Reasons To Remain – Economic

The Punchline

The historic mission of capitalism is to develop the productive forces to a degree that makes Socialism possible. Its in workers' interests that capital develops the productive forces as rapidly and as much as possible, not just because that is a precondition for Socialism, but because it also strengthens workers economic, social and political position in the short run, and provides the basis for their own transformation into a potential ruling class. The EU, and other formations like it, are the rational development of the kind of framework that capital requires to effectively expand and accumulate, so workers should not seek to hold back the development of such structures.

If You Are In A Rush

• Marx's theory of Historical Materialism describes the way development of technology brings about new productive forces. From the first time a humanoid picked up a stick, or a rock to act as a tool, instead of using their hands, this evolution of the productive forces began, and along with different types of instruments of labour, went different ways of producing, which in turn led to different ways of consuming, and different forms of social organisation conditioned by it.
• The two things are not mechanically linked, and the new means of production create the potential for new ways of consuming long before society actually creates the new social forms appropriate to it. But, each new society grows out of the old, and develops the means of production and consumption to a higher level.
• Capitalism grew out of feudalism, and in the 19^th century created the nation state, with a single centralised state, a single market, single currency, and single fiscal system, as the rational structure within which every firm would operate on the same level playing field, as the best means of capital accumulating.
• Just as capital has a natural tendency to grow, and also to become more concentrated and more centralised, so the rational structures within which it operates have a need to increase in size also. The bigger the single market within which capital operates, the greater its potential to operate on a much larger scale, and to obtain the significant benefits of economies of scale.
• In the middle of the 19^th century, that was indicated by the industrialisation of the United States. As a late comer, to industrialisation, its industries developed, from the start, on the basis of a much larger minimum scale of operation, and higher level of technological development than those of Europe. The US Civil War, was about the creation of a single Federal State, and the removal of the rights of the individual states, as against it. As such a huge state, it had immediate benefits of the fragmented, and warring European states.
• European capital had also already gone beyond the limits of the nation state, almost as soon as those nation states were created. The Napoleonic Wars were about creating a large European State, and Britain's attempt to prevent it, as it would have challenged its dominance. The First and Second World Wars were simply extensions of that process. Logically, capital in Europe needs to operate on a continent wide scale, and it will continue to drive for such a structure either peacefully, as with the EU, or by war as happened in the US, or with repeated European wars over the last two centuries.
• Not only do workers have a vested interest in capitalism creating these larger, more rational structures, therefore, so that economic development and accumulation of capital can proceed at the fastest pace, but they have an interest in seeing that happen by peaceful, democratic means rather than violently, because it is workers who are always the ones called on to fight in such wars, and the physical destruction of capital they bring about not only destroys current wealth, but also hampers future growth of capital too.
• Our interest is not some Luddite, or spiteful attempt to restrict capitalist growth out of some moralistic opposition to the undoubted evils of capitalism, but to welcome capitalist growth, as the means of making possible a new kind of society whereby those evils can be eradicated.
• It has always been the case that such economic development benefits workers, both because it means that wealth in general rises, and the mass and range of new use values that enrich workers' lives is expanded, but also because the larger economic units always enable higher wages, and better conditions than the smaller units.
• The interests of workers lies not in turning backwards to smaller, less efficient economic units, but in organising themselves on this larger scale. That means not only EU wide trades unions, and workers parties, but demands that the EU rationalise the payment of benefits and collection of taxes across the whole economy, and it means the creation of EU wide worker co-ops, that can also benefit from the economies of scale that such a large market brings. It means a demand that the principles set out in the EU Draft 5^th Company Law Directive, on industrial democracy, be implemented and extended, so as to restrict or remove the right of shareholders to elect company boards, and instead for the boards of companies to be elected from the firm's workers and managers.
• The days of the nation state are over. Reformist and nationalistic demands for nationalisation, are utopian and reactionary. They act to line workers up in one country behind their own nation state, against the workers in the same industry in other countries. At the very least, any such policy today, for example, in relation to the crisis in the steel industry, would call not for nationalisation by the British, French, German or other such state, but by the EU, as part of the creation of an EU wide steel industry, with all of the capital that such a huge state can provide.

