Tuesday, 28 February 2017

The Metropolitan Elite Myth - Part 1 of 4

What connects Donald Trump, Theresa May, Marine Le pen, Geert Wilders, Benjamin Netanyahu, and Vladimir Putin? They are all hard right, authoritarian conservative politicians that lead parties they claim to be “Workers Parties”. The above is not an exhaustive list. To it could be added further politicians in Central and Eastern Europe, Scandinavia, not to mention Erdogan in Turkey.

Besides the factor of pure propaganda, there is also a remarkably identical narrative presented by these politicians, to support their claim to be leaders of “workers' parties”. It is based on the idea that what have traditionally been considered workers' parties – Labour, Democrats, French Socialists etc. - have deserted workers, to become instead parties that represent a narrow, middle-class, metropolitan elite, usually framed vaguely around concepts of a group of people based in the capital.

As a consequence, that narrative continues, instead of the traditional workers' parties representing workers' real economic interests, they have become concerned only with a range of middle-class interests on sexuality, gender, the environment, human rights and so on. By creating this concept of a metropolitan elite, determining the politics of the old workers' parties - and this is extended to cover the politics of the other mainstream centre-right parties – the source of the problems of a large portion of the population is attributed to some ill-defined other.

For these hard right, conservative politicians, the narrative goes that the nation's problems are the fault of foreigners – Mexicans, Muslims, East Europeans, Chinese, Palestinians – and to address these problems, the narrative continues, we need to pull up the drawbridge – Brexit, America First, build a wall. But, the conservative right then says the old mainstream parties will not do that because they are more concerned with these other issues, which cut across the idea of such isolation.

As this Alt-Right frames the argument, the solutions are indeed collective solutions, as socialists have always argued, but those collective solutions are based not on class as the collective, but the nation. By this means, class and nation are fused together, the interests of the class are inseparable from the interests of the nation; the Alt-Right are the proponents of the national interest, and thereby represents the working-class interest, ergo they are the true workers' party, and socialism is national socialism.

It is, of course, bunkum, and nor is it new bunkum. The same snake oil was peddled by Henry Ford, in the 1930's, in the US, by Oswald Moseley in the UK, by Benito Mussolini in Italy, and Hitler in Germany, although more specifically by Otto Strasser and others, whose ideas now form a core element of National Bolshevism, and played a significant part in the ideas of those Zionists who established the modern state of Israel, for example via the Lehi Group) – whose members included Yitzhak Shamir, (Israeli Prime Minister in 1983-4 and 1986-92).

What is different, at the moment, compared to Mussolini's Italy, and Hitler's Germany, is that these Alt-Right politicians, in the US and Western Europe, are not backed by paramilitary forces that go around smashing up the organisations of their opponents. They don't need to, because the real workers' organisations are weak, and it is simply sufficient to close down their voices by use of the media the Alt-Right controls, and by psychological bullying calling anyone who speaks out over Brexit a “Remoaner” and so on, or anyone who challenges Trump's ridiculous nonsense a purveyor of “fake news”.

Yet, in parts of Central and Eastern Europe, more or less paramilitary forces do back up these Alt-right politicians, who have been allowed to flout the basic norms of bourgeois democracy, and EU laws. In Russia, such force, along with political assassinations is carried out against the regime's opponents. Erdogan has responded to the supposed coup attempt, in Turkey, by a harsh crack down, the sacking of tens of thousands of potential opponents and so on. 

Netanyahu runs a militarised state, that routinely acts violently against not only Palestinians living in the West Bank and Gaza, but against opponents within Israel's own borders. It has been further emboldened by the support given by Trump, who has now brought appearance and reality, at least, into alignment, by killing off the fantasy of the US pursuing a Two-State solution. Day by day, Trump closes down democratic life in the US, and undermines the basis of a free press, and he is backed up by a string of right-wing militia groups that possess around 90% of the firearms in private hands.

In the UK, there has been a spike in race hate incidents following the Brexit vote, and just as BNP members sank into UKIP, now they will sink back, along with UKIP members into a rapidly right moving Tory Party, as they have done on many previous occasions.

Forward To Part 2

Theories of Surplus Value, Part I, Chapter 3 - Part 48

If we take linen as representing this consumption fund, then the producers of this linen (12 metres = £36) take out an amount equal to the new value they have created in this product, i.e. 4 metres = £12. This is equal to their wages and profit. The remaining 8 metres = £24, they pay to the suppliers of their constant capital – the spinner, and the machine maker. But, the spinner and the machine maker can only consume an amount equal to the new value they have created themselves, i.e. the new labour undertaken, and equal to their own wages and profit.

They in turn must hand over the remainder to their own suppliers of constant capital – the flax grower, wood producer, and iron maker. In ever decreasing quantities, the amount taken as revenue eventually equals the total of new labour undertaken. But, at each stage, the amount of value exceeds the new value produced, because it includes a quantity of constant capital, alongside the additional labour expended.

It must always be the case, therefore, that a proportion of the total output never exchanges with linen, but is used solely to replace the means of production used in the production of means of production.

The account, however, can only be settled if it is only revenue, newly-added labour, not constant capital, that has to be replaced by the last part of the linen, the consumable product. For on the assumption we have made the linen enters only into consumption and does not in turn form the constant capital of another phase of production.” (p 144)

It was seen in relation to agriculture that a portion of output is directly returned to production to replace what was previously consumed, seed etc. But, Marx now turns to the rest of the means of production, i.e. Department I, as described in Capital II, to show how a portion of its output similarly goes only to reproduce its own constant capital.

The issue of fixed capital is effectively set aside here, because it is only its wear and tear that goes into the value of output. It is not a question of the fact that a certain sum of value is consumed to produce this fixed capital, but only a portion of it is returned via wear and tear. The issue here concerns the portion of total social output that simply replaces the consumed constant capital.

As well as in agriculture, where seeds are directly replaced out of production, fish are replaced out of production in fish farms, and so on, there are other types of production where the constant capital is directly reproduced out of the industry's product. For example, coal mines replace the coal they use in steam engines from their own coal production.

Monday, 27 February 2017

Theories of Surplus Value, Part I, Chapter 3 - Part 47

The producers of raw material and other means of production cannot consume their revenue in the commodities they produce. For example, suppose the flax grower adds £10 of new value by their labour. They cannot consume the 100 kg of flax that they produce, because it is means of production, not means of consumption. In order to consume £10 of consumption goods, they must obtain these by exchanging £10 of producer goods for them.

The question remains here what happens to that portion of value that is equivalent to the wear and tear of the machine maker's machine – and the same applies to the seed required by the flax grower etc. The resolution to this problem has nothing to do with an expansion of capital, or the utilisation of a portion of profit for accumulation. Its assumed that there is simple reproduction.

The total of new value created in a year is equal to the labour expended during that year. This new value is equal to the society's revenue, divided into wages, profits etc. equal to National Income. Its physical equivalent is the society's consumption fund, which comprises all those commodities such as food, clothing shelter, entertainment and so on.

