subsistence economy in Third World countries; 2) the benefits of the public services taken into account are only evaluated according to their cost, essentially their wage cost. 3) “The calculation of GNP is based on flow accounting and not on asset accounting. We assess income not fortunes. This means that we assess the new wealth created in a year (flow) leaving aside the heritage already existing in the country (assets) ”p 45. This accounting adds the author does not indicate who is poor or rich in the country.

From a technical point of view, the calculation is done in monetary terms, which “is said to have little meaning since inflation and exchange rate fluctuations constantly disrupt the relationships between currencies. » p 45, modifying the international ranking of countries in terms of GNP. The price is not the exchange value but in addition everything that has no price is discarded. “According to a recent OECD study, non-monetary production is equivalent to half of GNP in countries like Malawi, Rwanda or Ethiopia, around 25% in countries like Malaysia, Dahomey or India. International comparisons therefore mean nothing. ” p 46. But globalization has worked its way through this.

Of course, we insisted on the crucial and unequaled contribution of public services before the dismantling of the Welfare states. I also pointed out several years ago that the rankings in terms of GNP-GDP do not do justice to socialist countries like Cuba which offer universal access to health and public pensions; higher education comparable to that of major American universities; transportation and public housing; culture, sport and leisure. Of course, without the blockade, the otherwise relative food supply problems would be non-existent. You could say that the Cuban citizens are collectively wealthy citizens but confined by the blockade which is the only cause of their daily worries.

As the author aptly notes, GNP is inflated by government spending that contributes nothing to social welfare and very little to growth, primarily military and security spending. We know that since Reagan, this shortcoming has taken on irrational proportions; indeed a declining USA is now wasting more public funds on armaments than the other great powers combined… In addition, “the growth indicators, GNP in particular, candidly forget the degradations caused by the incoherent runaway of production and consumption in a country ” p 46 The trade unionist Laurent Laot noted that by subtracting these environmental costs “ the GNP should be considered as zero… ” p 46. Some deduced from this the need for ‘’include qualitative notions which should have led to an improvement in the consideration of public services’’. Others already added that ” For a GNP based on the concept of valuation of flows, an asset accounting must be substituted ” p 47

In our review we tried to show that all these questions remain derisively inscribed in the Marginalist paradigm based on value added and on the blind allocation of resources by the invisible hand. We cannot therefore correct anything without changing the paradigm. Take for example the accounting given in constant price. The difference between nominal and constant prices emerges from the monetary falsification imagined by Irving Fisher, which aggravates the falsification linked to a market price stemming from the wobbly logic of crossing supply and demand curves. To control the excesses resulting from its falsification, Fisher succumbed to a sweet obsession, that of the Indices. Take a base year whose data is taken “empirically” and set it as base 100. Then you compare the previous or later years on this basis: it is an accomplished nonsense. It is devised to gauge divergences thus allowing bourgeois economists to react pragmatically. However, have you ever seen such adjustments by governments or central banks capable of voluntarily restoring price stability? Neither yesterday nor today. In reality Volcker put the inflationary dragon down but only at the cost of scuttling wages and social benefits as it appears from my distinction between real and social salary masses. But in doing so he destroyed internal demand. Worse still, his successors, including Bernanke, demonstrated that they had no idea of ​​the genesis of the inflations. (see )
The same goes for the attempt to compare countries on the basis of their respective Purchasing Power Parities, which is aptly trivialized by the Big Mac Index. Of course this gives an estimate in terms of the average consumption basket which is worth what it is worth in the context of floating exchange rates and strong or weak currencies. However, giving GNP or GDP in PPP does not change the ontological and methodological flaws. (I refer here to my essay:

The Net Material Product was the victim of the unresolved false problem of transforming exchange values into production prices. The effects caused by productivity, the knowledge of would have been necessary to manage money and socialist credit, were mastered empirically on the heuristic basis of Simple Reproduction Equations by assuming identical v / C and pv / v. The discrepancies were corrected, but it became impossible to combine qualities and prices or exchange value. As the salary variations were very small – material encouragement – the Five-year planning remained very stable. It was therefore possible to rely in part on a quantity accounting. Everything got out of hand when the Marginalist socialism imagined by Oskar Lange was perverted when the revisionist Khrushchev and Liberman introduced market logic. The system became schizoid since on the one hand there was an emphasis on communist equality and on the other hand on the logic of the market for corporate and national accounting. In this way the so-called “command and control” system became more and more rigid, while the privileges of Party members transformed the State apparatuses into a new ruling class.

