Marx and Socialist Construction

For over a hundred years the basic teaching of Marx has been misrepresented. It has been misrepresnted by a number of socialists, and in a number of different ways. The original sin for this misrepresntation lies with those most closely linked to Marx and Engels the creators of the mass Social Democratic parties of the late 19th Century and early 20th Century, in particular the German Social Democrats who dominated the Second International. As the American Marxist Hal Draper says in his “Two Souls of Socialism” it has largely been accepted by Marxists down the years that the German SPD developed on the basis of a Marxist Programme, and Marxist theory. However, as he correctly says, in fact it owed more to the ideas of Lassalle, and to Fabianism than it did to Marx.

See: Two Souls of Socialism

Lenin recognised that Fabian element within the politics of the Second International, but was as caught up in the Lassallean, statist view of socialism as the SPD. The only difference was that the SPD believed that socialism could be brought about by top down reforms, carried through by a socialist governemnt, administering a bourgeois state, whereas Lenin believed that it was first necessary to establish a Workers State, and then proceed from there to transform property relations. I want here to show that Marx’s approach was quite different. Marx argued that Socialism could not be created from the top down, and that a healthy Workers State - which requires that the workers themselves have achieved a socialist class consciousness – cannot arise prior to the transformation, at least in part, of the economic and social relations, and, with it, the economic and social position of the working class vis a vis the bourgeoisie. The normal argument, raised by Leninists, against this, is the argument that the working class remains a slave class until the moment of its liberation, and that property relations cannot be transformed piecemeal. To argue otherwise they contend is to fall into either a reformist or else a utopian methodology. I will seek to show why this argument is false.

In the Communist Manifesto, Marx and Engels set out their critique of Utopian Socialism, the islands of socialist co-operation, put forward by the followers of people like Robert Owen. The experience of co-operatives, in Britain, during the 1970’s, such as that at Meriden, have consolidated this view in the minds of Marxists, of co-operatives as utopian ventures, doomed to failure, in a hostile sea of capitalism. Instead, for revolutionary Marxists, the alternative view of Lenin has dominated, that of a violent overthrow, capture of the State, demolition of the aspects of the State, designed to oppress the working class, the bodies of armed men – Lenin did not call for other aspects of the State to be smashed – and the wholesale transformation of property relations under the domination of a revolutionary proletarian State, acting as the Dictatorship of the Proletariat.

Unfortunately, of course, that model didn’t turn out too well, and Marxists should learn from history. Whilst far from advocating the kind of Utopian Socialist perspective of Owen’s followers, I think it is, however, useful to look at what Marx actually said about co-operatives, what he saw as their relationship to socialist construction, and also to look at other examples of co-operatives that perhaps challenge the received wisdom. I start also from a position, which is perhaps not usually stressed in Marxist thought – the idea that the most important aspect of socialist transformation is not the replacement of the market, and commodity production, not the introduction of planning, but is the ending of the position of the working class as a slave class, and its transformation into the owner and controller of the means of production.

We seem to have adopted the idea that, Co-operatives are bound to fail, within the confines of Capitalism. The argument is somewhat akin to the objection to the Theory of Socialism in One Country. That is, socialist construction can only occur within the confines of a world economy or, at least, a significant part of it, for the simple reason that Capitalism operates on that scale of the division of labour, and Socialism, which seeks to develop production beyond what capitalism achieves, cannot start from anything less. This is not the place to discuss the dogmatic nature in which Trotskyists have argued the case over Socialism in One Country, but, in dealing with the question of Co-operatives, at least some of that argument is necessarily addressed.

The Stalinist response to the Trotskyist argument was – “Do you not have faith in the superiority of socialist production?” It seems to me a reasonable argument to put forward. Yes, the full advantages of Socialism cannot be achieved, outside the confines of a socialist world economy, but that is not at all the same thing as arguing that the superiority of an economy, based on workers ownership and control, of the means of production, and on co-operation cannot, of itself, be innately superior to capitalist production, cannot out compete other capitalist states, and, thereby, act as a beacon for workers elsewhere. And, indeed, by the mid thirties, with Capitalism, throughout the western world, in deep crisis, and the Soviet Union growing at a rapid pace, that seemed even more a vindication of that line of argument. But, a similar line of argument can be put in relation to Co-operatives within the confines of a national capitalist economy. The fact is that the Co-op, established by the Rochdale Pioneers, over 150 years ago, has survived all that time, and not only survived, but branched out into Banking and Finance, and other areas, such as Travel Agents, Undertakers etc. In Britain, the Co-op is the largest farmer, in Southern Europe, many small farmers and peasants have established co-operatives as the most effective means of distribution, the workers at Tower Colliery took it over and ran it profitably where private Capital could not, the Factories Without Bosses Movement in Argentina shows again that Co-operatives can, not only, offer a positive economic alternative, but also that their establishment links into, or at least has the possibility of linking into, wider social struggles. Clearly, there is no absolute economic law that says, that co-operatives are doomed to failure, within an overall capitalist environment, anymore than that an attempt, to build wider socialist economic relationships, in the Soviet Union, was necessarily doomed to failure.

