The Tories, who have found their own magic money tree, from which they want to fund hundreds of billions of Pounds worth of additional spending, as well as hundreds of billions of Pounds of tax cuts for the rich, are criticising Labour for its own plans to borrow and spend money to repair the shattered fabric of Britain caused by a decade of Tory austerity. Their claims that Labour plans to spend £1.2 trillion, have even be ridiculed by sections of the Tory media. But, the reality is that, even if Labour did intend to spend that kind of money, providing Britain with the kind of 21st century infrastructure, healthcare, education and other basic requirements for a modern economy, it would be perfectly sensible to do so, given that it would be borrowing at negative real rates of interest. In other words, it would be being paid by lenders to borrow their money!
That might seem absurd, but it is the reality across much of the globe. Around the globe, $15 trillion of bonds have negative yields, even in nominal terms. This amounts to around 25% of all bonds. That arises, because, in the secondary bond markets, where speculators buy existing bonds from each other, they are buying bonds at prices higher than their face value. In other words, suppose the government issues a $100 10 year bond that pays a coupon (interest) of $2 p.a. Over the ten years, it pays out $20 in interest, as well as paying back the original $100. So, $120 in total. But, because demand for bonds has been increased so much due to speculation, itself encouraged by central banks, via their policies of QE, speculators are currently prepared to pay, say, $130 for such a bond. That means that, at the end of ten years, even allowing for the $20 of interest, they would be $10 worse off than they started out! They have received negative interest.
Why do lenders do this. For one thing, some of those lenders are central banks who have bought these bonds, as part of their programme of QE. Central banks now own a significant proportion of the bonds that have been issued. In addition, as part of QE, LTRO etc., central banks lent money to commercial banks at zero rates of interest, or near to it, and encouraged those commercial banks themselves to buy up bonds, so as to inflate their prices. They have done this, because the top 0.01% hold nearly all their wealth in the form of fictitious capital, that is shares, bonds and their derivatives. Every time there is a crash in these financial markets, it means that the paper wealth of that top 0.01% takes a big hit, and it is from that wealth that they get their power and influence. In fact, because in the 1980's and 90's, the rate and mass of profit globally had been rising sharply, there was already a large increase in the amount of loanable money-capital relative to demand for it, which caused interest rates to fall, and which was the initial cause of the sharp rise in these asset prices to begin with.
The other reason that lenders, therefore, have lent money at negative rates of interest is that they have become more concerned at being able to make capital gains from asset price inflation, than they have about the interest they get on their investment. For example, suppose you bought the bond in the example above for $120, as against its face value of $100. After 10 years, you have had the same $20 of interest, so that your real rate of interest is zero. However, if at some point after you have bought the bond, you think you can sell it on yourself, you might think that you can do so at a much higher price. If, in fact, you sell it for, say, $140, you will have actually made $20 in capital gains. This same phenomenon can be seen in the property market, where speculators have bought property and even left it vacant, thereby producing no rent for them. They do so, because they are only interested in the possibility of the price of the property escalating.
But, in addition to these nominal negative yields, there is a much greater amount of debt that has real negative yields. In other words, the interest you get paid is less than the fall in the value of the capital due to inflation. In other words, take a 1 year bond, with a face value of £100. It pays a coupon of £1, i.e. a yield of 1%. If inflation is 2% p.a., in reality, this £1 will actually only have a current value of £0.98, but, more significantly, the £100 you get back at the end of the year will only be equal to £98 today. So, in real terms, you will be £2.02 worse off for having loaned your money out. This current value of the bond, adjusted for inflation, is called its net present value. Now suppose, instead of a one year bond, we consider a 30 year bond, which is the kind of duration a Labour government might want to issue, to cover long-term financing for building hospitals, schools, roads and so on. Currently, the yield on UK 30 year bonds is around 1.7%. So, supposing the government were going to actually borrow £1 trillion for such investment.
