The 100

So, one hundred rich people, a large part of them active Tory supporters, wrote a letter to a Tory newspaper, proclaiming their opposition to Labour, although some of them have since claimed that in signing the letter, they were not necessarily supporting the Tories! What does this tell us? In some ways not much, because its a dog bites man, not a man bites dog story. In other ways, it tells us quite a lot.

First of all, it tells us quite a bit about the way British society, and British business operates. The Tories are always quick to point out to us the difference between the union leaders, and union members, and the media are always keen to allow them to do so. However, no one has actually asked the question of who these 100 individuals were actually speaking for. Did, they go to all of the workers, in the businesses they are supposed to represent, for example, and ask their opinion, before they signed this letter?

Not on your nelly. And, that tells us a lot about British society, its media, and the way business operates. Business is equated, not with the millions of people who actually do the work, day after day, produce the goods and services, and so on, if they are lucky, for most of their life, usually for a pittance, but with a handful of executives, who flit, every few years, from one lucrative appointment to another, and who represent, therefore, not the interests of any particular business, or even business in general, but only the interests of the money-lenders, the share holders and bondholders.

We are told that these top executives, must be paid these astronomical amounts of money, because they are irreplaceable. Yet, these same executives, are continually being replaced, with the kind of frequency that football clubs swap managers. The executives come and go with monotonous regularity, and yet the businesses themselves continue, with their workforces continuing to produce the wealth.

At the same time, a look at the performance of some of these businesses, under the invaluable leadership of these executives, hardly confirms the claim. A look at the performance of the banks, for example, can hardly be said to show that wealth creation comes down to the role of such invaluable executives, as opposed to the hard work of millions of workers, on a daily basis.

If the media really wanted to get a view on what is good for real businesses, they should talk to those millions of workers, not a handful of executives, looking to line their own pockets. But, then if the media wanted to do that, they would speak to the trades unions, who represent the interests of 6.5 million workers and their families, rather than the Institute of Directors, or CBI, which speaks for a handful of those executives.

The other thing that it tells us is that we are continually presented with a myth that is palpably untrue, and yet which is accepted pretty much without question. We are told that we have to listen to the views of these executives, because they “create” thousands of new jobs, by investing their money. Really? 

When a small capitalist sets up a new business, they put up their own capital. In other words, they take money savings, and use it not to buy things for their own consumption (revenue) but to buy means of production and labour-power (productive-capital) with the intention of turning this quantity of value into a greater quantity of value. In this sense, their actual investment of capital can be said to create new jobs, and in the process to create additional wealth.

Of course, they do not do it out of the goodness of their heart. Their capital expands, because the workers they employ produce surplus value, and it is only to obtain this surplus value that the capitalist advances their capital, not to provide employment or to increase wealth in general.

In fact, even as regards these small capitalists, its not necessarily their capital that is put up, and placed at risk, because even small businesses have to operate at a minimum level to be efficient (most of the “self-employed” are, in fact, really workers, who cannot find decent full-time employment, and operate at below these minimum levels, only because they exploit themselves more than would be the case for an ordinary worker), these small businesses require a sufficient amount of capital, which they obtain by borrowing. It is not their capital, in large part, that is advanced, but the social capital of millions of small savers, stored up in the banks, which the banks then advance in loans. The small capitalists advance their own capital, only to the extent that they hand over an equivalent amount of collateral, to the bank, in order to obtain the loan.

But, even this is not true for the big companies, and the executives. It was not Fred Goodwin's capital that was advanced to buy additional bank buildings, computer systems, or to employ additional bank workers at the Royal Bank of Scotland, for example! Nor indeed, in large part, was it the capital of the millions of individual shareholders, or the few very large shareholders, who bought shares in the bank over recent years.

The money that anyone buying existing shares in RBS, or any other publicly listed company, hands over, goes not to buying additional capital, but goes only into the pocket of the other individual, or individuals, who sell those shares to them. The vast majority of the capital actually invested in any company, to buy additional productive-capital, comes not from such sources, but comes from the accumulated profits of the company itself, and those profits are created by the workers in the company!

