Northern Soul Classics - Take Your Love & Run - Barbara Lynn

One of my favourite old school Northern records. Great stomper, from Barbara Lynn.

History Repeating As Farce - Part 3

Nothing in history repeats itself in the same way. Bonapartism was based upon the rule of an individual. The position of Prime Minister, has been described as “an elected Dictatorship”, but, Prime Minister's and Governments can only continue if they retain a majority in Parliament. In the first place, before the coup, Louis Bonaparte, ruled as an Executive, supposedly under the control of the Legislature. But, it was events, and the impotence of any of the contending classes to assert itself, which ultimately allowed Bonaparte to carry through the coup. The Monarchist parties, the Orleanists, and the Legitimists, represented the interests of the Financial Aristocracy, and the Landed Aristocracy respectively. The Tories fulfil this function today, but the Tories are more than this. They are a far more complex and contradictory formation.

The Tories, as Marx describes, began as the Party not of the bourgeoisie, but of their enemies, the old ruling Feudal Aristocracy. In fact, during the 19th century, when that class saw itself being usurped by the Bourgeoisie, a section of it, and of its Party, attempted to win over the workers to its cause. Marx describes it as Reactionary Socialism. Some of them, like the Countess of Warwick, even found their way into Hyndman's Social Democratic Federation. The Tories also, as Engels describes, even financed Keir Hardie's election campaign. It was frequently, the Tory representatives who were the ones advocating various forms of social reform, who put forward the legislation on working-time etc. It was Manchester Liberalism, which was the red in tooth and claw representative of the industrial bourgeoisie. But, rather like the workers in the Middle East today have allied with their new enemies, in the bourgeoisie, against their old enemies, in the Bonapartist State, so in the 19th Century, the British workers lined up with their new enemies, in the industrial bourgeoisie, against their old enemies, within the Feudal Aristocracy. After all, at the beginning of that century, peasant life, and the oppression, of that old ruling class, was within living memory of many workers, or for their parents or grandparents, who had been forced off the land by the Enclosure Acts, and more open robbery by that Aristocracy.

As Marx, sets out, it was not that the Tories changed their class affiliation, it was that the class they represented itself became bourgeois! That meant that all of the contradictions which go along with that became entrenched within the Tory Party. Those contradictions continue until today. They were shown vividly at the beginning of the 1960's in the division between the old Patrician Wing of the Party, and that wing represented by people like Heath and Thatcher, the embodiment of the Grammar School educated, offspring of the up and coming middle classes. It persisted when Thatcher was Prime Minister, many of her opponents coming from within the Patrician wing of the Party. Eton educated Cameron, and his cohort are part of that wing of the Party.

In the 19th century, many of the old Aristocracy, where they did not extend their family business of land-owning, into Capitalist farming or mineral extraction, or into vast Colonial estates, used their accumulated Capital to move into Banking and Finance. They saw engagement in industrial or other commercial activity as beneath them, and the function of the nouveau riche bourgeois. Not for nothing are they referred to as the Financial Aristocracy. Most of the British Banks obtained their initial Capital from the activities of the Aristocracy in the Triangle Trade, whereby they brought slaves from Africa to their plantations in the Caribbean, bringing the products of those plantations back to Britain. It is not surprising then that a section of the Tory Party have always had a close connection with this Aristocracy of Finance, as well as their continued links with the large landed estates. The Tories links with the bourgeoisie proper, the industrial bourgeoisie, developed out of the failure of the Liberals.

The contradictory nature of the Tories today reflects that. On the one hand, they are a Party whose mass base is made up of those reactionary petit-bourgeois elements, upon whom they also rely for their votes. On the other hand, as the main Party of Capital, they also represent the interests of the industrial bourgeoisie. But, by their history, and the continued role within the upper echelons of the Party, they remain tied both to landed property and to to the financial aristocracy. These irreconcilable rifts within the Party, is what leads to the division over Europe. Whilst, the necessity to pander to its electoral and party base dictates the kind of policy pronouncements it issues, the actual practice in Government has to contend with the conflicting interests of these different social groups, and in particular the interests of the dominant sections of Capital itself. Which section of Capital wins out, tends to depend itself on which is most powerful at the particular time.

Industrial Capital, which during the Long Wave, Post War Boom, proceeded on the basis of Fordism, of an accommodation with the Trades Unions and the Social-Democratic consensus, and the kind of strategy of Capitalist Accumulation that goes with it – Welfarism, Macro-Economic planning, to coincide with the enterprise planning of Big Capital etc. - is interested in the continuity of production and sale of its products, and as Engels described in his “The Condition Of The Working-Class” with the avoidance of labour disputes. Money Capital, on the other hand is interested in unimpeded circulation, particularly of currencies. It will tend towards a more Liberal, or Neo-Liberal position. (For a discussion of this division see Henk Overbeek - “Global Capitalism and Britain's Decline” - 1988 Doctoral Dissertation, University of Amsterdam , and also Kees Van Der Pijl – “The Making of An Atlantic Ruling Class” - 1984.)

