Saturday, 26 January 2008

The Nature of the Soviet State - The Marxist and Subjectivist Analysis

Workers Liberty 3/8 carries a series of articles about the split in the US Trotskyist movement between the Cannonites and Schactmanites. A significant aspect of the disputes leading up to the split was the characterisation of the Soviet Union. Trotsky had characterised the Soviet Union as a degenerated workers state i.e. a state which had come into existence as a workers state, but which had degenerated due to the political supremacy of a bureaucratic elite that controlled the state apparatus, and whose position itself had been created by the particularly unpromising material conditions that the revolution had taken place under. The Schactmanites arrived at a different conclusion. Looking at the reactionary politics of the Stalinist bureaucracy its destruction of an independent workers movement in Russia, and its reactionary politics on the world stage consummated in its alliance with Hitler at the beginning of the World War they concluded that this state could not be a workers state. The issue was not just one of theoretical significance, but one of practical politics. As World War broke out Marxists were presented with the immediate political question of what their attitude to the defence of the Soviet Union should be. Trotsky’s response was clear – for the defence of the workers state, but no support for Stalinism. The Schactmanites were unable to make this distinction between the actual economic and social relations which underpinned the new society, and the political domination of the state by the Stalinists. For them unconditional defence of the Soviet Union necessarily meant accommodation to, if not support for Stalinism. The question is not one of purely theoretical significance for Marxists today either. Cuba along with a number of other states were created in the image of Stalinist Russia. With the death of Castro looming in the near future, and the almost certain attempt by the US to use this opportunity for regime change in that country, Marxists once more are faced with the question of what their response should be. How should Marxists deal with the need to defend the interests of Cuban workers, including the very real gains they have achieved in things like healthcare and education, without at the same time giving any political support for the Cuban Stalinists?

Whatever, Trotsky’s characterisation of the Soviet Union in the 1920’s or even the late 1930’s, or for that matter the characterisation of his wife Natalia Sedova in 1951, the fact is that such characterisations are irrelevant to what the Soviet Union was by the time it collapsed, still less for what Cuba is now. To refer to such characterisations as holy writ is as ridiculous as referring to Lenin’s characterisation of imperialism as though time had stood still. But similarly, referring to Trotsky’s speculation as to what the Soviet Union might become as Sean Matgamna does in his editorial “The Other History of American Trotskyism”, referring to Trotsky’s reference to Bureaucratic Collectivism in “Again and Once More on the Defence of the Soviet Union”, with the implication being that had Trotsky lived he would have become a Bureaucratic Collectivist, is equally irrelevant and misleading. It is like the dispute between Lenin and Kautsky over Imperialism. Kautsky developed a theory of Imperialism, which in the long term has, in my opinion, proven to be more accurate than that of Lenin. But at the time of the debate Kautsky’s position was speculative, whereas Lenin’s was based on the political reality of the time. It made no sense for Marxists to base their politics and practical activity on a speculation of what Imperialism might become 30 years or more down the line. As Lenin often said, “The truth is concrete”. It goes to the heart of Marxism, a theory that starts not from what “ought”, or what “might” be, but what “is”. The first two of these are purely subjective they reflect the ideas and ideals of the individual, their concept of how the world should be. They are necessarily moralistic views of the world. The latter, the Marxist approach has no room for morals, any more than a physicist has a moral view of whether gravity is a good or a bad thing, whether in future it should be more or less powerful than it is now. That does not mean that the Marxist themselves might not hold moral views, any more than does the physicist, it does mean that they are not allowed to impinge on the objectivity of their analysis, an analysis which begins not from a personal view of how things should be, but from a sober assessment of the facts. It is this fundamental difference of approach that marks out Trotsky’s Marxist method of analysis of the Class Nature of the Soviet Union, from the Bureaucratic Collectivist and State Capitalist analyses, which are from their inception based upon subjectivism. It is why, whatever Trotsky’s reservations about the Cannonite regime in the US SWP, he fought so determinedly, until his last breath, against the Schactmanites on this question. And for good reason. Without materialism there can be no Marxism. The subjectivist method is not materialist, it is inherently idealist, it is the ideological standpoint of the bourgeois or petit-bourgeois, and to have allowed the infant Trostkyist movement to be infected with it would have meant to strangle it at birth.

That is not to side with the Cannonites either in terms of the factional dispute, a dispute, which as the history of every other Trotskyist organisation around the world has since demonstrated was to be far from unique. It is a history which necessarily flows from the Leninist conception of the revolutionary party, and which has crippled the Labour Movement for 100 years. It is a conception, which necessarily throws up prima donnas each seeking to build their own organisation often at the expense of building the Labour Movement itself, the very thing that Marx and Engels put all their efforts into, recognising that it is the working class, not some vanguard party, that is the vehicle of socialist revolution.

Philosophy is divided into two main camps. The idealist and the materialist. It is hard for most people today to understand the Idealist conception, so used are we to understanding the world in scientific, and therefore necessarily materialist terms. The Idealist believes that the material world is merely a reflection of the ideas in the human mind. In this view the human being is at the centre of the Universe, and it is no wonder that Idealism is closely linked to religion, because it is simple in this view to put God at the centre of the Universe, for it to be God’s ideas and their unfolding which are the source of the material world we see around us – part of his Plan. Some may be aware of these Idealist concepts from questions such as “Does the tree fall in the forest if there is no one there to see it?” The materialist would answer decisively in the affirmative, recognising that the tree exists in a material world of which Man is merely a part. Logically, Idealism ends up in solipsism – the idea that my mind is the only thing which exists. If everything in the material world is merely a reflection of the ideas in my mind, then other human beings, including my parents are not real but merely aspects of those ideas. No one can exist but me, and what I see of my corporeal self is again just a reflection of my mind. Only my mind can exist. It is a thoroughly reactionary and dead end philosophy, and no wonder that with the advance of science Idealism had to effectively abandon these more fundamentalist beliefs.

Materialism on the other hand takes the existence of a material world for granted, knows it existed before Man existed, will exist after he has disappeared, and is not at all dependent upon Man or what goes on in his head. On the contrary, what goes on in his head is in fact a reflection of what goes on in this real material world. And what goes on in this material world can be analysed and understood. That is because in this world there is cause and effect. Nothing happens without their being a cause for that effect. Some of those causes are themselves the result of the actions of Man. That is history. Marx began from this starting point – historical materialism. In analysing capitalism he did not start from a moralistic objection to the horrors of capitalist exploitation, he did not pick out as crucial to his theory the particular behaviour of the ruling capitalists. He began where his method required him to begin with an objective, honest and clinical analysis of the material world in which he lived, and an analysis of the historical events which had led up to that condition, of the series of causes and effects. He spent decades accumulating all of the facts about this world, and in particular the way in which it produced and distributed its wealth. Only on the back of that mass of facts was he then able to set out how this material world functioned, and how the functioning of this world necessarily created a class of people that owned the means of production, and were thereby enabled to exploit a much larger class of people that had been deprived of them, and how this necessarily lead to conflict between these two classes, and the forms that conflict assumed.

During the 19th century Idealist philosophy took shape in a different form. It still put ideas at the centre, but this was expressed in a different way. The division was apparent in many branches of social science but in Economics and Sociology most markedly. Marx’s Economic Theory like that of all the Classical Economists was thoroughly materialist. Individuals might view different commodities as having different use-values for themselves, might derive more utility from one than another, but this individual subjective value was irrelevant in terms of what the economic value of the commodity was. This economic value was not something subjective differing from one individual to another, but was objective and measurable in the same way that anything else in the material world was measurable. It was measurable because everything that is produced requires labour to produce it, and the producers of this good when they come to sell it will want something that would have required an equal amount of their time to have produced.

But long before Jevons, Bohm-Bawerk and others developed the neo-classical theory of economics Samuel Bailey was arguing a subjectivist theory of his own. Bailey argued that all commodities had only relative values. The value of any commodity could only be measured by how much of another commodity had to be given up to acquire it. And these relations one with another continually varied Bailey argued, and the reason they varied was because the proportion in which the individuals valued or preferred one with another was continually changing. Value was not objective, but subjective determined solely in the minds of men. In “Theories of Surplus Value” Marx disposes of this thoroughly spurious argument, and in so doing disposes of the later neo-classical arguments too. He points out that Bailey merely puts back the question of analysing values by a further step. It is necessary to ask the question what is it that leads the buyers and sellers of these commodities to arrive at these subjective valuations of the products they are buying and selling. They do not come out of thin air. In the end the subjective values themselves are merely reflections of objective values. Gold has a high value because it is rare and requires much labour to find and produce. The producers of gold will not continue to produce it unless the labour they expend in doing so is paid for by the gold being exchanged for a large quantity of other commodities with lower value. In arriving at his valuation of gold the buyer must take into account how much labour he would have had to expend to have acquired it himself, compared to the labour he has expended in acquiring the goods he wishes to exchange for it. The buyer will have to take into consideration how much other buyers would be prepared to give up for it etc.

The reason that this subjectivist theory of economics became dominant, and now constitutes the bedrock of orthodox economic theory is that from the point of view of the capitalist class it fulfils a useful function. It puts the individual at the centre of the economic world reinforcing the individualist ideology of capitalism. In addition if all values are purely subjective then the question of where that value comes from is resolved to the satisfaction of capitalism. If wages are low then it is because capitalists and workers as buyers and sellers value labour-power at that level. Both are happy with the deal. Finally, it obscures the fact that the source of value is Labour, and that profits are only possible because a portion of the value created by Labour is not paid for.

The subjectivist approach is the manifestation of bourgeois ideas. It is an indication of the dominance of those bourgeois ideas, and the infection of the Labour Movement with them, that few even Marxist economists vigorously defend Marx’s Labour Theory of Value. Most pay lip service to the theory, but use orthodox economics, confining themselves to normative analyses with some moralistic condemnation of the evils of capitalism tagged on as conclusions.