My resolution of the false problem of transformation by demonstrating the Marxist law of productivity and by inserting it in a perfectly coherent way in the SR-ER Equations eliminates all these problems and makes it possible to give Diagrams simultaneously in quantities, exchange value or prices, hours and number of workers estimated in terms of their labor force. In addition, the law of productivity explains the genesis of the Reserve Army, thus opening the way to understanding the salary mass and the crucial distinction between money and credit. It also makes it possible to show that the management of socialist credit is done by respecting the proportional symmetry of the sectors given by the SR-ER Equations by modulating the ratios of the public banks in connection with the needs of various sectors. The uniform interest rates of the capitalist central bank are only a means of respecting the formal equality of access to credit of the various capitalist agents while aggravating the drift – expansion-contraction – in the allocation of resources which leads to conjunctural crises. At best, for the socialist central bank, the uniform interest rate would only aim to manage money and household savings, not public credit. I refer here to my two essays: a) “Socialist marginalism or how to chain oneself in the capitalist cave” in; b) “Note on socialist planning -2” in )

I should underline here that the great communist economist Stalin had developed an additional tool to judge the effectiveness of planning. When he visited factories or collective farms and sovkhozes he always asked workers and peasants if they thought they were a little happier than the year before. Its 2 Five-Year Plans did indeed work wonders, just like those implemented in China.

All in all the Bhutan Gross National Happiness Index is better than our spurious GDP which today serves to legitimize the dismantling of the public sectors which are the real wealth of the Nations. (see


As Jacques Barraux shows in his very concise article summarized above, GDP is one of the great statistical aggregates born of a class narration given by the bourgeoise as « economic science ». We have seen that these aggregates are not susceptible to be made better, which also applies to national or individual disposable income, the latter being far from reflecting the complexity of our “ global net revenue” of households, the form that the “structure of v” takes. according to the epochs of redistribution.

These bourgeois aggregates, primarily GDP, are based on the fallacious concept of value added determined according to the unequivocal and subjective marginal utility of goods and services. On the basis of this definition, no scientific production function can ever emerge, and therefore no theory of stationary or dynamic equilibrium. On these fallacious bases, no equation can predict anything.

Take economic stimulus policies, whether those pulled by demand or those pushed by supply. Leaving aside the intervening variables – extroversion of the Multiplier, regulation by the interventionist State etc. – just look at both sides of the equality in the definitions of GDP. All bourgeois theories simply aim to act on these components to cause the increase in GDP, that is A, B, C of this « dismal science ».

Unfortunately we have seen that not only does value added have no tangible basis – use value – but, moreover, this also implies that these theories are incapable of conceiving of microeconomic productivity and macroeconomic competitiveness per se, and, even less, to understand the dialectical links which unite them. In fact, the “invisible hand”, although randomly allocating resources, is never more than the heavy hand of the State acting in favor of private accumulation. This becomes properly catastrophic in the era of hegemonic speculative finance during which speculative interest legally usurps the role of profit thus redefining in its own terms the whole set of relative prices, its “greater productivity” imposing its terms on whole socio-economic system.

Of course, in the context of global free trade based on the current definition of anti-dumping this is done to the detriment of the real economy, employment and wages paid. This is also to the detriment of the public service and the public social services offered by public or State enterprises. For example, the universally accessible public health-care system costs almost 9% of GDP while the private system costs more than double that but it leaves millions of people without health-care coverage. For this reason, the public system contributes to the competitiveness of Social Training, and therefore to microeconomic productivity, but the GDP treats it only as a cost without any contribution in terms of value added, as if the living labor of the employees of these sectors did not contribute any surplus value! The same nonsense applies to public pension schemes and to all infrastructures and all public services.

These infrastructures and public social services are powerful counter-cyclical levers. They make a powerful contribution to reducing poverty. Better, being the property of those who do not have lots of personal property, they help to remove the fear of tomorrow, the net salary then going then much further; this allows employees and their households to live as citizens capable of disposing of themselves even within the framework of their duties and their rights, the first being the right to work with dignified remuneration for any person able to work.

