High Pay, Capital And The Tories

Reality is complex, or as Lenin put it, “The truth is always concrete”, which is the basic principle of the dialectic. For many things in normal life, its possible to get by with superficialities and generalisations. This is the stuff of formal logic, where the world is black and white, rather than a spectrum, whose colours blur into each other. So, Marxists who operate with the view of class sketched out by Marx and Engels in “The Communist Manifesto”, for propagandistic purposes, in which society increasingly divides into two hostile camps, Bourgeois and Proletarians, are no Marxists at all, because as Engels makes clear in his letter to Bloch, their view of class is far more complex, far more nuanced than that. Similarly, it is an easy piece of shorthand to say something like, “The Tories are the Party of the Bourgeoisie; Labour is the Party created by the proletarians, but whose ideas were always based on the needs of Capital, and whose leaders long ago sold out to the Capitalists, whereas the Liberals can't even make their own minds up about themselves.” All of these general ideas have some validity, but they can hardly tell us anything really useful about any of these parties in general, let alone about their particular actions. Using this schematic, it would be almost impossible, for example, to understand why the Tories should now be proposing what appears to be an attack on their class interests, by proposing limitations on the high pay of Executives. In fact, a Marxist analysis has no difficulty in explaining it.

Just as classes are not monolithic, homogeneous blocs, so too with mass political parties. It has been said, for example, of the US Republican Party, that its current round of Primaries has shown that it is basically made up of three major constituencies. Firstly, there is the Libertarian wing, which favours small government, balanced budgets and so on, and whose figurehead is Ron Paul. Secondly, there is the Republican Establishment, whose main concern is not any particular point of political principle other than to win elections. They are, therefore, prepared to bend with the wind in order to pick up sufficient middle ground voters to go with their core support to ensure victory. They are represented by Mitt Romney. Finally, there is the Religious Right, which is concerned with banning abortion, and even contraception and so on. It frequently supports the small government agenda of the Libertarians, but unlike the Libertarians, it wants the State to intervene in people's lives to tell them what their morals should be. The Tea Partiers tend to be divided between the Religious Right, and the Libertarians. The Religious Right have attempted to put forward several candidates to act as their figurehead, in order to oppose Romney, but all have crashed and burned. But, the Republicans are not unique, these and other kinds of divisions are a feature of all mass political parties, including the Tories.

The Tories, as Marx describes, began as the Party not of the bourgeoisie, but of their enemies, the old ruling Feudal Aristocracy. In fact, during the 19th century, when that class saw itself being usurped by the Bourgeoisie, a section of it, and of its Party, attempted to win over the workers to its cause. Marx describes it as Reactionary Socialism. Some of them, like the Countess of warwick, even found their way into Hyndman's Social Democratic Federation. The Tories also, as Engels describes, even financed Keir Hardie's election campaign. It was frequently, the Tory representatives who were the ones advocating various forms of social reform, who put forward the legislation on working-time etc. It was Manchester Liberalism, which was the red in tooth and claw representative of the industrial bourgeoisie. But, rather like the workers in the Middle East today have allied with their new enemies in the bourgeoisie, against their old enemies, in the Bonapartist State, so in the 19th Century, the British workers lined up with their new enemies in the industrial bourgeoisie against their old enemies within the Feudal Aristocracy. After all, at the beginning of that century, Peasant life, and the oppression of that old ruling class was within living memory of many workers, or for their parents or grandparents, who had been forced off the land by the Enclosure Acts, and more open robbery by that Aristocracy.

As Marx, sets out, it was not that the Tories changed their class affiliation, it was that the class they represented itself became bourgeois!!! That meant that all of the contradictions which go along with that became entrenched within the Tory Party. Those contradictions continue until today. They were shown vividly at the beginning of the 1960's in the division between the old Patrician Wing of the Party, and that wing represented by people like Heath and Thatcher, the embodiment of the Grammar School educated, offspring of the up and coming middle classes. It persisted when Thatcher was Prime Minister, many of her opponents coming from within the Patrician wing of the Party. Eton educated Cameron, and his cohort are part of that wing of the Party.

In the 19th century, many of the old Aristocracy, where they did not extend their family business of land-owning, into Capitalist farming or mineral extraction, or into vast Colonial estates, used their accumulated Capital to move into Banking and Finance. They saw engagement in industrial or other commercial activity as beneath them, and the function of the nouveau riche bourgeois. Not for nothing are they referred to as the Financial Aristocracy. Most of the British Banks obtained their initial Capital from the activities of the Aristocracy in the Triangle Trade, whereby they brought slaves from Africa to their plantations in the Caribbean, bringing the products of those plantations back to Britain. It is not surprising then that a section of the Tory Party have always had a close connection with this Aristocracy of Finance, as well as their continued links with the large landed estates. The Tories links with the bourgeoisie proper, the industrial bourgeoisie, developed out of the failure of the Liberals.

