Tuesday, 24 April 2012

Making The Workers Pay? - Part 7

Sismondi - Who Marx called a Moral Socialist
Much of the argument which lies behind the notion of Capital “making the workers pay” for the crisis is in fact, a return to the ideas prior to Marx, to Moral Socialism. It is to suggest that what lies behind it, is the determination of greedy Capitalists to hang on to their profits, so they can maintain their rich lifestyles at the expense of the workers. But, this is to abandon the scientific analysis of Capital that Marx provided of the dynamics of Capitalism, in favour of a subjective analysis of the behaviour of Capitalists. It is to suggest that they could choose to act differently, to not make workers redundant, not cut wages etc. rather than that it is the objective laws of Capital, which determine their actions. To make such a suggestion, is to deceive the workers. Ultimately, it is a reformist deception, because it is to suggest that Capitalism would be all right, if only the behaviour of the Capitalists were different, rather than to explain to workers that the problem is not greedy Capitalists, but Capitalism itself!

If we examine Marx's analysis, then we can see what is wrong with the argument. In fact, whether the argument is put to oppose reductions in workers wages, or to put forward the idea of a reduction in working hours without loss of pay amounts to the same thing. Both amount to a demand for wages per hour to either rise, or not to fall. But, both Marx and Engels demonstrated why this is not possible within the realms of Capitalism. In fact, given Marx's analysis its not clear its possible outside the realms of Capitalism either.

Engels writes,

" The history of these Unions is a long series of defeats of the working-men, interrupted by a few isolated victories. All these efforts naturally cannot alter the economic law according to which wages are determined by the relation between supply and demand in the labour market. Hence the Unions remain powerless against all great forces which influence this relation. In a commercial crisis the Union itself must reduce wages or dissolve wholly; and in a time of considerable increase in the demand for labour, it cannot fix the rate of wages higher than would be reached spontaneously by the competition of the capitalists among themselves.”

Engels Condition of The working Class in England p243

Whilst Marx wrote,

“I think I have shown that their struggles for the standard of wages are incidents inseparable from the whole wages system, that in 99 cases out of 100 their efforts at raising wages are only efforts at maintaining the given value of labour, and that the necessity of debating their price with the capitalist is inherent to their condition of having to sell themselves as commodities. ... the working class ought not to exaggerate to themselves the ultimate working of these everyday struggles. They ought not to forget that they are fighting with effects, but not with the causes of those effects; that they are retarding the downward movement, but not changing its direction; that they are applying palliatives, not curing the malady. They ought, therefore, not to be exclusively absorbed in these unavoidable guerilla fights incessantly springing up from the never ceasing encroachments of capital or changes of the market.”

Marx, Value, Price and Profit

And, in the above pamphlet, Marx demonstrates why this is. Capital is self-expanding value, and the means by which it expands, is through the production and reinvestment of Surplus Value. Marx's great advance over the previous Socialists was to demonstrate that it was this objective drive of Capital, and not the subjective desires for enrichment by Capitalists, which explained the dynamics of the system. But, as Marx demonstrates, if wages were to rise above the Value of Labour-Power, then the consequence of this, is that Surplus Value falls. But, if Surplus Value falls, then there is less investment, the expansion of Capital is at least slowed down, if not halted. As a consequence, the natural rise in population, means that additional workers are not hired, and unemployment rises. Of course, this is true even were workers to own the means of production. For so long as we have not increased the productive forces to such a condition that there is general abundance – a condition that even Marx did not know if it was possible or not – then it will be necessary to make choices between what proportion of society's output is devoted to current consumption, and what is devoted to investment.  This, in fact, formed the core of the "industrialisation debate" between the Left Opposition, and the Stalinists in the USSR in the 1920's.

See for example, Marx's criticism of the Lassalleans on the point of “undiminished proceeds of labour” in The Critique of the Gotha Programme.

But, within the confines of Capitalism, Marx and Engels understood this from another aspect too. So, for Marx, it is precisely the fact that Capital is forced to self-expand, which is the explanation of competition. Competition he says is not something external to Capital, but is inherent within it. Competition, forces individual Capitals to attempt to maximise profits, because only in doing so can they invest in the latest equipment, expand so as to grab market share, buy out their competitors etc. They are forced to compete or die. But, as a consequence, any individual Capital facing having to pay for labour-power above the Value of Labour Power, will seek to remedy its lack of competitiveness by other means. Capital is not short of such means.

In the modern world, Capital has acquired its ideal form. The development of the modern Stock Market means that Capital can move in less than a fraction of a second from one use to another. The press of a button means that billions of pounds worth of shares in one company are sold, and billions of pounds, reinvested in another, or some other form of asset. As a consequence the ability of the former to expand is reduced, and of the latter to expand increased. In the more medium term, this is expressed in the physical reallocation of Capital from one type of production, or activity to another. Employment in the former is reduced, and in the latter increased. In a global Capitalist system, that can, and has, meant jobs moving not just from one industry to another, or one country to another, but from one Continent to another.

