Understanding The US Political Crisis - Part 13

The Role Of Big Industrial Capital

Because big industrial capital is objectively the source of surplus value, within the economy, the logic of this material reality is ultimately determinant. But, in just the same way that capitalists do not perceive the reality that their profits are only the phenomenal form of the surplus value extracted from their workers, so capital in general does not perceive that its profits arise in the sphere of productive-capital.

Capital believes that profit is merely the difference between cost and revenue, a difference that may arise from buying low and selling high, by buying beneath value, and selling above it. It believes that profit flows from the use of all its capital, not just from labour. Similarly, the money capitalists and merchant capitalists do not see that their profits only arise as a share of the profits created by productive-capital. The money-capitalists believe that the interest they receive on the money they lend out, is no different to the rent landlords receive on the land, or the workers receive as wages for their labour. They do not question where the value comes from that enables this payment to be made.

But, of course, the landlord can only be paid a rent because the peasant produces more food than they require for their own subsistence, i.e. they produce a surplus product. The worker can only be paid wages because their labour produces a commodity with at least as much value.

Similarly, the merchant capitalists believe that their profits come from the same source they have always done – their ability to buy low and sell high. But, the problem with that was seen in the very early stages of capitalism. In the 15th century, in the Mediterranean city states, powerful merchant families like the Medici, arose. Their wealth came from their ability to buy low from the peasant producers and to sell back to them high. But, over time they bought so low, and sold so high that the peasants could no longer reproduce themselves. Their ability to produce continually deteriorated. Once production ceases or reaches a low enough level, there is no longer anything for the merchant to buy, and therefore nothing for them to sell. The basis of their profits disappears.

So, too with economies like the US and UK. It is only possible to sell in these economies if the workers ultimately have sufficient income to buy. The use of credit can prolong even for an extended period the time they can buy without such an income, but only by storing up a bigger problem for the future. Ultimately, the workers must have sufficient income, and it can only arise if a sufficient number of them are engaged in producing new value and surplus value.

On this basis, an inevitable contradiction arises. Money-capital, merchant capital and landed property derive their profits by sharing in the surplus value created by industrial capital. But, they do not perceive this reality and each seeks to maximise its own profit, therefore, at the ultimate expense of productive-capital. At various points, each respective form of capital will enjoy greater strength than another, and the more successful it is, the more the wealth of the state will appear to flow from it. The Physiocrats thought that all wealth flowed from the land. More latterly, it has seemed that all wealth flowed from the banks.

On the back of this, the political representation of these material interests, and their reflection in the realm of ideas ebbs and flows. In the post-war boom, with big industrial capital dominant, the need to keep the wheels of industry turning, leads to a more dominant social democracy, the hegemony of Keynesianism etc. As the boom ends, the power of big industrial capital wanes, more so as it locates overseas, and the relative strength of money-capital and merchant capital rises. It is less interested in keeping the wheels of industry turning, and more interested in keeping money and commodities circulating.

During the post war boom, the commitment of the Capitalist State, to a Fordist regime of accumulation, based on mass consumption and mass production, on macro-economic planning, and expansive welfarism “implied a subordination of independent bank capital and the rentier element in the bourgeoisie to an integrated, state supported finance capital” (Kees Van Der Pijl - “Neo-Liberalism vs Planned Interdependence. Concepts of control in the struggle for hegemony” - 1986.)

But, the end of the Long Wave Boom in the 1970's brought with it a crisis of Fordism too, and the kind of state structures and policies based upon it. That is not to say that Fordist regulation ceased. Just as Fordism was never an hegemonic form of Capital Accumulation, but merely represents a dominant form of regulation utilised by the more powerful fractions of Industrial Capital, so the crisis of Fordism only meant that the solutions it provided, just as with the macro-economic policies, based on Keynesianism, that went with it, were no longer capable of working in the way they had in the previous period. Capital needed to find alternative solutions, and within the Crisis of Capitalism that ensued, the fact that Money Capital was able once again to come to the fore, meant that the Neo-Liberal policies that reflected its interests were brought to the fore along with it.

Fennema and Van der Pijl described this transition.

“the disintegration of the industry trade union compromise supporting the Fordist order politically was replaced by bank power and rentier interests as the dominant group in the new configuration. Thus rentier interests in the broad sense of the word were crucial in the formation of a new power bloc which rose to power after 1975.” (“International Bank Capital and The New Liberalism” (1987).

Its not surprising that, in the light of this, Thatcherism's ideological base was provided by the high priest of Money Capital, Frederick Hayek, and the first manifestation of that was in the adoption as Van der Pijl argues of the principles of “sound money”, in order to force “sound micro-economic reasoning … upon the state and society as a whole.” (Van der Pijl - “Capitalist Class Formation At The International Level” - 1987.)

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