Monday, 30 March 2009

Understanding the Conjuncture

I’ve said before that we are in a Kondratiev Long Wave Boom that began in 1999 – See: Kondratiev Long Waves . The main features that characterise and lead to the Long Wave Boom can be summarised as: A wide range of potential new products and techniques deriving from new base technologies developed during the previous Innovation Cycle; the availability of abundant cheap Labour; the availability of abundant Capital manifested in relatively low interest rates; relatively low prices of primary products; and finally a relatively high rate of profit.

A look at every previous Long Wave Boom exhibits these features. Joseph Schumpeter, in his works on the economic cycle focuses on the role of the Innovation cycle. Other economists have pointed to similar features in the industrialisation process, for example, “The Take-off Into Self-Sustained Growth”, W.W. Rostow. A look at the first Long Wave Boom identified by Kondratiev that running from around 1790 to around 1817 is a good example. In the preceding period that had been perhaps 30 years – the kind of time period Rostow settles on – during which there was an accumulation of new inventions. All, of these are brought together as the real period of expansion takes place. But, a look at that time frame also shows that all of those other factors had come together too. The revolution in farming has made available cheap foodstuffs as well as other necessary products such as wool. The supply of Capital was present too as a result of a whole period of Capital Accumulation by Money and merchant Capitalists. As a consequence of the Enclosure Acts, and particularly the 1801 General Enclosure Act, a large supply of cheap labour was also thrown on to the market, as peasant framers were thrown off the land. That together with all the previous features, and a growing market ensured a high rate of profit.

The other feature of the Long Wave boom can also be seen in that example too. Almost every new Long Wave boom brings forward some new economic power to lead the development. Although, in 1790, Britain was by no means some economic backwater it should be remembered that even in the field on which that first part of the Industrial Revolution depended almost exclusively – textiles – Britain was far from being the world leader. In fact, even in 1800 the world leader in textile production was India, which provided 25%, of the world’s production. It was only the imposition of swingeing tariffs on Indian textile imports, the destruction of Indian village economy by British colonialism, and subsequently the introduction of steam power, which enabled Britain to replace India in that role.

Similar developments can be seen in the subsequent Long Wave cycles of the 19th and 20th centuries. The current one is no exception. After the defeat of the working class internationally during the 1980’s Capital steadily raised the Rate of Profit in the following 20 years. In 1999, raw material and food prices had reached historic lows. Not only were vast new reservoirs of cheap exploitable labour opened up in Asia, in Eastern Europe and elsewhere, but even within the developed economies large pools of labour, still suffering from the defeats of the 80’s were available as and when production began to rise. The higher rates of profit achieved during the period, the slow emergence of new economic powers whose economies focussed on saving and accumulation rather than consumption created a large supply of available Capital, and finally the huge and far-reaching developments made in a wide range of sciences had in the Innovation Cycle made available a range of base technologies greater in number, and more revolutionary in their consequences than anything previously seen in human history. The developments in Computer Technology with computing power doubling every 18 months, and the subsequent ability to fuse that computing power into the development of other areas of science, in bio-technology etc. meant that these developments went deeper and faster than anything seen in previous cycles. A look at some of those developments from DVD’s to the Internet, Genetically Modified Food to Gene Therapy, the wide application of mobile technology, the digitisation of the whole of life etc. indicates the revolutionary scope of these developments, not just in a plethora of new consumer goods just aching for Capital to find its way into their production, but, in revolutionary methods of production and distribution that slashes costs at a faster rate, and thereby makes possible the rapid take-up of new consumer goods, unheard of even for consumerism.

If we want to understand the current conjuncture we have to ask what of those conditions for the boom still exist, and how powerful do they remain. The first observable reaction to the new boom comes from the reaction of raw material prices. As production is ramped up, and demand for these commodities rises quickly, so prices rise, because during the preceding downturn no investment in new mines, quarried is undertaken. Supply is unable to respond to demand pushing prices higher. Eventually, these higher prices can act as a drag on further growth, but usually before that happens new supply from feverish investment in new mines and quarries resulting from the high prices and profits kicks in after about 12 years. A look at the current picture shows that as the new boom started in 1999, demand for materials rose sharply setting off a spiral of rising prices. That in turn started a goldrush of new investments in Kazakhstan, Latin America and parts of Africa like Angola and Congo opening up Gold and Copper mines, and quarries for every kind of industrial metal you can think of. But, it takes 7 years to bring a Copper Mine on stream, and so in the intervening period prices continued to rise. Oil followed suit, but with the added factor of Peak Oil.

The usual feature of new dynamic economies leading the Boom materialised in the form of China and India, and both began to mobilise the vast numbers of new workers needed from a dissolution of their respective peasantries. In the developed economies unemployment fell steadily, and due to Labour Market rigidities all developed economies sucked in large numbers of migrant workers to do the lower paid jobs that domestic workers shunned. In the meantime, to create the kind of workforces that these economies would need for the new types of production that they would be forced into with mass produced manufactured goods increasingly being produced in low-wage economies, the developed economies increased spending and pressure to engage in higher education, or skills training, in the same way that they had previously at the turn of the last century been forced to introduce state education to provide the kind of minimally educated workers that industrial production required.

In both cases low levels of worker organisation and lack of leadership meant that workers demands remained subdued. But, as both Trotsky and Hobsbawm have pointed out, one consequence of the Long Wave boom is that after a period, workers see that instead of regularly firing, employers are hiring.

See: Trotsky – The Curve of Capitalism Development and

Hobsbawm – “Industry and Empire”

They find they can bargain for higher wages, even if only by moving to a higher paying employer at first. Over time they become bolder, rank and file organisation and militancy rises, and eventually new leaders are thrown up. For much of the current decade that has not yet materialised. In the developed economies struggles remained largely defensive, particularly in Britain and the US whose huge debt overhang limited the strength of the upturn. But, in recent years there has been increasing signs of worker confidence and militancy in China and other Asian economies. In Europe too in France and Germany in particular the strikes have become more offensive than defensive in nature. Even in Britain the tanker drivers strike last year that won large pay increases was a first sign of an offensive rather than defensive aspect of workers struggle. But, as yet those struggles have not reached the kind of levels where as in the previous Long Wave Boom of the post war period they begin to constrict the Rate of Profit – for example see Glyn and Sutcliffe’s analysis of that during the 1960’s – “Workers and the Profit’s Squeeze” – Andrew Glyn and Bob Sutcliffe – See also Andrew Glyn

Nor, unfortunately, have we seen the kind of rank and file organisation of workers that emerged during the 1960’s yet – though this could also be due to changes in the structure of employment in developed economies, let alone the bringing forward of new leaders.

Despite rising, raw material prices, unit costs have largely fallen due both to an extension in production and subsequent economies of scale, but inevitably as a result of the rapid take-up of many of the new techniques and inventions referred to earlier. Roboticisation has taken over from automation in many factories and warehouses. In all aspects of life the introduction of computers and of the Internet into almost every home has revolutionised not just consumption, but production and distribution. From online shopping to online banking. You can even now book your doctors appointment and repeat prescriptions online, not to mention get your own diagnoses from a plethora of medical websites. If you have to go to the supermarket the till operators are already being replaced by self-service tills. RF tagging of products helps track inventories, as well as prevents theft. As the prices of food and other basic items have fallen in relative terms to incomes so whole new areas of consumption have open up to replace the income previously spent on them, whether it is the latest mobile phone with camera, games, Internet access and built in tooth brush, or whole new areas of leisure and entertainment, many stemming from the products arising from that Innovation Cycle.

In fact, from what we can see at the moment that process is still in its infancy. If we compare with the post-war boom then we would still only be in 1959, with all of the technological developments of the 1960’s ahead of us, except this time it’s the 1960’s on steroids. All of that means that even as raw materials rise, and wages rise the rate of profit is set to continue at high levels.
And that high rate of profit, together with the profits racked up by primary producers for their higher priced raw materials and foodstuffs has meant that Capital Accumulation has been rapid over the last 10 years. Vast sums of Capital have accumulated in various funds around the globe, some still waiting for an outlet into some new venture, keeping interest rates low, and thereby enhancing profits of enterprise further.

In short all of the factors that lead to and sustain the Long Wave boom not only remain in place, but remain robust.

Sunday, 29 March 2009


A while ago I wrote that at the same time that Money Capital - or sections of it - were suffering as a result of the Credit Crunch, there would be undoubted winners within that same process. Whilst, huge dedbts had built up, even huger cash balances had built up on the Balance Sheets of some companies as a result of the higher rate of profit, and its translation into increasing volumes of profit as the Long Wave boom proceeded over the last 10 years.

I argued that other sections of Capital - Industrial Capital and Merchants Capital - that had built up these large csah balances were already beginning to encroach on the territory of the Money Capitalists. Some it has to be said, such as GM with GMAC, and GE Capital not so well, as they made teh same mistakes as the Money Capitalists themselves. But, others such as Tesco had succesfully used their huge cash flows to finance entry into the provision of Credit via Credit Cards, Loans etc.

Its just been announced that TESCO is now to open 30 banks in its stores, and is likely to begin offering mortgages! Perhaps, yet another sign that the Credit Crunch is ending, and that finance is beginning to find its way around the economic system!

