Friday, 15 April 2016

Tilting At Windmills - Part 6 of 6


Mike continues,

“In spite of his previous - correct - observation that the 1945 Labour government expropriated existing workers’ cooperatives and mutuals as part of their ‘reforms’, he argues that it would be politically harder for the capitalists to steal cooperative-held assets than it has been for them to steal public, charitable and local government assets in the last 50 years.”

In developing this line of argument, as a means of opposing the points I have put forward, Mike is in danger of throwing out his own baby with the bath water. In his original article, he had written,

“The more this policy progresses, the more the question of reconstituting cooperative, trade union and mutual-based healthcare will be posed. Arthur Bough has offered some useful arguments on this issue on his blog.”

But, now, Mike essentially reverts to the old sectarian, ultimatist stance that nothing can be achieved by partial struggles short of the revolution, because we might fail and currently the odds are stacked against us. The same is true of Mike's argument in relation to the EU. Where he basically concludes that even were workers to come together across Europe, and elect social-democratic governments of the type of Syriza, or Corbyn's Labour, it would still be hopeless because it would face all of the other power structures of the EU Commission, and so on. In other words, what Mike offers us, is a counsel of despair of a kind sectarians have always presented to workers, whereby it is “my way or the highway.”

So, Mike goes from a position where he is criticising me for supposedly advocating co-operatives without arguing for a workers party, to organise a political struggle alongside it (which is untrue), to now, when it comes to my arguments, in relation to such a political struggle, by such workers parties, arguing that its all hopeless anyway! For Mike there appears to be no possibility of any intermediate stages, no concept of process. 

Is it “politically harder” for conservative forces to take over co-operative property, in the hands of workers, than for them to take over statised property? Yes. Is it impossible for them to do so? No. That is the whole point about the need to develop workers self-government, alongside such forms and means of defending socialised property. It is the role of linking worker owned property up with the trades unions, and other workers organisations, and of carrying those ideas about worker-owned property, and workers self-government into the Workers Party, as a means of transforming such a party. It is the reason for utilising the workers brought into such a party, organised around those ideas, to develop new cadres of elected representatives of those workers, able to challenge, politically, any attacks by conservatives upon it.


In similar vein, therefore, Mike refers to my article “A Socialist Campaign For Europe”, which he says represents a significant improvement on previous versions, but there is nothing in that article which is in any way different from what I have been arguing for many years! The whole point about building a movement, across Europe, even just around support for social-democratic measures that oppose austerity, and promote the notion of an EU wide fiscal stimulus, similar to the Marshall Plan, or even similar to the kind of policies that have been implemented in the US, after 2008, is the basis upon which support for a Syriza or a Corbyn Labour government is based, as a stepping stone towards building such a movement.

Moreover, Mike's objection that, even if the EU Council of Ministers were dominated by social democratic politicians, it would still face “other elaborate safeguards against majority rule in the EU: the commission, the court of justice and the treaties” depends upon the EU proto-state itself being hostile to those social democratic measures required for strengthening EU industrial capital. I challenge that underlying tenet of Mike's argument. But, even were it correct, what happened to Mike's insistence on the need for a Workers Party to push forward the political struggle against any such safeguards and obstacles? Once again we are left with Mike's desire for such a Workers Party, but a reluctance to engage in any of the necessary practical actions and struggles by which such a party would be forged out of the existing materials. Instead Mike seems to simply want to suck such a party into existence out of his thumb, by a sheer act of political will.

The Bank Bail-Outs

Mike also says,

“Comrade Bough argues that the bank bailout was in the interests of industrial, as opposed to financial, capital. But this is not defensible.”

But, I have never argued any such thing! Going back to the collapse of Northern Rock, in 2007, I have argued consistently that the banks should have been allowed to go bust, and having gone bust, their workers should have taken them over, and run them as worker-owned co-operatives. I made the same point in relation to the collapse of the Irish banks in 2010. I have, in fact, repeatedly argued that it was in the interests of industrial capital to allow the banks to go bust, and for the masses of fictitious capital to be written down, and I have repeatedly quoted Marx's own words to that effect too.

The only thing that industrial capital required was that the mechanisms of money and commodity circulation were not frustrated by any such collapse, and resultant credit crunch. I have also consistently argued that having prevented such a credit crunch, by providing the required liquidity there was no grounds for the continued injection of liquidity, which acted only to benefit the owners of fictitious capital, by keeping asset price bubbles inflated.