Over 30 years, it would pay out £1 trillion x 1.7% in interest, p.a. for 30 years = £510 billion. Certainly a lot of money. However, if we assume 2% p.a. inflation, then the net present value of the £1 trillion is £552 billion. That means the NPV is £480 billion less than the face value. But, for the same reason, the £510 billion of interest payments will have been diminishing in real value each year too. The inflation adjusted value of the £510 billion is approximately £378 billion. In other words, the real current value of the total interest paid is approximately £100 billion less than the capital loss. It means, in real terms, the lender has paid the government £100 billion to borrow this £1 trillion over thirty years! So, why on Earth would any sensible government not take advantage of the fact that it can borrow at negative real rates of interest to finance much needed investment in the economy?
Of course, the argument is that, if the government came to borrow this money, the very fact of the additional borrowing would cause the rate of interest it has to pay to rise. Andrew Neill recently pointed to a statement from the world's biggest Bond Fund, PIMCO, where Ed Balls brother works, to the effect that, if such large scale borrowing were undertaken, it would steer clear of UK debt. But, the fact is that there are no shortages of other potential buyers of this debt. That is why there is that $15 trillion of negative yielding debt already. There is around $60 trillion of debt globally, and if real yields are taken into consideration, a large part of it pays negative real yields. Italy, whose credit worthiness is much worse than Britain's has just seen high demand for its latest issue of 30 year bonds, for instance. Moreover, Britain can currently borrow for ten years, at just 0.74%, so that it could spread its borrowing requirements over a period, by issuing a series of 10 year bonds over the next few years.
And, that is assuming that inflation remains at around the 2% target set for the Bank of England. Over a thirty year period that seems highly unlikely. Even in the last decade, we have seen inflation rise to around 5%. The current low levels of inflation are an anomaly, as are the low rates of interest. In part they have the same cause. QE has drained liquidity out of the real economy, so as to channel it into financial and property speculation. The low levels of general inflation are the corollary of the hyper-inflation of asset prices, just as the low yields on those assets, arising from the soaring prices of those assets, sees its corollary in the dearth of available loanable funds for the real economy, for small and medium sized business. If all of that liquidity pumped into the system by central banks had been directed towards the real economy, and real investment, then economic growth would have been much higher, employment growth would have been much stronger, and general inflation would have risen. Indeed, that is another reason why its necessary for the government to step in and direct their money towards the real economy, and away from dangerous financial and property speculation that creates destablising asset price bubbles that burst.
The Tories have wanted to paint this picture about out of control Labour spending and borrowing, because they want it to play into the narrative they have used for the last decade that the crisis of 2008 was in some way a fault of Labour profligacy. But, of course that claim is nonsense. The reality is that under Thatcher and Major's 18 years in government, there were only 2 years in which they ran a budget surplus, whereas in the 11 years of Labour under Blair and Brown, there were four years in which there was a budget surplus. Up to the financial crisis of 2008, the average deficit to GDP ratio under Blair and Brown was half that under Thatcher and Major. The main reason for UK government debt having risen was not Labour profligacy but was the global financial crisis itself, which led Blair and Brown to bail out the banks and financial system to the tune of £2 trillion, which makes even the proposed £1 trillion of spending and borrowing to finance real investment in the economy look like a bargain.
The Tories try to blame the 2008 financial crisis on Labour, despite the fact it started in the US, but the real culprit for that crisis is actually Thatcher and Reagan, back in the 1980's, who deregulated financial markets, and encouraged everyone to borrow and spend on an unprecedented scale. It was that which started the blowing up of sequential bubbles in financial and property markets, and it was the actions of conservative governments, and conservatively minded central banks who ensured that those bubbles were continually reflated every time they burst that caused the financial crisis of 2008. Indeed, they have done exactly the same thing following 2008 to reflate those bubbles, which means they have paved he way for an even bigger, even more devastating financial crash to come.
The Tories point to this spending and borrowing by Labour, but the fact is that, even after 2008, Labour's policies had started to bring about economic recovery. In the last quarter that Labour can be accountable for, GDP rose in Britain by 1%, or around 4% p.a. The Tories have failed to match that in all the time they have been in government.
