Understanding The US Political Crisis - Part 12

Money Capital v Big Industrial Capital 

The small capitalist is less concerned than the big capitalist about the effects on the value of labour-power of high levels of debt, because their general outlook is based on the extraction of absolute surplus value anyway. But, from the perspective of capital in general it is damaging, because it means either a fall in the rate of profit as wages have to rise, or else it means a diminution in the quality of labour-power, which means thereby a further decline in competitiveness, and thereby profits.

Industrial Capital also loses out for other reasons. Where property prices rise, that causes its input costs to rise. Workers faced with higher house prices and rents require higher wages, and housing benefits, to reproduce their labour-power. Also, the higher price of bonds and shares means fewer of them can be bought by workers' pension contributions. Higher prices for bonds and shares means lower yields and, therefore, less income for workers pension funds. The value of labour-power is calculated over the whole life of the worker, so these higher costs of providing for the workers' pension means a higher value of labour-power, and consequently higher wages.

Finally, as Engels describes in the situation running up to the financial crisis of 1847, a large supply of money-capital and low interest rates, in the context of the speculation of the railway Mania, led industrial capitalists to go beyond speculation with the surplus value, to draining their actual businesses of funds, in order to speculate in the hope of large, quick financial gains.

“With the same zeal as was shown in expanding production, people engaged in building railways. The thirst for speculation of manufacturers and merchants at first found gratification in this field, and as early as in the summer of 1844, stock was fully underwritten, i.e., so far as there was money to cover the initial payments. As for the rest, time would show! But when further payments were due — Question 1059, C. D. 1848/57, indicates that the capital invested in railways in 1846-47 amounted to £75 million — recourse had to be taken to credit, and in most cases the basic enterprises of the firm had also to bleed.”

(Capital III, Chapter 25)

Taking all this into account in relation to the matrix of contending interests in the US that leads into the current political crisis, then leads to the following conclusions. The US, like other developed economies, is a bourgeois social democracy. That is the ideology underpinning its state and political regime is one that is based on the needs of big industrial capital, which is the source of surplus value, without which the economy not only could not grow, but could not even reproduce itself.

For the last 100 years plus, the basis upon which big industrial capital has produced and extracted that surplus value is via relative rather than absolute surplus value. Its manifestation has been in the form of Fordism, and although Fordism appears to reach some limits, the attempts to develop some kind of post-Fordist mode of regulation involves moving beyond it, not moving backwards towards some previous form.

A requirement for this form of regulation is a modus vivendi between workers and big capital. Workers accept that capital must make increasingly larger profits, by which to expand, and on the basis of such expansion, their living standards will rise over the longer term, either via rises in actual wages or in the social wage. That was the basis of the “mutuality” agreements struck by unions in the car industry, for example, by which it was agreed that in return for annual rises in productivity, wages would rise by a given percentage above inflation.

This modus vivendi exists at a political level, because, as Engels stated, the big industrial bourgeoisie recognised it could not rule politically without the support of the working-class. The clearest example of that today is probably the coalescence of the big industrial bourgeoisie alongside the workers inside the US Democrats.

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