Sunday, 17 November 2013

US Politics and Economics v The UK and Europe - Part 6

In the US, as in the UK, the failure to restructure capital, in the 1980's and 90's, and instead to try to create a low-wage/high debt economy, had created that situation. Both the US and UK had essentially devoured their own accumulated wealth during that period in pursuit of this short-sighted policy, geared to the needs of small capital. That was true in two ways.
Firstly, at the level of the state itself, accumulated wealth was used as collateral for borrowing. In the UK that was perhaps clearest of all. Norway has used its windfall of North Sea oil and gas to build up a sovereign wealth fund that will finance its social welfare programmes into the next century. By contrast, Britain, under Thatcher, used North Sea revenues to finance the huge rise in welfare that was the result of the massive rise in unemployment, which in turn was needed , by the Tories, in the 1980's, to destroy the power of the workers and their unions.

But, secondly, it was true at the level of the individual, as the real assets that workers had built up after WWII, in the form of houses, were inflated, and then used as collateral to finance increasing levels of personal debt.

By contrast, Germany had followed a classically social-democratic course. The same kinds of 'labour market reforms' that were introduced in the UK and US over the bones of the workers, were implemented in Germany mostly by agreement with the Trades Union bureaucracy, although there was significant opposition to the reforms introduced by Gerhardt Schroder. But, Germany was able thereby to develop its high value added sector in a way that the US and UK could not. Germany might not have been able to compete with China in the production of cheap mass produced commodities, but it could provide China and other such economies with the high quality machine tools and equipment required for that production. It could also supply them with the high quality, high value commodities their rapidly rising middle classes desired, and for which the question of price comes a distant second to the question of quality and status.

Obama was then hamstrung by the situation he confronted. But, he was also hamstrung by the limitations of social democracy. Those limitations essentially come from the fact that it represents a compromise between the interests of workers and the interests of big capital, but always ultimately for the benefit of the latter. As Engels put it, it is not that the big capitalists have actually had some Damascene conversion, that they have really become moral and proponents of Socialism and social harmony.

“The competition of manufacturer against manufacturer by means of petty thefts upon the workpeople did no longer pay. Trade had outgrown such low means of making money; they were not worth while practising for the manufacturing millionaire, and served merely to keep alive the competition of smaller traders, thankful to pick up a penny wherever they could. Thus the truck system was suppressed, the Ten Hours’ Bill was enacted, and a number of other secondary reforms introduced — much against the spirit of Free Trade and unbridled competition, but quite as much in favour of the giant-capitalist in his competition with his less favoured brother. Moreover, the larger the concern, and with it the number of hands, the greater the loss and inconvenience caused by every conflict between master and men; and thus a new spirit came over the masters, especially the large ones, which taught them to avoid unnecessary squabbles, to acquiesce in the existence and power of Trades’ Unions, and finally even to discover in strikes — at opportune times — a powerful means to serve their own ends. The largest manufacturers, formerly the leaders of the war against the working-class, were now the foremost to preach peace and harmony. And for a very good reason. The fact is that all these concessions to justice and philanthropy were nothing else but means to accelerate the concentration of capital in the hands of the few, for whom the niggardly extra extortions of former years had lost all importance and had become actual nuisances; and to crush all the quicker and all the safer their smaller competitors, who could not make both ends meet without such perquisites.”

“The manufacturing capitalists set about the realisation of this their great object with that strong common sense and that contempt for traditional principles which has ever distinguished them from their more narrow-minded compeers on the Continent. Chartism was dying out. The revival of commercial prosperity, natural after the revulsion of 1847 had spent itself, was put down altogether to the credit of Free Trade. Both these circumstances had turned the English working class, politically, into the tail of the ‘great Liberal Party’, the party led by the manufacturers. This advantage, once gained, had to be perpetuated. And the manufacturing capitalists, from the Chartist opposition, not to Free Trade, but to the transformation of Free Trade into the one vital national question, had learnt, and were learning more and more, that the middle class can never obtain full social and political power over the nation except by the help of the working class. Thus a gradual change came over the relations between both classes. The Factory Acts, once the bugbear of all manufacturers, were not only willingly submitted to, but their expansion into acts regulating almost all trades was tolerated. Trades Unions, hitherto considered inventions of the devil himself, were now petted and patronised as perfectly legitimate institutions, and as useful means of spreading sound economical doctrines amongst the workers. Even strikes, than which nothing had been more nefarious up to 1848, were now gradually found out to be occasionally very useful, especially when provoked by the masters themselves, at their own time. Of the legal enactments, placing the workman at a lower level or at a disadvantage with regard to the master, at least the most revolting were repealed. And, practically, that horrid People’s Charter actually became the political programme of the very manufacturers who had opposed it to the last.”

Big industrial capital dominates modern capitalist economies. It is the main source of surplus value, and so ultimately it is the material condition underpinning everything else. But, the number of big industrial capitalists is infinitesimally small, perhaps amounting to only 0.001% of the population, and so as Engels describes above, always dependent for its political rule on the working-class via the medium of bourgeois social democratic regimes, the ideology of which forms the basis of the state. But, the other fractions of the ruling class, the small capitalists, and the layers of the middle classes attached to them, are far more numerous than the big capitalists. As an organised political force they continue to be powerful.

For so long as the workers themselves continue to be dominated by bourgeois ideas, for so long as they see no credible alternative to capitalism in practical operation, therefore, whenever social democracy fails to keep its side of the bargain, by ensuring that workers living standards continue to rise, the beneficiaries are always the political representatives of these more reactionary sections of capital.

I will examine the consequences of that in Part 7

Back To Part 5

Forward To Part 7

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