Wednesday, 29 September 2010

The Fear Is Palpable

In a blog, a couple of weeks ago, Newsnight's Paul Mason, wrote Next: QE2 - and if that doesn't work it's a currency war. In actual fact, the talk of the US engaging in another round of Quantative Easing – rumoured to be of the order of $1 trillion – was an indication of the fact that such a currency war was already under way. The US has been applying pressure to China for some time to revalue the Yuan. It expressed considerable displeasure at Japan, last week, when it intervened in the currency markets, to push down the value of a rapidly rising Yen, against the dollar. The only area that the US has no reason to complain about is the Eurozone. But, it is only a matter of time before the growing contradictions, and problems within the Euro area, burst forth, and force more QE by the ECB.

An indication of that problem is shown by Ireland. As Alistair Darling pointed out, the other day, the Tories used to refer to Ireland, alongside Canada, when they were justifying their Cuts agenda. Big Cuts, they argued, created the condition for the private sector to step in, and for growth to take off. They failed to mention that, in the case of Canada, this was at a time when the world economy was growing rapidly, and when Canada could get out of some of its own problems by leaning on its next door neighbour, the US. But, the Tories do not mention Ireland today, because those very same Cuts have had the effect most economists have been arguing they would for some time. Ireland has gone back into recession. That recession means that Welfare Payments rise, and Taxes Fall. Instead of the Deficit falling it widens, requiring on that logic even bigger Cuts. In such a downward spiral, such as that which occurred in the 1980's, the very basis for rebuilding the foundations of growth are undermined. A similar trajectory is inevitable for all those economies whose basis of economic recovery is weak – the PIIG economies, and the UK. And, as I have argued previously, because those economies, like Germany, which do have a more robust basis for recovery, are so tied in to the weaker economies of Europe, they will be pulled down along with them.

The recent Stress Tests carried out on European Banks were a charade, and a charade which is quickly being revealed. A number of European Banks have experienced difficulty in recent weeks, and the latest figures demonstrate that liquidity is once more drying up, as it did prior to the Credit Crunch. In Ireland, the Anglo Irish Bank is now in need of further support from the state, and there is a possibility that if it goes bust it will bring the Irish State down with it. That is why the ECB has had to say it is standing by to provide support. But, Ireland is not Greece. If the ECB, and the EU has to bail-out Ireland that is a far more serious business than having to bail out Greece. As I wrote two years ago, when State's were coming in to support the banks,

“The problem that could arise given the scale is that the same causes of breakdown of trust and relations between Banks, which led to the Crunch could simply be transferred to the relations between States now acting as banks.”

Where We've Been, Where We Are, And Where We Are Going

That is the scenario that is now playing out. Imperialism, understood as that social relation that is global Capitalism, is wrestling with the problem of how to avoid such a problem becoming devouring of Capital itself. It is looking to fudge and mudge to get through the crisis, but that very social relation is built on a whole series of contradictions, of conflicting interests, between classes, fractions of classes, nation states, and economic blocs. At a certain point, it becomes impossible to resolve all of those contradictions, and, like an individual who tries to do that, it eventually arrives at a crisis, it shuts down.

The Bank Stress tests were an attempt to calm nerves, not the nerves of the professional traders, who could see through them, but of the general public. The IMF report, of the last few days, was intended to serve the same purpose, but, with the evidence of Ireland, with the latest economic data for Britain, showing sharp reductions in confidence, and a large slow down in bank lending, in mortgage approvals, in house prices and so on, no one can be fooled. In fact, another sign of the fear was shown when, at the same time as the IMF was making this statement, Charlie Bean from the Bank of England was coming out with an impassioned plea to the Public to go back to their profligate ways, and spend whatever savings they have to stimulate the economy! This at a time when the Government is telling us that the problem is one of overspending, and not enough saving. That, of course, is what Capital needs workers to do. Consumer spending accounts for around 60% of total spending in the economy. The Tories idea, of the private sector springing to life, to increase investment, and so on, is rather hollow if, at the same time, consumers stop spending! That is especially the case at a time when the other plank of the Tories strategy – exports – looks more than a pipe dream, as other economies sink into recession due to their own austerity programmes.

The contradiction is demonstrated in the Bank of England Monetary Policy Committee by Charlie Bean and Andrew Sentance. Bean recognises the need to prop up Aggregate Demand through encouraging consumer spending and borrowing. He argues that more QE is necessary to ensure that enough money is available in the economy to facilitate that. But, Sentance points out that inflation is rising. It is rising because of all the money printing that has already happened, that is now monetising the increased prices of imports, which is feeding through, also, into secondary price effects – though not yet wages. The 1970's showed that simply printing more money, at a time of rising inflation, does not have the effect of stimulating economic activity, but only of stimulating further price rises! It leads to stagflation. At best, if cost pressures abate, the increased money supply can simply lie stagnant in bank vaults.

That is the other problem at the moment. Nearly half a year into their period of office the Liberal-Tories have not been able to persuade the banks to increase lending. As I said before that is not because the Banks are acting irrationally. Banks make money by lending. But, not if those who they lend to don't pay them back! The banks are not lending because, especially in conditions of uncertainty caused by the Liberal-Tory Budget, they cannot guarantee that those who wish to borrow will pay them back. In fact, under current conditions, the most likely potential lenders are those who need money to stay afloat not to expand, or else who have plans to invest in things which the Banks will have good reason to believe will fail. Those who might have the potential to expand on a firm basis, the larger companies, either have large cash balances of their own, or else have much cheaper sources of finance in the Capital Markets by Bond and Share Issues. Microsoft has just borrowed money in the Bond Markets, where yields are at historic lows and falling – which again makes a mockery of the Tories claims - despite having billions of dollars of cash, and has used the money to raise its dividend, which also has the effect of raising its share price.

In a later Blog Paul Mason quotes the Brazilian Finance Minister from the FT, saying that such a currency war had already erupted. Brazil – Now Its Currency War.

The belief is, and Paul Mason repeats the argument here, that a currency war, which will also be the consequence of each country engaging in money printing, must be self-defeating, or a zero sum game. At best, as Paul sets out, its believed that those that pull the trigger first might gain an advantage, and some economies, because of the structure of their economies may gain advantage. The US, did gain from Protectionism during the 1930's, even though it was globally devastating. But, it does not have to be the case. The consequence of massive QE by all countries is only a zero sum game in so far as the relative values of currencies. If the aim is to try to push the crisis on to some other economy, then the consequences must be negative. But, if the purpose of that money printing is not to devalue, but to stimulate economic activity in each economy or economic bloc, then the consequence can be positive and reinforcing for the whole global economy. But, that is the kind of planning and co-ordination that Imperialism lacks, precisely because of those continuing series of contradictions that wrack it. Only a Co-operative economy, where every part of it worked in co-ordination with every other, to overcome such problems, rather than to try to shift them on to someone else, could achieve that.

Keynes pointed out that, under conditions such as those we have today, simply printing money can never be a solution. You can stuff the banks full of money, but unless someone wants to borrow that money to spend it, it will simply stay there. The banks do not want to lend to many people because, with the high probability of economic downturn, those who want to borrow will lose their customers, and not pay them back. The banks are already sitting on large loans, made to homebuyers, over the last few years, which they have not foreclosed on because house prices had temporarily risen, and the reduction of interest rates to near zero meant that those homebuyers on tracker mortgages saw massive reductions in their payments. As those tracker mortgages come to an end, and house prices crater, the banks stand in danger of finding that many of those lenders default, whilst the houses mortgaged become worthless.Robert Peston, in a recent News report from Dublin spoke about some properties that were selling for less than half their recent prices. That is the consequence that is likely to befall, still grossly over priced, property in Britain, as the consequences of the measures of the last 2 years unwind, and as the Liberal-Tory policies send the economy into a new recession.