But, this reallocation of Capital has other consequences. The reduction in the Capital invested in one industry, inevitably means that any Capital remaining will be the more profitable parts of that industry, those which have employed the most efficient techniques, which reduce the amount of living labour required in production. To the extent that new investment occurs, it will be in these more efficient, labour-saving techniques. As a consequence, the demand for labour-power will fall, and as unemployment rises, the pressure on wages will increase. As Marx put it,

Even the skilled labour of brain surgeons
can be roboticised!
“ Take, for example, the rise in England of agricultural wages from 1849 to 1859. What was its consequence? The farmers could not, as our friend Weston would have advised them, raise the value of wheat, nor even its market prices. They had, on the contrary, to submit to their fall. But during these eleven years they introduced machinery of all sorts, adopted more scientific methods, converted part of arable land into pasture, increased the size of farms, and with this the scale of production, and by these and other processes diminishing the demand for labour by increasing its productive power, made the agricultural population again relatively redundant. This is the general method in which a reaction, quicker or slower, of capital against a rise of wages takes place in old, settled countries. Ricardo has justly remarked that machinery is in constant competition with labour, and can often be only introduced when the price of labour has reached a certain height, but the appliance of machinery is but one of the many methods for increasing the productive powers of labour. The very same development which makes common labour relatively redundant simplifies, on the other hand, skilled labour, and thus depreciates it.”

In reality, the demand for “A Sliding Scale of Hours” as a response to unemployment cannot work for the reasons set out here by Marx and Engels. It is rather like the other demands that Trotsky included in the Transitional Programme, such as “Nationalisation under Workers Control”. These demands, as he recognised, were not capable of being conceded by Capital, and could only be imposed on Capital by a working-class itself on the verge of taking power. That is in a revolutionary situation, in which workers have occupied the factories, established their own Soviets, and alternative state forms in the shape of a Workers Militia etc. Outside those conditions, such demands could only ever be reformist illusions, revolutionary phrase-mongering, and a cruel deception of the workers. As he says in the Transitional Programme,

“However, the state-ization 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.”

And on Workers Control he says,

“However, a bourgeoisie that feels it is firmly in the saddle will never tolerate dual power in its enterprises. workers’ control consequently, can be carried out only under the condition of an abrupt change in the relationship of forces unfavorable to the bourgeoisie and its state. Control can be imposed only by force upon the bourgeoisie, by a proletariat on the road to the moment of taking power from them, and then also ownership of the means of production. Thus the regime of workers’ control, a provisional transitional regime by its very essence, can correspond only to the period of the convulsing of the bourgeois state, the proletarian offensive, and the failing back of the bourgeoisie, that is, to the period of the proletarian revolution in the fullest sense of the word.”

Trotsky, included these demands in the Transitional Programme in 1938, precisely because he believed the world had entered such a revolutionary situation, with Capitalism having reached the limits of its potential. In the Discussions On The Transitional Programme, Trotsky says,

“First, Marx one time said that no one society leaves its place until it totally exhausts its possibilities. What does this signify? That we cannot eliminate a society by subjective will, that we cannot organize an insurrection like the Blanquists... So long as society is capable of developing the productive forces and making the nation richer it remains strong, stable... Marx and Engels waited for a revolution during their lifetime. Especially in the years 1848-1850 did they expect a social revolution. Why? They said that the capitalist system based on private profit had become a brake upon the development of the productive forces. Was this correct? Yes and no. It was correct in the sense that if the workers had been capable of meeting the needs of the nineteenth century and seizing power, the development of the productive forces would have been more rapid and the nation richer. But given that the workers were not capable, the capitalist system remained with its crisis, etc. Yet the general line ascended. The last war (1914-1918) was a result of the fact that the world market became too narrow for the development of the productive forces and each nation tried to repulse all the others and to seize the world market for its own purposes. They could not succeed and now we see that capitalist society enters into a new stage... The war was only an expression of its inability to further expand. We have after the war the historic crisis becoming deeper and deeper... Beginning with the war we see the cycles of crisis and prosperity forming a declining line. It signifies now that this society exhausted totally its inner possibilities and must be replaced by a new society or the old society will go into barbarism just as the civilization of Greece and Rome because they had exhausted their possibilities and no class could replace them.”

Ten Years After The Transitional Programme
Capitalism Was Booming
But, in fact, Trotsky was as mistaken here, as were Marx and Engels in the 19th Century. Marx and Engels saw the consequences of the Long Wave decline, which ended, and was succeeded with the Long Wave boom of 1890-1914. Trotsky witnessed the consequences of the Long Wave downturn from 1920-49, and particularly its depths in the 1930's leading to WWII, and similarly mistook that for the death agony of Capitalism. But, in fact, ten years after the Transitional Programme was written, Capitalism entered on the greatest boom it had experienced until that time. It took many Trotskyists more than a decade to realise that the expected collapse of Capitalism, simply was not going to happen. Some only began to accept that, and, in fact, to begin to believe that, in Keynesianism, it had found a means by which to create a crisis free Capitalism, just as that Long Wave Boom came to an end, and a new period of Downturn began in the 1970's.