But, even in terms of their argument over borrowing, and interest rates, the Tories lie. The yield on UK Ten Year Gilts was falling at the time Labour left office, and was even then at historically low levels, even before QE, sent those yields lower.
The Tories say that Labour's plans would add around £43,000 to household debt, but that is minor compared to the increase in household debt that the Tories policies have created since the 1980's. Take the major form of debt that many households incur, that of mortgage debt. At the end of the 1970's, the average house price was around £15,000, whereas today it is around £300,000, though there are wide regional variations. So, in say 1979, when the Tories came in, you might have needed to put down £3,000 deposit, and borrow £12,000 to buy a house. Today, if you can raise the minimum 5% deposit, that still leaves you needing to borrow around £285,000 to buy the average house. Even allowing for inflation over that period, that is a massive increase in the amount of debt that households need to undertake. Even one Tory MP was moved to comment, some time ago, that if other prices had risen by the same amount as house prices, you would be paying around £35 for a frozen chicken!
Yet, the Tories are happy for people to have to take on this astronomical amount of debt to buy a basic requirement of life. Indeed, their policies have done everything possible to inflate house prices further, such as via their Help To Buy scam. They have also been happy for people to take on much greater amounts of debt in the form of Student Loans to pay for University Tuition, and so on, and their low wage policy to subsidise cheap skate employers has led to millions of people having to resort to payday lenders, charging interest at rates up to 4000% p.a., just to get to the end of the month.
Set against all that borrowing that the Tories have brought about, even were it true that Labour's plans amount to an extra £43,000 of debt per household, it would be money well spent to get the hospitals, doctors, schools, roads, broadband, old folks homes and so on that we need for a civilised existence, and which the Tories once again have destroyed over the last ten years with their insane, economically illiterate, policy of austerity, whose main purpose was to ensue that the asset prices of their rich friends were once again reflated.
Once again, we find what we find with every Tory government, which is that they fail to do the necessary repairs on the fabric of the building. Like a Rachmanite private landlord, they want to take in the rent, but allow the accommodation to rot, and when they do repairs, as with Grenfell, they want it done on the cheap, even if it puts lives at risk. Like every other Tory government they do that so that they can sell off the family silver to their friends. Like every other Tory government they leave the country in a mess that a Labour government then has to come in and clean up after them.
16 comments:
Don't we need to move on from the borrow to spend paradigm? As with QE, the govt is able to 'print' money to fund spending so borrowing/increase debt is not an issue?
The government cannot simply print money. Money has to be created as with any other commodity. The government can only print money tokens as representatives of that money. If it creates more of these tokens, without actually producing more money it simply devalues each of those tokens in circulation. That is what QE has done. It leads to inflation, because money is the indirect measure of the value of other commodities. Its like measuring the length of a football pitch with a foot ruler rather than a yardstick. The length of the pitch itself does not change, but the number you get measured in feet is three times greater than the measure you get in yards.
That is why there has been a hyperinflation of all those assets into which all of the QE has been diverted. And, of course that is not t all cost free. Take housing, by hyperinflating house prices, the cost has been immediately born by all those people who have had to pay these hyperinflated prices; it is paid by those who cannot afford to buy the houses at those prices, including those who now can't afford to move from a lower priced house to a higher priced house; it is born by those who have to go into rented accommodation, because it has pushed rents also to astronomical levels too, part of which is paid for out of taxes in the form of £9 billion a year of Housing Benefit that goes into the pockets of landlords, that otherwise could have been used to finance schools, hospitals etc.
Similarly, it has caused an hyperinflation of shares and bonds, which means that monthly pension contributions today by perhaps only 3-4% of the number of shares and bonds they did back in 1980. That means the capital base of pension funds is undermined, which is why we have black holes in pension funds. So, the cost of printing money is already being born by those whose pension funds have been destroyed, and whose pensions where they still exist have been massively devalued.
