Stonernomics: The Marxist Explanation for Why You’re in Debt

Twice over the past year, I’ve found myself trying to explain basic aspects of Marxist theory while stoned. I’m not sure how it happens, but one minute I’m chilling out talking crap, the next I’m trying to articulate some argument around uneven development, or the tendency of the rate of profit to fall.

The last time this happened, I was just trying to explain why debt is a thing, when a cookie made my brain melt.

When I woke up the next morning, I went hunting around for a straight forward Marxist explanation of debt, and couldn’t find shit. So, now that I’ve had a coffee, I figured I’d write my own explanation, in a way that’s hopefully easy enough to understand; even the bakiest BakieMcBakeFace of Baketown could follow this.

The short version

So, the basic idea is pretty simple. Most people are workers. Workers get paid less than the value of what they produce. This means most people can’t buy what they produce. This means businesses can’t sell all their crap, because most people can’t afford it. So, we end up drowning in an ever growing pile of useless shit. This is obviously a possible source of economic instability. So, we have debt to stabilise things, but it doesn’t really work that well.

Before I go on, some comrades out there will probably freak the fuck out right about now, and want to accuse me of being an under consumptionist, reductionist freak. If that’s you, then you can start reading at the sub heading, “Fuck you this isn’t reductionist at all”. Moving on though, let’s start with the obvious …

You’re probably a worker

Odds are, you work for someone. Let’s say you’re a chef, and you work for a restaurant called Midnight Munchies. You have stuff like hot chips, and burgers, and steak, and Mexican food, huge pizzas with extra peperoni and fuck I’m not as sober as I thought I was.

But whatever, you make food, and it all tastes great. Now let’s imagine one night, you try to buy every meal you made that shift. Can you do it? Odds are, your wages won’t be equal to the value of the dozens of meals you made. What about if you go all in with all the kitchen staff, could you all collectively afford to buy back everything you produced that shift?

The short answer is no fucking way. The reason is that the value of what you produce is worth more than what you get paid.

The Labour Theory of Value

This is where Marx comes into things. Marx had this crazy idea that by working, we create value. So, let’s say you have a raw steak. That steak has some value on its own, like maybe it costs $5 at the butcher. But, let’s say Mr Chef cooks that steak up. Now, he can sell it for like $50 or something. So where the fuck did that extra $45 come from? Marx’s answer was that by cooking the steak, Mr Chef actually created value. Under capitalism certain percentage of this value is given back to the worker in the form of wages, while a bit of it is withheld by their boss as profit. Because after all, the only reason anyone starts a business is to make profit, right?

This is the Labour Theory of Value. It’s not a perfect theory, and we can really pick it apart and find some dumb holes in it, but it’s important to get the general idea of this basic concept if we want to talk about Marx.

So, let’s apply this theory to a closed, simple economic system. Let’s pretend that everyone who works at Midnight Munchies also lives there, eats there are sleeps there. So, Mr Chef knocks off work, and he eats at the restaurant. When he wakes up, he eats some bacon and eggs there too. Also, because this is a closed system, there are no other customers; just off the clock workers chilling out. In this world, each day a similar story plays out. Mr Chef works, and produces value. Let’s put a nice round figure on it, and say he produces 100 units of value in a shift. At the end of the shift, the boss gives him 80 units of value, while withholding 20 units as profit. Now, Mr Chef has 80 units to spend on satisfying his daily needs. Obviously though, this means he can only consume 80 percent of what he produced. All the other workers are in the same boat. Assuming these workers are the only customers, this means the restaurant will produce 20 percent more food that everyone can afford to eat. This is bad for business, because the restaurant is producing stuff it can’t actually sell. So the big boss man makes the decision to reduce output. But, this means less work and less wages for the workers, which means they can afford less food. And BAM! Fucking fiddle sticks, our closed economy is pretty much fucked from the start.

In many ways, this weird scenario is a lot like a stripped down, super simple model of capitalism. Sure, we don’t all work for the same company, but that’s not really important. What matters is that the same basic economic mechanism is the same everywhere.In economic terms, what we’re talking about here is effective demand, and it’s a major aspect of both Marxist and Keynesian thought. In reality, we’re all a little like Mr Chef and his fellow employees: on a rat race, producing more than we can consume.