Co-op and Britannia Merger – Vote yes, But…

Voting papers have gone out to members of Britannia Building Society to approve the merger with the Co-op Bank, which should be ratified at the meeting on 29th April. See: Co-op – Britannia Merger . The new Bank, with assets of £70 billion, will be a part of the Co-op Group. In light of the financial crisis hitting Capitalist Banks, the merger joining together two organisations that have largely kept clear of the chaos around them, and which have links to the Labour Movement is to be welcomed. As the International Co-operative Association put it in their submission to the G20,

“At the same time, those same world’s citizens know that there is an alternative secure, stable and sustainable model of business owned and controlled by 800 million people worldwide. It is true to its global values and principles of self-help, sustainability, community ownership and control, democratic participation, fairness and transparency. It is a model of business that is not at the mercy of stock markets because it relies instead on member funds for its value; and is not subject to executive manipulation and greed because it is controlled by local people for local people. It is a business where the profits are not just distributed to its shareholders,but are returned to those who trade with the business, thus keeping the wealth generated by local businesses in the local community for the good of the local environment and families.

This is the co-operative sector of the global economy which employs 100 million people worldwide. It is no coincidence that the world’s most successful and stable economies generally also happen to have the world’s most co-operative economies.
It is also no coincidence, that those co-operative businesses that have stayed faithful to cooperative values and principles, are the same businesses that in recent weeks have benefited from the flight of deposits and bank accounts from the failing and collapsing investment houses and banks – an acknowledgement of the continuing trust with which they are endowed by the general public.”

See: ICA Open letter to G20

Of course, not all mutual Building Societies performed so well as the collapse of the Dunfermline Building Society shows, which seems to have engaged in some of the same risky operations that other Banks such as Northern Rock came to grief on. Its Chairman, who presumably was responsible for those actions, now has the nerve to criticise the Government for not bailing him out for those actions. The best thing would be for the Co-op to pick up the healthy bits of the business. In fact, the best thing would be for the merger with Britannia to be just the first step in a process of bringing all the Mutual Financial organisations under the auspices of the Co-op Bank. With one proviso….

The example, of the Dunfermline shows that the principle of a Co-operative Bank is only as good as the actions of its members to ensure that the Bank acts in a way that is responsible, and in the interests of the millions of workers who own it. The problem with all of the Co-operative and Mutual sector is that just as few workers take part in their Trade Union, so too few workers take an active part in controlling the Co-op and Mutual organisations, of which they are the owners. That is why members of the Britannia should vote yes to the merger, but workers must begin to take an active part in controlling the new organisation. The Trade Unions themselves have a large role to play here. The Trade Unions need to mobilise their active members to also take an active part in the meetings of these organisations. More than that the Labour Movement needs to take an active part in democratising these organisations. At the moment the democracy within them is purely formal, often members are presente with a fait accompli – Vote for or against this or that resolution, this or that Board Member. For example, I’ve been unable to find out from the Co-op Members website where my Local Area is, or who the representatives are. Last time I checked the nearest meeting was somewhere in Wales, and I live in Stoke!!!

Even so this lack of democracy does NOT make the Co-op a state capitalist institution as Bill Jefferies of Permanent Revolution suggested to me some time ago. For one thing its not owned by the Capitalist State! Its owned by workers. It is directly parallel to the Trade Unions which are also workers organisations, but which need a root and branch democratisation. The two things go together with the need to rebuild the Labour Movement including the Labour Party from the grass roots upwards. Its not going to be easy, but there is no shortcut.

Saturday, 28 March 2009

The Economics of Co-operation - Part 2

What then are the progressive features of Capitalism as it currently exists, and how can those features be advanced. How can the reactionary features of modern Capitalism be negated?

The following features can be listed as generally progressive and leading to a raising of productive potential.

1. Large scale production of mature commodities. Contrary to orthodox economic theory, which posits the onset of diminishing returns beyond a certain level of output, there is in reality no indication for most mature products of such a phenomenon. On the contrary all empirical evidence indicates that for such products alongside greater and greater levels of production goes lower level of costs through the economies of scale. Rationally, such production should be encouraged as an efficient use of man’s resources with the proviso that consideration of transportation costs to markets, including the external costs in terms of environmental damage, be taken into consideration in locating such large plants around the globe. However, such large-scale production necessarily implies a degree of monopoly or oligopoly, which might have a reactionary consequence in terms of the willingness to innovate, to restrict consumer welfare etc. As previous experience has demonstrated addressing such monopoly power through the replacement of a private with a public monopoly does not constitute a progressive solution.

The State as a Capitalist State can only carry on its activities including the provision of goods and services according to the norms of Capitalist production, including all of the limitations that entails – in particular the idea of production for profit rather than for need. Capital in the form of State owned Capital continues to confront the worker as Capital rather than as means of production. In fact, as Kautsky argued it can because of the power of the State confront the worker in a more awesome manner than does private Capital. The worker continues to suffer alienation, and all of the attributes that limit large-scale production by private Capital are reproduced. The alienated worker has no connection with their product or with the final consumer of that product. They have no incentive to work efficiently, in fact, the general bureaucratism that always accompanies the activity of the Capitalist State is likely to ensure that they work if anything less efficiently than under a private capitalist regime, and consequently the products and services produced are often shoddy, and costly. Its clear that only by transferring such production into the hands of the workers can such problems be overcome. But, although such a transformation is a necessary condition it is far from a sufficient condition. A Monopoly simply in the hands of workers need not be any more progressive than a monopoly in the hands of the Capitalist State, or in the hands of private capitalists. Indeed, on its own such an enterprise could make its workers little more than such private capitalists. Such a venture can only be progressive if it acts in such a way as to utilise the advantages of large scale production to ensure both a reduction in costs, and a mobilisation of its resources to meet the needs of consumers now and in the future, that is that the problem of alienation is overcome in practice by fusing the interests of the workers in the enterprise with the interests of their fellow workers in the community at large. In other words it means that the enterprise must be organically linked to the working class, which acts to feed into it, ideas, needs and so on, whilst actual control of the means of production reside with the enterprises’ workers themselves.

Only in so far as these workers directly associate their own individual and collective interests with those of the working class as a whole can this be achieved. In short it implies, a qualitative shift in class-consciousness, and in working class democracy; the establishment of whole new structures of participation and discussion. Only on that basis could workers in these enterprises be persuaded to invest the necessary resources into Research and Development to ensure the creation of new products and designs to meet consumers needs, or to invest in Quality Control measures to ensure an ever improving quality of products and services provided to consumers and so on rather than simply sitting on their laurels and enjoying the benefits of being a monopoly supplier. Yet, it is in these areas that the real benefits of Co-operative production should be greatest. It is in the eradication of alienation as workers make contact with those for whom they expend their Labour that the worker can begin to transform “work” into a normal human activity, through which the worker expresses themselves, and thereby raises the productivity of labour to levels that Capitalist production cannot match. It is through the desire to produce as effectively as possible, and to produce new exciting products that the worker desires for themselves as a member of the community at large that the drive can come to innovate in products and techniques.

2. Technology Sharing. Given the huge costs of developing new products like engines the sharing of technology makes enormous sense. One area where competition continues perhaps to make sense is competition amongst workers to innovate, not necessarily for any financial gain, though there is no reason why under the rules of the Capitalist game that have to be observed at present workers should not gain financially from such innovation, but, for personal pride and satisfaction, and for the results of that innovation to be shared. At the present time such innovation under Capitalism is restricted. The large monopolies technology share with each other for their mutual benefit, but only amongst themselves. Although, some specialised workers engaged in R&D Departments may be well-paid to engage in such activity, the huge reservoir of talent that resides within the workforce in general is not utilised, and even the R&D workers remain just workers with no immediate incentive to innovate. More generally, monopoly capitalism is marked not by such technology sharing, but by the opposite, by commercial secrecy, by the protection of innovation by patents, etc. In some of the most important areas of life such restrictions are immediately harmful to the public well-being e.g. in the development of pharmaceuticals.

Although, a Worker Co-operative would have no reason to share its technology and innovations with private Capitalist enterprises, Co-operative enterprises operating as part of a broader Co-operative holding Company would have such an incentive, because with profits going to the holding company all workers in the Co-operative sector would directly benefit from the increased profits that would accrue from the rapid take-up across the sector of such new products, techniques and so on. Further arrangements to directly benefit the innovating enterprise by some kind of licensing arrangement or other financial inducement could also be considered.

3. Planned Production. The introduction of enterprise planning techniques, many of which have been learned from the experience in the USSR, represent a progressive development within Capitalism. However, it has to be remembered that although these techniques are similar to those that would have to be utilised in a socialist society the content and intent is completely different. A socialist society would use planning techniques such as Market Research and so on to determine the needs of society in order to allocate resources so as to best meet those needs. Capitalist enterprises utilise such techniques in order to maximise their own profits. A Workers Co-operative operating within a continued Capitalist environment would have to walk a line between both. A socialist society can allocate resources to fulfil a need for certain social goals irrespective of whether the enterprise/s producing those use values do so at a profit or not, because society as a whole decides to do that, and finances it by diverting surpluses created elsewhere in the economy. A Workers Co-op within a Capitalist environment cannot do that for the obvious reason that any resultant losses will not be financed.

