Monday, 30 November 2015

Terrorism and Democracy

Over the last few days there has been a lot of discussion about terrorism and democracy from a number of angles.

First of all there is the discussion about whether the terrorist attacks by ISIS and other jihadists in Paris and elsewhere, is just about the fact that they see people in western Europe as infidels, decadent and so open to attack whether or not they have given an excuse for those attacks, by first launching strikes or invading Muslim countries.  So, I thought I would do a simple piece of research, based on an impression I have had for some time, which is that one European country, that is noted if anything more for its democracy, and western values than any other, Switzerland, seems to have suffered very little over the years from terrorist attacks.  I was surprised by the findings.

This information from the Swiss Federal Intelligence Service indicates not only no activity by jihadists in attacking Switzerland, but even very little activity of people travelling from Switzerland to Syria to take part in terrorist activities.  Indeed, the main concern of the Swiss Intelligence Agencies seems to have been in relation to surveillance activities by foreign governments, whilst home grown terrorist activities by left and right-wing extremists was considered almost as much a threat as that by jihadists.

I tried to find details of actual terrorist attacks in Switzerland, from Wiki, and again found a dearth of evidence of such attacks.  Only three were listed, and none were actually to do with jihadists.  An internet video by some ISIS supporters has been released, which speaks of further attacks across European countries, including Switzerland, however.

So, although its clear that ISIS, ideologically hate modernism, and the principles of democracy, culture, equality and so on, which underlie civilisation, and so might attack people in European countries on that basis, whether or not they come from a country that has carried out attacks in Syria, Libya or elsewhere, the fact is that currently, Switzerland has not faced those attacks in the way that the UK, France and other countries have done, who have been actively involved in such intervention.

There is, of course, another reason why Switzerland has faced no such attacks, and less in the way of terrorism in general, and that is that Switzerland has a form of direct democracy, and also its own defence is organised more via the existence of its Citizen's Militia than a standing army.  Consequently, a more or less permanently armed citizenry, via that militia, is focussed upon national defence rather than external aggression against other countries, and so can be more actively involved on a daily basis in ensuring that defence, in a way that a permanent, small standing army, whose resources are concentrated on very expensive large-scale, equipment, that is only justifiable on the basis of fighting large scale wars across the globe, can never be.

A Citizen's Militia, can be provided with lots of equipment, can have its activities financed to cover permission from employers to train and so on, just for the equivalent of a single Cruise Missile, let alone an aircraft carrier, or a Trident submarine!

The other advantage of such a Citizen's Militia, is again this aspect of democracy, because the Citizen's Militia, is directly a democratic institution, under the control of the citizens themselves, whereas a small professional army, is under the control of an even smaller elite of unelected generals, often tied to a small elite of arms companies, and financiers.

The other aspect of democracy that has been discussed has been in relation to the decision of the PLP, and Shadow Cabinet, in relation to whether to bomb Syria.  The position of the Labour Party itself is quite clear.  It is to oppose such bombing, and understandably so on the basis of the disaster that resulted in Iraq, and Libya, and the failure of such policies in Afghanistan and elsewhere, not to mention the failure of bombing over the last year or so by the US and others in Iraq and Syria, against ISIS.

What is odd is the interpretation of democracy that some in the PLP have.  On the one hand, some of them think that it is perfectly democratic for some of them, in cahoots with sections of the Tory media, to ignore the wishes of 60% of the Labour Party, in supporting Jeremy Corbyn, as leader, and to try to organise a coup against him!  They think that it is fine for them to ignore the wishes of 70% of the Labour Party, according to recent polls, in opposing the bombing of Syria, and to go ahead with it anyway.

Yet, when Labour Party members who constitute that majority, quite reasonably suggest that they might like those MP's to discuss with them such decisions, those MP's describe this as undemocratic bullying.  Some of them, and their supporters in the Tory media appear on TV, and claim that these MP's, cannot be expected to vote in accordance with the Labour Party policies, on which they were elected, or which the members of the Labour Party, who got them elected, in the first place, decide, because they should represent the whole electorate.

Who says that is what they should do?  That idea fits conveniently with the Tories and other defenders of the status quo, but there is no reason why socialists should accept that restriction.  The workers, in creating their own party, decide for themselves what the rules should be, and how its representatives should act, precisely because we want to change the general rules of politics in which all decisions are made, against an environment where self-selecting elites retain the right to do whatever they choose.  No one would suggest that a shop steward elected by union members, should represent the views and interests of non-union members, for example, let alone the views of employers.  No one would expect, the Chairman of the FA to promote the virtues of rugby!

The idea put forward by these apologists that it is somehow undemocratic for Labour Party members to deselect MP's who repeatedly fail to reflect the views of the Labour Party members who selected them, and who have the job of knocking on doors and getting them elected, is not not just elitist, but it is not even consistent with the arguments put forward in its defence.  Who, for example, would suggest that voters who were unhappy with a Tory government, should not vote it out, or deselect it, and instead select a Labour government, that they were happy with?  Would electors be accused of "bullying" the government by making clear that its days were numbered?

In the same way, if Labour Party members feel that the MP, does not represent their views, they have a perfect right to select a new candidate who does.  The old MP, is perfectly free to stand under their own banner, and see how much of their success is down to them, and how much is down to the party that selected them!  The history on that is devastatingly clear, which is why so few MP's wish to try their luck on their own.

Its time for decisive leadership, and in line with those principles of democracy, Corbyn, in line with party policy, and the views of the overwhelming majority of party members should impose a three line whip against cameron's warmongering policies.  War is the continuation of politics by other means, and so a political party that cannot take a clear political stance on questions of war cannot be expected to take a decisive and principled stand on anything else.  War is not a moral, but a deeply political issue, and should be treated as such.  If Labour Shadow Ministers are not able to support party policy they should go and make way for others who will.  Labour MP's will have the same right to defy the party whip as were Corbyn and others in the past, and will then have to justify their actions to their party members in the same way that Corbyn and others have had to do for the last 30 years, without the kind of hullaballoo over "bullying" that the Tory media have only just discovered.

Capital III, Chapter 19 - Part 2

As Marx pointed out in Capital II, the circuit of productive capital is P...P, or C' – C'. It starts not with the advance of money-capital, but with the productive process and the creation of commodities that already represent expanded value -  capital. The purpose of its circuit is to return to this same position, to reproduce the elements of productive capital consumed in that process, so as to continue on at least the same scale. In this circuit, P. . . C' – M'. M – C … P, money-capital only represents a mere transitional phase, not a start and end point.

“It is only when, and in so far as, capital is newly invested — which also applies to accumulation — that capital in money-form appears as the starting-point and the end result of the movement. But for all capitals already engaged in the process, these first and last points appear merely as points of transit.” (p 315)

This is why Marx insists that the value of the productive-capital advanced to production must be based on its current reproduction cost, rather than its historic price, because its only on the former basis that the circuit is logically consistent. Its only on the basis of the current values, of the consumed productive-capital, that their use-value can be logically reproduced, and as Marx points out, it is this use value that must be reproduced, on a like for like basis, that must be effected for social reproduction to continue, on at least the same scale.

“This entire portion of constant capital consumed in production must be replaced in kind. Assuming all other circumstances, particularly the productive power of labour, to remain unchanged, this portion requires the same amount of labour for its replacement as before, i.e., it must be replaced by an equivalent value. If not, then reproduction itself cannot take place on the former scale.” (Chapter 49)

Marx also clarifies elsewhere that this “like for like” replacement of the physical use values is only “in terms of effectiveness”. That is a machine may be replaced by an equivalent machine, or better machine; a material may be replaced by some other material that is at least as good, and so on. This has the same effect, as if the labour-time required for production of these use values falls. In other words, if the labour-time required for the production of the use values that comprise the consumed constant capital falls, the value of the constant capital falls – the amount of social labour-time required for its reproduction is less, leaving a greater proportion of social labour-time available for other purposes.   The rate of profit - the relation between the social surplus product, and the portion of the social product that must be devoted to this like for like replacement of the use values that comprise the constant and variable-capital - thereby rises.  The opposite is true if the labour-time required for this like for like replacement increases.