Ultimately, those bubbles will burst which will cause further disruption. In the meantime, to cover the higher price of shelter and of pension provision, wages would need to rise hugely. That huge rise in wages, means that profits would then be significantly reduced. If profits are thereby reduced, that means less available for investment in new capital, so that economic growth and employment is reduced, which means that workers would pay for it via unemployment and lower living standards in the longer term.
There is no magic money tree. Money is the universal equivalent form of value, and value can only be created by new purposeful labour.
Very interesting and comprehensive response indeed! To be honest, I'm pretty ignorant when it comes to this sort of thing. Perhaps naive.
Could you please explain if we can ducting at all as interdependent nations without money and within a communist or socialist state of affairs? Is it actually needed? I think it may have a functional value perhaps, but it is dispensable in that it can be done away with as something that maintains the division between the have and have nots right?
Sorry, but I don't understand the question your are asking. I don't understand what you mean by "ducting"?
If you are asking is money required under communism the answer is no. But, communism is a long way from where we are. Money is a commodity in which the value of other commodities is measured indirectly. It is as Marx calls it, therefore, the general commodity. many commodities have served as the money commodity in history from cattle to silver and gold. Money tokens, such as a gold coin, or a copper coin, or a paper bank note, act as mere representatives of a quantity of this money commodity.
A money commodity, and then these money tokens arise as a means of measuring value indirectly, because the volume of trade, of exchange of commodities, increases to such an extent that it becomes impossible to for those engaged in these exchanges to measure the actual value of any commodity directly, i.e. to measure the labour-time required for its production. So, a general commodity such as gold arises, whose value is known, and the labour-time required for its production becomes the general measure of the value of other commodities, and the labour used in the production of this commodity becomes a proxy for abstract labour.
But, the real basis of money is that it is a claim to a certain quantity of social labour-time. A money commodity is merely an embodiment of this claim in a physical form, a claim to a commodity that itself contains this amount of value. It is never then necessary to actually have this physical commodity in your possession, or for it even to exist, provided that the state by issuing fiat currency can guarantee your right to that equivalent amount of social labour-time. Initially, that takes the form of state issued bank notes, but today it takes the form of electronic entries on a bank account.
Money is required in conditions where the values of commodities continue to be calculated indirectly, as relative values, as the value of commodity A, relative to commodities B, C, D, E etc, i.e. its exchange value, which takes the form of its price, its exchange value against the general commodity money.
But, under communism, this calculation of indirect value, of exchange value, and so of prices becomes unnecessary because it becomes possible to calculate value directly. The book-keeping of society will provide all of the data about how much labour-time is required to produce every commodity, and every component of every commodity. So money itself then becomes superfluous to this calculation. Gold can go back to being just a commodity like any other useful for producing jewellery or in electronic circuits and so on. Its requirement as money will cease.
Instead, when we again know that a ton of apples requires 100 hours of labour-time to produce, whereas a ton of potatoes require 200 hours of labour-time to produce, we will know the value of each directly as a certain quantity of labour-time. For each individual who works 200 hours (subject to some deductions for items that society itself requires that must be met out of a social pot) they will get a certificate that says you are entitled to take products from society's store equal to this 200 hours. So, they could take out either 2 tons of apples or 1 ton of potatoes, or a combination of the two etc.
For society itself, having direct knowledge of these values, it can decide in respect of large expenditures of labour-time, what its priorities are. For example, it can decide to build x amounts of hospitals, and y amount of schools, balancing the utility it considers it obtains from these productions against their value, i.e. against the quantity of social labour-time required for their production.
Cont'd
Cont'd
All of this has become much easier as a result of the advance in technology since Marx's day. For example, there is no need now to issue actual certificates to workers of the number of hours of labour-time they are entitled to withdraw, because each simply has an electronic account in which this information is stored, and each time they withdraw goods and services from society's store, there account would be electronically debited with this amount. It only requires everyone to have the equivalent of a credit card.