Housing Benefit

The same is true of Mike's comments in relation to Housing Benefit. He states quite correctly that the huge amounts of Housing Benefit are a subsidy to landlords. It is, of course, no coincidence that those landlords form part of that class which provides a base of support for conservatism. Nor is it any coincidence that the rise of this Housing Benefit begins in the 1980's, when a conservative government acting in the interests of small private capitals acts to suppress wages, and promotes a property price bubble.

Mike wants to suggest that every policy action by any government of any political persuasion that increases the size of the state is equivalent to a social democratic policy. Or at least he wants to suggest that this is my contention. It is just another straw man to be knocked down, because I have never suggested that such measures are necessarily social-democratic. It does, however, indicate the contradiction that interest-bearing capital faces, because the alternative to these subsidies is higher wages, and lower property prices, which would directly hit the owners of interest-bearing capital, and of property. Mike has once again confused here the holders of governmental office, with the holders of state power, and assumes the policies introduced by governments are identical with the wishes of the state, and the interests of the industrial capital it reflects.


Mike also presents my argument about social democracy and the social-democratic state as being about statisation, but again that is far from the truth. The argument I was making is that bourgeois social democracy is a form of state that develops in correspondence with the needs of large-scale socialised capital. Rather than statisation playing a central role in that, I have concentrated on the nature of joint stock companies and co-operatives as the forms of this socialised capital. The role of the social-democratic state is not in terms of statisation, but of creating the kind of conditions under which such socialised industrial capital can accumulate. It involves the creation of stable macro-economic conditions, which requires planning and regulation, it requires the regulation of the provision of labour-power via the creation of a welfare state, it involves socialising the working-class – in the workplace via the trades unions and in society by social-democratic parties, and participation in the electoral process. 

Economic Misconceptions

Let me finally return to some of the economic misunderstanding in Mike's argument. He confuses “socialised capital” with “socialised production”. All capitalist production is socialised production, because it relies upon co-operative labour, both within the workplace and within the economy itself. Socialised capital only arises at a more developed stage of capitalism, when it breaks through the fetters imposed by capital as private property.

Mike says,

“Once the large-scale corporate banks had developed, and reached the point at which de facto state bailouts existed, the ability to use non-bank-backed commercial paper to fund industrial operations largely evaporated.”

But, the majority of commercial credit has nothing to do with bank credit. The vast majority of commercial credit simply involves suppliers not demanding immediate payment from their commercial customers for the commodities supplied. It involves the invoices under which goods and services are supplied simply stating payment terms, in which the customer should pay within 30,60 or 90 days etc.

Swallowing The Banker's Propaganda

Mike's further comment,

“It should perhaps be added that the Truck Acts 1831-1940, obliging employers in general to pay wages in cash (or, more recently, by bank transfer), add to the requirement on industrial operations to have bank credit facilities.”

Shows that he has swallowed whole the bankers line that all money in their coffers, and paid out by them is credit, or the advancement of loan capital. In fact, the money paid into such accounts is the property of the depositor, and the bank merely transfers it to someone else. The bank does not advance credit, or loan-capital by such operations, but acts merely as a merchant, a money-dealer, moving around other people's funds!

Mike says,

“Further, the retained profits have to be by some means saved up to finance any large new investment - and the means of doing so is to bank them or invest them in one or another form of financial securities. Otherwise, the firm would have to hoard cash on its own premises, incidentally withdrawing it from circulation.” 

Quite true, but again Mike seems to have bought the bankers line that any money in their vaults somehow becomes their money. It is quite clear that the money here belongs to the industrial capital and not to the bank or to any money-lending capitalist.

Money and Capital

Mike then both misrepresents what I said in relation to the ability of a country with lots of capital to obtain liquidity, and simultaneously gets the economics of the situation wrong. He says,

“Thirdly, comrade Bough argues that the state in a strong capitalist country could get away with printing money on a large scale:”

Firstly, its clear from reading what I actually said, and which Mike quotes, that I did not at all say what he claims. What I said was that a country with lots of capital can always obtain liquidity, and then listed ways in which it could obtain such liquidity. None of those ways referred to printing money on a large scale. In fact, where I did refer to printing money on a large scale it was to point out that such large scale money-printing, or indeed the provision of large amounts of money-capital, via the provision of loans, would not solve the problems of Greece, because those problems consisted of a shortage of capital, not of money or money-capital.

Mike then states that I make the error of an “implicit assumption that physical assets amount to capital”. But, I made no such assumption implicit or explicit! I am more than aware of the difference, and the argument was predicated on obtaining liquidity on the basis of the existence of capital, not of physical assets. Indeed, the argument that no matter how much money, or money-capital, Greece had it would not resolve its problem of a lack of capital, is only comprehensible on that basis!