“This quantity of labour must be equal to the total labour contained in these products, both the added and the pre-existing labour. In these products not only the labour newly added, but also the constant capital they contain, must be paid for. Their value is therefore equal to the total of profit and wages. If we take linen as the example, then the linen represents for us the aggregate of the products entering into individual consumption annually. This linen must not only be equal to the value of all its elements of value, but its whole use-value must be consumable by the various producers who take their share of it. Its whole value must be resolvable into profit and wages, that is, labour newly added each year, although it consists of labour added and constant capital.” (p 142)

The key, however, to the whole riddle, as suggested above, is that the consumption fund does not constitute the sum total of production. A proportion of production goes neither to the production of consumer goods, nor to the production of means of production used in the production of consumer goods. Rather, it goes only to the production of means of production used in the production of means of production.

Like the seed of the flax grower, the wear and tear of the machine maker, and so on, this is production which never goes into circulation, and never forms a part of revenue, never forms income for anyone. So, the total value of national output must always be greater than the value of national income, and the more developed society becomes, so that the mass of means of production grows, relative to the means of consumption, the more the difference between the value of national output and national income must become. In other words, a growing proportion of society's total output must go simply to reproduce its consumed means of production, rather than be used to produce means of consumption, and to form revenue.

Sunday, 26 February 2017

By-Election Biopsy

Labour won the by-election in Stoke Central, and lost in Copeland. What do these two elections tell us?

As I said several weeks ago, the by-election in Copeland, probably was not going to tell us very much. However much the mainstream media, needing as always to sensationalise every story to maintain their own ratings and justify their existence, tries to make the Copeland by-election into some epoch making event, it wasn't. The main strand of their argument itself indicates why. Their argument that Labour's defeat in Copeland was in some way epochal has been founded on the rather meaningless statement that it has been a Labour seat for 80 years. In that case, they ought to realise that the voters who first voted in that constituency 80 years ago, are dead and buried, in fact, so too probably are their children. In other words, the composition of the electorate in the constituency has changed during that period.

For a long time, that change in composition had been accompanied by a fall in Labour's share of the vote in the constituency, so that it was now, in any case, a marginal seat. But, also, a significant factor in the constituency has been the existence of the nuclear plant at Sellafield, which provides a large number of jobs for workers in the area, and on which an even larger number of other jobs, and revenues depend. It would be all the same if the major employer in the area were an asbestos mine, and processing plant. The principled position for Labour to adopt, in such a situation, would be to demand that the plant should only be able to operate if it could be done under conditions that guaranteed the long-term health of the workers in that industry, and of the surrounding communities. We know the damage and destruction that asbestos has done to people's lives. Yet, experience teaches us that where workers are dependent upon a large employer in an area, they are reluctant to see its existence threatened, even if the cost is the lives of themselves and their children.

Unfortunately, workers who have to sell their labour-power, in order to survive, are often put in a position where they see no alternative to this trade-off, and therefore, sacrifice the health and lives of themselves and their children, in order to obtain current income, particularly where that income might be higher than average. So, Copeland was never going to be a meaningful test of Labour's position, given that Jeremy Corbyn's position of opposition to nuclear power is well known, and was always going to be highlighted and distorted by the Tories and the media. But, as with so many other such issues where Corbyn, McDonnell and co. have held positions in the past, when the pressure was applied, they buckled and thereby looked weak, and dissembling. That happened over their principled republicanism, with their support for a United Ireland, and so on.

One of Corbyn's main character strengths has been his commitment to stand by his principles over the last thirty years, and his personal honesty and integrity. But, on issue after issue, he has begun to bend those principles rather than stand up and aggressively defend them. Trying to make him do so has clearly been a strategy of the Blair-rights and of the Tory media, and the fact that he, McDonnell and others have complied, now risks throwing away the support of the hundreds of thousands of new members that were drawn into the party, because of those original principles, and that integrity.

What Copeland, Stoke and most other constituencies around the country have in common is that for at least thirty years, Labour had no economic strategy that offered hope for the ordinary working-class people living in them. The Blair-rights, and the Tory media repeatedly hark back to Blair's three election wins, but in many ways they were an aberration, coming not just after a period of eighteen years of Tory misrule, but at the start of a period of global long wave boom. But, it is also a delusion in other ways, because Blair also benefited from illusory inflation of paper wealth that Thatcher had also encouraged and gained by, during the 1980's, as stock, bond and property markets entered a massive bubble, that also provided the collateral for a huge expansion of private debt, which in turn assisted in blowing up those bubbles even further.

Yet, the truth is that after 1997, Blair also saw a steady draining of Labour votes, and the 2008 Financial Crash was the pay back for the policies that essentially conservative regimes had conducted across much of the globe for the 20 years prior to it. Blaming Corbyn for a situation in which Labour votes had drained away, during all that prior period, and had done so as a result of the conservative policies that Labour under Kinnock, Smith, Blair and Brown had adopted is senseless. As the saying goes, you cannot fatten a pig on market day, and it will take more than just a few months, or even years, for Labour, under Corbyn, or any other left social democrat, to undo the damage that was done over those previous decades by Kinnock and his heirs.

And that ought to be the lesson that is learned. There are no quick fixes. Anyone who thinks that things could be remedied by getting rid of Corbyn, and restoring the policies of Blair and co., or some modified version, is seriously deluded. If that were possible, the Blair-rights, and their periphery would already have followed the example of their SDP predecessors, and jumped ship to ride the wave of the rapidly rising support of the Liberals. But, they know they can't. The SDP sank into the Liberals, and now the Liberals have simply just sunk without trace. They are enjoying rising support, but it is the rising support of a heartbeat on life support. 

In Stoke Central, the Liberals more than doubled their vote share from 4.2% to 9.8%, yet the fact is that, it was still only 9.8%; it was just 2,000 votes, as opposed to Labour's 37% of the vote, and 7,800 votes. The Liberals are the future of Blairism, and its is a future that is doomed.

The Stoke by-election confirmed many of the arguments I have put forward in recent weeks. UKIP were quite right to put forward Nuttall as their candidate in such a high profile by-election. They were not to know that he would go into unforced self-destruct. Nuttall had several great advantages. He was an established national figure, with a well developed media presence; he is an accomplished media performer; he had a simple message – its all the fault of foreigners; and in a by-election, he had every chance that the Tories as the third party would vote tactically in his favour. 

A look at the 2015 election figures shows that UKIP should have won in the by-election easily. If most of the Tory voters voted tactically to kick Labour, then UKIP would have won with a majority of around 3,000. But, Nuttall went into self destruct with the silly antics over the house, then with the claims about Hillsborough, which added to previous statements about his PhD., being a professional footballer and so on. As with Trump, none of that seems to have put off the core UKIP vote. Nor did the attempts to introduce silly comments about him not knowing that the Potteries is comprised of six towns. In fact, that excursus says a lot about those that pursued it, because in fact, the Potteries have always been referred to as “The Five Towns”, as reflected in Stoke's greatest author Arnold Bennett's novel, “Anna of the Five Towns”. Although the forgotten town has always been Fenton, not as in Nuttall's case, Tunstall.

But, Nuttall's self-destruction was enough to prevent Tory voters switching to him tactically, and that doomed his chances. UKIP is now politically dead for the foreseeable future, like the Liberals. But, that means that, in Stoke, if Labour cannot enthuse its own voter base, it will lose the next election to the Tories, as all those UKIP voters return to their natural home. They will either go back to the Tories, or else they will go back to their status as non-voters, ready to be picked up by the next demagogue, when the current set of centre ground policies inevitably fail.

