Friday, 22 May 2015

Friday Night Disco - Is It In - Eddie Harris

Capital III, Chapter 5 - Part 4

If things were viewed from the perspective of the economy as a whole – and increasingly that means a global economy – rather than from the perspective of each individual firm, then it would be clear that the savings that are achieved in the cheapening of constant capital are the result of the increasing productivity of the socialised labour. The individual British capitalist not only benefits from the productivity of his own workers, but from that of the Chinese workers who produce the cheap wage goods, like clothes, that reduce the value of labour-power of his own workers, from the productivity of the Chilean copper miners who reduce the price of copper that goes into the machines he uses and so on.

Yet, the individual capitalist sees none of this arising as a product of social labour, but only of his own ability to buy low and sell high.

“He is always well aware, however, that the labourer has something to do with the employer buying much or little labour with the same amount of money (for this is how the transaction between the capitalist and labourer appears in his mind). This economy in the application of the means of production, this method of obtaining a certain result with a minimum outlay appears more than any other inner power of labour as an inherent power of capital and a method peculiar and characteristic of the capitalist mode of production.” (p 84)

Of course, from the perspective of the individual, alienated worker, things can appear in this way too. The worker only confronts these means of production as use values. Not use values owned by themselves, but owned by capital, with which they have to deal in the productive process. It is of no interest to the worker, therefore, whether these use values have a high or low value, whether they are used efficiently or inefficiently in the productive process.

This, in fact, is the main reason that capitalism, even as it tries to produce efficiently, is forced into producing inefficiently, because the greatest productive resource, that of the workers themselves, is squandered.

“The situation is quite different in factories owned by the labourers themselves, as in Rochdale, for instance.” (p 85)

To the extent that workers are cheap and replaceable, the capitalist has an incentive to wear out the workers and risk their lives, to better economise on the amount they have to spend on constant capital. We saw an example of that recently in the collapse of the factory building in Bangladesh. We have seen it in the squandering of workers lives from the continued use of asbestos. Even today, as hundreds of workers lose their lives in industrial accidents, the need for Health and Safety provision is seen as something to be made fun of and ridiculed, particularly by the Tories, who represent that section of small, inefficient capitalists. 

Moreover, to the extent that labour is cheap and constant capital is expensive, capital will always be more reluctant to introduce machines that make work lighter, than will workers who benefit thereby. Talking about the worker's co-operative at Ralahine, James Connolly wrote,

“To those who fear that the institution of common property will be inimical to progress and invention, it must be reassuring to learn that this community of ‘ignorant’ Irish peasants introduced into Ralahine the first reaping machine used in Ireland, and hailed it as a blessing at a time when the gentleman farmers of England were still gravely debating the practicability of the invention. From an address to the agricultural labourers of the County Clare, issued by the community on the introduction of this machine, we take the following passages, illustrative of the difference of effect between invention under common ownership and capitalist ownership: –

“This machine of ours is one of the first machines ever given to the working classes to lighten their labour, and at the same time increase their comforts. It does not benefit any one person among us exclusively, nor throw any individual out of employment. Any kind of machinery used for shortening labour – except used in a co-operative society like ours – must tend to lessen wages, and to deprive working men of employment, and finally either to starve them, force them into some other employment (and then reduce wages in that also) or compel them to emigrate. Now, if the working classes would cordially and peacefully unite to adopt our system, no power or party could prevent their success.”

This was published by order of the committee, 21st August, 1833, and when we observe the date we cannot but wonder at the number of things Clare – and the rest of Ireland – has forgotten since.”


Thursday, 21 May 2015

Capital III, Chapter 5 - Part 3

If wear and tear of machinery and other fixed capital is reduced, this reduces the price of commodities, because a part of that price is made up of the value of the wear and tear, and which is accumulated in depreciation funds, to replace that fixed capital. But, it also reduces the amount of capital that has to be advanced, and as seen previously, that raises the rate of profit. The cost of repairs are added to the initial cost of the fixed capital, so if those repair costs are reduced, because the fixed capital is more durable, again the capital advanced is reduced, increasing the rate of profit.

All of these savings are possible only because of production by co-operative, social labour, which itself is premised on production on a large scale. But, the savings are even greater, indeed only really achieved, when production takes place on an even larger scale.