Lunch-o-Rama, fuckers!

To really ram that point home, imagine that a restaurant opens next door to Midnight Munchies. We’ll call it Lunch-o-Rama, because whatever. Imagine now workers from both restaurants are free to move between the two businesses, buying and eating whatever delicious shit they want. In the end, we’ll still have this problem where the workers don’t have enough money to consume everything the two restaurants produce. All we’ve really done is move the problem around a little.

This phenomenon has two names: overproduction or under consumption. They’re two words for basically the same thing. Again, Marx didn’t invent this idea, but he used it to explain why capitalism is prone to crisis.

Fuck you this isn’t reductionist at all

So, Marxists are totally in love overproduction and under consumption, despite the fact that Marx himself viewed it as just one of many internal contradictions within capitalism. If you rely on overproduction to explain everything from the GFC to the weather, then you’re not a Marxist, you’re an idiot. Capitalism is waaaaay more complicated than one simple little lever we call overproduction/ under consumption. However, if you understand it just as one aspect of a broader, more complex system, then good-o Joe, you’re on your way to the USSRrraad.

Nonetheless, I think overproduction is a good place to start when discussing the basics of Marxism. It’s easy to understand, and easy to see at work in your daily life. At the very least it makes more sense than starting with boring shit, like a long winded definition of what a commodity is.

Fix’n the contradiction

Anyway, let’s return to our fucked up little duo of restaurants, which are basically screwed at this point. Now, there’s all sorts of ways to avoid this tailspin of fucktardery we’ve gotten ourselves into. If more customers could be coaxed in, that’d be a good start. Maybe the big boss could reduce the amount of profit he makes, which might stabilise the system for a while. What if we could stop paying for stock, and just steal shit from other restaurants? Might help a bit.

In the real world economy, we can keep shit from falling apart if the system just keeps expanding. A growing population, opening new markets (such as the collapse of the USSR), war for resources (primitive accumulation) and other strategies can all postpone the inevitable crisis, and give capitalism the fresh blood it needs to really flourish. But, it seems pretty obvious that all we’re doing here is moving the problem around, and not really solving it.

Things look pretty bad, but what if a bank opens up next door, and gets integrated into our little closed system? The bank could give everyone credit cards!

Then, the workers be able to afford whatever they want! Holy shit, we’ve stabilised our economy!

… Until everyone maxes out their cards. Even if we keep giving them more cards, we’re not going to fix the problem. The reason is because just like the restaurants, the bank wants profit. So, it tacks interest onto its credit cards. At first, the interest is no big deal, but what about when Mr Chef is sitting on a Smaug hoard of credit cards? How much interest will he be paying each month? Eventually, Mr Chef is going to end up broke, sleeping in a ditch, trainspotting with rusty nails. All the while, the boss man is off somewhere with a fuckton of surplus value to piss away.

This is what led Marx to one of his most famous, and powerful comments near the end of Capital Volume 1:

“This law rivets the labourer to capital more firmly than the wedges of Vulcan did Prometheus to the rock. It establishes an accumulation of misery, corresponding with accumulation of capital. Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery, agony of toil slavery, ignorance, brutality, mental degradation, at the opposite pole, i.e., on the side of the class that produces its own product in the form of capital.”

It’s at this point that most people call bullshit on Marx. After all, we don’t all live like 19^th Century labourers. For many of us, things have gotten better since Marx’s era. Of course, if you read Capital Volume II, you’ll find Marx actually has a very compelling model explaining this. This model becomes even clearer if you consider the incomplete Volume III. Put simply, contradictions like overproduction can actually good for the system. Just as they can destabilise the system, they can also act as motors driving it forward. Contradiction forces capitalism to be innovative, constantly searching for new markets, new opportunities and new ways to turn a buck. In this sense, the problem is the solution, and the solution is the problem.

Marx himself had his own solutions, too. One in particular is fairly well known, and probably occurred to you when you were reading about Midnight Munchies’ woes. If we want to stabilise the system, all we need to do is get rid of that pesky profit issue. That closed system over at Midnight Munchies would work great if someone could just get the boss to go fuck himself, and leave the workers to keep 100 percent of the value they produce. Hence, the whole communism thing. But, this is a topic for another day.

Anyway, now you know why you’re in debt.