Similarly, the subjectivist approach was developed in sociology in the 19th century, notably by Comte. In place of Marx’s starting point being the economic relations of production, and the way this throws up classes depending upon the relationship of these classes to the means of production, the subjectivist approach divides society up by other methods, their social status, function etc., ignoring the fact as did Bailey in relation to economics that all of these aspects are themselves secondary to the primary objective factor of class determined by the relationship to the means of production. Rather as subjective changes in people’s preferences might lead to ephemeral movements in prices that give the appearance that prices themselves are the result of these preferences, so these subjective assessments of social groupings give pointers to ephemeral aspects of behaviour of these groupings. But again it is necessary to separate out the ephemeral from the fundamental. Once again the subjectivist approach fulfils the requirements of bourgeois ideology glossing over the real class contradictions within capitalist society, and replacing it with an analysis based on superficial evaluations of the positions of individuals and groups within society.

An excellent example of the difference between this subjectivist method of analysis and the Marxist method is given by Lenin in his early writings where he takes up the cudgels against the Liberal Narodniks on the question of the nature of Tsarist Russia at the end of the 19th century. The early Narodniks had been radicals based on the struggle of the peasants, and adopting aspects of Marx’s economic theory as part of that struggle. The Liberal Narodniks that Lenin was arguing against were not. They were thoroughly bourgeois in character. They continued to pay lip service to Marx – at the end of the 19th century nearly every intellectual paid lip service to Marx – but their method of analysis was imbued with subjectivism, completely lacking in Marx’s and Lenin’s materialist method. Rather than beginning with “what is”, they began with “what ought” to be the case were Russia really travelling down a road to capitalist development.

The Narodniks wanted to portray a picture of a Russia that was not developing down a capitalist path, but was in fact going down a new historical path, one not envisaged by Marx, though the Narodniks did try to dishonestly use some comments by Marx on the possibility of Russia developing down a route to socialism based on the village communes. The parallels with the debate on the nature of the Soviet Union here are obvious. The main difference of course being that the Narodniks in their subjectivist analysis wanted to paint a picture of Tsarist Russia as developing in a progressive direction, whereas the Bureaucratic Collectivists want to paint a picture of the Soviet Union progressing in an increasingly reactionary direction. Marx raised the possibility of the village communes being used as a basis for socialist construction only if a socialist revolution had already occurred, Trotsky pointed to the theoretical possibility that the Stalinist Bureaucracy could develop into a new class as a straw man to be knocked down, and as a theoretical possibility that could arise only on the back of fundamental further changes in the nature of economic and social relations in the Soviet Union – changes which did not occur.

In a series of pamphlets such as “The Economic Content of Narodism”, “What the Friends of the People Are”, and culminating in his “The Development of Capitalism in Russia”, Lenin mercilessly exposed the subjectivist nature of the Narodniks analysis, and demonstrated by use of the Marxist method of objective analysis the way in which the development of the productive relations in Russia had led to a differentiation in the peasantry increasingly dividing it up into a class of bourgeois that owned the majority of animals, and equipment, that rented land from smaller peasants, and employed workers on its lands, and a larger class of peasants that were increasingly forced to rent out their land because they could not farm it effectively, and who were forced to sell their labour-power in order to survive.

In the same way that the Bureaucratic Collectivists claim that the Soviet Union could not have been a workers state because the Stalinists had transformed property relations rather than the workers themselves, so the Narodniks claimed that where capitalism did exist in Russia it was unnatural and due to it being transplanted on to Russian soil. Lenin exposed both the inadequacy of the Narodniks subjectivist theory, showing that they had completely falsified the real economic relations of production as a result of that method, and that capitalism was developing in Russia’s countryside as a result of its own internal resources just as it had done in the rest of Europe. Some of the causes of that may well have arisen from actions by the State, for example the Emancipation of the Serfs, and the requirement for peasants to make redemption payments in order to effectively buy back their own land, created conditions under which large landlords and capitalists could prosper and speeded up the process of differentiation, but nevertheless a process of capitalist transformation was going on.

Once again the difference between the subjectivist and Marxist methods is apparent. The subjectivist says, our theory says that capitalism looks like, works like this. This is how capitalism “ought” to work, “ought” to look. The Marxist says, “This is how it is.” The truth is always concrete, and as Trotsky once said the Marxist that looks for socialism to be created in accordance with some textbook description is bound to be disappointed.

The Marxist method begins with the facts, begins with the material conditions of production, and builds up from there to examine the social relations that spring out of them that is its fundamental criteria in determining the type of society that it is examining. The ideological, legal and political superstructure arises out of and on the basis of those material conditions and social and economic relations. But there have been many occasions in history when the two have been out of synch one either lagging or sometimes being ahead of the other. Where the political superstructure has lagged behind the social relations, e.g. the continued political dominance of the British aristocracy long after capitalist productive relations became dominant, then either those political relations are brought into conformity as they were in Britain, with a fairly peaceful Parliamentary political revolution symbolised by the 1832 Reform Act and the Repeal of the Corn Laws, or else by a not so peaceful political revolution such as those in France, or else the politically dominant class must destroy the new economic and social relations, throwing the society back to some lower level of development. Such happened with the victory of the Barbarians over the Romans, and with the feudalists of Pol Pot in Cambodia. Something similar could occur with feudalist Islamists though most of them seem tied to sections of the bourgeoisie.

But capitalism offers examples of the converse. Not only did capitalism’s low prices act as the battering ram that broke down all Chinese walls, but capitalist classes themselves used the political power they had in their own state, to transform economic and social relations in other societies. And faced with the challenge of capitalist economic power the Junkers in Germany, Tsarism in Russia, the Mikado in Japan took the lead in transforming the economic and social relations in their own societies. Where the Narodniks misrepresented the actions of the state in Russia, and sowed illusions in the idea that the state could be used, and was being used to promote the interests of the peasants, Lenin exposed the real capitalist nature of that state, and its actions as being those of a capitalist state promoting the interests of the bourgeoisie. The fact that Germany, Russia and Japan were far from being liberal bourgeois democracies did not change one jot the characterisation of the economic and social relations in these societies as being capitalist, and just as the state in Britain had been a capitalist state acting to promote the interests of the capitalist class prior to the reflection of that in the political supremacy of the bourgeoisie, so the states in these other countries were capitalist states too, acting in the interest of the capitalist class, despite the continued political dominance of classes and individuals of a bygone age, and whose continued political dominance acts not to define the class character of the state, but to deform it. The Marxist looks through that deformity, and focuses instead on the objective reality behind it. The subjectivist is transfixed by the deformity, and can look no further. The more obnoxious the deformity the more he is transfixed by it. Such is the case with the subjectivist analysis of Stalinism and the USSR that lies behind the Bureaucratic Collectivist and State Capitalist theories.

Looking at the main tenets of these theories their subjectivist nature becomes apparent.

1. These cannot be Workers States because Workers do not hold state power.

But as set out above there have been many occasions when the economic and social relations that predominate in society do not directly correlate with the needs of the social class that owns those means of production, and is the dominant social class in consequence of them. The British State that presided over the Corn Laws, which were detrimental to the interests of the socially dominant capitalist class, was still a Capitalist state. The Corn Laws, and many other such laws which benefited the old feudal landlord class, were merely a reflection of their political power, a deformation of the state as a capitalist state, not a decisive characteristic of it. The function of a Capitalist State is to promote the conditions under which Capitalist property can be defended, and capitalist economic relations promoted, including acting against those classes that threaten those relations. The function of a Workers State likewise is to defend workers and state property, and to promote those conditions under which such property can develop, including acting against those classes that threaten that property.

In Nazi Germany threatened with the possibility of workers revolution and battered by the economic penalties imposed on it by the Treaty of Versailles the capitalist class were forced to cede political power to Hitler. In the use of state power, and the establishment of a totalitarian state, the Nazis not only smashed the Labour Movement, but also acted against the interests of some sections of the capitalist class themselves – especially if they happened to be Jews. But neither the totalitarian nature of that regime, nor the fact that in some of its actions it acted against the immediate interests of some capitalists changed the nature of that state as being a capitalist state. Yet if we were to accept the subjectivist bureaucratic collectivist argument we would have to conclude that not just the USSR, but Nazi Germany too was a new form of class society.

2. These Cannot Be Workers States because only the working class through its own actions can create socialism.

But the two things are not the same. Socialism is only possible after a long period of transition during which the means of production are transformed, and upon which new social relations and political relations are established. It is absolutely true that this transformation can only be achieved by the working class itself acting consciously to bring about that transformation. It also requires that as part of this transformation of social relations a whole series of other changes in class consciousness occur too. There is no reason why for example a working class could not take hold of the means of production, establish democratic control of those means of production and of society, and then for example, take a democratic decision to expel all Muslims from the country. If you doubt it I can point to a number of Tenants Associations in thoroughly working class areas that have taken similar decisions in terms of who they want living on their estates. Such a society could be a perfectly democratic workers state. It would not be socialist.

A Workers State merely requires that the working class are the dominant class in the society. Even the Bureaucratic Collectivists accept that Stalinism wherever it took control abolished all other social classes, and did so by abolishing the property relations on which those classes were based. By definition if all other social classes have been abolished, then if only by default the working class becomes the dominant social class. In order for this not to be the case the Bureaucratic Collectivists have to prove that the bureaucracy represents not just an excrescence upon the working class, but constitutes a fully formed class in its own right. This they continually have failed to do.

3. These cannot be Workers States because the actions of the Stalinists have been repulsive and reactionary.

But this represents the subjectivist method most clearly. Before Capitalism could develop in Britain it was necessary to create a working class. That was done when the landlord class stole the peasants land through the Enclosure Acts. In Capital Marx depicts the depravity to which this new working class was reduced, Engels spells it out more clearly in “The Condition of the Working Class in Britain”. Capitalists trading in human flesh just as their counterparts in the slave states in the US were doing, human beings ground down in squalor, nine generations of textile workers consumed in the space of the normal lifetime of just three. A Capitalist class that not content with this level of savagery within its own boundaries used its armies to enslave most of the world.

Could there be anything more reactionary? Yet Marx set aside all these moral considerations, and decalred that capitalism was up to that moment the most progressive system the world had ever seen! And of course he was right. Viewed not in terms of the subjectivist and moralist, but in terms of the materialist capitalism despite all that depravity was bringing about the greatest transformation of human potential ever.

It is a clear example of the subjectivist “ought” triumphing over the Marxist “is”. A Workers State “ought” to be like this, as opposed to this particular Workers State or group of Workers States “is” like this, and it “is” like this because of these particular circumstances of history, because of these objective material conditions.