But, Mike makes a number of other errors here. Firstly, as Marx sets out, in order to determine the value of capital as a commodity, it is necessary to know two things. Firstly, the money equivalent of the capital whose use value is being sold, and secondly the average rate of profit. In other words, it is impossible to begin to calculate a rate of interest unless I know the amount of money-capital to be loaned, and the potential profit that this capital could produce. In so far as existing capital exists in the shape of buildings, machines, materials and so on, it is impossible to calculate how much money may be loaned against such collateral without putting a money price upon them. 

Moreover, the commodities that comprise capital, be it productive-capital or commodity-capital always exist as something that can be sold, and which, therefore, have a money price. The commodity-capital is capital because it already incorporates surplus value, and that surplus value is also realised when the commodities themselves are sold. In fact, as Marx points out, commodity-capital is always also, therefore, money-capital.

“... commodity-capital is in itself simultaneously money-capital, that is, a definite amount of value expressed in the price of the commodities.”

(Capital III, Chapter 30)

But, secondly, Mike is also wrong in his argument, because in so far as an economy has such physical assets, it can always use the value of those assets as collateral.

If an economy has productive-capital in the shape of buildings, machines, materials and labour-power, and is able to use this capital, as capital to produce commodities profitably, it can always produce the liquidity required to circulate those commodities and capital. That indeed, was Marx's point in relation to the crisis caused by the imposition of the 1844 Bank Act. Britain had all those things, but the Bank Act, by artificially preventing the required quantity of bank notes to go into circulation, prevented it. As soon as that restriction was lifted, and bank notes went into circulation, the crisis was ended.

Immaterial Production

Mike's comments in relation to World Money are opaque, and its not clear how he thinks this relates to the question of the provision of Britain's invisible earnings. This again seems to be a question of Mike confusing structures with forms of capital. British money-lending capitalists undoubtedly obtain large amounts of revenue in interest from their overseas assets built up over centuries. But, that is a quite different issue to the profits obtained by the financial services industry, and all of the other profits obtained by other types of service industry, which sells goods and services to foreign consumers of those services. There is essentially no difference in the profits obtained by selling these services as commodities than there is in the sale of pottery or cars to consumers in other countries. Mike slips into the kind of Physiocratic conception of value and surplus value that Adam Smith sometimes succumbed to.

In Theories of Surplus Value, Marx discusses such situations, and refers to the sale of dancing lessons by French dancing masters, making the point only that it is necessary to go to France to obtain such lessons. But, today such lessons and others similar services can be exported via the Internet, just as the large amount of value and surplus value produced by English Premier League footballers is exported as part of that “invisible trade” around the globe, by satellite and internet transmission. 

Long Wave Boom

Finally, Mike says,

“It is indeed possible to have a new 1950s-60s. But the price of doing so is the overthrow of the global military power of the USA, analogous to the 1914-45 processes of the overthrow of the global power of the UK - and, going along with it, the loss of London’s global financial role.”

There is absolutely no grounds for this argument. Indeed, prior to the financial crash of 2008, the global economy already was experiencing economic growth and dynamism greater than existed in the 1950's/60's. Mike refers to the long wave cycle, but the long wave is not some mechanically determined set of dates on the calendar. It is a cycle, and has a regularity, only because the material factors, in terms of the time required to explore for and develop new sources of primary products, to develop new forms of labour-saving technologies and so on, determine the duration of those stages of the cycle, and in turn, affect other aspects of the cycle, in terms of changes in productivity, profits and so on.

That does not at all mean that, within the confines of such a cycle, played out over a 50 year period, other factors, such as the actions of governments cannot, and do not, play a role. The introduction of the 1844 Bank Act, affected the cycle in 1847, by creating a financial crisis at the start of a period of boom, because it caused a credit crunch, which subsequently caused a 37% drop in economic activity in the UK. Had the Bank Act not been suspended that would have had a continuing effect on economic activity, and the duration of that stage of the cycle.

The same is true with the nature of the financial crisis of 2008, and more specifically with the actions of conservative governments and central banks in its aftermath, which have acted to reflate huge asset price bubbles, and at the same time, in Europe, to undermine the accumulation of productive-capital by measures of austerity. I suspect that once the effects of that financial meltdown, and of the measures of QE introduced after it, are removed, the consequence will be a resumption of that dynamism, and economic growth, and the basis of it is already discernible if you look. It resides in huge areas of technology that has yet to be fully utilised to raise productivity, and reduce the value of capital, along with the development of whole new consumer goods industries, and it exists in the potential for development of whole new markets in Africa and elsewhere.

No comments: