Anti-Duhring, Part III – Socialism, I – Historical - Part 13

But, as Marx notes, as soon as credit arises, the currency circulation becomes almost infinitely flexible. Capitalists are no longer reliant upon the supply of money tokens from the state, because they are able to trade with each other via commercial credit transactions, the use of Bills of Exchange and so on. The consequence of this is that, irrespective of any change in the value of money, capital is able to cover the increased costs it faces, be it from rising wages or other costs, by raising prices, again, irrespective of any change in values. It simply increases the amount of credit in circulation, which is tantamount to an increase in the currency supply, reducing the value of each money token/the standard of prices – inflation.

So, as relative wages rise, and relative profits fall, that is reflected, not in a “recession”, driven by a falling rate of profit, but a proportional movement of capital into wage goods production. Capital mitigates this process, and tries to protect its relative profits, by inflating the currency supply/credit, and so causing a general rise in prices, but that cannot change the underlying material conditions, of the demand for labour expanding faster than its supply. As seen, clearly, in the 1960's/70's, as capital inflates the currency supply, to enable firms to raise prices, to protect profits, workers simply respond by demanding even higher nominal wages, so as to protect their real wages. It simply creates a price-wage spiral, and increasing instability.

As the rate of profit falls, and the supply of additional money-capital from realised profits falls, relatively, the rate of interest rises, causing asset prices to fall. All this was seen, for example, in the period between 1962-1974. What was also seen, and is discussed by Marx in Theories of Surplus Value, Chapter 21, is that, as this unfolds, workers, also, demand a shorter working-day, more holidays and so on. Consequently, not only does relative surplus value fall, but so does absolute surplus value. Eventually, this phase of boom tuns into a phase of crisis in which the squeeze on profits from rising relative wages, creates an overproduction of capital relative to labour. The least efficient capitals start to make losses, and this spreads across the economy.

“The rate of profit would not fall under the effect of competition due to over-production of capital. It would rather be the reverse; it would be the competitive struggle which would begin because the fallen rate of profit and over-production of capital originate from the same conditions. The part of ΔC in the hands of old functioning capitalists would be allowed to remain more or less idle to prevent a depreciation of their own original capital and not to narrow its place in the field of production. Or they would employ it, even at a momentary loss, to shift the need of keeping additional capital idle on newcomers and on their competitors in general.

That portion of ΔC which is in new hands would seek to assume a place for itself at the expense of the old capital, and would accomplish this in part by forcing a portion of the old capital to lie idle. It would compel the old capital to give up its old place and withdraw to join completely or partially unemployed additional capital.”

(Capital III, Chapter 15)

But, it is precisely this crisis of an overproduction of capital relative to labour that provokes capital to seek to resolve it via a technological revolution.

“...the fall in prices and the competitive struggle would have driven every capitalist to lower the individual value of his total product below its general value by means of new machines, new and improved working methods, new combinations, i.e., to increase the productivity of a given quantity of labour, to lower the proportion of variable to constant capital, and thereby to release some labourers; in short, to create an artificial over-population.”

(ibid)

Whether it is the introduction of steam engines to power machines, or electric motors, or internal combustion engines, assembly lines, electronic devices, or microchips, the driver of all these developments is to replace labour in the production process, and so overcome the relative shortage of labour/overproduction of capital.

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Anti-Duhring, Part III – Socialism, I – Historical - Part 12

Marx summarises it in Capital III, Chapter 15.

“As soon as capital would, therefore, have grown in such a ratio to the labouring population that neither the absolute working-time supplied by this population, nor the relative surplus working-time, could be expanded any further (this last would not be feasible at any rate in the case when the demand for labour were so strong that there were a tendency for wages to rise); at a point, therefore, when the increased capital produced just as much, or even less, surplus-value than it did before its increase, there would be absolute over-production of capital; i.e., the increased capital C + ΔC would produce no more, or even less, profit than capital C before its expansion by ΔC. In both cases there would be a steep and sudden fall in the general rate of profit, but this time due to a change in the composition of capital not caused by the development of the productive forces, but rather by a rise in the money-value of the variable capital (because of increased wages) and the corresponding reduction in the proportion of surplus-labour to necessary labour.”

So, if the demand for labour rises faster than the supply, at a certain point, the market price of labour-power – wages – rises. That means that relative wages rise. As relative wages rise, workers have more to spend. The demand for wage goods rises, and so, over a period, capital accumulates faster in that production than in the production of luxury goods. Marx discusses this in Capital II, and in Wage-Labour and Capital, and Value, Price and Profit.

