I'm unsure about attributing this directly to Marx's Capital, although the inspiration, if not the explicit exposition, is clearly there. Wennerlind's analysis is grounded in a critique of what he calls "credit fetishism" an explicit hat tip to commodity fetishism.

What I am suggesting is an analysis that takes issue with the intuitive/Marxist notion that it is the "reserve army of labor" that disciplines labor, if only because the crucial moment when such discipline is needed is when the threat of unemployment is least credible. Peter Frase has a post today at his blog on "The Scourge of Overemployment" (http://www.peterfrase.com/2012/03/the-scourge-of-overemployment/) that I have commented on. Here is my comment:

As you know, I've been grappling with this issue for quite some time. Not only have economists "chosen not to pay attention to this gross distortion of the labor market," they have also chosen to not pay attention to the neoclassical theory -- Chapman's -- that predicts precisely such a gross distortion.

The structural, cyclical and frictional explanations still leave me with a riddle: why do these conditions persist through successive "regimes of accumulation" and why has there been such an enduring and spirited defense, by economists, of the effects of these structural, cyclical and frictional distortions? It can't be (I suspect) because they actually think long hours are more "productive".

I think I have an explanation but it involves setting aside the "intuitive" assumption that production precedes distribution and working through the problem with the sequence: 1. consumption, 2. distribution and 3. production. This is how the modern credit system evolved, with government war debts representing the first stage of the sequence, followed by monetary expansion facilitated by that debt and finally production stimulated by the monetary expansion.

I suspect the logic will be difficult to follow without close acquaintance with the history of the English financial revolution and I strongly recommend Carl Wennerlind's "Casualties of Credit" for an exposition of that history. The financial revolution was literally a "revolution" in terms of turning the expected sequence of production and consumption upside down! To continue the account of that inversion into the industrial revolution, I would recommend Robert Steinfeld's "Coercion, Contract, and Free Labor in the Nineteenth Century." Steinfeld challenges the conventional wisdom that employment relations in the 19th century U.S. and the U.K. was "at will" and describes the key role played by state enforcement of coercive master/servant contracts.

As your opening quote suggests, there is a tendency, following Marx, to see the "industrial reserve army" and the threat of unemployment as the great enforcers of labor discipline. But that really is only salient during the slumps. The trick for capital is to enforce discipline during the boom period. All those seemingly perverse structural incentives start to make sense in a regime compelled by credit to "make hay while the sun shines".

I should mention a brief essay of mine that refers to the Wennerlind and Steinfeld theses, "Crisis, Credit and Credulity: the incredible circulation of a counterfeit idea." (http://tinyurl.com/belgianlol) It was written for an "ethics in economics" online conference, so it takes that angle. Eventually, I'll work up a step-by-step presentation of the argument that credit imposes an inverted production cycle.

I'll take the "mistake" then, Jim, because it accords with the historical evidence.

It is precisely because it looms as a "possible source of a squeeze on profits" that capital must take precautions to make sure that such a potential does not materialize.

Hence, the Masters and Servants Act in the 19th century, suppression of trade unions, otherwise nearly unintelligible or incoherent bourgeois economic pseudo-theories -- wages-fund doctrine, lump-of-labor fallacy, canonical labor/leisure choice model, NAIRU -- and a structure of perverse incentives imposing quasi-fixed costs, tying social benefits to employment, etc.

But, again, I'm not interested in a pissing match about whether Marx did or did not say something or whether what I'm saying does or does not accord with or contradict Marx. Let the dead bury the dead.

By the way, Paul Dirac has it ass-backwards.