Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 36 of 39

“If it were not for this interest, the farmer—the chief agent in agriculture—would not advance the capital for investment in it. Already from this standpoint, the appropriation by the farmer of that portion of the agricultural surplus proceeds which represents interest is, according to the Physiocrats, as necessary a condition of reproduction as the farmer class itself; and hence this element cannot be put in the category of the national “net product” or “net income”; for the latter is characterised precisely by the fact that it is consumable without any regard to the immediate needs of national reproduction.” (p 321)

In other words, to use Marx's formulation, gross output is equal to c + v + s. C, the consumed constant capital (raw and auxiliary materials, and wear and tear of fixed capital) plus the variable-capital (the physical wage goods), must all be reproduced on a “like for like basis”, so that reproduction can occur. Only what is left over after that represents the net or surplus product. Of course, in class societies, the exploiting classes do not see things that way. They, after all, must consume to live, and they justify their consumption on the basis of their functional role in society. Landlords provide land, without which production could not take place; capitalists provide capital, without which production could not occur; money-capitalists provide money, without which some industrial capitalists could not accumulate capital.

The Physiocrats represented the ideas of the rising French bourgeoisie, and, in particular, the capitalist farmers. Like the rising productive-capitalists everywhere, they recognised that the old, aristocratic, landlord class no longer had any functional role. They played no part in agricultural production, as that function was now undertaken by the capitalist farmer. If the landlords didn't exist, then, what the Physiocrats saw as the mystical power of the land to create a surplus product (output greater than inputs) would still exist. If the farmers did not have to hand over that rent to landlords to consume unproductively, production not only would still take place on the same scale, but those rents could be used productively, to cultivate additional land.

In Britain, this same perception led the bourgeoisie's ideologists to argue for land nationalisation. If land was nationalised, they argued, rents paid to the aristocracy would instead go to the capitalist state, so that it would not need to levy as much in tax, which is a deduction from profit. That would leave more profit, and so a greater potential for capital accumulation and economic growth. This is the opposite to the Keynesian argument set out earlier, which argues that increased taxes by the state used, for example, in arms spending can act to increase capital accumulation, employment and growth. Keynes' argument was just a 20th century version of the argument put forward by Malthus as paid apologist of the landed aristocracy. Malthus plagiarised Sismondi's arguments in relation to the inevitability of an overproduction of commodities, and put forward as the solution, increases in the revenues of the landlords, clergy and state, so that the capitalists had less to use to increase production, and all of these other parasitic and unproductive classes had more to spend to increase demand.

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The Hypocrisy of NATO's Illegal War On Iran - Part 5

So long as capitalism exists, competition will exist. That competition is no longer the free market competition that existed even in the early days of capitalist production, let alone in the period of small-scale, independent commodity production that preceded it. It is globalised, monopoly-capitalist (imperialist) competition, but it is competition no less.

“In practical life we find not only competition, monopoly and the antagonism between them, but also the synthesis of the two, which is not a formula, but a movement. Monopoly produces competition, competition produces monopoly. Monopolists are made from competition; competitors become monopolists. If the monopolists restrict their mutual competition by means of partial associations, competition increases among the workers; and the more the mass of the proletarians grows as against the monopolists of one nation, the more desperate competition becomes between the monopolists of different nations. The synthesis is of such a character that monopoly can only maintain itself by continually entering into the struggle of competition.”

(Marx - The Poverty of Philosophy)

In the preceding era of free market competition, each producer sought to increase their market share by undercutting other producers. It was this plethora of small capitals, and petty-bourgeois commodity producers that determined the market-value of commodities, and it was the small number of larger-capitals that were, thus enabled to obtain, surplus profits/rent by selling at these market-values that exceeded the individual value of their own production. It was this same plethora of small private capitals, in conditions of all-out free market competition that led to the crises of overproduction of commodities, such as that of 1825.

By the latter half of the 19th century, it was already the large monopoly-capitalist (imperialist) producers that dominated the economy. It was their production that now determined the market-value of commodities, thereby, removing the conditions that enabled them to obtain, surplus profit/rent. It was now, the remaining small-scale private capitals and petty-bourgeois producers that had to sell at these lower market-values, and who, thereby, obtained lower than average profits, facilitating their ultimate dissolution and subordination to the large monopoly capitals. These large monopoly capitals themselves began to plan their production over the long-time horizons required to justify the investment in huge amounts of fixed capital equipment.

They found that the old free market competition of seeking to gain market share by price-wars was destructive.

