Sunday, 29 July 2012

A Reply To Paul Smith - Part 2

Paul claims,

Bough agrees with Kondratiev that it is technological change (such as the invention of computers) that triggered this wave.”

I have said no such thing. The causes of the beginning of a new Long Wave are manifold, technological change being only one of them. As I pointed out to Tony Clark in another reply it is also down to the length of time required to develop new sources of raw materials etc. A fundamental aspect is the development of whole new industries, and products, some of which can be based on technological changes from a long time before. For example, the steam engine was based on a technological discovery back in ancient Greece. Yes, I do believe that if Capitalism were no longer able to develop the productive forces then it would be in decline. It is no different than Marx's statement that no Mode of Production leaves the stage of history until, it has exhausted its potential to develop the productive forces!

Paul says,

For Bough, ‘decline’ would only make sense if research into science and technology ceased and the tendency towards greater automation reversed.”

Why? There could be increased research, but nothing new coming out of it. The number of workers employed across the globe, and the level of their consumption could reach such a level that it was no longer possible for capital to create new Use Values that could be sold profitably to them, which would mean Capital would have no reason to invest in trying to do so. Why would it require the tendency to greater automation to be reversed? In fact, one of the greatest developments of higher value production by Capital in recent years, has been in knowledge based production, and in other forms of high value production that relies on highly skilled, often highly paid, complex labour rather than on automation! In fact, some of the development in Financial Services (by no means all of which is unproductive in a Marxist sense) fits this description.

Paul asserts,

In other words, it would mean an absolute collapse of the system leading to mass impoverishment.”

Why? Such a situation could simply lead to stagnation, or low growth. If it were accompanied with falling population growth, then stagnant productivity growth, which is the concomitant of no development of the productive forces, could actually lead to higher per capita living standards for workers.

Paul's accusation that my description of decline is “Stalinist” is laughable. As Mandel points out the Stalinists continually tried to “prove” that living standards were really falling in the West, when it was obvious they were rising. The Stalinists believed that Lenin's pronouncement in “Imperialism”, that Capitalism was in decay, required denying that any real progress was being made. In other words, it is the Stalinists who made exactly the same arguments that Paul is making today! It is Paul who treats Lenin's 'Imperialism' as though it were some Holy Manuscript. But, sine the 1980's, at least, many, if not the majority, of Marxist economists have recognised that Lenin's “Imperialism”, was theoretically flawed, and factually incorrect even at the time it was written. As Bill Warren points out in “Imperialism: Pioneer of Capitalism”, for Lenin it is a pretty shoddy piece of work that relies heavily on the analysis of the British Liberal Economist Hobson for the role of Monopolies, and their activities in the Colonies, and on Hilferding's “Finance Capital”, which was a phenomenon particular to Germany.

The Human Genome was decoded by a private
 company.  It is already leading to many new
treatments that will replace existing drugs,
 more cheaply and effectively.
As Warren states, many of the comments that Lenin makes, and which today's faithful repeat, are so hedged around with caveats as to make them meaningless. Unfortunately, today's believers, like Paul, always forget to consider or to mention the caveats, a process that began with Stalinism in the late 1920's. For example, Lenin gives examples of various inventions that were supposed to have been invented that Monopolies prevented from being introduced. Stories of this kind have always abounded, and Marxist economists in later years have found that most of them are untrue. In general, Monopolies have an incentive in cornering the market of any new wonder product. Having provided these examples, Lenin continues,

Certainly, monopoly under capitalism can never completely, and for a very long period of time, eliminate competition in the world market (and this, by the by, is one of the reasons why the theory of ultra-imperialism is so absurd). Certainly, the possibility of reducing the cost of production and increasing profits by introducing technical improvements operates in the direction of change. But the tendency to stagnation and decay, which is characteristic of monopoly, continues to operate, and in some branches of industry, in some countries, for certain periods of time, it gains the upper hand.”

Even in high value production like surgery
technology is intervening via robots, to reduce
costs, and boost profits.
Just look at all the provisos! Monopoly cannot, either completely or for any length of time eliminate competition. A fact that Marx had made clear in the Poverty of Philosophy against Proudhon. As Marx puts it, Monopoly begets Competition, which begets Monopoly, which begets Competition at a higher level. Lenin recognises that the potential for reducing costs and raising profits by introducing technical improvements works in exactly the opposite direction of the decay he had just described! And, what have we seen in the period since WWII, is precisely that Monopoly Competition has raised the level of competition to ever new heights. Not competition to lower prices, though that has been a necessary consequence of the massive increases in productivity – but one of the roles of Central Banks has been to ensure that it is only real rather than nominal prices that fall – but precisely what Lenin describes here. These large Monopoly firms have competed by seeking to continually raise productivity through large scale investment, economies of scale, the introduction of better machines and systems such as Taylorism, and Toyotism etc. It has been precisely this competition to reduce costs, and extract Relative Surplus Value, that has driven rapid technological change of the kind that Lenin hedges his statement about decay with here! But, Lenin ends the paragraph about decay with the provisos of all provisos. This decay is neither ubiquitous, nor permanent! Rather it may only operate “in some branches of industry”, and only in “some countries”, and then only “for certain periods of time”!!!! It is on this theoretical rock that Paul builds his church!

