A Reply To Paul Smith - Part 3

Paul continues,

“Thus he is more optimistic about the future of capitalism than most bourgeois commentators today and thinks that financial crises can occur with no harmful effects on industry or employment.”

Which bourgeois commentators are these? Where am I supposed to have said that financial crises occur with no harmful effects on industry or employment? When I predicted accurately the Financial Meltdown of 2008, - Severe Financial Warning - I said the exact opposite! I have repeatedly said that unless the Eurozone politicians deal with the Debt Crisis, the consequence could be a Depression in Europe!

Nor have I said that Trotsky agreed with Kondratiev's theory of the Long Wave. I have said that Trotsky did argue that Long Waves existed, which can be seen by reading Flood Tide , and even more clearly in The Curve Of Capitalist Development.

Trotsky's position as set out in the latter is far closer to that of Kondratiev than Paul or Mike McNair suggest. Moreover, there are clear contradictions in Trotsky's argument in relation to those points where he does differ, as well as misrepresentations of Kondratiev's actual argument. For example, Kondratiev never said that the Long Wave was a fixed 50 year period, as Trotsky says, but said it varied in length between 40-60 years. In fact, the proportionate degree of variation in the Long Wave Cycle is less than that of the shorter cycle which historically varied between 7-10 years. Trotsky begins by quoting Engels,

“So here the materialist method has quite often to limit itself to tracing political conflicts back to the struggles between the interests of the existing social classes and fractions of classes caused by economic development, and to demonstrate that the particular political parties are the more or less adequate political expression of these same classes and fractions of classes.

”It is self-evident that this unavoidable neglect of contemporaneous changes in the economic situation, the very basis of all the processes to be examined, must be a source of error.”

In the diagram, Trotsky indicates the course of economic development mapped against Kondratiev's long wave trend line indicating clearly the periods where there is Long Wave Boom and decline relative to the trend. On it, Trotsky also maps the great historical events. The whole point of Trotsky's argument against both the Opportunists and the Ultra-Lefts with whom he was arguing within the Comintern was that it is precisely the conjuncture, and indeed the sharpness of conjuncture between these two types of periods that is the stimulus for wars and revolutions, a conclusion that Kondratiev would not disagree with.

“Oscillations of the economic conjuncture (boom-depression-crisis) already signify in and of themselves periodic impulses that give rise now to quantitative, now to qualitative changes, and to new formations in the field of politics. The revenues of possessing classes, the state budget, wages, unemployment, proportions of foreign trade, etc., are intimately bound up with the economic conjuncture, and in their turn exert the most direct influence on politics. This alone is enough to make one understand how important and fruitful it is to follow step by step the history of political parties, state institutions, etc., in relation to the cycles of capitalist development.

By this we do not at all mean to say that these cycles explain everything: this is excluded, if only for the reason that cycles themselves are not fundamental but derivative economic phenomena. They unfold on the basis of the development of productive forces through the medium of market relations. But cycles explain a great deal, forming as they do through automatic pulsation an indispensable dialectical spring in the mechanism of capitalist society.”

It is clear given the political conditions under which Trotsky was writing why he would want to distance himself from the Menshevik Kondratiev, and from the charge of Economism. But, his argument that the turns of the Long Wave had to be viewed in terms of political and other superstructural events sits oddly with the thrust of his argument, and his quote from Engels with which he began. Indeed, he writes himself,

“There has been no lack of caricature conclusions drawn from the Marxist method! But to renounce on this account the above indicated formulation of the question (”it smells of economism”) is to demonstrate complete inability to understand the essence of Marxism, which looks for the causes of changes in social superstructure in the changes of the economic foundations and not anywhere else.”

So, on what basis can he argue in relation to the long wave fluctuations,

“The acquisition by capitalism of new countries and continents, the discovery of new natural resources, and, in the wake of these, such major facts of “superstructural” order as wars and revolutions, determine the character and the replacement of ascending, stagnating or declining epochs of capitalist development.”

The Long Wave Boom that accompanied the Industrial
Revolution prompted a drive for new resources.  Today's
Long Wave Boom has prompted a Gold Rush in C. Asia.

