Anti-Duhring, Part III – Socialism, II – Theoretical - Part 24

I have set out why there has been that change, elsewhere. It is symptomatic of the fact that the ruling-class during the last century became entirely a class of owners of fictitious-capital. The state, as the state of the ruling-class, acts to protect their interests, and its ruling ideas are those of that class, even when those ideas are based on a delusion that falls apart as each day passes. As capital became increasingly imperialist capital (large-scale, socialised, state-monopoly capital), from the end of the 19th century, the ruling-class itself, in proportion, became a class of coupon-clippers.

As coupon-clippers, dependent on the interest on bonds, and dividends on shares, they continued to have a direct interest in the growth of the profits of the companies which paid out those revenues. The state acted accordingly to ensure the growth of those profits, and accumulation of industrial capital. The heyday of that came in the period after WWII. It actually began in the 1930's, as on the one hand, the 1929 financial crash ruined many of the speculators, and created the conditions for the dominance of an accumulation of industrial capital, of its reflection in a corporatist, progressive social-democratic ideology, and a significant extension of economic planning and regulation by the state. In the US, The New Deal, but, in Europe, Nazi Germany, Nordic Social Democracy, etc. As economies geared up for WWII, that process was accelerated, and it continued after the end of the war.

That heyday ended in the 1970's, for the reasons I have set out earlier, and elsewhere. The period since, then, in particular since the mid 1980's, is the first time when the nature of the ruling-class, as a class made up entirely of owners of fictitious-capital, increasingly divorced from the interests of industrial capital, and, indeed, as Marx describes, antagonistic to it, has asserted itself. Initially, the defeat of the working-class, resulting from the technological revolution of the 1970's/80's, which resolved the crisis of overproduction of capital, and created a huge relative surplus population, and a massive rise in the general rate of profit, caused a fall in interest rates. The supply of additional money-capital from these higher profits, rose significantly. At the same time, the technological revolution, created a huge moral depreciation of the fixed capital stock, and the rise in productivity, also cheapened materials and energy, as well as labour-power. In other words, it created a huge release of capital.

By the time the 80's became the 90's, asset prices had risen significantly. House prices in Britain had quadrupled, and similar rises occurred across the globe. In addition, money that did not find a home in real capital accumulation, found its way into other forms of speculation. In the US, the Dow Jones and S&P 500 rose by around 230%, between 1980 and 1990, whilst US GDP rose, just 108%. In 1987, a global financial crash set the scene for the following 40 years. It is the first time that the consequence of the ruling-class having become a class of owners of fictitious-capital becomes apparent.

The period of social-democracy, in its ascendancy, had been one in which real industrial capital accumulated, profits rose and out of those profits, were paid increasing amounts of interest, rent and taxes. The fact that demand continually expanded during this period, meant that every industrial capital was forced to seek to grab its share of the market, by increasing its output/accumulating capital – the intensive accumulation of the 1930's/40's, turned into the extensive accumulation of the 1960's/70's. The owners of fictitious capital, were subordinated to the needs of capital accumulation, but content in conditions where the mass of their revenues, in the form of interest/dividends and rent, continued to rise, even if, as a proportion of profits, they declined. When that period culminated in a crisis of overproduction of capital, in the 1970's, there were only two options. Either the constraints of capital itself had to be smashed, or else the working-class would be smashed.

The first required that the working-class had a fully conscious political leadership that understood the real basis of struggle. No such leadership existed. Instead, one of two strategies pervaded the labour movement. The most significant of those strategies was that which simply saw the period ahead as being a more intense continuation of the period that was, now, gone. In other words, it was a strategy based on a bourgeois, trades union consciousness of bargaining within the system for a bigger slice for labour. That had worked since the 1950's, as capital expanded, profits were high, and as the period progressed, labour became increasingly in relative short supply. It was precisely the success of workers in that period – more to do with the expansion of capital than effective trades union militancy – that brought about its demise, for the reasons I have set out, and that Marx describes in Wage-Labour and Capital, and Value, Price and Profit. It was an impossible strategy, at the point that capital had already responded to the overproduction of capital/shortage of labour, by revolutionising technology, and creating a relative surplus of labour!