But, now, nearly 75 years on, from the Transitional Programme, it is clear that Capitalism was not in its death agony, nor is it now. As with the last period of Long Wave Boom, we find that many Marxists are still transfixed with the period of downturn, and see this as once again reflecting that Capitalism has run out of steam. But, clearly it has not. In fact, the strength of the current Long Wave Boom, which began in 1999 is summed up in one statistic. Of all the goods and services produced in the entire history of humanity, almost a quarter have been produced in the last ten years alone!!!!

Under those conditions the repetition of demands from the Transitional Programme, such as "Nationalisation under Workers Control", "A Sliding Scale of Hours", a "Workers Government", which were written for application under revolutionary or pre-revolutionary conditions is simply mindless. It is to turn the Transitional programme and its method into some kind of Holy Book with the assorted demands turned into a set of Commandments. It has nothing to do with Marxism.

Of course, there are elements of the Transitional Programme, which can be applied today. For example, it is wholly valid to apply the demands for the establishment of Workers Defence Squads to defend strikers against the forces of the State, or paramilitary forces. It is right to raise the demand for a Workers Militia, for the same reasons, particularly in those circumstances, such as the workers in Iraq, Libya, Syria, Egypt etc. find themselves in. Rather than limiting ourselves to Trade Union organisation, which breeds sectionalism, we should seek to build Factory Committees in workplaces that can bring in workers from all unions and none.

But, these forms of organisation, which represent in embryo the workers creating their own forms of democracy, and state, are only meaningful if they are in turn based upon the development of the workers self-activity, and self-government in general. So, as Trotsky says in the Transitional Programme, a requirement for the revolution is that the workers constitute a significant economic force. In the current conditions, that can only arise on the basis of the workers seeking to present an alternative to Capitalist property relations. It means that they have to begin to develop their own Co-operative property as an alternative to Capitalist property. That is not to say that such Co-operatives can simply replace Capitalist enterprises, or even significantly change the position of the working-class. As Marx says, that can only happen, when such Co-operative production is extended on a national basis. It will require the support of a Workers State to achieve that kind of transformation, just as the bourgeoisie had to secure State power in order to finally transform Feudal property relations. But, that is not an argument against commencing that process. Even a Workers State, after all, within the context of a global Capitalist economy would find itself in the same situation. As the USSR demonstrated the extent to which workers' wages and conditions could rise, continued to depend on the ability to compete in the global market place. That was why Lenin reintroduced the market, and private property under NEP, and why he attempted to tempt foreign Capitalists to invest in the country to drive up efficiency through competition, and the introduction of the latest machines and technique.

But, what cannot happen, and what would be a deception of the workers, is to suggest that the existing Capitalist State can be used to further the workers interests. That is no more possible than that the Capitalists could have used the Feudal State to transform property relations in their interests. A necessary condition for securing State power, however, for the bourgeoisie, was that they developed their own property, developed their own economic power upon it, and established their own forms of state and democracy, which enabled them to challenge for power. The workers have to do exactly the same in developing their own Co-operative property, workers democracy, and state forms in opposition to Capital. That is the real solution to the fact that workers pay a price for the contradictions inherent in Capitalism, not the reformist suggestion that this price is the consequence of greedy Capitalists, and which could be negotiated away by militant Trade Union struggle.

Back To Part 6


Anonymous said...

If you have a moment, check out Robert Reich's analysis of the Bain Capital,(Romney's private equity fund), business plan:


Is Robert Reich incorrect to repeatedly hammer home the "We Pay" lesson at the end? Isn't it true a capitalist such as Mitt Romney gets stinking rich without producing value for the rest of society, while at the same time leaving the rest of society to pick up the tab for the economic consequences he's introducing?

By the way, I would like to express appreciation for a very enlightening series of articles.

Anonymous said...

In fact, the strength of the current Long Wave Boom, which began in 1999 is summed up in one statistic. Of all the goods and services produced in the entire history of humanity, almost a quarter have been produced in the last ten years alone!!!!

This is not necessarily a sign of the strength of the capitalist system, however. For the capitalist, if this enormous volume of production is not profitable, it is almost of no consequence to her.

Boffy said...

Thanks for your comments. I'll have a look at the Reich piece. Clearly, its true that some Capitalists are involved in some businesses that do not create Value, and yet make profits for themselves. Its also true, of course, as marx demonstrates, that some Capital - Merchant Capital, Money Capital - does not produce new Exchange Value, or Surplus Value, and yet is necessary for the efficient fucntioning of the system. Its also true, using Marx's definition that even under Socialism/Communism, some people will have to be involved in activities, which are not themselves productive of new value, for example administration. (See Marx: CGP)

On the current global boom. In general, the massive increase in production of goods and services of the last 10 years, would only have happened if Capital WAS profitable. Its possible that it could represent overproduction of Capital, as Marx sets out, but clearly that is not the case here. The rate and volume of profit has been rising. There is no generalised crisis of overproduction of Capital, there are no vast amounts of over produced commodties that cannot be sold, there is no vast level of global unemployment - on the contrary, globally employment is rising at unprecedented levels making workers now the biggest class on the planet!!!