Keynes argued that simply relying on increased money supply in these conditions was like pushing on a piece of string. Consumers will not borrow or spend if they think they might lose their job, their house and so on. Businesses will see demand slowing down, and will at least cut back any expansion plans, if not begin to retrench ahead of the expected downturn. The only way of avoiding this is to increase confidence. That is what the authorities have been trying to do, a version of “Crisis, what crisis?” But, that can't change the reality. The only way of changing that reality is to do the opposite of what the Liberal-Tories are proposing. It is to use a large fiscal stimulus to create demand, to provide people with jobs, and, from there, to encourage them to be more optimistic. There are two ways to do that. You can give people big tax cuts. But, those most likely to spend them are those on the lowest pay who will get the least back in tax. And if you think you might lose your job, you might simply put the tax cut in the bank. The other way is for the State to spend the money itself. That immediately means that other firms receive orders, and their workers jobs become secured. It means that more people are employed as teachers, nurses and so on. That is what Governments, outside Europe, have been doing, for the last two years, with considerable success.

Its no wonder that there was a leak from the Ministry of Defence about the devastating effect of the cuts being proposed. Its one of those areas that the Tory faithful have a knee-jerk reaction to. But, if the Government caves in to the MoD, then every other Sir Humphrey will take their cue to make a similar case of why their department cannot be cut without similar dire consequences. That actually was what happened under Thatcher's Government, which meant that it was unable to achieve its goal of shrinking the State. Big Capital, then as now, needs a Big State, and the Cuts are not in its interests. It will work behind the scenes to protect its interests, along with those of its representatives at the top layers of the State bureaucracy. The Cuts and privatisation are not in workers interests either. The Cuts will devastate the economy, and, although Big Capital will suffer loss of profits from that, workers will suffer a loss of jobs, and lower living standards, as well as setting back their confidence to resist. Nor is privatisation in our interests, because it is a step backwards from the existing State Capitalism. Our alternative to the oppression, bureaucratism and inefficiency of State Capitalist provision is not privatisation, but the transfer of these services and functions to workers ownership and control, through the establishment of worker co-operatives. We should oppose the Tories Cuts and Privatisation programme, but we should at the same time recognise that our interests are not those of Big Capital, and its representatives in the State who want to protect their own interests. We have to put forward our own interests and our own solutions, based upon regaining control over those aspects of our lives that the State currently dominates.

Tuesday, 28 September 2010

What Is An Irresponsible Strike?

"Trades Unions work well as centers of resistance against the encroachments of capital. They fail partially from an injudicious use of their power. They fail generally from limiting themselves to a guerrilla war against the effects of the existing system, instead of simultaneously trying to change it, instead of using their organized forces as a lever for the final emancipation of the working class that is to say the ultimate abolition of the wages system."

Karl Marx - Value, Price and Profit

Ed Miliband's first speech as Labour Leader begged more questions than it answered. That is an indication that it was vacuous. The general themes of social justice were fair enough, but only because they are so general that almost anyone, including, as people like Andrew Neill pointed out, David Cameron could accept them. There may have been the odd commitment, such as to a Living Wage, which would be beyond the scope of Cameron and Co., but even that was set in such general terms as to be meaningless. How is this "Living Wage" to be implemented, for instance, and doesn't it imply that it requires the Minimum Wage to be set at a decent level? Why not just commit to that?

There were some moralistic comments about how unfair it is that a Banker can earn as much in a day as a Care Worker earns in a year, but his Dad would have told Ed that such inequality is an inescapable feature of Capitalism, and the fact that workers are deprived of ownership of the means of production. Unless you are committed to replacing Capitalism by returning ownership of the means of production to those very workers then those moral sentiments are meaningless. Inequality did not rise under New Labour because they set out to bring about such a situation, but because tinkering with Tax and Benefits to try to redistribute wealth will never address the real causes of inequality.

And, even within the context of Ed Miliband's argument and politics this approach is clearly flawed. He spoke about the dire consequences that the Liberal-Tory cuts will have on those very people at the bottom of the heap, and the need to oppose those cuts. But, at the same time he caved in to the bosses media - apparently according to Trevor Kavanagh, former Sun Editor, the first person he rang after his election was the current Sun Editor - by trying to separate himself from the unions with a meaningless statement. He warned against an irresponsible wave of strikes against the Cuts, saying that he would not support such strikes, and nor should the Party. But, what is an irresponsible strike?

If you listen to the bosses media then strikes are simply the actions of militant Trade Union leaders, and a handful of extremists. If that is true then the vast majority of workers must be very dumb indeed, because, especially today when unions are hamstrung all roads up by legislation, it is very difficult to win support for a strike. Every worker has to be consulted, and if there is any chance that the bosses can show that some worker has not been, or that some have been who should not have been, then a strike ballot can be disqualified as the recent BA Cabin Crew dispute shows. Even where a huge majority is obtained in such a ballot the Courts will throw it out if a few discrepancies exist. So, all those workers who do vote for a strike, were we to believe the bosses media must be real dupes to be voting for something that is against their interests, and is only being manipulated by a militant minority. But, of course workers are not stupid or dupes. They do not vote for a strike because they want to strike, or because they have been manipulated, but because they can see no other solution to the situation they face. A strike is a sign of workers weakness not strength.

And as the Channel 4 "Dispatches" Programme, "What's The Point Of The Unions", last night, demonstrated most workers experience of unions is not that of being manipulated to strike, but being manipulated not to strike, to accept deals with the bosses rather than rock the boat, of victimisation for those who do try to put forward such a stand. With union leaders, like Derek Simpson, being paid £200,000 a year, more like the boss of a medium size company or the Chief Executive of a Council, is it any wonder that such people associate more with the bosses than the ordinary workers?

Of course, there are some union leaders like Bob Crow who will set out to improve the conditions of their members, and who recognise the importance of effective action to bring that about. But, as the programme showed, such leaders "manipulation" amounts to nothing more than actually arguing with members, providing leadership to take a particular course of action. As though, every day workers are not being bombarded by propaganda from the newspapers and the media to take another course of action, to lie down and be rolled over by the bosses.

There are too, those within the Left sects for whom a strike is a means to an end. The conventional wisdom is that during a strike workers political consciousness is raised more than at any other time. Yet, there is really no evidence to support this contention. One or two people might be politicised as a result of being involved in a significant strike, but generally speaking those who come to prominence are people who have not been previously involved, and who just as quickly disappear after it has finished. The Left sects are more interested, because they believe that one or two of these individuals might be won to their particular organisation. This is essentially the outlook of the Leninist/Luxemburgist Left, which is that nothing can really be done short of the revolution, but Economistic demands have to be raised in order to provoke workers into struggle for them, out of which the Party can be incrementally built ready for the Revolution when it comes. But, as a strategy it is pathetic. If workers really were politicised by such strike action, then solely on an incremental basis over a few decades the forces of the Left - even broadly defined - should have grown to 100 times what they are today.

The real problem with strikes is that outlined by Marx above. It is not that workers are "irresponsible" in engaging in them, but, precisely because of the weakness of the workers position that leads them to engage in them, because of seeing no alternative, they are not always the best solution to their problems - they are not irresponsible but as Marx puts it an "injudicious use of their power." In part, they can be injudicious for the reason that Miliband was suggesting - the need to build a wider coalition of support for a better solution. But, they can also be injudicious for the reason Engels set out in his "Condition of the Working Class", where he wrote,

"and thus a new spirit came over the masters, especially the large ones, which taught them to avoid unnecessary squabbles, to acquiesce in the existence and power of Trades’ Unions, and finally even to discover in strikes — at opportune times — a powerful means to serve their own ends."

As I've written elsewhere, that appears to be the case in Greece. The bosses state wants to save money by saving on wages to Public Sector workers, it does that when those workers are on strike. It wants to save money by reducing the services provided to the Public, it achieves that when strikes stop those services being provided. It is falling into precisely the trap that Engels describes. The bosses state has no reason to concede when the strikers are achieving its ends for it. And all the time, those denied the services by the strike are turned away from their fellow workers. Unless, the strikes were to build into something more, into a challenge for power, they are a dead end. But, that kind of Luxemburgist strategy was shown to be false by Lenin. There is no necessary transition from mass strikes to insurrection. In fact, the longer the strikes fail to move forward, the more likely that demoralisation will set in, and the workers will be set back decades.

