Capital I, Chapter 23 - Part 1

Simple Reproduction

The only way any society can continue to produce – and thereby to consume – is if it continually sets aside part of what it produces, just to replace what it has used up, in the process of production itself. A farmer growing corn, for example, may have used 100 kilograms of corn as seed, to produce 1000 kilograms of corn. If they want to grow 1000 kilograms of corn again next year, they will have to set aside 100 kilograms out of this year's crop to use as seed again. But, they will also have used a certain amount of fertiliser, a certain proportion of the life of their plough and so on. The cost of replacing these elements and instruments of production has also to be taken out of the proceeds of selling the 1000 kilograms of corn. Of course, these other things, the fertiliser, the plough and so on, made by other members of society, also require labour-time for their production, and the elements and instruments of their production in turn – for example the lathe used to produce a plough – also get used up, and a proportion of output set aside for their replacement too.

Put another way, - maybe looking at it from the standpoint of Robinson Crusoe – in any given year, out of the total labour-time available to society, then just to continue production at the same level, a certain proportion of that labour-time has to be set aside for no other purpose than to just replace the means of production. Under capitalism, this proportion is what we have described as the constant capital.

“If production be capitalistic in form, so, too, will be reproduction. Just as in the former the labour process figures but as a means towards the self-expansion of capital, so in the latter it figures but as a means of reproducing as capital — i.e., as self-expanding value — the value advanced.” (p 531)

Marx’s analysis here is important in relation to the errors made by the Temporal Single System Interpretation (TSSI). Note that Marx does not speak of the “money” advanced here, in this process of reproduction, but of the “value” advanced, and these are two very different things. He continues,

“It is only because his money constantly functions as capital that the economic guise of a capitalist attaches to a man. If, for instance, a sum of £100 has this year been converted into capital. and produced a surplus-value of £20, it must continue during next year, and subsequent years, to repeat the same operation. As a periodic increment of the capital advanced, or periodic fruit of capital in process, surplus-value acquires the form of a revenue flowing out of capital.

If this revenue serve the capitalist only as a fund to provide for his consumption, and be spent as periodically as it is gained, then, caeteris paribus, simple reproduction will take place. And although this reproduction is a mere repetition of the process of production on the old scale, yet this mere repetition, or continuity, gives a new character to the process, or, rather, causes the disappearance of some apparent characteristics which it possessed as an isolated discontinuous process.” (p 531-2)

But, the TSSI does continue to see it as a discontinuous process, because they have a syllogistic view of time. Each year, each period of production is viewed as discrete rather than continuous. Rather than the purpose of capitalist production being viewed objectively from the standpoint of capital, as the continuous reproduction and expansion of capital, it is viewed subjectively from the standpoint of the capitalist, and his desire for enrichment. That is why they put forward as valid the idea that capitalist production could cease, mid-flow, simply in order for the capitalist to realise capital gain, where capital has been revalued.

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Forward To Part 2

Capital I, Chapter 22

National Differences of Wages

The analysis so far has demonstrated the basis of the value of labour power, and how this can rise or fall as a consequence of numerous combinations. It can rise or fall in absolute terms and in relative terms as against surplus value. This provides the underlying basis upon which arises the market price of labour, in the form of wages.

“As has been already said, the simple translation of the value, or respectively of the price, of labour-power into the esoteric form of wages transforms all these laws into laws of the fluctuations of wages. That which appears in these fluctuations of wages within a single country as a series of varying combinations, may appear in different countries as contemporaneous difference of national wages. In the comparison of the wages in different nations, we must therefore take into account all the factors that determine changes in the amount of the value of labour-power; the price and the extent of the prime necessaries of life as naturally and historically developed, the cost of training the labourers, the part played by the labour of women and children, the productiveness of labour, its extensive and intensive magnitude. Even the most superficial comparison requires the reduction first of the average day-wage for the same trades, in different countries, to a uniform working-day. After this reduction to the same terms of the day-wages, time-wage must again be translated into piece-wage, as the latter only can be a measure both of the productivity and the intensity of labour.” (p 524)

In any national economy there is an average intensity of labour that determines how much labour-time is socially necessary. But, at an international level, there will be a series of these average intensities, because each country will be different.

“These national averages form a scale, whose unit of measure is the average unit of universal labour. The more intense national labour, therefore, as compared with the less intense, produces in the same time more value, which expresses itself in more money.” (p 525)

The more productive country's labour will also be counted as more intense because its greater productivity will appear as a greater amount of labour performed in a given time, compared with a less productive economy. At least, that is the case so long as competition does not drive this economy to reduce the price of its output down to its value.

The more capitalist production develops in a particular country, the more productivity and intensity of labour there rises compared to those economies that are less developed. The consequence is a modification of the Law of Value. Now, two identical commodities, that absorb the same amount of labour-time, have different values, because the labour-time of the more productive country, A, counts as a multiple of that of country B.

“The different quantities of commodities of the same kind, produced in different countries in the same working-time, have, therefore, unequal international values, which are expressed in different prices, i.e., in sums of money varying according to international values. The relative value of money will, therefore, be less in the nation with more developed capitalist mode of production than in the nation with less developed. It follows, then, that the nominal wages, the equivalent of labour-power expressed in money, will also be higher in the first nation than in the second; which does not at all prove that this holds also for the real wages, i.e., for the means of subsistence placed at the disposal of the labourer.” (p 525)

But, these differences in productivity between different countries, mean that other variations in wages, besides those caused by different relative values of money arise.

“But even apart from these relative differences of the value of money in different countries, it will be found, frequently, that the daily or weekly, &tc., wage in the first nation is higher than in the second, whilst the relative price of labour, i.e., the price of labour as compared both with surplus-value and with the value of the product, stands higher in the second than in the first.” (p 525)

Marx cites James Anderson,

“James Anderson remarks in his polemic against Adam Smith: “It deserves, likewise, to be remarked, that although the apparent price of Labour is usually lower in poor countries, where the produce of the soil, and grain in general, is cheap; yet it is in fact for the most part really higher than in other countries. For it is not the wages that is given to the labourer per day that constitutes the real price of labour, although it is its apparent price. The real price is that which a certain quantity of work performed actually costs the employer; and considered in this light, labour is in almost all cases cheaper in rich countries than in those that are poorer, although the price of grain and other provisions is usually much lower in the last than in the first.... Labour estimated by the day is much lower in Scotland than in England.... Labour by the piece is generally cheaper in England.” (James Anderson, “Observations on the Means of Exciting a Spirit of National Industry,” &tc., Edin. 1777, pp. 350, 351.) On the contrary, lowness of wages produces, in its turn, dearness of labour. “Labour being dearer in Ireland than it is in England ... because the wages are so much lower.” (N. 2079 in “Royal Commission on Railways, Minutes,” 1867.)” (Note 2, p 525)

He also cites Ure, who referred to the findings of J. W. Cowell's investigation into the spinning trade,

“...in England wages are virtually lower to the capitalist, though higher to the operative than on the Continent of Europe.” (p 526)

The same conclusion was arrived at by the Factory Inspector, Alexander Redgrave, in his Report of October 1866. He,

“...proves by comparative statistics with continental states, that in spite of lower wages and much longer working-time, continental labour is, in proportion to the product, dearer than English.” (p 526)

Marx provides a number of further examples of the way the less developed capitalist economies across Europe displayed all of the horrors of the early capitalist development in Britain, and yet with all that, and with wages often only 50% of those in Britain, the same industries in Germany, Russia, etc. were unable to compete with their British equivalents.

