Anti-Duhring, Part III – Socialism, II – Theoretical - Part 17

Even in Marx and Engels time,

“It is this counterpressure of the productive forces, in their mighty upward growth, against their character as capital, this increasingly compulsive drive for the recognition of their social nature, which forces the capitalist class itself to treat them more and more as social productive forces, as far as this is at all possible within the framework of capitalist relations. The period of industrial boom with its unlimited credit inflation no less than the crash itself operating through the collapse of large capitalist establishments, drives towards that form of the socialisation of larger masses of means of production which we find in the various kinds of joint-stock companies. Many of these means of production and communication are so colossal from the outset that, like the railways, they exclude all other forms of capitalistic exploitation. At a certain stage of development this form, too, no longer suffices; [the large-scale producers in one and the same branch of industry in a country unite in a “trust”, an association for regulating production.” (p 357-8)

Within the confines of capitalism, even this increasing regulation, planning and monopoly of production continually, and cyclically hits the buffers, because commodity production implies continued competition, even if it is, now, monopolistic/oligopolistic competition. To overcome that requires an ever larger single market, regulated by an ever larger state. Either the nation state annexes other nation states – resulting in imperialist wars – or else those states voluntarily associate. In Theories of Surplus Value, Marx noted that private industrial capital was the inevitable means, the historically necessary condition for the centralisation of the means of production, because, although considered abstractly, there was no reason why the independent commodity producers could not have done so, by forming a cooperative, in reality, no such development was possible.

There was no reason such producers would do so, and their individual relation to their own means of production engendered a powerful, individualist and competitive mindset within them that precluded it. Kautsky found the same thing. It is only when wage-workers, who have developed a collectivist ideology emerge that they are able to bring about the creation of such producer cooperatives. When peasant farmers create cooperatives, faced with competition from large capitalist farms, they usually establish marketing cooperatives and cooperatives for the shared use of very expensive machinery, rather than voluntarily turning themselves into an agricultural cooperative.

Fairly equal nation states are unlikely to voluntarily merge for similar reasons. Each one believes it will come out on top in the global competitive struggle, including when it becomes a military struggle. Only when a series of smaller nation states realise that their only hope is to combine, if they are to compete with larger states, are they likely to do so, as with the creation of the EU. Even then, formerly dominant nation states seek to assert themselves within the bloc. One reason the EU has not moved more quickly to the creation even of a centralised federal state is the continued protection of existing interests by national elites. The working-class has no reason to constrain its voluntary association across existing national borders, which have become an outdated anachronism, not just holding back human progress, but threatening humanity itself, as those national borders form the basis around which wars are fought, wars which, now, lead to thermonuclear destruction.

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 16

But, of course, Marx and Engels did not end their analysis of capitalist development at the point of the dominance of the private industrial capitalist (the monopoly of private capital), and the nation state. Those were simply moments in the process of development of capitalism as a necessarily global system in which, also, the free market competition it had been based around becomes a regulated and planned production, even within the capitalist system itself. They set out how capitalism itself evolved in the 19th century, so that what had once been a progressive development in the form of the private industrial capitalist and the nation state, became a fetter on its further development, and that fetter was burst asunder, by the development of large-scale, socialised capital, state-monopoly capitalism/imperialist capital.

In other words, all of those things that the moral socialists and petty-bourgeois nationalists see as an evil that must be resisted in the name of their “anti-capitalism” and “anti-imperialism”, Marx and Engels saw as the fundamental, progressive signs of the metamorphosis of this mode of production into Socialism. Moreover, as I have set out, elsewhere, Lenin, also, makes this point, as against the petty-bourgeois, ultra-Lefts of his time.

“This is precisely the case with our “Left Communists”, who in words (and of course in their deepest convictions) are merciless enemies of the petty bourgeoisie, while in deeds they help only the petty bourgeoisie, serve only this section of the population and express only its point of view by fighting—in April 1918!!—against . . . “state capitalism”. They are wide of the mark!