The money received for the commodities that comprised the commodity-capital, is not an end point, but only the end of one stage of the metamorphosis of the productive-capital, but it is simultaneously the starting point of the second stage, of that metamorphosis, as the money-capital is transformed again into productive-capital, that physically reproduces that previously consumed. This applies equally to the merchant capital, when it assumes the function of converting the commodity-capital into money-capital.

“And although the C — M of industrial capital is always M — C — M for merchant's capital, the actual process for the latter is continually also C — M — C once it has begun to function.” (p 316)

But, as was analysed in Capital II, in relation to productive-capital, in order for production to be continuous, the same capital must be simultaneously in all its forms. Outputs are simultaneously inputs, whether for the same individual capital, as part of its labour process, or for the total social capital, as part of the process of social reproduction.

The conveyor belt was the classic manifestation of that as, along its length, its continuous movement meant that the output of one worker was simultaneously the input of the next, so that the first worker on the line was inextricably linked to the last.

The same applies to the merchant. They are not, in fact, buying in order to sell, other than when they advance their initial capital. Just like the productive capital, once it has started to function, the requirement of continuous movement means both occur simultaneously.

“But it performs the acts C — M and M — C simultaneously. This is to say that there is not just one capital in the stage C — M while another is in the stage M — C, but that the same capital buys continually and sells continually at one and the same time because of the continuity of the production process. It is to be found always in both stages at one and the same time. While one of its parts turns into money, later to be reconverted into commodities, another turns simultaneously into commodities, to be reconverted into money.” (p 316)

Incidentally, this simultaneity, which is fundamental to Marx's materialist and dialectical analysis, is rejected by the TSSI, which operates on the basis of syllogistic logic, and so denies the possibility of the contradiction implied by such simultaneity, but which is central to understanding any kind of movement and, therefore, process.

Sunday, 29 November 2015

The Blair-right Dead End

This weekend, and over the last few days, the Tory media have stepped up their attacks on Jeremy Corbyn and the Labour Party he leads. In part, it is because of a desire immediately to get support for Cameron's warmongering plans for bombing Syria. After all, nothing sells newspapers, or fills the ratings of vacuous 24 hours News Channels, better than a good old war, is there? In part, though, it also the other way round. The issue of Syria and the bombing thereof, also presnts the Tory media with an opportunity to play up the divisions between Corbyn's, Labour Party, which voted decisively and clearly just a couple of months ago against bombing, and the remnants of the Blair-right Parliamentary Labour Party, which still has not accepted that it has been consigned to the dustbin of history.

The issue of Syria is actually a good proxy for the problem that faces the Blair-rights, and others who for the last 30 years have occupied the same political centre ground. In both cases, it revolves around the same attempt to see the potential for any political regime to exist separate from the reality of the underlying social forces, and social relations in society.

There is a simple reason that the repeated attempts at liberal intervention in Afghanistan, Iraq, Libya and Syria have failed. It is the same reason that these societies had the political regimes they already had, usually of some form of Bonapartism. It is that in these societies industrial capitalism had not developed to such a stage, whereby the economy could sustain a modern bourgeois social democracy, and in the modern world bourgeois democracy can only take a stable form as a social democracy, in which a large working-class is incorporated, via a universal franchise, in which a large middle class, and bureaucracy based upon socialised capital, acts as a mediating force, and where developed means of production based upon that socialised capital, is sufficiently productive to ensure a minimum standard of living for the working-class, along with generally rising standards of living, and social protection.

When those things are absent, as they were in Britain and other parts of Europe until the latter half of the 19th century, bourgeois social democracy is not possible, and so the capitalist polity, the political regime, takes the form of Bonapartism, and within that category, we could also include the type of bourgeois liberal democracy that existed in those societies prior to that period, when the workers were denied the vote, and where the bourgeoisie, along with the landed class, exercised their rule, on the basis of repeated use of violence by its state, to suppress the workers, who had no other form of political response other than violent opposition.

That Bonapartism is, in fact, the means by which the means of production are developed to such an extent that social democracy becomes possible, which is why, however repulsive some of these regimes might be – and the political regime in Britain, where laws existed that allowed the unemployed to be branded, and taken as slaves existed up until the latter part of the 19th century, was itself pretty repulsive – considered from the Marxist perspective of what is objectively, historically progressive, they meet that criteria. Trying to impose bourgeois social democracies upon such societies when these material conditions do not exist, is not just utopian, and subjectivist moralism, but it is dangerous folly, because the inevitable consequence must be that the political regime collapses for lack of the necessary social underpinning, and leads to chaos and reaction within the society itself.

That is what has happened in Afghanistan, Iraq, Libya, and Syria. Cameron is ludicrously suggesting that he has a plan for Syria, based upon the idea that ISIS can be bombed out of existence, and that a moderate, non-sectarian government can then be installed, so that everything will be sweetness and light. But, of course, not only has recent history shown that bombing alone will not destroy ISIS, but his idea that this moderate government is somehow going to be magicked out of thin air, is not even believed by many of his own MP's, and still less by any serious analyst that has looked at the country. The only people who purvey that nonsense, as was the case with politicians like Chalabi in Iraq, or the the Libyan National Council in Libya, are the handful of professional bourgeois politicians in those countries, who actually lack any meaningful social support, and who need western intervention to replace that support, and put them in office by military power. In other words, it is just a different Bonapartist regime, disguised as liberal democracy. As soon as that external military support disappears, the reality imposes itself, and those regimes collapse.

But, in fact, a similar process has happened across the existing bourgeois social democracies too. Greece is a perfect example. For the last 30 years, the locus of the political centre has shifted to the right. That itself was a function of changed economic and social relations during that period. In the mid 1970's, the long wave boom that had run since around 1949, came to an end. That boom had been the basis of a rapid accumulation of socialised capital, upon which was based a strengthening of social democracy.

When that boom came to an end, there was a choice. Either the representatives of that socialised capital, would assert its primacy, and take measures to deal with the need to restructure, and renovate the productive relations, which would have required further inroads into the power and influence of the owners of fictitious capital, or else the latter would assert their interests, at the expense of a growth of real capital.

In the end, the latter won, and the representatives of socialised capital, and social democracy were thrown backwards. The interests of the owners of fictitious capital were furthered by money printing, and lax credit regulations, to cause bubbles in the prices of shares, bonds and property. The political representatives of that fictitious capital, were thereby strengthened, and so conservative regimes were established across Europe and North America, and along with it the professional politicians in the existing social democratic parties themselves adopted more conservative ideas.

It is that consensus between these professional politicians of all main parties, and the social milieu of journalists, and so on around them, which has defined the political centre during that period. But, that political centre existed on the basis of very definite economic and social conditions that arose during that time. Those conditions were themselves necessarily time limited. It is only possible to keep inflating asset prices bubbles for so long, before they burst, and those that exist are bigger than ever and more likely to burst than ever. And the other side of those asset prices is massive amounts of debt.

When the state attempts to pay off its own debts, as in Greece, and elsewhere by austerity, then it also reaches a point where that is no longer viable. Not only does the economy shrink, and become less productive, thereby undermining the potential to pay off the debt, but there is a limit to how much can be screwed out of workers to cover those debts too. Trying to overcome this by the old methods, of yet more debt, of “extend and pretend”, only exacerbates the problem, as Greece demonstrated, and which is why Varoufakis and Syriza were correct to have initially rejected that non-solution, of simply covering the existing debts, by further loans from the EU and ECB etc.

