Saturday, 28 March 2009

The Economics of Co-operation - Part 2

What then are the progressive features of Capitalism as it currently exists, and how can those features be advanced. How can the reactionary features of modern Capitalism be negated?

The following features can be listed as generally progressive and leading to a raising of productive potential.

1. Large scale production of mature commodities. Contrary to orthodox economic theory, which posits the onset of diminishing returns beyond a certain level of output, there is in reality no indication for most mature products of such a phenomenon. On the contrary all empirical evidence indicates that for such products alongside greater and greater levels of production goes lower level of costs through the economies of scale. Rationally, such production should be encouraged as an efficient use of man’s resources with the proviso that consideration of transportation costs to markets, including the external costs in terms of environmental damage, be taken into consideration in locating such large plants around the globe. However, such large-scale production necessarily implies a degree of monopoly or oligopoly, which might have a reactionary consequence in terms of the willingness to innovate, to restrict consumer welfare etc. As previous experience has demonstrated addressing such monopoly power through the replacement of a private with a public monopoly does not constitute a progressive solution.

The State as a Capitalist State can only carry on its activities including the provision of goods and services according to the norms of Capitalist production, including all of the limitations that entails – in particular the idea of production for profit rather than for need. Capital in the form of State owned Capital continues to confront the worker as Capital rather than as means of production. In fact, as Kautsky argued it can because of the power of the State confront the worker in a more awesome manner than does private Capital. The worker continues to suffer alienation, and all of the attributes that limit large-scale production by private Capital are reproduced. The alienated worker has no connection with their product or with the final consumer of that product. They have no incentive to work efficiently, in fact, the general bureaucratism that always accompanies the activity of the Capitalist State is likely to ensure that they work if anything less efficiently than under a private capitalist regime, and consequently the products and services produced are often shoddy, and costly. Its clear that only by transferring such production into the hands of the workers can such problems be overcome. But, although such a transformation is a necessary condition it is far from a sufficient condition. A Monopoly simply in the hands of workers need not be any more progressive than a monopoly in the hands of the Capitalist State, or in the hands of private capitalists. Indeed, on its own such an enterprise could make its workers little more than such private capitalists. Such a venture can only be progressive if it acts in such a way as to utilise the advantages of large scale production to ensure both a reduction in costs, and a mobilisation of its resources to meet the needs of consumers now and in the future, that is that the problem of alienation is overcome in practice by fusing the interests of the workers in the enterprise with the interests of their fellow workers in the community at large. In other words it means that the enterprise must be organically linked to the working class, which acts to feed into it, ideas, needs and so on, whilst actual control of the means of production reside with the enterprises’ workers themselves.

Only in so far as these workers directly associate their own individual and collective interests with those of the working class as a whole can this be achieved. In short it implies, a qualitative shift in class-consciousness, and in working class democracy; the establishment of whole new structures of participation and discussion. Only on that basis could workers in these enterprises be persuaded to invest the necessary resources into Research and Development to ensure the creation of new products and designs to meet consumers needs, or to invest in Quality Control measures to ensure an ever improving quality of products and services provided to consumers and so on rather than simply sitting on their laurels and enjoying the benefits of being a monopoly supplier. Yet, it is in these areas that the real benefits of Co-operative production should be greatest. It is in the eradication of alienation as workers make contact with those for whom they expend their Labour that the worker can begin to transform “work” into a normal human activity, through which the worker expresses themselves, and thereby raises the productivity of labour to levels that Capitalist production cannot match. It is through the desire to produce as effectively as possible, and to produce new exciting products that the worker desires for themselves as a member of the community at large that the drive can come to innovate in products and techniques.

2. Technology Sharing. Given the huge costs of developing new products like engines the sharing of technology makes enormous sense. One area where competition continues perhaps to make sense is competition amongst workers to innovate, not necessarily for any financial gain, though there is no reason why under the rules of the Capitalist game that have to be observed at present workers should not gain financially from such innovation, but, for personal pride and satisfaction, and for the results of that innovation to be shared. At the present time such innovation under Capitalism is restricted. The large monopolies technology share with each other for their mutual benefit, but only amongst themselves. Although, some specialised workers engaged in R&D Departments may be well-paid to engage in such activity, the huge reservoir of talent that resides within the workforce in general is not utilised, and even the R&D workers remain just workers with no immediate incentive to innovate. More generally, monopoly capitalism is marked not by such technology sharing, but by the opposite, by commercial secrecy, by the protection of innovation by patents, etc. In some of the most important areas of life such restrictions are immediately harmful to the public well-being e.g. in the development of pharmaceuticals.

Although, a Worker Co-operative would have no reason to share its technology and innovations with private Capitalist enterprises, Co-operative enterprises operating as part of a broader Co-operative holding Company would have such an incentive, because with profits going to the holding company all workers in the Co-operative sector would directly benefit from the increased profits that would accrue from the rapid take-up across the sector of such new products, techniques and so on. Further arrangements to directly benefit the innovating enterprise by some kind of licensing arrangement or other financial inducement could also be considered.

3. Planned Production. The introduction of enterprise planning techniques, many of which have been learned from the experience in the USSR, represent a progressive development within Capitalism. However, it has to be remembered that although these techniques are similar to those that would have to be utilised in a socialist society the content and intent is completely different. A socialist society would use planning techniques such as Market Research and so on to determine the needs of society in order to allocate resources so as to best meet those needs. Capitalist enterprises utilise such techniques in order to maximise their own profits. A Workers Co-operative operating within a continued Capitalist environment would have to walk a line between both. A socialist society can allocate resources to fulfil a need for certain social goals irrespective of whether the enterprise/s producing those use values do so at a profit or not, because society as a whole decides to do that, and finances it by diverting surpluses created elsewhere in the economy. A Workers Co-op within a Capitalist environment cannot do that for the obvious reason that any resultant losses will not be financed.

However, the opposite is not true. Whereas, an individual capitalist enterprise produces to maximise profits in the long term, the worker co-operative has no such imperative. It may not even have to produce profits at all on an individual basis. Very large Capitalist enterprises may well operate on a basis in which certain parts of their business produce no profit, for a number of reasons. One Department might produce inputs for another department, and the losses of one are the gain of the other. Production may continue at a loss in one Department if that production makes a contribution to the enterprises overall fixed costs. In other words, if that production ceased the firms fixed costs then had to be borne by the remaining Departments who as a result produce a lower overall amount of profit than was previously the case. But, enterprises have to make a profit overall – at least in the long-term. But, the worker Co-operative might have other goals than simple profit maximisation. It may engage in some form of market research in order to determine consumer needs, and then plan its production not to maximise profits, but to maximise the long-term employment stability of its workers. As part of a C-operative holding Company it might produce at a loss, in order that its products can be used by other Co-operatives profitably giving them a competitive advantage over their private competitors and so on.

Planning by Capitalist enterprises is also restricted in the obvious sense that each enterprise seeking to maximise its profits works with closed books and commercial secrecy. Its planned decisions are not shared with competitor firms, and so the underlying planning assumptions of each firm may well turn out to be false. Each enterprise might think it knows what capacity its competitors has and its ability to expand that capacity, it may expend resources on employing industrial espionage to uncover those secrets and plans, but it can never really know what they are going to do. Experience in the realm of microprocessors over the last couple of decades has shown competing firms spending large amounts of money on new capacity only to find that their competitors have done the same creating a resultant glut. Economic theory describes such behaviour in terms of the cobweb theorem which shows the way such production decisions rather than leading to conditions of equilibrium, rather lead to ever wider disparity between demand and supply.

See: Cobweb Theorem

But, a worker’s Co-operative as part of a Co-operative Federation would work with open books in relation to other Co-operative enterprises. Not only would each Co-operative enterprise in a particular industry have an incentive to share its plans with its fellow co-operatives, because in doing so it would avoid making costly investment decision mistakes, but it would have an incentive to share such information both with its suppliers to ensure that they could gear their own production plans to its needs for inputs, thereby avoiding dislocation and costly hold-ups, but would have an incentive to share those decision with those which it supplied for similar reasons, particularly in the case of co-operative retail outlets, which could be an important secondary source of consumer information and feedback.

4. Globalisation

One of the reasons that Capitalism has revolutionised production has been its ability to take the division of labour to new heights. Its pinnacle is the globalisation of production. The latest Nobel Laureate for Economics Paul Krugman won for his work on analysing trade patterns. He asked the question why was it that trade cannot be theorised in the terms of Ricardian Comparative advantage, why is it that some countries produce essentially the same products, but trade these similar products between them? His answer was simple – economies of scale. It does not make sense to produce at a single car plant small batches of 5 different models. It makes sense to produce a large number of one model. It then makes sense to produce the other 4 models at 4 other plants, and these can just as easily be in say Canada as in the US, resulting in trade between the two.

Although, there has been a lot of opposition to globalisation in recent years focussing on the exploitative nature of such investment in poor countries a lot of this opposition has, in fact, been ill-thought through. Most of it comes from that “anti-imperialist” Left, in the West, that also lines up with assorted reactionary “anti-imperialist” forces in some of these countries that are the immediate and real enemies of the workers there. In fact, for the same reasons that Marx saw Capital performing a revolutionising role in India, and Lenin saw it performing in Tsarist Russia, globalisation performs a truly revolutionising role in industrialising poor countries, and creating the basis for them transcending Capitalism through the creation of powerful new Labour Movements. Of course, Marxists do not condone or encourage the oppression and exploitation of workers in this country, but the solution to that as in the opposition to the rule of Capital at home is to organise the workers into Trade Unions, Co-operatives and Workers Parties, not to condemn the peoples of these countries to perpetual backwardness. Of course, workers here are limited in what they can do to assist such a development in poorer countries simply through their Trade Unions, and campaigns such as “Fair Trade”, which focus simply on consumerist boycotts and so on can never provide a real solution to the workers in these countries. But, Worker Co-operatives can, because they have a direct incentive to assist in the development of worker owned Co-operatives in those countries, and to integrate them into such an international Co-operative conglomerate.

Such a development is a direct means of ensuring direct technology transfer into these economies, and the immediate effect that would have in raising both the productivity and living standards of workers there. It would also provide a powerful motive force to encourage further development, not to mention encouraging further such Co-operatives and he consequent effect on workers class consciousness and the facilitation of the development of Labour Movements and Workers Parties.

In short the spread and co-ordination of Co-operative production on a global basis is a direct and practical application of the slogan – “Workers of the World Unite”.

5. The Greening of Business

In recent years business has responded to the growth of environmental concerns by taking on board green issues. Even Investment houses have established so called Ethical Funds, which only invest money in companies that conform to some code of ethics, be it in terms of environmental impact, avoidance of trade with certain regimes and so on. Some of the leaders of these companies do actually seem to be committed to these ideals, but in large part it is, of course, just a marketing exercise, intended to win market share from that large number of middle class consumers who wish to assuage their consciences. In the end, capitalist business will continue to attempt to maximise profit – the current downturn has seen a marked move away from concern for such issues by companies that have tried to maintain their bottom lines – and this is just a ploy to that end. Having said, that in the process some useful tools have been developed in the way of Green Audits, Carbon footprinting and so on that will be useful to workers in developing Co-operatives that really do have a concern for the environment.

More than that, it has become clear that the amount of investment that should be being directed to green industries is not being made, partly due to the frictions that arise from large amounts of Capital remaining tied up in traditional monopoly capitalistic business. Considerable scope exists for Co-operatives to expand into these new technology areas, which because they are at the leading edge tend to have a low organic composition of Capital in their initial stages – that is they require relative small amounts of Capital compared to the high value intellectual Labour involved in developing new technologies and technological products – but which have high value added, and potentially high growth rates driven by exceedingly high rates of profit. A Co-operative conglomerate could and should help to foster such industries and development.

6. Taking on the socialised production of the state

In the twentieth century the State socialised considerable functions important to the running of a modern Capitalist economy. It provided an educated workforce via State Education, it provided a healthier longer-lived workforce via socialised healthcare, it socialised social care through National Insurance Pensions, Unemployment Benefits etc. in order to maintain a calmer social order, and more compliant workforce, it socialised Housing Provision through the construction of Council Housing and so on.

During the Long Wave downturn from the mid 90’s to the end of the 90’s it rowed back from some of these programmes as the cost became too high, reducing them to minimum levels, and where possible privatising provision. As I have written previously it was no coincidence that the State introduced National Insurance just at that point where workers living standards had risen to a level where their own Friendly Societies could have become well-financed Social Insurance organisations directly owned and controlled by workers, and instead diverted those funds into the pocket of the Capitalist State, for scant return, and no control. Marxists should not support the privatisation of these functions, but we should look to transfer them back into the hands of the workers themselves so that the workers have control over their own finances, and can use them for their own purposes not to finance some latest idea of the Capitalist State such as building a new Trident nuclear submarine and so on.

In the news today, for instance, was the crisis over housing. One of the BBC Newsreaders asked the Government spokesman why with lots of unemployed building workers, and lots of housing needed the Government could not itself simply employ those building workers, providing them with a job, and the homeless with a home. Of course, no reply was forthcoming. But, we should not expect the Capitalists’ State to do that anymore than the Capitalists themselves. It operates according to the same principles of profit, and concern for the profit of the Capitalists who would pay the taxes to finance such a scheme. They work according to different criteria and interests to us.

But, the point itself can be addressed to the workers movement itself. The Co-operative Bank is in the midst of a £70 billion merger with Britannia Building Society. The latter as a mutual BS is controlled by its members as is the Co-op. Both have links with the Labour Movement, and the Co-op in particular through the Co-operative movement. Brittania finances people to buy houses, the Co-op Bank in addition as part of its business helps finance businesses. It seems obvious to me that the focus of attention of the merged organisation should be to prioritise and direct their funding towards a) the creation of Housing Co-ops, which can buy up existing properties that are empty, and the construction of new co-operative housing, and b) towards the financing of worker-owned and controlled construction Co-operatives that could employ some of those unemployed building workers at decent rates, and who could then build and maintain the former housing thereby not only housing the homeless, but who through their rents/and or mortgage repayments would not only replace the wages and costs of the Co-operatives, but would create a large new pool of finance to cover the expansion of the Co-operative Housing sector.

The solution to these problems lies within our own hands, if we only mobilise to bring it about rather than sitting back and waiting for the bourgeois state to do it.

7. The Decentralisation of production

As the introduction of new technologies has once again revolutionised production, so property forms and social relations are once again undergoing change, and the form of co-operation is once again changing in consequence. Alongside all of the above, the concentration of production etc. is occurring a contradictory development, not the concentration of production, but its decentralisation. That has come about as a result of a number of developments.

Firstly, mass production led to automation, and automation has led to computerisation and roboticisation. Where mass production manufacturing has not already been shifted overseas it is now undertaken in huge factories that employ few actual workers, and where many of the repetitive jobs have been taken over by robots. There are already a number of fully automated workplaces. Similar, transformations have occurred in distribution too. Point of Sale terminals in stores now send instructions directly to computer systems that automatically place orders with suppliers once some minimum stock level is reached, and those computers communicate directly with the suppliers computer to make the order, which in turn sends those instructions to robots which pick the necessary products from the shelves, and take them to be shipped out. Now even the shipping function might be further automated. Not only do the huge freight ships have very few crew for their size, but a new technology is being introduced, which will enable a convoy of vehicles to be led by a single lead vehicle with a driver, whilst the others are computer linked to it behind!

Even in banks and other service industries, computers have replaced cashiers, and increasingly banking is done electronically by Internet. It cannot be long before the cost of maintaining large supermarkets and stores becomes such that the advantages of online shopping will see a change in that area to. Already online shopping is increasing at a far more rapid rate than through retail outlets. And in high cost areas, already there is a move to avoid the high cost of office space by encouraging home working. The danger for workers of such a development is of isolation and atomisation, undermining collective bargaining power.

The simple answer to that is to use the techniques that peasant producers have developed in Europe, the establishment of marketing and distribution co-ops. In fact, such a solution could be useful as a response to the increase in casualisation of labour. In other words workers could form their own distribution Co-ops that acted as suppliers of labour power. It would in fact be a way of replacing all of those private manpower agencies that rip workers off and provide them with no protections in the supply of temporary and part-time labour to minimum-wage paying employers. A Co-operative Labour exchange of this kind could act as a monopoly supplier of Labour Power to Capital, thereby raising the price of labour-Power as a commodity, and putting an end to the back street sweatshops.

But, more than that already there has been established Co-operative ventures into the world of ISP with Poptel. Not only should such Co-operatives be developed, but a Co-operative for homeworkers could also ensure that the potential for their atomisation was overcome, and their services could be marketed by such a Co-operative over the Internet.

And as I have said, previously the tendency is increasingly towards consumer spending on Leisure and entertainment as living standards rise and spending on traditional consumer items declines as a percentage of spending. That together with the Internet and the cheapness of much of the required technology has led to the growth of new artists and creative people selling their product over the Internet to a global marketplace. Again, such production is highly suitable to organisation and distribution through a Co-operative. In fact, a Co-operative for Creative people already exists - Creative Co-op . If all of those socialist film directors, writers, musicians, actors and other creative people were to combine their talents in such a Creative Workers Co-op what a tremendous force that would be to undermine the monopoly of bourgeois ideas, and the bourgeois media!

Back to Part 1

Forward to Part 3


MARWRA said...

You have certainly provided an abundance of information about co-ops and this article is particularly good.

Still, there are still some areas that I feel need expanding:

1) How will the process of co-ops joining up work? At what point do you see this happening? Will this be a natural development of the mature stage of co-op development or is it something that needs to occur early on in this process? Is it something that needs to be argued into existence by Marxists?

2)A deeper analysis of modern class relations needs to be brought into the equation. This is a very important aspect of how your idea can and should develop and will highlight potential problems/opportunities.

Boffy said...


I haven't finished this series yet, but thought that I would post these individual parts rather than waiting until I have completed the entire section. In soemthing I have been working on today I have been looking at the specific question you have raised.

I can sumamrise it as follows:

The nature of Co-operative production means that within each Co-op the Marginal Productivity of labour is higher than for a Capitalist firm. Orthodox economic theory would suggest then that efficient allocation requires a more Labour intensive production function. Or in Marxist terminology as close as can be made, a low organic composiiton of Capital.

There are two conclusions:

The availability of cheap labour in developing economies means that Capitalist production in such economies could still udnercit Co-op production of mass produced goods in developed economies. So Co-op production of such goods is suitable only in developing not developed economies. As workrs in such economies tend not to have access to Capital - certainly in sufficient quatity - for efficient levels of production, such Capital needs to be provided by European/International Co-op. I would suggest that Euro Co-op could identify potential products and a known market, and then set up production in some suitable location. My further article will expand on this.

Secondly, Co-ops in developed economies that develop as Labour-intensive need to produce soemthing different, something not facing competition from cheap labour. They should focus on production that requires a large quantitity of compelx labour. Example, IT programmers, Biotechnology development, Alternative Energy Technology, High Value production such as Film, Music, Media etc.

In so far as they can establish some form of Monopoly and obstruction to entry of private capital - the normal advantages of Co-op production alreadys et out can do that to some extent, first mover advantage would also help, use of Capitalist laws on copyright, and patents could also be used agaisnt Capital, then following Marx the high rate of profit that flows to firms with low organic composition of Capital could be utilised as the Monopoly position prevents thesse profits from being taken into account in the calculation of the Average Rate of profit viz Marx's argument re. Agricultural production and rent.

Further in relation to workers in developing econs. If they remain paid at local wages plus small premium they retain competitive advantage in production enabling them to expand from just supplying Co-ops to supplyin Capitalist firms. But, as set out in "Can Co-ops Work 4", if they are part of conglomerate, and pass all profits on apart from agreed retentions, on basis of share of profits of conglomerate, AND also benefit from the co-op conglomerate Pension funds, then those profit shares could mean actual incomes of workers in these Co-ops are multiple times actual wages, plus have pension that most workers in developing economy would not have! Not only is this a powerful ideologuical, indsutrial and political weapon, but it also assists in economic development of coutnry, and speciically creates a "balanced growth" type framework for extension of Co-operative production within that economy.

As the links I've given demonstrate there is no shortage of Co-operative organisations on an international level. The weakness iis the politics and political outlook, which is at best social-democratic at worst liberal. Both political mindsets favour the market, both favour individualistic development with mutual support rather than a class struggle perspective, and the necessary centralist and strategic outlook I am proposing.

Yes, it requires marxists and other socialsists to get stuck in and change that framework. It will have to be done from the ground up, involvement in local Co-op on an activist basis for a start.

The anslysis of class relations on a marxist basis can only proceed after a proper evaluation of current productive and social relations of property forms in their development. But, yes especially to address the political programme such an analysis will be necessary.

Marko said...

I would agree that the expansion of co-operatives is a fundamental part of the transformation period from capitalism to socialism.

However, you say the main critique of Marx against Anarchism in this context is its failure to locate the working class at the centre of co-operative development. I think it goes beyond this, I believe he critiques the anarchy of anarchism, i.e. an unplanned economic system which leads to a kind of social Darwinism. The same unplanned anarchy that is capitalism.
I feel your co-operative idea, as presented, to some extent also exhibits a failure in trying to locate a working class that doesn’t exist, i.e. one that is ready to act in a proactive way. Under present conditions working class consciousness is so low/apathetical that a socialist party, and by extension, state power, is far more important that you have claimed.
Marx himself did not rule out the possibility of socialism coming about in England by electoral success, an indication that Marx had statist tendencies.

Have you read some of David Harvey's comments re the current crisis and his opinions on populist struggles?

Boffy said...

“However, you say the main critique of Marx against Anarchism in this context is its failure to locate the working class at the centre of co-operative development.”

I was more setting out Marx’s criticism of Owen and the Utopian socialists on that basis, and particularly their followers. But, yes its true that people like Proudhon also opposed strikes. That’s not so true of Bakunin see here for the basic arguments, though its true that Bakunin like many on the left today tended to see the most oppressed layers of society as forming the revolutionary proletariat, whereas its clear from Marx’s writings, particularly in the Grundrisse, that his hope of socialist transformation lay in an increasingly educated, organised and thereby class conscious proletariat. Not a Leninist Vanguard, but not a lumpen or semi-lumpen layer either. But, that criticism can be laid at the door of statists too, because for them in whatever variety the only role of the working class is to act to put pressure on the State to carry through the transformation, not to do the transforming themselves.

“I think it goes beyond this, I believe he critiques the anarchy of anarchism, i.e. an unplanned economic system which leads to a kind of social Darwinism. The same unplanned anarchy that is capitalism.”

That’s true, but I think if you spoke to many Anarchists they would say they DO believe in planning, but they think that this planning can arise in some spontaneous manner without any kind of structure. I believe that planning has to be developed organically from the bottom up - and so did Marx, and even Lenin and Trotsky – and cannot simply be imposed from above. To that extent I think we would agree with the Anarchists as opposed to many of today’s “Leninists”, who really stand in the tradition of Lassalle and Stalin, rather than Marx of Lenin, and think that some “Workers’” State can simply draw up a plan overnight to replace the market, and that so long as its based on “democracy” rather than “bureaucracy” i.e. workers are asked their views before he central planner actually make the decision, then this will avoid the problems experienced in the USSR et al. But, where I like Marx and Lenin differ with the Anarchists is in the need for this organic development of the plan to take place within the framework of some structure, and on the basis of some form of organisation, which will form the basis of the Workers State.

”I feel your co-operative idea, as presented, to some extent also exhibits a failure in trying to locate a working class that doesn’t exist, i.e. one that is ready to act in a proactive way. Under present conditions working class consciousness is so low/apathetical that a socialist party, and by extension, state power, is far more important that you have claimed.”

I think we have had this discussion before. My point remains as it was then. You put yourself in a chicken and egg situation. If we start with your assumption that the working class is indeed so apathetic, its consciousness so low that any attempt to mobilise it to self-activate is utopian then the same argument raised to a power applies to that same working class electing some “socialist” party into power! The Workers Party can and should have a higher level of consciousness than the class as a whole. The party draws in by its nature the most active most class conscious, and the job of the Marxist is to help develop those workers further, and thereby to raise up not just them, but the party and its programme. But, that is not a mechanical process. The Workers Party, as with the LP now can sink backwards as class consciousness within the masses falls back, especially if as now, the Marxists desert their duty and leave the Workers Party to go off on their own sectarian fantasy. In contrast, so long as bourgeois democracy continues to be the main focus of political activity for the workers a Workers Party that stands on an adequate Programme, probably stands no chance of election during periods when as you say like now Workers class consciousness is very low. The whole period from 1979, demonstrates that in Britain. The Workers Party only becomes electable when it sinks back to a political level more approximating the class consciousness of the Workers. But, that is no use for bringing about the radical changes you want this “Socialist” government to bring in, for the simple reason that such a Government never would introduce such changes, because it would in fact be far from “Socialist”!

So, the question is not is state power important, but who holds it. The question is not does a class-conscious working class exist at the moment, but how to create it. The working class exists, it exists as a class in itself, that is objectively it has shared conditions, shared interests, that are clearly distinct from the conditions and interests of other classes. The question only then is how to make that class into a class for itself, to enable the class to recognise and understand its objective condition and interests, and to act upon it. I believe that can only be done in the way that Marx describes the historical process as it has unfolded throughout the whole of class society. That is there has to be a change in the material conditions of the class, that change social and property relations in such a way that the class can recognise in reality in practice, its true position as a class, can recognise its interests, an thereby take appropriate action. That is what Marx says the building of Co-operatives does. Not as some Bernstinian growing over of Capitalism to Socialism, by Co-operatives simply buying up the whole of Capitalism, but by them demonstrating in practice to workers their true interests, showing on a large enough scale the fundamental basis of the new society as a more rational, more efficient means of man producing his needs, and doing so in a way that benefits them as workers. Capital did not simply grow over from feudalism either. Capital grew to a stage whereby the Capitalists could see how a new society could work, enabled them to develop a sufficient class consciousness, won over a large number of intellectuals to its ideas, who in turn invested those ideas with the power to infiltrate the State, and consequently enabled the bourgeoisie to assume State power, which they then used to finish the job, using the State power to support Capitalist property, to oppose the interests of Landed property and so on.

“Marx himself did not rule out the possibility of socialism coming about in England by electoral success, an indication that Marx had statist tendencies.”

I strongly disagree. I have quoted in my blogs on “Can Co-operatives Work” the link to Jossa, , Jossa .

“As theoretical studies have shed light on numerous advantages of cooperative firms over their capitalistic ‘twins’, it is possible to argue that democratic firms are ‘merit goods’ which are capable of generating ‘external economies’ and would hence well deserve incentives from the public hand. Provided this is true, a parliament sharing the view of democratic firms as merit goods could be assumed to enforce a
wide spectrum of benefits in favour of cooperatives and thereby encourage their proliferation with intent to spark off a transitional process.”


“In fact, one reason why history records no systematic transfer of insolvent firms to workers is that left-wing parties have never pro-actively worked towards this goal. It remains to be established if this is mainly due to lack of confidence in this solution or to the fear of a back-lash from industrialists. For our part, the assumption which is at the basis of this paper is that the findings of modern producer cooperative theory are providing clear evidence that a system of democratic firms can function properly provided it is organised in accordance with principles of economic efficiency. Thus, there are reasons to assume that unions, left-wing parties and the greater part of the electorate and intelligentsia will gradually espouse both the equation of a self-managed firm system with “true socialism” and Lenin’s belated insight that cooperation “nearly always coincides fully with socialism”. And the moment when the cooperation/socialism equation becomes a hegemonic notion (along with the idea of the feasibility of the process), a systematic takeover of firms in financial crisis by workers is likely to start a transition to socialism.

But there is also a ‘third road’ towards ‘true socialism’. No major political shift – Hayek argued – is obtainable through mass propaganda; the problem is just to
persuade intellectuals (Hayek, 1983, p. 192; see, also, Keynes, 1936, last page). If this is correct and intellectuals are won over to the idea of a system of democratic firms as a major advancement over capitalism, this far-reaching political shift could be set off by a majority vote in parliament abolishing wage labour in ways and to the extent deemed appropriate in the circumstances prevailing from time to time. In line with Hayek’s and Keynes’s suggestion, once intellectuals have fully interiorised this notion, the general public would gradually assimilate the beliefs of their leaders and, sooner or later, a parliament would probably be in a position to pass the legislative provisions required for implementing socialism by democratic means. From our perspective, the most effective measure would be an act of parliament simultaneously converting equities of joint stock companies into bonds of equal value and limited companies into firms run by their own workers.

Following the enactment of such a revolutionary parliamentary measure, the managers of one-time limited companies might remain in office unless the workers’
councils of the cooperatives established by operation of law should otherwise resolve.”

I think that some of this has resonance within Marx to the extent that it like Marx bases itself in these three scenarios with the idea that such a transformation by “democratic” means is merely a pinnacle, the bringing of form into compliance with content, of an already completed socio-historical process i.e. the bottom up remaking of society. So it is quite possible that alongside the various Workers Committees, and Workers Councils that workers would have to create in the process of creating Co-operative enterprises, Co-operative communities and so on, what I would suggest is the gradual development of an alternative workers power or workers state, they will continue for a long time to have to, and maybe even want to send political representatives into the forums of bourgeois democracy, and that these representatives will increasingly correspond to the new dominant ideas developing within the class. But, alongside Marx’s speculation that such a process COULD mean that such a parliament could simply legislate to legalise such really existing Workers Power, could facilitate the remaining transformation of society by the kind of emasures referred to here, or by Engels about assisting workers to establish further Co-operatives, remember that both Marx and Engels warned that against such a process would come an inevitable backlash from the bourgeoisie, that it would be necessary to put down such a slaveholders revolt. Remember, also that alongside Marx’s speculation on such a transformation came the further elaboration of his historical materialist method, seeing the way in practice historical problems were resolved. He saw the Paris Commune, and said, “here is the form of the new society, here is the solution to the problem, the Commune State”. I paraphrase.

“Have you read some of David Harvey's comments re the current crisis and his opinions on populist struggles?”

Unfortunately, no, I’m somewhat bogged down with programmed reading, and writing at the moment. Could you summarise? That would be useful.

Marko said...

I have tried to summarise Harvey as mmuch as I can but have direct quotes where I feel they are needed.

Current crisis = Massive consolidation of banking system.

Only sustained revolt can bring about redistribution and socialisation of wealth.

Neo liberalism has been successful in consolidation of class power, i.e. achieved it’s goals.

Basic principle of IMF is to protect financial institutions at all costs, even when it destroys people.

Sees US bailout as a financial coup against US people.
Will lead to massive consolidation of financial/capitalist power
On the other hand this could lead to increased questioning and scrutiny of this class.

He believes Finance capitalism could survive the crisis, but whether it does depends entirely upon the degree to which there is going to be popular revolt against what is happening, and a real push to try to reconfigure how the economy works.

Discusses reasons for crisis, wage depression due to abundance of Labour and rise in credit, followed by rise in assett values.

To quote from Harvey,

This growth of the financial area after the 1970s has a lot to do with what I think is another key problem: what I would call the capitalist surplus absorption problem.
As surplus theory tells us, capitalists produce a surplus, which they then have to take a part of, recapitalise it, and reinvest it in expansion. Which
means they always have to find somewhere else to expand into. In an article I wrote for the New Left Review (Sept-Oct 2008)called ‘The right to the City’, I pointed out that in the last 30 years an immense amount of the
capital surplus has been absorbed into urbanisation: urban restructuring, expansion and speculation. Every city I go to is a huge building site for
capitalist surplus absorption. This way of absorbing capital surpluses has got more and more problematic over time. In 1750 the global value of the total output of goods and services was around $135 billion, in constant
values. By 1950, it’s $4 trillion. By 2000, it’s $40 trillion. It’s
now around $50 trillion. And if Gordon Brown is right it’s going to double over the next 20 years, to $100 trillion by 2030.
Throughout the history of capitalism, the general rate of growth has been close to 2.5 per cent per annum, compound basis. That would mean that in 2030 you’d need to find profitable outlets for $3 trillion dollars.
That’s a very tall order. I think there has been a serious problem,
particularly since 1970, about how to absorb greater and greater amounts of surplus into real production. Less and less of it is going into real production, and more and more into speculation on asset values, which accounts for the increasing frequency and depth of the financial crises we’ve been having; they are all crises of asset value.
My argument would be that even if we came out of this crisis right now, and there’s going to be capital accumulation at a 3 per cent rate of growth, we've got a hell of a lot of problems on our hands. Capitalism is running
into serious environmental constraints, as well as market constraints, profitability constraints. The recent turn to financialisation is a turn of
necessity, as a way of dealing with the surplus absorption problem; but one that cannot possibly work without periodic devaluations. That's what's
happening now, with the losses of several trillion dollars of asset value.
The term ‘national bail-out’ is therefore inaccurate, because they’re not bailing out the whole of the existing financial system – they’re bailing out the banks, the capitalist class, forgiving them their debts, their transgressions, and only theirs.

He believes that until we rise up in revolt they are going to redesign the system according to their own class interests.
Believes in strong social movements, e.g. rights of the city, Landless peasant movements and even though small at the moment he believes they can grow and have importance. Believes that society must look at housing itself in a different way, he mentions housing co-operatives.

*Radical politics beyond class divides*

Again to quote directly from Harvey,

There is another point we have to consider, which is that labour, and
particularly organised labour, is only one small piece of this whole
problem, and it’s only going to have a partial role in what is going on.
And this is for a very simple reason, which goes back to the failure of Marx and how he set up the problem. If you say to yourself the formation of the
state-finance complex is absolutely crucial to the dynamics of capitalism, and you ask yourself what social forces are at work in contesting that or
setting it up, labour has never been at the forefront. Labour has been at the forefront of the labour market and the labour process, which are important moments in the circulation process, but most of the struggles that have gone on over the state-finance nexus are populist struggles.
For example, many of the struggles going on in Latin America are more
populist than labour-led. Labour always has a very important role to play but I don’t think we are in a position right now where the conventional view of the proletariat being the vanguard of the struggle is very helpful.
There may be times where proletarian movements may be highly significant – for example, in China, where I envisage it playing a critical part that I do
not see it having in the US (although it still has an important role there).
What is interesting in the US is that the car workers and automobile
companies are in alliance right now in relation to the state-finance nexus, so in a way the grand dividing line of class struggle that has always been
there in Detroit isn’t there anymore. We have a completely different kind of class politics going on. So I think some of the conventional Marxist ways of viewing these things get in the way of a real radical politics.
There is also the big problem on the left that many think the capturing of state power has no role to play in political transformations. I think
they’re crazy. Incredible power is located there and you can’t walk away from it as though it doesn’t matter.

Boffy said...


This looks interesting, but I'm tied up at the moment. I will try to read and get back to you in a day or so.