If You Have Time

Marx had no time for that kind of Moral Socialism, which only saw the evils of capitalism, and so sought to restrict its development, rather than recognising the revolutionary role it played in developing the productive forces, and thereby being essential for the creation of Socialism. So, he writes,

“Ricardo, rightly for his time, regards the capitalist mode of production as the most advantageous for production in general, as the most advantageous for the creation of wealth. He wants production for the sake of production and this with good reason. To assert, as sentimental opponents of Ricardo’s did, that production as such is not the object, is to forget that production for its own sake means nothing but the development of human productive forces, in other words the development of the richness of human nature as an end in itself. To oppose the welfare of the individual to this end, as Sismondi does, is to assert that the development of the species must be arrested in order to safeguard the welfare of the individual, so that, for instance, no war may be waged in which at all events some individuals perish. Sismondi is only right as against the economists who conceal or deny this contradiction.) Apart from the barrenness of such edifying reflections, they reveal a failure to understand the fact that, although at first the development of the capacities of the human species takes place at the cost of the majority of human individuals and even classes, in the end it breaks through this contradiction and coincides with the development of the individual; the higher development of individuality is thus only achieved by a historical process during which individuals are sacrificed for the interests of the species in the human kingdom, as in the animal and plant kingdoms, always assert themselves at the cost of the interests of individuals, because these interests of the species coincide only with the interests of certain individuals, and it is this coincidence which constitutes the strength of these privileged individuals.” 

Theories of Surplus Value, Chapter 9, Section 2

Rather than looking backwards, therefore, Marxists look forward. We see the unfortunate necessity for society to endure capitalism, precisely because it is the means by which the productive forces are developed, as the precondition for the establishment of Socialism. As Marx put it, in a debate with John Weston within the First International,

“They ought to understand that, with all the miseries it imposes upon them, the present system simultaneously engenders the material conditions and the social forms necessary for an economical reconstruction of society.”

Value, Price and Profit, Chapter 14

But also, even in the short term, the development of capitalism, creates the best conditions for workers, because it is during periods of more rapid growth that the demand for labour-power rises. At those times, the competition between workers is reduced, as it becomes easier to obtain employment, and indeed, employers begin to compete to attract workers. During such times, not only do workers wages and living standards rise, but they are able to increase their own organisation, to devote time to developing their own culture and so on. Marx describes it in “Wage Labour and Capital.”

“And so, the bourgeoisie and its economists maintain that the interest of the capitalist and of the labourer is the same. And in fact, so they are! The worker perishes if capital does not keep him busy. Capital perishes if it does not exploit labour-power, which, in order to exploit, it must buy. The more quickly the capital destined for production – the productive capital – increases, the more prosperous industry is, the more the bourgeoisie enriches itself, the better business gets, so many more workers does the capitalist need, so much the dearer does the worker sell himself. The fastest possible growth of productive capital is, therefore, the indispensable condition for a tolerable life to the labourer.”

Wage Labour and Capital, Chapter 6

The development of nation states went side by side with the development of capitalism. Marx points out that capitalism is not possible without large markets. Until such time as towns developed, there were no such large markets, and so it is impossible to produce commodities on the kind of scale that justifies the employment of capital. But producers need to be able to sell their commodities into markets where they know that the same property rules apply, and where various costs, such as the existence of different currencies are removed. The nation state provides the framework for that common set of rules.

Even in the 19th century that became obvious in relation to regulating competition between firms, which, left unchecked, threatened to destroy the system, by destroying the source of profits, the working-class. Foresighted industrialists like Wedgwood petitioned for parliament to introduce limits on working hours, because, as they stated without such legislation, competition would drive each firm to try to extend hours as much as possible so as to gain advantage.