During the post war boom, the commitment of the Capitalist State, to a Fordist regime of accumulation, based on mass consumption and mass production, on macro-economic planning, and expansive welfarism “implied a subordination of independent bank capital and the rentier element in the bourgeoisie to an integrated, state supported finance capital” (Kees Van Der Pijl - “Neo-Liberalism vs Planned Interdependence. Concepts of control in the struggle for hegemony” - 1986.)

But, the end of the Long Wave Boom in the 1970's brought with it a crisis of Fordism too, and the kind of state structures and policies based upon it. That is not to say that Fordist regulation ceased. Just as Fordism was never an hegemonic form of Capital Accumulation, but merely represents a dominant form of regulation utilised by the more powerful fractions of Industrial Capital, so the crisis of Fordism only meant that the solutions it provided, just as with the macro-economic policies, based on Keynesianism, that went with it, were no longer capable of working in the way they had in the previous period. Capital needed to find alternative solutions, and within the Crisis of Capitalism that ensued, the fact that Money Capital was able once again to come to the fore, meant that the Neo-Liberal policies that reflected its interests were brought to the fore along with it.

The near collapse of the global financial system that followed on the decision of the US to close the Gold Window, in 1971, making the dollar no longer convertible with Gold broke down all of the forms of State, and international State forms of regulation set up at Bretton Woods, which were themselves an application on an international level of those very forms of Fordism, and Keynesianism, which advanced the cause of the huge multinational industrial Capitals, whose heartland was in the US. When the US abrogated the Bretton Woods agreement, its unintended consequence was the creation, or at least huge development, of the Eurodollar market, through which dollars were purchased via the European arms of US Banks. The breaking up of these forms of state and international state regulation meant that nation states lost control over Money Capital, in effect the international monetary system became privatised.

At the same time, freed from regulation, the Banks expanded massively overseas in search of customers, in a way that Industrial Capital had done via the MNC's. With industrial capital in decline, at home, and increasingly locating overseas, in search of cheap labour, with consumers and small businesses being encouraged to borrow to the hilt, and with them also being encouraged to buy a whole range of new financial commodities, being produced by Financial Capital, the further deregulation of Financial Services, in the 1980's, by Reagan and Thatcher, meant,the ground was set for Money Capital to become a powerful economic, social and political force. The News International phone hacking scandal, exposed the close links that existed in Britain, between sections of the media, the Police and other elements of the State, and with politicians. But, what has not been exposed as yet, is the close links of these same elements with the City, and Financial Capital. That the position of Money Capital became weakened as a result of the Financial Meltdown, may not be divorced from the fact that the News International scandal, which had been known about for years, came to prominence now. And, the consequences of the Leveson Inquiry may be to uncover other similar activities and contacts amongst the other sections of the right-wing gutter press, whose appeal to nationalism, and promotion of anti-Europeanism is against the interests of Big Industrial Capital.

Fennema and Van der Pijl described this transition.

“the disintegration of the industry trade union compromise supporting the Fordist order politically was replaced by bank power and rentier interests as the dominant group in the new configuration. Thus rentier interests in the broad sense of the word were crucial in the formation of a new power bloc which rose to power after 1975.” (“International Bank Capital and The New Liberalism” (1987).

Its not surprising that, in the light of this, Thatcherism's ideological base was provided by the high priest of Money Capital, Frederick Hayek, and the first manifestation of that was in the adoption as Van der Pijl argues of the principles of “sound money”, in order to force “sound micro-economic reasoning … upon the state and society as a whole.” (Van der Pijl - “Capitalist Class Formation At The International Level” - 1987.)

Politics, particularly bourgeois democratic politics, is always a matter of building alliances. The Tory Party is an alliance, of all these bourgeois and petit-bourgeois forces, and it is within this dynamic that its policies and actions have to be understood. Of course, the period after Thatcher was marked by a move of Labour and the Liberals on to this ground too, demonstrating the power that Money Capital exerted during the period. As Marx notes, in the process leading up to Bonaparte's coup, such situations frequently see parties giving ground to those to their Right, and the more they do so, the more they cut from beneath their feet their only real source of support within society. That ultimately was the undoing of Labour – and indeed has always been the undoing of every other Labour Government.

But, the dynamic for Labour is different from that of the Tories. It is never likely that sections of Big Capital will openly declare their support for Labour, as they do, for example, in their support for the Democrats in the US, who stand on the same ground of that Social Democratic consensus. The capitalist class understands the importance of class solidarity in a way that the working-class as yet does not. The interests of Big Capital are not those of Small Capital or of the petit-bourgeoisie and Middle Classes. As in the US, and as set out by Engels, more than 100 years ago, in fact, in many areas, there interests are more closely related to those of the workers. Indeed, its on that basis that the Social Democratic consensus, and Fordism was built. The first Minimum Wage was introduced in Britain by Winston Churchill, as President of the Board of Trade, in 1909, and echoing Engels words, Churchill said, “The good employers must be protected from the bad...” But, the Big Capitalists will not openly break from their smaller Capitalist brethren, even if they work to screw them relentlessly behind the scenes.