The Liberals sought to reconcile the contradictory interests of the workers and the industrial bourgeoisie. The idea, borne out of the notion, put forward by Adam Smith, Ricardo and others, of both being part of the producing class, as against the non-productive landlords, and founded in practice in their joint struggle against Landlordism, was bound to founder, because of the inherent contradiction of interests between these two classes. The Liberals in Britain, filled the same function essentially as the Bourgeois Republicans in France, who aligned with the workers in the Montagne. But, as I set out in my post At Last The Liberals Commit Hari Kiri, this basic contradiction within the Liberals was bound to blow them apart, once the workers themselves began to organise a Party of their own. Once that happened, the Tories became the natural Party for the bourgeoisie as a whole, with all of the contradictions, which that itself entailed.

Whenever the actions of the Tories are analysed, it is important to remember that, even aside from the minor limitations, placed upon them by their Coalition with the Liberals, these contradictory influences are continually at play. But, more than that. Just as with the Establishment Wing of the US Republicans, any mass, bourgeois-democratic Party has one main concern, and that is to be elected. There tends to be an attitude amongst some on the Left, which virtually sees bourgeois democracy in conspiratorial terms. In part, that comes from Lenin, who on occasion seems to see the election of Governments as being controlled by the ruling class. Trotsky also talks, for example, about Social Democracy, even left Social Democracy being a final choice for the ruling class to pacify the working-class, before it is forced to resort to Fascism. This assumes that the bourgeoisie are themselves able to determine that choice of Government. Undoubtedly, they can, via their control of the media etc., influence the outcomes of elections, but it is almost certainly marginal. The Sun might have proclaimed “It was the Sun What Won It”, when Neil Kinnock lost the election, but Labour Party internal polling and research showed that it was Kinnock, and the Labour Leadership that had lost the election, not the Sun that won it for the Tories. Nor, in fact, could all of the media support, for the Tories, in the last election, win a majority for Cameron, despite the unpopularity of Gordon Brown, and Labour.

It is the need to be elected and maintain electoral support that is the main dynamic for bourgeois-democratic political parties. That means that Right of Centre Parties have to address the concerns of their core supporters, and tack sufficiently to the Centre to pick up the additional votes needed to be elected, whilst Left of Centre parties have to do the same thing from the other direction. How successfully they can do that depends upon where exactly the Centre is at any one time, and how polarised the support of each Party is. That is part of what is causing the Republicans such problems in the US at the present time, with much of its base looking to choose a candidate that would be so far to the Right as to be unelectable, but with much of that base potentially deserting if the Establishment is successful in getting Romney selected, who is seen by many of the Republican Right as a socialist no different to Obama!!!

It is also what explains the attitude of the Right of Centre parties in the US, in Britain and in Europe in relation to the debt crisis and austerity. For, 30 years the dominant approach has been that of Monetarism, and of control of deficits – even if it was practised more in the exception than the rule. But, when it reaches a situation where it is seen as a crisis, Right of Centre parties are led to reach for orthodoxy straight away, in order to distinguish themselves from their opponents. That is why the Tories, went from saying they would match or exceed Labour's spending plans until just months before the Election, and then switched to claim that Britain was a basket case like Greece that could only be saved by drastic austerity! But, it is also why in the US, the Democrats, who occupy a position similar to that, which the Liberal Party held prior to the establishment of the Labour Party, has instead ignored the massive debt and deficit, and has engaged in large scale fiscal stimulus, to haul the economy away from the danger of recession, which would both damage the interests of Big Capital in the US, and damage the Democrats chances of ensuring that US Workers come out to vote for them.

The same factors can be seen lying behind Cameron's recent actions. The Tories are thoroughly divided over Europe. Part of the Party, which represents the interests of Big Capital is pro-Europe. Another part, which instead represents all of those small minded, reactionary ideas of the small capitalist, the frightened middle classes, and backward workers is anti-Europe. Big Capital sees its main profits coming from a large powerful Europe, a Europe that is modern and forward looking, that operates like a fully fledged state, and is able to counter the US State, the Japanese State, Chinese State etc. within the global economy, within the international quasi state bodies established by Capital to regulate its activities on a global basis. For Big Capital, the excesses of Eurocrats, the costs of improving workers conditions via the Working-Time Directive, Health & Safety regulations and so on, are minor issues, part of the faux frais of production as Marx describes them. But, for the frightened Middle Class, that sees a danger, a threat to its way of life around every corner, and for the Small Capitalists for whom these concessions to civilisation are seen only as an intolerable burden, there is every reason to object, to insist on control being kept at a national level and so on.