The reason was quite clearly the relative differences in productivity between countries. Marx highlights that by presenting the comparative tables produced by Redgrave, showing the average number of spindles per factory, and average number of spindles per person across across a number of European economies.

AVERAGE NUMBER OF SPINDLES PER FACTORY
England, average of spindles per factory	12,600
France, average of spindles per factory	1,500
Prussia, average of spindles per factory	1,500
Belgium, average of spindles per factory	4,000
Saxony, average of spindles per factory	4,500
Austria, average of spindles per factory	7,000
Switzerland, average of spindles per factory	8,000
AVERAGE NUMBER OF PERSONS EMPLOYED TO SPINDLES
France	one person to 14 spindles
Russia	one person to 28 spindles
Prussia	one person to 37 spindles
Bavaria	one person to 46 spindles
Austria	one person to 49 spindles
Belgium	one person to 50 spindles
Saxony	one person to 50 spindles
Switzerland	one person to 55 spindles
Smaller States of Germany	one person to 55 spindles
Great Britain	one person to 74 spindles

But, it should not be assumed from this that wages rise or fall in each country in proportion to the different levels of productivity. As the discussion in previous chapters has shown, as productivity rises, this cheapens the necessaries needed by workers, so that real wages might rise, whilst nominal wages fall, and certainly fall relative to surplus value. This mistake was made by the US economist Henry Carey.

“In an “Essay on the Rate of Wages,” one of his first economic writings, H. Carey tries to prove that the wages of the different nations are directly proportional to the degree of productiveness of the national working-days, in order to draw from this international relation the conclusion that wages everywhere rise and fall in proportion to the productiveness of labour. The whole of our analysis of the production of surplus-value shows the absurdity of this conclusion, even if Carey himself had proved his premises instead of, after his usual uncritical and superficial fashion, shuffling to and fro a confused mass of statistical materials.” (p 527-8)

Half a century later, it was the understanding of this principle that laid the basis of Fordism. Ford realised that he could afford to raise the wages of his workers, if by doing so he could raise productivity. Ford raised wages and introduced a corporate welfare system. It led to workers staying with the company, and as a result their productivity rose. Provided productivity continued to rise proportionately more than wages, it led to a proportionately greater increase in profits. That in turn, meant that more was available for additional accumulation of capital, which made possible even greater increases in productivity. At the same time, the steadily rising wages of Ford's workers, and the workers of the other companies, adopting similar Fordist methods, meant that a steadily rising market was created for Ford's cars, and the products of the other companies producing a range of mass produced consumer goods.

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Forward To Chapter 23

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Northern Soul Classics - Double Cookin' - The Checkerboard Squares

Classic bit of Northern instrumental.  Top dancer from Wigan.

Money Week and the Minimum Wage - Part 2

Moreover, raising the Minimum Wage is also consistent with the Government's own stated, but never acted on, commitment to rebalancing the British economy. Thatcher's shopkeeper mentality meant that in the 1980's, British industry was gutted. Much of it went overseas, and capital moved into areas like Finance and Retail. Having defeated the unions, wages were driven down, forcing workers into ever more debt. A low wage-high debt economy was developed, encouraged by financial deregulation and continually lower interest rates that stoked a massive property and asset price bubble. That model has now hit the buffers. There is no potential to extend debt any further, as households face massive, and widespread defaults, the property market is living on borrowed time, and the same applies to the Bond and Stock Markets. The illusion of all this paper wealth is about to be brought back into alignment with reality. Wages could never be lowered sufficiently to compete with China, and in any case, China is itself farming out to lower wage economies in Vietnam, Indonesia and elsewhere. Import prices are rising while wages continue to fall. Rebalancing and restructuring of the economy is the only way out. Short of a very widespread socialist transformation, it would be a necessary solution for a Workers State in Britain too, as it tried to pay its way.

In fact, an increase in the Minimum Wage plays into that strategy too. Marx points out that David Ricardo had been the first one to note that Capital only invests in new machinery when wages have risen above a certain level. As Marx points out in Value, Price and Profit the natural response of Capital faced with rising wages, is indeed to invest in new machines, new techniques and so on to raise productivity. What applies here to individual companies applies equally to the economy as a whole. The more the economy itself is comprised of high value, productive companies, the more profitable that economy will be, the more it will be capable of sustaining higher living standards.

Of course, the Capitalists, particularly the small capitalists who are generally the ones that rely on paying low wages, and providing poor conditions, will complain that they cannot afford to pay higher wages, that it will drive them out of business etc. They always have. They said the same thing about the introduction of the Ten Hour Day more than 100 years ago. They complained that the restriction on the hours they forced workers to work would mean their business could not function, just as today they argue that they cannot comply with the Working Time Directive. What these arguments amount to are the usual calls from Capitalists to have their businesses protected. It means they want to avoid having to make their businesses more efficient, and simply to keep drawing their profits at the expense of the workers health and living standards.

But, in many cases, as Marx demonstrates, in doing so they frequently undermine their own interests too. Marx refers to the Staffordshire earthenware manufacturers who made all these kinds of arguments as to why the Factory Acts limiting working hours would destroy them. But, when the Acts were applied to them, they found new innovative ways of producing, and far from being bankrupted, their productivity rose, their output increased significantly, and so did their profits!!! So, raising the Minimum Wage, is in fact a means by which these lazy, inefficient capitalists, who rely on paying low wages, and providing poor conditions to their workers, will be forced to become more innovative, to introduce new technologies etc. in order to be able to pay their workers better wages. In doing so, that in itself moves the economy in the direction of the restructuring it needs to become competitive.

Its obvious that the Government is moving in the direction of encouraging this restructuring even if they are not moving in the direction of raising the Minimum Wage – though there has been some talk of piecemeal support for the Living Wage. Universities Minister, has been given some funding, and has been talking about the Government backing particular industry sectors. One reason for that is illustrated by the example of what happened with Graphene. It is a new wonder material that is just one atom of carbon thick, and has amazing properties in relation to its flexibility, conductivity etc. that opens up the possibility of all sorts of amazing new products. It was developed by scientists at Manchester University, who gained a Nobel Prize for their work. But, few of the patents for its use have been taken out in Britain. Most have been taken out in China!

The objection to such State backing has always been that it distorts the market, but also that the State is very bad at picking winners. The first objection fails, because every State in the world always has, and continues to support capital within its borders. Most new developments in the US are the result of backing by the US State in one form or another. The second objection falls because in fact, the State is no better or worse at backing winners than are individual capitalists. The argument usually rests on picking as examples nationalised industries like British Leyland, or British Coal. But, these companies were not picked as “winners”! Nearly all of the industries nationalised in Britain were taken over not because they were seen as winners, but because they were already capitalist losers! The State took them over, as it took over the banks in 2008, because Capital had bankrupted them, but they were seen as too important for the wider economy to allow to disappear. But, if we look at that section of Capital that its apologists usually refer to as the most dynamic, the new, small to medium enterprises, their success is far from stellar. About half of all new companies go bust within the first year, whilst within the first five years, 75% have gone to the wall!