The Trades Unions do not exercise anything like the kind of power over Labour Governments that Capital exercises over Tory Governments. Rather the function of the Trades Unions is to act as a safety valve, controlling the actions of their members that might threaten to go beyond the limits that the requirements of the social democratic consensus determines as compatible with Capital Accumulation. But, just as the Tories have to shape their policies, and actions around the need to cater for their base and electoral support, so Labour has to shape its policies around the need to win electoral support, without alienating its own core support. It is forced by those requirements to remain firmly within the Social Democratic consensus in order to meet both the needs of its base, and the needs of Big Capital.

Cameron is attempting to mimic Thatcher, but without the basic requirements that meant her strategy could succeed. The Trades Unions and working-class have been beaten down. The consequence was that real wages flat-lined for a couple of decades. The only way that could be sustained, and profit rates rise was by encouraging workers and the middle class to go massively into debt. Of course, not all did. Those workers who had joined the workforce in the post-war period, and were able to buy a house in the 1960's or 70's, had seen the price of their house rise astronomically, and the inflation of the period meant that their mortgages were inflated away. If they were sensible, they had been able to take advantage of this situation, to build up a considerable buffer of savings and investments – the same that were channelled into the many new financial products created in the 1980's and after. If they were lucky, they may even have benefited from a company pension.

Its to elements of this section that the Tories have been able to target their attention. Its to this section that the Daily Express aims its repeated headlines that house prices are once again soaring. It provides a material base for the idea that interest rates have to be kept low to keep these asset price bubbles inflated, and which thereby provides support for the interests of Money Capital, which would be wiped out if those assets bubbles were to burst.

But, even some of these workers were not sensible, others of this generation were never lucky enough to buy a house, and instead had to pay Council House rents, usually subsidising the Rates of those in owner occupied housing, who also benefited from generous tax relief on their mortgages. Others did benefit from having bought a house before the property bubble began, but were persuaded to squander the equity they had in it, by taking out loans against it, to finance other consumption. At the same time, workers joining the workforce in the 1980's and 90's were confronted with low inflation, low wage rises, and sky-high house prices. A generation of consumerism, which persuaded everyone they should have everything immediately, ensured few of them had any savings. On the contrary, many already had large debts to cover the car they had bought, the holidays they had taken, the mountain of clothes they had stashed in their wardrobes, the plethora of electronic gizmos they had accumulated, and so on.

But, the Money Capitalists would still entice them to take out mortgages they could not afford, by allowing them to have 125% mortgages of amounts up to six times their earnings, and no check was made on whether those earnings were real or not. It was exactly the conditions that had led to the Sub-Prime crisis in the US. It was on this basis that private debt rose to account for 450% of GDP, dwarfing the 70% of GDP, which Public Debt accounted for. But, it was on this basis that attempts to encourage workers to take on even more debt to keep the economy afloat floundered. No matter how much the Government tried to tell people that their now trebled University Tuition Fees did not have to be paid for until they began to earn £21,000 a year, it didn't change the fact that people realised that they still had to be paid back, with interest! It didn't change the fact that they would have been losing potential wages during all that time, and that, in any case, there were tens of thousands of graduates who could not get ANY job, let alone a decent one! They responded with a 10% reduction in the number of people applying for University places.

Thatcher and Reagan's experiment was probably a one-off opportunity. It was made possible because of the savings the Baby Boomers had accumulated in the Post War Boom. Cameron faces its mirror image. Any attempt to repeat Thatcher and Reagan's experiment, today, can only result in mass bankruptcies by individuals, weighed down by a mountain of unsustainable debt. Over Christmas it was reported that 3.5 million people had resorted to Pay Day Loans to cover their immediate costs. Anyone resorting to these usurers, and paying the 4000% interest they demand must be in desperate conditions. But, it is not just the very poor who are in this position. Pawn Brokers are expanding, and they are expanding into middle class areas! The arrears on mortgages have been growing steadily, and it is only fear of sparking a fire sale of house prices, and the ability to sustain loans due to low interest rates, and near free money, provided by the Bank of England, which is preventing them from foreclosing on these mortgages. That situation is not likely to persist for much longer.

If there is fear, today, at the consequences of a Greek default, imagine the devastation of Money Capital that will ensue, when people begin to default on their £2 Trillion of private debt, sitting on their credit card statements, their mortgages, their Student Loans, the Store Cards and so on. But, if millions are already resorting to Pay Day Loans, and with around 20 million people estimated to run out of money around ten days before their next pay day, such defaults seem inevitable as inflation squeezes further people whose wages are effectively, if not actually, frozen, as unemployment rises inexorably towards three million, and as a growing Credit Crunch means that whatever Central Banks do, mortgage rates, and other loan rates are bound to rise sharply.