However, the opposite is not true. Whereas, an individual capitalist enterprise produces to maximise profits in the long term, the worker co-operative has no such imperative. It may not even have to produce profits at all on an individual basis. Very large Capitalist enterprises may well operate on a basis in which certain parts of their business produce no profit, for a number of reasons. One Department might produce inputs for another department, and the losses of one are the gain of the other. Production may continue at a loss in one Department if that production makes a contribution to the enterprises overall fixed costs. In other words, if that production ceased the firms fixed costs then had to be borne by the remaining Departments who as a result produce a lower overall amount of profit than was previously the case. But, enterprises have to make a profit overall – at least in the long-term. But, the worker Co-operative might have other goals than simple profit maximisation. It may engage in some form of market research in order to determine consumer needs, and then plan its production not to maximise profits, but to maximise the long-term employment stability of its workers. As part of a C-operative holding Company it might produce at a loss, in order that its products can be used by other Co-operatives profitably giving them a competitive advantage over their private competitors and so on.

Planning by Capitalist enterprises is also restricted in the obvious sense that each enterprise seeking to maximise its profits works with closed books and commercial secrecy. Its planned decisions are not shared with competitor firms, and so the underlying planning assumptions of each firm may well turn out to be false. Each enterprise might think it knows what capacity its competitors has and its ability to expand that capacity, it may expend resources on employing industrial espionage to uncover those secrets and plans, but it can never really know what they are going to do. Experience in the realm of microprocessors over the last couple of decades has shown competing firms spending large amounts of money on new capacity only to find that their competitors have done the same creating a resultant glut. Economic theory describes such behaviour in terms of the cobweb theorem which shows the way such production decisions rather than leading to conditions of equilibrium, rather lead to ever wider disparity between demand and supply.

See: Cobweb Theorem

But, a worker’s Co-operative as part of a Co-operative Federation would work with open books in relation to other Co-operative enterprises. Not only would each Co-operative enterprise in a particular industry have an incentive to share its plans with its fellow co-operatives, because in doing so it would avoid making costly investment decision mistakes, but it would have an incentive to share such information both with its suppliers to ensure that they could gear their own production plans to its needs for inputs, thereby avoiding dislocation and costly hold-ups, but would have an incentive to share those decision with those which it supplied for similar reasons, particularly in the case of co-operative retail outlets, which could be an important secondary source of consumer information and feedback.

4. Globalisation

One of the reasons that Capitalism has revolutionised production has been its ability to take the division of labour to new heights. Its pinnacle is the globalisation of production. The latest Nobel Laureate for Economics Paul Krugman won for his work on analysing trade patterns. He asked the question why was it that trade cannot be theorised in the terms of Ricardian Comparative advantage, why is it that some countries produce essentially the same products, but trade these similar products between them? His answer was simple – economies of scale. It does not make sense to produce at a single car plant small batches of 5 different models. It makes sense to produce a large number of one model. It then makes sense to produce the other 4 models at 4 other plants, and these can just as easily be in say Canada as in the US, resulting in trade between the two.

Although, there has been a lot of opposition to globalisation in recent years focussing on the exploitative nature of such investment in poor countries a lot of this opposition has, in fact, been ill-thought through. Most of it comes from that “anti-imperialist” Left, in the West, that also lines up with assorted reactionary “anti-imperialist” forces in some of these countries that are the immediate and real enemies of the workers there. In fact, for the same reasons that Marx saw Capital performing a revolutionising role in India, and Lenin saw it performing in Tsarist Russia, globalisation performs a truly revolutionising role in industrialising poor countries, and creating the basis for them transcending Capitalism through the creation of powerful new Labour Movements. Of course, Marxists do not condone or encourage the oppression and exploitation of workers in this country, but the solution to that as in the opposition to the rule of Capital at home is to organise the workers into Trade Unions, Co-operatives and Workers Parties, not to condemn the peoples of these countries to perpetual backwardness. Of course, workers here are limited in what they can do to assist such a development in poorer countries simply through their Trade Unions, and campaigns such as “Fair Trade”, which focus simply on consumerist boycotts and so on can never provide a real solution to the workers in these countries. But, Worker Co-operatives can, because they have a direct incentive to assist in the development of worker owned Co-operatives in those countries, and to integrate them into such an international Co-operative conglomerate.

Such a development is a direct means of ensuring direct technology transfer into these economies, and the immediate effect that would have in raising both the productivity and living standards of workers there. It would also provide a powerful motive force to encourage further development, not to mention encouraging further such Co-operatives and he consequent effect on workers class consciousness and the facilitation of the development of Labour Movements and Workers Parties.

In short the spread and co-ordination of Co-operative production on a global basis is a direct and practical application of the slogan – “Workers of the World Unite”.

5. The Greening of Business

In recent years business has responded to the growth of environmental concerns by taking on board green issues. Even Investment houses have established so called Ethical Funds, which only invest money in companies that conform to some code of ethics, be it in terms of environmental impact, avoidance of trade with certain regimes and so on. Some of the leaders of these companies do actually seem to be committed to these ideals, but in large part it is, of course, just a marketing exercise, intended to win market share from that large number of middle class consumers who wish to assuage their consciences. In the end, capitalist business will continue to attempt to maximise profit – the current downturn has seen a marked move away from concern for such issues by companies that have tried to maintain their bottom lines – and this is just a ploy to that end. Having said, that in the process some useful tools have been developed in the way of Green Audits, Carbon footprinting and so on that will be useful to workers in developing Co-operatives that really do have a concern for the environment.

More than that, it has become clear that the amount of investment that should be being directed to green industries is not being made, partly due to the frictions that arise from large amounts of Capital remaining tied up in traditional monopoly capitalistic business. Considerable scope exists for Co-operatives to expand into these new technology areas, which because they are at the leading edge tend to have a low organic composition of Capital in their initial stages – that is they require relative small amounts of Capital compared to the high value intellectual Labour involved in developing new technologies and technological products – but which have high value added, and potentially high growth rates driven by exceedingly high rates of profit. A Co-operative conglomerate could and should help to foster such industries and development.

6. Taking on the socialised production of the state

In the twentieth century the State socialised considerable functions important to the running of a modern Capitalist economy. It provided an educated workforce via State Education, it provided a healthier longer-lived workforce via socialised healthcare, it socialised social care through National Insurance Pensions, Unemployment Benefits etc. in order to maintain a calmer social order, and more compliant workforce, it socialised Housing Provision through the construction of Council Housing and so on.

During the Long Wave downturn from the mid 90’s to the end of the 90’s it rowed back from some of these programmes as the cost became too high, reducing them to minimum levels, and where possible privatising provision. As I have written previously it was no coincidence that the State introduced National Insurance just at that point where workers living standards had risen to a level where their own Friendly Societies could have become well-financed Social Insurance organisations directly owned and controlled by workers, and instead diverted those funds into the pocket of the Capitalist State, for scant return, and no control. Marxists should not support the privatisation of these functions, but we should look to transfer them back into the hands of the workers themselves so that the workers have control over their own finances, and can use them for their own purposes not to finance some latest idea of the Capitalist State such as building a new Trident nuclear submarine and so on.

In the news today, for instance, was the crisis over housing. One of the BBC Newsreaders asked the Government spokesman why with lots of unemployed building workers, and lots of housing needed the Government could not itself simply employ those building workers, providing them with a job, and the homeless with a home. Of course, no reply was forthcoming. But, we should not expect the Capitalists’ State to do that anymore than the Capitalists themselves. It operates according to the same principles of profit, and concern for the profit of the Capitalists who would pay the taxes to finance such a scheme. They work according to different criteria and interests to us.

But, the point itself can be addressed to the workers movement itself. The Co-operative Bank is in the midst of a £70 billion merger with Britannia Building Society. The latter as a mutual BS is controlled by its members as is the Co-op. Both have links with the Labour Movement, and the Co-op in particular through the Co-operative movement. Brittania finances people to buy houses, the Co-op Bank in addition as part of its business helps finance businesses. It seems obvious to me that the focus of attention of the merged organisation should be to prioritise and direct their funding towards a) the creation of Housing Co-ops, which can buy up existing properties that are empty, and the construction of new co-operative housing, and b) towards the financing of worker-owned and controlled construction Co-operatives that could employ some of those unemployed building workers at decent rates, and who could then build and maintain the former housing thereby not only housing the homeless, but who through their rents/and or mortgage repayments would not only replace the wages and costs of the Co-operatives, but would create a large new pool of finance to cover the expansion of the Co-operative Housing sector.

The solution to these problems lies within our own hands, if we only mobilise to bring it about rather than sitting back and waiting for the bourgeois state to do it.

7. The Decentralisation of production

As the introduction of new technologies has once again revolutionised production, so property forms and social relations are once again undergoing change, and the form of co-operation is once again changing in consequence. Alongside all of the above, the concentration of production etc. is occurring a contradictory development, not the concentration of production, but its decentralisation. That has come about as a result of a number of developments.

Firstly, mass production led to automation, and automation has led to computerisation and roboticisation. Where mass production manufacturing has not already been shifted overseas it is now undertaken in huge factories that employ few actual workers, and where many of the repetitive jobs have been taken over by robots. There are already a number of fully automated workplaces. Similar, transformations have occurred in distribution too. Point of Sale terminals in stores now send instructions directly to computer systems that automatically place orders with suppliers once some minimum stock level is reached, and those computers communicate directly with the suppliers computer to make the order, which in turn sends those instructions to robots which pick the necessary products from the shelves, and take them to be shipped out. Now even the shipping function might be further automated. Not only do the huge freight ships have very few crew for their size, but a new technology is being introduced, which will enable a convoy of vehicles to be led by a single lead vehicle with a driver, whilst the others are computer linked to it behind!