“... if one firm out of a small group of firms raises its price, all the others, who at the old price were happy with the volume of sales they were enjoying, would see that volume of sales increase without their doing anything. Hence they might be expected to be reluctant to follow a price increase. On the other hand, one firm lowering its price would take customers from them, if they did not respond. Hence, to avoid this possibility these other firms would be likely to follow a price cut. And not only is there a priori plausibility here; there is also a certain amount of evidence from questionnaires circulated to firms that they do indeed tend to expect their competitors to react this way – not following a price increase, but following a price cut.”

(David Laidler - “Introduction to Microeconomics, p 69-70)

As I have set out, elsewhere, in conditions where social productivity rises by an average of around 2% p.a., the unit value of commodities, also, continually falls, which, if the standard of prices remained constant, would translate into continual falling unit prices. For, one thing, a consequence of that would be that firms would, also, need to reduce nominal wages, each year, which workers would resist. So, imperialist states created central banks in the early part of the 20th century, which presided over fiat currencies. In so doing, they could inflate the currency supply, and, thereby, depreciate the currency/standard of prices so that, despite falling unit values of commodities, prices themselves did not fall, including the price of labour-power/wages.

The monopolies rather than generally competing against each other on the basis of price, sought to compete on the basis of costs. If each firm maintained its prices in line with others, but was able to reduce its production costs, it would make bigger profits. Bigger profits facilitated increased capital accumulation, but that was only useful if the market itself was expanding enough to absorb the additional supply. Otherwise, this increased production could only be sold at the expense of other monopolies. One solution to that, if prices were not to be reduced, was to offer real or supposed improvements in what was being sold. The development of brands, was a part of that. But, bigger profits, if not used for capital accumulation could also enable larger dividends to shareholders, which, then, resulted in a higher share price for the company. A higher share price for one monopoly against another, transferred the competition between them to the stock market, enabling the more valuable company to simply buy-up a controlling stake in another's shares.

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SNNS 36

 

Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 35 of 39

Above, I set out that the real explanation for the existence of surplus value is the surplus labour undertaken by labourers. That surplus value is produced in industry as well as in agriculture, contrary to the belief of the Physiocrats. On the one hand, they could only explain the unequal exchange between town and country by claiming that it was a result of the town selling its output above its value. However, they have a similar problem with the surplus value produced in agriculture. Its output was 5 milliards, and only 2 milliards was required to replace its working-capital, which it did in natura. That left a surplus product of 3 milliards, of which only 2 milliards is handed over as rent to landlords.

“The third milliard of the surplus constitutes the interest on the total invested capital of the farmers, that is, ten per cent on ten milliards. They do not receive this interest—this should be carefully noted—from circulation; it exists in natura in their hands, and they realize it only in circulation, by thus converting it into manufactured goods of equal value.” (p 320-21)

The argument of the Physiocrats is that, were it not for this interest, the farmers would not advance the 10 milliard of capital required for production. In this, already, however, we see the need to distinguish within the productive class between the capitalist farmer and the labourers employed by them. It is the capitalist farmer that advances the capital not the labourer, who, in fact, is exploited by it. As Marx sets out in Capital and Theories of Surplus Value, however, this begs the question of where the surplus value of 1 milliards, which takes the form of this “interest” comes from. Moreover, why is it only this 1 milliard that is required as “interest”, rather than 2 milliard or ½ milliard?

According to the Physiocrats, the surplus product arises as a free gift of the land. Its on that basis that the landowner claims the 2 milliard of rent, but, again, why not, then, the whole 3 milliards? In fact, the argument is like that put forward by Duhring, which is stood on its head from the real situation. It would mean that the whole surplus of 3 milliards is due to the landlords, but that they “pay” to the capitalist farmer 1 milliard as the required interest to advance their capital!

The reality, of course, as Marx sets out in Capital III, is that the surplus value is produced by the agricultural labourers, and appropriated as profit by the capitalist farmer. Because of the lower organic composition of capital in agriculture/primary production, it produces surplus profits, i.e. profits above the average annual industrial rate of profit. This makes possible Absolute Rent. In addition, because some land is more fertile than others it produces even greater surplus profits, which are the basis of Differential Rent.

The capitalist farmers, having appropriated the profits produced by their workers, hand over a portion of it, the surplus profit, to the landlord. There is nothing, then, arbitrary in this amount, but, as Marx sets out, is now objectively determined. The landlord obtains these revenues, but without giving anything of equal value in exchange. That the landlord, or the state and church, then, hand back some of these revenues to the farmer, in exchange for actual commodities, does not change that situation. It is the original version of the ridiculous Keynesian argument, used today, that claims that economic expansion can be produced by having the state engage in arms spending. The opposite is the truth.