Moreover, the other solutions, adopted by Capital during the 1980's and 90's, are not likely to work either. The end of the Long Wave Boom, brought with it a crisis in the dominant Fordist method of accumulation. As In the 1930's, Capital sought to bolster the faltering ability to generate Relative Surplus Value, due to slowing increases in productivity, by a return to methods of Absolute Surplus Value. It took the form of casualisation, of intensification of labour, lengthening of the working-day by various methods, including workers being available 24 hours a day on their mobile phone, via email etc., and starting work on their lap-top during their journey into work. But, many of those changes have already been introduced. As Marx and Engels pointed out, long ago, Capital dropped the idea of Absolute Surplus Value because its functionality is limited. Amongst other things it means increased wear and tear on workers, and can be counter-productive because it can lead to lower actual productivity. The main strategy for extracting Absolute Surplus Value, today, centres around extending the working-life rather than day, through the raising of the State retirement age, but, for that very reason, the immediate benefits for Capitalist profits are slight.

In fact, attacks on wages driving them below the Value of Labour Power, whilst possible for a certain time, will as Marx sets out in Value, Price & Profit ultimately have a negative effect, because they will reduce the quantity and quality of Labour Power supplied. This may not take the form of workers refusing to work, under Capitalism, they have to work to live, but will take the form of low productivity, increased sickness absence, higher labour turnover as workers seek better paid jobs, whenever they arise, and so on. It will also mean that workers will tend to be of lower quality, as their reduced condition means they have less ability to obtain education and training, and so on. In more advanced economies, that is more significant than in economies that are reliant on large amounts of unskilled labour.

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History Repeating As Farce - Part 2

“When we think about this conjuring up of the dead of world history, a salient difference reveals itself. Camille Desmoulins, Danton, Robespierre, St. Just, Napoleon, the heroes as well as the parties and the masses of the old French Revolution, performed the task of their time – that of unchaining and establishing modern bourgeois society – in Roman costumes and with Roman phrases. The first one destroyed the feudal foundation and cut off the feudal heads that had grown on it. The other created inside France the only conditions under which free competition could be developed, parceled-out land properly used, and the unfettered productive power of the nation employed; and beyond the French borders it swept away feudal institutions everywhere, to provide, as far as necessary, bourgeois society in France with an appropriate up-to-date environment on the European continent.”

Eighteenth Brumaire Ch. 1

Thatcher did not carry through a Revolution in the way the French Revolutionaries of 1789 did, but the economic and social changes she wrought were thoroughgoing, and, like the changes after 1789, were designed specifically to meet the needs of Capital. The actions of Thatcher, as with the similar actions of Reagan, in the US, were not some whim, but were conditioned by the very economic conditions which confronted them, and the specific conjuncture of the Long Wave Cycle, in which they occurred, which made the old Keynesian solutions, no longer applicable. They performed the task of their time. Thatcher unchained an established bourgeois democracy by introducing a deregulation of old restrictive monopolies, much as the bourgeois revolutions of the 18th and 19th Centuries broken up restrictive feudal monopolies, but she did so not in “Roman costumes”, but in Victorian costume, harking back to Victorian Values, to the principles of Free Trade, and to Empire. And with Reagan and other Imperialists they too swept away restraints to such Free Trade, and the ability of Capital to settle anywhere in the search of more and more profit.

But, under modern conditions Cameron's reflection of these measures cannot be other than farcical, because now is not then. The objectives which Thatcher had set were achieved. The working-class and its organisations were smashed. Any further attack on the Trades Unions could only ever have marginal impact, and might even be counter-productive. If it was ever necessary to achieve the absolute majorities in strike ballots that have been hinted at, then any strike that did occur, would pose the Tories with far more problems than they face now. If ever an absolute majority of workers do decide that enough is enough, and take action, then nothing will be able to stand in their way. In the meantime, it would mean that socialists would have to pay more attention to Marx's dictum about “winning the battle of democracy”, in gaining majority support for any action, and less time in manoeuvring and position seeking.

The deregulation that Thatcher and Reagan sought was introduced, and its end result was the accumulation of huge amounts of unsustainable private, debt, the lunacy of the Sub-prime crisis, which was a feature of it, and the virtual collapse of the Global Financial System, which could only be arrested by the very opposite of that deregulation, in the form of the nationalisation of the Banks and Finance Houses in the US, UK, and Ireland, a solution, which ultimately will have to be implemented in Europe too, before the debt crisis is over. And, of course, the farce of the repetition of those earlier events, under Cameron, is that the measures, now being proposed, in the form of austerity, are themselves being proposed as solutions to the build up of debt that arose as a direct consequence of the policies of Thatcher in the first place! Contrary to Cameron's propaganda, the deficit had nothing to do with profligacy under Labour. In the period after 1999 up to 2002/3, Labour was actually paying down the debt. Under Thatcher and Major, between 1979 and 1997, borrowing accounted for 3.4% of GDP; between 1997 and 2005 it averaged just 1.2%. Moreover, even when Labour did begin to act counter-cyclically, under Brown, the increase in the deficit was nothing extraordinary. It is clear from the data that the significant change DID come in 2008/9, when, even excluding the amounts pumped into the Banks, net debt rose from 36.5% of GDP, to 43.2%, a bigger cumulative rise than in the previous 7 years combined!