Even in banks and other service industries, computers have replaced cashiers, and increasingly banking is done electronically by Internet. It cannot be long before the cost of maintaining large supermarkets and stores becomes such that the advantages of online shopping will see a change in that area to. Already online shopping is increasing at a far more rapid rate than through retail outlets. And in high cost areas, already there is a move to avoid the high cost of office space by encouraging home working. The danger for workers of such a development is of isolation and atomisation, undermining collective bargaining power.

The simple answer to that is to use the techniques that peasant producers have developed in Europe, the establishment of marketing and distribution co-ops. In fact, such a solution could be useful as a response to the increase in casualisation of labour. In other words workers could form their own distribution Co-ops that acted as suppliers of labour power. It would in fact be a way of replacing all of those private manpower agencies that rip workers off and provide them with no protections in the supply of temporary and part-time labour to minimum-wage paying employers. A Co-operative Labour exchange of this kind could act as a monopoly supplier of Labour Power to Capital, thereby raising the price of labour-Power as a commodity, and putting an end to the back street sweatshops.

But, more than that already there has been established Co-operative ventures into the world of ISP with Poptel. Not only should such Co-operatives be developed, but a Co-operative for homeworkers could also ensure that the potential for their atomisation was overcome, and their services could be marketed by such a Co-operative over the Internet.

And as I have said, previously the tendency is increasingly towards consumer spending on Leisure and entertainment as living standards rise and spending on traditional consumer items declines as a percentage of spending. That together with the Internet and the cheapness of much of the required technology has led to the growth of new artists and creative people selling their product over the Internet to a global marketplace. Again, such production is highly suitable to organisation and distribution through a Co-operative. In fact, a Co-operative for Creative people already exists - Creative Co-op . If all of those socialist film directors, writers, musicians, actors and other creative people were to combine their talents in such a Creative Workers Co-op what a tremendous force that would be to undermine the monopoly of bourgeois ideas, and the bourgeois media!

Back to Part 1

Forward to Part 3

The Economics of Co-operation - Part 1

Economics undergraduates are given a definition of Economics, which basically says that it is the study of the “allocation of scarce resources to meet unlimited wants.” Its an inadequate definition shaped by the concerns of the dominant Western School of Economics that arose out of the “Marginal Revolution”, a revolution which shifted the emphasis from what the study of Economics had until that time been about – essentially HOW society goes about producing what it produces, the laws which determine what things are produced and how that impacts on the way they are distributed – on to the mundane question of how efficiency and welfare can be increased by reallocation of inputs at the margin. In defining Economics in this way, it cuts out all possibility of raising the most important questions, which any study of Economics as a study of human society, need to raise.
The framework in which this optimal allocation is most frequently posited is that of so called Pareto Optimality. This can be summarised as saying this. Given any set of original conditions, an optimal state is reached – say for production – where no reallocation of resources, factor inputs, can result in an increase in output of at least one product without a consequent reduction in output of all other products. Similarly, and as a concomitant of this no reallocation can result in an increase in welfare for at least one person, whilst resulting in no reduction in welfare for every other individual.

It can fairly easily be seen what is wrong with all this. Take the definition. Is it true either that there are scarce resources, or unlimited wants? For thousands of years, the Plains Indians in America faced no such dilemma.
The fortunate topography of where they lived meant that there was abundant food resources in the form of herds of bison and other animals, and there was an abundance of root vegetables as well as fruit and nuts ample to feed the population. The climate and wide open spaces meant that the need for shelter and warmth could be accomplished and so on. Moreover, the Indians had lived their lives for all that time with a culture and limited range of needs that these ample resources could easily meet. They would have failed to understand the meaning of this definition of Economics. In fact, the idea of unlimited wants is a rather recent phenomenon. The Medieval peasant
whilst having a wider range of wants than the Plains Indian had a much more limited range of wants than the average person in today’s consumer society. It is one reason why for very long periods of time peasant societies were content to continue to use their traditional means and methods of producing in order to satisfy those limited wants. It is Capitalism, which in its need to continually expand the market, expand the scale and range within which Capital can operate and expand, which creates the idea of unlimited wants. It is Monopoly Capitalism, which needs to produce on a huge scale in order to enjoy the benefits of the economies of large scale production, which needs to keep its huge investments of fixed Capital constantly employed, and which relies on the consumption of millions of wage workers, which creates through sophisticated advertising and marketing, through the provision of consumer credit, the idea of unlimited wants, of a consumer society, or “retail therapy”, based on instant gratification through the continual purchase of ephemera, of throw away products.

A Plains Indian or a medieval peasant would probably look on in bewilderment at such a society. Often to explain economic principles Economists have referred to Robinson Crusoe on his island. Generally, such examples are rather facile, but they can sometimes illustrate a point. Imagine poor Robinson operating by such means. With his limited resource – his Labour Power – he deliberately, produces a pair of trousers that will quickly wear out, just so that he can keep himself busy some other day making a new pair of trousers, instead of spending his scarce Labour Power on producing something else that he requires!

And if we consider those Pareto Optimality conditions the obvious point is that they fail to consider some important issues. By simply accepting, the original starting points they rule out any question of how the different economic players arrived at that original factor endowment.
So the fact that one set of actors – the owners of Capital – arrived at that position by piracy, thieving or other unsavoury methods is not considered, along with the fact that other actors those who only have Labour Power as a commodity to sell, perhaps arrived at that position because they had had their means of production thieved from them! It can only tell us what is an optimum allocation on the basis of those original conditions. It does not tell us, for instance, if some other set of factor endowments were the starting point whether some new optimal condition could arise that would be even more efficient, create an even higher level of welfare than that first optimum.

Furthermore, it is a static model of optimality. It effectively assumes that the re-allocations of resources has no consequence for the nature of the factors themselves. But, this is quite clearly an untenable assumption. Take Capital in the form of machines and equipment. It is not homogenous and unchanging.
A reallocation of inputs might create an optimum condition provided we assume that no such change occurs, but it could be that a diversion of resources might result in the production of a machine that is twice as effective as current equipment, and consequently the efficiency of Capital against Labour is fundamentally altered. It would imply a reallocation to divert resources to employing more Capital and less Labour. Similarly, simply assuming that a change in welfare that results in the increase in welfare for already rich Capitalists, whilst no reduction in the welfare of workers, will have no negative consequences is also a rather silly assumption. It can be fairly well assumed that workers will react to such a change either by demanding higher wages for themselves, or else reducing the productivity of their output by various means.

I don’t start with this apparent diversion for no good reason. I do so in order to point out the limitations of attempting to study the economics of Co-operative production using the usual tools of orthodox economics. Although, I intend to look at those orthodox theories, and to deal with them in their own terms, I hope to show why the assumptions generally used have to be modified, and I also hope to show that the use of Marxist Value Theory is a better guide to understanding Co-operative Production and distribution.

Although, its not overtly stated, the Paretian model is always presented as though this allocation of resources to maximise production and welfare is effected through a competition between and for inputs. In other words an assumption of a competitive market. That is not essential. In fact, the Paretian Economist, Oskar Lange,
was one of those who showed in the 1930’s that the claim of Von Mises and others that planning was impossible, because its impossible to calculate efficient prices, was wrong. But, it is fairly unsurprising given the fact of the ruling capitalist ideas, that a general assumption of competitive behaviour is made, the notion that Man himself by nature is competitive. In the year of the centenary of Darwin’s “Origin of the Species”, it also has to be admitted that whatever the general benefits that have derived from that theory, it along with Darwin himself, who, in later editions of his work, took on board the concept of “a war of all against all”, has contributed to the idea of Man as a naturally competitive animal like all others. Its worth I think before proceeding further to just look at that idea, and check its validity. In fact, I would argue that far from such competition being natural it is the very opposite.

If we think about most animals we in fact see Co-operative behaviour at least as much as competitive behaviour. Animals congregate in herds, because they provide protection against predators, particularly as means of protecting the young. Every member of the herd acts to keep watch and convey any sign of danger to the rest of the herd. Similarly, predators often hunt in packs combining their actions to best secure the kill.

In fact, its long been known that even animals thought to be natural enemies are only so, because of the environment in which their behaviour is conditioned. Experiments with animals have shown that through conditioned reflexes, far-reaching alterations in the environment have the effect of abolishing aggressive tendencies, which were once thought to be “unchangeable”. Its been shown that its possible to get cats and rats to co-operate peacefully provided you start the training early enough, and provided the obtaining of food is based on co-operation. As Zing Y. Kuo put it “Genesis of Cat’s Responses to the Rat”, in Journal of Comparative Psychology Vol II 1931 p35, “Nothing is more natural than for the cat to ‘love’ the rat. And if one insists that the rat has an instinct to kill the rat, I must add that it has an instinct to love the rat too.” In nature behaviour is what can be built in and not what is supposed to unfold from within. In the same journal Loh Seng Tsai came to a similar conclusion in his article “Peace and Co-operation among Natural Enemies”.
Both are quoted by the eminent American anthropologist Ashley Montagu in his book ”Direction of Human Development” see pp 34-5, 35-8. See: Montagu .

Langois even undertook similar experiments with perch that were presumed to be cannibalistic and showed they could be trained not to be. Montagu concluded,

“Slight changes in the environment are sufficient to change the behaviour of creatures from a cannibalism that was erroneously thought to be instinctive to social behaviour that is co-operative.” Op cit p44.

More recent studies also demonstrate that animals can co-operate.