Its true that the Co-op, in many respects, bears no relationship to Socialism, in fact, in many respects, it bears more similarity to Stalinism, but we should ask why that is. Unlike a Capitalist company, anyone can become a shareholder in the Co-op, for a nominal sum, and, unlike a capitalist company, every shareholder has an equal vote in the running of the Company. But, how many socialists actually do so? I know I don’t. Shouldn’t that perhaps be a warning to us about the possible problems of constructing a socialist society, if we all have opportunity, to have a say, in a large enterprise, that we can collectively own and control, and yet don’t, why do we assume that workers will do so in the future? And yet, as I have argued elsewhere, Thinking Outside the Box if workers mobilised their financial resources, amassed in their Pension Funds, they could, if the resources of the Co-op, Co-op Financial Services and Unity Trust were combined, have significant power. Instead of carping about Tecopoly, the Co-op could become a model employer, setting the standard that others have to meet, and could challenge the market power of private companies, both other supermarkets, and suppliers.

And, in contrast to the failed worker co-operatives, such as that at Meriden, let me cite these others.

James Connolly gives the example of the Agricultural Co-operative at Ralahine in Ireland. Despite the fact that the Landlord charged a high rent, and the banks charged high rates of interest, the workers at Ralahine were able to establish an effective and efficient Co-operative, encouraged by Robert Owen. The workers, as with the textile workers in Lancashire, quoted by Marx, in Capital, made a much more effective use of fixed Capital than did the average private capitalist, because they had an incentive to do so. By bringing in the latest techniques, and using Capital equipment effectively, the workers could ease the burden of their labour, as well as raising its productivity. But, as with the Co-operative at Xanon, which has had much wider social consequences, so too with the Co-operative at Ralahine. Not only were the workers able to introduce, democratically, rules and regulations, for the more egalitarian operation of their community, and greater social security for its inhabitants, but they were also able to virtually eliminate criminal activity, and to remove any sectarian rivalry between the catholic and protestant members of the Community.

See this Chapter of Connolly:Connolly

And what of Marx’s attitude to real life workers co-operatives.

Marx comments,

“It is manifest from the public accounts of the co-operative factories in England [6] that — after deducting the manager's wages, which form a part of the invested variable capital much the same as wages of other labourers — the profit was higher than the average profit, although at times they paid a much higher interest than did private manufacturers. The source of greater profits in all these cases was greater economy in the application of constant capital. What interests us in this, however, is the fact that here the average profit ( = interest + profit of enterprise) presents itself actually and palpably as a magnitude wholly independent of the wages of management. Since the profit was higher here than average profit, the profit of enterprise was also higher than usual.”

Capital Vol III Ch 24.

He says,

“The co-operative factories of the labourers themselves represent within the old form the first sprouts of the new, although they naturally reproduce, and must reproduce, everywhere in their actual organisation all the shortcomings of the prevailing system. But the antithesis between capital and labour is overcome within them, if at first only by way of making the associated labourers into their own capitalist, i.e., by enabling them to use the means of production for the employment of their own labour. They show how a new mode of production naturally grows out of an old one, when the development of the material forces of production and of the corresponding forms of social production have reached a particular stage. Without the factory system arising out of the capitalist mode of production there could have been no co-operative factories. Nor could these have developed without the credit system arising out of the same mode of production. The credit system is not only the principal basis for the gradual transformation of capitalist private enterprises. into capitalist stock companies, but equally offers the means for the gradual extension of co-operative enterprises on a more or less national scale. The capitalist stock companies, as much as the co-operative factories, should be considered as transitional forms from the capitalist mode of production to the associated one, with the only distinction that the antagonism is resolved negatively in the one and positively in the other.”

He goes on,

“The two characteristics immanent in the credit system are, on the one hand, to develop the incentive of capitalist production, enrichment through exploitation of the labour of others, to the purest and most colossal form of gambling and swindling, and to reduce more and more the number of the few who exploit the social wealth; on the other hand, to constitute the form of transition to a new mode of production. It is this ambiguous nature, which endows the principal spokesmen of credit from Law to Isaac Pereire with the pleasant character mixture of swindler and prophet.”

(Capital Vol III pp441-2)

Echoing this idea, of the gradual transformation, of property relations, by the extension of Co-operatives, at first on a national scale, and of workers buying up the Joint Stock Companies, in the Grundrisse, Marx says,

"As the system of bourgeois economy has developed for us only by degrees so too its negation, which is its ultimate result." p712.