“It is not alone the consumption of necessities of life which increases. The working-class (now actively reinforced by its entire reserve army) also enjoys momentarily articles of luxury ordinarily beyond its reach, and those articles which at other times constitute for the greater part consumer “necessities” only for the capitalist class. This on its part calls forth a rise in prices.”

(Capital Vol II)

This rise in market prices for wage goods, and some luxury goods, resulting from increased wages is what leads bourgeois economists to claim that it is increased wages that cause higher prices/inflation. But, as Marx sets out in Value, Price and Profit, that is nonsense. The rise in wages/relative wages, does not change the value of commodities, it merely leads to that value being resolved in different proportions. The rise in relative wages is the other side to a fall in relative profits. The rise in market price of wage goods, is a result of increased demand not immediately being met by increased supply. The higher market prices for those wage goods, mean that the rate of profit in that production rises relative to the average rate of profit, which is what brings a faster accumulation of capital in that sphere.

But, likewise, the market prices of luxury goods fall for the opposite reason. As relative profits fall in proportion to the rise in relative wages, capitalists and other exploiters have less to spend on luxury goods. As the demand for luxury goods falls, so their market price falls, also leading to a fall in the rate of profit, below the average, in that sphere. Capital accumulates slower in that sphere. Overall, there is no change in the total value produced, and so no change in the total of prices. As capital is reallocated to wage good production, the supply of wage goods, and those luxury goods now consumed by workers, increases and their market price falls. The reverse happens in the production of luxury goods consumed by capitalists.

As Marx put it,

“... in periods of prosperity, particularly during the times of bogus prosperity, in which the relative value of money, expressed in commodities, decreases also for other reasons (without any actual revolution in values), so that the prices of commodities rise independently of their own values.”

(ibid)

For, all prices to rise simultaneously, it requires a relative fall in the value of money/standard of prices compared to the value of all other commodities. As Marx points out, when economies based their currency/standard of prices on precious metals such as gold or silver, new discoveries of these metals, that reduced their value, indeed created such conditions. But, it was that fall in the value of money that caused rising prices, and which led to workers requiring higher nominal wages, in order to maintain the same level of real wages, not vice versa.

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SNNS 54

 

The Hypocrisy of NATO's Illegal War On Iran - Part 22

NATO's illegal war against Iran, as well as its proxy war with Russia, in Ukraine, cannot be divorced from this global imperialist competition. Indeed, in the last week, that has become glaringly obvious, as Ukrainian imperialism, has attacked Iranian ships in the Caspian Sea as well as its increasing missile and drone strikes deep inside Russia, killing Russian workers. Its not the first time Ukrainian imperialism has involved itself in the region, as it sent military forces to support US and UK imperialism in their previous illegal war and occupation of Iraq. Ukrainian imperialism has also been involved in the civil war in Sudan etc. Yet, not only do the western imperialist powers and their apologists, but, also, the social-imperialists of The Ukraine Solidarity Committee, continue to ludicrously claim that “poor little Ukraine”, much like “Poor Little Belgium”, in WWI, is merely engaging in an act of national self-defence, to assert its right of national self-determination, much, as is, of course, claimed by the Zionists in relation to their genocidal acts in Palestine, and Lebanon.

And, of course, the other side of that is true, also. NATO's hypocrisy is shown in its argument that it had to launch a pre-emptive strike against Iran, because the Zionist state in Israel had claimed that Iran was within weeks of developing a nuclear weapon, much as the same had been claimed in relation to Saddam Hussein and WMD, in 2003. When Russia argued, on better grounds, that NATO had been continually expanding up to its borders, despite previous assurances it would not, and so launched its invasion of Eastern Ukraine, as a similarly pre-emptive action, NATO and its apologists, including the social-imperialists of the USC, dismissed that argument. Marxists, have no truck with either side of these imperialist wars, and we reject and expose the hypocrisy being shown by them.

Marxists do not support Russian imperialism, in its invasion of Eastern Ukraine, but we reject the hypocrisy of NATO imperialism, in claiming that Russia had no grounds for doing so, especially when, NATO and its Zionist ally has used precisely the same argument to justify its illegal war on Iran, much as it did in Iraq, Libya, Syria and elsewhere. As Trotsky noted, Lenin described this plainly in relation to WWI.