The state finances arms spending by taxes (even if it borrows to finance it, it must eventually repay the loan plus interest on it out of its tax revenues). Taxes, like rent and interest, are a deduction from surplus value/profit. So, that spending reduces the amount of profit available for capital accumulation, and capital accumulation is the basis of economic expansion. That the state spends some of that tax buying arms from some arms companies, who may, then, employ additional workers, does not change the fact that it has done so by reducing the profits available for capital accumulation in the rest of the economy.

What is more, unlike real capital accumulation, which creates new value (because more labour is employed), which goes back into the economy, arms spending does not create any new value that goes back into the economy. That is particularly the case, where, say, the UK government uses those taxes to buy US arms, fighter jets and so on, which creates jobs in the US, not Britain.

If the government uses tax revenue to build a bridge, the bridge itself is a use-value. It raises productivity, by reducing the time required to transport commodities. It feeds back into the economy. The same is true if the government uses tax revenue to build a new school or hospital. It takes part in the production and maintenance of labour-power, just as much as the food produced by a farmer that is then sold to workers.

But, at best, tax spent on arms, results in a stockpile of weapons that sit there and rust away! Non-use values. At worst, it is used destructively – means of destruction, negative use-values – and so further damages real capital accumulation. Obviously, as Marx sets out, in Theories of Surplus Value, states, sometimes, need to spend money on arms, and employing workers unproductively, as soldiers, where they fear invasion. But such diversion of resources is a reduction in its potential capital accumulation and growth forced on it, and the opposite of being a means of stimulating growth.

If Robinson Crusoe had the choice of spending his surplus labour hours building additional animal pens and stocking them, or building sea defences against an unlikely invasion, what do you think his rational choice would be? The ridiculous claims of the British government about the possibility of a Russian invasion of Britain – the same Russia that has spent more than 3 years just trying to advance a few dozen miles into Eastern Ukraine – are simply a means of it justifying its own additional arms spending, as part of NATO's global imperialist ambitions. The suggestion that such spending would have the benefit of creating jobs and spurring the economy is equally ludicrous. The money would be better spent on repairing the crumbling roads, rail network, schools and hospitals, which is where the real threat to the well being of British workers is to be found.

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The Hypocrisy of NATO's Illegal War On Iran - Part 4

This objective reality that The Law of Value drives societies to continually seek to raise productivity so as to be able to produce more use-values with any given amount of social labour is not just a matter of each society doing that in order to increase its own real wealth and well-being. Unless it does so, it puts its own existence as a society in peril. It has no insurance against natural disaster, such as crop failures and so on. But, it also has no protection against other societies that seek to resolve their own problems by the use of force against them. As Engels sets out, in detail, in Anti-Duhring, against the latter's “force theory”, force, of itself, cannot explain why some in society become the rulers, nor why some societies are able to exert rule over others. Force itself is a function of production, and the more developed is production, the more the producer is able to gain access to superior force.

To raise productivity, societies are led to engage in technological development, and that creates new productive and social relations, which, in turn, creates new forms of property and social classes as the personification of that property. But, technology's ability to raise productivity is itself limited by the purpose of its use. There would have been little point Robinson Crusoe or a medieval peasant household introducing a piece of technology that enabled them to increase their production of food ten-fold, because they simply could not have consumed the food they produced. Time spent producing fishing nets, or animal pens that raise productivity by, say, 10 or 20%, however, are worthwhile, and free up time to produce other use-values.

So long as the demand for these products is severely limited, which it always is when their production is geared to consumption by the individual producer, so too, the development of productivity by the use of technology is limited. It is only when societies begin to produce commodities on a large scale, and that production becomes geared to this production of commodities in a market, that the benefits of the use of technology/machines comes into its own, because the larger the market/demand for any commodity, the greater production of it is justified, and any producers that can meet this demand most effectively, will benefit. The larger the market, the more the use of technology/machines by any producer is justified, and profitable.

It was this reality that led to the need to create ever larger single-markets, so that, as capitalist production expanded, particularly machine production from the time of the Industrial Revolution, the old principalities, and small kingdoms became a fetter on the development of society, and were replaced by the nation state, as part of the bourgeois-national revolutions. At that time, the nation state was, therefore, an objectively progressive development, required for the further development of the productive forces, just as, at that time, the role of the individual private industrial capitalist was objectively progressive, as a means of centralising and developing the means of production as capital.