4. The Bureaucracy represent a New Class because they exploit the working Class and hold Political Power.

This is a failure to understand the basics of Marxism. Adam Smith, let alone Marx decried the existence of sections of society such as the clergy, and politicians that effectively leach off the productive sections of society. Every society including a Workers State requires some people that perform duties that are necessary for the efficient functioning of the society, but which are not in themselves productive. By definition such people can only be supported if a proportion of the product of other workers is assigned to them.

The CEO of a large capitalist company is paid in the US 1,000 times as much as the average wages of the workers in that Company. It is almost certainly more than the value of the labour-power that CEO provides. But the fact that this CEO is paid hundreds of times more than he should be does not represent exploitation of the workers. On the contrary if anyone is being ripped of it is the capitalist owners of the Company, whose profits are reduced as a result. The ability of such people to obtain such payments is partly a reflection of the fact that these companies even within capitalist terms are not run very democratically. But the fact that these bureaucrats working for these large companies can obtain these huge payments, and as was the case with a number of companies recently in the US, run them in their own interests rather than the interests of the capitalist owners does not mean that they form a new class of exploiters – though that was the argument put forward by some of those in the Trotskyist Movement, like James Burnham, that first raised the Bureuacratic Collectivist argument, an argument latched on to with gusto by the right-wing subjectivists such as Hayek.

Similarly, the fact that in every bourgeois democracy political power is exercised by professional politicians that run bureaucratic party machines, and rely on full-time Civil Service bureaucrats, sometimes passing laws that are inimical to the interests of the capitalists does not change the nature of these states as capitalist states.

5. The Bureaucrats don’t own the Means of production but they control them.

The bureaucrats that run large western companies don’t own them either in many cases, they often control them because shareholders are dissipated and lack democratic means of exercising control – especially when those shareholders are workers who own the shares through their pension funds etc. Marxists argue that the important determinant of class is relationship to the means of production. A class can only be a dominant social class if it owns the means of production. The definition of a class according to status on the other hand is a subjectivist notion.

The straw man put up by Trotsky in the quote by Sean referred to earlier required a series of other changes to occur in the USSR before the bureaucracy could be transformed into a class. None of those changes occurred. In fact even if the changes Trotsky postulated had occurred the bureaucracy would have become not a class, but a caste. The type of society he envisaged would not have been new, but merely a modern version of something old. A modern version of the Asiatic Mode of Production. Marx described how because of the specific conditions in which they emerged, and the requirement for irrigation on a massive scale, societies in Asia had developed down a completely different path to that of Western Europe. In order to undertake these constructions only a centralised state was adequate, and so societies emerged where the state was the central and driving force in economic activity. (A good discussion of the AMP is given in “Marx and the Third World” by Umberto Mellotti.) A bureaucracy developed that controlled the means of production through the state, and this bureaucracy consolidated into a caste. That is entry into the bureaucracy was limited by birth. In India the Brahmin caste form the highest reaches. In China the various dynasties held that position. But in order for such a social system to function all of this required a set of legal, and religious rules to be established that socialised the society into an acceptance of this as being the natural order of things. No such transformation occurred in the Soviet Union, or other Stalinist states.

Its true that Trotsky spoke of the potential for the bureaucracy to consolidate into such a caste, but potential is not actuality. Capitalism had the potential in the 1920’s to develop into “Ultra Imperialism” and 30 years later it pretty much did, but to base your politics in the 1920’s on that potential was to be completely disoriented.

The reality is that the USSR far from seeing the bureaucracy consolidate into such a caste saw a high degree of social mobility, a natural result of the huge investment in education that primarily benefited the workers and peasants that the workers state undertook as a priority task, alongside the similarly huge investment in healthcare that also mostly benefited the poorest workers and peasants. Even today and despite the huge disadvantages an embattled Cuba has faced it has a much better healthcare system than its rich neighbour. The consequence is that most of those that came into dominance in the state and party structures in the Brezhnev era were not the children and family members of the existing bureaucrats and apparatchiks, they were the children of ordinary, and often poor workers and peasants.

See Sheila Fitzpatrick’s “Education and Social Mobility in the Soviet Union 1921-34”.

and Mary Macaulay “Politics and the Soviet Union” pp 309-10,

or this comment by the US Library of Congress

here

Sean in his article in WL referred to Trotsky’s comments in “Again and Once More Again on the Nature of the USSR” concerning the theoretical possibility of “Bureaucratic Collectivism. But what exactly was it that Trostky said here? Did Trotsky raise this “theoretical possibility” in terms of it being a likely development. Not at all. Trotsky raised it as a straw man, a device by which to beat over the head once again those that were arguing that the USSR was not a workers sate, that it was some kind of state capitalist, bureaucratic collectivist or non-proletarian state. He sets out the conditions that would need to appertain for such a development. In short those conditions are the extension of fascism internationally, and the further isolation of the workers state forcing a further move to the Right. He spells it out such a perspective is that of thorough pessimism.

But what in fact did history reveal. Not the creation of a new revolutionary party as Trotsky had hoped it is true, but certainly not the extension of fascism, and certainly not the further isolation of the workers state in Russia. On the contrary the end of the war witnessed upsurges of workers militancy. Even in Britain the workers party was forced to the Left, and made large reforms to assuage the working class. And in large areas of the world capitalist property relations were overthrown, and the former exploiting classes liquidated, not by the textbook independent workers self-activity required by the “Kantian idealists” as Trotsky previously described them, but by means of a bureaucratic overturn engineered by the Russian Stalinists, and their counterparts. Indeed such actions, inspired as much by a need to reduce the isolation of the property relations in the USSR as by the bureaucrats desire to expand their own prestige and influence – and the two went together because as Trotsky points out the bureuacracy’s own position was inextricably tied to the property relations of the workers state – demonstrated once again the correctness of Trostsky’s analysis of that bureaucracy its dual nature progressive in relation to defending the property relations established in 1917 – I would argue more correctly 1927 or thereabouts – and reactionary in relation to the world revolution.

But even before those historical events unfolded Trotsky’s position was not that of the pessimists it was that of revolutionary optimism. There is nothing in this one of Trotsky’s last writings on the subject to suggest that had Trotsky witnessed the post-war events he would have had any more time for the subjectivist notions of Bureuacratic Collectivism, no reason to change his analysis of the class nature of the USSR.

    ““Revision of Marxism”?

Some comrades evidently were surprised that I spoke in my article ("The USSR in the War") of the system of “bureaucratic collectivism” as a theoretical possibility. They discovered in this even a complete revision of Marxism. This is an apparent misunderstanding. The Marxist comprehension of historical necessity has nothing in common with fatalism. Socialism is not realizable “by itself,” but as a result of the struggle of living forces, classes and their parties. The proletariat’s decisive advantage in this struggle resides in the fact that it represents historical progress, while the bourgeoisie incarnates reaction and decline. Precisely in this is the source of our conviction in victory. But we have full right to ask ourselves: What character will society take if the forces of reaction conquer?

Marxists have formulated an incalculable number of times the alternative: either socialism or return to barbarism. After the Italian “experience” we repeated thousands of times: either communism or fascism. The real passage to socialism cannot fail to appear incomparably more complicated, more heterogeneous, more contradictory than was foreseen in the general historical scheme. Marx spoke about the dictatorship of the proletariat and its future withering away but said nothing about bureaucratic degeneration of the dictatorship. We have observed and analyzed for the first time in experience such a degeneration. Is this revision of Marxism?

The march of events has succeeded in demonstrating that the delay of the socialist revolution engenders the indubitable phenomena of barbarism-chronic unemployment, pauperization of the petty bourgeoisie, fascism, finally wars of extermination which do not open up any new road. What social and political forms can the new “barbarism” take, if we admit theoretically that mankind should not be able to elevate itself to socialism? We have the possibility of expressing ourselves on this subject more concretely than Marx. Fascism on one hand, degeneration of the Soviet state on the other outline the social and political forms of a neo-barbarism. An alternative of this kind—socialism or totalitarian servitude—has not only theoretical interest, but also enormous importance in agitation, because in its light the necessity for socialist revolution appears most graphically.

If we are to speak of a revision of Marx, it is in reality the revision of those comrades who project a new type of state, “nonbourgeois” and “non-worker.” Because the alternative developed by me leads them to draw their own thoughts up to their logical conclusion, some of these critics, frightened by the conclusions of their own theory, accuse me . . of revising Marxism. I prefer to think that it is simply a friendly jest.

    The Right of Revolutionary Optimism


I endeavored to demonstrate in my article “The USSR in the War” that the perspective of a non-worker and non-bourgeois society of exploitation, or “bureaucratic collectivism,” is the perspective of complete defeat and the decline of the international proletariat, the perspective of the most profound historical pessimism.

Are there any genuine reasons for such a perspective? It is not superfluous to inquire about this among our class enemies.
In the weekly of the well-known newspaper Paris-Soir of August 31, 1939, an extremely instructive conversation is reported between the French ambassador Coulondre and Hitler on August 25, at the time of their last interview. (The source of the information is undoubtedly Coulondre himself.) Hitler sputters, boasts of the pact which he concluded with Stalin ("a realistic pact") and “regrets” that German and French blood will be spilled.

"But,” Coulondre objects, “Stalin displayed great double-dealing. The real victor (in case of war) will be Trotsky. Have you thought this over?”

"I know,"-der Fuehrer responds, “but why did France and Britain give Poland complete freedom of action ?” etc.

These gentlemen like to give a personal name to the specter of revolution. But this of course is not the essence of this dramatic conversation at the very moment when diplomatic relations were ruptured. “War will inevitably provoke revolution,” the representative of imperialist democracy, himself chilled to the marrow, frightens his adversary.

"I know,” Hitler responds, as if it were a question decided long ago. “I know.” Astonishing dialogue.

Both of them, Coulondre and Hitler, represent the barbarism which advances over Europe. At the same time neither of them doubts that their barbarism will be conquered by socialist revolution. Such is now the awareness of the ruling classes of all the capitalist countries of the world. Their complete demoralization is one of the most important elements in the relation of class forces. The proletariat has a young and still weak revolutionary leadership. But the leadership of the bourgeoisie rots on its feet. At the very outset of the war which they could not avert, these gentlemen are convinced in advance of the collapse of their regime. This fact alone must be for us the source of invincible revolutionary optimism!

