Wouldn’t Marxists get taken more seriously if they could actually, you know, MAKE MORE MONEY with their superior understanding of capitalism?

Businessmen and bourgeois economists will often scoff at Marxist economists and their outdated “labor theory of value.”  “Bah!” They say, “Their theories might be fun to play with for a bunch of bored academics, but they hardly apply to the REAL WORLD of MAKING MONEY.”

And…they have a point, do they not?  Does it not seem strange to anyone that, for all of the 150 years that Marxists have spent studying capitalism, never have they actually tried to really outsmart it, to beat the market?  You’d think, if they had a winning theory that they actually understood, that they could use it to devastating effect—if not to incite worldwide proletarian revolution, then to at least make a buck or two.

Marx’s crowning achievement was titled, “Das Kapital,” not “Das Kommunismus,” after all!  If there’s anything Marxists should really be experts at, it is capitalism, not communism.

That said, I understand why reading Marx to become an expert at capitalism might have not caught on among his audience.

Proletarians—the ones who would be expected to read and try to understand Marx—are usually (rightly) warned against trying to play in the stock market or otherwise make risky investments because:

  1. They cannot afford to risk losing their meager savings.
  2. They do not have the capital to weather a prolonged downturn if their investments go through a slump.  They will be tempted to bail out before the market gets a chance to come back up.
  3. The “Efficient Market Hypothesis” states that it is unlikely that one is going to “beat the market” with specific investment picks, UNLESS one thinks that one has special knowledge about some segment of the market that the rest of the market does not.

I am not discounting the importance of #1 and #2.  So please, readers, do NOT take this post as advice to go playing around with your humble savings in investments if you are a pretty ordinary Joe-Schmoe like me with not a lot of money to spare.

That said, if there are any moderately wealthy readers following along, who understood my previous post on using world gold production as an indicator of crises of overproduction, then I encourage you to listen up.

Because, if you are a Marxist who understood that post and has read through all of Sam William’s “Critique of Crisis Theory” blog, and who has been following Jehu’s blog at “The Real Movement,” then you are in very select company.   Of the already small number of Marxists in the world, you are privy to the analysis of an even more select company that I would venture to call the “Commodity Money School of Labor Theory.”  So far, this emerging school of Marxist thought, centered on returning to the fundamentals of Marx’s “Capital” in taking the reality of commodity money seriously admist our world of apparently fiat money, would encompass, according to my findings, only the following few authors:

Sam Williams – http://www.critiqueofcrisistheory.wordpress.com

Jehu – http://www.therealmovement.wordpress.com

The Socialist Party of Great Britain – http://www.worldsocialism.org

(For example, I judge from these two articles that the SPGB actually understands labor theory and commodity money well, and isn’t just parroting the latest Keynesian or MMT fads that pass for “Marxist economics” these days).

If you are privy to this select company, then you have information about how the market really behaves that is beyond what everyone else has.  Objection #3 above should not apply to you.  You should, in theory, be able to beat the Efficient Market Hypothesis…at least until such a time when most other investors in the world wisen up and become Marxists themselves!  (And Marxists of the Commodity Money School, no less—because, if you ask me, these Commodity Money School authors are the only ones who really have a clue about what’s going on, even among Marxists).

You should easily be able to recognize where world capitalism is in its industrial cycle at any given point if you read and understand these posts on Sam Williams’s blog:

The Phases of the Industrial Cycle (Part I)

The Phases of the Industrial Cycle (Part II)

The Phases of the Industrial Cycle (Part III)

The Phases of the Industrial Cycle (Part IV)

You should know that, in the boom phase of the industrial cycle, all commodities except for the money commodity increasingly become priced above their values.  When the inevitable crisis hits, and the boom gives way to a recession, all commodities except for the money commodity then take a turn with prices below their values.

The flipside of this is that the money commodity (currently gold) goes from being relatively undervalued to being relatively overvalued (of course, precisely speaking, gold can’t be “undervalued” or “overvalued” because gold, the current money commodity, itself represents value.  Gold has no price).

Nevertheless, you should see that, if the Federal Reserve engineers just enough inflation to keep commodity prices steady during a crisis (when, by all accounts, their prices should be declining), then the “price” of gold must increase through the roof.

You should be able to discern those times when irrational optimism reigns just before the credit crunch and crash.  You will know that a crisis of overproduction is approaching when world gold production has started to steadily decline and interest rates have started to rise and cut into the profit of enterprise.  That’s when you go “long” on the money commodity, and “short” on all other commodities.

Well, are there any financial instruments already out there that allow one to go “long” on the money commodity and “short” on all other commodities?

Well, going “long” on the money commodity means buying gold during the boom phase in the lead-up to the crash that the perpetually-irrationally-optimistic capitalists will never see coming (but which YOU will see coming, because you know that these crises are inevitable, and you even understand what causes them and what the signs are that they are emerging).

To be clear, buying gold will not earn you surplus value.  An ounce of lifeless gold sitting in a hoard never produced an iota of surplus value for anyone.  I am not selling “goldbuggery” here.  When the price of gold goes up in the next crisis, it won’t be that gold is earning you a “profit.”  It’s that owning anything else will be bringing you a huge loss.  Gold will merely be preserving the value of your wealth.

Likewise, during the boom phase, just before the crisis, would be a good time to sell your factory, your inventories…any commodities whose use-values you can personally afford to part with (which will not be many for most of the readers of this column…but hey! if there happen to be any oddball Marxist capitalists in the crowd…any trust-fund radicals…hey, it’s something to think about!)