But, as Ann Pettifor has pointed out, it is not Public Sector Debt that is the real threat to the UK economy. It is Private Debt. Where Public Debt stands at around 70% of GDP, Private Sector Debt stands at around 450%! The Public Debt was created to deal with the Financial Meltdown that was the result of the deregulation of Financial Markets, introduced by Thatcher and Reagan, in the 1980's, and the massive accumulation of private debt is itself the direct consequence of that deregulation of Financial Markets, and of the encouragement to workers, the Middle Class, and Small Capitalists to drive themselves into penury, in order to keep the economy going, and to compensate for the fact that their real living standards were stagnating. And, today's image of Thatcher, wants those that have suffered, as a result of that process, to also be the ones who pick up the Bill that would otherwise be borne by the Banks, Finance Houses, and their shareholders. But, absent any credible alternative, a large portion of those affected, see no solution other than in a return to the cause of those problems in the first place. They cannot let go of the shade of Thatcher, even before she's dead, as the recent fascination shown over the film illustrates. As Marx put it,

“From 1848 to 1851, only the ghost of the old revolution circulated - from Marrast, the républicain en gants jaunes [Republican in yellow gloves], who disguised himself as old Bailly, down to the adventurer who hides his trivial and repulsive features behind the iron death mask of Napoleon. A whole nation, which thought it had acquired an accelerated power of motion by means of a revolution, suddenly finds itself set back into a defunct epoch... The nation feels like the mad Englishman in Bedlam who thinks he is living in the time of the old Pharaohs and daily bewails the hard labour he must perform in the Ethiopian gold mines, immured in this subterranean prison, a pale lamp fastened to his head, the overseer of the slaves behind him with a long whip, and at the exits a confused welter of barbarian war slaves who understand neither the forced labourers nor each other, since they speak no common language. “And all this,” sighs the mad Englishman, “is expected of me, a freeborn Briton, in order to make gold for the Pharaohs.” “In order to pay the debts of the Bonaparte family,” sighs the French nation. The Englishman, so long as he was not in his right mind, could not get rid of his idée fixé of mining gold. The French, so long as they were engaged in revolution, could not get rid of the memory of Napoleon, as the election of December 10 [1848, when Louis Bonaparte was elected President of the French Republic by plebiscite.] was proved. They longed to return from the perils of revolution to the fleshpots of Egypt , and December 2, 1851 [The date of the coup d’état by Louis Bonaparte], was the answer. Now they have not only a caricature of the old Napoleon, but the old Napoleon himself, caricatured as he would have to be in the middle of the nineteenth century.”

And all this to pay for the debts run up as a result of the policies of Thatcher.

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Forward To Part 3

History Repeating As Farce - Part 1

“Hegel remarks somewhere that all great world-historic facts and personages appear, so to speak, twice. He forgot to add: the first time as tragedy, the second time as farce.”

Marx – The Eighteenth Brumaire of Louis Bonaparte.

Thatcher, the Grammar School educated, shopkeeper's daughter, desperate for the support of millionaires; Cameron, the Eton educated millionaire, desperate for the support of shopkeepers. Thatcher, declaring a war in the Falklands, she had not really intended to wage; Cameron intending to wage a War against Libya, but declaring he was waging anything other than War. Thatcher undermining the fascists by shooting their Immigration fox; Cameron lining up with the fascists and loonies across Europe and undermining himself. Thatcher, the Iron Maiden, mugging the Europeans for Britain's Rebate, before walking away with the loot; Cameron flouncing out of the room, like a Maiden whose honour has been besmirched, without even bothering to find out what price would be placed on her virtue. Thatcher waging open war against “Red Ken”, to prevent any challenge to the central authority of the State; Cameron waging a covert war with “Blonde Boris”, to protect his own authority within the Tory Party. Thatcher slapping around the “Wets”, known as vegetables; Cameron slapping around Nick Clegg like a wet lettuce. Thatcher unleashing the mass of the State to defeat the Miners; Cameron unleashing the mass of Eric Pickles to defeat the Local Government workers.

In the 1980's Thatcher smashed the working class and introduced austerity, which, was the only solution available for Capital, given the economic conditions. Cameron seeks to mirror Thatcher in different economic conditions. But, there are big differences. In the early 1980's, workers had experienced 30 years of economic boom. During, the 1950's, they began to recover from the devastation that had been wrought on them during the 1930's, and the period of War. Their living standards rose, including those elements of the Social Wage, such as better education, which Capital needed to meet its requirements for more technological production. Things, such as home ownership, began to be taken up by workers, who, until then, had only known renting, as a means of meeting their housing needs. It had begun during the 1930's, when workers, experienced rising wages, in new developing industries, in the Midlands and South-East,, and when new building techniques reduced the cost of housing. The introduction of labour-saving consumer durables, in the home, freed up female labour, to meet the growing demands of capital, for an increased labour supply.

Workers found that they could win higher pay, as employers were more than able to pay, in a growing economy, and as the principles of Fordism spread. Large employers effectively entered into a compact with workers, whereby they would ensure that real wages rose, year on year, linked to rises in productivity, in compensation for the workers enduring the tedium of mass production assembly lines, which generated those rises in productivity. The ability to obtain such pay rises, gave confidence to build new Trade Union organisation at a plant level, creating a new force in the shape of the power of the shop stewards, as workers found they could simply down tools rather than wait for full-time union officials to intervene, and often derail their struggle. It created an increasingly reformist consciousness, which was manifest in an increased level of support for Left leaning Trade Union and Labour leaders, as well as for, what were essentially, syndicalist political groups such as the International Socialists. This was both the strength and the weakness of working-class development during the period. Strength in that it saw a rebuilding of rank and file working-class organisation, weakness in that it was diverted into these dead-end political solutions. Just how dead end those solutions were was demonstrated when the conditions that created them disappeared, when the Long Wave Boom ended.