“... the development of the productive power of labour in any one line of production, e.g., the production of iron, coal, machinery, in architecture, etc., which may again be partly connected with progress in the field of intellectual production, notably natural science and its practical application, appears to be the premise for a reduction of the value, and consequently of the cost, of means of production in other lines of industry, e.g., the textile industry, or agriculture. This is self-evident, since a commodity which is the product of a certain branch of industry enters another as a means of production. Its greater or lesser price depends on the productivity of labour in the line of production from which it issues as a product, and is at the same time a factor that not only cheapens the commodities into whose production it goes as a means of production, but also reduces the value of the constant capital whose element it here becomes, and thereby one that increases the rate of profit."(p 81)

In fact, that same principle is increasingly applied by capital to the most important element in the productive process – the labour power – itself. The more surplus value relies on technological development to drive up productivity to create relative surplus value, the more this relies on an educated and cultured working class. But, the more such a society invests in education to achieve that, the more it is also driven to produce all of the other things that go with it, including a reasonable level of healthcare, so that the quality and reliability of the labour-power meets these standards, set for the other machines and materials. That is one of the biggest drivers for capital to establish welfare states.

“The capitalist's fanatical insistence on economy in means of production is therefore quite understandable. That nothing is lost or wasted and the means of production are consumed only in the manner required by production itself, depends partly on the skill and intelligence of the labourers and partly on the discipline enforced by the capitalist for the combined labour.” (p 83)

Marx says that this attempt to minimise the costs of production is also conversely seen in the attempt to adulterate the output. So, on the one hand, capitalists attempt to only buy good quality inputs, whilst selling poor quality outputs, including to their capitalist brethren. He remarks sarcastically,

“This practice plays an essential part particularly in German industry, whose maxim is: People will surely appreciate if we send them good samples at first, and then inferior goods afterward.” (p 83)

But, Engels notes that this kind of cheating belongs really to the early stages of capitalist development. Big capital does not need these kinds of penny-pinching methods.

“Though not expressly stated in our recognised treatises, it is still a law of modern Political Economy that the larger the scale on which capitalistic production is carried on, the less can it support the petty devices of swindling and pilfering which characterise its early stages. The pettifogging business tricks of the Polish Jew, the representative in Europe of commerce in its lowest stage, those tricks that serve him so well in his own country, and are generally practised there, he finds to be out of date and out of place when he comes to Hamburg or Berlin; and, again, the commission agent who hails from Berlin or Hamburg, Jew or Christian, after frequenting the Manchester Exchange for a few months, finds out that in order to buy cotton yarn or cloth cheap, he, too, had better drop those slightly more refined but still miserable wiles and subterfuges which are considered the acme of cleverness in his native country. The fact is, those tricks do not pay any longer in a large market, where time is money, and where a certain standard of commercial morality is unavoidably developed, purely as a means of saving time and trouble. And it is the same with the relation between the manufacturer and his “hands.””


And the same thing is seen today. It is the inefficient, small scale capital that relies on this kind of cheating. Meanwhile, as Marxist economists noted in the 1980's, monopolistic competition has been led, on the contrary, by a drive to offer better quality commodities, new innovative commodities etc., and to drive up profits by increasingly innovative production methods. The increase in the rate of profit arises here, not from increasing the rate of surplus value, but by increasing the volume of surplus value, whilst reducing the value of the constant capital. Of course, this does not necessarily mean reducing the absolute value of the constant capital. In fact, it is partly because the total amount of constant capital employed, its physical amount, rises that these economies of scale arise. It is the unit cost that falls. But, that in itself is an indication and a result, of the fact that production is the result of socialised, co-operative labour.

Wednesday, 20 May 2015

Capital III, Chapter 5 - Part 2

Marx then sets out a series of what today would be called economies of scale. The modern large factory enjoys all the benefits that arise from the rise of co-operative labour. The cost of the motive power provided, and scope on which it can then operate, number of machines it can drive etc. is reduced. The transmission mechanisms do not become proportionately more expensive the more equipment it controls. Machines do not become proportionately more expensive the larger they are, and the number of tools they contain. Buildings do not become proportionately larger or more expensive, the more equipment they contain, and further economies are made for storage etc.

“The same applies to expenditures for fuel, lighting, etc. Other conditions of production remain the same, whether used by many or by few.” (p 79)

All of these savings arise because of the social nature of labour.

“Even the continual improvements, which are here possible and necessary, are due solely to the social experience and observation ensured and made possible by production of aggregate labour combined on a large scale.” (p 79)

The same is true with the use of what formerly would have been waste production. Many of these items on a large scale can be utilised in either the same or some other industry. 

“It is only as waste of combined production, therefore, of large-scale production, that it becomes important to the production process and remains a bearer of exchange-value.” (p 79-80)

Its use effectively reduces the cost of raw material, and by reducing the value of the constant capital increases the rate of profit.