That is why I've argued that we need a more intelligent strategy against the Cuts in this country too. Rather than such strikes what we need is to use the experience of the Anti-Poll Tax Movement. We need to build the largest possible movement across society to oppose the Cuts, by Trades Unions mobilising to send their activists out into the communities to canvas people on every doorstep, and they should be supported in that by every Branch LP member. We need to build anti-cuts committees on every street, on every estate, in every town and city uniting LP's, Trades Councils, TRA's and every other rank and file organisation of workers. But, the basis of such a movement should not be to do the Tories work for them by depriving workers of the services they need through strikes, it should be to refuse to allow the Liberal-Tories to withdraw those services. Every school, library hospital or other facility threatened with closure should be immediately occupied, and the service continued to be provided under workers control with the democratic involvement of those dependent on the service. If workers within Council Building are threatened with redundancy, the Council Offices should be occupied the same, and only those Councillors who support the workers admitted. The buildings taken over should be financed by a Council tax and rent strike, with workers on each estate paying the money into an account established by their anti-cuts committee, and if the Council Offices have to be occupied the Accounts staff should stop payments to every large company, and to central government in order that funds remain available to pay workers.

But, we should learn the lessons of UCS and of May '68, and many more struggles. Having occupied these facilities and started to run them under our own ownership and control, we should not be persuaded to hand them back to the bosses state. To do so is to accept the bosses ideology that workers cannot run their own lives. It is to ask for the attack to be renewed upon us at a time of the bosses choosing. If Ed Miliband really wants a new politics for a new generation, if he really wants to put forward an alternative to irresponsible strikes, if he wants to support the idea of "Community", let him support and argue for such a solution.

But, having said all that, if instead workers threatened with cuts decide to strike, am I going to say, sorry I can't support that? No, of course not. Marx advised the Paris Workers not to rise up in 1871, but when they did he put himself wholly on their side. I disagreed with the slogan of "British Jobs For British Workers", raised by the Lindsey Oil Refinery Workers, but I supported their strike. Why because, ultimately it is a class issue. It is a question of "What Side Are You On?" I am on the side of the workers even when the tactics and strategy they use I think is wrong. Only then do you have the right to criticise those tactics, and to try to convince workers of a better course. Unfortunately, I suspect that Miliband's course is not even a different course let alone a better course, but is no course at all.

Saturday, 25 September 2010

Ed Miliband Wins

Ed Miliband has been elected very narrowly as the new Labour Leader. I've not blogged anything about the campaign until now, and for a simple reason - I don't think it matters. It isn't that I don't think it matters because there is no difference between the candidates, I don't think it would have mattered had someone like John McDonnell was standing.

In fact, I was thinking about this the other day, and imagined it in terms of a Game of Fantasy Politics. Imagine you could in the same way just put together your dream Cabinet - Lenin as Prime Minister, Marx as Chancellor, Engels as Industry Minister, Trotsky as Defence Minister, Gramsci as Education Minister, Rosa Luxemburg as Equalities Minister and so on. But, I don't beleive that such a line-up would make more than a marginal difference! Its like those organisations who similarly put forward as their immediate solution the demand for a Workers Government without the slightest thought of where such a Government would come from, who would make it up, and where the popular support for such a solution is to come from!

The only point of a Workers Government, the only point of having a Left-wing Leader of the Labour Party is if that individual is representative of the Party, and if the Party is representative of the working class. If not, then it is merely a token, and an indication of how much work needs to be done to change that situation from the ground-up. I once joked with someone that the Milibrothers were not all they seemed, that they were really part of a left-Wing plot dreamed up by their Father, so that they could become elected PM, and then expose the reality of Parliamentary Socialism as Ralph had analysed it. But, of course, ist precisely that analysis of Ralph Miliband of the idea of Parliamentary Socialism, which shows why the question of Labour Leader is irrelevant. The real transformation that needs to take place is one that only the tens of thousands of LP activists can bring about, through work within their communties to encourage the self-activity of ordinary workers, and thereby to raise their consciousness. Only then will the people they elect on that basis actually reflect anything meaningful. The struggle for Socialism has to take place not within the confines of Parliamentary institutions, but within the hearts and minds of millions of workers, and more immediately in their communities and workplaces.

The task remains to turn the LP outwards to the working class.

Friday, 24 September 2010

Northern Soul Classics - Heatwave - Martha & The Vandellas

I was watching the Phil Collins Special last weekend, where he was performing Motown. So, I thought for the next few weeks it would be an opportunity to feature some of the Motown that also made it as Classic Northern. The other week I posted "Quicksand" by Martha & The Vandellas, and decided that as this is the other Summer tune of theirs, it would be a good place to start, before the last remanants of Summer disappear.

Liberal Re-Writing Of History

In interview after interview, Liberal spokesmen have responded to questions, about why they changed their position, over the Cuts, by saying that it was a pure co-incidence that their change of position was simultaneous with their negotiations, with the Tories, to get their grubby hands on a share of power. The real reason they changed position, they claim, was that the crisis, in European debt markets, so changed conditions that they had to change their position. Besides being economically illiterate, and unsupported, this also represents a re-writing of recent history.

Anyone, looking back, knows that their claims are simply untrue. For example, some time before the election, the situation in Greece, and the other PIIGS, was so severe that, even in April, I wrote a blog, which opened with the sentence "Greece has gone bust!", and featured a CNBC interview with Jim Rogers to that effect Beware Of Greeks In Need of Gifts. How bad did the Liberals need the situation to be before they felt that they had to change course??? Or are they so incompetent that they were unaware of what was happening in the European economy? What does that tell us about the confidence we should have in Comrade Vince?

But, its a re-writing of history for another reason. At the time the Liberals were involved in these negotiations, with the Tories, and claiming that the situation in Europe had changed, so significantly, as to require them to change their policy, I was in Spain, and watching things unfold at first hand. In that previous blog, I'd spelled out how the crisis could be resolved, through debt monetisation, and the establishment of a centralised European Debt Management Office, as part of a single European State, with control over Fiscal Policy. While I was in Spain, and at the time the Liberals claim this game changing event took place, the first part of that was what European leaders did. They announced a huge package of European aid, to bankroll the PIIG economies, to avoid the danger of immediate default, and the ECB announced that it would begin buying the Bonds of the PIIG economies i.e. monetising their debt, in the same way the Bank of England had done in the UK, and the Fed has started to do in the US. I was writing about this while I was away, but could only blog it when I got back, towards the end of May, in my blogs The Return Of Illiterate Economics. But, as I wrote in that blog, the initial response, to the announcement of the package, was that the Yield on Greek Bonds fell from 15%, to 8.5%. Stock Markets soared in Europe, and around the globe, and the Euro rose against the dollar. Why, because the monetising of the debt was precisely the solution that Global Capitalism needed, to avoid an immediate crisis, to provide breathing space, and to provide the basis for the long-term debt problem to be dealt with via restructuring and growth.

But, as I also wrote in that blog, a week later, all that had been dramatically reversed. Why? because the ECB had announced that it was sterilising the money, it had pumped into the economy, to buy Government Bonds, by withdrawing money through selling commercial bonds, it was holding, and because, partly as a result of pressure from Germany, who had resisted providing any assistance to Greece in the first place, the PIIGS were being asked to implement precisely the kind of fiscal austerity that would lead to their economies being cratered, and the potential for the very growth required to solve the problem undermined. In other words, the very policies the Liberals claim they had to change to, were precisely the policies, which had led to a big sell-off on European Markets - and then world markets - and the dramatic fall in the Euro! If anything the experience in Europe during that period should have led to the exact opposite of the conclusion the Liberals say they were led to. It should have led to the conclusion that what was needed was further Quantitative Easing, and at least no tightening of fiscal policy to ensure that this additional liquidity found its way into the economy!