As Marx put it,

“Factory legislation, that first conscious and methodical reaction of society against the spontaneously developed form of the process of production, is, as we have seen, just as much the necessary product of modern industry as cotton yarn, self-actors, and the electric telegraph.” (Capital I, Chapter 15, p 451)

“Some of the masters themselves murmured: 

“On account of the contradictory decisions of the magistrates, a condition of things altogether abnormal and anarchical obtains. One law holds in Yorkshire, another in Lancashire, one law in one parish of Lancashire, another in its immediate neighbourhood. The manufacturer in large towns could evade the law, the manufacturer in country districts could not find the people necessary for the relay system, still less for the shifting of hands from one factory to another,” &c.

And the first birthright of capital is equal exploitation of labour-power by all capitalists.” (Capital I, Chapter 10, p 276)

Already, by the middle of the 19th century, capital had expanded on a massive scale, and had become concentrated into a number of very large privately owned businesses, and increasingly also centralised, as these larger businesses began to take over their competitors. The minimum scale required for efficient and profitable production, grew ever larger. It led to even the large private capitalist enterprises being themselves taken over by new socialised capitals in the form of joint stock, and then limited liability companies, and co-operatives.

In the United States, the industrialisation, concentrated in the northern states, began from a higher level than industrialisation in Europe, because it started on the basis of the much later technological development of the productive forces, and the requirements for huge markets that demanded. When the Industrial Revolution began in Britain, it took place on the basis of hand spinning of yarn, and hand loom weaving. A hundred years later, when that industrialisation takes off in the US, it takes place on the basis of huge, steam powered, multi-spindled, spinning machines, and similarly huge power looms. It required the rapid development of a large single market, and single state across the United States, and a Civil War was fought to bring it into existence.

It was inevitable that the small warring, states of Europe would not be able to keep pace with the economic development of such a giant economy, and within little more than half a century, it went from being an essentially colonial peasant economy, based upon small farmers, to being the predominant industrial power, and continued to increase its dominance from that point forward, until such time as a new huge economy, in the form of China arose to begin to challenge it. Whatever, romantic fantasies the Brexiters engage in about Britain being the fifth largest economy, the fact is that compared to these huge economic powers, Britain is a minnow, and a minnow that is continuing to decline in importance.

None of the individual EU states, including Germany, are big enough to compete with the US or China. Capital, for more than a century, is now only rationally organised in Europe on the basis of a single market, which in turn requires the establishment of a single currency, single fiscal regime, and consequently a single state standing behind it, able to enforce those rules, to provide capital with a level playing field within its borders. That is the underlying reality, which has led to the various European wars over the last two centuries, including the two world wars of the twentieth century. As I wrote some time ago, there will be a single Europe one way or another.

In 1917, recognising this drive towards expansion that is fundamental to imperialism, Trotsky wrote,

“Let us for a moment admit that German militarism succeeds in actually carrying out the compulsory half-union of Europe, just as Prussian militarism once achieved the half-union of Germany, what would then be the central slogan of the European proletariat? Would it be the dissolution of the forced European coalition and the return of all peoples under the roof of isolated national states? Or the restoration of tariffs, “national” coinage, “national” social legislation, and so forth? Certainly not. The program of the European revolutionary movement would then be: The destruction of the compulsory anti-democratic form of the coalition, with the preservation and furtherance of its foundations, in the form of complete annihilation of tariff barriers, the unification of legislation, above all of labour laws, etc. In other words, the slogan of the United States of Europe-without monarchy and standing armies-would under the foregoing circumstances become the unifying and guiding slogan of the European revolution.” 