October 18, 1939.”


Again and Once More Again on the Nature of the USSR

For further discussion of these issues see.

(Debate with USRed – Euston Manifesto)

(The Russian Question)

(The Cuban Revolution Revisited)

(Stalinism and State Capitalism)

(Bonapartism in Venezuela)

Thursday, 24 January 2008

Critique of the AWL on Socialist Action

"The argument between SA and Workers' Liberty is in part: what is most important - workers' self-activity and independent organisation, or nationalised property relations?

Why did Stalinist Eastern Europe collapse?"


This is a strange counter-position surely. If the question is "What was the class nature of x state" then this can only be determined by looking at the relations of production for a Marxist. Certainly bouregois and subjectivist sociologists and political scientists might look at the more superficial features of a state such as the formal levels of democracy and so on, but for a Marxist these features are just that superficial, and subjective. There is formally more democracy, and more self-activity in say Britain than there was in the USSR does this mean that Britain was in some sense a Workers State. In the 18th century Britain's natural economy gave great freedom to peasants to arrange their own economic affairs, and to workers as artisans precisely because such workers and peasants DID own their own means of production, but could this self-activity tell us anything about the class nature of the state? Of course not.

Nor can the fact of nationalised or non-nationalised property be determinate, because it depends on class relations. A society in which all means of production were owned by workers and managed co-operatively would tend to create a workers state, yet there is no requirement that the workers should give up their own ownership in favour of nationalised property. Property could be nationalised, and yet have been nationalised by a Capitalist class. What was distinctive in the USSR was precisely the fact that the exploiting classes had been liquidated prior to the transformation of property relations, and that in Eastern Europe a similar liquidation of these exploiting classes took place.

It might not fit the ideal picture of what a Workers State should look like, but reality often does not turn out to look that way we hoped. The job for a Marxist is not to turn their face against the ugliness of reality, but to analyse the nature of the disfigurement, to understand its causes the better to treat it, and to avoid the causes in future.

“Socialist Action (no 6, Feb-March 1990): "The creation by Gorbachev of conditions for Germany's reunification into a single united imperialist state sets the seal on the catastrophic course on which he has led the international working class movement." Talking of Gorbachev in this way, as if he is a leader of the international working class, is as sensible as describing Margaret Thatcher as a leader of the international workers' movement. SA take Gorbachev at his word: that he is a socialist leader. SA's problem with Gorbachev is: "from the beginning [Gorbachev worked for a] turn to a closer collaboration with imperialism."

However, "any accommodation to [imperialism], or weakness, leads not to peace, stability and advance for the left but to greater aggression by imperialism". This is a simple prescription to turn the socialists into advocates for the most aggressive, hawkish Stalinists.


The first part of this is correct though not absolutely correct. The Soviet bureuacracy held a position essentially the same as Trotsky pointed out as do the Trade Union bureuacracy in the Labour Movement. Trotsky’s attitude in that regard followed on from Lenin’s when Trotsky submitted his resolution to the Politburo over the Anglo-Russian Committee. Trotsky argued that Marxists support such leaders in so far as they are being pushed forward by the mass of the working class. We cannot deny the reality that such leaders ARE the leaders of the mass of workers despite often being the hangmen of workers struggles, unreliable, self-serving and so on. It is that latter point that marxists have to always point up to the mass of workers even at those times when they form a bloc with the leaders. But these leaders are the leaders of organisations and structures to which the mass of workers remain tied, and in order to make a United Front with the workers Marxists have to sometimes make blocs with those organisations DESPITE the leaders, in the case of Trade Unions and parties even of the most reactionary kind have even to work as members of them.

Trotsky’s works up to his last are replete with such criticisms of Stalin’s policy for not being adequate in revolutionary proletarian terms because however much certain Ultra-Left elements in his own organisation might have felt that because THEY recognised the bankruptcy of the Stalinists it was sufficient to simply write them off, many workers still did not do so, still had not written them off, still saw the Stalinists as the actual leaders. It is ultra-Left lunacy then in 1989 to pretend that a few thousand Trotskyists worldwide represent the world working class leadership as opposed to the fact that millions of workers around the world in so far as they look for a workers leadership looked to the Soviet leaders. Yet, of course it is right to criticise SA for writing as though Gorbachev the bureuacrat would do any different than a TU bureuacrat that at every opportunity looks to do a sweetheart deal with the class enemy in order to gain a quiet life.

And it is for this latter reason that the last sentence of the AWL’s makes no sense. Every militant DOES know that trying to do such deals only encourages the bosses to make greater demands, sees it as a sign of weakness, and that was precisely the way Reagan and Thatcher saw Gorbachev’s weakness. To recognise that does not commit you to supporting “Stalinist Hawks” in the sense of supporting “Workers Bomb” type theories, or greater ruthlessness against workers, anymore than opposing doing sweetheart deals with bosses commits you to supporting the hotheads that might want to burn down the factory or smash equipment during a strike, or support those that would want to curtail democracy in the union in order that the views of the leadership went unchallenged under cover of showing a United Front.

“Yes, and the crushing of the Soviet workers by Stalinism led to the emergence of Stalinist imperialism and the over-running of Eastern Europe - but imperialism for SA is something only capitalist states are capable of.”

But as Trotsky pointed out to Burnham and Shachtman the term “Imperialism” means something specific to Marxists. There have been many “Imperialisms” thoughout history, but to treat them all the same is to make the same mistake that Marx accuses the bouregois economists of making – in fact not a mistake in some cases but a deliberate effort to blur distinctions – in relation to Capital by defining all types of machinery throughout history as “Capital” irrespective of the relations of production at the time. That a Workers State might invade another country is not impossible – Lenin argued strongly in favour of the invasion of Poland – and might arise for many reasons, but the reasons will not be the same as those which drive Capitalist imperialism inexorably in that direction, even for a Deformed Workers State. This blurring of Marxist distinctions is a very worrying facet of the AWL’s politics visible in many of its writings in relation to the State, and soemthing it is clearly driven to as were Burnham and Shactman beforehand in order to make their theory fit reality. But as I have pointed out elsewhere it is a strange kind of imperialism which rather than draining resources from its colonies actually pumps its own lifeblood into them as the USSR did into Eastern Europe, Vietnam, China (initially), Angola, Cuba and into the many national liberation movements around the world it supported.

”SA make their support for democratic change in the USSR conditional and they judge Gorbachev's policy by a ridiculous yardstick: "Any shift in the Soviet Union in a leftwards direction would involve a rapid expansion of democracy. But it is absurd to believe such democratisation is itself a left wing shift because it can occur for quite different reasons. If, say, Gorbachev had accompanied democratisation in the USSR with stepped up aid to Cuba and Nicaragua, or the launching of a deeper international campaign against apartheid we would have been dealing with a left wing development."

I agree this is confused. The first part is undoubtedly correct. An extension of democracy is not of itself left-wing. It depends upon the nature of this democracy, and what is driving it. An extension of bourgeois forms of democracy pushed forward by the middle-class or sections of the bureaucracy seeking a capitalist restoration would not be left-wing, and would tend to marginalise workers. An extension of factory and workplace democracy introduced as a result of direct activity by workers for such demands, and feeding through the ordinary worker members of the Party would have been a left-wing development, however, and would have strengthened workers against the former tendencies. Why such democratisation can only be viewed as left-wing if it coupled with increased support for Nicaragua or Cuba is not at all clear other than for the fact that these two were SA’s pet Stalinist States.

”What a mess. Gorbachev was a reforming Stalinist leader - but a reformer whose 'reforms' aimed to aid the ruling class he was the leading representative of. He was not capable of a 'left' policy of any type - because, fundamentally, 'left' and 'right' are judged by an attitude towards the working class (for SA 'left' and 'right' are mainly functions of more or less aggressive policy towards the US and 'imperialism'). Gorbachev's relationship to the Russian workers was that of a reforming Tsar trying to sort out the mess the ruling elite found itself in. His aim was to make the workers pay for the crisis through speed-ups, unemployment, factory closures; 'democratisation' was limited and was intended as a mechanism which could help Gorbachev's system work better - for Gorbachev and the Russian bureaucrats and against the workers. If 'left' and 'right' have any meaning here Gorbachev's policy is another variant of a right-wing policy.”

But this is a worse mess. Why could Gorbachev not have been seen to be following a Left or Right course any more than Trotsky described the zig-zags of Stalin as following a Right or left course??? This makes no sense. Even a Tory Governemtn can be said to be following a course which veers to either the Right or the left so why, other than their pathological rather than Marxist approach to Stalinism, could such descriptions not be applied to Gorbachev?

And yes of course Gorbachev was trying to sort out the mess, but just as in the 1920’s the mess could be sorted out by a Left or a Right course. It is surely legitimate for Marxists to point out that the leader of a huge country that is looked to by millions of workers around the world for leadership is heading down a course which is in the wrong direction! And repeating the mantras about the idea was to make the workers pay, and so on because this was a new ruling class merely betray a lack of detailed knowledge. Firstly, the idea that some new ruling class existed in the USSR is clearly nonsense as I have demonstrated many times previously. Every previous ruling class in history has been centuries in the making. It has had to accrue ownership of themeans of production beneath it, and on that basis over generations develop the class solidarity, and class conscioussness necessary to take, and then hold power. The more dynamic such a class, the more cohesive it is socially the more facility with which it is able to achieve this. That is why as Marx points out the Peasantry although it owned its own means of production, was a massive social class with great potential power could never become the ruling class because it lacked the social cohesion, and the dynamism of say the bourgeoisie to achieve it. The main candidate for such a new class in the USSR – though the proponents of these theories ever specify exactly who this class was because any attempt to actaully name it falls apart like dust in the wind on contact with reality – the bureuacracy were none of these things. They neither owned the means of production – nor were even capable of passing CONTROL from one generation to the next, they were far from dynamic, and they were not only lacjing in any kind of social cohesion, but suffered considerable necessary antagonisms between different sections. Yet we are asked to believe that this new class emerged from nowhere overnight – just by coincidence at the time Lenin dies – and in just two years take power for themselves!!!! Now for a Marxist such a miraculous feat unknown previously in human history would have to signify that the social force acghieving this was something truly remarkable, something truly dynamic and progressive. But no we are told that this force is in fact less dynamic, less progressive even than the bouregoisie.