But, even if none of that were the case, the Liberals argument makes no sense. As I wrote, in my blog, Britain Is Not Greece, and Britain had many options not available to individual Eurozone economies. For one thing, at the time, the yield spread between Greek Bonds and German Bunds was more than 12 points. By contrast between Bunds and UK Gilts it was only 2 points! There was a considerable chance that Greece might have defaulted on its debt - and that risk still exists, and has been increased with the austerity measures - but there is absolutely no chance that Britain is going to default on its debt, and the traders in the Bond and Currency markets, who are pretty savvy people, when it comes to not losing their shirts - know full well that there is no chance that would happen, which is why UK Gilt Yields were less than 4%, which is historically low - itself hardly a suggestion that the markets were going to refuse to buy UK debt, or push interest rates to unspeakable levels!

And the irony is that, in the intervening period, as a result of the austerity measures, introduced in the PIIG economies, the weak recovery, they had been experiencing, has been reversed, as a direct result of the Cuts, and, in consequence, just as borrowing had to increase, in Britain, in the 1980's, under Thatcher, as Tax revenues fell, and welfare payments rose, so the PIIG economies are facing a similar scenario, and as a consequence yields on their debt are now back almost to the level they were at in April! If the Liberals want to learn from the experience in Greece, then they should learn that lesson, that if the policy of Cuts was intended to reduce interest rates, it hasn't worked! All it has done is to increase misery, and make it more difficult to resolve the crisis through growth.

But, the Liberals are not that stupid or ignorant. They know that nothing really changed that justified them changing their stance of opposition to immediate Cuts. The only thing that changed was that, if they wanted to get jobs for themselves in Cameron's Government, they had to be prepared to sacrifice whatever principles they might have had, as well as sacrificing the jobs of hundreds of thousands of workers, and maybe more if the idiocy of this policy is persisted with.

Pure Evil

As a Marxist, and, therefore, a materialist, I do not believe the terms "Good" and "Evil" have any meaning. They imply the idea of a God and a Devil each as the personification of the two traits, and of human beings who stand some way on a continuum between the two. They imply that our actions are wholly a matter of "free will". In fact, human beings like any other animal, are conditioned, by our environment and experiences, as well as by our physical make-up. Just as a dog can be conditioned to be a vicious attack dog, or else a guide dog for the blind, so the conditioning that life gives to us determines how we think and act. To be consistent, we have to accept that even a Hitler is the product of the material world, even if that doesn't change how we respond to him and those like him. But, I was watching the TV last night, and the first thought that came into my mind to describe what I saw was "Pure Evil".

I was watching the last in the series of Alan Davies' "Teenage Revolution". The series has been a recounting of the comedians experience of growing up as a teenager in the 1980's. It is a not uncommon account of a young person from a middle class background who rebels against their upbringing. It is the experience of someone who from that background, and who essentially retained the same lifestyle as an entertainer, rebels as a lifestyle choice, not as a necessity. In other words dilletantism. As part, of last night's programme Davies recalls the point when he joined the Labour Party. It is a time when the working class was in a decisive battle against Capital, its State, and its political representation in the form of the Thatcher Government. From 1979, the Tories had set out to wage Class War against the working-class using the Ridley Plan as their military strategy, and the economic doctrine of Hayek, as the means to force Capital to resist Labour by reducing the Money Supply, and at the same time to undermine the economic conditions that enabled the working-class to continue with simply bargaining within the system. It was one of those moments when that “Social-democratic Consensus” I have described as being the framework by which Big Capital has operated over the last 100 years or so, broke down.

Outside such periods we have the luxury of being able to analyse our condition, to self-criticise, and to engage in similar criticism of the position of others. We can present our own views by means such as this blog, and so on. But, during conditions like the 1980's, although we have a duty to continue to argue our own views, and to point out where we believe others are wrong, the emphasis is different. In such conditions the real question is put in the way Billy Bragg put it, in his song featured in Davies previous programme - “Which side are you on?” Scargill had bad, bureaucratic Stalinist politics. Many miners themselves thought that it had been madness not to have had an overtime ban in place long before the strike to prevent the Government building up stocks ready for the confrontation they were clearly planning. Some thought a national ballot should have been held. But, once the strike began, those questions were secondary to the need to be on the side of the Miners, and all the other workers supporting them. Anyone who refused to do that because they objected to Scargill's politics, to the tactics adopted and so on, quite simply placed themselves on the other side of the class barricades, and became the enemy just as much as Thatcher and MacGregor.

The same was true of Liverpool and other Councils struggles against the Government. Militant were a pretty abysmal, sectarian organisation. On issue after issue that the left had been involved in, be it fighting fascism, CND, opposing sexism and homophobia, Ireland and many more, the Militant frequently stood aside from any broad movement, describing them as Popular Fronts, in order instead to establish their own activity with the hope of “Building The Party”. In the process they pissed off large sections of the Labour Movement. When it came to the struggle in Liverpool that meant that there was already a reservoir of opposition to them, and the tactics that were adopted, for example, the failure to link up with the Miners, were abysmal too. Yet, despite that the question was still posed in those stark terms. This was just as much a matter of life and death class struggle as the Miners Strike. It was still a question of - “Which side are you on.” In fact, just as with the Miners Strike, it should not have been a question of Liverpool or any other Council fighting the Tories. That fight should from the beginning have been a fight led, and co-ordinated by the Labour Party as the Workers Party. Instead, the reality was that the LP, understood as the vast majority of its members, were supporting those struggles. It was the leadership of the LP, along with its co-thinkers at the head of the TUC, which were refusing to provide such support, refusing to provide any kind of leadership.

It was with the knowledge of that, with the experience of living through those events not as an entertainer for whom these events were a source of material, but as a worker, as a Trade Union militant, who was standing on a Miners Picket line from day one, until the return to work, who was the Secretary of the local Trades Council Miners Support committee, and who through the LP was busy every week collecting money for local Miners and their family that part of what I saw in that programme turned my stomach and provoked that impression of “Pure evil”.

Davies showed the ranting speech of Kinnock at the 1985 LP Conference, where he attacked Liverpool City Council for their struggle against Thatcher's Class War. Throughout the Miners Strike, Kinnock had refused to give support to the Miners, let alone act in any way to mobilise political support. I remember going to a huge rally in Stoke where Scargill and Kinnock were to speak. When Kinnock entered the hall, the response from all of the Miners I was with echoed out in unison, “Mind your back Arthur!” they shouted to Scargill. They were right. Kinnock might have been standing in front of him, but the knife was ready to stab him and the Miners in the back. And, with the Miners defeated, and Thatcher rampant, Kinnock took the opportunity not to try to mobilise the Labour movement to try to avoid a similar defeat, but instead to come to Thatcher's aid once more by attacking Council's like Liverpool who were putting up the resistance that he and the Labour leadership should have been providing. He used it to destroy, for a generation, the LP's ability to act as a means of resistance to the political attacks of Capital, and to make it ready for its domination by the ideas of Thatcherism itself, in the form of Blair and Brown.

Davies says that he was so impressed by Kinnock's speech, attacking workers in struggle, and siding with Thatcher, that he sent off for a copy of it. That tells us just how much of a revolution he was engaged in! It tells us just how little he had in common with those sentiments of Billy Bragg - “Which side are you on?” Davies was clearly not on the side of the workers, not on the side of the revolution, but like Kinnock on the side of our class enemies. In that speech attacking Liverpool, Kinnock sunk to all time lows of hypocrisy. Having failed to support the Miners, and thereby aided in their defeat, he had shown the same degree of class betrayal when it came to Labour Councils. The clear message of his politics, which was echoed by the Soft Left within the LP at large, was that workers should lay down and die, not rock the boat, and thereby facilitate the return of a Labour government. The consequence of that would have to be that labour Council's – as many were already doing – would have to implement the Tory Cuts, and sack thousands of workers. But, what did Kinnock's attack focus on – the fact that Liverpool (as part of a very questionable, but understood tactic) had issued redundancy notices to its workers! Within months, Kinnock was to do exactly the same thing, but not as a tactic, by sacking loads of LP staff!