We could allow the rich to retain their wealth as a large store of such credit in their account as a means of placating their resistance, because this wealth could no longer act as capital. Workers would own he means of production collectively, so that their labour was no longer exploited by capital. Interest itself would disappear under communism, because money-capital would disappear, so there would be no requirement to borrow it, or if such borrowing did occur, it could be provided by the state so that the state itself would accrue the interest to cover its own expenses, in the same way that in the 19th century, some of the industrial capitalists proposed that land be nationalised so that all rents went to the state, so as to reduce its requirement to levy taxes.
As no individual could, thereby obtain additional credit into their account other than by performing labour, the wealth of the rich would only enable them to consume, not to exploit, and over time, therefore, it would disappear, and along with it the fundamental inequalities in societies.
Thank you very much for that very detailed response. I often wondered about that, but you have clarified much of it. I especially like,
"We could allow the rich to retain their wealth as a large store of such credit in their account as a means of placating their resistance, because this wealth could no longer act as capital."
As for 'ducting', Samsung phones are really great at auot-wronging what's 'swipe-typed'.
With regards to 'all rents going to the state'. I, unfortunately, live in singapore, where 'all rents go to the state', but unfortunately, the state acts as the ultimate capitalist, and enriches itself like a private company, whilst the (largely racist and apathetic chinese) people are alright with being told to take care of themselves. State capitalist might be the appropriate term for it.
I've favourited your site a couple of years ago when i chanced upon it, but it is only now that i've started reading it. I've lived in the UK for more than a decade (and will probably be returning there soon, hopefully) and hence find that the system in the UK is quite the contrast and education compared to singapore. Well, please keep up the writings, as it is certainly one of the last 'warrior' blogs around where one can learn more than a thing or two.
Lastly, great taste in music mate. :)
ed
What should the "ducting" have been for interest?
On rents and the state. As I said, the proposal originally, in the 19th century did come from ideologists of industrial capital, who saw it as a means of hitting landlords, and reducing taxes on capital. For Marxists, the workers state is something that workers themselves construct on the basis of the workers themselves having taken power. We do not at all think its possible to simply take over the existing capitalist state. Moreover, we want the state itself to "wither away". We want it to be replaced by merely a means of administration of things, so that for example, things that are more rationally coordinated at a global level can be so. An example, is what Marx said about education. He said it was objectionable that the state should be involved in providing education, but that its necessary to have nationally agreed minimum standards, and so quite acceptable to have state inspectors to ensure that these standards were being met. But, even that, was only necessary when workers themselves were at a low level of development and under pressure to send their children to work, for long periods. Today, workers are quite capable of enforcing such minimum standards by their involvement in School Boards and so on.
One of my son's friends went to live in Malaysia a year or so ago.
Glad you like the music.
If you like the music, you might want to check this out.
Soul Boy.
My son worked as camera crew on the film, made here in Stoke. He also ferried the cast around North Staffordshire in my other son's car, doing location spotting etc. He also features for few second as a barman in the film. On top of that, he also worked redecorating Stoke Town Hall, to fit in with its presentation as being Wigan Casino!
Hi Boffy,
Haha...i was wondering too, when i read the 'ducting' bit. How on earth did 'function' come out as 'ducting'? Yes, it's 'function'. You are very meticulous. Good that.
Questions...
"the workers state is something that workers themselves construct on the basis of the workers themselves having taken power. We do not at all think its possible to simply take over the existing capitalist state."
Isn't 'taking over the capitalist state' the same as the workers constructing the state and taking power?
By the state 'withering' away, it is something like movement toward an 'anarchist' state right?....where the state is simply administrative? Or is anarchism the endpoint of communism? Just want to get the terminology correct - it's been a couple of decades since i did Marxism at uni in Lancashire, so i'm a bit rusty now.
Yes. I agree with what you say about the workers now being ready to maintain curriculum standards - though that wouldn't apply to the people here in singapore, as the chinese in this part of the world are adept in the martial art of 'leaving the thinking to the professionals'. They still believe the government's implied standpoint that marxists are by definition violent revolutionaries and terrorists.
I was a kid in the 70s and a teen in the 80s. Whilst i love the 80s, i'm always more appealed to by the 70s with its more adult, relatively intricate, and depth - which is why i'm pretty much into 70s Jazz....and do it myself.