But anyone that has actually studied the USSR in detail knows that the picture painted does not meet the reality anyway. Like any Trade Union bureuacrat the Stalinists looked to their own interests, but also like any TU burueacrat they had to look to the social base on which they rested. The various schemes in the post-war period particularly Khruschev’s so called Hare Brained schemes had nothing to do with screwing the workers. They were genuine if half baked schemes designed to generally improve productivity – in Khrushev’s case agricultural productivity because he was udner pressure from the peasantry – the consequence of whch would have been to increase the output of consumer goods the major beneficiary of which would have been the working class. And Soviet Planners attempted all kinds of schemes to ensure that production met the needs of workers, including the establishment of Committees of workers to act as Consumer Panels etc. who tested western consumer products in an attempt to match the latest fads and fashions. There was no mechanism within the Soviet economy that drove the bureuacrats to exploit workers more intensely to drive up Surplus Value as there is under capitalism because there was no production of Surplus Value. Like every other state burueacracy in history the Stalinist burueacracy lived not from Capital, not from the extraction of Surplus Value, but from Revenue. And like every social group that lives off revenue there is a desire to see the total product the total quantity of Use Values produced increased, because it is that increase which enables a more lavish lifestyle to be enjoyed. To that extent the interests of the burueaucracy and the interests of the workers were the same, the contradiction between them arises not from the necessary contradiction of exploiter and exploited as is the case under Capitalism, but from the desire to maintain control, and thereby maximise the share of the Use Values being distributed. It is a subjective not an objective contradiction.

The next section of the AWL’s critique rightly rips apart SA’s cringeing in support of the Romanian Stalinists, but it says,

“This last sentence is particularly revealing: SA assume the role of advisor to the 'liberal' wing of the ruling elite - helpfully suggesting a policy for the Front; SA tell their readers that the "guiding light" of a workers' state's policy is to make "concessions" to the workers! Isn't the "guiding light" of a workers' state to be a state of the workers? And how much sense does it make to talk of a workers' state making concessions to the workers?!”

Well of course that is true of a healthy workers state, but no one would claim that Stalinists states WERE healthy workers states, and anyone wanting to cure the sickness would obviously want to do so by moving them in the right direction. But the AWL’s criticism would have more grip were they themselves not still in thrall to Leninism. Perhaps they could have given their advice to Lenin and Trotsky at Kronstadt for instance, or in response to Lenin’s statement to Kollontai and the Workers Opposition that if they really believed in their criticisms they should be voicing them guns in hand.

And in relation to much of the other discussion in this section it is important to acknowledge that we now know – because the CIA have admitted it – that huge amounts of money and resources was pumped into Eastern Europe to support petit-bourgeois organisations, to help print leaflets and newspapers and so on. True such activity can only really take off if there is some tinder for it to light, but the nature of mass movements is not necessarily rational – just look at the way angry mobs gather when they get a rumour of a paedophile on an estate – and in the absence of organised socialist forces to direct the class it is not difficult for some organised force to put itself at the head of a mob. That they were able to do this is not the sad thing, the sad thing is that in 80 years the Marxist movement throughout the world had through its sectarianism so divorced istelf from the working class that it was unable to provide any kind of pole of attraction for the workers of Eastern Europe when they needed it.

On Imperialism

I broadly agree with the AWL’s criticism of SA and the other idiot-anti-imperialists. I disagree with the way the AWL increasingly have moved away from that correct position to one of “Idiot Imperialism” a class neutral view of the state in which they make calls upon imperialism to act progressively in the same manner that they above criticised SA for doing the same thing in relation to Stalinism.

In a conflict such as that between the US and Saddam Hussein Marxists must oppose their own imperialism and work for its defeat, but that does not at all mean they have to side with a Saddam Hussein, any more than they had to side with Galtieri as a concomitant to opposing Thatcher and working for the defeat of her forces in the Falklands. The job of Marxists, particularly those inside the country being invaded is to oppose the invasion by mobilising the truly revolutionary forces as the most ardent fighters, and by pointing out why the forces of other classes cannot be relied upon to wage such a fight, why they will always seek to make some kind of deal with imperialism, and so on.

In Kuwait the background seems fairly clear. The US had sought to weaken its main rival in the area – Iran – by promoting Iraq as its client. In the Iran-Iraq war Iraq showed itself incapable of being a reliable agent for US imperialism. Faced with a growing threat to its main ally in the region – Saudi Arabia – from Al Qaeda, the US needed to ensure its own military domination of the region, and with the USSR now not in the equation to prevent the US exercising its imperialist power unrestrained it set about doing so. It required a pretext. Iraq had already been complaining to the Arab league for some time about Kuwait stealing Iraqi oil by tapping into Iraqi oil deposits from inside Kuwait. The complaints were going nowhere in resolving the situation. Iraq called in the US Ambassador to outline their intention to take military action if the issue was not resolved and sought the US blessing. What proceeded was typical US policy. In the 1950’s the dominant imperialist powers in the Middle East were still Britain and France. When Britain asked the US unofficially to give them the nod for the invasion of Suez the US gave them the wink to a blind horse. As soon as the Suez crisis erupted France and Britain’s position in the Middle East was undermined, and the US was able to step in as the good anti-imperialist. When the US Ambassador was called in by Iraq they simply stated that the matter was a local affair of no concern to the US. Of course, once the invasion took place the US obtained the pretext it required for its own invasion. And we know that the US sought a similar pretext this time round for establishing its long term presence in Iraq, a pretext obtained through nine-eleven and the conscious misrepresentation of information.

”This is disgusting stuff - SA fade out the question of Saddam, the "murdering butcher", as 'historically insignificant' and back Iraq simply because it is a smaller power than the US. Moreover, the US and Britain have installed regimes in Arab countries before - e.g. the Jordanian monarchy - and it is difficult to imagine that such a regime, or any other government they might replace Saddam's rule with, could possibly be as bad as the current regime - for "the Arab people" or anyone else.”

Yes it is, but unfortunately for the AWL, which now equally disgustingly for Marxists, looks to a progressive imperialism, to carry out the progressive tasks, they have lost faith in the working class being able to accomplish, the reality of Iraq is that they HAVE created a regime far worse than Saddam Hussein’s. A regime that rests upon the Imperialist Occupation whose actions the AWL tell us they deplore, but don’t deplore enough to call for it to end.
”However these are different wars. Japan had invaded China with the intention of occupying large parts; the Chinese nationalists' war aimed to kick Japan out of Chinese territory. Iraq, on the other hand had not been invaded and was not seeking to expel a powerful neighbour. SA get it wrong because their parallel is not a parallel.”

But Iraq was occupied by imperialism, and no fly zones were imposed in the North and South. The whole country was not occupied reportedly on the request of the Saudis who feared further unrest should it happen, a fear which the current colonial policy has unleashed.

“SA see the Gulf war as "the first of a new wave of North-South wars, wars conducted by imperialism against the consequences of its economic destruction of the semi-colonial world...[the] period could be dubbed a new era of direct colonialism." (SA no. 8, pg. 4). This prediction, like virtually every prediction made by SA, has been proved wrong. There has been no return to "direct colonialism".
But in actual fact that prediction has turned out not to be so far out. The US has established a colonial regime in Iraq. The US now has three huge bases in Iraq which are clearly there for the long-term, and are intended to constitute the US means of controlling Iraq. These bases are so big that the largest one has an airport only exceeded by Heathrow, and which furnishes what is effectively a US City on Iraqi soil.

That is not to say that imperialism is going to adopt colonialisim as its modus operandi as SA suggest, I don’t think it is. The preferred method of operation is still via bouregois democracies because that has much lower overheads. But increasingly, as economic growth accelerates, and new dynamic economic powers like China, India Russia and Brazil develop with a huge hunger for resources, the US will be led to move from its current move towards Protectionism towards outright grabs for resources where it cannot outbid its rivals. The current US outposts established in the Stans are the front runners of that policy as is the current arming of its main client Saudi Arabia with the latest equipment.

”1. "The regime of capital accumulation in the third world is thoroughly disrupted. Under these conditions local ruling classes cannot be counted upon to be stable enough to guarantee imperialist interests for a prolonged period. With no stable regime of accumulation in the third world the imperialist economies [economies?] are forced once more in the direction of substituting their own direct military intervention...

"The result is a massive reinforcement of direct imperialist military force in the third world. A process of 'recolonisation' of the third world has begun."

2. The next state to receive the same treatment as Iraq is likely to be Cuba, "the Pentagon must be reconsidering the possibilities of a successful military strike against Cuba."

3. No Israeli-Palestinian deal is possible, "of even the most token kind."
"Israel has no intention of making such a deal and the US will not compel it. Confronted with this situation the Israeli regime is likely to start gearing itself up for another war to try to weaken its enemies - this time almost certainly with Syria." And, (SA no. 9, Winter 1990), "Syria's present course of allying with imperialism is strategically suicidal."

4. "There will be a political crisis in the US" due to America's inability to fund the war, and "a US heading into recession has been struck a further blow." (Can the imperialist economies take the strain?, SA no. 7, Summer 1990).
All four of these predictions have been proved utterly wrong. There has been no process of recolonisation of the third world. Regimes in the third world have been, on the whole, more stable than in previous decades. Cuba has not been invaded. Israel has struck a deal, and there has been no Israeli-Syrian war. The US has not gone into political crisis and its economy has not slumped, it has boomed in the 90s. All rubbish.”


Really?

So if we take point 1) the invasion of Iraq and its direct rule by US imperialism didn’t happen then? On 2) well no attack on Cuba yet, but despite increasing moves by European and Canadian Capital towards Cuba the US has, and probably partly because of the above relations of Europe and Canada, tightened its sanctions, and supports terrorist acts against Cuba. On 3) no deal has been reached as far as I am aware, and in fact a two states deal looks more a dead duck now than it ever has. On the back of the US invasion of Iraq, and with the USSR out of the picture Israel did provoke the Intifada, and did invade Lebanon. Finally, on 4)The US economy certainly did go into another recession in 1991, and the increase in oil prices made it worse, and the consequence was that George H. Bush lost the election because in the words of Bill Clinton “It was the economy stupid.”