… the continuation of the anarchy of small ownership is the greatest, the most serious danger, and it will certainly be our ruin (unless we overcome it), whereas not only will the payment of a heavier tribute to state capitalism not ruin us, it will lead us to socialism by the surest road. When the working class has learned how to defend the state system against the anarchy of small ownership, when it has learned to organise large-scale production on a national scale, along state capitalist lines, it will hold, if I may use the expression, all the trump cards, and the consolidation of socialism will be assured...

To make things even clearer, let us first of all take the most concrete example of state capitalism. Everybody knows what this example is. It is Germany. Here we have “the last word” in modern large-scale capitalist engineering and planned organisation, subordinated to Junker-bourgeois imperialism. Cross out the words in italics, and in place of the militarist, Junker, bourgeois, imperialist state put also a state, but of a different social type, of a different class content—a Soviet state, that is, a proletarian state, and you will have the sum total of the conditions necessary for socialism.

… socialism is inconceivable unless the proletariat is the ruler of the state. This also is ABC. And history (which nobody, except Menshevik blockheads of the first order, ever expected to bring about “complete” socialism smoothly, gently, easily and simply) has taken such a peculiar course that it has given birth in 1918 to two unconnected halves of socialism existing side by side like two future chickens in the single shell of international imperialism. In 1918 Germany and Russia have become the most striking embodiment of the material realisation of the economic, the productive and the socio-economic conditions for socialism, on the one hand, and the political conditions, on the other.

“… socialism is merely the next step forward from state-capitalist monopoly.

“. . . State-monopoly capitalism is a complete material preparation for socialism, the threshold of socialism, a rung on the ladder of history between which and the rung called socialism there are no intermediate rungs ”.

(Lenin – Left-Wing Childishness)

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 15

Globalisation has been a powerful and progressive development that reduced circulation costs and so raised profits, without the need for a corresponding investment of capital. The creation of large single markets, like the EU, is integral to that process. But, the large growth of the petty-bourgeoisie in the same period, as part of that process, engendered all of those old reactionary, individualist ideas of the past. It not only fuelled the reactionary notions of trying to turn the clock back to the days of the nation state, but, inevitably, was forced to go beyond that to a return to the old provincialism and regionalism.

However, each time petty-bourgeois populism attempts to implement these utopian and reactionary schemas, as with Brexit, Trump etc., they quickly fail, and are forced to confront the reality, just as much as the ruling-class owners of fictitious-capital have been forced to recognise the reality that their dividends/interest are a deduction from profits, and, in the end, profits only grow by an expansion of capital, an expansion of the quantity of labour exploited.

“... the ultimate causes of all social changes and political revolutions are to be sought, not in men's brains, not in their growing insight into eternal truth and justice, but in changes in the modes of production and exchange. They are to be sought, not in the philosophy, but in the economics of each particular epoch. The growing recognition that existing social institutions are irrational and unjust, that reason has become unreason, and kindness a scourge, is only a sign that changes in the mode of production and exchange have silently been taking place with which the social order adapted to earlier economic conditions is no longer in keeping. From this it also follows that the means of eliminating the abuses that have been brought to light must also be present, in a more or less developed condition, within the changed relations of production themselves. These means are not to be invented out of one's brain, but discovered by the brain, in the existing material facts of production.” (p 343-4)

Marx and Engels set out, already, in Capital III, and, here, in Anti-Duhring, what these changed conditions were, and that had become dominant by the end of the 19th century.  I have set them out again, in summary. But, I have also set out, here, how the most recent development of those, now, over-ripe conditions means that the irrationality has reached a crescendo.

The ruling capitalist class is, now, the immediate, mortal enemy of capital.

Engels sets out the state of play at that time.