Societies without extensive and efficient public social services are societies of forced individual savings. When it is done through private funds, the disaster that suddenly turns 401K into 201K always still behind the corner. However, in such cases, if the worker is 45 or 50-year old he can no longer recoup his loses. Social insecurity and general impoverishment are the consequences. It then becomes impossible to get out of the poverty trap, a perverse mechanism legalized by the practice of means-tested social assistance, which transforms social insurance established as a fundamental social right into social assistance often privatized and / or denominational. To top it all, these private assistance organizations remain publicly funded by the tax deduction of the donations they receive.

It is therefore necessary to develop real scientific statistics. They can only emerge from the scientific function of production reintegrated in a coherent manner within the SR-ER Equations. These production functions are grouped into branches, sub-sectors and filières – the latter referring to transversal branches. All the social divisions of labor ranging from the production and transformation of resources to the sale realized by the exchange value – or market price which oscillates around the exchange value – via transport, public and private bureaucracies and marketing have their own production function which can be subsumed in one of the two main Sectors, the SI of Mp and the SII of Cn. All must be counted.

We have demonstrated in our Synopsis of Marxist Political Economy – Books Section of – that dynamic equilibrium – ER – adds credit to reinvestment. Institutionalized saving organised by public or private pension funds or by savings accounts – eg Livret A – plays its role here in the reproductive cycle since the purchase of durable goods, unlike daily consumption, requires greater disbursements, hence the creation of savings. We have emphasized that planning for harmonious growth – both qualitative and quantitative – requires proportionately symmetrical investments according to the data provided by the SR-ER Equations. I described in my Tous ensemble how the Workers’ Funds could create great pools of social capital capable of gently socializing property ownership while changing the sociological structure in a more citizen, more republican and more egalitarian sense.

When considering reinvestment, the planner will take into account the specific role of credit. Public or private credit is always an anticipation of growth which compensates for the possibilities of reinvestment. The investment is generally distributed around 60% in payroll and the rest in fixed and circulating capital. The canonical function of production c + v + pv = M considers constant capital c as circulating capital – Paul Sweezy says “capital used-up” – since it is it that enters into the composition of exchange value of the product. But the circulating capital is a part of the fixed capital which implies heavier medium and long terms investment which, as we know, are antithetical to short-term speculative capital. This embodies all the benefits derived from public credit.

The latter therefore presupposes both an overcapacity of production in terms of capital and labor power as well as a controlled integration of the SF into the World economy. In the latter case, the holding of external balances will be taken into account with or without having a strong international reserve currency. In a planned economy, as in indicative and incentive planning, known as French-style planning, credit is public and as such it eliminates at its source the over-indebtedness of the State through public and para-public debt. Indeed, with public credit, the central bank would preferably operate with internal bureaus directly linked to the branches and sectors according to a modulation of the reserve ratios, thus making it possible to take due account of the proportional symmetry of the investments. This central public bank would buy public and para-public bonds at extremely low rates directly on the primary market without going through the private banking sector and its ruinous commissions and speculations. In addition, through regular audits and parliamentary oversight to avoid corruption and cost drift, public credit would, by definition, become a supplement to the real economy without debilitating speculation. And without insane buybacks that only encourage the widening of inequalities and all forms of more or less legal evasion.

We have seen above how ecomarxism makes it possible to rationally integrate the costs of nature conservation, both at the microeconomic and macroeconomic level – SR-ER. – only from a human, ecological and economic point of view.
Ultimately, based on the scientific production function and on the SR-ER Equations, the scientific statistics would be crystal clear. This would be true for corporate as well as national accounts. I also said in my Synopsis how, thanks to the incorporation of barcodes – or 5 G electronic chips – central planning and its statistics could be tracked in real time online, thus allowing all the necessary reactivity and readjustments related to natural or social contingencies.

However, in this case, it will then be necessary to take into account the vulnerability caused by unfriendly powers. For example, the CIA obtained government and economic statistics through its companies established in Chile, like Bell. This allowed it to stage strikes in the logistics sector which destabilized the democratically elected socialist government of Salvador Allende before the final attack launched by Pinochet-Kissinger on the government palace.

For my part, I believe that a new definition of anti-dumping protecting the three components of the household “global net revenue” – net wages, deferred wages, taxation – would suddenly stabilize the International Labor Division, thus opening up the way to an era of stability and prosperity unprecedented in the History of Humanity. Tariff wars are a thing of the past, while the new definition of anti-dumping would simply interpret for the benefit of all, the current but debilitating free trade agreements. And this without having to face the arduous task of their renegotiation, which supposes the unanimity of all the member states of the WTO.