And Labour itself has prepared the ground for that. As I wrote some time ago, the principled position for Labour to adopt, was to oppose Brexit. Brexit is against workers interests, and Labour should oppose it. Whether or not workers or Labour voters supported Brexit does not change the matter. In fact, there is an argument for saying that every Labour MP should have resigned their seat to force effectively a General Election, on which Labour could have stood on a position of opposing Brexit, and thereby have gained a mandate for that position.

The Tories will not call a General Election, because if they were to do so, it would trigger a series of reselections of sitting Blair-right and soft-left Labour MP's, who would be replaced by Corbynite candidates. Although the Tories might see that as an opportunity to increase their current majority in Parliament, they know that it would be against their longer-term interest. In place of a situation where there are half a million Corbynite LP members, but only around 15 Corbynite MP's, with around 250 Blair-right/soft-left MP's, the sitaution would be reversed with that half million Corbynite members then also having around 150 Corbynite MP's, and there being only around 25 Blair-right/soft-left MP's.

That would mean that Labour might be weakened in Parliament in the short term, in terms of numbers, but its message would be much more powerful, cohesive and clear, and would be more easily carried out into the country, in support of workers actions, community actions and so on, so as to provide a much more powerful basis for a Corbyn led government in 2020 or shortly thereafter.

But, the weakness that Corbyn has shown on other issues has also carried forward into Brexit too. In addition, as I wrote a while ago, some of the reason for that also seems to stem from the influence of those Stalinist elements around Corbyn, that hark back to national socialist ideas of “Socialism In One Country”, or more ludicrously, in this case, social-democracy in one country, and the influence also of the idiot anti-imperialists of the StWC and other such groups, whose vision extends no further than what they perceive as being bad for imperialism, rather than what is good for socialism and the working-class.

Not only was the collapse into nationalism unprincipled, but even in terms of short-term opportunist electoral politics it was misguided. I have pointed out in the past that the working-class voters of the area did not suddenly become concerned about immigration or the EU overnight ahead of the EU Referendum. Anyone who lives in the area, and my guess is this applies to every other similar area of the country, knows that around 30% of the population holds bigoted views. That is more true of the older and less educated sections of the population. (This is also why the idea of the “metropolitan elite” is bunkum, and yet another example of problems being blamed on a distant other. There are just as big a proportion of people in North Staffordshire who hold the views of the metropolitan elite as there is in London.)

Yet, the fact that a substantial number of workers in Stoke held bigoted views never stopped them voting Labour. They saw no contradiction in holding such views, whilst voting for a Party that opposed that bigotry. Remember, that Mrs Duffy too was a long standing Labour voter! In fact, I know of many Labour Party members that held bigoted views, long before the media decided to create a witchhunt against anti-semitism by some party members. In the 1960's, I remember one Labour Councillor, when the proposal was put to establish the gypsy camp at Linehouses, who said that he would lead the way in burning them out! 

Labour did not descend to that low level in Stoke Central, but with Labour nationally collapsing into pro-Brexit nationalism, it must have seemed a small step to try to wrap yourself in the flag of St. George in election leaflets. Whether Emily Thornberry took any pictures of them this time I don't know.

Yet, for all this disgraceful collapse into nationalism and jingoism it failed, as I had predicted it would, to win any of the UKIP or Tory votes for Labour. As I said long ago, the idea that UKIP's vote in somewhere like Stoke was comprised of disgruntled Labour voters was always bogus. There are a few maverick Labour Councillors, and we all know who they are in each area, and party members, that saw UKIP as just another vehicle for them to expound their ideas, and seek to gain publicity, and maybe even a Council seat. However, the majority of UKIP voters, like the vast majority of UKIP members, are disgruntled Tories. The remainder of UKIP voters in an area like Stoke, are those elements who are generally atomised and alienated from political life, and who see it simply as a means of kicking out, and expressing their generally bigoted views, developed in isolation from any rational discussion of the facts.

So, the grand result of Labour's collapse into nationalism, in search of these non-existent former Labour UKIP voters, was that Labour's share of the vote fell by 2%, whilst UKIP's share of the vote rose by 2%, as did the Tories. At the same time, the Liberals more than doubled their share of the vote from 4.2% to 9.8%. That was undoubtedly actually a result of former Labour voters who were disgusted at Labour's reactionary nationalist turn, who swapped to the Liberals who advocated a clear pro-Remain position.

And, in fact, as I'd argued several times in recent weeks, not only was Labour's position over Brexit unprincipled, it was even stupid in purely electoral terms. Labour seems to have swallowed the ridiculous notion that the fact that 65% of Labour MP's were in constituencies that voted Leave, was the same things as 65% of Labour voters in those constituencies voting Leave. It clearly wasn't, as I demonstrated.

The fact is that nationally 65% of Labour voters voted Remain. That Labour voters in constituencies that voted Leave, might have been less likely to vote Remain, may be true without that changing the fact that, even in these constituencies, a majority of Labour voters, by some margin, were likely to vote for Remain. The reason is that not all voters in those constituencies voted Labour. In Stoke Central, for example, in 2015, only 40% of the vote went to Labour, whilst nearly 60% went to UKIP and the Tories.

That has now been confirmed by Professor John Curtice, basing himself on a survey of 30,000 voters, conducted by the British Election Study . The survey shows that although support for Remain is generally lower amongst voters for each party, in the North and Midlands, amongst those who voted Labour in 2015, there were still a clear majority for Remain. In the North, the figure amongst Labour voters is 57% for Remain, in the Midlands it is 60%, comparing with 67% in the South, 74% in London, 64% in Wales and 66% in Scotland.

“According to the BES, in Labour-held seats across Britain as a whole 63% of Labour voters voted to Remain, exactly the same as the proportion across the country as a whole. As we might now expect, the figure is somewhat lower in Labour seats located in the North of England and the Midlands, but at 57% it is not significantly different from the proportion (58%) across the North of England and the Midlands as a whole.” 

In fact, as Curtice says, the proportion (around 37%) of Labour voters who voted Leave in Labour held seats, is about the same as the proportion of Tories, who voted Remain in Tory held seats. As I have set out above, and in previous posts, that minority of labour voters, in Labour seats, that voted Leave, are unlikely to drop Labour if Labour adopted a principled position of opposing Brexit, because other issues such as jobs, wages, public services, housing are more important to them. If Labour adopts radical, credible policies on these issues, that is far more important than tailing after that minority. But, Richmond showed this does not apply for the Tories in reverse. Tory voters who are committed to Remain, are far more likely to drop the Tories for their hard Brexit strategy, and to support the Liberals, or Greens, and potentially if it develops a credible strategy to Labour too.

As Curtice puts it,

“Ensuring Labour’s survival in the North of England and the Midlands is not just a question of strengthening the party’s appeal to the so-called traditional Labour voter who voted to Leave. There are simply not enough of them for that alone to be a viable strategy. Rather, it is also about retaining the support of the majority of Labour voters in the northern half of England who voted to Remain. For without them, the party really will be in trouble.”