So, it is no wonder that Cameron, besides seeking to look after that bastion of the Patricians, the City of London, also sought to accommodate the views of the Tory base, in his EU walk-out, despite the threat it placed upon UK industrial Capital, and its relations with its European partners. Ironically, even the UK Financial Capitalists spoke out about the threats that Cameron's actions had posed for their own activities.

Similar factors can be seen in relation to Cameron's populist campaign in relation to the High Pay of Executives. Who exactly is threatened by Cameron's proposals? Certainly Big Capital is not threatened by these proposals. On the contrary, to the extent that they reduce the salaries of Executives, employed by Big Capital, it will increase Profits! Big Capitalists do not accrue their wealth by the payment of income, but via the increase in value of their assets, shares, Bonds, and other investments. As I pointed out in my post Who Are The Middle Classes?, someone like Lakshmi Mittal, who owns Mittal Steel, is worth £20 billion. Simply putting that in the bank at 2% interest would bring in £400 million a year. But, in fact, with average dividends of around 5%, the actual figure would be more like £1 billion a year, even without any Capital Gain on the share holdings. But, Cameron's proposals say nothing about limiting this unearned income. Similarly, there is no restrictions to limit the earnings of footballers, pop stars, writers, actors and so on, which can frequently exceed those of Executives.

The proposals will not affect many of the Tories core supporters and members either. The frightened Middle Classes, with their incomes of £100,000 and above no doubt look on as much in askance as ordinary workers at the salaries of £1 million and above that some of these Executives take away. Many of the small Capitalists too, probably look on with some envy at Executives taking home such payments without risking their own Capital, in the way the small Capitalist has to do. Its to these voters, and to any workers they can pick up, that Cameron's latest piece of populism is addressed.

Yet, in reality, most of these Executives themselves are closer to the small capitalists than they are to Big Capital. Indeed, many of the Executives have either been, or go on to become, small Capitalists themselves. In reality, they form a part of the bureaucracy of Big Capital, in the same way that the Labour and Trade Union Leaders form a bureaucracy of the Labour Movement. Their position is likewise contradictory. It is also why, the representatives of this strata, people such as John Cridland, of the CBI, frequently represent the interests not of Big Capital, but of the Small Capitalists and Middle Classes upon whom the Tories are based. As Marx says in “The Eighteenth Brumaire of Louis Bonaparte”,

“Only one must not get the narrow-minded notion that the petty bourgeoisie, on principle, wishes to enforce an egoistic class interest. Rather, it believes that the special conditions of its emancipation are the general conditions within whose frame alone modern society can be saved and the class struggle avoided. Just as little must one imagine that the democratic representatives are indeed all shopkeepers or enthusiastic champions of shopkeepers. According to their education and their individual position they may be as far apart as heaven and earth. What makes them representatives of the petty bourgeoisie is the fact that in their minds they do not get beyond the limits which the latter do not get beyond in life, that they are consequently driven, theoretically, to the same problems and solutions to which material interest and social position drive the latter practically. This is, in general, the relationship between the political and literary representatives of a class and the class they represent.”

If we assume that the average Executive achieves their top pay of say £5 million, for around 20 years, then, even were they to accumulate all of it, they would have only a tenth of the increase in wealth of Lakshmi Mittal in just one year!!! In fact, as actual UK earnings, they would be more likely to pay half of it to the taxman, whereas Big Capital can largely avoid paying Tax at all. But, Cameron knows that he is safe in making such proposals. He will not lose the votes of these Executives, and if he did, it would be more than compensated in additional votes from elsewhere. But, he knows he is safe, because he realises that these Executives know why he he has proposed it, and also know that in practice no such proposals will be capable of effective implementation. The only way to control the pay of executives is if it is set by the workers in the Company, and the only way that will happen is if workers themselves own the Company, as happens in the many worker owned enterprises, that currently outperform the FTSE 100 by around 10% a year.

But, with increasing fears about rising wage claims as inflation continues to climb, there is another reason for Cameron's proposals. It is that, which I set out in my post, Beware Of Greeks Bearing Gifts. That is it can act as a trojan horse to implement more general pay controls, extending those already applied in the State Capitalist sector. With the workers at Unilever, showing the way, and standing up to strike against cuts in their pensions, the Tories must be worried that it could presage more wider worker resistance in the coming year.