The Left & The Crisis

This is an extended version of latter sent to the Weekly Worker, in response to an article about discussions recently within the CPGB - The Polemical Alternative.

I was disappointed to read the Weekly Worker’s analysis of the economic crisis, and where we are within it. Of course, the WW are not alone in the kind of catastrophism that was represented in the article. On the contrary, that kind of view is typical on the Left, some groups, even talked about the “recession” at the beginning of 2008, whilst the world economy was still growing quite strongly, and a full six months before the recession began, following the outbreak of the Financial Crisis, in the Autumn! It is rather sad then that they criticise “Permanent Revolution” for asking the question, “What Happened To The Depression?”, because of all the Left groups, they have been about the only one that has had anything approaching a correct analysis, and as I wrote some months ago, Financial Crisis & Recession, even they wobbled in the depths of the crisis, in the face of a wall of doom-mongering. In fact, I think that the CPGB’s analysis, like most of that of the Left, is based not on Marxism, but on Lassalleanism, just as much of the Left’s politics are based on Lassallean statist notions rather than on the anti-state positions of Marx.

Running, through almost all of the Left’s economic analysis is the idea repeated in the WW article that Capitalism is a system in decay.

“Comrade Bridge pointed out that it was not just a question of capitalism’s cyclical crises that ought to concern us, but the fact that it is a system in long-term decline.”

Lassalleanism

It is an idea that basically flows directly from Lassalle’s “Iron Law of Wages”, the idea that if there is growth, if there is improvement in workers conditions, it is necessarily suspect, it has to be explained as not real improvement, but some kind of mirage, the result of super-exploitation somewhere else etc. In fact, this is another hang-over from Stalinism, which, as Mandel demonstrated, continually spoke in these terms. Soviet economists went through the most extreme panegyrics in trying to demonstrate that living standards in the West were really falling, even when to the most casual observer it was obvious that exactly the opposite was the truth! Yet, it is common to read in the “Where We Stand” columns of even supposedly “anti-Stalinist” organisations, comments such as “Capitalism creates poverty”, which whilst relatively true, in absolute terms is fundamentally, and palpably false. Not for nothing did Marx talk about the revolutionising role of Capitalism, its rescuing millions from the idiocy of rural life, nor of its “Civilising Mission”, in raising workers standards of living, their access to leisure, education and culture, which were fundamental, and necessary for workers to adequately develop the class consciousness that would make them the new ruling class.

Mandel writes,

The apologists for capitalism have always pointed to the reduction in prices and widened market for a whole set of products as the benefits brought about by this system. This argument is true. It is one of the aspects of what Marx called “the civilizing mission of Capital.” To be sure we are concerned here with a dialectical but real phenomenon where the value of labor-power has a tendency to fall by virtue of the fact that capitalist industry produces the commodity equivalent of wages with ever increasing rapidity while it simultaneously has a tendency to rise by virtue of the fact that this value of labor-power progressively takes in the value of a whole series of commodities which have become mass consumer goods, whereas formerly they were reserved for a very small part of the population.

Basically, the entire history of trade between the sixteenth and twentieth century is the history of a progressive transformation from trade in luxury goods into trade in mass consumer goods; into trade in goods destined for an ever increasing portion of the population. It is only with the development of the railroads, of the means for fast navigation, of telegraphy, etc., that it became possible for the whole world to be marshalled into a real potential market for each great capitalist producer.

The idea of an unlimited market does not, therefore, merely imply geographic expansion, but economic expansion, available purchasing power, also. To take a recent example: the extraordinary rise in the production of durable consumer goods in world capitalist production during the past fifteen years was not at all due to any geographic expansion of the capitalist market; on the contrary, it was accompanied by a geographic reduction in the capitalist market, since a whole series of countries were lost to it during this period. There are few, if any, automobiles of French, Italian, German, British, Japanese or American manufacture exported to the Soviet Union, China, North Vietnam, Cuba, North Korea, or the countries of East Europe. Nevertheless, this expansion did take place, thanks to the fact that a much greater fraction of the available purchasing power, which had increased absolutely as well, was used for buying these durable consumer goods.

See: Introduction To Marxist Economic Theory

Rosdolsky, trawled through every reference in Marx to wages, and in the several thousand there was just one that he found, that could be interpreted as suggesting that Capitalism drives down wages and living standards in absolute terms i.e. causes immiseration. But, it is massively outweighed by all of his other comments to the contrary, and in particular in his attacks on Lassalle and the notion of the Iron Law of Wages. In the Critique of the Gotha Programme he reiterates that in a comment, which should serve as an indictment of all those who have followed in Lassalle’s footsteps.