The only solution for Greece, as elsewhere, was to write off the debt, which means when applied generally a massive fall in stock, bond and property markets, destroying the fictitious paper wealth of all of the bond, share and property owners, in order to promote the real wealth creating power of society. But, of course, the current political centre could not promote such a policy, because it is precisely on the ground of inflating the prices of fictitious capital that it has rested and grown for the last thirty years, and it is to the social forces that depend on that, on which its own political fortunes depends.

The political centre wants to continue in the old way, but the economic and social reality makes it impossible, as Greece, and elsewhere has shown, and the more the parties of that political centre attempt to continue in the old way, the more they ensure its collapse. That is why, in Greece, that political centre collapsed, PASOK was destroyed and the same was true of the centre-right. It is what led to the creation of Syriza, not really as the kind of far-left, or revolutionary party it has been described as, but only really as the kind of social-democratic party that Labour, or the German SPD represented in the 1960's, and 70's. Syriza, Podemos, and Corbyn's Labour Party do not represent some kind of new radical left formation, but only demonstrate the extent to which traditional social democracy had been undermined, and shifted to the right over the last 30 years.

Syriza, Corbyn, Podemos and other formations across Europe, as well as Sanders in the US only indicate the nature to which the underlying social relations has caused a shift of where the political centre now needs to be. The destruction of those parties of the political centre across Europe, also symbolised by the Liberals in the UK, which are a physical manifestation of that political centre, is the necessary consequence.

And that is why the hope of the Blair-rights, and of the Tory media that those elements in the PLP can simply ignore the social reality and organise a coup against Corbyn and the Labour Party is simply wishful thinking. They first hoped that after Corbyn's election as Leader, that a large number of Blair-rights would leave as the SDP did in 1981. They did not leave, because they knew it would be political suicide. It would be to follow the Liberals into oblivion. Nor can they anymore leave today than two months ago, for the same reason.

Odious eulogists for Blair, such as John McTiernan continue to hope that some sort of coup will be organised, but that is just as unlikely. Those Blair-right MP's, who are seeking to override the democratic decisions of the Labour Party by seeking to organise a coup against Corbyn, and seek legal support to prevent him standing in any subsequent election, are already guilty of bringing the Party into disrepute. By plotting such a coup, they are acting as a party within a party, and such be expelled from the Party forthwith, by the NEC. It is also up to the party members to bring to heel any MP's who give succour to such thoughts.

But, let us assume that a handful of MP's launched such a coup against Corbyn, an that the bosses' courts backed them up in preventing Corbyn from taking part in such an election. What would be the consequence? Firstly, it means that Corbyn and his supporters, as I suggested some time ago, should organise an Emergency Rules Conference to ensure that the Party's rules are changed for election of the Leader, to prevent such a challenge. The PLP should have no more greater right in nominating candidates then any other party member. That is what One Member One Vote should really mean.

Secondly, it would mean that CLP's would be infuriated that MP's should take such a callous, undemocratic attitude towards their own party members, so that those MP's would be told to nominate Corbyn, or be threatened with their own deselection. Thirdly, Corbyn, and his supporters would use the party machinery to themselves challenge any such ruling in the courts, delaying any such election for months, during which time there would be civil war inside the party, with large numbers of MP's being put under daily pressure and facing deselection, which currently they do not.

Thirdly, even if all that failed to stop Corbyn retaining his position, the Blair-rights would have won nothing. The Party would not split as much see the Blair-rights within the PLP, fly off as a spark that would burn brightly for a fraction of a second, before dying out. As against the real Labour Party, of half a million members, with all of the trades union movement standing behind it, the Blir-rights would have a party comprising just a couple of hundred members who temporarily were MP's, and a small portion of party members who might follow them into oblivion.

The vast majority of members who already support Corbyn would be joined by others, who would be disgusted at the extent to which a handful of MP's put themselves above the party, and undermined its opposition to the Tories at a vital moment. The party has already seen the return of trades unions that left because of the dominance of the Blair-rights. The reality would be that the Blair-right MP's would be rather like the Tory MP Mark Reckless, who held his seat as a UKIPPER only for a few months until the election brought appearance into alignment with reality. They would have given their political careers a definite and short duration by their actions, as the real Labour Party, whatever name legalities might cause it to have to assume, would simply eclipse them, at every subsequent election.

That is why they have not split before now, it is why they are unlikely to split in future, and why any attempt at a coup against Corbyn would be a disaster for them, and so why they are unlikely to attempt it.

But, for that very reason, Corbyn and the party should not cause confusion over Syria, by giving these Balir-right wreckers, and their party within a party the opportunity to defy party policy with a free vote. Unlike Trident, the party's policy over Syria is clear, and past experience dictates why Labour should not support an attack on Syria. There should be a whipped vote, imposed by Corbyn in line with party policy, and if that means some Labour Shadow Cabinet Ministers decide to walk, so be it. We could probably do with a smaller, more select and cohesive Shadow Cabinet anyway, alongside a much greater role for the party itself in providing policy support for the Leader.

We have to end the undemocratic, and elitist privileging of MP's over other party members, and now is the opportune time to do it.

Capital III, Chapter 19 - Part 1

Money-Dealing Capital

Money-dealing capital, dealt with in this chapter, has to be distinguished from interest-bearing capital, dealt with later. Money-dealing capital here is a form of merchant capital. Merchant capital obtains its share of the total surplus value, because of the function it performs in selling commodities on behalf of productive-capital. It is the commodity-capital of industrial capital that has separated off into its own independent existence. But, similarly, industrial capital must always hold a certain quantity of money-capital. It requires money for circulation, and for payments; it must hold money hoards, which are the money equivalent of the value of wear and tear of fixed capital, waiting to be reproduced; it must hold money hoards which are the equivalent of realised surplus value that is not yet sufficient to be reinvested; it must hold money reserves to cover payment of wages during the turnover period and so on.

As well as the requirement to hold this money-capital, it must employ bookkeepers, cashiers, and so on to keep track of the various payments and receipts, as well as to actually make the payments and take the receipts. All of these activities are necessary functions, are costs, which, like the selling of commodities, add no new value, but which are required for the value of commodities to be realised. As with the selling of commodities, the more capital can reduce these costs, therefore, the greater the proportion of the produced surplus value that can be realised as profit.

Money-dealing capital is then the equivalent, at the level of the social capital, of the role of the bookkeeper or cashier within the firm. Its profit derives not from the lending of money, but from the provision of these services. An example, would be something like Paypal, which makes its profits solely on the basis of providing a money transmission service, or various Bureaux de Changes, or FOREX companies who make their profits from charges levied for changing money from one currency to another.

As Marx puts it,

“A portion of industrial capital, and, more precisely, also of commercial capital, not only obtains all the time in the form of money, as money-capital in general, but as money-capital engaged precisely in these technical functions. A definite part of the total capital dissociates itself from the rest and stands apart in the form of money-capital, whose capitalist function consists exclusively in performing these operations for the entire class of industrial and commercial capitalists. As in the case of commercial capital, a portion of industrial capital engaged in the circulation process in the form of money-capital separates from the rest and performs these operations of the reproduction process for all the other capital. The movements of this money-capital are, therefore, once more merely movements of an individualised part of industrial capital engaged in the reproduction process.” (p 315)

Saturday, 28 November 2015

Capital III, Chapter 18 - Part 12

The difference between the role of turnover of capital on values for industrial capital and on selling prices for merchant capital, acts to obscure the real relations. Taken solely on its own, and from the perspective of the total social capital, the value of commodities can be seen to be determined by the labour-time required for their production. But, when it comes to selling prices of commodities sold by merchants, these seem arbitrary, the price being a function of the profit margin charged by the merchant, which in turn seems an arbitrary figure, chosen by the merchant, dependent on whether they want to maximise their profits by selling a lot on a low margin, or a little on a high margin.

