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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SNNS 65

 

Northern Soul Classics - Catch Me I'm Falling - Esther Phillips

 

Anti-Duhring, Part III – Socialism, II – Theoretical - Part 20

But, after 1855, and the passing of the Limited Liability Act, those same processes of capital accumulation, the socialisation of that production, and of the large scale industrial capital itself, leads to an explosion of the joint-stock companies, which, previously, were a minority. It is this form of socialised capital, rather than the worker cooperatives, which became the means by which “the expropriation of the expropriators” was accomplished. It is the joint-stock company, whose form, today, is the limited liability company/corporation, which became the dominant form of socialised capital, as the transitional form of property between capitalism and socialism. The fact that these large corporations, inevitably developed into multinational corporations, breaking themselves out of the fetters of the nation-state is an indication of that transitional nature.

It does not mean that worker cooperatives have no place, today, in that process, but, it does mean recognising the constraints on them. It involves recognising that, to break out of these constraints, a worker cooperative needs to be able to mobilise the mammoth amounts of capital that a multinational corporation does. It also means that, like the multinational corporation, it cannot limit itself to being tied to the nation state, let alone some smaller, local operation. That, also, shows why the statist notions about nationalisation are, now, both idealist and utopian, and consequently a reactionary delusion.

As I set out many years ago, even in Marx and Engels' time, they argued that it was necessary for worker cooperatives to combine their capitals, including cooperatives in different industries, as well as to plough their profits into a centralised pool to be used for a planned expansion of cooperative production.

“Then what is the only salutary basis for co-operative industry? A NATIONAL one. All co-operation should be founded, not on isolated efforts, absorbing, if successful, vast riches to themselves, but on a national union which should distribute the national wealth. To make these associations secure and beneficial, you must make it their interest to assist each other, instead of competing with each other—you must give them UNITY OF ACTION, AND IDENTITY OF INTEREST.

To effect this, every local association should be the branch of a national one, and all profits, beyond a certain amount, should be paid into a national fund, for the purpose of opening fresh branches, and enabling the poorest to obtain land, establish stores, and otherwise apply their labour power, not only to their own advantage, but to that of the general body.

This is the vital point: are the profits to accumulate in the hands of isolated clubs, or are they to be devoted to the elevation of the entire people? Is the wealth to gather around local centres, or is it to be diffused by a distributive agency?”

(Ernest Jones Letters)

Ernest Jones, who Marx and Engels, initially, saw as the future leader of the working-class, was writing, here, on behalf of the First International. His position, even nearly two centuries ago, is way in advance of those, today who, instead want to promote the idea of localism.

That combination, today, has to extend even further beyond the constraints of the nation state, and to utilise the kind of credit that Marx and Engels – and , here, Jones – refer to. It means mobilising the large pools of workers' savings in their pension funds that did not exist even 50 years ago, let alone in Marx and Engels' time. We certainly should have democratic control by workers over them, and certainly, as the repeated attacks by the state on pensioners shows, should not rely on the state to provide them. No wonder the ruling-class not only deny workers the right to control their collective property in the form of the socialised capital of the joint-stock companies/corporations, but also deny them control of their own money accumulated in the workers' pension funds!

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Anti-Duhring, Part III – Socialism, II – Theoretical - Part 19

A century later, it is even more apparent, and the scale of production is such that even that idea of nationalised industries in each nation state is consigned to history. The EU, 80 years ago, began as its original member states created the European Coal and Steel Community to regulate and plan production on a multinational scale. The atomic energy industry in Europe, from the start, was set up as a planned and regulated, European industry. The idea that a puny and rapidly declining British nation state can compete, globally, in steel production is risible. The British coal industry has already gone, but, similarly, if the British state seeks to continue a British steel industry, by nationalising it, separate from an EU steel industry, it will just throw potential money-capital down the drain that could have been better used in some other industry. British steel production could only continue if it was part of a large-scale EU steel industry, which itself requires EU wide planning and regulation of production.

“In the trusts, free competition changes into monopoly and the planless production of capitalist society capitulates before the planned production of the invading socialist society. Of course, this is initially still to the benefit of the Capitalists.

But, the exploitation becomes so palpable here that it must break down. No nation would put up with production directed by trusts, with such a barefaced exploitation of the community by a small band of coupon-clippers.” (p 358)

Here, clearly can be seen the vision of Marx and Engels, and just how markedly it differs from that of the petty-bourgeois socialists and nationalists, including those who, for much of the last century, masqueraded as Marxists. In contrast to the “anti-capitalists”, and opponents of globalisation, Marx and Engels, as well as their early adherents such as Kautsky, Pannakoek, Plekhanov, Lenin and Trotsky, saw this development of ever larger-scale capitals, and the consequent destruction of nation states by this “imperialist” capital, not just as inevitable and unstoppable, but as, partly for that reason, also progressive. Today's “anti-capitalists”, “anti-globalists”, and “anti-imperialists” are like the petty-bourgeois moral socialists and Luddites who responded to the form and not the content of that development.

The Luddites saw machinery destroying their petty-bourgeois, handicraft production, and responded by breaking into the factories and breaking the machines, or setting fire to the factories, much as previous peasant rebellions responded by burning the barns and manor houses of the landlords. But, Marx and Engels point out in The Communist Manifesto, it was not the machines that were the cause of that misery but the social context in which those machines were employed, as capital, not simply as means of production. The machines were actually a powerful basis upon which the lives of the labourers could be hugely improved, if they were used as means of production, instruments of labour, not as capital. It is what the labourers in the Lancashire textile cooperatives and the agricultural cooperative at Ralahine discovered.

Of course, as described previously, the centralisation of the means of production and the development of machine production itself could not have arisen without the existence of the private industrial capitalists. The first conscious response to that, of course, is, therefore, the creation of worker cooperatives, such as those described above. In Marx's Inaugural Address to the First International, in 1864, he not surprisingly highlights the huge significance of the cooperatives. But, he, also, sets out the constraints on their ability to simply expand without the working-class doing what the bourgeoisie had previously done, which is to wage a political struggle to remove all of the political fetters on their continued expansion. In Capital III, Chapter 27, he sets out, in that regard, also, the role of credit, in facilitating the extension of this cooperative production.

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