A look at countries that have developed rapidly like Japan, South Korea, Singapore and China shows a high degree of state direction. In Japan, the State intervened not only to back particular companies in sectors like electronics and cars, but it also intervened to encourage consolidation of firms within these industries, into huge globally dominant producers. Singapore, as well as pumping huge amounts of state funding into creating a modern economy with ultra high speed broadband, has played an active part in moving production up the value chain, by encouraging higher wages, and encouraging lower value producers to make way for higher value industries. Although, China has now a massive capitalist sector of its economy, in many ways it resembles Lenin's model of the kind of State Capitalist economy he sought to create under the New Economic Policy. China's Stalinists have succeeded in attracting the kind of foreign investment that Lenin sought and failed. Large State owned enterprises in strategic sectors continue to be controlled by the Stalinist State, and the most important of these are probably the Banks, which operate under State direction, in accordance with the Five Year Plan, to direct investment into the required areas of production.

But, of course, none of these solutions have anything to do with Socialism, they are not the solutions that Marxists advance. Marx was a vociferous opponent of “State Socialism”. A powerful State exercising control over the levers of economic power, even in a society that has abolished Capitalists will inevitably use that control to exercise control over the workers themselves. There is no way to plan production in an economy by committee whether that committee is democratically constituted, or made up of bureaucrats. Economies can only be planned as part of a long term process based on re-establishing human relations between workers as producers and consumers, a process of developing co-operative enterprises, and co-operative consumer organisations that can gradually co-ordinate and integrate their activities, and their own plans. Simply trying to impose planning on the existing conditions will necessarily result in the kind of bureaucratism that deformed the USSR and other Stalinist states.

Planning already exists in a significant degree in capitalist economies. As Engels pointed out, firms began to plan their production even in the 19^th century. Capitalist States use control over Monetary and Fiscal Policy to plan at a macro-economic level. But, all of this planning, including any planning to restructure the economy, will be done in the interests of Capital, not workers.

Nor is a higher Minimum Wage a socialist solution either, any more than are higher wages in general. They reflect merely a lessening of the workers exploitation, and possibly as a result, the driving of capital towards a more rational, more developed form.

The real solution resides in workers themselves taking over the means of production, and in place of the current entrapment of workers in the National Insurance Scheme, in its replacement by a worker owned and controlled Social Insurance Scheme, that can provide workers with decent Pensions at earlier retirement ages, which the Mondragon Pension Scheme demonstrates is quite achievable; that provides them with a civilised level of unemployment benefit, in return for valuable work to meet the needs of workers rather than capital, and thereby prevents them being forced to sell their labour-power to capital below its Value; and which provides workers with civilised levels of Sickness and Incapacity Benefits without the kind of intimidation imposed upon them by the Capitalist State system. All of these would be means by which workers could then abolish in work benefits, and force employers o have to pay wages at least equal to the Value of labour-power. It could be further advanced, if in addition the Trades Unions, created a huge single employment agency that operated as a monopoly supplier of Labour to Capital.

But, so long as Capital survives, even these measures will be unable to overcome the whip hand that Capital exercises over labour. Capital will continue to be able to extract profits even if it pays workers the Value of their Labour-Power. The more it advances productivity, the more it will create a relative surplus of Labour, undermining any monopoly the workers try to establish. Only if workers themselves become the owners of the means of production can they prevent that. We can begin, as Marx advised, by setting up Co-operatives, particularly where workers are faced with the loss of their jobs. They could act themselves having taken over these firms to rapidly adopt more efficient techniques, to move their production to higher value products, which will enable them to enjoy higher wages. But, on a piecemeal basis that can offer no overall solution, and in any case, Capital will seek at every stage to destroy such worker owned enterprises, and take them back into its fold. Only if all these enterprises are brought into a single Co-operative Federation, itself integrated totally into the Labour Movement, as one weapon in its armoury against Capital will we have any possibility of fighting off those challenges.

Another tool, would be for such a movement to demand control over the money in our pension funds – around £800 billion in Britain. That should become part of the workers Social Insurance Fund, as should the money built up in the State National Insurance Fund – which in fact, does not exist, because the Government has done a Robert Maxwell and used our Pension Fund to cover its current expenditure on things like wars in Afghanistan and Iraq. On that kind of basis the position of workers would be strengthened considerably over what it is today. It would put the Trades Unions in a much stronger position to negotiate with the capitalists. But, it would also bring about a dramatic change in workers consciousness. It would mean that workers would begin to see in practice a different way of running society. They would gain confidence from owning and controlling their own significant elements of economic activity and control over their own lives. That would feed through into their political representation and aspirations. It would mean it feeding through into their expectations of the Labour Party, and it would either develop and respond to those aspirations, or else it would be replaced by a new Workers Party created by these workers, just as the Liberal Party was replaced by the Labour Party under similar changes in workers consciousness.

Under these circumstances, some of the elements of Trotsky's “Transitional Programme” begin to become relevant. Under these conditions of widespread workers self-activity and self-government, workers can respond to unemployment by demanding a sliding scale of hours, which would require that workers were able to exercise day to day control over the workplace. The fact that workers on a wide scale already exercised such control over their own co-operatives would place them in both a materially, and ideologically stronger position to do that. The existence of widespread workers democratic organisations within each neighbourhood, built up on the back of their co-operatives, and reflected in a flowering of things like Trades Councils, would facilitate the workers supporting each other in such ventures in the way that, in the 1920's, the Workers Councils movement did in Italy. At its peak, it means that the workers could demand the establishment of a Workers Government that would act to defend the interests of workers, taking over capitalist enterprises, and converting them to Co-ops etc.

But, that is a long way from where we are today. Under current conditions, raising Transitional Demands amounts either to what Marx called “Revolutionary Phrase-Mongering”, or else it is really just a reformist charade. Outside a revolutionary situation, as Trotsky set out, there is no way that the bourgeoisie or its State is going to agree to any meaningful “Workers Control”, without which the other demands for a “Sliding Scale of Hours or Wages”, for a Workers Government etc. are meaningless. Given that we quite clearly are in nothing like a revolutionary situation, raising these demands now is indeed just revolutionary phrase-mongering. Again as Trotsky points out, if Capital were to agree to some kind of Workers Control, it would be the kind we have seen before, such as Mondism, whereby the Capitalists do a deal with the Trades Union bureaucrats to exercise control not over Capital, but over the workers!!!

Those who use Trotsky's Transitional Programme, under current conditions, therefore, to raise these demands demonstrate that they do not understand its methods at all. Rather than a set of tools to be used under specific conditions, where the workers are themselves in a condition of transition from left reformism to revolutionary consciousness, they see it instead as some kind of Talisman, or Philosopher's Stone, which they can use to simply pull off an incantation that will transform the workers consciousness as if by magic! Trotsky once said that the Transitional Programme was like a bridge taking the workers from that reformist consciousness to a revolutionary consciousness. The problem is that at present, the workers are at a level whereby they do not have a road to get to that bridge, in fact, they do not even have a path, to get to a road, to get to the bridge! Our task is to first build the path, and construct the road, before we can offer workers the opportunity to cross the bridge.

Back To Part 1

Money Week and the Minimum Wage - Part 1

Money Week Editor, Merryn Somerset Webb, recently wrote this article arguing for a big increase in the Minimum Wage. She had raised the question back in 2010, and came back to it, following the idea being taken up in the Sunday Times. Money Week is certainly not some kind of lefty journal. It can't even be classed alongside some of the more Keynesian sentiments of people like Martin Wolf of the Financial Times. It is part of the Agora Publishing Group owned by Bill Bonner, and whose publications are set well in the mould of Libertarianism, and the economics of the Neo-Austrian School of Mises and Hayek. That these sections are looking at such solutions, demonstrates that the ideologues of Capital are being led to seriously question their faith, as their off the peg solutions continue to fail.

The argument put forward by MW is quite straightforward, and echoes many of the points I have set out myself based on Marx's analysis, over recent months. Marx pointed out, by reference to a number of examples, that although at the level of many capitals i.e. looking at the way each individual capital operates, there is always a tendency to reduce wages to a minimum, for Capital in General i.e. looking at Capital from the perspective of the whole economy, such measures not only offer no long term solution for Capital, but can be contradictory to its interests. For example, at the level of “many capitals”, each individual firm will seek to minimise the wages of their workers, but that means that these workers then have less money to spend on buying the commodities produced by other capitalists. Given, as Marx describes, that the expansion of capital is the expansion of wage labour, that workers continually make up a larger and larger proportion of consumers, such a limitation on workers spending capacity is contrary to the interests of Capital in General.

At the end of the 19^th Century, when as Engels points out, this kind of small-scale competitive stage of Capitalism had ended, and been replaced by the dominance of huge, collectively owned, capitalist concerns, that operated on the basis of planning, a partial solution to this problem was found. Fordism was based on a steady annual rise in workers wages, thereby underpinning rising consumption, but an even larger annual rise in productivity, so that although workers real wages rose, profits rose even more.

But, even before that, Capitalism imposes its own limits on the extent to which individual capitalists can reduce wages. Although, wages appear as being the price of labour, they are, in reality a transformed manifestation – the phenomenal form - of the Value of Labour-Power. The value of Labour-power, like that of any other commodity is determined by the labour-time required for its production i.e. the labour-time required – or for short the money equivalent of that time – for its production. Moreover, the labour-power that is provided is concrete labour, it is the labour of the joiner, the engineer, the book-keeper, and so on, and all of these different types of labour have different costs of production. Capital can reduce wages below these levels for a time, just as for a time, depending on supply and demand, the prices of other commodities will vary from their Exchange Value (or under Capitalism, Price of Production), but, ultimately that price will have to correct, and average itself out.

But, as Marx points out, the Value of this labour is also affected by other factors. A worker who works producing widgets by hand, for example, will have a low level of productivity, whereas a worker who produces them with an advanced machine will have a high level of productivity. Worker A may produce 100 widgets in a 10 hour day, whereas B will produce 10,000 in a day. In reality, Marx points out, it will be as though worker B's Labour is 100 times more valuable than that of A. So, although they both produce exactly the same product, and worker B might even work less arduously than A, B's wages could be higher. That is exactly why, in the 19^th century, Britain was able to pay much higher wages to its workers than those of India, and yet still produce textiles more cheaply. It is why wages in Britain were about 50% higher than in Europe, and yet Britain was still more competitive than France, Belgium, Germany etc.

That was seen in Britain with the example of the hand-loom workers. To begin with the hand-loom workers did extremely well from the Industrial Revolution. As new spinning machines were introduced, the price of cotton and wool dropped sharply. That meant weavers could produce much more cloth, demand for their now cheaper cloth soared, and so did the weavers wages. But, then Capital responded as it always does. It brought in new machines, this time the power-loom. A power-loom could weave as much cloth as dozens of hand-loom weavers. They could only compete by slashing their wages. Weavers wages fell to miserable levels totally incapable of sustaining them. But, although many weavers starved to death, they were enabled to continue in this state of misery for many years, because their wages were made up out of Poor Relief. The Poor Relief offered them still nothing approaching a minimum standard of living, but it meant that they did not do what, perhaps was in their long-term interest, which was to abandon their attempts to compete with the power-looms. At the same time, the Poor Relief was made possible, because of contributions of other workers living in the parish. They were hardly affluent themselves, and the more Poor Relief needed to make up the wages of the weavers, the more these other workers had to contribute, thereby draining their own resources.

The connection between this, and the current situation is fairly obvious, because we have an identical situation today. Welfarism in the form of Benefits such as Housing Benefit, Child Tax Credits etc. fulfil exactly the same function that Poor Relief did. The hand-loom weavers were self employed artisans, and the Poor Relief enabled them to continue operating, despite the fact that the wages they paid themselves were insufficient to cover the Value of their Labour-power. Benefits today, to workers, similarly are subsidies not to those workers but to their employers, who do not even pay them wages sufficient to cover the Value of their Labour-power, insufficient to cover the costs of reproducing these workers. What is more, just like the Poor Relief, those benefits are made possible only because other workers are taxed to raise the money to transfer to them. We know after all that for Capital, tax is a voluntary affair. If better paid workers did not pay tax to make these benefits possible, then either these low paying employers would have to pay higher wages, or they would go bust.

But, in reality, things are not that simple. If the workers that receive these in work benefits suddenly found they stopped, that would have a dramatic immediate effect upon them, before it had an effect on the bosses that employ them. The obvious thing for them to do would be to abandon their job, if the boss would not raise wages, and go on the dole, where they might be as well off. But, JSA regulations prevent that. If we had a worker owned and controlled Social Insurance Scheme, whose aim was partly based on the need to unite the employed and the unemployed, we could avoid that situation, but we don't. We have allowed ourselves to be held hostage to the State Capitalist National Insurance Scheme designed to meet the needs of bosses. A worker owned and controlled Social Insurance Scheme would allow workers to refuse to sell their labour-power to bosses unless they paid a living wage.

In the absence of that, workers finding their Housing Benefit, Tax Credit etc. had been cut, would continue in their jobs, and make up even more of the deficit from borrowing, increasingly borrowing from the modern day usurers in the Pay Day Loan companies, and worse. Moreover, as Marx points out, and in the process destroys the argument of those who say lower wages result in more jobs, workers finding that their incomes have fallen would have another response – work more hours to earn more! That is why contrary to the arguments of the Neo-Austrians, and orthodox economists that lower wages would mean more jobs, the opposite is frequently the case. Lower wages, mean that workers agree to work longer hours – or more intensively on piece work – so as to bring their wages up to a more reasonable level. Because, bosses squeeze more work out of the same number of workers, their demand for workers actually falls! That is why periods of persistent long-term unemployment are frequently accompanied by what seems a paradox – over work.