Was Colonial expansion entered into out of a whim? Was it responsible for a growth of Capitalism, or was it that the growth of trade, led to the development of a Merchant Class, that was led to find new markets and sources of new materials. That a Landlord Class reaching the limits of Rent income at home within the confines of Feudalism, saw the potential of aligning with this Merchant Class for Colonial expansion? Did, new natural resources just happen to be found by accident, which then prompted economic development? Or was it that rising trade, and then rising economic activity, drove the prices of raw materials, foodstuff higher, which in turn created the economic conditions, which encouraged a search for new sources of materials etc. Is it wars and revolutions, which are the primary factor, which determine these changes in conjuncture, or as Trotsky himself says, within the same article, the sharp changes in conjuncture that create the conditions for War and Revolution?

An Historical Materialist analysis demonstrates that Trotsky had it the wrong way around, and Kondratiev the correct interpretation. The discovery of new resources occurs because, rising demand for them arising from rising economic activity drives the price higher and encourages exploration and development, as well as more efficient means of production. That has been quite clearly witnessed during the current Long Wave Boom. In 1999, primary product prices had reach a low point not because of new sources of Supply, but because of the effects of the Long Wave decline for the previous quarter century depressing demand. When the new boom started, it created huge new demand, and sent primary product prices soaring. That in turn prompted a massive new round of exploration and development of new resources. That has been the typical sequence in past Long Wave cycles too.

Of course, this is a dialectical not a mechanical relation. That is why each Long Wave is different. Its rather like the role of the individual in history. Marxists do not claim that say the Russian Revolution occurred because of Lenin. The conditions in Russia created a Lenin, but that does not change the fact that this particular Lenin was a specific unique individual, who put his mark on events in a way that some other Lenin would not have done.

Lenin, was quite clearly wrong in what he said in 'Imperialism', it has all the hallmarks of a provisional analysis written as it was, largely for propagandistic purposes, at a time of Imperialist War. It has been a pretty useless guide to the development of Imperialism during the last century. In fact, Kautsky's Theory Of Super-Imperialism has been a closer match to actual developments.

If Trotsky and Lenin were correct, then there would not have been the Long Wave Boom from 1949 to 1974. Then too, the Stalinists, and many Trotskyists were proclaiming that the Boom was not real, that it was based on appearances, that it was just a temporary upward blip and so on. Ironically, they only realised they were wrong, at the point in the late 60's when it was coming to an end. By that time they had convinced themselves that Capitalism had become crisis-free, which led them to become Keynesians.

Similarly, Marx and Engels for much of the adult life experienced Capitalism during that period of Long Wave decline, which is manifest in the First Great Depression of the 19^th Century. It is not surprising that having witnessed the Revolutions of 1848, and witnessed this long period of stagnation and decline that they should see the potential for Capitalism as being limited, and the likelihood of a Proletarian revolution following on close behind the Bourgeois revolution as much greater than it was. In fact, Engels admitted later in life that they had grossly over exaggerated that possibility. Engels, did not live long enough to witness the full effects of the Long Wave Boom that began around 1890, and which created the economic conditions that led to the growth of new trades unions, and the establishment of mass workers parties.

The Post War Boom was based on
development of a range of new industries
and products, using new technologies.
 Contrary to Stalinist claims, Capital grew, and
workers living standards rose.

When that Long Wave Boom ended and created the conditions for WWI, and the rash of European revolutions and upheavals of the next decade, it is not surprising that Marxists saw the return of those conditions as heralding once more the limits of Capitalism, and the inevitability of revolution. That was the conditions which framed the narrative set out by Trotsky above. But, likewise, it was those very economic conditions, which, when the workers failed to secure power, led to a diminution of the strength of workers, and created the conditions under which Capitalism could re stabilise itself, before entering a new period of rapid economic growth and dynamism, as a new Long Wave Boom commences.

Paul argues,

“If capitalism is in decline, then greater socialisation and politicisation of the economy will be an observable tendency. I have cited the dependency of Chinese accumulation on Stalinist bureaucratic and political controls over workers as an example of this.”

In fact, what Paul originally claimed was that Britain had seen an increase in bureaucratic control over the Labour Movement in the post-war period. Quite clearly wrong, because that was the period of growth of the Shop Stewards Movement! Actually, the Stalinists in China have been forced to agree to higher wages for workers as labour shortages arise. The massive rise in investment in China clearly has little to do with such controls by Stalinism, and everything to do with the fact that Capital has found both a massive new source of available cheap labour power to exploit, along with the potential on the back of such development for the creation of a vast new market into which it can sell its products, and thereby realise Surplus Value. If anything, what is being seen in China, as elsewhere, when such development occurs, is workers increasingly asserting their independence and creating their own organisations! China is now developing a Welfare State, to assist in the reproduction of Labour Power, and to ensure that Chinese savings can be mobilised for consumption. Paul argues that the increasing role of the Capitalist State is yet another sign of the decline of Capitalism. But, how then does Paul view the increasing privatisation of State Capitalist provision? In fact, what we see is that the development of the productive forces is now proceeding to such an extent that Capital is no longer reliant on Fordist mass production of things such as Health Care and Education, which could only previously be delivered effectively via the State. New productive forces and relations mean that these commodities can now be effectively produced privately. A development that Aglietta forecast twenty years ago.

Paul claims that State capitalist workers produce neither Value nor Surplus Value, which contrary to his statement is not at all compatible with what Engels says in the quote I provided.

“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).

State workers in Health or Education produce those commodities in exactly the same way that identical workers in the private sector of those industries do. All that is different is the method of payment for the commodities produced. They are commodities sold to workers, and paid for out of society's wage fund. It is even called “The Social Wage”! Alan Freeman in 1991, in “Quantitative Marxism” shows that in the UK during the whole post-war period, the Social Wage was negative. In other words, workers were paying more in “taxes” for these various services than they received back in Value from them, emphasising once again that the State Capitalist produces them as commodities, and extracts Surplus Value from the workers it employs to provide them.

But, what is this “increased sense of solidarity between workers from below”, he is referring to? Trade Union membership is down, industrial action is down, there are widening divisions between workers in the private and state capitalist sectors! How on Earth from any perception of current conditions can he conclude “Workers are therefore more powerful”! And that process began not as a result of Capitalism growing, as it is now, but precisely from the period of its defeat, which was in turn made possible by the end of the previous Long Wave Boom, and the downturn that began in the mid-1970's! In fact, Paul's argument in this regard is precisely the kind of nonsense that Trotsky attacked in “Flood-Tide”. It is precisely the fact of capitalism developing the productive powers that makes Socialism possible, and the more it develops them the more easily Socialism can be constructed, which is why Marx believed it would happen first in Britain as the most developed economy. Far from it being decline that strengthens workers position as Paul believes, it is growth as Trotsky says,

The Long Wave Boom in China and other parts of Asia,
has raised workers confidence and consciousness.  As in
the past, such development sees, new independent workers
organisation at the grass roots.

“ But a boom is a boom. It means a growing demand for goods, expanded production, shrinking unemployment, rising prices and the possibility of higher wages. And, in the given historical circumstances, the boom will not dampen but sharpen the revolutionary struggle of the working class. This flows from all of the foregoing. In all capitalist countries the working-class movement after the war reached its peak and then ended, as we have seen, in a more or less pronounced failure and retreat, and in disunity within the working class itself. With such political and psychological premises, a prolonged crisis, although it would doubtless act to heighten the embitterment of the working masses (especially the unemployed and semi-employed), would nevertheless simultaneously tend to weaken their activity because this activity is intimately bound up with the workers’ consciousness of their irreplaceable role in production.”

The Stalinist amalgam sought
to avoid dealing with arguments
or providing facts.  It relied on
demonising the opponent by linking
them with known hate figures.

In his final paragraph it seems Paul cannot decide whether he wants to agree with me, or to attack me! On the one hand he agrees Capitalism is not about to collapse. He believes that in the absence of that all that is possible is for workers to create Co-ops, which might ameliorate their condition. He argues that an alliance to build such Co-ops is needed, but then has to jump back, and argue that my natural allies would be anarchists and liberals, who also advocate Co-ops (I'm only surprised that in order to make this Stalinist amalgam complete he didn't add David Cameron to this list of ne’er do wells), and protecting himself with garlic, rushes to add that a Marxist Party would try to win over people from this perspective. Of course, he doesn't tell us what perspective it would try to win them to! What perspective does Paul propose? The kind of Economism of Trade Union struggle to ameliorate their condition, that Marx argued against, when he argued instead for creating Co-ops, perhaps. The same Trade Union, Economism that reproduces bourgeois ideology. Or perhaps, Paul would have this “Marxist” Party, win them over to the Fabian policy he seems so attached to of building the power of the Capitalist State. In that case, they may as well just join the CPB or the Bennites.

Back To Part 2