Theories of Surplus Value, Part I, Chapter 3 - Part 46

“The whole problem was partly solved by the fact that the part of the farmer’s constant capital, which does not itself consist of labour newly added or in machinery, does not circulate at all, but is already deducted, replaces itself in his own production, and therefore also—apart from the machinery—his whole circulating product consists of wages and profit and consequently can be consumed in linen.” (p 140)

But, that is not just the case for the farmer, and this reality that it is only the new value created which enters circulation, is disguised by the fact that what is revenue in one place appears as constant capital in another. So, for example, suppose the flax grower could produce flax without any constant capital. The value of all of their output would then be equal to the new value they created. Suppose they work for ten hours, and so produce £10 of new value, comprising 100 kilos of flax. All of this value is revenue, which they can consume. They sell 100 kilos of flax to the spinner, who pays them £10, or 3.33 metres of linen.

But, for the spinner, all of this £10 of flax is constant capital. None of it constitutes revenue. When its value is incorporated in the value of the yarn, they sell to the weaver, none of that value received in exchange for the yarn can be used as revenue by them, because all of it must be once more paid to the flax grower, to replace the flax they have consumed in production. Only the new value added by the spinner, in the production of the yarn, can be used as revenue, by them, and used for their own consumption.

But, if we return to the flax grower, the reality is that they do use constant capital, in their production. Let us say that it constitutes only seeds, equal to 10 kilos of flax output, or equal to £1 or 1 hour of labour. The actual situation is then that their total output is 110 kilos of flax, and the total value of their output is £1 constant capital (seed) plus £10 new value added = £11, or 11 hours of labour. But, of this total value of output, £1 or 10 kilos is simply returned to replace the consumed seed, leaving just £10 of value (100 kilos of flax) to be thrown into circulation, all of which then constitutes revenue, and all of which can then be consumed.

This effect that what is revenue for one is constant capital for another is best illustrated where different operations are brought together. For example, suppose someone both spins and weaves. In that case the constant capital appears as the flax that comprises the raw material, plus the spinning machine and loom. For a separate weaver, however, the yarn itself comprises constant capital. To illustrate:-

A spinner buys 100 kg of flax with a value of £10. They use a spinning machine that transfers £1 of value in wear and tear, and they add £4 of new value by their labour. The value of their output is then £15, with £11 comprising constant capital and £4 labour.

They sell this yarn to a weaver, for £15. This £15 now comprises part of the constant capital of the weaver. Another £1 of value is added as a result of the wear and tear of their loom. They add another £4 of value by their labour. The value of their output is then £20, comprising £16 of constant capital and £4 labour.

But, if the weaver also spins we would have a situation where he buys £10 of flax, they have £1 of wear and tear on their spinning machine, and the same on their loom. They add £8 of new value, £4 from spinning and £4 from weaving. In that case, the total value of their output is still £20, but it comprises now only £12 of constant capital, and £8 labour.

Saturday, 25 February 2017

Theories of Surplus Value, Part I, Chapter 3 - Part 45

[(c) Exchange of Capital for Capital between the Producers of Means of Production. Annual Product of Labour and the Product of Labour Newly Added Annually]

Marx sets out the position as it now stands. 0.80 metres of linen, in value, has to be replaced by the machine maker, to cover the wear and tear of their own machines, used in machine production. 0.75 metres of linen, in value, has been given by the machine maker to the producers of wood and iron, in exchange for his raw material.

The 0.80 metres, which the machine maker pays to themselves, to cover the cost of the wear and tear of their machine, is equal in value to £2.50, or two and a half hours of labour. But, the machine maker cannot pay himself in linen for this amount. In other words, it cannot form a part of his revenue or consumption. That is because, if he were to take linen for this value, he would again have to exchange it to be able to obtain wood, iron, leather, so as to reproduce his machines.

But, this leads back to the problem encountered previously. If he has been paid 0.80 metres of linen to cover the value of the wear and tear of his own machines, used in the production of other machines, and transferred to the value of those other machines, to whom is he to sell this 0.80 metres, in order to obtain the value required to reproduce his capital?

Adding up the total value of machinery, we get the following:-

The weaver replaces machinery equal to 2 metres of linen = £6 = 6 hours of labour.

The spinner 1 metre = £3 = 3 hours of labour.

The flax grower 0.5 metres = £1.50 = 1.5 hours.

Iron and wood producers 0.58 metres = £1.75 = 1.75 hours.

The total is 4.08 metres = £12.25 = 12.25 hours.

For ease of calculation, and illustration, Marx rounds this to 4 metres = £12 = 12 hours of labour. Of this machinery, a third is equal to the new value created in its production, and equal to the revenue of wages and profit, whilst two-thirds is equal to the value of constant capital used in production – wood, iron, wear and tear of machine etc.

In other words, this is equal to 1.33 metres of linen = £4 = four hours of labour for the former, and 2.66 metres of linen = £8 = eight hours of labour for the latter.

Of the latter, it is divided 3:1 between raw material and wear and tear of machinery. So, of this 2.66 metres, a quarter, or 0.66 metres covers wear and tear, and 2 metres covers raw materials. The machine maker has then obtained 4 metres in total. They have consumed 1.33 metres as revenue, in the form of wages and profit; they have exchanged 2 metres with the producers of wood and iron, to obtain the raw materials they require, and this leaves them with just 0.66 metres, equal to the value of the wear and tear of their own machinery.

In other words, the total value of output of machinery is greater than the total value of machinery that is reproduced in final output. But, it is not just for the machine producer that this is and must be the case. It is the case also for the producers of wood, iron, leather, the flax grower, and so on, because all of the producers will produce a quantity of use values, which never enter into circulation, but which only ever go directly to reproducing themselves on a like for like basis, i.e. the seed of the flax grower and wood of the wood producer, the iron of the iron maker, the wear and tear of machines of the machine maker and so on.

It is impossible for the whole output of wood, iron, leather, flax, yarn and so on to be exchanged against linen, the final output, because the value of this total output is greater than the value of the output of linen. The former is equal to c + v + s, whereas the latter is equal only to v + s. The value of c is already removed, so as to replace the consumed constant capital, so it never enters into circulation, and consequently it is only the new value created by labour, including that used in the production of wood, iron, flax, yarn and machines, which enters circulation.

Back To Part 44

Forward To Part 46

Northern Soul Classics - Remember Me - The Whispers

With the same backing track as "Times A Wastin" - Fuller Brothers, a great dancer from The Whispers, reminiscent of the Top Rank, Hanley.

Friday, 24 February 2017

Friday Night Disco - Bourgie Bourgie - Gladys Knight & The Pips

Theories of Surplus Value, Part I, Chapter 3 - Part 44

Marx reviews this analysis so far.

“We said at the start that in the different spheres of production there are different proportions as between the newly-added labour (which partly replaces the variable capital laid out in wages, and partly forms the profit, the unpaid surplus-labour) and the constant capital to which this labour is added. We could however assume an average proportion, for example, a—labour added, b—constant capital; or we could assume that the proportion of the latter to the former is 2 : 1 = 2/3 : 1/3.” (p 133)

In that case, the workers and capitalists in any particular sphere, only have enough income as wages and profit to buy a third of their output. But, the capitalists of this sphere own the remaining two-thirds of the output of that sphere. If they are to continue in business, they must sell this remaining output, so as to realise its value, and so be able to reproduce the constant capital used in its production, whose equivalent value it represents.