A simple look at workers in different jobs demonstrates it. Workers at McDonalds on low wages make up for them by working longer hours, and working more intensively. A consultant surgeon paid high wages, is able to decide not to work on a Friday when they are out on the golf course, because their income is high enough without having to work hours that are inconvenient to them. So, the first response of workers given current conditions might well be to put themselves in a worse position, by going deeper into debt, and working longer and harder. Neither are very long term solutions. You can only go deeper into debt up to a point. Eventually, you can't pay back, and you get knee capped by the loan shark. Its only possible to work longer and harder up to a point too. At some point that causes workers to simply wear out, to become too ill to work etc.

Money Week understands the other problems that would result from simply withdrawing these benefits to workers too. Somerset-Webb writes, in a further article,

“We can force companies to raise wages by cutting all benefits to workers right away. That would make it pretty hard for them to get any workers (unemployment benefits would be better), but even if they could get them, I think it would force up wages pretty quickly: would you shop in Tesco if it was clear that every shelf-stacker was slowly starving to death or spending every night sleeping in a tent in the carpark? Me neither.

Still, as short and sharp a solution as abolishing welfare in work in one go might be, I can’t see it happening (nor would I wish the social consequences on anyone).”

The social consequences of course, would likely be a big increase in crime, as well as rioting on the streets! That is why they have come down on the side of increasing the Minimum Wage. Despite, what some of the Neo-Austrians claim, in fact, such a demand is not at all, anti-capitalist, or anti-liberal even. Hayek, in “The Road To Serfdom”, for example, argued that providing a decent minimum guaranteed standard of living did not infringe liberal principles, and was quite possible in a country like Britain. What infringed liberal principles he argued, was only regulations that were arbitrary, and did not affect everyone equally. A Minimum Wage set at a determined figure sufficient to ensure the reproduction of labour-power, is not arbitrary, and because all employers would have to comply with it, it treats none any different from another, any more than laws over pollution etc. That is why the Liberal Winston Churchill was able to introduce the first Minimum Wage in 1909, saying,

“It is a national evil that any class of Her Majesty’s subjects should receive less than a living wage in return for their utmost exertions… where you have what we call sweated trades, you have no organisation, no parity of bargaining, the good employer is undercut by the bad and the bad by the worst; the worker, whose whole livelihood depends upon the industry, is undersold by the worker who only takes up the trade as a second string… where these conditions prevail you have not a condition of progress, but a condition of progressive degeneration.”
Trade Boards Act 1909

Forward To Part 2

AWL, Mali, Libya and The Islamists

More than a week after Imperialism, headed by France, invaded Mali, the AWL got round to providing their response – here, in an article by Colin Foster, a pseudonym for Martin Thomas. Its perhaps not surprising that the AWL waited to produce a response, because the bureaucratic centrist nature of their politics, means that every new event poses them with a problem of squaring their current response with their previous positions. In particular, how are they to square their current position, in relation to Mali, with their previous positions where they justified imperialist intervention in Libya, as well as defending the allies of Imperialism in the shape of the Islamists, and the Feudal, Gulf Monarchies.

The reality is that although the AWL, with their Third Campist methodology, based on syllogistic logic, see every event as separate from any other event, reality is far more complex and interrelated than that. Reality is dialectical. So, it was obvious, when events were occurring in Libya last year, this could not, and would not, be separate from events occurring elsewhere in the world, let alone in Libya's immediate neighbours, like Mali.

That is why, when it became obvious that things in Libya were not as straightforward as they first seemed, some of us cautioned against simply providing uncritical support for the “rebels”. It soon became fairly obvious that these “rebels” did not have massive and widespread support, amongst the people in Libya. Even if they did, Marxists would have had to be circumspect about exactly what the social forces were that were involved, before giving uncritical support. But, fairly early on, it was obvious that these “rebels” were largely based in Benghazi, and that a large part of the rebellion had been pre-planned with the assistance of outside forces. The “rebels” themselves amounted to no more than about 15,000 fighters, equivalent to less than 1% of the population, or about the same level of support that the left sects are able to obtain in British elections. Hardly, a basis for a revolution!

Even with the assistance of a massive bombing campaign by Imperialism, to clear the path for them, the rebels were able to make little or no progress over a period of many months. Even after a further huge intensification of the bombing, and the intervention of British, French, Saudi and Qatari Special Forces, forced Tripoli into submission, the rebels, and their Imperialist backers, took a further two months, imposing a humanitarian disaster in the process, to take control of Sirte.

The AWL not only backed the Libyan rebels, but they also justified the Islamist nature of those rebels. Echoing the argument that the SWP have used in the past, and that the AWL have criticised, when it was used to support Hamas, and Hezbollah, the AWL argued that after years of oppression under Gaddafi, it was not surprising that the Libyan rebels should hold reactionary views. See: AWL Dig Bigger Hole. In fact, as set out in the post above, it was not the only old AWL position they ditched in justifying their support for the jihadists in Libya, as they marched forward to the position of being Sharia socialists, long ago adopted by their fellow Third Campists of the SWP.

What was even more ludicrous in that attempt was one comment they made, where they claimed that the intervention of the Feudal Gulf Monarchies in Libya, now had to be seen as one of the ways in which bourgeois democracy was now to be brought about!  These are, of course, the same feudal regimes that batter their own populations, and that are murdering protesters in Bahrain!

The total hyperbole, and so much zigging and zagging that its like a day out at Alton Towers, comes out in the AWL's latest pronouncements, then, in relation to Mali.

The AWL write,

“On 2 April an alliance of Islamist militias, well-funded from Saudi Arabia and Qatar, and with bases also in Algeria and Mauretania, ousted the secular MNLA and seized Timbuktu in their turn. By late June the Islamists dominated the north-west.”

In which case you would expect on the basis of their previous positions that the AWL would welcome that development! After all, the funding from Saudi Arabia and Qatar, is the same funding for Islamists that was provided, with the AWL's blessing, for them in Libya, and which is being provided to them in Syria. The intervention by Saudi Arabia, and Qatar, is intervention by the same feudal forces that the AWL previously explained to us, in relation to Libya, were the forces which we now had to understand were the vehicles by which bourgeois democracy was to be introduced!!!

Ever since the jihadists took control of Libya, after the fall of Gaddafi, the AWL have done all in their power to keep quiet about the consequences of their former allies assuming power. They have said next to nothing about the series of atrocities committed by the Jihadists in Libya, and their attacks against workers there. They have tried to present a picture in which the bourgeois forces of the TNC are in control, and the jihadists are being opposed by large numbers of the population e.g. here. This is rather like the reports that George Bernard Shaw sent back from Stalin's Russia, where he could see no signs of repression, or show trials.  Even by the AWL's standards it is a pretty weak, confused mish-mash of self-contradictory positions, based on bourgeois liberlaism, and constitutionalism.  Consistent with the AWL's method based on formal logic rather than dialectics it takes as real what is merely superficial i.e. the existence of an elected government, whilst then having to accept again and again that this elected government has no real control over the country!

Today, the UK Foreign Office has advised UK citizens to leave Benghazi because of a threat to them – BBC. It also comes, as its confirmed that some of the forces involved in the seizure of the Algerian Gas Plant, were the same forces that took part in the attack on the US Embassy in Benghazi.  The reality of Libya is that control of the streets remains in the hands of the militias, mainly the Islamist militias.  Its on that basis that the kinds of actions we have seen in Mali and Algeria are spreading out.  Even the Imperialists recognise that, if the AWL do not want to see it.

Of course, it is not fair to draw a straight line between Gaddafi's downfall and the coming to power of the Islamists in Mali. Nor, even if that were possible would it be justified to have opposed bringing down Gaddafi, if the forces ranged against him were genuinely revolutionary forces, even genuine revolutionary, bourgeois-democratic forces, of the kind Lenin describes, as deserving support, in the Theses on the National and Colonial Questions. But, the rebels in Libya were not even that. In many ways, like the forces now in Syria, they were merely agents of the Feudal Gulf Monarchies, and of Imperialism, engaged in a regional war of Sunnis against Shia, which itself is really a cover for a war of those same forces against Iran and its allies, and behind them Russia and China. If ever there were a situation in which a “Third Camp” position, of a plague on all your houses, was justified, it was here! But, the AWL failed even the test of its own political method. That's not surprising, because it has failed it in almost every other case too, where it was a matter of opposing Imperialism and its backers.

The situation is that the Tuareg's were utilised by Gaddafi as mercenaries. In return, Gaddafi supported the Tuareg's in their grievances against the Malian Government. The Tuareg's were also a useful support for Gaddafi in opposing the jihadists, who had for some time been trying to get a foothold in Libya, along with their attempts to win power in Algeria. Gaddafi ruled as a Bonapartist, keeping a lid on a whole series of explosive social cleavages, which as always happens when such a lid is removed, were necessarily going to explode in all directions.

After he fell, the Tuareg's took the ample supply of weapons they had been provided by Gaddafi, and turned their attention to resolving their own grievances. For a long time, the Tuareg's had opposed the jihadists, but in recent years, the jihadists have been building links with the Tuaregs, marrying themselves into important Tuareg families. When the previous corrupt Malian Government fell in yet another coup, that gave the opportunity for the Tuaregs to seize the day, but then they too were replaced by the jihadists. The jihadists have themselves a large supply of money and the latest weapons provided by the Feudal Gulf regimes, who have used them as mercenaries to overthrow regimes that might be potential support for Iran. That is why the sectarian war is being stoked again in Iraq.

But, the jihadists, as Bin Laden showed, are not simply puppets of these bigger players. They have an agenda of their own. Their operations in Mali are part of that, and sooner or later their operations against Israel will likewise be part of it. That is why Imperialism seeks to limit such rogue operations that conflict with its interests.

That some of the peoples of the region rally behind such forces is not surprising, for the reasons Trotsky condemned in the Balkans. There the Liberals, playing the same role that the AWL and other Liberal Interventionists play today, encouraged the belief that, if they rose up, even with wholly inadequate forces, and proclaimed “atrocity” Russia would come to their assistance, just as today they are encouraged to believe that Imperialism will come to their assistance. It can only lead to disaster, and given the nature of these forces it certainly can never lead to anything progressive.

Our role, as Marxists continues to be, not that of moralistic ambulance chasers, seeking to support these anti-working class forces, but to continue to argue the need for building support for the working class in opposition to them, and more importantly, to focus on where the real struggle for socialism resides – the struggle of the advanced sections of the global working class against Imperialism.

Capital I, Chapter 21

Piece Wages

“Wages by the piece are nothing else than a converted form of wages by time, just as wages by time are a converted form of the value or price of labour-power.

In piece wages it seems at first sight as if the use-value bought from the labourer was, not the function of his labour-power, living labour, but labour already realized in the product, and as if the price of this labour was determined, not as with time-wages, by the fraction

daily value of labour-power

the working day of a given number of hours

but by the capacity for work of producer.” (p 516)

Marx points out that this appearance ought to be questioned by the simple fact that both piece rates and day rates appear side by side in the same industry.

“But it is, moreover, self-evident that the difference of form in the payment of wages alters in no way their essential nature, although the one form may be more favourable to the development of capitalist production than the other.” (p 517)

Suppose in a 10 hour day, 5 hours are paid (necessary labour) and 5 unpaid (surplus labour). Suppose the value of the output is £100. The worker receives £50 wages, capital £50 surplus value. Suppose the total output is 100 units. The worker is paid £0.50 per unit wages, and capital £0.50 surplus value. If a particular worker works at the average rate then clearly it does not matter whether they are paid at the rate of £0.50 per piece (piece rates) or £50 per day (day rates). In both cases their wage is £50, and they produce as much surplus value in either case.

If there are 100 workers on piece rates, the wages of those who work below the average rate, and whose wages fall below the day rate will be cancelled out by the higher wages of those who work above the average rate.

“Piece wages do not, in fact, distinctly express any relation of value. It is not, therefore, a question of measuring the value of the piece by the working-time incorporated in it, but on the contrary, of measuring the working-time the labourer has expended by the number of pieces he has produced. In time-wages, the labour is measured by its immediate duration; in piece wages, by the quantity of products in which the labour has embodied itself during a given time. The price of labour time itself is finally determined by the equation: value of a day’s labour = daily value of labour-power. Piece-wage is, therefore, only a modified form of time-wage. (p 517-8)

Piece rates have clear advantages for capital. With time wages, the worker needs close supervision to ensure they are continually working. That implies costs of supervision. With piece rates, the worker has an incentive to work continuously and at their maximum intensity in order to produce more pieces and maximise wages. Under time wages, the quality of output needs to be checked, and fines imposed for poor quality. Under piece wages, the worker has an incentive to maintain quality, because substandard pieces are not paid for.

This also provides the capitalist with a measure of work intensity, so workers unable to match this standard are dismissed. This also means the normal intensity of labour is raised.

“Since the quality and intensity of the work are here controlled by the form of wage itself, superintendence of labour becomes in great part superfluous. piece wages therefore lay the foundation of the modern “domestic labour,” described above, as well as of a hierarchically organized system of exploitation and oppression. The latter has two fundamental forms. On the one hand, piece wages facilitate the interposition of parasites between the capitalist and the wage-labourer, the “sub-letting of labour.” The gain of these middlemen comes entirely from the difference between the labour-price which the capitalist pays, and the part of that price which they actually allow to reach the labourer. In England this system is characteristically called the “sweating system.” On the other hand, piece-wage allows the capitalist to make a contract for so much per piece with the head labourer — in manufactures with the chief of some group, in mines with the extractor of the coal, in the factory with the actual machine-worker — at a price for which the head labourer himself undertakes the enlisting and payment of his assistant work people. The exploitation of the labourer by capital is here effected through the exploitation of the labourer by the labourer.” (p 518-9)

As well as raising the average level of intensity of labour, this also tends to a lengthening of the day, because that means more pieces are produced, meaning more wages. However, Marx’s previous comments in an earlier chapter have to be set against this i.e. that a shorter day enabled a higher intensity, which led to increased output, and both higher wages and higher profits.