But, what wrenched my gut, was what happened as Davies watched this speech with Mr and Mrs Kinnock. On the platform behind him was the late Joan Maynard, who was shaking her head in rightful disgust at Kinnock's open betrayal of the workers in struggle. His comment, “Look at Stalin's Nanny shaking her head", was said with all the bile of someone who has been on one side of a war. Worse, was his and his wife's comment in response to the late Eric Heffer's subsequent walk-out during the speech - “Welcome to oblivion.” But, of course, Kinnock and his wife were on one side of a class war, so it is no wonder they should exhibit such grotesque bile. They were on Thatcher's side in that Class War, whereas Maynard, Heffer, Scargill and the Militant, for all their faults, were on our side. Eric Heffer who was certainly no Stalinist, had more principle, let alone socialist principle in his little finger than Mr. & Mrs Kinnock have ever had in their entire bodies.

Of course, Kinnock and the Soft Left's argument might have had some validity if the idea of “not rocking the boat” in order to get a Labour Government, would have given workers any confidence that such an eventuality would have saved them from the iniquities of Thatcherism. But, it was a Labour Government, of which Kinnock had been part, that had begun the process of Cuts in the 1970's. It was Labour under Healey that had abandoned Keynesianism in favour of Monetarism. It was a labour government that had imposed a Pay Freeze on workers that eventually led to the winter of Discontent, and Thatcher winning the election. Moreover, as a tactic it wasn't even working. After 1979, Thatcher became the most unpopular Prime Minister on record, and it appeared that even then the party might have ditched her. Although, we hear all of the stories today about Michael Foot, and his donkey jacket, the reality is that even in 1981, when he was leading mass demonstrations in cities across the country to mobilise opposition to the Tories, and the rising levels of unemployment, he and the LP were at 51% in the opinion polls. Had an election been held then a landslide Labour Victory dwarfing 1945 would have been achieved.

What had undermined that was the fact that Labour began to pull back from such activities. Worse, when Thatcher embarked on her adventure of the Falklands War, Labour backed her. After Thatcher defeated the steel workers, and moved on as part of the Ridley Plan to other groups of workers, whilst Labour failed to provide the necessary leadership, she began to look like a winner, and Labour to have no answer. When the SDP split, the writing was on the wall for Labour's immediate electoral prospects. But Kinnock and the Soft Left's cringeing approach rather than seeing Labour win increasing support, simply saw them have to concede more and more ground to the Tories, politically and ideologically.

Ironically, the clearest refutation of Kinnock's approach came with the removal of Thatcher. It was not Kinnock and the Soft Left's “Don't rock the boat” approach, which led to Thatcher's dismissal, but the very opposite. It was the eruption of that same kind of mass grass roots movement that had developed in response to the attacks on Liverpool and other Councils, and the Miners Strike, in the form of the anti-Poll Tax Movement, again ironically due in large part to the Militant and its inheritors, which undermined Thatcher and led to her being removed by the Tories. Even then, when those who stood on the right side of the Class divide, had done the heavy lifting for Kinnock and the Soft Left, they could not seal the deal. In the most cringeing piece of television footage available Kinnock sealed Labour's fate at the 1992 Election, with his repeated shout of “Well, Alright” at the Sheffield Rally, where he appeared like some kind of Southern Evangelical Preacher selling his own brand of snake oil. It made you want to cringe, because like the snake oil salesmen it was so obviously fake, but that is what Kinnock is, and always has been – fake.

He could not return to oblivion as he wished upon Eric Heffer, because in reality, at least as a socialist politician, he had never emerged out of it. Even as a bourgeois politician he was a rank failure, and, like all such failures, his main role, today, is to act as a cameo in the kind of programmes as this. In Christian burial services they say “Ashes to ashes”, but in Kinnock's case it would be more appropriate to say “Shite to shite”. Of course, in his and his wife's personal terms, none of that matters. They may not have achieved the earning potential of Tony and Cherie Blair, who inherited the devastated LP that Kinnock created, but, unlike the tens of thousands of Miners and other workers, whose lives were devastated as a result of the Class War waged against them by Thatcher and Kinnock, they were sure to be provided with a lucrative reward for the betrayal of the workers. Whereas all the SDP'ers were given Peerages from which to draw an easy and large income, Mr. and Mrs Kinnock were simply provided with lucrative jobs in Europe.

Those miners were right in their warning to “Watch Your back”. Workers should bear that warning in mind today in response to today's Kinnocks. Then, perhaps, we might be able to bring them all to account for their sins.

Thursday, 23 September 2010

Comrade Cable?

Was Vince Cable's speech, to the Liberal Party Conference, the kind of anti-Capitalist rant that the media has presented, and which has provoked scornful comments from the City and CBI? Was it an indication that the Liberals really are some radical force, acting as a limiting factor on the Tories? The answer is quite clearly no!

Cable himself pointed to the source of his comments, about Capitalism attempting wherever possible to limit competition - Adam Smith. He could, equally well, have referred to Liberal thinkers such as Frederick Hayek, who was the great intellectual force that guided Thatcher and Keith Joseph in the early 1980's. Hayek argued that Liberalism was not the same as Laissez-Faire, because a Liberal State did have to intervene to guarantee Liberty and free markets. It had to act against Monopoly, be it a business Monopoly or a Labour Monopoly. Cable's speech was in that right-wing, Liberal tradition, as witnessed by the fact that, at the same time as attacking the Banks and Finance Houses, he had to link that with an attack on the Trades Unions, with his ill-informed attack on the "Trotskyite" Bob Crow!!!

Of course, there was also a political, with a small "p", aspect to Cable's speech, on a number of levels. Firstly, the Liberals are under attack, both electorally and from their own base, as a result of the coalition with the Tories. The Liberals have been at pains to stress how much of their policies have fed through into Government policy. That, of course, just demonstrates, how right-wing Liberal policies were to begin with, and how duped some of those were who once saw them as some kind of radical force to the Left of Labour!!! In this speech, Cable has simply tried to put some rhetorical space between the Liberals and Tories. Clearly only rhetorical, because the speech was agreed, in advance, by Cameron and Ozzy Osbourne. There is probably another bit of politicking going on here. Even during the initial stages of the election campaign, it was Cable who was the Liberal star, as he had been the darling of the media for the year before. The unknown Clegg went nowhere without him. Overnight, as a result of the Leadership Beauty Contest debates, Clegg became the star, and Cable disappeared from sight. It is perhaps no accident that, just as Clegg disappeared off to the UN, Cable produced this closing speech for the Conference, and ensured media debate over it, by leaking those key phrases from it to the media the day before.

But, the speech, and the fact that the Tories have been so relaxed about it, whilst the City and CBI have poured scorn on it, also tells us something, and confirms the argument I have been putting forward for some time. The other Liberal who could be cited as a precursor of Cable's comments is John A. Hobson, whose analysis of the role of Monopoly and Imperialism, was used by Lenin, in his work, "Imperialism, The Highest Stage of Capitalism". As I have been arguing for some time, the politics of the Tories, as with many other similar parties throughout Europe, is based on a type of right-wing populism, whose aim is to win sufficient votes from their core electoral base within the ranks of the middle classes, small Capital, and backward sections of the working class, to get elected, or stay in power. As I have referred to, a similar trend can be seen now, in the US, with the Tea Party movement, as Newsnight's Paul Mason has described in recent blogs. This kind of right-wing populism has been seen at similar conjunctural points in the past. In part, it reflects a reaction by those elements, and particularly by small Capital against the growing power of Big Capital. It was seen at the end of the 19th Century, in the US, with the anti-monopoly measures introduced by the Government, which broke up the Big Oil companies, and so on. But, as Lenin points out, in "Imperialism", these kinds of measure are doomed to failure, and are reactionary. Capital is centralised and concentrated by the normal functioning of capitalist competition. The big monopolies merely reflect its normal trajectory, its more mature form, and therefore, are historically progressive. They are a stage closer to the demise of Capitalism itself. Break up the monopolies, and they will only re-form. In fact, that was precisely what happened in the US. The giant Oil Companies, that were broken up, simply became giant companies in their own right, often bigger than the original companies themselves!