If we really wanted to know what was good for business, therefore, the people who really need to be consulted are not the handful of executives, lining their pockets, but the workers in those businesses, who produce the profits, which are in turn accumulated, so as to provide the additional capital, which then expands the business, and really employs more workers, and creates additional wealth.

After all, if we look at the behaviour of those executives over recent years, it could hardly be said to have been in the interests of actual businesses. If these executives were acting in the interests of businesses, they would have been using the profits that the workers in these business created, so as to expand the businesses, employ more workers, and create more wealth. But, that is not what they have been doing.

Instead, besides the blatant inflation of their own incomes, they have used those profits, to buy back company shares, so as to inflate the share price. Even companies with hundreds of billions of dollars of cash sitting on their balance sheet, have borrowed money, again so as to buy back shares, and inflate the share price. How can anyone claim that such behaviour, which does nothing to expand the actual business, to buy one extra factory, machine, or employ one additional worker is in the interests of business, or of the workers employed by those businesses?

The only people who benefit from such behaviour are those big money lenders, who own these bonds and shares, who fictitious value soars as a consequence, and their representatives, the Boards of Directors, and the executives appointed by them, not to look after the interests of the business, but to look after the interests of the money lenders.

That is an illusion that again has been created, that these Chief Executives and so on, are the representatives of business whereas they are actually only the representative of money lending capitalists. The actual representatives of the interests of productive-capital, are the day to day managers of production, the factory floor production manager, and all those other day to day managers who organise the forces of production, so as to maximise the production of surplus value. They are the “functioning capitalists” that Marx describes in Capital, who even during the 19th century had begun to take over the social function, and the role in production, that the private capitalist previously occupied.

But, again, the media will not seek their opinions either on what is good for business. In the post war period, the expansion of education, brought about exactly the situation that Marx described. Large numbers of educated workers, were enabled to take on this role of day to day managers, of being “functioning capitalists”. Indeed, as he forecast, so many were produced that the wages of these “functioning capitalists” fell, sometimes, even below the level of the wages of the workers whose labour they were organising.

The first union I belonged to, when working in private industry, was the Association of Scientific, Technical and Managerial Staffs (ASTMS). My Branch Secretary, was one of these functioning capitalists, a production manager, in one of the factories. He lived in a council house on the biggest council estate in North Staffordshire. He'd been politically educated by a prominent local CP'er, and in later life became a Labour Councillor on Stoke City Council. He was not the only manager, in the union branch who had links with the Communist Party.

ASTMS was always one of the most left-wing unions affiliated to the Labour Party, as was the other similar union organising such “functioning capitalists” (AUEW-TASS), led by long-time CP member Ken Gill.

Of course, however, left-wing these views, they remained locked within the realm of bourgeois social democratic ideology, because the social function of these day to day managers remained to maximise the production of surplus value.

So, again, its not surprising that the Tory media, when seeking the views of “business” do not look to the views of these actual representatives of the interests of productive-capital, but instead only present the money lenders, that leach off the surplus value pumped out of the workers by these “functioning capitalists”, as being the authentic voice of capital.

But, the reality is that there is a clear difference between the interests of money-lending capital, of the fictitious capital, represented by these executives, as opposed to the interests of productive-capital represented by the day to managers, the functioning capitalists, as Marx calls them. It is reflected in this material difference that the representatives of money-lending capital, seek on the one hand to maximise the amount of interest they can leach out of the surplus value, produced by productive-capital, and that then materially restricts the proportion of surplus value available for productive investment. But, the owners of fictitious capital, and their representatives, at other times, have an incentive in simply inflating the prices of the assets that comprise this fictitious capital, because on that basis they are able to obtain paper capital gains that give the illusion that their wealth has risen.