As described earlier, although piece rates mean each worker is paid an individual wage based on their ability, this does not alter the total wage bill or relation to surplus value. But, it has other effects.

“But where a particular rate of piece-wage has for a long time been fixed by tradition, and its lowering, therefore, presented especial difficulties, the masters, in such exceptional cases, sometimes had recourse to its compulsory transformation into time-wages.” (p 520)

Marx argues that piece rates are the form most in harmony with capitalist production. At the beginning of modern industry between 1797-1815, they facilitated the lengthening of working day, and lowering of wages. But, piece rates have disadvantages for capital as productivity rises. In the example above, 100 pieces were produced in 10 hours with a value of £100. If productivity doubles so that 200 pieces are now produced in 10 hours, the value of each piece falls to £0.50. But, its clear that wages could not then continue to be paid at £0.50 per piece, or else there would be no surplus value. Wages need to fall to £0.25 per piece, leaving £0.25 per piece surplus value. Then wages and surplus value remain £50 each per day, equal to the value of the 200 items now produced. However, if workers accept the view that what they are being paid for is the value of their labour in each piece, they will be reluctant to reduce the rate per piece. This means that continual battles break out between workers and bosses over the latter's attempts to reduce piece rates.

Back To Chapter 20

Forward To Chapter 22

Back To Index

Cameron Craters Country's Credibility

For the last two year's I've been pointing out the incompetence of the Liberal-Tory Government. Its not just that they are economic illiterates, whose scaremongering before and just after the election injected fear and loathing into sentiment, or that this was exacerbated by the introduction of austerity measures, which further undermined confidence, and sucked demand out of the economy. It is the fact that they are also simply politically inept.

For example, at a time when they needed the support of the permanent State bureaucracy to push through some of their policies, they attacked their very bureaucracy. Not surprisingly, they were faced with opposition from all sorts of quarters within it, from the police and army top brass, as well as frustration by civil servants. Also not surprisingly, Ministers found themselves presenting duff information to Parliament, provided by those Civil Servants, as happened with Michael Gove's several attempts to get the figures right over Building Schools For the Future. All of that could have been foreseen as indeed, I pointed out in – A Bit Of A Pickle.

Part of the reason for that incompetence is simply that as politicians the Liberal-Tory Government are just not very good, partly its a reflection of the fact of a Coalition Government, but partly it is also a reflection of the fact that the Tories in particular are themselves a disparate coalition, but whose determining feature is their need to accommodate the needs and interests of their membership and electoral base, and the extent to which that is in conflict with the interests of a modern capitalist economy, and of the interests therefore of Big Capital itself. They are continually left having to say one thing for electoral and party political purposes, whilst really knowing that they need to do something else.

That can be seen in a number of areas, but Europe is the most obvious. To give just one other, however, take the issue over Child Tax Credit. It is now fairly common knowledge that when Osbourne made his announcement of austerity measures two years ago, he anticipated that many of them would not actually be needed. The austerity measures were back loaded for that very reason, the heaviest immediate cuts being loaded on to Local Government, so they could take the majority of the blame. The part-time Chancellor hoped and believed that the economy would continue to benefit from the growth that labour's stimulus had created, and that similar measures taken by other Governments were having. He hoped, therefore, to be able when the further cuts, such as those to Child Tax Credits were due, to be able to stand up in Parliament, and say, “We had intended to have to do this, but our policies have been so successful, that I can now announce, that we no longer need to make these cuts.” It was supposed to be an element of his supposed genius for electoral strategy.

But, of course, when the Liberal-Tories scared the shit out of consumers and businesses at the beginning of 2010, by claiming, ridiculously, that Britain was in as bad a state as Greece, they responded accordingly. Consumers began to retrench, and build up their savings and reduce their debts. Businesses did the same thing. The 2.5% growth that Labour left the Liberal-Tories came almost instantly to a halt, even before they had started to implement the austerity measures, as a consequence. That meant, when those austerity measures were introduced, the economy was already weakened, and was simply given another kick in the groin, sending it into recession. The money printing by the Bank of England, and the unsustainably low interest rates introduced in 2009, could not provide any support for the economy.

It was like pushing on a string as Keynes had described such a situation. Low interest rates, and money printing can only stimulate the economy if consumers and businesses want to borrow money, and are encouraged to do so by the easier lending conditions. But, the consequence of the Liberal-Tory policy was that the only people who wanted to borrow, were those people who needed money to stay afloat, and who were, therefore, not likely to pay it back! Nor surprisingly, the Banks trying to rebuild their own Balance Sheets, and increase their profits, had no interest in lending to such people. Rather than stimulating the economy, all the money printing and low interest rates did, was to delay the collapse of huge house price bubble, blow up further bubbles in share and bond prices, and devalue the pound, thereby increasing inflation, and squeezing household incomes that were already under pressure from loss of jobs, and falling or frozen wages. It created the inevitable conditions for a prolonged period of stagflation, and also for rising welfare bills, as payments of in work benefits necessarily rose.

The consequence was that when the time to introduce the Child Tax Benefit cuts came along, Osbourne was left with no alternative but to introduce them, though under pressure from Tory backbenchers, fearful of losing votes, he did raise the level at which they were to be cut off.

The Tory Party, going back to the end of the 19^th Century has been riven with divisions over Protectionism, and that at heart is what drives the division over Europe. It was, after all the Tory Party that had introduced, and defended the Corn Laws to protect the interests of the Landlords who made up the backbone of the Part, and its electoral support. When the industrial capitalists became dominant in the second half of the 19^th Century, they pushed through Free Trade measures, that benefited British Capital going out into the wider world. At the end of the century the Tories polices were based, as some of them would have it today, on the idea of Empire, and Protectionism for the home industries.

When the Liberals were supplanted as the major force of Social Democracy (representing the compromise of interests between Big Industrial Capital and the working-class) by Labour, the Capitalists became absorbed in the Tory Party. The Big Capitalists could hardly be seen to be members and supporters of a Party largely dominated by workers, and nominally committed to replacing Capital. That, however, is what happened in the US, with the Democrats. But, that meant that the Tories were now necessarily conflicted between one Protectionist Wing, reflecting the interests of the small, usually inefficient, nationally based capitalists, along with sections of Money Capital, the Landlords, and the other social layers attached to them, and a Liberal-Social-Democratic Wing, reflecting the interests of Big Capital, largely efficient, able to cope with higher wages, better working conditions, a reasonable level of social welfare and so on, that continued to support Free Trade.

That is essentially the division that exists within the Tory Party today over Europe. It can be seen in the statements of various sections of Capital. The British Chambers of Trade, which represents the interests of small, nationally based capital, has a far larger proportion of its members – around 45% - supporting the idea of some kind of renegotiation than there is amongst the ranks of the big multinationals. In fact, it is the representatives of the latter, that have eventually begun to recognise the threat to their interests, and started to organise to oppose the eurosceptics. It is to represent the interests of those sections of Capital that we have had representatives of the US State – which far more openly represents the interests of Big Capital – come out and warn against Britain raising the prospect of leaving the EU. There have even been some of these large companies talking openly about leaving the UK, were it to exit the EU.