Science Daily

Elena Berg Co-operative Jays

In fact, there is profusion of evidence of Co-operative behaviour in the natural world, and recent developments of Darwin’s Theory demonstrate why that is.
As Richard Dawkins has argued in The Selfish Gene what characterises natural behaviour is not a desire for the individual member of the species to survive and multiply, but the need for the SPECIES to survive and multiply, and so altruistic or co-operative behaviour amongst members of that species is the most effective way of achieving that end. This explains why some ants or bees give up their individual rights to pass on their genes, and live their lives servicing the hive instead.

It is unlikely that what is a basic urge within nature is not present in Man himself. In fact, as Mandel outlines in ”Marxist Economic Theory” there is more reason to believe that this altruism and co-operation is more natural in Man than in all other parts of Nature. As Ashley Montagu puts it in his book “Direction of Human Development” and also in Malinowski’s “A Scientific Theory of Culture” p209, competition is a tendency which is not “innate” but socially acquired. And as others have noted, of all the higher mammals it is the very biological nature of man, which makes him more disposed to co-operation, solidarity etc. than to competition. Man is a social being not just in the sociological sense but in the biological sense too. He is born in the weakest state of all the higher mammals, least protected and least capable of self-defence. Anthropo-biology considers Man to be an embryo prematurely born, one of the reasons for his greater adaptability thanks to socialisation, in fact its now thought that this is one of the features that leads to the creation of Modern man as a species. (See Portmann “Die Zoologie und das neueste bild des menschen pp74-76 and La barre “L’Animal humain” pp5051)

And, again as Mandel points out even studies undertaken in the most unpromising conditions – those of Nazi Germany – have confirmed this. Professor A. Gehlen in fact conducted one of the studies, which proved this, under the Nazi regime. See “Der Mensch” pp39-40 and Portmann “Die Zoologie und das neuest bild des menschen” p14. The Nazis tried to direct anthropology towards the study of “unchangeable biological characteristics” of “racial substances” and the like. Scientific truth showed itself stronger than these charlatan appeals even though the Nazis had massive state power behind them. As Gehlen concludes from his studies what is distinctive about man is precisely his capacity for adaptation, his capacity to create a second nature in the culture, which forms the only framework in which he can live.

(The above taken from Mandel “Marxist Economic Theory” pp 669-71)

So discussing Co-operation in terms of Economics as a means of Man achieving his basic needs is not in some way to suggest a change in Man’s behaviour, certainly not to suggest a change to a way of producing that is alien to Man, but is really to look at the specific ways in which that Co-operation has manifested itself in the past, how it is manifested within present Monopoly Capitalism, and how the current material conditions lead towards future such Co-operation, and the most effective means of organising it. The forms of Co-operation depend upon the forms of property that exist in society, and those forms of property in themselves depend upon the nature of the productive forces at any specific time, and the productive relations which grow up on those forces.

The most primitive forms of Co-operation arise within the most primitive societies where the limited nature of the productive forces prevents the development of private property in the means of production as a decisive social force. At its most basic level we can consider human society arising out of the animal world with packs of humans as hunters and gatherers with very little in terms of weapons or tools to assist their productive efforts, and whereby co-operative effort is essential. In fact, one of the techniques used by North American Indians involved no weapons at all, but consisted in driving the Bison towards a cliff or ravine into which they fell to their death. But, the first such weapons and tools would have been available materials – sticks to scrabble in the Earth with, or to sharpen as spears, rocks to throw or again to sharpen for use as a cutting blade. But, such tools would have formed a small part of the human activity of production. Quickly, worn out, destroyed there would be little in the way to be retained by the individual hunter-gatherer in the way of means of production. The main element would be the combined and collective effort of the members of the clan or tribe, and that collective effort in production would find its concomitant in the collective consumption of what was produced.

Even when society develops beyond such primitive levels and tools become more durable and passed on within the family such co-operative behaviour continues not because it is economically necessary in the strict sense, but because it gives other benefits, benefits which orthodox economics does not take into consideration when evaluating the responses of Labour as a factor input within a competitive model.

”The interest of primitive work is increased, and its drudgery mitigated, by the fact that it is often co-operative. Major undertakings, such as house-building or the construction of large canoes, usually require the labour of more than one person. And even when the task concerned could be done individually, primitive peoples often prefer collective labour. Thus in Hehe agriculture much of the cultivation is done individually or by small family groups. But at the time of the annual hoeing of the ground, it is customary for a man to announce that on a certain day his wife will brew beer. His relatives and neighbours attend, help with the hoeing, and are rewarded with beer in the middle of the day and in the evening. This is not to be regarded as payment, since casual visitors who have not helped with the hoeing may also take part in the beer drink. Under this system, each man helps others and is helped by them in turn. From the purely economic point of view, the system has no advantage, since each man could quite well hoe his own ground and the preparation of beer adds substantially to the work involved. But the system does possess psychological advantages. The task of hoeing might well appear endless if undertaken by each individual separately. Collective labour, and the collateral activity of beer-drinking, changes a dreary task into a social occasion. The same principle applies to collective labour in general in primitive society, and to the social activities of feasting, dancing and other forms of collective enjoyment which frequently accompany it or mark its conclusion.”

See for example: An Introduction to Social Anthropology – Piddington .

Even the development of slave society does not abolish such Co-operation in production, but the form of Co-operation changes. For the slave certainly it changes, the slave is now required to co-operate with other slaves in order to undertake production typically on some large plantation, or in some mine but as the property of the slave owner the slave does not engage in such co-operation on the basis of their own free will, not out of some desire for mutual advantage in bringing about a higher level of productive efficiency, nor even as described above by Piddington to reduce the tedium or unpleasantness of the work, but solely on the instruction of the slave-owner, who already recognises the advantages of the division of labour, whose concomitant co-operation is.

Moreover, it has to be remembered that even in the most successful slave societies such as the Roman Empire only a minority were slaves. At most around 30% of the population were slaves, though the figure is likely to have been much smaller than this. See: Slavery The majority of people were peasant producers with also a sizeable number of artisans as trade had a large role in the City States. And, although peasant production represents individual production par excellence, most peasants through to perhaps as late as the 18th century continued to live in some form of communal organisation be it a clan, or as in the case of Medieval Europe the Village Commune, and with similar structures within the Asiatic Mode of Production. Clan ownership of land continued until the Highland clearances in Scotland, and in Ireland clan ownership of land continued until it was forcibly destroyed by the British in successive apportionments to those who assisted the British State. Through until the General Enclosure Act in England of 1801, and similar measures throughout Europe, alongside the village commune stood the Common Land, owned and used in common by all the peasants and landless labourers.
And in the US even into quite modern times the principal of co-operation still existed even amongst the most individualistic of peasant farmers in the custom of “barn-raising” whereby farmers would all join together to help build a new barn for one of their neighbours, in a way reminiscent of the accounts given by Piddington above.


Medieval Commune
Barn Raising

So, it is important to remember that even at the height of the age of individualism in the 18th century, an individualism that arises out of the nature of the form of individual, self-sustaining peasant production that leads to the development of the Libertarian
ideals of that century summed up in the writings of Rousseau, co-operation continued to be a powerful force within human production and life, but its specific form is dictated by the nature of productive relations, and of the property relations which dominate. It is not co-operation as collective action for overall production, as in the case of the primitive communist society, but co-operation between atomised family units for the purpose of mutual support. In a sense we see the same kind of co-operation today in the numerous agricultural co-operatives of particularly Southern Europe. The Co-op is not a collective farm effort, but a joint organisation made up of individual farms for such mutual support, and for the more effective marketing of output, or for the sharing of costs on the provision of equipment etc.

The revolutionising aspect of Capitalist production is that it does away with these individual family units of production and combines them in one large co-operative productive effort. But, where the individual peasant producer shares in common with the member of the primitive commune a decision to engage in co-operative effort out of free will, out of a recognition that such co-operative effort is to their own advantage, the worker in the Capitalist enterprise in contrast shares with the slave the distinction that their co-operation is borne not out of any such mutual benefit, nor even of lessening the tedium or drudgery of the task at hand – on the contrary the raising of the division of labour to previously unheard of heights magnifies those aspects of the work process – but, purely on the behest of the Capitalist who buys their labour power, and who recognises the tremendous power of that division of labour, and of the co-operative production function in order to raise the productivity of labour to every higher levels. It can be summed up like this in the Primitive Commune and the Peasant Commune it is the producer who owns the means of production, and that dictates the motivation for the Co-operation, and dictates its nature. In the slave society and under Capitalism, the producer does not own the Means of Production, and again that determines the motivation for Co-operation, and dictates its nature.

From the earliest human societies to today Co-operation has remained a constant of human labour and production. Its form and function have changed as the forms of production and property have changed.

In today’s Capitalism Co-operation has been raised in production to levels that would have been inconceivable in the period of 19th century free market capitalism. That Capitalism began by farming out production by Merchants to individual peasant producers, and then selling their individual products, increasingly raising their productivity as they concentrated more and more on that production at the expense of expending their labour on meeting their own immediate needs. It progressed by bringing those individual peasants together into a manufactory where, still using handicraft methods their labour could be combined in a co-operative manner to raise productivity, and thereby through the division of labour to increase productivity further by each worker becoming a specialist carrying out one single function, and their labour then being dependent upon co-operation with all other workers each of whom had their own specific function to perform.