That strategy was one pursued by the Stalinists in the Communist Party, and their fellow travellers in the Labour Left. In conditions where the historic dominance of those forces was being effectively challenged by the likes of the SWP and Militant, they, also, pursued that strategy. In the case of the Communist Party, Bennite Left, and Militant, the extension of this strategy took the form of a process in which mounting industrial struggle would lead to increased pressure on the Labour Party, via its Left-wing, to, in some form, “take the power”, meaning, in reality, that a Labour government would respond to opposition from bosses, by supporting trades unions, nationalising companies that were closing down, and by continuing the process began in the 1970's, of increased planning and regulation of production. In short, to become a Workers' Government. Unfortunately, not only was such a strategy, at this point, doomed, but, it was also, thoroughly confused and nationalistic, including elements that were inherently racist.  It was a modern version of the Moseley Memorandum, put forward by Oswald Mosely, when he was a Minister in the Labour Government, and which became the basis of the economic strategy he adopted for the New Party, and the British Union of Fascists.

So, elements of this Alternative Economic Strategy, called for import controls, which, of their nature, as with Trump's tariffs, not only lead workers to the conclusion that the source of their problems is not capitalism, but “foreigners”, who are, in some way, doing them down, by producing goods more cheaply, and exporting them to Britain, it also means that, as domestic prices rise, the consequence is either falling real wages, or, to the extent real wages are protected, falling domestic profits, and so less new money-capital available for capital accumulation, causing higher interest rates, a tie-up of capital, slower growth etc. That at a time when the solution for workers across Europe, and indeed across the globe, was to unite, across national borders, against their common enemy capital. Indeed some elements of that strategy not only called for import controls, but also immigration controls, immediately and visibly blaming foreign workers for the problems of British workers.

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Northern Soul Classics - Secret Agents - The Olympics

 

Anti-Duhring, Part III – Socialism, II – Theoretical - Part 23

Of the billions paid into pension funds, each year, even the money that does go to buy shares or bonds, rather than line the pockets of the financial institutions, 70% of it goes to buy up existing shares and bonds, and so to simply inflate their prices, rather than financing additional, real capital investment/accumulation. That is the case with all transactions on the financial markets, which act primarily as casinos where the participants simply gamble on which stock or bond is going to race ahead, and which be left behind. As Marx put it,

“It reproduces a new financial aristocracy, a new variety of parasites in the shape of promoters, speculators and simply nominal directors; a whole system of swindling and cheating by means of corporation promotion, stock issuance, and stock speculation. It is private production without the control of private property.”

(Capital III, Chapter 27)

Marx saw no reason why the regular financial crises/crashes, as against the cyclical economic crises, resulting from an overproduction of capital, or an overproduction of commodities, should be a concern of the workers.

“As regards the fall in the purely nominal capital, State bonds, shares etc.—in so far as it does not lead to the bankruptcy of the state or of the share company, or to the complete stoppage of reproduction through undermining the credit of the industrial capitalists who hold such securities—it amounts only to the transfer of wealth from one hand to another and will, on the whole, act favourably upon reproduction, since the parvenus into whose hands these stocks or shares fall cheaply, are mostly more enterprising than their former owners.”

(Theories Of Surplus Value, Part 2, p 496)

But, of course, now that the ruling-class is comprised entirely of such parvenus, and speculators, rather than industrial capitalists, and, because their entire wealth has become dependent on continually inflating asset/fictitious capital nominal prices, it is no wonder that they use the state to ensure that condition persists, even where doing so, directly conflicts with the interests of real industrial capital. As Marx again put it,

"... the reduction of the money equivalents of these securities on the stock exchange list has nothing to do with the actual capital which they represent, but very much indeed with the solvency of their owners."

(Capital III, Chapter 30)

“Talk about centralisation! The credit system, which has its focus in the so-called national banks and the big money-lenders and usurers surrounding them, constitutes enormous centralisation, and gives to this class of parasites the fabulous power, not only to periodically despoil industrial capitalists, but also to interfere in actual production in a most dangerous manner — and this gang knows nothing about production and has nothing to do with it. The Acts of 1844 and 1845 are proof of the growing power of these bandits, who are augmented by financiers and stock-jobbers.”