But, the analysis so far has raised the question of to whom these other two-thirds are to be sold? If the workers and capitalists in each can only together buy a third of their own output, from their incomes, the answer clearly cannot be that this remainder can be bought from the incomes of workers and capitalists from other industries.

If the value of output from industry A is £3,000 and from B £9,000, then incomes in A will buy £1,000, and in B £3,000. If all of A is bought, because its workers and capitalists buy £1,000, and workers and capitalists from B buy £2,000 worth, A's problem is resolved only at the expense of making B's worse, because it can now sell only £1,000 of its total output, rather than £3,000.

We also saw that introducing additional industries only makes this problem worse. Here, A's output was £3,000, and the shortfall of demand was £2,000. If B's output was £6,000, giving combined income for its workers and capitalists of £2,000, this could now fill the gap. But, now there is a lack of demand, equal to £6,000 required for B's output.

Clearly, it is untenable to look for a solution that requires the amount of output to continue to expand, so as to provide additional revenues, when that very process increases the value of output even further, beyond what existing revenues can buy.

“So from this it became clear that the shifting of the difficulty from Product I to Product II, etc., in a word, merely bringing in to the problem the exchange of commodities, was of no avail.” (p 134)

The problem was then considered from the other angle, whereby the value of final production – twelve metres of linen, thirty-six hours labour, £36 – divided into £12 new value added by the weaver, plus £24 of value transferred by constant capital. But, it was equally clear here that this £24 of value of the constant capital, itself could only represent the value of new labour added by the spinner, machine maker, flax grower, wood producer, iron maker and so on, and that for each of these additional producers, we had to take account of the fact that, in addition to the new value added by their labour, they in turn used constant capital, which formed part of the value of their output.

Yet, it was obvious for some of these producers that although this value of constant capital formed a part of the value of their output, it did not form a part of their product that was exchanged, or for which they obtained an amount of value in exchange, as revenue, therefore. A portion of the flax growers output was not exchanged but used to physically reproduce their seed, as manure and so on; a portion of the machine maker's output was not sold, but was used to reproduce their own machines; a portion of the wood grower's output would similarly be used to grow replacement trees, and of the iron producer would be required to repair their own equipment, even if it passed first through the hands of the machine maker.

If the weaver buys yarn from the spinner with six metres of linen, and a loom from the machine maker with two metres of linen, this may appear as income for the spinner and machine maker. But, of course, they can only use a portion, a third, of this linen as income, because two-thirds of the value of the yarn and the machine they sold to the weaver comprised their own constant capital. They must use two-thirds of the linen they receive not as revenue, but to reproduce their own constant capital. Similarly, when they pay for the flax, the wood, iron, leather and so on that they receive as inputs, the linen thereby obtained by their own suppliers does not represent all revenue for them either, because only that portion which represents the new value added constitutes their revenue, and the remainder must be used to reproduce their own constant capital.

“Something would always be left over and a progression to infinity.” (p 138)

If we consider the position of the flax grower, or machine maker, a portion of the output used to reproduce their constant capital – seed and machines – itself constitutes new labour as well as constant capital. The flax grower must exert labour to produce that portion of their output that replaces their seed, as much as for that portion, which produces flax supplied to the spinner, and the machine maker must exert new labour to produce the machines required for their own use, as much as in the production of looms, spinning machines and agricultural equipment. This component of value, therefore, is revenue, and is used as such.

Thursday, 23 February 2017

Brenda Procter - A Fighter For Her Class

I was saddened to learn yesterday of the death of my old friend and comrade Brenda Procter, who for more than thirty years had been a prominent member of the Miners' Wives Group, and a series of other mining communities related activities.  She was a real working-class fighter for her class.  I first met Bren in 1981, long before the 1984 strike.  I met Bren as a result of my contact with her next door neighbour Paul Barnett, who later joined the Stoke Socialist organiser group, for a short time.

The Stoke Socialist Organiser group arose in 1979, as a result of the creation of the Socialist Campaign for a Labour Victory.  The SCLV was the project of Workers Action, of which I had been a member since 1974.  It also drew in supporters of Socialist Charter, and won the affiliation of a number of CLP's, branches and PPC's across the country, including one Jeremy Corbyn.  There was one Socialist Charter member in Stoke, at the time, Jim Barrow, a journalist who like me had gone to University after having worked for several years beforehand.  Both of us continued to maintain close contact with the world of work, and with the trades union movement, we had spent much of our time in over the previous years.

In the early days of the Stoke Socialist Organiser group it had rapid success starting off with around 15 members.  But, apart from myself, Jim, and Neil Dawson, all the other members were students, and as Trotsky pointed out, in relation to students, they can be more trouble than they are worth, unless they are part of a large proletarian organisation that can keep them under control.  Their essentially petit-bourgeois, dilettantist approach means that they tend to flit in and out of political activity, and sure enough within about three weeks, 90% of the students flounced out of the group.

I paint this picture, not just to give an impression of the times, but also to make the contrast between this studentist politics and the working-class politics of Bren.  Over the next year, another couple of students came into the group, whilst Jim Barrow also left, as Socialist Charter nationally engaged in work on London Labour Briefing.  The only workers left in the local group were then myself and Neil Dawson.  In the meantime, the group suffered an infiltration by a member of the Sparts, which led to Martin Thomas coming up from London to carry out his expulsion.

Again indicative of this dilletantism, it was after this event that two of the student members told me that they had known that the person concerned was a Spart, because he sold copies of their paper around the Poly, sometimes to them, after Socialist organiser meetings, and after I had left.  Yet neither of these students thought it fitting to have provided this information beforehand!  Over this period, I found myself increasingly frustrated at this kind of behaviour, which left me spending endless amounts of time driving from one end of the city to another for meetings, only to find that these students, including the former Branch organiser, never turned up.  In the end, I had to ask Martin Thomas about the situation, and we agreed to expel the former Branch Organiser.

So, by 1981, the Socialist Organiser Branch was down to just two members, myself and Neil Dawson.  Yet, things were actually turning up in many ways.  It was liberating not to be wasting so much time in pointless journeys, for one thing.  But, also by 1981, the long hard work of the last seven years, in the Labour Party and local Trades Council, had begun to pay off.  Both had turned left, and in the Labour Party branches, the moribund organisations had begun to flower once more.

In 1981, I was elected as Assistant Secretary of Stoke District Labour Party and on to its Executive Committee with a vote that was twice as large as the next highest EC member.  At the time, I was also leading a number of community actions, via the Labour Party Branch, as well as being involved in trying to set up local Rank and File Mobilising Committee Groups and so on, which kept the media full of stories, and kep John Golding busy threatening to have me expelled from the party.

After the meeting, I was approached by the late John McCready, a pottery union militant, who I also subsequently supported (unsuccessfully) for the nomination for the Stoke North PPC (won by Joan Walley).  I'd first met John, back in 1974, when I sat on an ASTMS negotiating team to hammer out a Spheres of Influence Agreement with CATU, the pottery union.  John was on their EC, as was another comrade I already knew, Geoff Bagnall, who had been a member of the IMG with Jason Hill. John had numerous questions, for me, such as "Is it true you support Troops Out of Ireland?"  It was, and in fact, the Labour Committee on Ireland, was only one of a long series of such campaigns that I was involved in at the time.