So without in anyway wanting to support SA in what way were these predictions all proved wrong? In what way were they all rubbish??? If you are going to criticise someone’s position at least have the Marxist honesty to do it on the basis of the facts.

“Of course a colonial people, even led by reactionaries, should be supported in a struggle for self-determination and freedom. That is a basic duty of socialists.”

Unless of course the people are in Iraq where you have tied your fortune to the hope that the imperialist occupation might act progressively, in which case you have to cover your arse by arguing that the people’s struggle against the Occupying power is not really a struggle for national liberation precisely because it is led by “reactionaries” who have to then somehow be passed off as not being part of “the people” at all. In that case self-determination apparently runs through opposing the removal of the colonial power.

“1. "Open a period of the most extreme international reaction, pose a new, qualitative, threat to a large part of the historical gains of the world working class, and that of the peoples oppressed by imperialism."

2. "Unleash a wave of racism that would engulf Europe and probably shatter the framework of liberal politics."

3. "[The imperialists] would attempt to eliminate the welfare state."

4. "In Eastern Europe a new wave of capitalist dictatorship would set in... which would pose a long-term threat to democracy in Western Europe."

5. And if the "Russian Revolution" is "defeated" the consequence would be imperialism re-spreading like a cancer through the world. Moreover, say SA, imperialism would have a new weapon, nuclear weapons, to impose its rule.
The "destruction of the Russian Revolution would re-ignite the open contest of the imperialist powers for the division of the world... [and] a nuclear arms race between the US, Europe and Japan."

Now, in 1999, we can easily draw up a balance sheet of SA's 'perspectives'. And we can conclude that SA's comment was hysterical, babbling nonsense.”


But in 2008 we can draw up another and conclude that perhaps it was not.

1) We have seen the election of a Bush government as the most right-wing government in the US for many years perhaps even more right-wing than that of Reagan. We have seen the growth throughout Europe of outright fascist organisations and even the participation in Austria and Holland of fascist and racist parties in Government. We have seen the development by the US Neo-cons of the theory of the New American Century Project whose goal is to achieve multi spectral dominance of the globe. We have seen increasing tendencies to genocidal warfare around trhe globe. We have seen the US with British support launch an illegal war in contravention of the United Nations,a nd the acceptance as a result of the principal of pre-emption in warfare.

2) We have indeed seen racism and anti-semitism rise dramatically throughout Europe as stated above, including the development of ultra nationalist parties throughout Eastern Europe sometimes even parties achieving governmental power on the basis of nationalistic and racist rhetoric for example in Poland and Hungary.

3) Well the imperialists might not yet have succeeded in eliminating the welfare state, but I would be interested to know if the AWL no longer believe their own propaganda to the effect that they are having a bloody good go at it.

4) Well some of the dictatorships (including those that pass themselves off as democratic) are capitalist, certainly many of those in the Gold Rush region of Central Asia appear to fit that description. I wouldn’t describe Putin’s Dictatorship as capitalist it is pretty much straight forward Stalinist, but its actions certainly do seem to be a threat to other European democracies.

5) I’m not sure what SA mean by “Imperialism” here they seem to confuse it with Colonialism to which I have spoken above. As for “Imperialism” proper their seems little doubt that globalisation represents the spread of Capitalism in a much deeper and wider context thatn previously, and part of the reason for this is that in the absence of backing for nationalist movements, and given the weakness of the working class internationally domestic bouregoisies in developing countries have been able to introduce bouregois democracy more widely,and thereby create the basic conditions required for efficient capital accumulation.

“It is not true … or that there is a new "open contest" for the redivision of the world, or that there is a nuclear arms race between Japan, Europe and the US.”

Really? There are calls in Japan for the Constitution to be changed so that its military can be used in warfare, and even for the ban on possessing nuclear weapons to be lifted. Central Asia, Latin America, and the Middle East and increasingly Africa are the focus of huge battles between particularly China and the US over access to resources. Despite its dire economic position the US continues to devote huge sums to armaments including development of Star Wars 2 including its provocative deployment on the borders of Russia.

“Although racism continues in Europe, the form it takes - currently focused on asylum seekers - is internal to Europe”

No its not there is increasing racism in the US against Latin immigrants. There is increasing anti-semitism both in Europe and the US.

”and as if the Chinese market reforms had not led to great misery for millions of Chinese people and are not bound up with a great increase in unemployment, the creation of gigantic special economic zones where even the minimal workers' rights which exist elsewhere in China are scrapped, the closure of factories, the creation of a new very rich capitalist elite.”

Its certainly true that there was considerable unemployment caused by the privatisation of some of the Chinese SOE’s, but far less than occurred as a result of the privatisations and economic chaos brought about by Yeltsin’s counter-revolution that the AWL supported. But unlike the aftermath of Yeltsin’s counter-revolution the reality in China is that employment grew massively with millions of new workers being drawn into employment with real wages rising at around 10% per year! And its on the back of that that Chinese workers have gained in strength and confidence for some of the recent battles they have undertaken.

The last sentence also seems to give us a glimpse at the kind of contradiction the AWL find themselves in. In the “Capitalist” sector of the economy we are told workers do not have any rights yet in the “State Capitalist”/Bureuacratic Collectivist” sector they do, though minimal. Yet we are told that Capitalism is progressive compared to the new class mode of production introduced by the Stalinists!

”SA advocate a policy for Russia which has been tried in China, by the Chinese bureaucrats, in the interests of the Chinese bureaucrats, which has been a disaster for many millions of Chinese workers.”

I doubt the many millions of Chinese workers and former peasants who now for the first time in their lives find themselves owning houses, driving cars, owning TV’s, computers and all the gizmos western consumers enjoy, and for many even looking at the possibility of foreign holidays would agree that ist been such a disaster. I was talking to someone a while ago whose Mother in Law lives in China. Despite being on a fairly low wage she still manages to save 20% of her income.
”Of course a real workers' government in a former Stalinist state might well introduce some market relations - as part of the process of clearing up the mess left by the bureaucrats. But this would be under the direction of the working class as a whole, in the interests of the workers, with the rights and living standards of the workers protected.”

This is moralistic nonsense of the type Marx argued against in the Critique of the Gotha Programme. Market relations by their nature cannot be under the control of anyone or they are not market relations. Its possible to take some areas of the economy out of the market sector – as for example capitalism does where its efficient to do so as with healthcare – but other commodities are either marketised or they are not. If you try to introduce controls then you end up with all the kinds of contradictions and distortions that the USSR faced in the 1920’s,a nd that capitalist economies have faced under wage and price controls. It is a recipe for disaster. Workers can through their own direct ownership of the means of production in co-operative enterprises gradually integrate their activities and forward plans in order to slowly replace the market with democratic planning as and when the technique and ability to do so arises, but to suggest that its possible to simply plan democratically or otherwise (in fact doing it democratically would technically be even more difficult because of the problems of the tyranny of democracy in planning) most of a complex economy from scratch is cloud cuckoo land. And to suggest that this could be done whilst at the same time protecting “the rights and living standards of the workers” is fantasy. Every new mode of production goes through a period during which living standards fall, and where the level of production itself falls. As Marx says in the CGP “Right can never be higher than the economic structure of society”, and to suggest that you can in a Stalinist state – all of which were economically backward – guarantee socialist rights to workers is to write a cheque that is destined to bounce.

”Rather than arguing for international workers' unity across national frontiers, in opposition to the managers, remnants of the old Soviet ruling class and international capitalists, SA propose popular front class collaboration in defence of "Russia" and "Russian industry".

This is exactly the sort of nonsense that we often have to combat in the British labour movement - that British workers have an interest in uniting with their managers and bosses in defence of British industry against foreign competition.”


But the AWL assume what has to be proved here that what exists is a new ruling class. The more appropriate analogy is that given by Trotsky that of the TU bureuaucracy, and the fact is that Marxists would form a common front even with a reactionary TU bureaucracy to the extent that it fought alongside workers and was pushed on by them. That was Trotsky’s critique against the ultra-lefts that rejected such an approach. But of course, yes the TU bureuacrats too would fight in their own way, which is why the Marxists advise the workers even whilst marching alongside them to watch their backs to keep their political independence, and be ready to strike out on their own.

The rest of the article which continues to ramble on is a justification for the AWL’s collapse into Shachtmanite petit-bouregois socialism, and a critique of orthodox Trotskyism. The lack of Marxism is indicated by statements such as,

”Of course state ownership simply begs the question: who 'owns' the state?
For a Marxist, the concept "workers' state" can only be meaningful if the working class holds state power, consciously, through its own organisations.
SA have come to believe that workers' states can be created by militarised Stalinist parties, which are simultaneously anti-capitalist and anti-working class - totalitarian workers' states where the workers have far fewer rights and less control over the state than do the workers in capitalist Britain.”


But for a Marxist this is wrong from start to finish. A Marxist does not look first at the ideological and political superstructure but at the material base on which that superstructure arises i.e. looks at the economic and social relations, at what classes exist in society, and which through its economic and social position is the dominant class. It is that which determines which is the ruling class even if that class does not at the particular moment exercise political power in its own name. The working class whatever the AWL might want to claim is no different than any other class in history. Leninist theory portrays it that way because on the back of such a theory Leninism justifies the need for a revolutionary party that wins political power on behalf of the working class PRIOR to such a social transformation, thereby relegating the working class to the role of foot-soldier in its political revolution, and humble recipient of the Party’s favours after the completion of that revolution. It is a thoroughly unMarxist and elitist theory that has no foundation in the writings of Marx himself who argued instead for the working class to make itself the dominat economic and social class through the establishment by its own hand of workers co-operatives, spread throughout the economy, and the development on the back of that material foundation of socialist class conscioussness, and an alternative workers power and democracy. IN this Marxist perspective there is no room at any point for the development of any burueacracy or elite holding state power separate from the workers as a class that can develop into the abscess that Leninism became in the form of Stalinism.

The AWL do not explain why the concept “Workers State” can only be meaningful if the workers hold power themselves consciously through their own organisations any less than can a bouregois state be a bourgeois state without the bouregoisie themselves necessarily holding power in that way – of which history knows many examples – nor do they explain how they can then define the USSR in its early years under Lenin as being such a Workers State, when in fact none of the conditions they outline as a requirement existed either!!!