When the Boom began to falter, in the late 60's, Capital began to respond. It was no longer able to so easily accommodate workers' demands. Not only was productivity and profitability falling, but the ability of the State to accommodate the requirements of the other part of wages, the Social Wage, was declining too. It was no longer necessarily in the majority of large employers' interests to agree to pay increases or other improvements, and they began to resist, resulting in strikes becoming more prolonged. The Labour Government also attempted to intervene by introducing anti union legislation in the form of “In Place Of Strife”, but the workers were still too strong, and able through the unions link with Labour to defeat it.

As the Boom turned to recession Governments sought, during the 1970's, to utilise the economic orthodoxy, which from 1949 had successfully cut short every previous recession. But, under the new conditions, that could not work, and instead it only resulted in rising inflation, and then stagflation. So long as employers could respond to rising Money Supply by conceding to wage rises, in the knowledge that the increased cost could be passed on in higher prices, this spiral would continue, and no real solution to the problem of Capitalist profitability could be found. Cuts in nominal wages were difficult to achieve, because, as Keynes discovered, decades before, wages are “sticky downwards”. The best tactic for Capital is reductions in real wages via inflation. But, that required destroying the economic muscle of the working class organised in its Trades Unions.

In the late 1970's, Thatcher, with the help of her advisors, such as Sir John Hoskyns, Sir Keith Joseph, and Frederick Hayek, recognised this and began to plan for dealing with it. The “Ridley Plan”, developed by Tory MP, Sir Nicholas Ridley, set out a strategy for taking on the Trades Unions and defeating them. They would begin with the weaker unions such as the Steelworkers, and move on until they felt able to take on the Miners. Alongside these attacks, they began to introduce new anti-union laws, introducing a small number of measures to begin with, on which they could gradually build. At the same time, the changed economic conditions, of the Long Wave downturn, began to facilitate such a struggle. Under the advice of Hayek, a curtailment of the Money Supply was introduced. This meant that employers not only had an incentive to resist pay rises, but they would now find that if they didn't resist, they would not be able to pass them on. The consequence was a sharp rise in Unemployment, which eventually rose to around 6 million, though the Tories introduced more than 20 changes to the method of calculation to keep the official figure to around 3 million.

But, Thatcher's strategy was clever in another way. Some of the measures used to massage the figures, did so by encouraging workers to voluntarily come off the list of those seeking work. In addition to the mass of schemes run by the Manpower Services Commission, such as YTS, which paid young workers a bit more than dole to do a training course, there were things such as the Enterprise Allowance Scheme, which paid people more than their dole, if they would set up their own business. Comedian Alan Davies, in a documentary series, a while ago, described how he and other comedians, at the time, used it to obtain additional money by describing themselves as a business. But, there were many other such changes. They introduced a measure whereby workers, over 59, could obtain a higher rate of benefit, if they basically signed to say they were not looking for work. They encouraged a development of people being switched on to Incapacity Benefit, which often paid more than dole, so that the unemployed figure was reduced. All of this was designed to reduce the likelihood of workers putting up fiercer resistance to being made redundant.

In reality, the political strategy of the working-class, including that of the political leadership from the Left, was completely incapable of responding to this. It relied on “more militancy” defeating bosses, who now were likely to go bust and shut down if they did concede. It relied, on the other hand, on electing a Labour Government, who would be pushed to take action against Capital in a way it had never shown itself likely to do, on the basis of past performance. And, because it was incapable of responding to this situation, the working-class increasingly recognised it had no answers, and turned away. Had, Thatcher been defeated in 1984 over pit closures, as she had been a couple of years earlier, it would have been a temporary victory, until they came back stronger. The strategy of the “revolutionary left” was essentially that, a strategy for revolution. The only real solution to the Miner's Strike, for example, would have been if it had escalated into a struggle for power by the workers. But, although I remember attending meetings of the National Labour Briefing Editorial Board, in Birmingham, at the time, and hearing from Chris Knight that we were in a situation of dual power, in many of the coalfields, living in one of those coalfields, and being on picket lines every day of the strike, I could only smile, because the reality was quite different.