John was a member of Stoke South CLP, and with him was another Stoke South member Paul Barnett, who lived in The Broadway at Meir.  From that point on, I would visit Paul and his wife Lynn and their four kids every week to talk over the latest paper, and local political events.  I was not alone, I would often run into Steve Martin or John Pickett from the Militant, who were also trying to draw Paul into their orbit.  Paul eventually joined SO, and wrote a few articles covering his area of interest in theatre, particularly reviews of the then current "Boys From The Blackstuff".  As an added bonus for me, Paul also used to service my car.

It was in this context that I first met Bren who would come round from next door.  At the time, Bren was married to Ken.  If I remember correctly, Ken was a biker, or at least 36 years on, I have an image in my mind of him wearing a leather motorbike jacket.  Ken worked at Florence Colliery in Fenton, though his parents owned the local Procter's Coach company.

So, when the 1984 Miners' Strike broke out, I was not at all surprised to see Bren taking a leading role in it, organising the local Miners Wives group, and from the start being regularly on the picket line to turn back anyone even thinking of crossing, and standing four square against the police that tried to keep the pickets down to the then maximum six.

I can't remember if Bren came with me and a number of local miners to Merseyside to collect money after I'd organised a tour there with Lol Duffy, and other comrades in the area, but on almost every occasion when something was going on, Bren was involved in it.  At the end of 1984, I took over was Secretary of the North Staffs Miners Support Committee, set up by the North Staffs Trades Council.  Every week, in that capacity, as well as my capacity as organiser of my Branch LP Miners Levy, I met with Joe Wills, up at the NUM offices in Burslem, and shortly after taking over as Secretary of the Support Committee, I organised with the NUM, a mass picket of Wolstanton Colliery, where Joe had previously worked, and where my comrade the late John Locket was a prominent figure.

One again, Bren was there, bringing a large number of Miners Wives with her, and the picket, which drew in around 300-400 people, also brought in local MP Mark Fisher, from Stoke Central.  In the following weeks, we also organised a number of such mass pickets at the Meaford power station.

Even after the defeat of the strike, working-class morale and organisation did not dissipate quickly.  In 1985, I took over as President of the North Staffs Trades Council, and for the two years I held that position, there were still attendances each month of around 80 delegates.  And, during that time, we drew in a number of speakers from disputes that were going on around the country, notably the Silentnight dispute, where all the workers had been sacked.

We organised a leafleting outside the Co-op furniture store in Hanley, in the not unreasonable belief that the Co-op might itself be amenable to such activity.  Unfortunately, it turned out that the manager of the store was more concerned with the stores sales of Silentnight beds than he was the rights of Silentnight workers.  Bren and a group of Miners Wives turned up to take part in the activity,a nd we split ourselves between the two store entrances.  Myself, and another Trades Council activist, Andy Day, who also worked in the Hanley Peace Centre, took the front doors, and Bren and the others were on the side doors.  Shortly after we had started leafleting, a police van pulled up, and a sergeant got out to tell all of us that if we did not go, by the time he returned, we would be arrested.

After a short discussion, we agreed there was no point all of us risking getting arrested, so just me and Andy remained on the front doors.  Sure enough, when the sergeant returned we got nicked for "Behaviour likely to result in a breach of the peace."  When questioned as to exactly what that behaviour was, we were told that it was handing out leaflets that someone might take offence too, and thereby respond violently!  Not surprisingly, the charges were later dropped.

Bren later entered a relationship with Phil Pender who along with his brother Chris, was a member of my Labour party Branch in Tunstall.  Both Phil and Chris for a brief period joined the Stoke North SO group, which met in the Hole In the Wall pub in the back streets of Tunstall, off America Street, and just up from the Torch.  Both Phil and Brenda, joined Scargill's SLP.

I last saw Bren, I think back in 2011, when I had gone to a meeting of the NSTC, Chaired by Jason, to oppose the new round of austerity that the Tories were inflicting.  I commented in my speech to that meeting that it reminded me in many ways of how things were back in 1974, when I first got involved in political activity.

Brenda Procter was one of those working class heroes whose mettle was forged in the fire of that time.

Theories of Surplus Value, Part I, Chapter 3 - Part 43

Marx then turns to the position from the standpoint of the machinery producer. They produce machines for the weaver, spinner and yarn producer, as well as producing machines for their own use in producing other machines. Measured in terms of linen, this comes to two metres for the loom, one metre for the spinning machine, one metre for agricultural machines, or four metres of linen in total, which is the equivalent of a value of twelve hours labour or £12.

But, again, of this total value of machinery supplied to these other producers, it is only the revenue component – the component equal to the value newly added by labour, and equal to wages and profit – that can be consumed by the machine maker. The other component of the value of the machine, the constant capital, must be reproduced. The machine maker must use linen to buy these commodities – wood, iron, leather and so on – from the suppliers of these commodities, or as with the flax grower, who reproduces their seed from their own output, the machine maker must reproduce their own machines out of their own output.

Looking at the machine maker's production, the value of a machine is comprised two-thirds constant capital, and one-third new value added by labour. Consequently, only one third of the linen they obtain represents revenue, which can be consumed.

In total, they can consume 0.66 metres of linen from loom production, 0.33 metres from spinning machine production, and 0.33 metres from agricultural machine making, which makes 1.33 metres altogether. The remainder of the 2.66 metres of linen they have obtained represents the value of the constant capital contained in those machines. Out of this, they must pay their own suppliers for that constant capital.

Marx assumes that of the value of this constant capital (2.66 metres = eight hours labour = £8) raw material used in their production constitutes two-thirds, whilst the other third is comprised of the wear and tear of their own machinery, used in the production. As described above, the position of this machine is the same as for the flax grower, who has to replace their own seed, but Marx analyses it further later on.

The amount of linen equivalent for wood, iron, etc. comes down to 1.78 metres. But, its necessary to refer back to the machinery producer again at this point, because the wood producer and iron maker also use machines in their own production, and they must therefore hand some linen back to the machine producer equal to the value of machinery used in their output.

The situation is, however, more straightforward in respect of those extraction industries, because they do not use any raw materials for processing, so the value of their output divides into the value of wear and tear of the machines used in production, plus the value of the new labour added.

The point being here that there are innumerable exchanges that could continue to mushroom out of the total production. Just as was the case in trying to find sufficient demand from revenue, by introducing revenue from additional capitals only compounded the problem, because the total value of output necessarily grew faster than revenue, so its impossible to resolve the problem on the back of exchange itself.

“And so we might go on calculating to infinity, with ever smaller fractions, but never able to divide the 12 yards of linen without a remainder.” (p 133)

The linen here represents the consumption fund, and consequently is equal to, and can only be consumed by revenue – the value added by labour, or v + s. But, in examining the production of the linen, in ever more detail, we find that the total value of production is greater than the value of this final output, i.e. the linen, because it necessarily involves the production of constant capital used not in the production of the final output, but also in the production of constant capital itself.