“If the surplus-value is given, the rate of profit can be increased only by reducing the value of the constant capital required for commodity-production. So far as constant capital enters into the production of commodities, it is not its exchange-value, but its use-value alone, which matters. The quantity of labour which flax can absorb in a spinnery does not depend on its value, but on its quantity, assuming the productivity of labour, i.e., the level of technical development, to be given. In like manner the assistance rendered by a machine to, say, three labourers does not depend on its value, but on its use-value as a machine.” (p 80)

The process by which the value of the constant capital is reduced involves a rise in the productivity of those industries producing the constant capital. When a rise in productivity is cited here, this does not just mean that workers in Department I themselves produce more efficiently, for example, as a result of having better machines to work with. That is part of it. But, what is really meant is that the labour-time required for the production of the constant capital falls, for a variety of reasons. But, also firms using this constant capital can achieve savings themselves.

Machine A may require as much labour-time to produce as machine B. But, if machine A produces twice as many use values as B, it represents a saving compared to B. If A lasts twice as long as B, because of its construction, it represents a saving compared to B. If material A contains as much labour-time as B, but it is higher quality etc. it represents a saving. If firms can replace some materials with others, they may obtain savings in their advance of constant capital.

“Other savings of constant capital arising from the shortening of the time of circulation in which the development of means of communication is a dominant material factor will be discussed later. At this point we shall deal with the savings yielded by continuous improvements of machinery, namely 1) of its material, e.g., the substitution of iron for wood; 2) the cheapening of machinery due to the general improvement of machine-building; so that, although the value of the fixed portion of constant capital increases continually with the development of labour on a large scale, it does not increase at the same rate; 3) special improvements enabling existing machinery to work more cheaply and effectively; for instance, improvements of steam-boilers, etc., which will be discussed later on in greater detail; 4) reduction of waste through better machinery.” (p 80-81)

All of these are significant items in relation to the later discussion of the tendency for the rate of profit to fall, because they indicate the extent to which the same factors that contribute towards a rising physical quantity of constant capital to be employed, at the same time act powerfully to reduce the value of that constant capital thereby acting to bring about a rising rate of profit.

Tuesday, 19 May 2015

What Next? - Part 8

For Labour(6)

Labour will need to carve out a specifically internationalist and social democratic line, in order to build an effective opposition. The focus of Labour in the period ahead should be to develop such an approach. The Tories will now push ahead with an EU referendum, and now it is to happen, Andy Burnham is correct to argue that it should be held as soon as is possible. Labour should avoid the severe mistake they made in the Scottish referendum, where they joined a cross party campaign with the Tories. Labour should have put forward a social democratic and internationalist argument for retaining the union, in the Scottish referendum, and they need to likewise put forward a specifically social democratic and internationalist argument for Britain remaining in the EU. Neither of those things are possible, if you are lining up with the Tories.

That Labour has gone along with the Tories proposals for limiting the right of free movement of labour, within the EU, by supporting the idea of restricting benefits, is not a good start. It is ridiculous to make a distinction between workers moving to take up work, in another EU country, and workers obtaining benefits, in those countries, when they have moved. Such restrictions essentially prevent the right of free movement, as well as creating a two tier labour market, in each country, with some workers being entitled to benefits and other workers denied them, even though they are paying taxes to cover them.

Workers do not control the conditions under which they either have employment or do not, so a worker may move from country A to country B to take up a job, but has absolutely no control over whether they will still have that job 3, 6 or 12 months from now. Single workers may possibly be able to move from one country to another whilst taking that risk, and without any guarantee of benefits should things turn out badly for them, but workers with families that they need to move with them certainly cannot, especially where any such move depends upon the other members of their family being able to obtain such benefits whilst they obtain work etc., or if they are sick, disabled and so on, and thereby dependent on some form of support.  Moreover, in a single market, which the EU is supposed to be, there should be no difference between workers, from say Stoke, moving to seek work in an area with high levels of employment, and wages, like Dortmund, than there is those workers moving to Birmingham.  To demand that workers have employment before they move, is to restrict free movement, and it is only possible to move on that basis, if there is some basic safety net that covers people while they find work.

The answer to the Tory and nationalist objections is not to pander to them, as Labour has done, but to put forward an internationalist solution. The answer, so long as workers benefits are to be provided by a capitalist welfare state, rather than by workers collectively themselves, is to create an EU Welfare State, rather than remaining limited within the constrictions of national welfare states. On that basis, a level playing field would be created, which, in any case, should be a minimal requirement for any single market, with common benefits, pensions etc., payable to all workers within the EU, and paid for out of a single EU Welfare budget.