I followed the link, but the screen was a bit too small. I'll get it off the internet 'sharing-is-caring distribution' centre later on. Will watch for your son. Thanks for the link.
Malaysia is alright i suppose. It's far more down-to-earth, and the people are more 'real' and sincere unlike singapore. The Malays are generally a warm, hospitable, sort of people. So it should be alright for your son's friends. Marx, if i recall, said something about culture being formed by economics - historical materialism and all that i think. He should have come to asia and hung out for a bit. Over here, economic and social being is interpreted through the cultural framework, and it is more so the case with the chinese whose culture here has stood the test of time for more than 2000 years. Capitalism goes so well with them.
Ed,
Thanks for clearing up the ducting. On the Workers' State. The capitalists state is there to protect capital against workers. It can't be taken over, but has to be smashed. For one thing all of the personnel of he state are connected to the capitalist class. It was a problem the Bolsheviks found in Russia.
Lenin, in State and Revolution, underestimated the complexity of the state. The result was that they did not have the people who could undertake those functions. Not only under NEP did they have to bring back private capitalists and the old managers to run businesses, but they also had to bring back old Tsarist state officials, diplomats and so on. At each level, they had to put in political commissars to oversee the work of these old officials, which was very bureaucratic and inefficient. If you have ever studied politics or worked in local or central government, you will be familiar with the idea of the politicians "going native" or being captured by their officials. Councillors are captured and use by the Chief Officers in Local government, becoming merely spokespeople for that bureaucracy, and Ministers have the same relation with the permanent civil service.
In Russia, under Stalin, this party bureaucracy became fused with the state bureaucracy. The old Tsarist state officials were brought into the Communist Party, and became leading representatives of the regime, as part of its degeneration.
Yes, the end point is pretty identical to that described by Anarchism. In State and revolution, Lenin makes that point that in relation to the capitalist state Marx and Bakunin were closer than many like Kautsky liked to admit. The difference is that Marx did not believe that it was possible for workers to take state power without having organisation, which meant a revolutionary party, and it would not be possible to hold on to that power, against the inevitable resistance, internally and externally, that would try to overthrow that state. That is what happened to the Paris Commune, and was a fate that Lenin was keen to avoid in Russia.
Boffy,
The capitalist state 'has to be smashed'? Frankly, that's what i think as well for a variety of reasons. But what do you mean 'smashed'? You mean outside of the 'democratic' electoral process?
On Politicians 'going native'. Something like in Yes Minister perhaps?
I really like your explanations on what happened in the ole USSR. Do you have write-ups on these along the lines of a '101' sort of thing? Something like a crash course on these and related matters on your site?
Thanks again Boffy.
ed
Ed,
On the USSR etc, check out the posts in the marxists and the Workers' State Index.
On smashing the state, it means that, in a revolutionary situation, workers will need to have their own state organs in place, and these organs will be controlled by alternative forms of workers' democracy. We have to build and prepare these organs in preparation. For example, in the American Revolution, the revolutionaries proposed a militia as their means of fighting George III and his armies. The idea of a militia is precisely that it is comprised of a citizen army. We propose replacing the standing army with such a militia that is under democratic control. In the same way in place of a full-time police force, we should have self-policing of communities, and communities should be democratically controlled by the people who live in them. Doing the community policing should be a civic duty, just like Jury Service.
Engels argued that universal military conscription was a necessary corollary of universal suffrage, because the citizenry, having elected their government, should also be the ones who then act to defend that government, and the measures they have voted to implement, guns in hand, so as to prevent their will being overturned by other force of arms.
The whole point about soviets - Workers Councils - is that they are both an immediate form of workers democracy, by which the workers whether in their workplace or in their communities exercise direct democracy over questions relating to their lives, but they also act as executive bodies, in other words, having collectively arrived at these decisions, the workers, via their own organs of state power - community policing, defence squads, militia, or simply administrative bodies used to allocate resources, for example, to build houses, to allocate houses, and so on - then directly implement those decisions. This is what Marx means by workers self-activity and self-government.