This new definition of anti-dumping would be compatible with the global circulation of public or private capital, but this circulation would then be based on the superior quality of their activities. Public joint-ventures would become a great lever of development. But in doing so, the coherence of the Social Formation would be restored both for the net salary and for the deferred salary – the paycheck contributions funding social services – and for the tax base necessary for State intervention. And the whole thing would be statistically complete and transparent.

I also underlined the fact that Social Affairs is an exclusive national competence within the EU. We can therefore anticipate this necessary new anti-dumping by imposing a low import surcharge aimed at supplementing the social contributions deemed necessary. It would be added to VAT, which would make it easier to raise it at no additional cost and would also make it possible to manage, at best, the cost of the basket of current consumption. The impact on relocation would be much more virtuous than that of the carbon tax which is a pure anti-economic nonsense – because it destabilises relative production costs and grants support for pseudo-Green speculative capital. It is also a huge scientific nonsense since CO2 does not cause global warming but follows it and is also beneficial for the vegetation.

Paul De Marco

Copyright © La commune Inc, May 24, 2020

1 ) See Jacob Assa, The financialization of GDP: implications for economic theory and policy, Routledge ed., 2017, p 41. Assa writes “The 1993 revision of the SNA was the first to explicitly recognize financial intermediation as productive, using the concept of financial intermediation services measured (FISIM) to input value added to these activities ”p 37. He estimates the weight of the financialization of the economy – finance, insurance and real estate – at 30% of GDP as of 2008. He seeks to draw out the consequences in terms of biased income distribution, tax evasion and especially employment. To restore better predictability of the GDP, he proposes to deduct the financialization to arrive at the final GDP – FGDP. The interest of these analysis, like that of the analysis which differentiate between real economy and speculative economy within marginalism – and GDP -, is due to the fact that they are schizoid. Indeed, within the framework of this paradigm, the distinction is ontologically and methodologically impossible just like that which differentiates profit, classical interest and speculative interest. Where does Jacob Assa take these presuppositions without giving his references? It is a mystery. Recalling the historical evolution, he notes: “As discussed in the previous chapter (and explained in detail in Christopher, 2011), the interest-based part of financial income has gone from being accounted for as non-productive (prior to 1953) , to implicitly productive (between 1953 and 1993) to finally an explicitly productive activity in 1993. ” p 73 He rightly insists on the narrative and political aspect of these accounting choices. However, when he says against the dominant textbooks: “… fiat money is not really ” produced ” in the way other goods and services are” (p 46) to conclude: “In other words, the ” output “of finance should be deduced , not merely excluded, from GDP as it is the ultimate and ubiquitous intermediate input (albeit an intermediate cost rather than an input for intermediate consumption) to all industries producing a use-value output of either goods or services “(p 52) he demonstrates his ignorance of the genesis of the difference between credit – public or private – and money, therefore also of the salary masses, real and social. In the end his FGDP is little better than the GDP being both falsified Marginalist creatures and his challenges to the financial sector FIRE only look plausible at best. However, his analysis testifies to the fact that the problems get so heavy that the ruling circles start to worry, see for example: WORLD ECONOMIC FORUM, “Is growth in the financial sector good for the economy? »

Like all economic activities, banks and the financial sector have their specific production function and generate surplus value. They must therefore be included in scientific statistics. Problems arise from their function and their management, that is, either blind management with the CMP or scientific management. To manage the aggregates of the salary masses you need to know what money is. To manage credit, you must know what function it plays and hence be able to deduce its perversions when the credit is private. In fact, when speculative credit is legally hegemonic, it is only by usurping the role of profit – when it is based only on speculative interest. This implies that it determines the entire structure of relative prices by its highest but sham productivity, thus cannibalizing the real economy. With public credit and its concrete contribution to anticipating growth through public investment, such a deduction from GDP would make no sense. This is easily verifiable in France before the privatization of the Banque de France in 1973, or in Italy before the same drift in 1981-83.

2 ) I refer here to my Tous ensemble, as well as to my draft Hi-Ha: the bourgeois economits’ donkish visual hallucinations available in the Books-Books Section of my old Jurassic site For a summary see “The pseudo-economic science of the bourgeoisie = here is why we should change economic paradigm”, .