That would not only remove the argument about workers moving in order to obtain the higher benefits in certain countries – which is a fallacy in any case, as regards Britain, because it has worse benefits than countries like France and Germany, and also because the proportion of migrants, who claim any kind of benefits, is much lower than the proportion of UK citizens who claim benefits – but would also remove the argument that any such benefits are being paid for by the workers of one country, and received by the workers of another.

In other words, Labour's way forward here is to be the standard bearer of internationalism and social democracy. The logical thrust of its policy should be, not only to put forward a strong message for staying in the EU, but for the EU to be strengthened, relative to the existing nation states, for greater measures to defend the rights of workers within the EU, and for the development of a United States of Europe. Far from entering into any cross-party alliances with the Tories, to fight such a referendum campaign, Labour should rather be joining up with the trade union and co-operative movement in Britain, and in every other country across the EU, and with parties like Syriza and Podemos, to put forward a pro-EU, anti-austerity agenda.

But, this also shows the real basis of opposing the nationalists. The cause of unemployment, lack of housing, poor healthcare, lack of schools and so on, in the UK, is not the EU, or immigration, any more than, in Scotland, the cause of those things is England or the English. Its ultimate cause is capitalism itself, which although generally it improves conditions, does so in a very chaotic and crisis ridden manner. But, the immediate cause of those things, in Britain, is the economic policies that successive governments have pursued. The Thatcher/Major governments pursued a deliberate policy of low wages and high private debt, and that led to a low skilled, low productivity workforce, alongside the blowing up of financial bubbles, that made it impossible to finance workers pension schemes, and a property bubble that made it impossible for workers to buy houses, or to move to better houses, and massively increased rents, and the need for housing benefit. None of that was the fault of the EU or migrants.

In the last five years, the cause of the growth of zero hours contracts, of a deterioration in schools, housing and so on has been the austerity measures that both the Tories and the SNP have pursued, when, as the US demonstrated, the more sensible solution would have been to spend more on those things, as a counter to the recession caused by the financial crisis, and thereby to put people back to work. It is in a reversal of those policies, and their equivalents pursued in Greece, Spain, Ireland, Portugal and elsewhere that provides the solution, and workers in Britain have a direct interest in joining with workers in those countries to bring it about, not in allowing nationalists to split us apart.

Capital III, Chapter 5 - Part 1

Economy in the Employment of Constant Capital 

Measures to increase absolute surplus value such as extending or intensifying the working-day, whilst employing the same number of workers, reduces the relative value of the constant capital, because the fixed capital is now being worked for longer.

“The volume of the fixed portion of constant capital, such as factory buildings, machinery, etc., remains the same, no matter whether these serve the labour-process 16 or 12 hours. A prolongation of the working-day does not entail any fresh expenditures in this, the most expensive portion of constant capital. Furthermore, the value of the fixed capital is thereby reproduced in a smaller number of turnover periods, so that the time for which it must be advanced to make a certain profit is abbreviated.” (p 77)

Even if workers are paid overtime the saving in respect of the fixed capital can outweigh it so that profit rises, as capital rapidly increased the amount of fixed capital employed. This gave an incentive for capitalists to lengthen the working day.

“"Since in all factories there is a very large amount of fixed capital in buildings and machinery, the greater the number of hours that machinery can be kept at work the greater will be the return." (Reports of Insp. of Fact., 31st October, 1858, p. 8.)” (Note 11,p 77) 

On the other hand, if the length or intensity of the working day is constant, more surplus value can only be produced by employing more workers. But, that would mean not only is more material required for processing, but more tools, or machines will be required, even bigger buildings may be required. On the one hand, the rate of profit may be increased, as the amount of surplus value produced increases, on the other, it is reduced because a larger quantity of constant and variable capital is required to produce it.

Moreover,

“Quite a number of current expenses remain almost or entirely the same whether the working-day is longer or shorter. The cost of supervision is less for 500 working-men during 18 working-hours than for 750 working-men during 12 working-hours. 

"The expense of working a factory 10 hours almost equals that of working it 12." (Reports of Insp. of Fact., October 1848, p. 37.) 

State and municipal taxes, fire insurance, wages of various permanent employees, depreciation of machinery, and various other expenses of a factory, remain unchanged whether the working-time is long or short. To the extent to which production decreases, these expenses rise as compared to the profit. (Reports of Insp. of Fact., October 1862, p. 19.)” (p 78)

Marx argues that, in practice, the lifetime of the fixed capital is determined by the time required to reproduce its value. In other words, a given amount for wear and tear is transferred to the end product and accumulated in funds for its replacement. The longer or more intense the working-day, the more output in a given time, the more this transferred value is, the sooner the value of the fixed capital is reproduced. This is not always the case, however, as Marx set out in relation to “Moral Depreciation”, there are periods when even new machines have to be scrapped because they have been superseded by far more efficient newer machines. 