The classic confrontation between these forms of workers democracy and workers state, and the capitalist state and bourgeois democracy arises in what is called a situation of dual power. In Russia, in 1917, it is when you have Kerensky's government on the one hand, which increasingly is led to rely on the forces of reaction, such as Kolchak, supported by all of the imperialist armies of intervention, whilst on the other you have the workers having created their own soviets, and this results in the climax, of the Bolsheviks calling for "All Power To The Soviets". This is the point when the workers' democracy asserts its dominance over bourgeois democracy, and the organs of the workers' state assert their dominance over, and dismantle the apparatus of the capitalist state. They overthrow the power of the army generals, as the soldiers and sailors rise up against them, and so on.
We do not seek to violently smash the state out of choice, but recognise that in reality the capitalist class will not surrender its power peacefully. If as, Engels suggested we had universal military conscription, with thereby a permanently armed citizen's militia, and we had widespread organs of citizen's democracy - given that the large majority of thee citizenry are in fact workers - then it would be difficult for the capitalist class to organise what Marx called a slaveholders' revolt, but we cannot control the exact circumstances under which such situations will unfold, so we have to prepare on the basis of meeting fierce and violent resistance.
On Yes Minister, yes exactly that kind of thing. Former Labour Minister Dick Crossman, in his Diaries wrote about how the life of a Minister could be very easy, simply transferring what was in their "In" Box to their "Out" Box, allowing their civil servants to deal with the processing of the material. Its difficult for any politician to have the knowledge and information that their top Civil Servants possess, backed up by thousands of civil servants beneath them. Moreover, the Civil servants are professionals trained in the particular field, they stay in their job for decades, irrespective of change of government, whereas Ministers get moved every year or so.
The same in Local Government, Committee Chairs are part time politicians, they are not specialists. The agenda for meetings is drawn up by the Chief Officer of their department, and reflects the policies that this full-time bureaucracy seeks to pursue. The Chair meets with their Chief Officer, and their subordinates on a weekly basis in the latter's office for tea and biscuits, they get invited to go to the conferences and shindigs associated with the particular committee, where they can be feted by their Chief Officers. The Chair might have some pet projects they want pursued, which the officers will try to accommodate, but the Chair realises that their own prestige is judged by the success of their Department, and that depends upon its officers, so the Chair associates themselves with the programme of the bureaucracy.
Hi Boffy,
Workers need to have their own state organs....Like Shadow parliaments, etc, prior to a change in the system?
Can't the system be overturned via politically-democratic means i.e. the electoral system? (personally, i think not)
With regards to the civil service, is it that they only focus on the MEANS by which policy is achieved, and do not actually determine what the policy is? Or is it a mix of both with a tussle between the government and the civil service resulting. I'm talking about the UK or theoretical context as it does not apply to singapore where everything is under the draconian control of the fascist chinese government.
Thanks for the explanation on the workers soviets' role vs the Power. It really does clarify. And thanks for the link as well. Will read as recommended. :)
ed
Ed,
Yes. One of the things that Marxists do is that we do not prescribe formulas, solutions, or institutions plucked out of thin air, based on what we think an ideal solution would be. Instead, we adopt the scientific method of examining reality, and looking at the solutions that reality itself repeatedly throws up, and we codify those solutions, trying to identify the core essence of those solutions, why they were adopted, why they worked, what were any weaknesses that needed addressing and so on. In other words, in the same way that an evolutionary biologist looks at the way species evolve, and devolve common organs, such as eyes, we analyse why it is that these things evolve, we recognise their usefulness, and we say to workers, here is a shortcut. You do not have to relearn these lessons all over again, we will act as your collective memory.