But, we don’t have to rely on Marx’s views, set out here. He elaborates his position far more clearly, as Draper pointed out, in the article I have referenced above. In criticising Lassalle, and his statist view of socialism, Marx says of the function of Co-operatives,

“That the workers desire to establish the conditions for co-operative production on a social scale, and first of all on a national scale, in their own country, only means that they are working to revolutionize the present conditions of production, and it has nothing in common with the foundation of co-operative societies with state aid. But as far as the present co-operative societies are concerned, they are of value only insofar as they are the independent creations of the workers and not protégés either of the governments or of the bourgeois.”

Emphasising that this has to be the work of the workers themselves, and not some top down approach, by the current state, or some state of the future, Marx says,

“Instead of arising from the revolutionary process of transformation of society, the "socialist organization of the total labour" "arises" from the "state aid" that the state gives to the producers' co-operative societies and which the state, not the workers, "calls into being". It is worthy of Lassalle's imagination that with state loans one can build a new society just as well as a new railway!

From the remnants of a sense of shame, "state aid" has been put -- under the democratic control of the "toiling people". …

Second, "democratic" means in German "Volksherrschaftlich" [by the rule of the people]. But what does "control by the rule of the people of the toiling people" mean? And particularly in the case of a toiling people which, through these demands that it puts to the state, expresses its full consciousness that it neither rules nor is ripe for ruling! ….”

And

“The German Workers' party — at least if it adopts the program — shows that its socialist ideas are not even skin-deep; in that, instead of treating existing society (and this holds good for any future one) as the basis of the existing state (or of the future state in the case of future society), it treats the state rather as an independent entity that possesses its own intellectual, ethical, and libertarian bases.”

In his Address to the First International, Marx again emphasises the fundamental role, for him, of Co-operatives, not just in transforming property relations, but of transforming the workers conscioussness, he wrote,

“But there was in store a still greater victory of the political economy of labor over the political economy of property. We speak of the co-operative movement, especially the co-operative factories raised by the unassisted efforts of a few bold “hands”. 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 labor need not be monopolized as a means of dominion over, and of extortion against, the laboring man himself; and that, like slave labor, like serf labor, hired labor is but a transitory and inferior form, destined to disappear before associated labor plying its toil with a willing hand, a ready mind, and a joyous heart.”

So, clearly, Marx does not see the idea, that such workers co-operatives, being extended throughout the economy, is utopian, indeed, he sees Credit as the means for facilitating such expansion. Such a vision, of socialist construction, is at extreme odds with the top down, statist approach of Lenin, and also with the statist approach taken many years earlier by Marx himself in the Communist Manifesto. In fact, this gradualist approach to socialist construction, of “a new mode of production naturally grow(ing) out of an old one, when the development of the material forces of production and of the corresponding forms of social production have reached a particular stage”, is far more akin to the views of Kautsky than those of Lenin. It presupposes socialist transformation, occurring in an advanced economy, where the productive forces, and credit, have developed to this stage to enable it to develop “naturally”.

And, of course, if we accept the outline of socialist construction, set out by Marx here, then we come back to the point I made at the beginning. Such a gradual extension of co-operative industry, whether or not accompanied by an extension of state owned industry, in those sectors where this is the most practical form, implies a continuation of the market. In Marx’s words,"although they naturally reproduce, and must reproduce, everywhere in their actual organisation all the shortcomings of the prevailing system. But the antithesis between capital and labour is overcome within them, if at first only by way of making the associated labourers into their own capitalist, i.e., by enabling them to use the means of production for the employment of their own labour.” Marx sees this as natural, and not at all something that should necessarily be feared. And, of course, why not. If workers have reached the level of consciousness, by which they recognise the benefit, indeed necessity, to own their means of production collectively, in such co-operatives, then isn’t it the most natural thing in the world for workers, in each of these co-operatives, to themselves co-operate one with another, and thereby to organically replace the market by ever closer ties, and co-operative agreements amongst them.

As I have said, elsewhere, that does not leave us advocating some syndicalist view of Socialism, of bringing about the replacement of Capitalism purely in the industrial sphere. A political struggle is required too. The gains for workers, in constructing socialist bridgeheads, within the capitalist battlefield, require political legitimation, but that political advancement, too, should advance accordingly, if we accept the basis of Marxist materialism, in line with the strengthened social position of the working class, and, ultimately, before political power is finally secured, will require the putting down of a slaveholders revolt, but such a task becomes much simpler, the Dictatorship of the Proletariat more secure, on such a basis of the overwhelming social weight of the working class, and its political legitimacy than was required by the Bolsheviks in their attempt to create socialism from the top down and on the back of a very small, very weak proletariat.

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