But, this co-operation between different aspects of the labour process was only one aspect of the general extension of co-operative labour that Capitalism brought about. Each enterprise was in its turn dependent upon the output of other enterprises in which a similar process of co-operation took place, so that a division of labour occurred not just within the factory, but within the economy as a whole.
Adam Smith set out the idea that this co-operation arises within Capitalism spontaneously as a result of each individual seeking to maximise their own benefits. The butcher does not co-operate in providing meat to their customer out of any sense of altruism, but in order to turn a profit. It just so happens that this act benefits both parties who obtain what they want. Of course, Smith’s notion of the invisible hand here is one that a Marxist would challenge, and other economists too. Joe Stiglitz for example commented, "the reason that the invisible hand often seems invisible is that it is often not there." (Making Globalization Work, 2006).

Yet, the fact remains that in a very real sense Capitalism does raise to a high level this need for co-operation in production. The fact that this co-operation is not planned, that the invisible hand isn’t there, doesn’t change that fact, it only tells us something about the specific nature of Co-operation under Capitalism, its specific form determined by the productive relations and forms of property. In fact, its that criticism of the fact that under Capitalism that Co-operation is NOT planned, which is the fundamental basis for arguing for the rational extension of that Co-operation in a way which overcomes that criticism, which leads to a new form of Co-operation in the form of Worker Owned Co-operatives, and which in their turn form the rational core of the argument for socialism.

In fact, globalisation shows the degree to which Capitalism HAS raised that co-operation already. Globalisation makes every worker in Britain reliant upon tens of millions of workers all around the globe whether that reliance is upon the output of those workers for the clothes they wear, the food they eat, the car they drive and so on, or for the materials and machines they utilise in their own work process every day.

And, although the classical definitions of Capitalism talk about it being based on such concepts as competition and risk, the reality is that Capitalists themselves have always done everything they could to avoid both!!! The first large Capitalist enterprises were themselves Monopolies guaranteed by Royal Charter like the East India Company. From, the end of the 19th century in place of competition the Capitalists instead attempted to develop production based on their own Co-operation first in the form of price fixing agreements, then of cartels, and then of giant Trusts, the whole motivation for which was the removal of competition and risk.
As early as the middle of the 19th century the US Capitalists had forged a close relationship with the State, which provided its Army to clear American Indians from their lands so their railroad could traverse it, and which imposed high tariffs on foreign goods so those Capitalists could develop their own production free from external competition.

And as those cartels and trusts themselves became obsolete as the average size of many businesses expanded to huge proportions as the economies of scale ensured that production had to be conducted on an ever larger scale with ever larger investments of fixed Capital so those firms increasingly had to look to protect their investments in the long term, by looking for co-operation from the State in providing an overall macro-economic environment in which they could continue to invest with a certain degree of confidence, confidence that an adequate supply of suitable labour would be available, confidence that an adequate level of aggregate demand would continue in the economy so that they could sell their commodities at prices that guaranteed a return on those investments.

And in an economy where it is these huge enterprises that effectively determine the market price, and where the main concern is to ensure that their huge investments continue to be fully utilised, the mechanism for determining production, for allocating Capital can no longer be the idea of responses to the price mechanism, but can only be the formulation of long term production and business plans, based on sophisticated market research, demographics etc. and the shaping of the market around the margin by the use of psychologically based marketing and advertising techniques. In fact, except for this latter many of the techniques that a society in transition might use to determine consumer needs, and to organise production to meet them. Even that other fundamental aspect of an economy based on Co-operation rather than competition can be detected within the modern Capitalist economy. In the motorcar industry the huge costs involved have led to a sharing of not just technology, but of the basic building blocks of car construction. Nearly all motor manufacturers now share engines, gear boxes, etc., whilst the application of game theory to design and production decisions ensures – if the latter technical requirements didn’t already necessitate it – that within each range each manufacturer’s products are barely distinguishable from another’s. As the old song used to have it “boxes, little boxes all the same.”

In fact, one form of Co-operative production that began in the realm of computer programming – Open Source – has now even found its way into motor manufacture, as a means of reducing R&D costs. See: Open Source Car at Geneva Motor Show

In fact, if we look at modern capitalism we find that it has been forced increasingly to adopt the basic techniques and forms of a Co-operative, socialist society. Huge monopolistic enterprises engage in market research to determine consumer wants i.e. to ascertain what use values they should produce – though it has to be said that they also shape those consumer desires to fit what they have already committed to – and then develop long term plans to organise production accordingly. Large sections of the capitalist economy are taken out of the circuit of Capital and placed in the realm of direct production of Use Values i.e. provision of services by the Capitalist State such as Healthcare, Education, Roads and infrastructure, Social Services, Security and so on, amounting in most advanced economies to around 40% of all economic activity(See Edit Below). The provision of a “planned” macro environment. The recent examples of State intervention to deal with the consequences of risk taking by sections of Capital in the Bank bail-outs, and probably bail-outs of other sections of Capital, for example in the Motor Industry – even Larry Flynt has now petitioned for Congress to give a bail-out to the Sex Industry (I’ll resist the temptation to say because its fell on hard times) – show how far it is from the concept of Capitalism based on Competition and Risk Taking. The Anarcho-Capitalist variety of Libertarian may well bemoan such facts and conclude that they mean that what exists is some form of Mercantilism or even Socialism, but the truth is that what exists is just the mature form of Capitalism. A Capitalism in which the need to remove competition and risk taking, to enhance Co-operation etc. has been taken to the limit that it can reach within the confines of a still essentially Capitalist economy, an economy in which for all the above features the driving force remains the organisation of production in order to maximise profits over the longer term. The only way in which that process can be taken further now, is to step outside the bounds which Capitalist production imposes and to begin to organise production on a basis other than long-term profit maximisation.

(January 2011 Edit)
They are only taken out of the circuit of Capital in the sense that this is true for all Monopolies. For example, Marx shows how the Monopoly of Land Ownership leads to Capital involved in agriculture being taken out of the Circuit of Capital in the calculation of the Average Rate of Profit. It is this fact, which enables the Landlord to extract Rent. Similarly, an effective Monopoly enables a similar extraction of Rent, which may take the form of Monopoly Profit, or higher rates of wages. However, Marx makes the point that although competition leads to Monopoly, Monopoly also leads to competition. If Monopoly profits are being made, then this will lead to other large Capitalists entering production, or will lead to the development of alternative products. The same is true if the Monopoly leads to the prices of the product rising to levels that are uncompetitive with available alternatives, due to the monopoly leading to a lack of dynamism, and failure to revolutionise technique.

A lot of this can be related to the State Capitalist Sector, and the analysis of Aglietta in relation to neo-Fordism are relevant. Capital should be viewed as a single entity, and each enterprise as just a Department. A large company that provides a creche in order to sustain its supply of Labour Power, does not establish it as a profit making centre. The same company that sets up a gym for its workers to use, again does not do so as a profit making centre, but as a means of maximising its supply of suitable Labour Power. Yet, the Capital involved in providing the creche or the gym remain Capital, remain an expenditure to buy Labour Power, as much as if it had been laid out as wages. The role of the Capitalist State is the same. Its function is to ensure the reproduction of Labour Power, and the provision of State Education, and Healthcare are a central aspect of that function. But, if the company were to prove inefficient in the provision of the creche or gym, compared to some other private provider, then it would be possible for the workers to negotiate with the employer for a rise in wages in return for the employer no longer providing the creche and gym. The employer would raise profits by a reduction in costs, and workers living standards would rise provided the increase in wages was more than the cost of the new provision of creche and gym facilities.

This is essentially the situation workers face in the event that new more efficient provision of Education or Healthcare or other welfare provision opens up by alternative providers to the State Capitalist.

Forward to Part 2

Friday, 27 March 2009

The Cancer of Nationalism in the Workers Movement

A defining moment in the Workers Movement was the decision of the Parties of the Second International, an International which nominally stood on Marxist principles, to abandon Internationalism, and to line up behind their own ruling classes in 1914, setting worker against worker for a mass slaughter. It went against everything the Labour Movement was based upon, and certainly against those few simple words – “Workers of the World Unite”, under which Marx and Engels and their followers had stood. Yet, in reality it is no wonder that it happened. The Labour Movement as part of society is riddled with the same cancer of Nationalism that poisons society as a whole. But, again it is no wonder that society itself is poisoned with this disease.

The first human societies grew up on the basis of kinship, of extended consanguineous families, and these formed the bedrock of the various clans and tribes, which in turn formed the first nations. It is understandable that those blood ties should be strong, and that in primitive times when resources might have been scarce that such societies should see in them protection against potential adversaries. The allegiance to blood, to tribe to nation, precedes class society by some millennia even if its basis has become considerably altered over time. Nor does the fact that such allegiances, based on blood ties, once in the mist of time, were based on the objective interests of those in these primitive societies, change the fact that once class society comes into existence those objective interests themselves change, and consequently, the ideology of Nationalism becomes increasingly reactionary, increasingly comes into contradiction with the real objective interests of the oppressed classes, becomes a tool in the hands of the rulers to maintain that oppression. But, old ideas die hard, and the objective interests of the oppressed are never obviously apparent to them. It is easy to move from what is natural, affinity to and protection of one’s family, to what appears merely a logical extension of that, the same sentiments in regard of one’s own compatriots. Yet, in reality that simple idea on which Nationalism stands, is the greatest weakness of, and greatest threat to the working class and its real interests. It is not just the Second International, which knelt down before its altar, its inheritors within reformism have made it their by-word, and the reactionary National Socialist ideology of Stalinism has continued to infect the Labour Movement with it since the adoption of the reactionary idea of “Socialism in One Country” replaced the idea of international revolution. The latest manifestation is the disgraceful “No2EU” stunt set up by the Stalinists of the Communist Party of Britain (CPB), along with Bob Crow of the RMT, and to their shame being supported by the Socialist Party, whose comrades did such a good job in combating the same kind of nationalistic crap during the refinery strikes.