Paul in one of his previous letters had also used Lenin's work to claim that Imperialist states had only been able to develop their Welfare States because of the super exploitation of their Colonial possessions. As Warren points out Lenin's theory in relation to the connection between Colonisation and Monopoly is obviously factually flawed. The country with the largest Colonial Empire was Britain, but its economy was the least dominated by Monopolies. The country whose economy was more Monopolised and characterised by Hilferding's “Finance Capital” i.e. Germany, essentially had no Colonies to speak of. The other economy that was dominated by large industrial monopolies, the US, had no Colonies. In fact, under the Munroe Doctrine, it also warned European Colonial powers to keep their hands off Latin America. Worse still, the development of these huge Monopolies could hardly be an explanation of the carving up of the world, because the development of these large monopolies that Lenin describes did not occur until the end of the 19th century, and by that time the world had already been carved up!!!

There undoubtedly was exploitation of Colonies on the basis of unequal exchange, because the Colonies were the product of European Landlordism and Merchant Capital. That is how both these forms of Capital extract surplus. But, Imperialism, the expansion of industrial Capitalism is not Colonialism. Contrary, to Lenin's expectations, based on an analysis of Colonialism, the world was not carved up into a series of Colonial possessions, but the very opposite happened. The Colonial Empires were broken up, with a good degree of urging from the US, and capitalism expanded not through the combination of Monopolies and their own domestic State, via military conquest, but through the global expansion of multinational and transnational companies that increasingly had no particular allegiance to any one State, and which encouraged all states within the system of states to create international state bodies, and legal structures, to facilitate their operation throughout the globe.

Contrary, to Lenin, in many of the colonies, which were dominated by Landlordism and Merchant and Money Capital, there was no major investment of Capital. The largest Capital flows by far went not to these economies, but to other developed “Imperialist” economies. Only when some of these ex-colonies achieved a minimum standard of infrastructure, and other basic requirements, did industrial Capital begin to invest in them in a large way, and by and large the consequence has been progressive. Instead of super exploitation, these economies have been able to industrialise rapidly, to an extent that many of them now challenge the “Imperialist” states themselves in global markets.

Fordist Education Factories mass produce
new workers to meet the needs of Capital.
So Paul's claim that the development of Welfarism as only possible on the back of super exploitation of the Colonies is as baseless as his other arguments. Germany, which had no Colonies to speak of, developed elements of a Welfare State (in Prussia) in the 1820's. It was the first to have a National Insurance Scheme by the end of the 19th Century. The US, which had no Colonies developed free State Education at a fairly early stage, to meet the needs of US Capital, which was developing on the basis of a rapid development of technology. But, Paul also argues that the most rapid growth in Welfarism occurred after WWII. But, that is precisely the period when the Colonial Empires were being dismantled! In the US, which again still had no Colonies, Fordism developed on the basis of Company provided Welfarism, and did so not because of super exploitation of Colonies, but through the rapid expansion of Relative Surplus Value made possible by Taylorism, and mass production techniques! Precisely, the basis upon which Welfarism was expanded after WWII across Europe. Once again, Welfarism is not the product of Capitalist decay, and the decline of Exchange Value as Paul would have us believe, but was the product of rapid technological change by Capital, making possible the rapid growth of Relative Surplus Value, which funded Welfarism, which in turn provided the essential commodities (Health and Education) to workers via mass production (Fordist) methods that were both the most efficient for Capital at the time, and which met its needs for the reproduction of labour-power.

Was it Really?
Instead of seeing this development of State Capitalism for what it is, Paul instead sees it once again as an indication of decay, and yet at the same time sees in it something socialist, representing the replacement of the market with some form of planned production of Use Values. Oddly, he views it as being, therefore, unproductive! Once again, these are ideas that have come down through Stalinism and Fabianism. In what sense does a miner go from being a productive worker one day, to becoming an unproductive worker the next, just because the Capitalist State has become his employer? Clearly he does not. The same is true for steelworkers, railworkers, nurses, doctors, teachers etc. All of these workers are involved in producing commodities, which are sold to the working-class. They may provide them being employed by a private employer or by a State capitalist employer. In either case they are employed by Capital, they produce commodities, and they produce Surplus Value. Whether that Surplus Value is appropriated by their own employer (be it a private employer or the State) is irrelevant, because as Marx demonstrates in his Transformation of Values into Prices of Production, the total Surplus Value produced by all workers is shared out by Capital in accordance with the Capital employed via market prices. In reality, the existence of Monopoly power, and the way in which Capital uses the State to meet its needs means that the actual allocation of Surplus Value is more complicated than that.

All Capital, be it small scale Capital or State Capital produces Use Values, because as Marx says, nothing can be a commodity unless it is also a Use Value. Someone must want it. All Capital is, therefore, forced to organise its production to produce to meet the needs of consumers, because unless they do so, they do not sell their products, and they do not realise their profits. To claim there is something different about State Capitalist production because it produces Use Values rather than things to sell is simply wrong. Moreover, what the Capitalist State does in relation to commodities like Education and Health, is that it uses its monopoly position to sell these commodities to workers as a captive market, in the same way that 19th century Capitalists did via the Truck System. It is not at all true to say that these Use Values are produced to meet needs of, or that they are provided free to workers. The only needs they are produced to meet are the needs of Capital, which is why they are reduced whenever Capital experiences a prolonged or serious economic crisis, which reduces its needs for labour-power.

They are merely important commodities required for the reproduction of labour-power, and as such Capital forces workers to buy them in sufficient quantity and quality to meet its needs, and to pay for them via taxes. The situation was even clearer in regard to State owned industries such as Coal, Energy and Steel, where market prices to domestic private industries were set at such low levels as to ensure a direct transfer of the Surplus Value created by State workers to private Capital.

As Engels puts it in Anti-Duhring,

The modern state, no matter what its form, is essentially a capitalist machine, the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage-workers - proletarians. The capitalist relation is not done away with. It is rather brought to a head” (p360).

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