He wrote,

“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!”

Critique of the Gotha Programme

Imperialism & Decay

Of course, Lenin and other Marxists at the beginning of the last century did not help matters by themselves declaring that the “Imperialist” stage of Capitalism was one of decay. But Trotsky, advised his supporters – “Learn To Think”. Rather than simply accepting Lenin’s dictum, Trotsky’s advice should be heeded. Trotsky himself wrote that if Capital survived the crisis of the 1930’s, and was able to restructure, then not only was it possible that Capitalism would return to growth, but that such a prospect was likely. That, of course is precisely what did happen.

On what possible rational basis can any serious economist describe Capitalism as being in “long-term decline”? There is absolutely no basis at all. Far from it, since at least the end of WWII, Capitalism has been in a phase of development that far exceeds its earlier stages. Not only has it created a world market in the true sense of the word, but it has opened up, within that market, the potential for a much freer movement of Productive Capital than existed before, when “Imperialism”, was really a function of marauding Merchant Capital. It has harnessed science to production in ways that make the Industrial Revolution appear pitiful, and consequently it has expanded production, and raised living standards way above anything that seemed possible in the 19th century. And on the back of it, it has spread its preferred political regime, for the accumulation of Capital, bourgeois democracy, more widely than at any other time in history. For Marxists to try to portray Modern Capitalism as in decay or long term decline, can only further damage the image of Marxism in the eyes of the working class.

Twenty-five years ago I wrote about emerging Asian economies at a time when most of the left viewed these economies as being subjects of neo-colonialism at best Imperilaism & The New International Division of Labour. Those economies are now some of the most dynamic and powerful economies in the world. More recently, I have spoken about how the same process of Capitalist development will bring about a similar transformation in Africa. In fact, that transformation appears to be occurring more quickly than I anticipated. According to this recent article on CNBC, there are already 20 investable markets in Africa.



The rise in commodity prices has given some African economies staggering growth rates in recent years, whilst rising food prices is leading economies like Angola to invest billions in developing their fertile soils, on an industrial basis to meet growing world food demand. At the same time, Middle Eastern states with huge oil wealth to invest are buying up huge tracts of land in Africa, purely in order to set up their own industrial agriculture to directly meet their needs, in a confirmation of part of Kautsky’s theory of Imperialism. In doing so not are they rescuing millions of subsistence peasant farmers by transforming them into an agricultural proletariat, but at the same time they are creating the very conditions by which those proletarians will be able to transform those large farms into Worker Co-operatives.

Faith & Objectivity

The fact, that the WW seized upon the events in Dubai to try to bolster their argument, and to attack PR, is symptomatic. But, it is not PR who have been embarrassed by Dubai surely, but the WW’s own analysis, which blew the event up, only to see it disappear as a 48 hour wonder, because in reality it was negligible in its economic importance. It is symptomatic, because much of the Left has based itself not on an objective economic analysis, but on its own hopes for some kind of economic collapse in the false belief that this would improve their own political fortunes. Yet, it is a very misguided approach as I set out in my blog Oh Ye Of Too Much Faith.

What is missing from the CPGB's analysis is any consideration of the question of why capital used Keynesian methods in the US in the 1930s, but essentially nowhere else; why it used such methods during the post-war boom and why it used them now; and why, in contrast, it did not use such methods in the 1930s in Europe, nor in the second slump of the 1980s. The answer is that it used such methods in conditions of long-wave upswing, when sufficient surplus value existed to finance them, and when renewed growth would repay the expenditure, and did not during the periods of long-wave downswing in the 1930s and 1980s when such conditions did not exist. We are in a period of long-wave rise, not decline.

The WW’s comments about China and India, suggesting that they were merely outposts of US Capital, and continue to be dependent upon it, to be honest I found laughable, but they are in the same vein. They are of the school which defines Imperialism in terms of some kind of immutable relationship of dependency, which is highly unMarxist, and undialectical. Dependency theory has never been a very good explanation of Imperialism, at best it had something to say about the relationship under Colonialism. Not only can it tell us nothing about modern imperialism, but, in fact, it misrepresents the real development occurring in many of these economies, thereby telling us less than nothing. In just the same way that firms grow, become dominant, and then decline, to be replaced by other large firms, so national and transnational economies go through a similar process.

To simply see China as dependent upon the US is to ensure that you are completely wrong-footed to understand both current global events, and those which will unfold over the next decade or so. See: Third World War.

Missing The Point

What is worse, is that in following this kind of economic catatrophism the Left fails to deal with the actual economic situation facing workers in Western economies. The reality of that is that in a Global Market for commodities, including Labour Power, and in which Capital can move to where it can most effectively exploit available Labour, the problem facing workers in the West is that the kind of frictions that enabled their relatively high wages of the past, are increasingly removed. No longer can they rely simply upon the fact that their Labour Power is backed up by masses of Capital, so that the higher productivity of labour affords higher wages. Workers in China and India now increasingly are equipped with even more effective machinery than workers in the West, and so on. No longer can workers in the West rely on the fact that it is difficult for Capital to relocate entire factories etc. The experience at MG/Rover demonstrated that, and increasingly as production moves to higher tech industries such relocation becomes even easier. Nor can they rely on the risks for Capital in relocating, as the spread of bourgeois democracy, and the Capitalist State enforcing property laws for all Capital operating within its borders creates the necessary conditions for its expansion and accumulation.

The second slump of the 1970’s and 80’s saw a process of deindustrialisation set in, which was limited, because given the conjuncture in which it was in a more thorough restructuring of Capital would have been devastating for Western economies. But, that process is symptomatic of this reality of the new world capitalist economy. A reality in which workers in the West will face increasing competition from workers in the East, and which will necessarily drive down wages and conditions in the West relative to those in the East. That is a simple matter of economics, and no amount of state ownership, reformism, syndicalism, or calls for more militancy can change it. To the extent that new areas of production such as high-tec production, or areas such as media and finance, which rely upon highly skilled complex labour, in which the West retains some comparative advantage, some workers with the necessary skills can maintain their conditions, but for the rest the next 15-20 years will be very uncomfortable . Capital is already responding by bringing in cheap imported labour to do the low paid, low status work remaining, and which it finds the domestic workforce is currently not prepared to undertake.

The reality we face is one in which Capitalism as a global system is in a period of rapid advance, but one which is full of contradictions. In the West we are likely to see a much more bifurcated workforce than in the past, and ordinary workers will see their relative position decline markedly. Only a political solution can provide workers with a way forward. That political solution cannot flow from Lassalleanism. Workers will no doubt respond in the first instance with traditional methods, but that may lead to Capital being even more inclined to simply up sticks and relocate. International solidarity between workers to prevent that would be nice, but the whole operation of Capitalism, which engenders competition between workers at an individual and collective level mitigates against it. It will then be necessary to respond with new, and not so new tactics such as the Occupation, as demonstrated at Visteon and Vestas, and over recent years by workers in Argentina. But, Occupation alone is not enough, after occupying workers need to resume production under their own auspices, perhaps using the example of the Argentinean workers in demanding that the factory be legally transferred to them. But, that too will require that workers have in hand their own workers plan of production similar to that drawn up by the Lucas workers, to ensure that production is viable in the longer term. Moreover, if these worker Co-operatives remain isolated they will necessarily fail, either economically, or because they will end up becoming simply Capitalist enterprises owned by workers – and that too would probably lead sooner or later to their reconversion into purely private companies. We need the Labour Movement and the left to take seriously the idea raised by Marx and the First International to create a national Co-operative federation through which all of this planning and support could be channelled, and to which each of these separate organisations should be tied.

The repetition of the old formulas by the left are inadequate. For example, in the current WW, James Turley writes,

“Rather, we have to confront the political issues involved. There can be no question - the nationalisation of the banks is an immediate economic measure which should be high up the agenda for any Communist Party. Nationalisation is not a panacea in itself, as is obvious from these developments at RBS. A nationalisation that puts the banking system under the democratic control of the masses, however, is a necessary measure for revolutionaries.”

In Another World

But, as I have written previously this is nonsense Nationalisation, Workers Control and Workers Ownership. Are we to believe that Brown’s Government will voluntarily grant such “democratic control of the masses” – a phrase by the way ruthlessly criticised by Marx in his Critique of the Gotha Programme? If not then does anyone seriously believe that the working class here and now are going to force this demand upon a Brown Government let alone a Tory Government? If not then who exactly is this demand aimed at, what is the means of its achievement? It is thoroughly pointless, and in fact less than that.
Trotsky in the Transitional Programme says of the demand for the nationalisation of the Banks,

“However, the stateisation of the banks will produce these favourable results only if the state power itself passes completely from the hands of the exploiters into the hands of the toilers.”

Are we seriously to believe that power is about to pass into the hands of the toilers? Are we on the verge even of the coming to power of a Workers Government? Of course not, so the demand for nationalisation is and can be nothing more than the old Labourite, Fabian and Lassallean demand for workers to place their faith in the good offices of the bourgeoisie and their state! Its time we had done with this stuff, once and for all.