The Platform of this nasty reactionary organisation states:

· Reject the Lisbon Treaty
· No to EU directives that privatise our public services
· Defend and develop manufacturing, agriculture and fishing industries in Britain
· Repeal anti-trade union ECJ rulings and EU rules promoting social dumping
· No to racism and fascism, Yes to international solidarity of working people
· No to EU militarisation
· Repatriate democratic powers to EU member states
· Replace unequal EU trade deals with fair trade that benefits developing nations
· Scrap EU rules designed to stop member states from implementing independent economic policies
· Keep Britain out of the eurozone

Let’s take these points in order.

Reject the Lisbon Treaty.

Fair enough, I was in favour of the campaigns organised by the Left in Europe to oppose the EU Constitution, which would have enshrined not just in law, but as the fundamental nature of the EU the ideology of Neo-Liberalism. But, that left campaign generally went beyond just a rejection of the Treaty, and called for an opening up of democracy, for a wide discussion on what SHOULD have gone into the Constitution. In contrast the No2EU position states,

“The Lisbon Treaty turns the EU into a state in its own right and gives the bloc its own legal identity. The unaccountable European Court of Justice, an EU institution, would effectively become the ‘supreme court’ of the EU.”

But, what is wrong with the EU being “a state in its own right”? As Marxists and, therefore, internationalists, we have no desire to defend the continued existence of “Our” British State! On the contrary, whilst Marxists would not actually call for the establishment of some new bourgeois EU state, they have no reason to oppose its establishment, because the fact of its existence would in reality facilitate the rational integration of the European working class, the establishment of a single European Labour Movement, a single EU Trade Union Movement, single EU Workers party and so on. It facilitates that basic element of our programme – WORKERS OF THE WORLD UNITE. And why pick out the European Court for criticism as being unaccountable? The highest court of the land in Britain – the House of Lords – is probably even less accountable!!!! Our task is not to say No to the EU, which means saying yes, to the UK, with all of its reactionary institutions and laws – including all those opt-outs of progressive EU laws such as The Working Time Directive – but to fight to democratise both EU and British institutions, to defend the interests of workers as workers, not to counterpose reactionary British institutions to reactionary EU institutions just because they are British!!

It goes on,

“Under the treaty, the unelected EU commission would propose all EU law which would then be imposed on member states by the council of ministers mostly on the basis of qualified majority voting.”

Again, anyone who has been a Councillor or worked for a Local Authority knows that the policies adopted by Councillors are nearly all the policies recommended to them for adoption by the full-time Capitalist State Bureaucrats working for the Council. The same is true on a much larger scale in relation to the role of the Civil Service and the Government. Criticising the EU for this lack of democracy and using it as an argument to reject the EU, is again to say that the same lack of democracy, the same bureaucratism in Britain is okay, because after all they are “OUR” British bureaucrats! The real task here for socialists is not to foster such reactionary nationalist ideas, but to work to smash the role and power of that permanent state bureaucracy, and to replace it with a real democracy based on the utmost participation of the working class in decision-making at all levels of society, to introduce election of the top Civil Servants with full recallability, and to restrict their wages to the average workers wages, and to make the politicians truly accountable to those who send them to do the job they subcontract to that bureaucracy. Ultimately, it means a root and branch reduction in the power and influence of that State in the affairs of society, and for real control to be passed down into the working class acting to look after its own interests, via an alternative system of democracy and administration that meets its needs rather than those of Capital.

“The treaty also contains a so-called ‘Paseralle clause’ which would allow the EU to give itself more powers as it sees fit without the need for any more treaties.”

But, of course, if the EU proto state is to become what is rational for it to become a real state then that is natural. It means that the labour Movement needs to act to democratise the institutions to send socialist MEP’s into the European Parliament etc. to control that process and to drive in a direction favourable to workers. But, “No2EU” can’t do that because they have said that if any of their candidates are elected they will not take up their seats!!!!!

No to EU directives that privatise our public services

Fine, but it has not been the EU that over the last 30 years has driven the privatisation programme in Britain, it has been our own home grown BRITISH politicians that led the way on that when in the rest of Europe there has been much greater reluctance to go down that route. Marxists should oppose privatisation as a retrograde step, but not because we have any faith in state capitalist enterprises or provision of services, and nor should we give any suggestion that such state capitalist solutions can provide any progressive answer to workers problems. On the contrary, these state capitalist industries and services are invariably bureaucratic, inefficient, run to provide for the interests of the top bureaucrats within them and to provide profits to the private capitalist enterprises that leach off them, not to mention usually as or more oppressive to the workers within them, and provide a poor product to the workers that rely on them. Marxists only defend them against privatisation on the basis of arguing for their democratisation, for the introduction of some form of workers control, and recognising that under normal circumstances the Capitalist State will not agree to that, their transfer into the hands of the workers themselves to be run as Co-operatives.

In fact, with an integrated European Labour Movement, the transfer of such Public Services and industries directly into the hands of workers themselves to run as Co-operatives would open up the possibility of such Co-operatives operating at an EU wide level, thereby facilitating the introduction of common standards across Europe for such provision, of common wage rates and conditions for workers in those industries across Europe, and for the economies of scale that would accrue to such a European wide Co-operative enterprise to be passed on to all workers across Europe further undermining the power of Capital.

Defend and develop manufacturing, agriculture and fishing industries in Britain

This demand was originally formulated in an even more nationalistic and reactionary form than it now has, which is bad enough. It originally talked about defending “British” industry and agriculture, as though these industries and this agriculture belonged to us the “BRITISH” workers rather than to our class enemies! A few weeks ago I wrote a blog about the BNP by-election campaign in Ravenscliffe. The nationalistic demands they raised included:

· Protect our core/strategic economic interests by the selective exclusion of certain foreign manufactured goods from the British Market

· We will ensure that wherever possible our manufactured goods will be produced in British factories, employing British workers. This will bring unemployment to an end , and give well-paid employment to many.

· We will unite the ingenuity of the British People with their hard work. We envisage a manufacturing base of factories producing super high-tech products that will be traded around the world.

· We will instantly power up the British economy by opening up dozens of deep coal mines across our nation. There is 300 years worth of coal beneath our feet, an independent source of energy for our people.

· We see a strong, healthy agricultural sector as vital to the country. Britain’s farms will produce a much greater part of the nation’s food needs.

Can anybody see any difference in the National Socialist policies put forward here by the BNP, and the National Socialist politics put forward by No2EU? I certainly can’t, yet they claim that one reason they are standing is to combat the ideas of the BNP!!!! It’s a strange way of combating ideas when you advocate them yourself!

There is nothing new in these ideas as I have said before. See: Ravenscliffe , for example. These kind of National Socialist politics were put forward by the Communist Party and its fellow travellers in the Labour left during the 1970’s in the form of the Alternative Economic Strategy. It was a thoroughly scurrilous document which called on British workers to make common cause with British bosses to defend “British” businesses against those nasty foreigners whose cheap goods were undercutting the inefficient British bosses profits. Its no step at all from there to arguing that British workers are likewise being put out of jobs by foreign workers coming to this country, and hence the fact that the CPB failed to criticise the “British Jobs for British Workers” demands during the refinery strikes, or that the “Left” Stalinoid Trade Union leaders collapsed into support of those reactionary demands at the time.

As socialists, and therefore internationalists we have no truck with demands for developing Capitalism in one country at the expense of others as No2EU suggest. We recognise the development of the productive forces as progressive wherever it takes place, and in so far as the development of the productive forces within a larger area such as the EU rather than the limited confines of the nation state is more rational we welcome that, but our task is more importantly to defend and advance the interests of the working class within that process, to point out the limitations of that process whilst confined within bourgeois limits, and thereby to push through it towards the idea of development of those productive forces on the basis of European wide Co-operative production.

In fact, it can be seen that this National Socialist politics dovetails in, and flows naturally from the statist ideology of much of the left. As Trotsky argued the leaders of the Second International in arguing their case started from the position that Germany had to be defended because the German Social Democrats were going to drive forward from their position of power within the German Parliament to the establishment of socialism, and that process could not be threatened by allowing French Capital to prevent it. In similar vein the French Socialists arguing on the basis of the revolutionary traditions of the French Revolution put forward a similar argument. Nationalists will always come up with reasons as to why THEIR nation represents the progressive future, and has to be defended. In fact, a few weeks ago during the by-election campaign I was arguing with a member of my local anti-fascist group who was standing precisely on that ground in defending Britain’s colonial past, and of defending Winston Churchill and Britain’s role in defeating those nasty Germans in WWII!!!!!

Repeal anti-trade union ECJ rulings and EU rules promoting social dumping

You would not think that Britain had adopted a wide ranging set of anti-union laws under Thatcher in the 1980’s, or that in the main those laws remain on the statute book. You would not think that Tony Blair bragged that Britain had the most restrictive union laws in Europe!!!! But, after all those are BRITISH anti-union laws not EU anti-union laws, so the CPB and Bob Crow remain silent on them in order to concentrate their firepower on the foreigners. Those same foreigners who in Europe have introduced the Working Time Directive to restrict workers hours, and which Britain opted out of, has adopted a 35 hour week and so on.