Nor do they explain why a Workers State cannot be established by means of an armed intervention – that after all was Lenin’s intention in invading Poland! As Lenin himself pointed out history has known many forms of social transformation, why the AWL believe they alone understand the sole means by which a Workers State can be created is a mystery. As Trotsky pointed out in relation to the Stalinist invasion of Poland Marxists may well oppose such an invasion as being reactionary because it strengthens the idea of bureuacratic revolution, and weakens the principle of independent workers action, but that does not prevent the consequences of such an action having a progressive result. Imperialism’s action in colonising India was reactionary, yet the consequence of that action, the destruction of old moribund economic and social forms, and the introduction of capitalism was historically progressive.

The facts come down to these both the orthodox, post-Trotsky Trotskysist and the Shachtmanite anti-Trotsky Trotskyists had to find a way of squaring an awkward circle. Both had to explain the degeneration into Stalinism whilst retaining their support of Leninism. The Orthodox Trotskyists squared the circle by increasingly turning Stalinism into something that could be reformed. The anti-Trotsky Trotskyists simply wished the problem away, wanting to hide the Stalinist regimes away like a mad auntie in the attic. They simply redefined the problem by declaring the workers states that had been created as not being workers states at all. The AWL apply the same method elsewhere, for example when they define workers in Venezuela as being “careerists” because they do not fit their criteria of what those workers should be like, what they should do, or when they describe workers in the LP as middle class, or when they say they are in favour of self-determination for a people, but not self-determination for an actual people as in Iraq, only their concept of what that people should be. It is the typical castle building of the petit-bourgeois, castles free from any earthly impurity because they are so far up in the air.

See Also:The Nature of the Soviet State

Joe Stiglitz, The Crisis, Stalinism and Socialism

In an interview this morning on CNBC Joe Stiglitz the Nobel Award Winning Economist of Colombia University said the greatest threat to the world economy was not the current crisis in the US, but the mishandling of that crisis. He said that the heads of financial institutions had made a serious mistake in udnerstanding risk, and had made it twice. First, they had assumed in giving out millions of sub-prime mortgages that they would not all default at the same time. Yet when house prices drop they drop for everyone, and as the sub-prime mortgages were predicated on continually rising house prices this was clearly an unreasonable assumption. But they had compounded the mistake by essentially repeating it. They attempted to take out insurance against any losses on the bonds and CDO's and other SIV's (Special Investment Vehicles) used to spread the risk of these sub-primes by bundling them and selling them in a merry-go-round of financial institutions, through the Monoline insurers. Again insurance is fine provided that not everyone wants to claim at the same time, but in a situation where large numbers at least of these sub-primes were going to default at the same time, causing in turn the SIV's to turn bad then everyone would be making losses at the same time, and calling on the insurance they had taken out.

Its been known that there was a potential problem with these Monolines since last year, but it was the particular problems of one company AMBAC which brought it to the fore last week. Now - again shattering the myth of neo-liberalism - the bosses Nanny state comes to their rescue with yet another bail out proposal, to add to the billions pumped into the economy as cheap financing for the capitalists, the astronomical sums pumped into Northern Rock, the interest rate cuts, the Keynesian Demand Management proposal from the supposedly neo-liberal, laissez-fair Bush regime for a $200 billion fiscal stimulus, and so on. Even then according to Stiglitz the huge sums pumped into the US Economy over the last 20 years mean that any fiscal stimulus would have to be much bigger than that already proposed. In reply to a question from Brian Shachtman of US CNBC Stiglitz said that any package would need to be around $600 billion equal to what has been taken out by homeowners Equity releases, and that Bush's proposals for tax cuts for the rich had been part of the problem, any stimulus needed to go into increased Unemployment Benefits and other payments to the poor.

Capitalism certainly is a chaotic system, though not perhaps as chaotic as it used to be as the Capitalists have been forced to adopt socialistic measures to sustain it. Major capitalist enterprises now operate on the basis of long-term Business plans. Their decisions are determined in advance on the basis of such plans, market research etc. and the use of advertising and marketing to shape the market. But they are only able to operate on this basis because their state has also adopted long-term planning methods which give these firms some environment of certainty and stability in which they can formulate their plans. The firms which dominate the economy are large monopolistic enterprises of the type a socialist economy would develop, inextricably tied to and controlled through the Stock exchanges which operate like a massive State Clearing House for the Capitalist class, moving Capital at an instant to where the highest profit can be made through the adjustment of the Capital Value of firms shares. But it remains capitalism even if it is now effectively State Capitalism.

In this piece Capitalism is Crazy the AWL argue that Capitalism defeated Stalinism but has not defeated Socialism. That is partly true. Certainly Stalinism in Eastern Europe collapsed. But the Chinese Stalinists, the Cuban Stalinists, the Vietnamese Stalinists learned lessons from that. The Chinese Stalinists witnessed the disenfranchisement of Soviet and east European citizens with their increasingly poor living standards, and taking a leaf out of lenin's books introduced a New Economic Policy on steroids, and again taking a leaf out of lenin's book invited foreign Capitalists in to exploit Chinese workers in return for modern technology and techniques. Yet the Stalinists retain control over the economy. In China 70% of Capital and Labour is still employed in the State Owned Enterprises, many private enterprises have the state as partner, and the State retains control over all the financial levers. In Russia Putin as a Stalinist leader in all but name despite the fact that he is opposed in elections by another faction of Stalinists in the ofical Communist Party. The same Stalinist state officials are in place, and the new Capitalist class represented by the oligarchs has been firmly slapped down. In Russia too the majority of the means of production remained in the hands of the State, and now that State enriched by oil and gas revenues, and increasingly by the foreign earnings of other Russian State industries is reigning control of privatised companies back under its control. Price controls have been imposed on other private companies, and so on.

In the Critique of the Gotha Programme Marx says that "Right can never be higher than the economic structure of society". Feudal society could not grant bourgeois Rights, and Capitalism cannot grant the Rights appropriate to a socialist society. Part of the problem for the Stalinist states was that they were in such terribly backward economies to begin with. No amount of democratic planning, or even the brains of the best economists could have overcome the backwardness of Russia compared to the surrounding Capitalist powers. As Trotsky put it in the 1920's a Lion can easily beat a pack of hounds, but if the hounds catch the lion when it is only a cub its a different matter. Add to that the enormous destruction inflicted on the Soviet Economy during the Civil War and WWII - in WWII alone the USSR lost 25% of its most productive agricultural and industrial areas, and 30 million people, compared to the US which lost just 300,000 soldiers, and had no damage to its productive capacity whatsoever - then the fact that the USSR could go from being a medieval society to the World's second super power in just 30 years is truly remarkable, and an indidcation of the strength of nationalised and planned economy even udner adverse conditions. But one of the major problems of the USSR and other Stalinist states was that they needed in order to retain the notion that they were workers states still in some way udner the control of workers to establish some of the attributes of Socialism. Yet this was providing "Rights" which economically they were not capable of providing. They were huge Social Welfare schemes with Health Services and education Services better than in the US, but without the productive capacity to fund them, they were hugely subsidised Public Transport systems, and huge Make Work schemes with workers in their millions kept on at work in enterprises that had nothing for them to do.

The advantage for the Eastern European Stalinists of the Yeltsin bouregois counter-revolution was that it swept away this charade.

The implication of the AWL's article is that Socialism will provide a much less riskier, much more sane and productive society than Capitalism. Well we hope so, but as Marx points out we have no way of knowing that Socialism or at least the higher stages of Communism are even possible. As marxists we are not crystal ball gazers we analyse society and see where logically it goes next. Much more than that we cannot say, and a Marxist should leave the moral judgement of what will turn out to be better up to the moral philosophers. We certainly know that companies that have been established under workers ownership as Co-operatives have advantages over privately owned companies, we know that the set of ideas that naturally spring up on the back of such co-operation offer the hope of a better society, but whether such a system can be developed throughout the economy as a whole let alone throughout the world as a whole we have yet to see, and yet to see what the implications of that will be. Certainly the spreading of such a system by the workers own hands through an organic process holds out better hope than the kind of model of socialist transformation the AWL clings to of a top-down revolution to seize state power by an elite revolutionary Party.

Sunday, 6 January 2008

Capital Consumes Itself

No Surplus Value Created in Department I

The proposition developed above See: Labour Power v Horse Power based on Marx’s analysis that slave labour cannot produce Surplus Value, any more than machine labour or animal labour – all can produce a surplus of Use Values i.e. they consume a certain amount of use values, but through their activity produce a greater volume of use values – says that in determining Exchange Value what is being measured is not simply average socially necessary labour-time – the average labour-time taken to produce something by a slave is “socially necessary” if society is taken as being all humans – but the average labour-time that must be taken by those that participate in the process of exchange. If some group does not participate in the process of exchange then their labour-time cannot be taken into account in the calculation. This is the importance that the introduction of wage labour has for Exchange Value obtaining its mature form under capitalism. Marx says,

“In production based on slavery, as well as in patriarchal agricultural-industrial production, where the greatest part of the population directly satisfies the greatest part of its needs directly by its labour, the sphere of circulation and exchange is still very narrow; and more particularly in the former, the slave does not come into consideration as engaged in exchange at all. But in production based on capital, consumption is mediated at all points by exchange, and labour never has a direct use value for those who are working. Its entire basis is labour as exchange value and as the creation of exchange value.

Well. First of all
the wage worker as distinct from the slave is himself an independent centre of circulation, someone who exchanges, posits exchange value, and maintains exchange value through exchange. Firstly: in the exchange between that part of capital which is specified as wages, and living labour capacity, the exchange value of this part of capital is posited immediately, before capital again emerges from the production process to enter into circulation, or this can be conceived as itself still an act of circulation. Secondly: To each capitalist, the total mass of all workers, with the exception of his own workers, appear not as workers, but as consumers, possessors of exchange values (wages), money, which they exchange for his commodity. They are so many centres of circulation with whom the act of exchange begins and by whom the exchange value of capital is maintained. They form a proportionally very great part -- although not quite so great as is generally imagined, if one focuses on the industrial worker proper -- of all consumers. The greater their number -- the number of the industrial population -- and the mass of money at their disposal, the greater the sphere of exchange for capital. We have seen that it is the tendency of capital to increase the industrial population as much as possible.”