Because commerce preceded capitalist production, and because a great deal of economic analysis is concerned with trade, with buying and selling, rather than with production, and the creation of value, it is no wonder that these deceptive appearances, in the realm of circulation, result in faulty conceptions. Even for the industrial capitalist, they must be also concerned with buying commodities – means of production and labour-power – as well as selling them in the shape of the end product. So, it is no wonder that even they can be taken in by these faulty theories and misconceptions.

“All superficial and false conceptions of the process of reproduction as a whole are derived from examinations of merchant's capital and from the conceptions which its peculiar movements call forth in the minds of circulation agents...

The conceptions of the merchant, stockbroker, and banker, are necessarily quite distorted. Those of the manufacturers are vitiated by the acts of circulation to which their capital is subject, and by the levelling of the general rate of profit.” (p 312-3)

So, the connection between the average rate of profit, determined in production, becomes completely separated from the commercial profit, at the superficial level of competition, even though, in reality, the latter is determined by the former. For the industrial capitalist, a high level of productivity that facilitates a more rapid turnover of capital results in a greater quantity of surplus value and profit produced, for any quantity of capital advanced, and consequently, a higher rate of profit. Yet, for the merchant capitalist, a higher rate of turnover appears as the concomitant of a lower profit margin.

“Small profits and quick returns appear to the shopkeeper to be the principle which he follows out of sheer principle.” (p 314)

As described earlier, in any branch of commerce, what is described above refers to the average rate of turnover, for that branch, but, the bigger, more efficient merchants, like their industrial counterparts will be able to turn over their capital faster and, thereby make a higher than average profit.

“If competition compels him, he can sell cheaper than his competitors without lowering his profit below the average. If the conditions which would enable him to turn over his capital more rapidly, are themselves for sale, such as a favourable shop location, he can pay extra rent for it, i.e., convert a portion of his surplus-profit into ground-rent.” (p 314)

Northern Soul Classics - You Better Keep Her - Marvin Holmes & Justice

Friday, 27 November 2015

Friday Night Disco - Flying High - The Blackbyrds

Cameron's Dodgy Dossier

Yesterday, David Cameron gave one of the lamest arguments for taking the country to war there has probably been seen in Parliament. This is the man who only two years ago wanted to bomb Assad, which would have resulted in ISIS now being in charge in Damascus, and who now wants to bomb ISIS instead. Even more ridiculously, he believes that there is no reason for the UK or the US to put boots on the ground, in Syria, because those boots will miraculously appear from somewhere else. He wants us to believe that there are 70,000 “moderate” rebels, ready and able to fulfil that function. No serious analyst, in fact, no one with a brain can, or does, believe this rubbish. It is Cameron's equivalent of Blair's “dodgy dossier”.

Not even many backbench Tories believe any of this boloney, including the Tory Chair of the defence Select Committee, Julian Lewis. Many of the Tories who opposed the bombing of Syria two years ago, if truth be told, are only backing Cameron now, because they don't want him to lose a second vote on the issue, and are more concerned to drive to maximise divisions in the Labour Party, and to embarrass Corbyn, than they are about the lives of the soldiers and airmen that will be lost, as a result of their decisions.

The idea that there are 70,000 “moderate” forces in Syria waiting to provide the basis not just for defeating ISIS, but of providing the basis for a stable democratic government in Syria, is just more of the same chaff that has been thrown out in the past, in such situations. For example, we were told prior to the invasion of Afghanistan that such forces would be able to establish a stable democracy, if given the necessary backing. Even, when billions of dollars of military backing for the government in Afghanistan was provided, it did not result in a stable democratic government, but only in an unstable government, that even the US admitted was thoroughly corrupt, and which as we speak is being gradually undermined and replaced, as the Taliban prepare to take over once more.

The same thing was said in Iraq, where we were told that moderate bourgeois politicians like Chalabi, were ready to establish a stable democratic government. In fact, he was a non-starter, as were all the others put up as alternatives, because they actually lacked any real social support within the country. So, we have again a corrupt, sectarian Shia government in Baghdad, which in part has provided the basis for the growth of ISIS amongst disenfranchised and oppressed Sunnis, in the country.

Then we were told that such forces were there in Libya to do the same job. That never even got started, because it was obvious once more that democracy requires more than just holding elections. The so called Libyan National Council was a mirage, that had no real existence outside the imagination of the liberal interventionists. Having removed the only sort of secular, sort of modernising power in society, that of Gaddafi's regime, the door was thrown wide open to all sorts of reactionary forces to be unleashed, which as could have been, and indeed I did predict, at the time, would lead to a descent into chaos.

Einstein said that the definition of madness was doing the same thing over and over again, and each time expecting a different result. That sums up the madness of the position of the liberal interventionists, and of Cameron in once again proposing such an intervention in Syria. The Blair-rights, who seem incapable of having any independent thought processes whatsoever, appear set to make the same mistakes they made in Serbia, in Afghanistan, in Iraq, and in Libya. Corbyn, and the rest of the Labour Party must make it absolutely clear that we have nothing to do with their decisions, which are clearly against the Labour Party conference decision of just a couple of months ago, and against the views of more than 60% of party members, according to recent polls.

If those Blair-right MP's, see the party, and the party members in their constituencies, who are the reason they are in parliament in the first place, as irrelevant to their decisions, if they think they have an obligation to all the voters in their constituency, be they Tories, Liberals, or whatever, rather than to the party and its members, then they should do the decent thing and go. They should leave the Labour Party and stand as independents able to act freely as merely mouthpieces of the electorate. Then they would see how little their position is down to them, and how much is down to all those party members they currently seek to ignore! They should remember how all those who went before them in that venture fared.

Capital III, Chapter 18 - Part 11

Illustrating the point made earlier, about Marx using the terms general rate of profit and annual rate of profit interchangeably, even though he has previously shown the considerable difference between the two, he uses the term “general annual rate of profit” here, which although he has sometimes used previously, he has not specifically defined, but is clearly to be understood as the general rate of profit described in Chapter 9, and modified in Chapter 17, to take account of merchant capital, but now specifically defining it to take account of the effect of the rate of turnover of capital, to establish the annual rate of profit.

“The same mass of profits, determined for any given magnitude of merchant's capital by the general annual rate of profit, hence determined independently of the specific character of the commercial operations of this capital, is differently distributed — proportionately to the rate of turnover — over masses of commodities of equal value, so that, for instance, if a merchant's capital is turned over five times a year, 15/5 = 3% if once a year, 15%, is added to the price of the commodities.” (p 312)

This differs from the situation in respect of industrial capital. Whereas the rate of turnover of commercial capital affects the selling prices of commodities, as outlined, the rate of turnover of productive-capital has no effect on the value of produced commodities.

The value of a commodity is determined by the labour-time required for its production. Whether the capital which purchases that labour-time - dead labour, in the case of constant capital, and living labour in the case of variable capital - turns over one or a hundred times, does not change that quantity of labour-time. But, what the rate of turnover does determine is how much capital is required, in any given period of time, to mobilise that labour-time, and thereby create that value. Consequently,

“... it does affect the mass of values and surplus-values produced in a given time by a given capital, because it affects the mass of exploited labour.” (p 312)

This Marx says, is hidden, because of the fact that prices of production differ from exchange values. If the total capital is considered so that the value of the totality of commodities is equal to the labour-time required for their production, and the capital required for their production is then the capital advanced for that production and not the capital laid out for that production, then this becomes clear.

“If we look upon the process of production as a whole, and upon the mass of commodities produced by the total industrial capital, we shall at once find the general law vindicated.” (p 312)

This, in fact, is the resolution of the discrepancy between Marx's use of the term general rate of profit (or average rate of profit) and his use of the term annual rate of profit, which he then merged into general annual rate of profit.