3 ) “Adam Smith said that the capitalists who are already paid as managers etc.,” liked to harvest where they had never sown “(p 47, ed. Sutherland, 1993); Smith, while proposing an earlier version of the risk theory (for the investor) vaguely remembers Pascal and compares the game to ‘’a lottery which would be perfect if the winners collected all the losers’ bets (p 102); but he immediately adds that such games resemble prostitution (p 103), the ideal being respect for the natural law of philosophers (p 392), that is to say respect for the most perfect justice, the most perfect freedom, and the most perfect equality (p 286), such respect being alone capable of ensuring the greatest prosperity of the three social classes – and by extension of their three forms of income: wages, profit and land rent. », Quote from my Hi-Ha: the bourgeois economits’ donkish visual hallucinations. This draft is freely accessible in the Livres-Books section of my old Jurassic site .

4 ) On this subject, see the article “Purchasing power, standard of living, socially necessary working time and ” global net revenue ” of households”,

5 ) For a summary of John Galbraith’s work see Note 15 on John Galbraith in my Keynesianism, Marxism, Economic Stability and Growth, 2005, freely accessible in the Livres-Books section of my old Jurassic website

6 ) See “Marginalist socialism or how to chain oneself in the capitalist cavern”, . As I explained Oscar Lange is behind this drift but at least he was well intentioned. This was not the case with Khrutchev and Liberman or the other revisionisms which followed. It is this so-called Marginalist socialism that caused the failures and delays in Soviet planning after the death of Stalin, who, for his part, had transformed the USSR from an underdeveloped country into a superpower capable of defeating, alone , the German industrial-military machine in just two Five-Year Plans.

7 ) To understand how the competition legally imposed by the capitalist property regime acts as social mediation for the expression of the exchange value which always underlies the price expression, we will refer to the relevant chapter, the last, of my Synopsis of Marxist Political Economy, freely available in the Section Books-Books my old Jurassic site . In summary, the Equations of SR-ER or social demand always over-determine prices, exactly as the “young” Marx already noted in his Parisian Manuscripts of 1844.

8 ) The highest ruling circles of the bourgeoisie were obsessed with the theoretical work of Marx, powerfully relayed by the International. We know, for example, that when reading Book I of Capital, Max Weber was so shaken up in his class convictions that he suffered a serious depression. He was advised to travel to Italy where he “recovered” thanks to his acquaintance with the work of Nietzsche. From then on, he was ready to lay down his sociology by replacing social classes with social groups. But it is Böhm-Bawerk who holds the palm of falsification… at least until I was able to put things right again. When Book III of Capital was published by the renegade Jewish-German Kautsky with the help of Bernstein etc., young people chosen by an overly confident old Engels suffering from declining eyesight, Böhm-Bawerk knew that he could begin his career as a public falsifier; he did so by claiming that the production price schemes of Book III contradicted those of the Marxist labor law of value of Book I. I have shown for a very long time, and for the first time in public in my Tous ensemble 1998, that this whole argument is only a vast Austrian Masonic and allied circles fabrication. I restored the scientific Marxist truth by exposing the history of the fabrication and by resolving the fake problem of transformation with the scientific demonstration of the Marxist law of productivity. The challenge of this falsification imposed by university and social selection was to portray Karl Marx, who with I. Kant is one of the greatest logicians in all of Human History, for an ideologue guilty of childish logical errors – namely the supposed contradiction between production prices and exchange values. By re-formalizing the problem in this way, the scientific duality of all goods – use value and exchange value – was by association. Thus, through a known cognitive bias, it was therefore possible to posit the Marginalist alternative, subjective and unimensional utility, as the authentically scientific alternative. This intellectual monstrosity was not immediately imposed except in imperial Austria and the even more in the philo-Semite Nietzschean Austrian Republic, from the Treaty of Versailles to the Anschluss. These deleterious lodges contaminated the Red Vienna renegades against whom Rosa Luxembourg fought – see – as well as the Black Vienna. Today it is everywhere obvious that the neoliberal monetarist recipes lead to catastrophy. In fact, the triumph of the monetarist neoliberals, hitherto herded into Chicago University and the Society of the Mont Pélerin, had to wait the slow discredit of Keynesianism. It was produced, among other things, by the Gatt’s undermining of the action of the Internal Multiplier, and by the coming to power of the neocons, with Reagan and the Nietzschean philo-Semite clique of the FED, starting with Volcker. This was done following the general rehearsal of this unprecedented anti-civilizational regression in Pinochet-Kissinger Chile, a decade earlier.