Trotsky - The Peace Programme

At the time, Trotsky was considering such a potential, resulting from German expansion into Central Europe, and excluding Britain, France and Russia. Today, the EU has brought about such a union on an even wider scale, and by peaceful, if thoroughly bureaucratic, means. It would be lunacy to respond to the inadequate development of that union, and its undoubted bureaucracy by demanding a return to the outmoded nation states, which hamper economic development, and the development of the productive forces on an even greater scale.

Our answer to the inadequate economic development and development of the productive forces in the EU, is to promote those aspects of socialised capital, which are themselves the harbinger of the new society. We need worker owned co-operatives, across the EU, combined in a European Co-operative Federation, linked to an EU wide Trade Union Confederation, and a European Labour Party, that engages in a struggle for a democratisation of the existing structures, including an extension of industrial democracy, as formulated in the EU's Fifth Draft Directive on Company Law. 

The solution to problems such as those afflicting the steel industry, currently, cannot be addressed by looking backwards to national isolation, but only by looking forwards to a more rational organisation of the productive forces on a European scale, taking advantage of the potential for a more rational, long-term economic plan across the continent, within which decisions on future investment can be taken, and which can mobilise the vast amounts of capital that such a state can bring about.

The problems that face countries such as Greece, are not problems caused by the EU, or the Euro, but by the crazy, conservative policies of austerity that have been inflicted upon it. The same policies were inflicted on the UK after 2010, by George Osbourne and Danny Alexander and Vince Cable. At a time when the UK economy had been growing under Labour, those policies of austerity, introduced by the Liberal-Tories sent it into recession, just as policies of austerity had that effect in Greece, Spain, Portugal, Ireland and elsewhere, which in turn affected the other economies of the EU, which given the size of the EU economy, necessarily impacted global economic growth.

It is not the EU or the Euro that is responsible for that, but conservative ideology, and economic dogma designed to protect the fictitious wealth of interest-bearing capital, by keeping asset price bubbles inflated at the expense of the real economy. The problems of Greece could be resolved overnight by even a rational capitalist EU state. Instead of the continual loans of money-capital to Greece, which disappear to cover existing debts, what Greece requires is the accumulation of real capital, the creation of globally competitive industries, along with a similar programme across the whole of the EU periphery.

Instead of handing bribes to Turkey in a scandalous programme of sending back refugees, the EU could instead, provide Greece with the resources to introduce civilised means of processing migrants and refugees, speeding up and rationalising the process, whilst also providing useful work for Greek workers. The recent tragedy of migrant workers dying in the English Channel, shows the need for Britain to be part of such a comprehensive solution.

The problems of the steel industry are just an indication of the kinds of problem that other industries in Britain would face outside the EU, and outside a rationally organised European economy. It would mean that each state would organise capital on an inadequate scale, so that it was too small to compete effectively on a global scale. As with the steel industry today, it would lead to demands to protect threatened industries, at the expense of workers in the same industry in other countries. That would lead to further demands in those countries for similar protectionism, via nationalisation, import controls and so on. It would be a recipe for dividing workers internationally, and thereby weakening them.

Even the IMF and OECD, are now arguing that, especially with interest rates currently so low, a programme of fiscal expansion is called for. Monetary policy has not just failed to promote economic growth, but has undermined it. It was not intended to promote growth, but only to prop up stock, bond and property markets. In doing so, it undermined investment in real productive-capital. The Tory Brexiters are claiming that the IMF had said that the UK economy would decline as a result of austerity, in 2014, but it grew. As with most of the economic claims of the Tories and of the Brexiters, that claim is bogus.

The UK economy's growth in the period from 2009-2010, was ended by the austerity policies of the Tories, and the economy, in 2014, therefore, only grew from the low level those austerity policies had sunk it to. Moreover, in 2014, Osbourne himself abandoned large chunks of his austerity programme, and engaged in fiscal expansion, via capital spending.

The solution to the economic problems faced by workers across Europe does not reside in a step backwards to the nation state, but a step forwards to a United States of Europe, and opposition to current conservative policies of austerity, wherever they exist.