The actual position is this. In order to understand the potential for crises, the role of profit margin is important, because the smaller the profit margin on each commodity unit, the smaller the drop in market prices need be to wipe it out. A change in consumer sentiment, a sharp rise in input prices, that cannot be passed on, in the end product price, can be enough to wipe out the profit margin on each commodity unit, so that without reducing supply, the capital consumed in those commodities cannot be reproduced.

Marx and Engels describe this in Chapter 13, discussing the Law of The Tendency For The Rate of Profit To Fall. Having set out the calculation of this general rate of profit, as the profit margin, i.e. cost-price plus profit, Marx comments,

“However, the rate of profit, if calculated merely on the elements of the price of an individual commodity, would be different from what it actually is. And for the following reason:” (p 227)

and Engels continues to explain that this rate of profit, based on the laid out capital, and the annual rate of profit could only be the same if the laid-out capital and the advanced capital were the same. In other words if the capital turned over just once during the year.

But, having pointed that out, the rest of the chapter continues to explain the tendency for the rate of profit to fall without reference to the annual rate of profit, i.e. without reference to the fact that the same process which causes a rise in the organic composition of capital, also leads to a rise in the rate of turnover, and, therefore, in the annual rate of profit.

In Chapter 9, in setting out the basis of the formation of the average rate of profit, Marx makes clear that the rate of profit must be calculated on the value of the total productive-capital advanced, i.e. including the total value of the fixed capital, not just the portion transferred as wear and tear. But, in all the examples given, its taken that the advanced capital turns over just once. This, in effect, gives us yet another average rate of profit, which is based on the laid-out circulating capital plus the value of fixed capital, for one turnover period.

Yet, as Marx now describes in Chapter 18, to properly determine prices of production, what is required is a “general annual rate of profit”, and that can only be one based on the capital advanced for one turnover period, but the surplus value produced in a year.  If this is done, then most of the argument surrounding the Tendency For The Rate of Profit To Fall disappears, unless it is considered solely on the basis of it being just a law of the tendency for profit margins to fall.  That is because, as productivity rises, causing the organic composition of capital to rise, and profit margins to fall, the rate of turnover of capital also rises, so that a given amount of advanced capital, produces a greater mass of surplus value, and a higher general annual rate of profit.

Thursday, 26 November 2015

Two Quick Wins For Corbyn's Labour Party

Yesterday's Autumn Statement showed two quick wins for Jeremy Corbyn's new leadership of the Labour Party.  Other candidates for the Labour Leadership had already undermined their position, by being tainted with the austerity-lite policies of the last Labour Government, and by their refusal to give a clear lead, either in opposing the Tories current austerity policies, or their attacks on welfare.  The Tories complete collapse over their Tax Credit proposals, and over police funding, are a direct result of the clear anti-austerity policies put forward by Corbyn, and the hundreds of thousands of Labour Party members who stand behind him in the country, along with millions of trades unionists.

In both cases, however, Tax Credits and police funding, there are other similarities and issues related to them.  Marxists are not in favour of Tax Credits, which act to subsidise low-paying, inefficient, usually small capitalists.  However, as set out recently, our response to that, as in all things, is not to first demand that something be scrapped, before we have established a more progressive alternative. Marxists are in favour of workers being employed in jobs that pay them wages that enable the reproduction of their labour-power.  Under capitalism, that cannot at all be guaranteed, as all of the zero hours and casual jobs attest.  Rather than Tax Credits that subsidise low paying capitalists, therefore, Marxists prefer the establishment of a Minimum Wage that is sufficient to ensure the reproduction of labour-power.

Capital then has to become more efficient, and raise productivity so as to be able to pay those higher wages to workers.  And Marx demonstrated that that is what it did in the 19th century, when the capitalist state enforced a level playing field, via the introduction of the Factory Acts, the Ten Hour Day, and so on.  But, where no such conditions exist, Marxists clearly will not argue for a removal of those elements of workers income, such as Tax Credits, on which they currently rely.  In other words, a high level of Minimum Wage first, and only then a removal of Tax Credits, Housing Benefit and so on.  And, of course, that requires a higher level of Unemployment and Sickness Benefit too.

The same thing applies with police funding.  Marxists are not in favour of strengthening the capitalist state, or expanding its remit.  It is the concentrated power of the capitalists, and so our main enemy.  Rather we are in favour of workers self government.  Not only does that mean workers extending the democracy that flows naturally from the creation of worker owned and controlled co-operatives, into such workers' democracy in their communities, and across those communities, it means creating all of the elements of the kind of semi-state, required to support that workers' democracy.

It means that just as workers, as citizens, have a duty already to take part in Jury Service, or to fight in the armed forces, so that has to be a permanent rather than occasional duty.  There is a need for communities to be able to police themselves, and there is a requirement, for the establishment of a Citizen's Militia, as described in the US Constitution, and as exists in Switzerland, rather than that the capitalist state should have a monopoly of violence, which can be used to defend the interests of the capitalist minority against the majority of citizens.

But, we do not have any current measure of workers self-government, or organs of workers democracy arising from it.  We do not have, other than sporadically, as in 2011, the self policing of workers' communities, by those workers' communities themselves.  Nor do we have a Citizens' Militia, as in Switzerland, or even as exists, in the form of the National Guard, in the US.  The only time we had something like that, was during World War II, in the shape of the Home Guard, which was established by a Marxist, Tom Wintringham, on the basis of his experience fighting in the Spanish Civil War.

So, although we would not start from here, as the saying goes, and would not advocate the establishment of a capitalist police force, or standing army, the focus of our attention is on advocating the progressive alternative to those things, rather than advocating a demolition of what does exist, prior to it.  I may think, that the fire brigade should have efficient fire engines, access to fire hydrants and so on, rather than be limited to a horse drawn cart, and buckets of water, but until the former is a reality, I'm not going to turn away the latter, if my house is on fire!

And that is a lesson, in general, that is important, but which seems to have been forgotten.  Our focus is on advocating and building our progressive alternative to capitalism, to be pro-socialist, not simply "anti-capitalist", because as Marx and Engels described, in the Communist Manifesto and after, there are numerous forces that are "anti-capitalist", but which are so only on the basis of being even more reactionary, of seeking to turn the clock backwards not forwards, just as Lenin pointed out that there are numerous forces that are "anti-imperialist", but which we should have nothing to do with, because they are in fact, even more reactionary.  That should also be considered in relation to the situation in Syria, and the response to the current situation over coming days.

If Corbyn and the Labour Party adopts that stance another quick win can be obtained against Cameron's hypocritical and warmongering too.

Capital III, Chapter 18 - Part 10

The merchant's capital, counted in the total social capital, is the advanced money-capital used for one turnover. If the general rate of profit is then 15%, the merchant capitalist like the industrial capitalist, will make 15% on the capital they advance, not on the total capital they then turn over. If they advance £100 just once for the year, they will sell the commodities bought with this £100 for £115. However, if they turn this £100 over five times in the year, they will sell each quantity of commodities at £103, so that in a year, they will have turned over £515.

The £15 profit will be only 3% on the total turned over capital, but will be 15% on the £100 of capital they actually advanced.

“If this were not so, merchant's capital would yield a much higher profit, proportionate to the number of its turnovers, than industrial capital, which would be in conflict with the law of the general rate of profit.” (p 311)

For this reason, the rate of turnover of the merchant capital affects the prices of commodities. The higher the rate of turnover, the lower the profit margin per unit sold. That is why, as mentioned earlier, a large merchant capital, may take a lower profit margin, in order to turn over its capital more frequently.

“The amount added to the mercantile price, the aliquot part of mercantile profit of a given capital, which falls upon the price of production of a commodity, is in inverse proportion to the number of turnovers, or the velocity of turnover, of merchants' capitals in the various lines of commerce. If a certain merchant's capital is turned over five times a year, it will add to a commodity-capital of equal value but 1/5 of what another merchant's capital, which turns over just once a year, adds to a commodity-capital of equal value.” (p 311)

As with industrial capital, therefore, the advantage of size is apparent. The larger capital may turn over a given commodity-capital in a shorter period, by accepting a smaller profit margin, and yet make a higher annual rate of profit, precisely because it turns over this capital more frequently.

“Hence, the number of turnovers of merchant's capital in the various branches of commerce has a direct influence on the mercantile prices of commodities. The amount added to the mercantile price, the aliquot part of mercantile profit of a given capital, which falls upon the price of production of a commodity, is in inverse proportion to the number of turnovers, or the velocity of turnover, of merchants' capitals in the various lines of commerce.” (p 311)

Because different types of commodities naturally turn over at different rates, the amount added to their price of production, i.e. the merchant's profit margin, will be different in each case. If the general rate of profit is 15%, then those types of commodity that merchant's capital turns over only once a year, will have a 15% profit margin, but those that are turned over on average five times a year will have only a 3% profit margin.

“The same mass of profits, determined for any given magnitude of merchant's capital by the general annual rate of profit, hence determined independently of the specific character of the commercial operations of this capital, is differently distributed — proportionately to the rate of turnover — over masses of commodities of equal value, so that, for instance, if a merchant's capital is turned over five times a year, 15/5 = 3% if once a year, 15%, is added to the price of the commodities.

The same percentage of commercial profit in different branches of commerce, therefore, increases the selling prices of commodities by quite different percentages of their values, all depending on their periods of turnover.” (p 312)

Wednesday, 25 November 2015

Capital III, Chapter 18 - Part 9

As capitalism develops, this means that the turnover of merchant capital increases, so the same quantity of capital turns over a larger quantity of commodities. The proportion of merchant capital to industrial capital, therefore, declines, which acts to increase the general rate of profit.

Yet, at the same time, capitalist development means that an increasing portion of economic activity passes through the market as direct production declines. Further capitalist development means that an increasing volume of commodities are sent into the market to be sold, and more and more markets are opened up across the globe so that the merchant capital has a growing mass of commodities to turn over.

The consequence is that although merchant capital shrinks as a proportion of the total social capital, its absolute size increases compared to its position in the past, where, by contrast, it was smaller but occupied a proportionately larger role.

Another consequence of the fact that a greater proportion of products take the form of commodities, is that in addition to the expansion of merchant capital, there is an increase of all capital employed in the process of circulation. So, for example, all transport industries expand. Marx comments,

“However, and this is an aspect which belongs to the discussion of "competition among capitals": idle or only half-functioning merchant's capital grows with the progress of the capitalist mode of production, with the ease of entering retail trade, with speculation, and the redundance of released capital.” (p 311)

But, he does not elaborate further. Presumably, he is referring to the situation where released capital, in the form of available credit, is picked up often by unemployed workers to open shops for their self-employment, or to engage in various forms of market trading and speculation.

Back To Part 8

Forward To Part 10

Tuesday, 24 November 2015

Turkey, Cameron and More Hypocrisy

Turkey claims to have shot down a Russian fighter, which it says infringed its airspace.  Russia says its plane was still in Syrian airspace, and that it was shot down, from the ground by rebel forces operating from inside Turkey.  Whatever the truth of the matter, it poses difficult questions for the arguments that Cameron has been putting forward in recent days, and which have been supported by various Blair-right MP's.

Let us assume that the Russian plane actually had infringed Turkish airspace in its pursuit of rebel fighters.  How is that different to Cameron, and the Blair-rights argument that NATO planes should have the right to cross into Syrian airspace in pursuit of jihadists, rather than remaining only over Iraqi territory?  If Turkey has a right to shoot down Russian planes that may or may not have infringed its airspace in pursuit of jihadists, then presumably that means that Syria, or the Russians backing Syria, have a right to shoot down other planes infringing Syrian airspace.  If the Kurds looked to Russia to defend them against bombing by Turkey, then presumably that would give Russia the right to shoot down any Turkish warplanes bombing in Kurdish areas.

Similarly, Cameron, supported by some Blair-right MP's has argued that it is perfectly fine for Britain to bomb other sovereign states that have not attacked them, and with which they are not at war.  In this case, Britain's use of drones to kill people like Jihadi John, in Syria.  I have covered all of the ways that this shoot to kill policy, and Britain's abandonment of all the principles of war and neutrality that existed, even during World War II, has been introduced, elsewhere, and that discussion has been taken up by others.

Every time they abandon all concepts of principle, in a reckless belief that they can do whatever they choose, in the immediate instance, they create the arguments for others, like Putin, to follow suit, when it meets their interests, and in so doing they create a far more dangerous and uncertain world for all of us.  Labour MP's should remember that when they come to vote on these issues, and Cameron's drive for war.  Labour Party members should ensure that it is impressed upon Labour MP's too.

2017 Is Coming!

Are you ready for it?

Capital III, Chapter 18 - Part 8

Unfortunately, I think Marx slips from one concept of rate of profit (essentially profit margin), calculated on the laid-out capital, to another, the general annual rate of profit (based on the advanced capital for one turnover) without realising he has done so, or at least making clear that he has done so. As I've demonstrated elsewhere, the condition for a tendency for the rate of profit to fall is rising social productivity, which implies a rise in the rate of turnover, thereby bringing about a rise in the annual rate of profit.

So, when Marx says that the increased number of turnovers produces a greater quantity of surplus value in a year, this is true. It also implies, therefore, a higher annual rate of profit. But, this does not imply a rise in the rate of profit (profit margin) because this greater mass of surplus value has to be measured against a much greater mass of constant capital laid out to produce it.

Similarly, in discussing the role of merchant capital on the general rate of profit, Marx talks about the mass of merchant capital employed. But, again, the general rate of profit (profit margin) is measured against the laid-out capital, yet, when Marx describes what he means by this mass of merchant capital, what he sets out is, in fact, the advanced capital. So, he says,

“But here we assume that its relative magnitude, say, 1/10 of the total capital, is given. This relative magnitude, however, is again determined by the turnover. If it is turned over rapidly, its absolute magnitude, for example, will = £1,000 in the first case, = 100 in the second, and hence its relative magnitude = 1/10. With a slower turnover its absolute magnitude is, say, = 2,000 in the first case, and = 200 in the second. Its relative magnitude will then have increased from 1/10 to 1/5 of the total capital. Circumstances which reduce the average turnover of merchant's capital, like the development of means of transportation, for instance, reduce pro tanto the absolute magnitude of merchant's capital, and thereby increase the general rate of profit.” (p 309-10)

In other words, Marx seems to be using the annual rate of profit as the basis of the general rate of profit rather than the laid-out capital, which is the basis for the general rate of profit he has used previously, in discussing the Law of The Tendency For The Rate of Profit To Fall. There is, of course, nothing wrong with that. On the contrary, for the reasons Marx describes in previous chapters, it is the annual rate of profit which gives an accurate picture, and its the advanced capital which gives the real measure of the capital existing in an economy, not the laid-out capital. The only problem is one of clarity and consistency in presentation.

Monday, 23 November 2015

There Can Be No Free Vote On Syria

Labour Party conference, only a few weeks ago, decided, clearly, that Labour could not support intervention in Syria, other than on the basis of a credible, long-term plan for dealing with ISIS, and the current civil war.  No such credible plan has been put forward by Cameron, or anyone else.  In fact, no such credible plan will be put forward, by Cameron, or anyone else, because, at a minimum, any such long-term plan will require the investment of trillions of dollars, in the region, over many years, to develop the economy of the region, and to create the kind of civil society, and social relations, required for a stable bourgeois democracy.  No such commitment is ever likely to be made.  No such investment is even being made in Greece by the EU, and other European economies, including the UK, are being subjected to austerity.

On that basis, there is no rational basis for Labour MP's supporting intervention in Syria, or anywhere else in the region.  All such previous intervention has inevitably led to chaos, for the reasons set out above, and has, in fact, made the situation much worse.  Saddam, Assad, and Gaddafi were vile dictators, and socialists have no reason to give them any support, or to defend them.  But, at least, under those vile bonapartist regimes, there was economic development, there was a movement towards modernism, as against the move toward the Middle Ages that the Islamists pursue, and there was even a greater level of stability.

Socialists should only have focussed their attention on removing those vile dictators, to the extent that they had built a progressive, and credible alternative to them.  As Lenin argued, for socialists, the achievement of bourgeois democracy is not an end in itself, but only a means to an end.  The main thing, was to do whatever best achieved a growth of the forces of production, so as to most rapidly develop the working classes, without whose predominance, the social relations required, even for bourgeois social democracy, are impossible to achieve.

No such progressive alternative existed in Iran in 1979,  Iraq in 2003, Libya in 2011, or Syria, and the same thing can be said of many more instances, where sections of the left have jumped to advocate bourgeois democratic demands, at the expense of developing the working-class.  Even where the working-class has been more developed, as in Iran, its relative strength has been diminished by the social power of other social groups, and division,s and by a failure of socialists to ensure a strict demarcation between their forces and those of the Islamists, in the name merely of "anti-imperialism", whose consequence then was to bring those other social forces to power, at the workers expense.

The progress that had been made, in the Middle East, as a consequence of the development that those bonapartist regimes achieved, has been lost.  Judged by objective historical development, the Middle East, now, is at a more primitive stage than it was sixty years ago, and the utopian moralistic policies of liberals, and some on the left, bear responsibility for that.

That chaos that has resulted, and which now impinges on Europe's social and political development itself, by strengthening the forces of conservatism and nationalism, as it seeks to defend borders, and to restrict movement, in response to the huge numbers of refugees, escaping the carnage in the Middle East, will not be made better, but only worse, by thinking that dropping even more bombs, even more violence, on the blighted people of the region, will help!

Socialists should have no part of it, and there can be no free vote on such action, given the reality, and given the clear nature of, recently decided, Labour Party policy.  MP's should be whipped to vote against the Tories hypocritical and warmongering policies.  Of course, any MP's who feel that they cannot abide by democratically decided Labour Party policy, are free, in the end, to vote according to their conscience.  But, they cannot then expect to hold positions in the Shadow Cabinet, and they have to take the consequences, as have Corbyn and others, in the past, of justifying their position to their CLP, and maintaining the support of the party members who put them into Parliament in the first place.

Capital III, Chapter 18 - Part 7

As analysed in Capital I, and stated above, the surplus value contained in any commodity unit has nothing to do with its price. A commodity that requires a high value of constant capital – either because it requires a large quantity of material, or a small quantity with a high value – will have a high price, because this value of constant capital is passed into it. But, the quantity of surplus value will depend only on the quantity of living labour used in its production, and the extent to which it is exploited.

The rate of surplus-value may therefore be large, while the absolute magnitude of surplus-value in each unit of the commodity is small. This absolute magnitude of surplus-value in each piece of the commodity depends primarily on the productivity of labour, and only secondarily on its division into paid and unpaid labour.” (p 308)

For the merchant capital, the price of production is already given. It is a function of the costs of production and the general rate of profit. This is different to the situation in the past.

“The high commercial commodity-prices in former times were due 1) to the high prices of production, i.e., the unproductiveness of labour; 2) to the absence of a general rate of profit, with merchant's capital absorbing a much larger quota of surplus-value than would have fallen to its share if capitals enjoyed greater general mobility. The ending of this situation, in both its aspects, is therefore the result of the development of the capitalist mode of production.” (p 308)

Just as different types of industrial capital have different rates of turnover due to the differing production times for one commodity compared to another, so merchant capitals employed in different areas have varying turnover periods. A car showroom, for example, may sell one car per week, whereas a newsagents will sell large numbers of various commodities every day.

But, for any particular type of merchant capital, the rate of turnover will vary with the economic cycle – as well as for seasonal reasons, e.g. car dealers sell more cars when new registrations are released. When considering the rate of turnover, therefore, it is an average figure that must be used.

“In the case of industrial capital, its turnover expresses, on the one hand, the periodicity of reproduction, and, therefore, the mass of commodities thrown on the market in a certain period depends on it.” (p 308-9)

In other words, in any turnover period, industrial capital will produce a certain quantity of commodities, which it sends to market. What quantity is sent to market is historically determined on the basis of what is an efficient quantity to transport etc.  For example, a pottery manufacturer in Stoke would not send just one 25-piece dinner service to market, in Birmingham - or anywhere else. The cost of doing so would be prohibitive.  They would wait until they had produced enough ware to fill a canal barge, to send to Birmingham or wherever to be sold.  It is obvious, therefore, that how quickly there capital turns over - how quickly they can get the capital back that has been consumed in this production, depends upon how quickly that quantity of ware can be produced and then shipped.

How quickly that quantity can be produced , and, therefore, how long the turnover period will be depends on the degree of productivity. The higher productivity rises, the quicker that quantity will be produced, and sent to market. The more the capital will, therefore, turn over.

“On the other hand, its time of circulation creates a barrier, an extensible one, and exerts more or less of a restraint on the creation of value and surplus-value, because it affects the volume of the production process. The turnover, therefore, acts as a determining element on the mass of annually produced surplus-value, and hence on the formation of the general rate of profit, but it acts as a limiting, rather than positive, element.” (p 309)

So, no matter how much productivity rises, so as to reduce the working period, the commodities produced must still be sold, and this requires time. If the circulation time does not decline, then an industrial capital must devote an increasing proportion of capital to cover this period, when it is waiting for the reflux of the capital it has already advanced. Moreover, although the constant rise in productivity reduces the working period, so that any given quantity of commodities can be sent to the market faster, unless the market itself expands, this greater quantity will take longer and longer to sell, so that the circulation time gets longer.

Provided the commodities sent to market can be sold, then, as described in Capital II, the more times the capital is turned over, in a year, the more surplus value the advanced capital produces, and so the higher also the general annual rate of profit.

“For merchant's capital, on the contrary, the average rate of profit is a given magnitude. The merchant's capital does not directly participate in creating profit or surplus-value, and joins in shaping the general rate of profit only in so far as it draws a dividend proportionate to its share in the total capital, out of the mass of profit produced by industrial capital.” (p 309)

Sunday, 22 November 2015

Labour The Polls and Biased Media

It has been two months since Jeremy Corbyn became Labour Leader.  During all that time he has been under intense attack by the Tory media, including from the BBC.  You would have thought, during all that time, as a main element of the attack on him, from the Tories and from the Blair-rights, has been that, however popular he might be with Labour Party members, he would be an electoral disaster, that they would have been falling over themselves, to back that argument up with poll evidence.

But, no.  Only today, have they made a big splash of a COMRES poll, which suggests that the Tories are flat, but that Labour has dropped 2 points in the poll, down to 27%.  In fact, given the venom and intensity of the attacks by the media, backed up by an endless supply of Blair-right MP's, ferried, on a production line basis, to comment in news studios and newspaper columns, that Labour's standing would be lower.  Indeed, you could be forgiven for believing that all of these Blair-right MP's are just itching to lose council and parliamentary seats, to prove their point!

Yet, the truth is that there have been many polls done, since the election, and since Corbyn won the leadership, and they simply do not support the contention of the Tory media or the Blair-rights, which is why they undoubtedly have not been falling over themselves to bring attention to those polls.  The actual position since 2010, since the May election, and since Corbyn became leader, is given by UK Polling Report here.  What the graph indicates is rising support for Labour, and declining support for the Tories.