Behind the scenes, Big Capital is no doubt applying pressure to try to ensure that the Tories do not kill the economy, with their irresponsible economic policies of cutting spending, and thereby cratering aggregate demand, in the economy, at a time when the recovery has not been stabilised. As I demonstrated in my blog, recently, on pensions, the Banks and Finance Houses, through the control they exercise over workers' Pension Funds, have influence, over sections of Productive Capital, way beyond their own shareholding. It is Big Capital that has the dominant influence within the corridors of the State, the same State, which has a vested interest in resisting attacks on its own influence by the Tories. The comments, by Digby Jones, on the BBC News recently, attacking the Liberal-Tories scrapping of the Building Schools For The Future Programme, and arguing that any attempt at reducing the deficit had to ensure that it did not kill the recovery, can be seen in that light of on going friction between Big Capital, and the Liberal-Tory Government, still trapped by its own ideology, and the pressure it faces directly from its own base - certainly its base within the Tory Party. In other words, it was a shot across the bows of Big Capital by Cable. Similar skirmishes, in the early days of the Thatcher Government, occurred. Despite its viciousness, that Government saw its spending plans blown apart even in the first year, and the size of the State continued to rise under Thatcher. Already, despite the rhetoric, the latest figures show that, for August, the Government's Borrowing rose substantially - whereas it had been falling steadily under Labour, and in the month or so after it left office. The Liberal-Tories will no doubt make Cuts, which will be noticeable, particularly in relation to Welfare, and in relation to Public Sector wages. But, Big Capital and its State, will continue to work in the background to ensure its interests are met.

Wednesday, 22 September 2010

Value Theory, The Transformation Problem And Domestic Labour - Part 4

c) Necessary, Productive and Unproductive Labour

In addition to the State, Bradby points to other forms of Labour that are supposed to be “outside value”, such as Domestic Labour, Labour performed and distributed within large Corporations and Scientific Labour. These last two arise from the work of Sohn-Rethel. And, of these, the former I have touched on previously in looking at the question of whether Labour in Department I is productive of Surplus Value. It will be worthwhile coming back to this question at some point in the future. But, its the points Bradby makes in relation to Domestic Labour, which I now want to deal with.

Bradby refers to the argument put by Diane Elson that we should analyse domestic and state labour as subordinate to the value form, which is essentially the argument I have set out above, but says this is not compatible with Elson's central thesis that Labour in Capitalist Society necessarily takes the Value Form. It depends how strictly you want to interpret “necessarily”. Iy you want to interpret it in a strict literal sense, then the fact that the same Labour continues to eist as non-wage labour would nullify the hypothesis. But, that would be to argue in a purely formalistic manner rather than to understand reality in dialectical terms, as a process. Viewed that way, the argument that Capitalism drives towards a situation in which all labour is transformed into wage-labour, that the market and exchange value continues to expand into every sphere of human activity, can be seen as not only theoretically valid, but empirically confirmed.

In the aftermath of WWII, when Capital was faced with a relative Labour shortage, it sought to bring women workers into the market. As part of that process, the sphere of economic activity dominated by Use Value shrank as exchange value advanced. Just as in the workplace, Capital seeks to reduce Necessary Labour-time, to a minimum, so in the home. In the workplace it seeks to achieve that by replacing living labour with dead labour – machines. So in the home with the introduction of a range of labour-saving devices.

Bradby says that Value Theory is centred on a contradiction - “Its central commodity, 'labour-power' derives its value from an appropriation of unpaid female labour, primarily by men.”

There are a number of things wrong with this. Firstly, its not clear why labour-power is the central commodity. In fact, central to Marx's theory is the idea that labour-power becomes relatively less significant as a proportion of total output, due to a rising organic composition of Capital. More importantly, the assertion that female domestic labour is unpaid is simply false. It is not paid a wage, like wage-labour, but that is not the same as being unpaid. The implication is that the female domestic labour receives nothing back in return for the Use Values it produces. But, for wholly domestic labour that is as untrue as the idea that slave labour receives nothing back in return for the use values it produces. If that were true then neither slaves nor female domestic workers would live very long! As an argument, it also seems to completely ignore the concrete reality of the many single male workers who continue to reproduce their labour power without appropriating the domestic labour of anyone but themselves.

Its certainly true, as Bradby says, that this is “Necessary Labour”. That is the case whether it is performed by female domestic labour, which is itself reproduced as a result of appropriating Use Values bought out of the money wages o the male worker, or by a male worker themselves or by a combined effort. As such, it constitutes a part of the Value of Labour power, and for the same reason, Capital has an incentive to minimise it by revolutionising domestic production as well as capitalist production.

A number of studies have tried to place a value on this domestic production by comparing the tasks performed with those undertaken in commercial activities. But, such studies tend to overlook some basic economic realities. In his, “The Development of Capitalism in Russia”, Lenin meticulously demonstrated that wages and conditions improved, and often dramatically, the more labour was removed from the domestic sphere, and into the small manufactory, and upwards to the large enterprise. The reason is quite simple. Capitalist production – even using the same means of production – raises labour productivity by means of the Division of labour, and more efficient organisation of production. Consequently, it is able to pay much higher wages than could be obtained in domestic production, whilst still extracting a profit.

Bradby's further argument that this domestic labour has the potential to contradict “value regulated labour” is also false. She says,

“For Labour done in the home is not governed by time economy in the way that labour is inside the capitalist sector. Use values produced at home very often derive value from having more time spent on them, rather than less, as in capitalist competition. A three course meal has more 'value' in domestic terms than a quick snack, a carefully ironed shirt more than one pulled straight from the tumble drier....The Capitalist firm, on the other hand, increases surplus value by spending less time on each operation than does its rivals.” (p126)

This argument is wrong on so many levels. Its actually a version of those Narodnik arguments - what Lenin called Economic Romanticism - against which Lenin argued. Firstly, it is precisely the basis of the LTV that Value is a function of labour-time. A three course meal in a restaurant also has more value than a quick snack! In Capitalist production as much as in doemstic production value is higher where more labour-time is required. Bradby's argument that the capitalist firm seeks to minimise necessary labour to maximise Surplus value is correct, but she has moved from a discussion of value to Surplus value without seeming to notice the difference! That is why diamonds have a higher value than potatoes. But in both cases, value is not added by needlessly using more time than is necessary. For example, does the carefully ironed shirt, dried in the tumble drier, have less value than a similarly ironed shirt dried using a hand cranked mangle and washed in a dolly tub, or down at the river? A well prepared three course meal may have more value than something slapped together in ten minutes, but does it have more value, because it was produced using no mechanical aids, than the same meal produced in half the time using such assistance, and thereby providing the time for the production of additional Use Values?

It is, in fact, impossible to determine whether any part of female, domestic labour is unpaid, precisely because, outside a market, neither its payment nor its output is measured. Under those conditions, only part of its relation with a male recipient of a part of that output, and who pays for that output from their own revenue, are determined by Exchange Value. Outside a market relation the actual amounts exchanged will vary in each particular case. The longer such a situation continues, the worse the oppression of women. To that extent, the natural tendency of Capital to expand at the expense of domestic production, continues to be progressive, and a force aiding the liberation of women, because each household will have an incentive in maximising its Exchange Value by mechanising domestic production so as to free female domestic labour from that drudgery. Capital has an incentive in such a development for two reasons.