Marx – Grundrisse p 419.


The question arrived at then from this is what about those goods that workers do not participate in the Exchange of – Producer Goods. The conclusion we should draw from the above analysis is that NO SURPLUS VALUE CAN BE CREATED IN THIS DEPARTMENT. The reason. Only capitalists buy Producer goods, and Capitalists can always acquire such goods at a cost less than the labour-time actually required for their production. They can do this by themselves producing them, and employing labour for this purpose that is paid less in wages than the value of its output.

Yet, this is counter-intuitive. We know that Capital producing these goods DOES make a profit. But we have come across this earlier. The slave owner produces no surplus value, yet the Capital of the slave owner receives its share of total profit. It is nothing more than the averaging out of the rate of profit. But a look at the actual relations shows that the proposition is valid, counter-intuitive or not.

Enterprises are in reality composites. Different departments of an enterprise undertake different pieces of work. A large enterprise might require the labour of solicitors for instance. The enterprise might employ a firm of solicitors to do this work. If it does so this firm of solicitors will seek to make an average rate of profit on the Capital they employ. The enterprise buying these services will have to meet the cost of this profit in the cost it pays for these services. If the enterprise is big enough, it might then decide to employ its own solicitors. It will then employ the same Labour Power as the firm of solicitors, but when it processes its accounts it will not add a profit figure for these services when it charges them to the business. The same is true say of engineering services that a firm needs for maintenance of its plant etc. A look at Marx’s Grundrisse explains what is happening. Marx goes into some length to describe the process whereby Capital is objectified Surplus Value. The enterprise that buys in these services from another enterprise has to objectify the Surplus Value created by the first enterprise in its own Capital. By taking over this operation the firm reduces its Capital requirements by reducing its costs, and by an equal amount to the Surplus Value no longer produced.

The consequences are significant.

Take two firms one in Department I, the other in Department II.

Department I
C = 100, V = 100, S = 100 Total 300, R = 50%

Department II buys the output = 300.

C = 300, V = 100, S = 200 Total 600, R = 50%

I am assuming price formation through transformation here to equalise R at 50%.

If either firm takes over the other we would instead have.

C = 200 (Made up of 100C + 100V in Department I), V = 100, S = 200 Total 500, R = 66.6%.

What has happened? Department II now acquires its Constant Capital without having to cover the profit of the firm in Department I, i.e. for 200 rather than 300. Its outlay on living labour for the transformation of these use values into their final form remains the same, and the surplus created by this labour also remains the same. However, this same level of Surplus Value is now related to a smaller outlay of Capital in total – 300 as opposed to 400 – and so the RATE of Profit rises from 50% to 66.6%. The consequence is that although the total amount of Exchange Value (Capital) circulating in the economy has fallen, although in correspondence the total volume of Surplus Value has fallen the rate of profit has risen.

Why? The conclusion can only be that previously the enterprise in Department I obtained its share of Surplus Value (its average rate of profit) by draining surplus value away from Department II – just as in fact an enterprise using slave labour drains surplus value from enterprises employing wage labour. The higher Rate of Profit now enjoyed should encourage other enterprises to enter this sphere of production, but the higher rate can ONLY be achieved if they too subsume production of their inputs into their own operations.

The clear conclusion is that Capitalism generates a powerful impetus towards vertical integration of enterprises, precisely because the calculation of Exchange Value for Producer goods by Capitalists alone (Capitalists who can always produce these goods at Cost themselves by entering production of them), means that competition amongst them will drive Exchange Value down to a level where Surplus Value disappears. If Capital continues to operate as a separate entity in this sphere and thereby receives average profit, it can only do so by draining Surplus Value from Department II.

But, as with other aspects of Capitalism there are countervailing tendencies to this law. Marx sets out how Capital which begins as a combination of Money Capital, Productive Capital and Commercial Capital, divides up into these three elements as separate spheres of activity. The reason is quite simple – specialisation. The whole basis of the Division of Labour is that specialisation on one aspect of the production process allows savings to be effective. If we go back to our original examples of solicitors and engineers it is quite possible that a large firm of solicitors or of engineers can even including its profits provide a service to our firm in Department II at a lower cost than the firm could do itself at cost. The reason is again simple. A specialist law firm can service the needs of many companies, and can thereby be of a size that enables it to enjoy economies of scale that a legal department within a single enterprise could not obtain. Yet it is clear that in many spheres where large amounts of Capital are involved, where the minimum size of operation is large there are good incentives for such vertical integration, and we can think of the oil companies as a good example, where this applies both backwards and forwards – backwards into the exploration, and drilling of the oil itself by the oil refiners, and forwards to the actual distribution and resale of the finished product.

There seems to be a contradiction here though. We have said earlier that what is significant is the calculation of necessary labour-time by those participating in the Exchange process, and it is the fact that wage workers as opposed to slaves participate in this process determining Exchange Value in accordance with the Labour-time required for production. Yet were a worker to be able to produce the finished product they would – unlike the capitalist – have to lay out the actual labour-time for the production of the Constant Capital that is used up in the finished product. This figure would be greater than the Exchange Value now calculated, because this Value now does not include the Surplus Labour-time of the workers in Department I – surplus only in the sense that it was provided over and above what they were paid for, not surplus in terms of the amount of labour-time required to produce the given amount of use-values.

This is true, but Capitalism is full of such contradictions. The reality of this contradiction has been explained earlier. The calculation of “Socially Necessary” can only be from the standpoint of those participating in the calculation. The reality is that those participating in this calculation are not homogenous – they divide into workers and Capitalists – we could also include Landlords – and the basis of calculation as we have seen of the two groups is different. The calculation of capitalists MUST always result in them having a LOWER calculation of Exchange Value than does the worker, for the reasons previously outlined i.e. they can always obtain a commodity at its cost, precisely because they can employ means of production, including the Labour Power of the worker. The worker cannot.

As Marx points out above the more production is production for the needs of workers, because workers form a larger component of demand “The greater their number -- the number of the industrial population -- and the mass of money at their disposal, the greater the sphere of exchange for capital” and as Marx sets out in the Grundrisse Capital IS Exchange Value in its mature form. It is for this reason that Marx sets out the situation were Capitalists able to do without workers, if they could organise all production to be by machines. In that eventuality there would be no surplus value. There would however, be an awful lot of surplus use values.

Capital Consumes Itself

But this is important too for the conclusions to be drawn from the above. In addition to the drive towards vertical integration outlined above, Marx also outlines the necessary drive of Capital not only towards concentration in general, but also towards the increase in the Organic Composition of Capital, towards the increase in the proportion of total output that is accounted for by Constant Capital in relation to Variable Capital i.e. to those commodities bought solely by Capitalists as opposed to workers. The conclusion we would have to draw from the above is that this process means that Capital increasingly devours itself, because an increasing proportion of production becomes a production not of Capital qua Exchange Value, but of Means of Production simply as Use Value. Consequently, society must drive towards the production of the social surplus not as a surplus of Exchange Value, but of Use Value. If we look at previous societies where this was the case we can get some idea of the type of production we would then expect to see as a consequence. A society which produces its social surplus in the form of use values will tend as the surplus rises to see this surplus increasingly in the form of luxury goods, precisely because those that have control over the social surplus will be driven to exchange their proportion of this surplus with others from within the same group, and there is no purpose to simply producing a Surplus of Means of Production. The surplus must take the form of products, which those that own the Surplus can consume. There is a limit to how much this can be simply more of the same, it must become a wider range of luxury goods. In short we would expect to see an increase in conspicuous consumption at the expense of productive consumption, mirroring the fact that use values without Exchange Value cannot be converted into Capital, and so have to be converted into consumption. The alternative is that USE Values in the form of wage goods which lack an Exchange Value lie unsold, and a crisis of overproduction arises, with Capital being destroyed in proportion – and often beyond. Such was the basis in the past for the Pharaohs to build the pyramids or the excesses of the Roman Patricians. Its not necessary to look far today to see the extent to which Capitalists increasingly put their wealth into such conspicuous consumption in the form of yachts costing hundreds of millions of pounds, or private jet airliners etc rather than into productive investment to see a similar picture.

The question then is to analyse this other Department of Production that meets the consumption needs of Capitalists, what is sometimes called Department III, the production of Luxury Goods.


Dept III

In short we can make the same comments about the products in Department III as for those in Department I. But with an important difference. In general Producer goods can only ever be Producer Goods – there is the obvious overlap in the sense of say hand tools which can be used in Production or which form a portion of end consumption, or materials that can be consumed productively or unproductively. But in general say a steel mill is a Producer Good. But the same is not necessarily true of “Luxury” goods. What were once considered such e.g. motor cars are now considered ordinary consumption goods, wage goods. To the extent that such a good moves from being a Luxury Good only bought by Capitalists to becoming a wage good, the basis of the calculation of its Exchange Value must change. The more workers buy this good the more must its Exchange Value be determined by actual socially necessary labour-time. Its Price of Production moves further towards this pole, and away from its mere cost of production. That is to follow Marx’s statement above the more such goods are drawn into “the sphere of exchange for capital”, as opposed to the sphere of exchange for revenue.

The concept used above that workers "Value" the commodities they buy in accord with some calculation of how much Labour-time they would expnd to produce them themselves is clearly unrealistic. A Capitalist can look at the books of some other sphere of production (say of an input) and fairly easily decide whether they can save money by producing this good for themselves rather than buy it. A worker cannot other than in the cases for example where say you calculate how long it would take to paint your house, how much you could earn in that time, and compare it against the price asked by a professional decorator for the work. But no worker can calculate how much labour time it would take for them to produce say a car (nor could a capitalist for their own consumption for that matter) in order to compare this with the market price i.e. to calculate an Exchange Value based on required Labour time. This is as unrealistic as the claims of Neo-classical theory that the consumer in deciding to buy a Mars Bar in reality calculates how much utility could be derived from spending the 30p in each of the billions of other ways possible in order to determine that they are maximising this utility!!!!! In the final section, therefore, I will look at the application of these ideas in relation to demand and supply.

See also: The Tendeency of the Rate of Profit to Rise