In fact, as they also indicate

"It is important to note that ComRes’s post-election polls are significantly worse for the Labour party than polls from other companies: since the general election ComRes have shown Labour with an average of 29% and a Conservative lead of 11 points; other companies have on average had Labour on 32% and an average Conservative lead of 6 points. Suffice to say, while this is a bad poll for Labour even by ComRes’s standards, it’s not some great slump in Labour support. The reason the Tory lead is bigger than in recent polls giving them a lead of only six or seven points is down to ComRes having a different methodology, not a sudden fracturing of support."

Yet, none of this was mentioned by any of the very highly paid, supposedly professional, and well informed political journalists on programmes such as "The Sunday Politics" or "Murnaghan", this morning, who for the first time were falling over themselves to highlight merely the headline figures of this rogue poll to support their party line.

In fact, as the above link indicates, if you take the IPSOS poll of 17th November 2015, it shows that Labour's standing is UP 2 points from 32%, on 19th October to 34%!  Of course, there has been no, and nor was there any reference, to this poll, on any of the politics programmes, whose duty, in the case of the BBC, is to inform, and not just to entertain.  A look at the table shows that IPSOS are not the only ones to show Labour's standing rising since Corbyn became Leader.

Once again the biased reporting of the media shows why we need our own Labour Movement mass media, and the sooner the better.

Capital III, Chapter 18 - Part 6

Marx then turns to the role of the rate of turnover of merchant's capital on prices, and the general rate of profit. The price of production of commodities does not affect the rate of profit, but it does affect the amount of profit contained in each commodity unit. In other words, if the price of a commodity is high, then, with any given rate of profit, the amount of profit in any commodity unit will necessarily be higher than for a commodity whose price is low. This is clearly significant for the merchant capital.

If the price of production of sugar is £1 per kilo, then a merchant can buy 100 kilos with a capital of £100. If the rate of profit is 15%, they sell these 100 kilos for £115, or £1.15 per kilo. However, if the price of production falls to £0.10 per kilo, then with their £100 capital, they can now buy 1000 kilos. With a rate of profit of 15%, their £100 would still bring them a profit of £15, but only if they can sell the whole 1000 kilos. They will sell each kilo for £0.115 per kilo., which means that demand will undoubtedly be higher than at its previous price of £1.15 per kilo, but there is no reason it will be ten times as high, so the merchant may not be able to sell all of their stock, even at this price, and so will not be able to realise all of their profit.

Whether the price of production is high or low depends upon the types of commodities he's trading in. A diamond merchant will make a larger quantity of profit from selling a given weight of diamonds than will a merchant selling the same weight of salt. But, the rate of profit will be the same, because the diamond merchant will have laid out a larger amount of capital to buy the diamonds than will have been laid out to buy the salt.

“If we except the cases in which the merchant is a monopolist and simultaneously monopolises production, as did the Dutch East India Company in its day, nothing can be more ridiculous than the current idea that it depends on the merchant whether he sells many commodities at a small profit or few commodities at a large profit on each individual piece of the commodities. The two limits of his selling price are: on the one hand, the price of production of the commodities, over which he has no control; on the other hand, the average rate of profit, over which he has just as little control. The only thing up to him to decide is whether he wants to deal in dear or in cheap commodities, and even here the size of his available capital and other circumstances also have their effect. Therefore, it depends wholly on the degree of development of the capitalist mode of production, not on the merchant's goodwill, what course he shall follow.” (p 306)

There are a number of factors which give the illusion that this is the case. Firstly, if instead of looking at the position of the merchant's profit as a whole, the position of some individual merchant is considered, this may appear to be true. So, one merchant may take a lower profit margin, in order to win a greater market share from their competitors. Secondly, the continued rise in social productivity, as was seen in Chapter 13, results in a falling rate of profit (profit margin), on each unit of production. It is not that profit margins are reduced, so that more can be sold, or as Roscher thought, because it was “common sense and humanitarian”, but that rising productivity results in a growing mass of profit being divided over an even greater mass of produced commodities.

Thirdly, where rapidly rising productivity causes prices of production to fall, demand, especially for new types of commodities, or commodities with low existing levels of demand, can rise sharply. The increase in demand can then outstrip even the rise in supply, so that market prices rise, resulting in higher than average profits.

Fourthly, a merchant may reduce his selling prices in order to turn over a large capital more quickly. As will be seen shortly, just as a falling rate of profit is consistent with a rising annual rate of profit, because it implies an increased rate of turnover, for industrial capital, so the same principle applies to merchant capital.

Saturday, 21 November 2015

Capital III, Chapter 18 - Part 5

As Marx described in Chapter 15, and sets out again here, these kinds of crises of overproduction are typical of periods of exuberance when high rates and masses of profits cause over investment and over-trading. Moreover, the high levels of profit and investment lead to high levels of employment and wages, which act both to squeeze surplus value and to lead to higher elasticities of demand for wage goods.

“The manufacturer may actually sell to the exporter, and the exporter, in his turn, to his foreign customer; the importer may sell his raw materials to the manufacturer, and the latter may sell his products to the wholesale merchant, etc. But at some particular imperceptible point the goods lie unsold, or else, again, all producers and middlemen may gradually become overstocked. Consumption is then generally at its highest, either because one industrial capitalist sets a succession of others in motion; or because the labourers employed by them are fully employed and have more to spend than usual. The capitalists' expenditures increase together with their growing income.” (p 304)
Its not just amongst the merchants, however, that conditions of prosperity and high profits breed the conditions of crisis. Marx points out that, in Capital II, it had been shown how constant capital itself circulates within Department I, irrespective of Department II. That is because the existing constant capital in Department I, must continually be reproduced.

If the whole of the capital goods sector is thought of as say a coal mine, a portion of the mine's output must be continually consumed by the mine itself to keep its steam engines running, so that the mine can operate. The same is true of the producer goods sector itself, a portion of its output must continually go just to reproduce its own constant capital, and, therefore, never forms a part of society's revenue, never forms an income – wages, profit, interest or rent – for anyone, even though it is an integral and growing element of society's value of output.

That is why there is a growing disparity between society's value of gross national product, and the value of gross national income, contrary to Smith and Keynes' belief that these two amounts are identical, i.e. that the value of a commodity, and so of a country's total production, resolves solely into factor incomes. But, as Marx illustrates, those factor incomes amount to only (v + s), whereas the actual value of the commodity, and so also total national output, is equal to (c + v + s), and c is constantly growing relative to (v + s), as a consequence of accumulation, and a rising organic composition of capital, brought about by rising social productivity.

“It is at first independent of individual consumption because it never enters the latter. But this consumption definitely limits it nevertheless, since constant capital is never produced for its own sake but solely because more of it is needed in spheres of production whose products go into individual consumption. However, this may go on undisturbed for some time, stimulated by prospective demand, and in such branches, therefore, the business of merchants and industrialists goes briskly forth. The crisis occurs when the returns of merchants who sell in distant markets (or whose supplies have also accumulated on the home market) become so slow and meagre that the banks press for payment, or promissory notes for purchased commodities become due before the latter have been resold. Then forced sales take place, sales in order to meet payments. Then comes the crash, which brings the illusory prosperity to an abrupt end.” (p 305)

The effect of the merchant's capital is greater because it affects the turnover of several industrial capitals, as described previously , and because as well as facilitating the metamorphosis of the commodity-capital, of industrial capital, into money, it also facilitates the metamorphosis of money-capital into productive capital.

The merchant buys the commodities of a number of industrial capitals, either all in the same line of business, or in different types of businesses. They are selling the commodities of one whilst simultaneously buying the commodities of another. But, at the same time, they are supplying industrial capitals with the means of production they require.