(Capital III, Chapter 33)

In previous financial crises, such as 1847, 1857, 1929, the state, responded to the events, and threat to production, by ensuring that credit was available for commodity circulation. In 1847 and 1857, as Marx and Engels describe, the financial crash itself had been provoked by the bursting of an asset price bubble, inflated due to low interest rates caused by burgeoning profits, which resulted in the supply of additional money-capital growing faster than the demand for it. The bubble burst when bad bank legislation (The 1844 Bank Act) unnecessarily caused interest rates to rise, because the Bank of England, reduced currency supply, in response to an outflow of gold. The resulting credit crunch led to a sharp curtailment of trade. But, as Marx and Engels note the real nature of the crisis was revealed because, when the Bank of England suspended the Bank Act, so as to facilitate additional currency supply, the crisis ended.

“By such artificial intensification of demand for money accommodation, that is, for means of payment at the decisive moment, and the simultaneous restriction of the supply the Bank Act drives the rate of interest to a hitherto unknown height during a crisis. Hence, instead of eliminating crises, the Act, on the contrary, intensifies them to a point where either the entire industrial world must go to pieces, or else the Bank Act. Both on October 25, 1847, and on November 12, 1857, the crisis reached such a point; the government then lifted the restriction for the Bank in issuing notes by suspending the Act of 1844, and this sufficed in both cases to overcome the crisis.”

(Capital III, Chapter 34)

But, in all these cases, including 1929, although the state facilitated the credit required to end the credit crunch restricting commodity circulation, it did not bail-out the financial speculators who had lost. As Marx notes above, some lost, others gained. In 1929, those like John Templeton, who sold prior to the crash, and, then, ploughed money in after it, when assets could be bought for 10% of their pre-crash prices, gained enormously. In 2008, and after, the opposite has been the case, as central banks have bailed out the speculators, whilst imposing credit restrictions and financial austerity on the real economy.

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 22

So, it is no surprise that, firstly, the ruling-class do not allow the workers to exercise any kind of control over their, now, huge pension funds. In Britain alone, those funds amount to trillions of pounds. It is the kind of amount of potential credit that Marx and Enegls noted could enable the effective expansion of the worker cooperative, to provide the same capitalisation as that enjoyed by the multinational corporations. Indeed, the workers' collective savings, accumulated in those pension funds, are currently a major source of the credit provided to those multinational corporations themselves, because those funds buy the bonds and shares of those companies.

It is clearly as impossible for each individual worker who contributes money to such a pension fund, to directly have a seat on a supervisory board of the fund as it is for every depositor of money in a bank. But that is the case in all sorts of similar situations, in modern society. Those societies, for example, hold elections to parliaments, where MPs are given the task of representing those collective interests. Those parliaments, of course, for all the reasons set out previously, are, themselves, a sham, because significant limitations are placed by the ruling-class on who gets elected, and, if the working-class overcomes even those constraints, the ruling-class simply sweeps away the façade of that democracy by use of its control of the state.

But, that does not change the underlying principle that democracy is the means by which the collective interests of millions of individuals can be aggregated and effectively manifest. We might, as Engels noted, need to counter the threat to universal suffrage by, also, ensuring universal conscription and military training, so that the workers defend their collective decisions arms in hand, organised in militia rather than a standing army; we might want to replace representatives with delegate, based upon a direct democracy and right of recall, but the principle remains.

Shareholders, after all, do precisely that. They vote at regular shareholders general meetings to elect Directors, who act to represent their interests. So, on what basis can workers, who contribute in aggregate, billions of pounds a year to their pension funds, on which their retirement depends, be denied the same right? Given that these are workers pension funds, the funds of workers employed collectively, in given companies, industries, local and central government, etc., there is no reason that these workers should not elect the supervisory boards of those funds to ensure they are used in the interest of workers.

Instead, workers are denied any such control in breach of even the most basic bourgeois property law. Control is given to representatives of the companies, but, for the reasons set out earlier, those representatives are, in fact, representatives not of the company, but of shareholders, i.e. creditors of the company. In addition, these pension funds sub-contract the actual day-to-day financial management of the fund to financial institutions and banks. Who controls those banks and financial institutions – shareholders. Numerous investigations have shown that a huge chunk of the money that workers pay into their pension fund does not even go to the purchase of shares or bonds, but is simply paid out – as much as 60% - in commissions and other fees, to those institutions!