In reality, Cameron knows that however much he has to assuage the feelings of the core of his party membership and voter base, it is the interests of Big Capital, that ultimately he will have to meet. That is just like, however, much Labour Governments have had to assuage the feelings of the workers that make up its membership and voter base, it has to meet the needs of that same Big Capital. In fact, Labour is usually better placed to do that than the Tories, precisely because Social Democracy is based on a very real compromise, and commonality of interests between workers and Big Capital, that lies at the heart of reformism. The real sharp separation of interest lies between workers and the small capitalists who cannot survive without the low wages, the terrible working conditions and so on.

In reality, of course, workers interests are also closer to those of the Big Capitalists when it comes to issues such as Europe too. A single European State would facilitate workers unity on a wider basis. A true single market would mean that national competition would be reduced. It would mean having a level playing field across the whole market, providing common levels of Pensions, Benefits and so on, as well as common laws on working hours, holidays, health and safety etc. It fundamentally undermines the basis of competition as a race to the bottom.

But, the real divisions within the Tory Party are made manifest on precisely these kinds of issues. It is precisely to defend the interests of the small capitalists who cannot survive without paying poverty wages, without providing terrible conditions, undermining health and safety and so on, that the Tory Party seeks to obtain some protection against the single market. It wants to protect those bad employers by opting out of civilised regulation, just as 19^th Century Tory Protectionism sought to protect British Capital against increasingly competitive European Capital.

If you look at the pronouncements of UKIP and of the Tory Right, it is precisely in order to be able to introduce further attacks on British workers rights, and living standards that they want these renegotiations and opt outs, and ultimately withdrawal from the EU. They do not say so openly, at the moment, but the logic of their position is still that of the old style Tory Protectionism, which would see them seeking to defend the interests of the small scale, inefficient sections of Capital they are based upon, by more overt forms of Protection were that needed.

Of course, as the old style Tory Protectionists did, they will cover that in phrases about protecting the rights of British workers against foreign competition, but that will be as hollow today, as it was when Marx and Engels derided it more than 100 years ago. Its only necessary to see how much these people are friends of the workers today, to see how much such policies would be motivated for that reason. They argue these nationalistic solutions for precisely the same reasons that the BNP do. To meet the interests of the backward looking, reactionary sections of British Capital.

But, for these very reasons we can now see just how incompetent Cameron and his Government are once again. On the one hand, the Liberals have been led, as always happens in such coalitions, to concede ground to their Right. In turn, Cameron has been led to concede ground to his Right, in the hope of assuaging the Right Wing of his Party, and to undermine the increasing support for UKIP. But, as again as always happens in such circumstances, all that weakness does is to strengthen those to whom you have conceded ground, and to make them bay for even more blood. The more Cameron has wavered over Europe in the last year, the more UKIP has gained in strength!

I pointed out the historical analogy here with what happened in France in the events leading up to the Coup of Louis Bonaparte – History Repeating As Farce. I don't expect that Britain is going to experience a coup – unless things deteriorate considerably – but, it is quite easy to see how the Tory Part could experience a coup, how the continuing weakness of Cameron's leadership strengthens his Right-wing, and leaves open the door to an even more populist leader like Crapulinsky/Johnson to take over.

In that series, I also pointed out the way that Cameron has effectively mimicked, but under wholly different conditions, Thatcher. It once again reflects their incompetence, and laziness, that thy think they can simply take off the peg solutions – previously Cameron quite clearly modelled himself on Blair – rather than thinking out and developing their own solutions. The issue over the EU is again another example of that. As well as assuaging his Right-wing, and trying to undermine UKIP, Cameron has quite clearly another motivation for offering an IN/OUT referendum.

Two years into her Government in 1982, Thatcher was deeply unpopular under similar conditions to those existing today. She was saved by the Falklands War. The EU is Cameron's Falklands. He hopes to latch on to the same kind of nationalist/populist sentiments that rescued Thatcher in 1982. He knows that, fed by the gutter press, who know their market, and by the failure of Big Capital to argue the case for Europe over the years, and indeed their undermining of that case by relying instead on bureaucratic methods to bring about more Europe, there is a considerable amount of opposition towards the EU. One Tory MP, in PM's Questions today, made it obvious, she said openly “Isn't the difference between us and the Opposition that if the voters want a referndum they have to elect us at the next election.”

That is the real populist motivation in Cameron's gambit. It is, in other words, an attempt at a bribe. It is an attempt to say, no matter how much we have cratered the economy with our economic incompetence, no matter how much we have undermined basic elements of a civilised society with our austerity measures, no matter how many of you we have thrown on to the scrap heap, no matter how much your living standards have fallen, vote for us, and we will give you a chance to leave the EU. Its inept again, because although there is opposition to the EU – and some of it, aimed at the bureaucratism of the EU is justified – it is not such a vital element of ordinary people's concern that they will ignore all those other things that the Tories have done. The only ones who will vote for the Tories on that basis are people who are already Tory voters anyway. At best it will stop a few voting for UKIP.

Of course, as with Gideon's brilliant strategy over Child Tax Credits, what Cameron hopes is that, when it comes to it, he will stand up and argue for Britain to stay in Europe, having been given some sops from European leaders, as happened with Harold Wilson's “renegotiation” in 1975. That is why he has put off any referendum until 2017, and why he will not commit himself to saying what items of this renegotiation constitute red lines, which would force him to argue for a NO vote. Indeed, pressed by Miliband in Parliament today, he refused time and again to even say whether he would call for a YES vote. Faced with the question, if you get nothing from the renegotiation what will you advocate, Cameron has no answer.

But, if Cameron says, I will recommend a Yes vote, even if I get nothing, that undermines his negotiating position. Other EU leaders would simply tell him, if you are going to stay in whether you get anything or not, why would e give you anything? Similarly, if he says he would recommend a NO vote unless he gets this or that concession, he has also tied his hands, because if he doesn't get it, then he is committed to arguing for a British withdrawal. Its reported that the Tory Right are already pushing further Right demanding that these red lines be spelled out, and included in the next Tory Manifesto, so that Cameron can't back out of any such commitment. Both UKIP and Labour are likely to keep pressing Cameron on this for the next 2 years up to the election, and he knows he can never answer that question. By contrast, Miliband has come out openly and said Labour will not offer an IN/OUT referendum, though they will offer a referendum over any new major changes, which seems a reasonable position.

The consequence is that just as Liberal-Tory incompetence over the economy led to it cratering, so Liberal-Tory incompetence over Europe is cratering confidence in Britain. How on Earth can foreign states, or large companies have faith in such an incompetent government, how can they make any kind of long term plans that are needed for large scale investments, if they do not know for the next 5 years whether Britain will be in or out of the EU, and so on. Already, over the last 6 months as this issue has developed, the Yields on UK Gilts have risen by around 30%. Its likely that the UK will lose its Triple A Credit Rating, and the consequence will be that interest rates, including mortgage rates will rise, further undermining the economy.