But, the means of blowing up such asset bubbles, is also to divert potential money-capital away from productive investment towards speculation in shares, property and bonds. That is one reason we have seen the blowing up of these bubbles, that periodically burst, in recent years, at the expense of an expansion of real productive potential. Those are the kinds of interest that these 100 represent, not the interests of business, and the expansion of actual productive capacity, but the interests of money lenders and usurers, of coupon clippers, who believe that they can simply create wealth for themselves, purely on the basis of an inflation of financial asset prices, without the need for real investment.

They are the kind of people Engels described in his Supplement to Volume III of Capital,

“But with this accumulation the number of rentiers, people who were fed up with the regular tension in business and therefore wanted merely to amuse themselves or to follow a mild pursuit as directors or governors of companies, also rose.”

These are the people that Marx had earlier described. Marx explains the point made earlier, that as the process of the “expropriation of the expropriators” unfolds, that is the big private capitalists who had previously expropriated the direct producers and smaller capitalists, themselves get expropriated by the new socialised capital in the shape of the joint stock company and workers co-operative. In the latter, the workers themselves appoint the “functioning capitalists”, the day to day managers, increasingly, as education is extended, from amongst their midst. But, in the former, the increasing number of “functioning capitalists” being drawn from the ranks of the workers, poses a problem for the money-capitalists.

“The capital, which in itself rests on a social mode of production and presupposes a social concentration of means of production and labour-power, is here directly endowed with the form of social capital (capital of directly associated individuals) as distinct from private capital, and its undertakings assume the form of social undertakings as distinct from private undertakings. It is the abolition of capital as private property within the framework of capitalist production itself.” (Capital III, Chapter 27)

It leads to,

“Transformation of the actually functioning capitalist into a mere manager, administrator of other people's capital, and of the owner of capital into a mere owner, a mere money-capitalist. Even if the dividends which they receive include the interest and the profit of enterprise, i.e., the total profit (for the salary of the manager is, or should be, simply the wage of a specific type of skilled labour, whose price is regulated in the labour-market like that of any other labour), this total profit is henceforth received only in the form of interest, i.e., as mere compensation for owning capital that now is entirely divorced from the function in the actual process of reproduction, just as this function in the person of the manager is divorced from ownership of capital.”

And Marx continues,

“This is the abolition of the capitalist mode of production within the capitalist mode of production itself, and hence a self-dissolving contradiction, which prima facie represents a mere phase of transition to a new form of production. It manifests itself as such a contradiction in its effects. It establishes a monopoly in certain spheres and thereby requires state interference. It reproduces a new financial aristocracy, a new variety of parasites in the shape of promoters, speculators and simply nominal directors; a whole system of swindling and cheating by means of corporation promotion, stock issuance, and stock speculation. It is private production without the control of private property.”

In order to control these “functioning capitalists” who are now no more than skilled workers, money-capital establishes new tiers of management above them, whose role is not to represent the interest of the business, but merely the interests of the financiers.

“On the basis of capitalist production a new swindle develops in stock enterprises with respect to wages of management, in that boards of numerous managers or directors are placed above the actual director, for whom supervision and management serve only as a pretext to plunder the stockholders and amass wealth. Very curious details concerning this are to be found in The City or the Physiology of London Business; with Sketches on Change, and the Coffee Houses, London, 1845. 

'What bankers and merchants gain by the direction of eight or nine different companies, may be seen from the following illustration: The private balance sheet of Mr. Timothy Abraham Curtis, presented to the Court of Bankruptcy when that gentleman failed, exhibited a sample of the income netted from directorship ... between £800 and £900 a year. Mr. Curtis having been associated with the Courts of the Bank of England, and the East India House, it was considered quite a plum for a public company to acquire his services in the boardroom' (pp. 81, 82). 

The remuneration of the directors of such companies for each weekly meeting is at least one guinea. The proceedings of the Court of Bankruptcy show that these wages of supervision were, as a rule, inversely proportional to the actual supervision performed by these nominal directors.” (Capital III, Chapter 23)

We see exactly the same thing today, as these gadflies of money-capital flit from one lucrative stipend to another. It is those interests that the Tories also represent, along with the interests of the most backward sections of private capital. It is those interests that the 100 were representing not even the interests of business.