But, everything has its time and season, and what was once progressive, turns into its opposite. The private industrial capitalist is, today, an historical anachronism. Even by the second half of the 19th century, as Marx and Engels describe, the private industrial capitalists (the expropriators of the small producers) were being themselves expropriated (expropriation of the expropriators) by the large-scale socialised capital that was itself the inevitable consequence of capitalist production on an ever larger-scale, which leads to the development of state-monopoly capitalism (imperialism). And, as this capital in its imperialist phase expands production on an even greater scale, so it requires ever larger single-markets, making the nation state a fetter on production, and objectively requiring its destruction and replacement by ever larger multinational states, as described by Trotsky earlier.

That long historical process inevitably unfolded violently, as the most powerful states sought to annex their weaker neighbours. England annexed Wales, and in conjunction with Scotland, annexed Ireland. Prussia annexed the other German states and so on. In France, more than 200 nationalities were forged into the French nation state. In America, European colonialism created nation states, and in North America, that initial process was supplemented by a violent civil war to assert the dominance of the Northern industrial capitalists over the Southern states, and to assert the dominance of a centralised Federal State over the individual states themselves. In Europe, faced with this dynamic, and the need to compete with an already dominant Britain, the two main continental European powers, France and Germany, sought to assert their dominance, in the creation of a single, European state.

This same process continues to play out on every continent on the planet. The war in Ukraine, and in Iran, is a manifestation of it.

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 34 of 39

Engels proceeds, then, to look at these series of exchanges, starting from the initial material balances in the hands of the three classes, and the 2 milliards in money in the hands of farmers.

The farmers, out of their production of 5 milliards, in the previous year, replace their working-capital of 2 milliards directly from that production, just as a farmer replaces seed corn out of their output of corn. That leaves them with 3 milliards of output. They also have the 2 milliards of money. They pay this to the landlords as rent.

“Circulation passing between only two of these three classes is called imperfect by the Physiocrats; circulation which takes place between all three classes is called perfect.” (p 319)

The landlords buy 1 milliard of means of subsistence from the farmers (imperfect), thus handing back half of the rent they had received. Quesnay does not refer any further to the state or church, which received a portion of these revenues as taxes and tithes, so all of this is subsumed under the heading of the transactions with the landlords.

“In regard to the landlord class proper, however, he says that its expenditure (in which that of all its retainers is included) is unfruitful expenditure, at least as regards the great bulk of it with the exception of that small portion which is used “for the maintenance and improvement of their lands and the raising of their standard of cultivation”. But by “natural law” their proper function consists precisely in “the provision of good management and expenditures for the maintenance of their patrimony”, or, as is explained further on, in making the avances foncieres, that is, outlays for the preparation of the soil and for the provision of all equipment needed by the farms, which enable the farmer to devote his whole capital exclusively to the business of actual cultivation.” (p 319-20)

A parallel could be drawn with the ruling-class of, today, whose revenues come from their renting out of money-capital, i.e. coupon payments on bonds, and dividends on shares. The vast majority of capital accumulation comes from reinvested, realised profits, not from additional financing from the issue of new shares. Only a tiny fraction of the shares traded on stock markets is of new shares issued to raise finance for capital investment. The majority of trading is just speculation – the buying and selling of existing bonds and shares.

And, of course, in relation to that portion of capital accumulation that is financed by the issue of new shares or bonds, the owners of money-capital that buy these shares and bonds do so with money previously paid to them (revenues) as interest/dividends out of realised profits. In other words, a payment of a revenue to them for which nothing was provided of equal value.

The landlords use the second milliard of rent to buy manufactured goods from the sterile class to buy means of subsistence from the farmers (perfect). The farmers, now, have the full 2 milliards of money, paid in rent, back in their hands. At the same time, of the 3 milliards of products they had, they have now sold 2 milliards – 1 milliard to landlords, and 1 milliard to the sterile class.

The farmers, now, use 1 milliard of the money returned to them to buy manufactured goods from the sterile class, which it sells from its initial stock.

“... a large part of these goods consists of agricultural implements and other means of production required in agriculture.” (p 320)

The sterile class, then, uses this same 1 milliard of money to buy raw materials from the farmers to replace its own working-capital consumed in the previous year's production (imperfect).