“Imperialism camouflages its own peculiar aims – seizure of colonies, markets, sources of raw material, spheres of influence – with such ideas as “safeguarding peace against the aggressors,” “defence of the fatherland,” “defence of democracy,” etc. These ideas are false through and through. It is the duty of every socialist not to support them but, on the contrary, to unmask them before the people. “The question of which group delivered the first military blow or first declare war,” wrote Lenin in March 1915, “has no importance whatever in determining the tactics of socialists. Phrases about the defence of the fatherland, repelling invasion by the enemy, conducting a defensive war, etc., are on both sides a complete deception of the people.” “For decades,” explained Lenin, “three bandits (the bourgeoisie and governments of England, Russia, and France) armed themselves to despoil Germany. Is it surprising that the two bandits (Germany and Austria-Hungary) launched an attack before the three bandits succeeded in obtaining the new knives they had ordered?””

(Trotsky – Lenin On Imperialism)

Neither Lenin nor Trotsky, saw any reason, whilst exposing the hypocrisy of British, French and Russian hypocrisy, and their claim that Germany-Austria started the war by shooting first, to side with German-Austrian imperialism, in that war either! Their clear Marxist approach, based on the interests of the working-class, as a global class, was to issue a plague on both their houses. Trotsky adopted the same approach in relation to the Balkan Wars, including the claims that this was a war of liberation against Ottoman oppression. Trotsky saw no reason not to tell the truth about the hypocrisy and war crimes that were taking place on both sides of that conflict. And, yes, while he and other Marxists supported the struggle against Ottoman oppression in the Balkans, they saw that as a struggle that has to be waged by the working-class, leading behind them the masses, not one that is to be delegated to the bourgeoisie, and still less to a bourgeois state.

“But it is not at all a matter of indifference by what methods this emancipation is being accomplished. The method of “liberation” that is being followed today means the enslavement of Macedonia to the personal regime in Bulgaria and to Bulgarian militarism; it means, moreover, the strengthening of reaction in Bulgaria itself. That positive, progressive result which history will, in the last analysis, extract from the ghastly events in the Balkans, will suffer no harm from the exposures made by Balkan and European democracy; on the contrary, only a struggle against the usurpation of history's tasks by the present masters of the situation will educate the Balkan peoples to play the role of superseding not only Turkish despotism but also those who, for their own reactionary purposes, are, by their own barbarous methods, now destroying that despotism...

Our agitation, on the contrary, against the way that history's problems are at present being solved, goes hand in hand with the work of the Balkan Social Democrats. And when we denounce the bloody deeds of the Balkan 'liberation' from above we carry forward the struggle not only against liberal deception of the Russian masses but also against enslavement of the Balkan masses.”

(Trotsky – The Balkan Wars, p 293-4)

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Northern Soul Classics - She's Looking Good - Wilson Pickett

 

Anti-Duhring, Part III – Socialism, I – Historical - Part 11

In France, the bourgeois revolution assumed its clearest political expression, whilst, in Britain, it was its economic and social expression that was paramount.

“Steam and the new tool-making machinery were transforming manufacture into modern large-scale industry, and thus revolutionising the whole foundation of bourgeois society. The sluggish march of development of the manufacturing period changed into a veritable period of storm and stress in production. The division of society into big capitalists and propertyless proletarians went on with ever-increasing rapidity; between these, instead of the former stable middle estate, an unstable mass of artisans and small shopkeepers, which constituted the most fluctuating portion of the population, now led a precarious existence.” (p 335)

It is an indication of the over-ripe conditions for socialist revolution that, in the advanced economies at least, those same poor and precarious petty-bourgeois, whose size and significance continually declined for 200 years, have, since the 1980's, increased by 50%, and, now, play a dominant role in relation to elections and the political regime, as seen with Brexit, Trump etc.

At the time of the bourgeois revolution, the capitalist mode of production was only at the start of its upward phase.

“Nevertheless, even then it was producing crying social abuses”. (p 335)

Engels described them in his “The Condition of The Working Class”, but, noted in his later Prefaces to that work, also, how the very progress of capitalism did away with most of those abuses. The critique of the capitalist mode of production, from a Marxist perspective, could not be based upon a moralistic concern for those abuses, particularly as its own development, not only put an end to the worst of them, but, also, provided the greatest increase in the living standards of workers, and potential for real freedom ever seen.

No, as Marx set out in The Critique of The Gotha Programme, the Marxist critique is not this moralistic concern.

“It is as if, among slaves who have at last got behind the secret of slavery and broken out in rebellion, a slave still in thrall to obsolete notions were to inscribe on the program of the rebellion: Slavery must be abolished because the feeding of slaves in the system of slavery cannot exceed a certain low maximum!”

Nor is the corollary of that the catastrophist claims of inevitable economic collapse. Marx himself, in his Theory of Crisis, set out in Theories of Surplus Value, Chapter 17, rejected such claims. Rather, the Marxist critique is that even as real wages/living standards rise for workers, relative wages, their share of the ever larger pie they create, gets smaller. What is more, an ever larger portion of this pie goes not even to feed the personal consumption of the capitalists, but goes simply to replace the consumed means of production.