The analysis proceeds on the basis that the mass and rate of surplus value are given.

Monday, 18 May 2015

What Next? - Part 7

For Labour (5)

The narrative that is being developed by the right-wing media and the Blairites, who they are filling their screens and pages with, is that this was a momentous loss for Labour, and that the cause of that loss was that Labour had put forward a programme that was too left-wing, and which did not accept that Labour had overspent when it was last in office.

The idea that this was a momentous loss is not just being put forward by the Blairites; people like John Cruddas have made similar statements. But, in fact, the idea that the election was a disaster for Labour is as much a myth as the idea that Labour lost because it was too left-wing, or that it could not claim economic credibility, because the last Labour government had overspent. Once again, look at the facts.

The last government had a majority of around 80. This government has a majority of just 12. To have reduced the Tories majority by that amount is in my opinion a massive step forward, not a step back! It requires the Tories to lose just 6 MP's, for them to be in a minority, and that could happen within 12 months. Whenever by-elections occur, unless they are in particularly safe Tory seats, they are likely to lose votes. The main reason for Labour not winning such by-elections will be if it is presenting itself as a bunch of losers, and disorganised, which is another reason why it was a mistake for Miliband to have resigned.

To what extent was the election a disaster for Labour, and to what extent does it fit the Blairite narrative, and that presented by the right-wing media? In England, Labour GAINED a net 15 seats, having gained 21, and lost 6. So, it could hardly be described as a disaster in terms of losing seats compared to 2010. Moreover, Labour's share of the vote in England rose by 3.6% points, compared to only a 1.4% point rise in the Tory share of the vote, and a 16% point fall in the Liberal share of the vote. That neither confirms the idea that this was a disaster for Labour, nor supports the Blairite argument.

The closest party advocating something close to what the Blairites suggest Labour should have put forward, is the Liberals – though some Blairites seem closer to the Tories. But, the 16 point drop in the Liberal vote hides just how disastrous their performance was. Not only did they lose 37 of their 43 English seats, but this 16 point drop in their vote share actually represents a 66% drop of their vote share.

By contrast, Labour's 3.6 point rise in its vote share represents a 12.86% rise in its vote share. The Tories vote share increased by just 3.5%. In other words, Labour failed to win the election, but its performance in England could not be described as disastrous, because the Tories majority was reduced from around 80 to 12, Labour gained a net 15 seats, and its vote share increased by nearly 13%, or nearly four times that of the Tories. The real problem for Labour, contrary to the Blairite narrative came not from Labour being too left-wing, but, in comparison with the SNP message, not left-wing enough.

Labour's real problem arose from losing all but one of its seats in Scotland to the SNP, and the fact that with such a large number of SNP MP's being promised by the opinion polls for months before the election, that meant that the Tories were able to raise the nationalist bogeyman, so as to swing nationalistically minded English voters behind Cameron, or Farage, and away from Labour.

It would be a grave mistake for Labour then to base its analysis on where it went wrong, and where it should go, on the idea that either this election result was a disaster, or that it lost because its position was too left-wing. In fact, the conditions of the election were largely unusual, and heavily influenced by Nationalism. If Labour really wants to know where it went wrong here, the focus should be on why it lost votes to the SNP, because had Labour continued to be the dominant party in Scotland, the Tory/UKIP narrative of the Scottish peril would not have flown, Labour would not have lost those votes in England, and would thereby have secured a majority.

But, this question of why Labour lost votes to the SNP is significant for other reasons. It is significant because of the question as to why Labour loses votes to nationalists in general. The reason that Labour loses votes to the SNP, in the end comes down to the reason why Labour loses votes to UKIP, or in the past to the BNP. It is because of a failure of Labour to address the underlying problems facing workers that cause them to seek the easy solutions that the nationalists provide, plus a willingness to then seek compromise, and bureaucratic solutions to those problems. In times of general affluence, as with other aspects of social democracy, that approach can at least partially succeed, but in times of austerity, it most certainly cannot.

The SNP will attempt to drive a bigger nationalist wedge into proceedings over the coming period. Cameron's rush to whip up English nationalist hysteria against the SNP, in order to garner votes, will play into the SNP's hands in that regard, but will also lead him into a dynamic that will favour the more extreme nationalists within his own party, who will push for greater English nationalist power, as well as a break from Europe. Both of those trajectories represent bad news for workers.