“Thus the two milliards expended by the farmers in payment of rent have flowed back to them, and the movement is closed. So this is the solution of the great riddle,

“What becomes of the net product, which has been appropriated as rent, in the course of economic circulation?”” (p 320)

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The Hypocrisy of NATO's Illegal War On Iran - Part 3

This reality that the world is unfair, that it favours the more able to adapt and survive within it, whether that be a stronger, or more skilled or intelligent labourer, or a large producer as against a smaller producer, or an imperialist state as against a less developed state, is the foundation of the world outlook and philosophy of the moral socialist. It is an outlook, as a basis for understanding the world and its development, that Marxists reject. As Marx and Engels set out as against the likes of Sismondi, Proudhon and Duhring, and as Lenin set out in response to the Narodniks, and Trotsky set out in response to Burnham and Shachtman, it is a thoroughly reactionary outlook.

Writing to Nikolai Danielson, Engels, noting that Danielson and others were still looking to the old Russian village communes as the basis of their vision of the future, as their “anti-capitalism” took the form of resisting the capitalist development of Russia, which they saw as an alien imposition imposed by imperialist powers in the West, and a diversion from Russia's true path, says,

“... capitalism opens out new views and new hopes. Look at what it has done and is doing in the West.”

Marx and Engels noted that, although the introduction of laws, regulations and even planning were only introduced by the big industrial capitalists because, at the stage of development of state-monopoly capitalism (imperialism), it was to their benefit, that did not, also, mean that it was not to the benefit of society and its development, overall, including that of the industrial labourer. Not only did it provide them with higher living standards, and better conditions, but, by replacing the anarchy and chaos of unfettered markets with the need to increasingly regulate and plan production across the economy, and, as the minimum scale of production continually rose, to continually increase the size of the economy, ultimately, the creation of a world economy, it created the very conditions required for Socialism. Our outlook is not to hold back that progressive development, as the petty-bourgeois moralists would have us do, in the interests of the small capitalists, the self-employed and so on, or the small, less developed economies. It is to continually defend the interests of the global working-class within it, in preparation for the working-class seizing control over it.

We do not advocate for a large capitalist monopoly, be it one controlled by shareholders, or a state controlled monopoly, but nor do we advocate against it. We simply point out the progressive, but limited, nature of such a development. And that applies to the development of the world economy too. As Trotsky put it,

“Capitalism has transferred into the field of international relations the same methods applied by it in “regulating” the internal economic life of the nations. The path of competition is the path of systematically annihilating the small and medium-sized enterprises and of achieving the supremacy of big capital. World competition of the capitalist forces means the systematic subjection of the small, medium-sized and backward nations by the great and greatest capitalist powers. The more developed the technique of capitalism, the greater the role played by finance capital and the higher the demands of militarism, all the more grows the dependency of the small states on the great powers. This process, forming as it does an integral element of imperialist mechanics, flourishes undisturbed also in times of peace by means of state loans, railway and other concessions, military-diplomatic agreements, etc. The war uncovered and accelerated this process by introducing the factor of open violence. The war destroys the last shreds of the “independence” of small states, quite apart from the military outcome, of the conflict between the two basic enemy camps.”

(The Programme of Peace)

And our response to that is not to moralistically argue for clinging to the past, for the rights of national self-determination of small nations.

“For the revolutionary proletarian the peace programme does not mean the demands which national militarism must fulfil, but those demands which the international proletariat intends to impose by its revolutionary struggle against militarism of all countries. The more the world revolutionary movement unfolds the less do the peace questions depend on the purely military position of the belligerents, the less becomes the danger that peace conditions may be understood by the masses as war aims.”

(ibid)

Trump at least, in his idiocy, simply lays bare what the imperialists of NATO tried to obfuscate.  His mafia regime makes no secret of its intentions in seeking to use war for its ends, to seize Venezuela, Greenland, the Panama Canal, or The Straits of Hormuz.  He even strips away the previous façade and describes the Department of War  of the US, honestly, in place of the lying label of Department of Defence.

If workers in a small company are faced by being taken over by a larger company, Marxists do not argue against the takeover. We seek to ensure the greatest unity of the workers in both companies. We point to the benefits of being within the larger company structure, for the purposes of the workers strength and bargaining capacity, and the fact that the larger capital is better able to make these concessions. But, nor do we suggest to the workers of either company that this is a solution to their problems, which rest on the exploitation of their labour by capital. Similarly, its clear that the interests of workers in small nations are advanced by being part of a larger state, and so the ability to join with other workers within that state.

As Lenin and the Bolsheviks put it,

“The Social-Democrats will always combat every attempt to influence national self-determination from without by violence or by any injustice. However, our unreserved recognition of the struggle for freedom of self-determination does not in any way commit us to supporting every demand for national self-determination. 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)

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