Bortkiewics and Tougan-Baranosvky, were fully aware of the ex ante / ex post problem of bourgeois theories. But they were apparently convinced by the critiques Böhm-Bawerk levied against Marx. We know at least since Althusser that Books II and III of Capital published by renegades, a fact that did not help to clarify things. The twosome embarked on an attempt to resolve the supposed contradiction between price of production and exchange value. They proposed a ridiculous solution of simultaneous resolution using quadratic equations. I have shown that this amounts to replacing the problem of Marx with a false problem reformulated in such a way that one has as many equations as unknowns. This is the worst example of a Model being substituted for Reality. (see my Tous ensemble)

9 ) For the deterioration of the health-care system that the health crisis linked to Covid-19 brought before everyone’s eyes, see « Health-care between cuts and corruption = a victim of choice for neoliberal and monetarist fiscal federalism »

10 ) For a defense of public services offered by public companies see the relevant chapter of my Tous ensemble. It includes also a critique of the Californian and British-Colombian “models”. Today, everyone is aware that deregulation and privatization are leading to the restructuring of public services, which are now subject to individual buying for the most part. This naturally favors the more prosperous geographic-economic zones and the least disadvantaged social strata. Accidents are increasing. For example, when while there was a new demand for preventive medicine a few years ago, today the concern of governments is to ensure a “defensive medicine” in order to protect caregivers against the results of the malpractice structurally engendered by budget cuts. With the Covid-19 crisis, this logic tending viciously towards eugenics and active euthanasia – against the wishes of the patients and of their families – took the form of triage, among other civilizational horrors. It seems that 75 year olds are now afraid to go to the hospital! Is it possible that, after World War II, citizens would end up in the hands of shameful philo-Semite Nietzschean criminals like Ludwig Mises and his clique? – see Note 11 of my text cited in note 9 above.

11 ) Capitalism in America: How a Dismal Decimal is Robbing Americans Blind, by Jon Hellevig for The Saker Blog in

12 ) See A) Financial sector «Definition according to the NACE-rev nomenclature According to the NACE-rev nomenclature, the actors of the financial sector are those which belong to one of the following categories: category 64 – Financial service activities, except insurance and pension funds; These include, for example, individual banks, commercial banks, investment and market banks, asset management activities, research / brokerage activities in the sector and many specialized financial services. category 65 – Insurance (insurance / reinsurance) category 66 – Activities auxiliary to financial services and insurance. Weight in the economy change code]

According to Fortune, the banking sector represents 12.9% of the global economy. The twenty largest banks in the sector earned $ 171 billion in profit between 2003 and 20121: with equivalent turnover, they are therefore on average twice as profitable as companies in the primary sector. ”

B) Finance According to Afic, companies supported by private equity represented 1.5 million employees in France in 200627.

Georges Pauget specifies that the financial sector represents 1 million employees in France 28, 40% of which in the banking sector alone . At the end of 2011, insurance companies had invested 925 billion euros in companies, or 54% of their assets. In addition to real estate, the French would have 3,600 billion euros of financial investments in their heritage in 2011, 39% of which in life insurance accounts. ” (translation mine)

13 ) Let us note the influence of Léon Walras on J.P. Sartre which explains several of his misunderstandings as a traveling companion of Marxism, notably in L’Etre et le Néant. Inspired by the pontificating French theorist in Lausanne, he believed that communism depends on prosperity and therefore on the end of scarcity. Obviously, he did not have access to the first edition of the Elements which states in a footnote that scarcity is a social production. The historian Ranke corrects this belief in his own way by saying that “each epoch is potentially as close to God”. As good Marxists, the Bolsheviks and Mao

Zedong proved this masterfully in their own way. The latter, inheriting a poor but very populous country, demonstrated how republican and egalitarian planning could make a difference, both in terms of extending the average life expectancy and raising the standard of material and cultural living. This was achieved thanks to the first developments of socialist democracy – democratic centralism, factory and village councils, communes, dazibao, etc. Socialism and communism are a matter of social redistribution rather than a function of an undefined concept of prosperity. Additionally, as I noted in my Methodological introduction, Sartre idealistic dialectical reasoning is based on his evacuation of Chaos in his duality Being and Nothingness. For an exposé of the Marxist dialectics, or historical materialism, see my Methodological introduction.

14) I refer here to the Introduction and Appendix to my Book III freely accessible in the Books-Books section of my old Jurassic site .

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