And, the other side of that reformism took a decisive twist to the Right too. If repeated industrial defeats signalled the failure of Syndicalism, Economism and Luxemburgism to provide a solution, then the other side was the increased concern for Labour Lefts to concentrate on getting a Labour Victory. The Left inside the Labour Party quickly fractured into Hard and Soft Lefts, and the Hard Left amounted to little more than the revolutionary sects, who were themselves bitterly divided against each other. I remember perfectly well how former Lefts, argued for keeping our heads down, not to rock the boat etc., which was most shamefully displayed in the attitude towards the Miners and others such as those opposing the Cuts. I remember at the time being a Councillor for a supposedly Left-wing LP Branch, and nominating Eric Heffer for Leader, and finding he received no votes, whilst the vast majority went to Kinnock. All of these defeats, industrial defeats, and political defeats, ate away at the working-class, and set the ground for Thatcher to smash the class, and its ability to resist. Once that was done, the road was open to pump money into the economy, so that inflation could rise, whilst wages did not, thereby raising the rate of profit. And, in order to compensate for falling real wages, the increased Money Supply and deregulation of the Financial and Credit Markets, which Thatcher introduced, meant that workers were encouraged to borrow like there was no tomorrow, and, in the process, put into hock all of those real assets that they had built up during the post-war period. Increasingly, workers, as well as being wage slaves, were turned into debt slaves.

Cameron, by contrast, has come to power during a period where the global economy is at a fairly early stage of a New Long Wave Boom. The reality of that is hidden because of the relative decline of developed economies such as that in Britain, and as a result of the recession in those economies, which is a consequence of the Financial Meltdown of 2008, which was itself a consequence of the build up of debt during the 1980's and 90's, and of the relative decline of the developed economies compared to the BRIC and other rapidly growing economies. The smashing of the working class, during the 1980's, set the scene for a rising rate of profit, within the global Capitalist economy, and, on the back of that, large surpluses were built up at the same time that large debts were accumulated. The BRIC economies, and others, accumulated massive surpluses, stored in Sovereign Wealth Funds, Private Investment Funds, Government Reserves, as well as private balances. Large companies accumulated huge amounts of cash, on their Balance Sheets, whether they were in the BRIC countries or in the developed economies. At the same time, household Balance Sheets, and those of small businesses, who had been encouraged to borrow on a massive scale, since the 1980's, accumulated huge debts, only sustainable on the basis of a secular downward trend in interest rates from 1982 onwards, made possible by increasing Money Printing, and by setting those debts against increasingly unsustainable and inflated assets, such as property and shares, that were themselves a product of that huge Money printing.

In other words Cameron has come to power under conditions, which are in many ways the opposite of those, which confronted Thatcher. In place of a Long Wave Downturn, Long Wave Boom; instead of a strong, militant working-class, a working-class that is smashed and demoralised; instead of a working-class that had built up real assets, a working-class that has been reduced to debt slavery.

Forward To Part 2

Northern Soul Classics - Who's Making Love - Johnnie Taylor

Old classic from Mr. Taylor. See also my favourite JT dancer - Friday Night, and the wonderful I Ain't Particular

Don Cornelius - Soul Train - Johnny Taylor

In memory of Don Cornelius, the founder of Soul Train who died yesterday. Don was the first to prove that Black people could establish a succesful media company without the support of powerful white interests.

Civil War In The Capitalist Class

There seems to be a simmering Civil War taking place within the ranks of the Capitalist Class. The removal of the knighthood, for Fred Goodwin, is a manifestation of it. As with other Civil Wars, the actual banners raised, under which the opposing sides fight, are not a reflection of the real reason for the conflict. The war is being fought out under banners such as “Moral Capitalism” or “Responsible Capitalism” or “Predatory Capitalism” and other such meaningless nonsense. But, the real conflict is one between the interests of Big Money Capitalists based in the City of London, and Wall Street, and the interests of Big, and not so big industrial capitalists.

In Capital, Marx's analysis demonstrates, not only the fundamental contradiction between the interests of Labour and Capital. Particularly in Vol. III, where he looks at Capital as a whole, he also sets out the conflicting interests between the Productive Capitalists, whose activities create Surplus Value, and the Commercial Capitalists, Money Capitalists, and Landlords, who claim a share of this Surplus Value for themselves in the form of commercial profits, interest and rent. In the 19th century, as Marx and Engels described, the Productive Capitalists were, in fact, able to form an alliance with Labour against the old ruling class, the landed aristocracy, precisely on this basis, of the former asserting its interests over the latter. Commercial Capital, makes profits through buying commodities from the productive capitalists below their value, and selling them at their value. The productive capitalists agree to this because they would otherwise have to lay out additional Capital themselves, to ensure the sale of their commodities. The Merchant Capitalists, through specialisation, can achieve this more efficiently, thereby providing the productive capitalists with a saving on their costs. The same is true in relation to the Money Capitalists, who reduce the productive capitalists' costs, by minimising the Money Capital they have to hold themselves. The Landlords, extract rent from the Capitalists as a result of the monopoly ownership of land. Moreover, wherever a particular piece of land facilitates the Capitalist in making above average profits, because of its location or fertility, the Landlord is able to extract a Differential Rent, which reduces this surplus profit down to the average.