Firstly, in the absence of efficient means of performing domestic labour, more of society's available labour-time is taken up in performing thse functions, which constitute Necessary Labour-Time for the reproduction of of Labour-Power. It raises the Value of Labour Power with a consequent opposite effect on Surplus Value. There may well be other sociological and historical reasons why, within the household, the burden of this Labour falls on women. But, the reality is that the development of Capitalism and the extension of Exchange Value acts to undermine those other factors, to liberate women from the “idiocy” of domestic life. If those other factors continue – the role of paternalism, sexism etc. - then rather like the continuation of racism, homophobia etc., it should be viewed in terms of the fact that Capitalism has failed to do a thorough job of modernising society – just as it has failed to carry through consistently the bourgeois democratic revolution – has settled for compromise with the past in the interests of social stability rather than open conflict, has failed to settle accounts with these relics of the past, rather than that it has deliberately reproduced them.

In my post A tale Of Contradictions I wrote,

“It is also no wonder that after 100 years, in which that Social-Democratic consensus has papered over not just the contradictions of class society, but papered over the other divisions within it, the cleavages of gender, sexual orientation, ethnicity and so on, and rather than dealing with them by thoroughly democratic means, which would have involved open struggle against the remnants of past ideologies, dragged down through the ages like shit through a sewer, has attempted to modernise society by bureaucratic and police methods – a good example is the legislation enacted in the 1970's on Equal Pay and Discrimination, which has not only failed to bring about the first, but has in some ways by criminalising the latter rather than dealing with it in people's heads, only driven it under ground, and, like illegal drugs, made it more powerful in the hands of its purveyors – that every time a crisis arises upon which the basis of that Social democratic consensus is undermined, these other contradictions become heightened, and exposed to the oxygen flare up.”

But, for capital, particularly Big Capital, any advantages that might arise from a division of the working-class, are almost certainly outweighed by the social costs of those same divisions, and the problems caused by social instability and uncertainty. Big Capital really only needs to so divide workers when its own existence is threatened. But such revolutionary situations are very rare. In the meantime, it is able to maximise its exploitation of Labour much more efficiently via that Social Democratic consensus it has fostered, which incorporates Labour, and limits its struggles within the manageable confines of collective bargaining whether in the workplace or within the forums of bourgeois democracy.

Secondly, Big Capital, in particular, needs to ensure that it can maximise the amount of Labour available to be exploited. That is particularly true in modern developed economies where the use of family planning means that large increases in Labour do not occur, and where the continuance of those relics of past society, such as racism, means that it is faced with a problem if it makes up the shortfall by an encouragement of immigration. Domestic Labour is necessary Labour, but it is not productive Labour i.e. it does not exchange with Capital, and does not produce Surplus Value. Like Peasant or slave labour, it may produce Surplus Use Values, and this means an increase in personal wealth. But, that is not an increase in Exchange Value, and, therefore, not an increase in the specific form of Capitalist Wealth – Capital. Consequently, Capital has an incentive not only to diminish the amount of Necessary Labour-time expended by this domestic labour, but, having done so, to bring that Labour into the Labour market to be sold as a commodity, to exchange with Capital, and, therefore, to become productive Labour, assisting in the accumulation of Capital.

Capitalism developed by the encroachment of Exchange Value into Peasant, domestic production. The basic mechanism was the Division of Labour, and then the application of technology. It would be surprising if Capital did not continue that process in order to continue its drive to reduce the Value of Labour Power, and in order to make available additional reserves of labour power to be exploited. The means of achieving that may be varied. Take the question of laundry. The initial response was the development of commercial laundries, but this tended to be inefficient because of the time taken between its collection and return. A second response was the development of the Laundrette, which could make available washing machines, and driers, but time was still required to go to and from the Laundrette. The development of technology such that white goods became readily available at low prices ultimately became the main solution.

The development of State provision of services has to be viewed in similar terms of Capital looking for the most effective means of reducing the Necessary labour-time required for the reproduction of Labour Power. Its within that context that the question of whether Labour employed by the State should be viewed as Productive or Unproductive. According to Marx, all Tax is a deduction from Surplus Value. That is true as I demonstrated in my blog Politics & Programme of The First International. But, there are a couple of caveats here. Firstly, Marx was talking about Tax raised to pay for Governmental activities i.e. for the administration of the State. He says, “Taxes are the economic basis of the government machinery and of nothing else.” But, clearly as I point out in that post the situation is different where what we are talking about is not the government machinery, but goods and services – commodities – produced and sold by the State. As I point out there, and as I have argued in Part 3 here, if this production is of commodities, which form a part of the wage bundle that constitutes the Value of Labour Power – and as I have pointed out it does not matter that the commodity healthcare or education is purchased collectively by the working-class, even though consumed individually – then essentially there is no difference than had workers purchased these commodities from any other Capitalist. All we have here is a collective payment for these commodities, in the form of tax paid by workers to the Capitalist State, which provides the contracted service as and when required, just as an insurance company provides the contracted service to get a car or house repaired as and when required.

The second caveat is that although all tax is a deduction from Surplus Value, it is also true that because Surplus Value stands in an inverse relation to Wages, then Tax paid for such commodities purchased from the State, is no different than any other necessary expenditure out of wages to purchase wage goods. Health and education merely become wage goods purchased from the State via the payment of tax, as opposed to purchased from a private supplier via an individual insurance premium or direct payment.

Where Tax simply goes to cover “the economic basis of the government machinery”, then this is an exchange of revenue with revenue. It is a payment by Capital to its State to cover its administrative costs. As such it is not an activity, which is productive of Surplus Value, and although the Labour employed in such functions may be classed as Necessary – certainly from the point of view of Capital – it is not productive labour. But, what about the labour-Power employed in the provision of the commodities Education and Health? These commodities are bought by workers as necessary components of the reproduction of Labour Power, just as necessary in a modern economy as food, clothing and shelter. The fact that workers buy these commodities collectively via the payment of tax does not change that fact. There are many forms of payment for commodities utilised by Capital. This is just one of them. But, in that case we can see that these Commodities are produced by a State capital, and the wage labour which exchanges with this Capital in order to produce these commodities must be Productive Labour, just as productive as if it were employed by a private Capital running a school or a hospital. Whether the State actually realises a Surplus Value out of such activity is as irrelevant as whether GM realised a Surplus Value – for years it did not – out of the Productive Labour it employed to produce cars, or whether a private hospital realised a profit from the Labour-Power it employed. But, it can be seen from this why Capital is keen that such commodities, which today form a huge component part of the Value of Labour Power should be produced by the most efficient means.

So long as various restrictions existed which limited the ability of Capital to exploit Labour on a global scale, the Value of Labour Power was largely determined on a national basis. That is it was the average socially necessary labour-time required to reproduce Labour-Power within that economy. That could lead to wide variations. However, the development of a global economy in the period after WWII, and more particularly over the last 30 years, means that Capital is able today to move quickly to most parts of the world to exploit available Labour Power. Increasingly, these variations disappear, and so it is the average necessary labour-time required globally that determines the Value of Labour Power. As a consequence, Capital searches out more assiduously, those methods of production, which minimise these costs. Hence, there is a tendency to move to the same kinds of provision of these commodities. Certain economies where a surfeit of Labour Power existed, such as China, could, for a time, substitute quantity for quality, but even China now has used up its vast available reserve. China too, is likely to have to respond by introducing some form of socialised healthcare similar to that in Europe, and for the same reasons.

A final argument has been raised in relation to socialised production in order to suggest that it is somehow different to commodity production, that is that the provision of healthcare to workers is beyond that which would be necessary just to provide suitable supplies of Labour-Power. But, the answer to this is quite simple. Engels, in his “History of the Working Class” writes,

“Again, the repeated visitations of cholera, typhus, small-pox, and other epidemics have shown the British bourgeois the urgent necessity of sanitation in his towns and cities, if he wishes to save himself and family from falling victims to such diseases.”