In other words, although output resolves into c, v and s, and although, in absolute terms, each of these gets bigger, v falls relative to s, and both v and s fall relative to c. This is the material basis of Marx's Law of The Tendency For The Rate of Profit To Fall. To put numbers to it, if we started with c 100 + v 200 + s 100 = 400, we might, then have c 750 + v 250 + s 250 = 1250. Each has grown absolutely, but, now, the rate of surplus value s` has risen from 50% to 100%, whilst the rate of profit has fallen from 33.3% to 25%.

Beneath these numbers resides a host of other quantitative changes. What is the basis for the disproportionate rise in c, compared to v + s, and so total output? As Marx describes in Theories of Surplus Value, Chapter 21 and 23, if output simply expanded on the same technological basis, there is no possibility of these proportions changing, simply as a result of increased output. However, as he sets out in Theories of Surplus Value, Chapter 21, and this point was made, also, by Adam Smith, as discussed by Marx in Theories of Surplus Value, Chapter 17, as output expands, the demand for labour grows at a faster pace than the supply of labour/social working-day. Capital can respond, in the short-term, by increasing absolute surplus value, that is by increasing the length of the working-day, but there are limits to that. There are only 24 hours in a day.

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Anti-Duhring, Part III – Socialism, I – Historical - Part 10

Fourier held up to the public gaze the glaring contradiction between the promised nirvana following the bourgeois revolution and the reality.

“He mercilessly lays bare the material and moral misery of the bourgeois world. He confronts it with the [earlier] philosophers’ dazzling promises of a society ruled solely by reason, of a civilisation yielding universal happiness, of an illimitable human perfectibility, as well as with the rose-coloured phraseology of the bourgeois ideologists of his time. He shows how everywhere the most pitiful reality corresponds with the most high-sounding phrases, and he overwhelms this hopeless fiasco of phrases with his mordant sarcasm.” (p 333-4)

The denial of liberty to millions of colonial slaves, was justified by claims of their lack of equality of being. A similar claim was made in relation to women. Women continued to be treated as with children, as chattels, the property of the male head of the household. Engels notes, in relation to Fourier,

“He was the first to declare that in any given society the degree of woman’s emancipation is the natural measure of the general emancipation.” (p 334)

This emancipation was, of course, only a formal, bourgeois emancipation, an emancipation in terms of individual freedom, and, as with equality, only on the basis of an equality of rights. But, as Marx sets out in The Critique of The Gotha Programme, a formal equality of rights must result in an inevitable inequality of outcome, precisely because the presumption of an equality of being is false. Individuals are not clones of each other, identical in their needs and abilities. Some are strong, some are weak, and so on. To expect a weak person to exert themselves to an equal extent as a strong person is clearly absurd. I certainly have no intention of deadlifting half a ton, as Eddie Hall was able to do.

For the bourgeoisie, this false claim of equality of being is the ideological bedrock upon which they rest. Everyone has an equal capacity to rise in society, and so those that do must do so on the basis of their individual merits and freely undertaken choices. Its why a billionaire moron like Trump poses a problem for that ideology, also exposing for it the contradiction involved in their insistence upon the right of inheritance.

“But it is in his conception of the history of society that Fourier appears at his greatest. He divides its whole course, thus far, into four stages of development, savagery, the patriarchy, barbarism, and civilisation, the last coinciding with what is now called bourgeois society [i.e. with the social order that came in with the sixteenth century]. He proves

“that the civilised order gives every vice practised by barbarism in a simple fashion a complex, ambiguous, equivocal, hypocritical form”;

that civilisation moves in a “vicious circle”, in contradictions which it constantly reproduces without being able to solve, that it constantly attains the opposite of what it wants to achieve, or pretends it wants to achieve. So that, for example, “under civilisation poverty is born of abundance itself”.” (p 334)

Fourier applied the same dialectical method of thought as Hegel and Kant, seeing every historical period as having an upward and declining phase.

“Just as Kant introduced the idea of the ultimate destruction of the earth into natural science, Fourier introduced that of the ultimate destruction of the human race into historical thought.” (p 335)

Marx and Engels noted in The Communist Manifesto that the class struggle results in the victory of the revolutionary class or else the destruction of the contending classes. In the time of industrialised, total war, it was expressed in the slogan “Socialism or Barbarism”; now, in the time of nuclear warfare it is expressed precisely in the choice of “Socialism or Annihilation”. It is a choice that appears ever more imminent.

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Forward To Part 11