In other words, the value of the consumption fund, of final output, is equal to v + s, but the value of total output is equal to c + v + s, so that it is impossible for the value of total output to be resolved into incomes – wages, profit, interest and rent – as Smith and his inheritors claim. National Income/Expenditure does not equal national output, but only the value of the consumption fund, the new value added by labour during the year.

Wednesday, 22 February 2017

Vote Labour In Stoke and Copeland

Vote Labour


23rd. February

In the by-elections tomorrow in Stoke central and Copeland, workers should vote Labour.  They should do so for all the reasons Marxists always advise workers to support the workers' party. 

“As the experiences of the Russian Revolution teach us – remember this in England and America! – the most important thing of all is to stay in the midst of the masses of workers. You will often go wrong with them, but never leave the mass organisations of the working class, however reactionary they may be at any given moment”.

(Zinoviev’s closing speech at the 15th Session of the Second Congress of the Comintern) 

Particularly, at the current moment, the Labour Party following the election of Corbyn, as Leader, in 2015, is moving Left, and so all of the old excuses of the left sects ring even more hollow today, as they ossify in their self-imposed isolation from the working-class, and its main political organisation.  No Marxist would suggest that Corbyn's Labour Party is perfect, though it is an improvement on what has existed over the last thirty years, but perfection only springs into existence ready formed, in the minds of fantasists and deists.  In reality, anything even approaching perfection has to be forged through hard work, over long periods.  The best conditions for workers identifying what is good or bad, and what needs to be improved in the existing Labour Party, therefore, arise when it is tested in that real fire of class struggle.  We need Labour MP's and a Labour government to test that mettle, and to forge ever harder tools and weapons.

Of course, for an ordinary worker in Stoke the recent events may weigh heavily on their hand as they hold the pencil in their hand ready to make their mark in the polling booth.  If they were a Leave voter, they may on the one hand, be concerned that Labour were opposed to Brexit, and that the Labour candidate Gareth Snell correctly stated in one tweet that "Brexit is a load of shit".  They may, on that basis consider voting for the parties that honestly support Brexit, rather than are committing themselves to it, only after the referendum, and so as not to risk losing the support of Labour voters in Leave areas.  So, they may consider voting for the Tories or more rationally UKIP.

But, even as a Leave voter, they would be wrong to do so.  In all polls going back years, prior to the referendum, the majority of voters, including in areas like Stoke, rated the EU and Immigration, as coming low down on their lists of concerns, behind jobs, wages, the NHS and so on.  That is why, these areas continued over the years to vote Labour, who the workers in these areas saw as being the party committed to policies they needed on those issues.  Workers in Stoke, and similar areas did not suddenly become hostile to the EU, or concerned about immigration only last June!  All of those who live in these areas, and talk to ordinary workers as a matter of our daily lives, know that these sentiments have been there for decades.  Yet, none of those concerns stopped workers in those areas, year after year voting labour, and in some cases being active members of the Labour Party itself.  Nor will that situation have changed on June 24th 2015 either.

Whatever Labour Leave voters might feel, their overriding concern for the issues of jobs, wages, the NHS and so on, means that they should still vote Labour, because they must know that the Tories are the enemies of workers on all these issues.  It is the Tories who want and where they can, have cut workers wages.  It is the Tories that are decimating the NHS just as they did under Thatcher and Major in the 1980's and 90's.  It is the Tories who want to use Brexit so as to have a bonfire of workers rights and turn Britain into a 21st century equivalent of Batista's Cuba, with low wage, low status jobs for the the majority, and low taxes and vast speculative wealth for a small minority.  

Moreover, Nuttall's Nutters in UKIP are even worse.  Nuttall himself is a former hard-right, Thatcherite Tory, who stood in elections under that banner in the past, and openly advocated privatising the NHS.  However, workers in Stoke feel about the EU or immigration, which the Tories and UKIP and the gutter press over decades have led them to believe are the causes of their problems, in order to distract them from the real cause in the inadequacies of capitalism, and the austerity policies carried out by conservative politicians, they should vote Labour, because only Labour comes close to offering them the kind of policies required for dealing with their main concerns over jobs, wages, the NHS.

The Tories and UKIP offer the opposite kinds of policies on all those issues.  They offer only further attacks on workers jobs, conditions, wages, the NHS and public services.  As far as the Liberals are concerned, its tempting to ask, "Are the still here?"  We all saw where the priorities of Liberal politicians lie in 2010.  The whiff of ministerial leather caused them to jump into bed with Cameron's Tories, and to stand shoulder to shoulder with them in carrying through their right-wing policies of austerity, supporting things such as the Bedroom Tax.  Had they won more than their paltry 8 seats at the 2015 General Election, they would have had no qualms about getting back into bed with the Tories.

Moreover, a look at the actual practice of parties like the Liberals and the Greens, in Local Government, shows a similar pattern, whereby they talk left, but act right, alongside the Tories to implement policies of austerity etc.

On the other hand, a Remain Labour voter in Stoke might be revulsed at the haste with which Corbyn and the Labour Party have themselves jumped into bed with Theresa May to push through Brexit.  They might think that, in response they will register their vote by voting for the Liberals or Greens, who have maintained a principled position of opposing Brexit.  Again they would be wrong.  The Liberals are partly responsible for this mess, because they facilitated Cameron's government, and his hubris in calling the referendum.  The Liberals long advocated such a referendum, yet it was clear that any such referendum undertaken under a Tory government, would not be an adequate test of public opinion on the matter.  The referendum descended into nothing but a Reality TV show, of coverage of the personal bickering of Tory politicians, with everyone else effectively blacked out along with any other perspective other than inside or outside the existing capitalist framework of the EU.  There was no discussion of the possibility of reforming the EU in the interests of EU workers, for example, as opposed to introducing further reforms, such as those proposed by Cameron which would have further undermined workers rights.

The Liberals had their chance and blew it, along with the rest of the Blair-right, Third Way political centre, whose conservative policies over the last thirty years blew up speculative asset price bubbles, which undermined real productive investment, caused the financial crisis of 2008, and threatens an even bigger financial crisis any minute.  The political death of that political centre, be it the Liberals, Blair-rights, Pasok, Clinton, the PSOE, Hollande etc. is no accident.  It created its own gallows, and there is no future for workers in trying to resuscitate that corpse, however much the media keep trying to forge a new Frankenstein's Monster out of the bits of separate corpses, the latest example of which was the attempt on Newsnight by Evan Davies to invite Tory Ed Vaizey and Progress Member Alison McGovern to join together, having had former SDP member Polly Toynbee sing the praises of the French Blair-right candidate Emmanuel Macron.

Even just practically, nationally, neither the Liberals nor the Greens could form a realistic opposition.  If the LIberals even trebled their number of MP's, they would have a measly 27, whilst Caroline Lucas would have her solitary confinement broken only by the addition of an additional two Green MP's.  The only real effect, would be to split the anti-Tory vote, as happened in 2010, and thereby help the Tories back into government.