The bourgeoisie have no desire to die from Cancer, or Heart Disease, or to suffer from Alzheimer's either. But, the cost of producing cures for these things, or of producing treatments and so on as with the development costs of any new commodity are immense. And, as with any other commodity, once developed, the costs of production can only be significantly reduced by production on a mass scale. The working-class is many, many times larger than the bourgeoisie. Even were it not the case that the conditions of life make the working-class more prone to illness, the much larger numbers mean that for any illness it will be far more prominent within the working class. The working-class necessarily, then provides the large numbers needed to study any illness, to provide the required number of guinea pigs upon which potential cures and treatments can be tested out, and when available the provision of those drugs and other treatments on a mass scale, largely paid for out of workers taxes, makes them available at affordable prices to the bourgeoisie.

If workers want to develop production for need, if they want to begin to develop production based upon Use Value rather than the domination of Exchange Value then they can only do that on the basis of their own collective production, not by looking to production by the Capitalist State. But, just as Exchange Value pushed out Use Value, as generalised commodity production opened the potential for more efficient production based upon comparative advantage, specialisation, the division of labour, and ultimately Capitalist production, so that Capitalist production can only be pushed out, if collective, co-operative production itself demonstrates its superiority, demonstrates its ability to raise productive potential and efficiency. Upon that rests the question of whether Socialism is possible. The starting point is for workers to begin to re-establish their ownership of the means of production, and to begin that co-operative production on a sufficient scale, and by choosing the most suitable areas that begins to demonstrate its potential.

Back To Part 3

Tuesday, 21 September 2010

Value Theory, The Transformation Problem & Domestic Labour - Part 3

The Critique of the Labour Theory of Value

b) Generalised Commodity Production

The reason Bradby makes her argument about Money is to undermine one definition of Generalised Commodity Production i.e. an economy in which exchange is mediated by the use of Money. She then turns to another definition, that of an economy in which, the majority of economic activity is based upon production for the purpose of Exchange. But, the problem with this definition, she claims, is that, in all modern societies, the biggest two employers are the State and Domestic Labour. This opens some interesting questions.

Before coming on to that let me just add that, of course, there is another definition of GCP, which is essentially that I have outlined above. That is, that, at a certain point in history, quantity changes into quality. At a certain level of trade it becomes possible, and even necessary, to evaluate commodities one with another. At the point, historically, this occurs we can say that there is Generalised Commodity Production. That does not, of course, mean that at this point there is Capitalism, nor even that Exchange Value has assumed a mature form. Capitalism is a system based on GCP, which is a necessary, but not sufficient condition. However, it does signify that at this point, because it has become possible to assign an Exchange Value to commodities that same Exchange Value is impressed upon Use Values that were not produced as commodities. The importance of that is considerable. A peasant whose land has a rich coal deposit on it will not have exploited the coal, because he can only consume a certain quantity of it. His economic activity will have been determined by Use Value. But, when a sizeable market for coal develops, and he becomes aware of the Exchange Value of coal as compared to say the potatoes he currently spends his time, and uses his land, to produce, for his own consumption, he may well see that spending the same amount of time producing coal, will render him sufficient Exchange Value so as to be able to buy far more potatoes than he is currently able to produce in that same time.

The Use Value “clean laundry” might be produced purely as a Use Value, by domestic Labour, but it is unlikely that the Exchange Value of “clean laundry” produced as a commodity will not be considered. That, after all, is why commercial Laundries arose, and why washing machines became commonplace, because workers measured the Exchange Value of those items in relation to the time spent on producing “clean laundry”, and related it to the Exchange Value that could be earned from wage labour as opposed to domestic labour during that same time.

The same is true in relation to the State. But, there are nuances. Firstly, it is clear that State production is determined by Exchange Value – for one thing nationalised industries were once required to set their prices equal to their Marginal Costs. Capital did not nationalise or socialise production and distribution out of some desire to meet society's needs removed from its own need to maximise profits. Nor does it conversely seek then to privatise what it once nationalised purely out of ideological conviction. Capital is quite happy to nationalise where it is in its interests to do so. It seeks to privatise where it believes it will reduce its costs by doing so. Moreover, the goods and services produced by the State are themselves commodities. Certainly, the Labour-Power purchased by the State capitalist is sold as wage-labour, as a commodity. The goods and services produced by the State Capitalist and sold to workers collectively under conditions of State Monopoly Capitalism, are commodities. The fact that they are sold to the working-class collectively – though consumed individually – does not change that fact. Nor does the fact that they are sold under conditions of Monopoly. The existence of that Monopoly might mean that workers overpay for those goods and services, but that is merely a function of Monopoly, not of State production.

Consider, the following. There is a small island close to the mainland. Most workers live on the island, but the majority of factories are on the mainland. Capital needs to get the workers to the factories. Workers might build their own little boats, and row to the mainland. For Capital this is an inefficient solution. The workers need recompense in their wages for the cost of building their boats. It forms part of the Value of Labour Power. Moreover, by exerting themselves in rowing, they arrive at work with part of their Labour-Power already depleted. It is in Capital's interest to find a more efficient solution. If a capitalist comes along and proposes to build a bridge to the island, they may agree to produce this commodity on condition that they can sell it to the workers on the island collectively. The workers on the island get together, and agree that it would be in their collective interest, and so agree to buy this commodity collectively, in return for the ability to use the bridge free of charge as and when they need to get to the mainland. The bridge was built as a commodity and sold as a commodity even though it was bought collectively and is consumed individually. The question of who the Capitalist is who built the bridge is irrelevant, it could have been a Capitalist State producer.

But, this is essentially the case with things such as Healthcare and Education produced by the Capitalist State. Capital requires a continual supply of wage workers, and in a modern economy requires them to be reasonably healthy so as not to be away from work, and so that the investment in education and training given to them is not wasted by early death. It also requires that they be educated to a given standard, or to a range of standards appropriate for jobs of varying degrees of skill and intelligence. In this instance, Health and Education are no different from the bridge. The advantage for Capital is that the workers themselves pay for the bridge that is necessary to get them to work efficiently. The only relevant question for capital here is who can produce the Bridge most efficiently, and is the most efficient solution one based on a once off price, or on the application of tolls.

In fact, its in that light that State provision ought really to be understand as the sale not of Health or Education and so on, but in terms of the sale of insurance to workers. But, that insurance is a commodity too. And like any insurance company, once it has sold the cover it is keen not to pay out if possible – which is why it changes the rules on Pensions for instance. But, where it does pay out, it wants to minimise what it pays for a given quality of provision. In Europe, for example, socialised healthcare works primarily on the basis of a State run insurance scheme, which all workers are expected to contribute to, because it has been found that such single payer schemes are far more efficient in collecting premiums and negotiating with suppliers than multiple private insurers as in the US, but the State then purchases the healthcare from private producers. It is like a car insurance where the insurer decides whether to do repairs themselves or to have them done by the most competitive specialist. Most of these European schemes are not only much more efficient than the NHS, but the level of healthcare provided is generally higher too. That is one reason that Capital in the UK has been trying to move in a similar direction. By comparison, the US system of multiple insurers, selling Health insurance either individually, or collectively has huge administrative costs, and the near monopoly of some insurers in particular areas has meant that the costs to US Capital have soared, which is why those sections of Big Capital in the US that provide such insurance to their employees, have been trying to shift this burden from their own books on to that of the State. The advantage for Capital of compulsory State schemes is that it ensures that workers are given no choice over the proportion of their wage devoted to things such as Health and Education, so that Capital obtains some control over the reproduction of Labour Power itself in order to ensure that it is fit for purpose.

To suggest that production, provision or distribution by the Capitalist State of these items is NOT a production, provision or distribution of commodities, and, therefore, governed by Exchange Value, which is inherent in Bradby's argument is to argue that this production, provision, or distribution is in some sense at least “post-capitalist”, if not socialist. It is not. State capitalism as Engels argued is a more, perhaps the, most mature form of Capitalism, but it is still Capitalism. And for that reason it remains governed by Exchange Value not Use Value.

In the next part. I will look more closely at Bradby's arguments in relation to domestic Labour, and the connections with the question of Productive and Unproductive Labour.

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