“... the BBC's Panorama on Monday, showed who the real villains are when it came to workers Pensions. It was, not surprisingly, the same Financial Institutions that caused the Financial Crisis, and which is the reason the Tories are now trying to load the cost of that on to workers with cuts in services, and in pensions.

It found that the investment of workers funds was almost like the kind of Ponzi scheme that others have recently been jailed for. It involved, workers money being taken in by Pension Companies, who then placed it with other institutions based on how much of a kick-back those institutions would give them, and a large cut in commission, and administration charges was deducted by each of these institutions. In total these organisations were deducting so much that workers pensions were being reduced by anything between 30%-60%.

“In one HSBC pension plan, £120,000 paid in over 40 years would result in fees and commissions totalling £99,900.”

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 21

That points to where the real basis of the workers' struggle, today, resides. In the same way that in the 18th and 19th centuries, the struggle of the bourgeoisie, backed by the petty-bourgeoise and proletariat was for political democracy and freedom, the struggle of the working-class, today, is a struggle for industrial democracy, as the necessary condition for their real freedom. The bourgeoisie and petty-bourgeoisie, in the 18th and 19th century, did not have to wage a struggle for control over their property. Within each enterprise, they exercised such full control already, on the basis of existing laws of private property. Rather, the struggle was one for political freedom and democracy, so as to reflect their position in society, as ruling class, and, thereby, to remove all of the fetters on the expansion of bourgeois production, in general.

The petty-bourgeoisie, and small private industrial capitalists, today, continue to exercise control over their private property, but, today, the limitation of that is precisely that they are subordinated, in the market, to the power of the mammoth socialised capitals. Their freedom and control is, ultimately, as much a delusion as is the political sovereignty of small nation states, in a world of huge imperialist powers. It illustrates why the demands of the petty-bourgeois nationalists for the right of national self-determination are an even greater reactionary delusion, today, than they were a century ago, when Lenin wrote,

“As the party of the proletariat, the Social-Democratic Party considers it to be its positive and principal task to further the self-determination of the proletariat in each nationality rather than that of peoples or nations. We must always and unreservedly work for the very closest unity of the proletariat of all nationalities, and it is only in isolated and exceptional cases that we can advance and actively support demands conducive to the establishment of a new class state or to the substitution of a looser federal unity, etc., for the complete political unity of a state.”

(Lenin – The National Question In Our Programme)

The petty-bourgeois nationalists demand to “Take Back Control”, as, for example, put forward by the Brexiters and Lexiters, was soon exposed for the reactionary delusion it is. The Brexit negotiations showed just how little “control” even an imperialist nation state like Britain has, when it comes to its relations with other, much larger, imperialist states and blocs of states. But, the fact that, for much of the last 70 years, the socialist movement has been dominated by that kind of delusional, petty-bourgeois nationalism, when it comes to acting as cheerleaders for one petty-bourgeois nationalist movement or another, on the basis of their “anti-imperialism”, paved the way for that delusion, when it came to Brexit, just as it does with Ukraine and Israel/Palestine.

Like the petty-bourgeoisie, and small private capitalists, the workers in the worker cooperatives, also, exercise control over their property, but face the same reality that this freedom and control is extremely limited, because they must compete, in the market, usually against much bigger capitals.

The important role of the worker cooperative, today, therefore, remains in the form that Marx posed it, in 1864.

“The value of these great social experiments cannot be overrated. By deed instead of by argument, they have shown that production on a large scale, and in accord with the behests of modern science, may be carried on without the existence of a class of masters employing a class of hands; that to bear fruit, the means of labour need not be monopolized as a means of dominion over, and of extortion against, the labouring man himself; and that, like slave labour, like serf labour, hired labour is but a transitory and inferior form, destined to disappear before associated labour plying its toil with a willing hand, a ready mind, and a joyous heart. In England, the seeds of the co-operative system were sown by Robert Owen; the workingmen’s experiments tried on the Continent were, in fact, the practical upshot of the theories, not invented, but loudly proclaimed, in 1848.”

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