“It is now pretty generally conceded that the existing social order is the creation of the ruling class of today, of the bourgeoisie. The mode of production peculiar to the bourgeoisie, which since Marx has been called the capitalist mode of production, was incompatible with the local privileges and the privileges of estate as well as with the reciprocal personal ties of the feudal system. The bourgeoisie shattered the feudal system and on its ruins built the bourgeois social order, the realm of free competition, of freedom of movement, of equal rights for commodity owners and all the glories of capitalism.” (p 344)

For petty-bourgeois socialism, it is as though Marx and Engels analysis ends there. This bourgeois development created all those bourgeois rights and freedoms and created the bourgeois nation state. They want to leap from there to Socialism, treating the modern economy and bourgeois society as though it is essentially no different to this era of private industrial capitalism. It justifies their hostility to imperialism both in the form of state-monopoly capital, and its concomitant the destruction of the old bourgeois nation states.

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SNNS 63

 

Northern Soul Classics - Stay Close To Me - The Five Stairsteps & Cubie

 

Anti-Duhring, Part III – Socialism, II – Theoretical - Part 14

The role of the boards of Directors, is to represent the interests of shareholders, not the company. As set out before, shareholders, as owners of interest-bearing capital/fictitious capital, seek to maximise their revenue in the form of interest/dividends. The interest of the company, however, is to maximise its profit of enterprise/retained profit, and so to minimise all other deduction from profit, such as rent, interest/dividends and taxes.

A company that simply borrows money from a bank, or in the bond market, pays only the going, competitive rate of interest on the money it borrows, though, as Marx describes, the worker cooperatives always found they were charged higher rates of interest. But, precisely because shareholders have control over companies, and appoint the boards of directors that set the dividend payments, they are able to pay themselves more than any such competitive market rate of interest. The consequence is that, where a company agrees a higher dividend pay-out, other owners of loanable money-capital seek to obtain it. By buying the company's shares. That causes the market price of those share to rise, and consequently the dividend yield (dividend/share price) to fall back towards the average.

But, in the same way, the speculative money that flows towards these shares flows away from other shares (and other speculative assets). The market price of those shares/assets then would fall, and so on. Speculative money moving to buy shares would cause bond prices, property prices etc., to fall, with a corresponding rise in bond yields, rental yields and so on.

Shareholders, therefore, simply by assigning to themselves a larger amount of interest/dividends than would represent a competitive market rate of interest, bring about changes in all asset prices and yields. But, as Marx sets out in Capital III, Chapter 23, it is still constrained by the laws of capital.

“It would be still more absurd to presume that capital would yield interest on the basis of capitalist production without performing any productive function, i.e., without creating surplus-value, of which interest is just a part; that the capitalist mode of production would run its course without capitalist production. If an untowardly large section of capitalists were to convert their capital into money-capital, the result would be a frightful depreciation of money-capital and a frightful fall in the rate of interest; many would at once face the impossibility of living on their interest, and would hence be compelled to reconvert into industrial capitalists.”

Shareholders cannot simply continue to pay themselves more out of profits as interest/dividends. On the one hand, the process described above creates a vicious circle. Dividend/interest payments rise, asset prices rise, yields fall, but, also, if more and more profit is simply shelled out as dividends/interest, less is available as profit of enterprise/retained profit, so, at some point, the actual industrial capital that creates the profit out of which that interest is paid does not grow. If industrial capital does not grow, i.e. if the social relation it represents does not expand, so that more labour is exploited, surplus value does not grow, and so the profit out of which all those revenues (interest/dividends, rents, taxes and profit of enterprise) are taken does not grow.

It is those laws of capital that have imposed themselves on the ruling-class over the last thirty years. They, also, found nuance, reflection and contradiction in the political sphere. The drawing of ever greater interest/dividends from profits, in the old imperialist state, showed up as deindustrialisation and asset stripping, but the other side of that was a combined and uneven development of large-scale industrial capital in China/Asia, Latin America, and later Africa. The globalisation of production, of which this was part, itself facilitated the continuation of the delusion in the West. It reduced unit costs, and facilitated trade, raising profits. In the same way that Britain, in the 19th century, used its surplus money profits to provide credit to those countries that used it to buy British exports, so China and other countries, now, ploughed money into western credit markets. They loaned money to he US, buying US bonds and so on, pushing up their price and reducing yields.