And what does the opposition to social dumping actually amount to. It amounts to support for those demands of “British Jobs for British Workers”! Of course, Marxists do not acquiesce in the bosses using cheap imported labour to undermine wages and conditions, but the answer to that is to build a European wide workers movement that is capable of enforcing Trade Union rates of pay and conditions for all workers in any job wherever that worker has come from. The solution is not to divide workers on the basis of Nationality as the No2EU programme does, but to build a European wide workers movement, and a Workers party across Europe that fights for common wage rates, benefits and conditions in the whole of the EU. If anything a single EU state facilitates such a campaign, along with the necessary introduction of a single fiscal and monetary system to finance it.

No to racism and fascism, Yes to international solidarity of working people

Fine, except that the whole of the No2EU platform is based on the kind of Nationalism that feeds racism and fascism! And the kind of statist politics of emphasis on state capitalist enterprise combined with Nationalism IS a fundamental aspect of fascism! If they really wanted to undermine racism and fascism they would not adopt the same kind of Nationalistic programme of economic demands that the BNP put forward, they would not oppose elements of the EU as being reactionary essentially for no other reason that they are not British – demonstrated by the fact that the same reactionary institutions and laws etc. are present in Britain, yet they don’t say “No2Britain”. If they really wanted to oppose racism and fascism they would promote the idea of a European wide campaign to build a European workers movement to represent workers interests throughout Europe rather than trying to hive off British workers into their own small reactionary enclave.

No to EU militarisation

Why specifically no to EU militarisation? Is British militarisation which is the largest in Europe okay then because after all it is “our” British militarisation???? Of course, socialists should be opposed to militarisation, but as Trotsky pointed out, in the end workers cannot control the foreign policy of the bourgeois state, and the use of armed force is the logical extension of that foreign policy. You can only control the military and the foreign policy if you control the state. In the meantime, until that date Marxists have to do everything in their power to use militarisation to our ends. Just as work in the capitalists factories trains us how to run those factories for ourselves, so training in the Capitalists military trains us to use weapons to defend ourselves when those Capitalists eventually try to use force against us. We should have democratic rights for all soldiers, sailors and airmen, we should build cells of socialists within the armed forces to propagandise for the troops not to be used to oppress other nations, other workers or to be used as strikebreakers. We should use the lessons those troops learn to help build a train a civilian militia as a replacement for the standing armies as is enshrined even in the Constitution of the USA, and which can be used in the future to protect the working class against the onslaught of the bourgeoisie.

Repatriate democratic powers to EU member states

This is a reactionary demand, because it suggests that the Nation State is some totem that Marxists want to defend. It isn’t. Marxists are by nature centralists, we are in favour of the replacement of the restrictions of small states with the opportunities presented by a larger political structure. Rather than repatriating democratic powers to the member states, we should insist that the opt-outs that currently exist, and which enable Britain to escape the requirements of the Working Time Directive, for instance, to be abolished, and instead we should demand a thoroughgoing democratisation of EU structures. A starting point would be the organisation by the Labour Movement throughout Europe of a series of local discussions of Trade Unions, Co-operatives, Workers parties and all other workers organisations on the nature of the EU, leading towards a series of Constituent Assemblies for the purpose of voting on documents that could form the basis of a new EU Constitution, and Parliamentary bodies.

Replace unequal EU trade deals with fair trade that benefits developing nations

Sounds good, but what does it mean? What is “fair trade”? It sounds like the old bourgeois notion of “a fair day’s work for a fair day’s pay”! But, if No2EU mean what they say on the can, how do they intend to introduce these “fair trade” deals? How can you insist on that from the standpoint of the British Nation State? Especially, how can you fight for that if as No2EU say they aren’t going to take their seats in the European Parliament from where they could raise such a demand??? Moreover, what about all those unfair BRITISH trade arrangements? Are they okay because they are British? To demand that Capitalism whether it is based in the EU, in Britain or anywhere else establish fair trade deals is effectively to demand it stops being Capital. Only a workers state could ensure that, and then such a state would ask the question who are we doing these trade deals with. Part of the problem with “Fair Trade” is that even if it pays “fair” prices to farmers, it doesn’t mean those farmers pay decent wages to their workers!

If workers really want to address this problem the solution lies not in such utopian demands, but in establishing and developing Co-operative production across Europe, and using such production to encourage and develop Co-operative production in other parts of the world, so that those producers can be paid decent wages, can utilise resources effectively, and invest in further development. There can be no fair trade without co-operative production.

Scrap EU rules designed to stop member states from implementing independent economic policies

All of these states are BOURGEOIS states. Workers can have no control over the policies they adopt and this demand raises the illusions that they can. We should accept no responsibility for the policies these states adopt as a means of trying to overcome the current crisis. Our job as Marxists is rather to defend the interests of workers against the effects of those policies, which sooner or later those states will try to use to throw the burden of the crisis on to the backs of workers. Rather than sowing illusions in the potential for any individual capitalist state to take progressive measures Marxists should be explaining why they won’t, why they will try to make the workers pay, and why, therefore, a European wide struggle by workers against that is required.

And to argue that at some point a Workers’ Government might be in place that WOULD introduce such measures is facile. Where is this Government to come from in the foreseeable future? Were such a Government to materialise at some time it is inconceivable that it would not be part of a wider European revival in workers consciousness and militancy, the least problem such a Government would face would be EU laws restricting its actions, far more of concern would be the actions of its own bourgeoisie, and permanent state.

Keep Britain out of the Eurozone

Its not Marxists job to instruct Capitalists how best to manage their system, our task is to represent the interests of workers, and to argue for the replacement of the current system with socialism. But, in like manner its not our job to tell the capitalists not to adopt some specific measure related to the way they organise their affairs, again only to defend the interests of workers against any consequences of it. In fact, its hard to see what ill-effects workers COULD face as a result of Britain joining the Euro! On the contrary, a single currency which is the inevitable consequence of the establishment of a single market, facilitates the free movement of workers within that market in search of the best jobs. It facilitates common wages and conditions within that economy. It certainly facilitates British workers going on holiday in Europe, and being free of the costs of converting currency, not to mention the vagaries of rapidly varying exchange rates. It is in the interests of all those British workers who have retired to Spain and other EU countries whose pensions are paid in a rapidly sinking pound against the Euro, and whose living standards are being slashed as a consequence. Marxists should leave such demands to the BNP, to William Hague and all the other reactionary nationalists.

They say,

“Nation states with the right to self-determination and their governments are the only institutions that can control the movement of big capital and clip the wings of the trans-national corporations and banks. This means democratic control of the major banks, including the Bank of England, and full public ownership and democratic accountability of railways, postal services, NHS, and the energy industry.”

But, the current crisis has demonstrated the very opposite is true. Capitalism exists as a global system, and the economies outside the big trading blocs and currency areas have been the worst affected – just look at Iceland, or the way the pound has tanked. Nation states have shown that they CANNOT control globalised Capital – remember Black Wednesday when George Soros made a billion betting against Sterling even while the UK was forced to increase interest rates to 15% - only larger economic units can do that. And having complained about nation states being hampered by EU rules to take measures to enhance their economies they are forced to admit that the EU rules on budget deficits have been scrapped for the duration. Moreover, completely contradicting their argument they point to the experience of the countries of Eastern Europe, but those countries would have been decimated outside the EU, and without the assistance the EU has given them in recent weeks to keep their banks and other institutions afloat.

As I said, this is just a reflection of that cancer of nationalism that infects the Labour Movement. That it should come from the National Socialists of the CPB and their hangers on is to be expected and true to form. That the SP should lend its support ot it is regrettable. This is not like the experience of the refinery strikes where the SP comrades did the right thing and stuck with the workers whilst intervening to get the reactionary nationalist demands dropped. This is not a spontaneous organisation or movement of workers this is a thought out stunt by a reactionary political organisation – the CPB. All Marxists should not only treat it like the plague, but do all in their power to criticise the reactionary nationalist basis of its politics.

A look at other discussions here, for example, my discussions with BVFG over Gaza and Israel, shows how far this cancer of Nationalism affects the Labour Movement. In his case, not a British Nationalism, but a nationalism dressed up as “anti-imperialism”, a willingness to drop all of the necessary elements of socialist politics based on the fundamental principle of at all times putting the interests of he international working class first, above all other considerations, and instead to call on the working class to fall in behind some reactionary nationalist force, for the sake of achieving some limited bourgeois goal.

Unless, we can defeat Nationalism in all its guises, unless we can mobilise the working class around those basic ideas summed up in the phrase “Workers of the World Unite” then the cause of socialism is lost, forever to be put off whilst some limited bourgeois nationalist demand is fulfilled. But, if we are to do that, if we are to win workers away from Nationalist ideology we have to provide them with the kind of immediate answers to their problems, which the appeal to Nation itself offers. WE cannot win workers away with offers of jam tomorrow, less still with the offer of tears and suffering some time in the future accompanying some big bang revolution, only after which will all their problems be resolved. We have to offer workers practical solutions to their immediate problems here and now. Those solutions can only be built around the perspective of showing workers how they can here and now begin to take control of their life, how they can work collectively and co-operatively to provide those solutions under their own ownership and control.