So, in 1871, the Paris Workers created the Commune. The Commune itself was the first example of an executive state organ created by the workers themselves, as an alternative centre of power to the capitalist state. Marx and Engels recognised it as one of these instances of reality throwing up for them a solution to a problem they had understood existed, but for which they had offered no "ideal" solution, which was how would the workers organise the question of state power and administration. Prior to that they had had to work with the idea that workers would have to seek to win parliamentary majorities, and that these majorities would be backed up by universal military conscription, putting guns in the hands of the workers themselves.
Remember, that Marx and Engels conception, however, was not that these parliamentary majorities would act to nationalise industries etc., as the reformists propose. Marx and Engels model was based upon workers creating cooperatives, utilising credit, and the formation of a Cooperative federation that would pool profits to develop an ever expanding number of cooperatives. It was that they would demand control over other forms of socialised capital such as the joint stock companies. The point of winning parliamentary majorities was seen as the means of stopping the ruling class politically blocking this continual extension of workers' ownership and control. That is what Marx sets out in his 1861 Inaugural Address to the First International.
In 1905, In Russia, the Workers again created Workers Councils/Soviets that mirrored the organisation of the Paris Commune. In 1848, the revolutions across Europe, such as that in Germany, were bought off with the promise of parliamentary reform, and extension of he franchise, but as soon as the promised reform acted to quell the forward movement, the old feudal ruling class, responded by introducing a counter-revolution, followed by reaction. The same thing happened in 1905, in Paris in 1871, they simply responded by military force to crush the Commune and murder thousands of communards. In 1917, the workers in Russia again responded immediately by recreating soviets, but now the Bolsheviks also learned the lessons of both 1871 and of 1905.
In 1918, similar soviets were established in a number of European countries, including Germany and Hungary. In the 1920's, Italian Workers as they began to take over the factories, also established a network of Workers Councils. In 1926, in the British General Strike workers used local Labour party organisation and Trades Councils to set up what were effectively Workers Councils to support the strike. The same thing happened in 1984, in the Miners Strike.
Cont'd
Cont'd
The point to remember is that these organs of workers power, and workers democracy is different to that of bourgeois democracy. Bourgeois democracy is essentially a fraud. Its purpose is to fool workers into thinking that they have some real control over their lives and society via the election every few years of parliamentary representatives. The real power lies with the ruling capitalist class and its domination of the ideas that rule in society, what today is referred to as the Overton Window. It is a small minority, and the purpose of the state is to keep it in power, the purpose of bourgeois democracy is to shroud the true nature of this state as being a class state, and to present it as being in some way neutral, there to do the bidding of parliament, which in turn is the servant of society.
The reality is that whenever parliament acts in ways that fundamentally damage the interests of that ruling class, the state machinery frustrates it, and depending on the extent to which it threatens the rule of the ruling class, the more violent and determined becomes the resistance of the state, including, as happened in Chile in the 1970's, the overthrow of the government by the state.
By contrast, the purpose of workers democracy is to involve the whole of the working class, which today in developed economies forms around 75% of the population, with about 25% of the population comprising the small capitalists, and only about 0.01% comprising the dominant section of the ruling class, the ones who own the vast majority of wealth in the form of financial assets and property. To do that, a different type of democracy is required. Instead of representative democracy, you require direct democracy. That is what the system of industrial democracy in the workplace, alongside the democracy of residents and tenants in their communities gives you.
In each of these places, everyone is directly involved in democratic debate and decision making, not every 4 years, but every day. That is one reason that Marx was so keen on reducing the working day so that workers could not only educate themselves, but so that they could take part in this direct democracy. Each of these bodies elects delegates to a higher level body, in the same way that a union branch elects delegates to a Trades Council, or to its union regional Council. Those delegates are mandated, and instantly recallable if they step out of line.
But, also, workers in their community have to protect themselves both against criminal elements, and against attacks by fascist thugs etc. In strikes, they have to create Defence Squads, and so on. These are drawn from amongst thee workers at these local levels, and are directly under the democratic control of those same local democratic assemblies. In 2011, when their was widespread looting, again we saw these local bodies of citizens arise to defend their communities, as the police failed to do so. Similarly, in the aftermath, it was local groups of citizens that came together to clean up. This is self-activity and self-government.
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