In the West, the US and UK in particular, the process of deindustrialisation led to a resurrection of the petty-bourgeoisie. It is most noticeable in the UK where, since the 1980's, it has grown by 50%. Napoleon called Britain a nation of shopkeepers, but, since the 1980's, it has been a nation of precarious, self-employed traders, symbolised by “white van man”. That includes those traders involved in the growing trade in illicit substances, home-made porn etc. The majority of adverts on Youtube etc., now assume that their audience are all involved in some kind of small business activity.

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 13

This introduces a further contradiction, which is obscured by the fact that, other than in the worker-cooperative, control over the socialised capital is exercised, not by its collective owners (the associated producers, i.e. the workers), but by a section of its creditors, i.e. the shareholders. That is true of a consumer cooperative and a nationalised industry, just as much as with a limited company. Indeed, with nationalised companies, the state, although the only shareholder, itself obtains the money-capital by borrowing on the bond markets, giving the private owners of fictitious capital an indirect influence on those companies.

Similarly, the Directors of those companies are appointed to represent the interest of the state as shareholder/creditor, and not the interests of the company – let alone its workers, as the real collective owners of it. It is no surprise, then, when the state appoints the very same Directors that circulate around the boards of limited companies, to carry out that role.

Marx points out that, in relation to the joint-stock companies, the revenues (new value created) resolve into wages, rent, interest and profit of enterprise, as with all industrial capitals. But, the fact that these companies employ professional managers, who act as “functioning capitalists”, means that the actual payments do not coincide with these revenues. A part of what is actually profit of enterprise/retained profit, which should be available for capital accumulation, as the property of the company, instead appears as “wages” for some of the company Directors, and, also, appears as “interest/dividends” to shareholders.

In these socialised capitals, the professional managers, or “functioning capitalists”, i.e. those that perform the functions of entrepreneur, by bringing together the factors of production efficiently, exercising day to day control over production, distribution, sales and marketing, etc., are drawn from the working-class, which is why this industrial capital, in its imperialist phase, requires an extension of “free” public education, to ensure the supply of this managerial/administrative/scientific/technical labour-power. Again, these welfarist concepts, associated with social-democracy, mushroomed from the latter part of the 19th century.

“The general relaxation of conventional barriers, the increased facilities of education tend to bring down the wages of skilled labour instead of raising those of the unskilled." (J. St. Mill, Principles of Political Economy, 2nd ed., London, 1849, I, p. 479.)”

(Capital III, Chapter 23, Note 79, p 389)

As Marx sets out, these actual functioning capitalists/professional managers etc., who are the personification of this socialised capital, are not to be confused with the Directors and CEO's, CIO's etc., that are set in place by shareholders to sit above them. For these Boards, as representatives of the shareholders, the actual functioning capitalists, are a potential threat to the interest payments and fictitious wealth of the ruling-class/shareholders.

“On the basis of capitalist production a new swindle develops in stock enterprises with respect to wages of management, in that boards of numerous managers or directors are placed above the actual director, for whom supervision and management serve only as a pretext to plunder the stockholders and amass wealth. Very curious details concerning this are to be found in The City or the Physiology of London Business; with Sketches on Change, and the Coffee Houses, London, 1845.

'What bankers and merchants gain by the direction of eight or nine different companies, may be seen from the following illustration: The private balance sheet of Mr. Timothy Abraham Curtis, presented to the Court of Bankruptcy when that gentleman failed, exhibited a sample of the income netted from directorship ... between £800 and £900 a year. Mr. Curtis having been associated with the Courts of the Bank of England, and the East India House, it was considered quite a plum for a public company to acquire his services in the boardroom' (pp. 81, 82).

The remuneration of the directors of such companies for each weekly meeting is at least one guinea. The proceedings of the Court of Bankruptcy show that these wages of supervision were, as a rule, inversely proportional to the actual supervision performed by these nominal directors.”

(ibid)

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