Just as the Capitalists have an interest in reducing the Value of Labour Power, so as to lower wages, and thereby increase profits, so Productive Capital has an incentive in minimising the share of Surplus Value they have to hand over to the Commercial Capitalists, the Money Capitalists and the Landlords. Historically, as I set out in previous posts there has been a connection between Money Capitalists – the Financial Aristocracy – and the Landlords – the Landed Aristocracy. Indeed, both extract a form of rent. The latter for lending out their land, the former for lending out their Money. For a long time from the latter part of the 19th Century, the Productive Capitalists had the upper hand. It was manifest in the rise of Fordism, and the Social-Democratic consensus, by which Big Capital co-existed with the working-class via the intermediary of the Trades Unions, and parties which developed and sustained Welfare States, and Keynesian policies. That broke down in the 1970's and 80's with the end of the Long Wave Boom, when Keynesianism showed it could not deal with the crisis. The decline of Productive Capital, and the ending of Keynesianism, was mirrored by the rise of Money Capital, and of Neo-Liberalism, which represents its ideological interests.

For the period of Long Wave downturn, Money Capital, and its Neo-Liberal ideology have been dominant. That dominance has been reflected in the political representation and links that the Money Capitalists were able to form within the political elites, within the corridors of the State, and within sections of the media. For the same reasons as its rise arising out of the end of the last Long Wave Boom, its position was bound to come under challenge once the new Long Wave Boom started around 1999. The fact of the Financial Meltdown, and the role of Money Capital in bringing it about, was bound to provide a basis for its rule to be attacked. What we are seeing is the playing out of this conflict, a struggle for dominance within the ranks of Capital, between the Money Capitalists and the Productive Capitalists.

There was an interesting example of that yesterday. Howard Dean, Chair of the Democratic National Committee, said on CNBC that one of the Republicans top spin doctors had advised candidates in the GOP primary elections not to use the term “Capitalism”, because it was a dirty word. However, he said, using the term “free enterprise” was okay. The difference is that the former is associated with Wall Street, whereas the latter is associated with all of the firms, especially the smaller firms who were actually engaged in making stuff.

Over the last 30 years, we have seen a secular trend of falling interest rates. That is an indication of the way the dominance of the Money Capitalists has led to its interests being met by the State. Of course, to an extent, low interest rates, benefited Capital as a whole, because it made possible a continuation of spending by workers during a period when their wages were stagnant or falling. But, the main beneficiary was Money Capital. The reason is as follows. If interest rates are high, then the demand for credit by businesses and consumers will be less than if they are lower. The lower this demand for credit, the more competition, between lenders, will force them to reduce their margins, in order to win the available business. The higher the interest rate, the Banks and Finance houses have to pay, to borrow in the Money Market, the higher the interest rate they have to charge for commercial credit. For example, if the Banks have to pay 5%, they may only be able to lend at 8%, because, at these levels, demand is choked off. But, at 1% they may be able to lend at 3%, because the demand will be higher at this lower rate. Although, in the first case, the margin is bigger in absolute terms (3 percentage points), in terms of profit it is lower, because it is only 60% more than their borrowing cost, whereas in the latter it is 200% more than their borrowing cost.

When Money Capitalists had to rely on savers depositing funds with them, their costs were higher, because they had to offer high enough deposit rates to attract savers. Today, they do not, because they obtain the funds to lend from the Money Market. And, at the moment, they are able to obtain longer term funds, from the Central Banks, who, in order to pump liquidity into markets, to avoid a recession, are lending money at historically low rates. In fact, for the Big Productive and Merchant Capitalists this is probably a disadvantage under current conditions. The Big Capitalists are generally able to raise their own funds, through Bond issues, as well as for some of them, like Microsoft, being extremely cash generative in their own right. That is also true for Merchant Capitalists like Tesco. Facilitating consumer credit is only useful to these capitalist to an extent.

Today, with huge levels of private and household debt, even at historic low interest rates, large amounts of income goes, not to purchase commodities, but to pay interest on credit card debt etc. The other effect of the money printing, and unsustainably low interest rates, has been a bubble in asset prices. The most notable of these has been the pumping up of house prices to around four times where they should be. Housing comprises a significant proportion of household expenses, and therefore, of the Value of Labour Power. Bloated house prices, and consequently bloated levels of rents, mean that upward pressure is put on wages, which in turn reduces profits. The beneficiaries are the Money Capitalists, and the sectors associated with them, such as the Estate Agents, as well as the Landowners, who see the amount of Absolute and Differential Rent (Capitalised in Land Prices) balloon up on the back of the surplus profits of housebuilders, arising from bloated house prices.

Not only the mass of workers – especially those seeking to buy for the first time, or to move up the housing ladder – but also Productive Capitalists would benefit from a collapse in house prices, and the attendant collapse in land prices, because it would mean that this important element of the Value of Labour Power would be restored to affordable levels, reducing pressure on wages, and therefore, profits. It would also be a far more equitable and efficient means of reducing the amount paid out in Housing Benefit than the Liberal-Tories vindictive proposals to cap it.

Fred Goodwin's knighthood is an irrelevance, not just because of the distasteful nature of the Honours System, but because it is quite clear that he is being scapegoated. The removal of his knighthood, along with the pressure put on Stephen Hestor not to accept his bonus, and the further pressure being put on other bankers, is really just a part of the skirmishes between these different fractions of Capital. After all, there have been many more CEO's in the rest of industry who have seen their salaries rise by 50% in the last year.