All of those arguments apply equally to the by-election in Copeland, but there is an additional factor there, which is the issue of nuclear power.  Everyone knows that Jeremy Corbyn opposes nuclear power.  However, Jeremy Corbyn is not the candidate standing in Copeland.  Moreover, the Labour Party is a democratic not a dictatorial party.  Jeremy Corbyn as leader has an important voice, but still only one voice.  The policy of the Labour Party is not to oppose nuclear power, as it is for the Greens and Liberals.

My personal view, as it has been for forty years, is that socialists should not cut off the potential of a power source that could be the most important one we have for the energy demands of our future. The question should not be whether we are in favour of nuclear power or against it, but as with any question of technology, how it is used, for what purposes, and under whose control.  No one opposes the use of nuclear material in medicine, for example, where it is used for X-Rays, C-T Scans, as well as for radiation treatment of cancers.

Our first concern with the nuclear industry should be that it is not used for purposes that damage workers interests, by threatening their lives, health and communities.  We have to be concerned for the workers who live in the communities surrounding such plants, as well as for all those generations of workers to come.  If only such concern had been shown for all of those workers, communities and families who were allowed to work for decades with deadly asbestos, that continues to blight people's lives decades later.  Everyone can be wise long after the event, and bemoan the fact that they were too concerned about short term economic considerations to have heeded the warnings that were given to them.

Labour's policy should be to demand that nuclear plants, and the nuclear industry in general is placed under workers control, with day to day workers supervision undertaken by committees of specialists drawn from the workers' movement, and local communities.  Activity should only be undertaken where it can guarantee very high levels of safety and security for workers and local communities, and just as the government provides huge subsidies to the private nuclear power companies, they should provide sufficient subsidies to ensure that workers can run such plants to these high levels of safety and security.

Moreover, we should demand as a priority, that the government provides large scale funding along with other EU governments for intensive research and development of nuclear technology so as to improve safety and security, and particularly, for the rapid development of nuclear fusion technology, which can provide limitless supplies, of safe and cheap nuclear power into the future.

But, all of that requires that we remove the Tories and their UKIP and Liberal allies, and their faith in capitalism and the free market.  It requires that we build the Labour party, and the Labour Movement, so as to be able to take on these challenges of the future.

Theories of Surplus Value, Part I, Chapter 3 - Part 42

Suppose the flax grower produces 300 kg of flax. Its value comprises 1 hour/£1 value of seed, and £2 value of labour added. Of the output, 100 kg is set aside just for the reproduction of the seed, so that only the remaining 200 kg are actually sold to the spinner. In that case, although the value of output is equal to £3, only £2 actually goes into circulation, and comprises a part of the constant capital of the spinner. When the spinner then uses this flax in the production of the yarn, only this £2 of value is incorporated in the value of their output, and when the yarn is sold to the weaver, the weaver only has to give them £2 of linen in exchange for it. (The weaver, of course, gives an additional quantity of linen equal to the value added to the constant capital by the spinner's labour).

“It is clear in the first place that the producers of the elements of the linen, of the constant capital of the linen, could not consume their own product, since these products are produced for production and do not enter into immediate consumption. They must therefore spend their wages and profits on linen—on the product which finally enters into individual consumption. What they do not consume in linen, they must consume in some other consumable product exchanged for linen. As much (in value) linen is therefore consumed by others as they consume in other consumable products instead of linen, It is the same as if they had themselves consumed it in linen, since as much as they consume in another product is consumed in linen by the producers of other products.” (p 128)

Looking at how the linen is then allocated Marx summarises the situation thus.

The linen has a value of £36 made up £12 newly added labour, £24 loom and yarn. The machine maker and yarn producer receive eight metres of linen with a value of £24. Marx assumes that the machine maker and yarn producer have added a third of the value by their added labour. That is the £24 value of machines and yarn £8, is the value of added labour, and £16 is the value of wood, iron and flax that comprise the constant capital of the machine maker and yarn producer.

In terms of linen, eight metres were paid out by the weaver, and of these 2.66 metres make up the consumption of the machine maker and yarn producer, leaving 5.33 metres left over, and which are the equivalent of the value of the constant capital of the machine maker and yarn producer, i.e. the equivalent of £16 or 16 hours of value.

If we take the flax grower then, Marx says, (and assuming no wear and tear of his fixed capital) all of the linen they receive from the yarn producer can go to consumption, because they replace their constant capital – the flax seed – out of their own output, and so do not have to buy it with linen.

Marx makes an error here. He previously said that the value of the constant capital of the machine maker and yarn producer combined was equal to 5.33 metres of linen, or £16. He begins by then setting the value of the constant capital of the yarn producer as equal to this 5.33 metres. Afterwards, he corrects it, and assumes that the yarn producers constant capital only has a value equal to four metres of linen.

We then have a situation where the constant capital of the weaver is equal to eight metres of linen (£24) divided into six metres of yarn, and two metres loom. For the spinner, Marx assumes that the value of their output comprises the four metres of linen (constant capital) and two metres of linen (new value added by labour).

The machine maker's output in linen equivalent comprises 1.33 metres of linen (constant capital) and 0.66 metres of linen (new value added by labour).

Of the four metres of linen that are the equivalent of the constant capital of the spinner, these are exchanged with the flax grower and machine maker. Marx assumes that three metres goes to the flax grower and one metre to the machine maker.

“A considerable part of the constant capital in the flax, used in its production, has not however to be replaced; for the flax-grower has already returned it to the land in the form of seed, manure, fodder, cattle, etc. Therefore in the part of his product that he sells, only the wear and tear of his instruments of labour, etc., has to be included as constant capital. Here we must rate the labour added at two-thirds at least and the constant capital to be replaced at one-third at the most.” (p 130) 

The total value of output of the flax grower is then equal to three metres of linen. Of this, two metres goes as revenue, and is equal to the new value added, whilst one metre is equal to the value of constant capital. This leaves a number of things still not accounted for. There is the equivalent of one metre of linen, which is equal to the flax grower's constant capital, 1.33 metres equal to the constant capital for the loom, and one metre, which is equal to the value of the spinning machine.

The spinning machine has a value equal to one metre of linen. It is comprised of 0.66 metres for constant capital, and 0.33 metres for added labour.

There is also the one metre of linen equivalent of the flax grower's machinery, which is divided 0.66 metres constant capital, and 0.33 metres new value added.

Tuesday, 21 February 2017

Business Rates

There has been a lot of discussion, over the last week, about Business Rates. The Tories have once more got themselves into a bit of a pickle, because they are in danger of alienating some of their small business supporters in the better off parts of the country, particularly London and the South-East. The basic issue is this. Business Rates are calculated on commercial property values, and in the better-off parts of the country, particularly London, commercial property values along with other property values have soared into an unsustainable bubble over the last decade. That means that Business Rates in these areas should rise. On the other hand, in other parts of the country, property values have stagnated or fallen, and so Business Rates in these areas are scheduled to fall. Overall, the Tories claim that the falls in Business Rates, will be larger than the rises, but it is those facing the rises, and specifically the largest rises that are complaining, and putting pressure on their Tory representatives.

Of course, the fact is that, commercial property has not been revalued for seven years. The revaluation should have been done, and the effects implemented ahead of the 2015 election, but the Tories, fearing the kind of hostility they are now encountering, deferred it to boost their election hopes. The reality is, therefore, that for the last seven years, when property values in London have soared, businesses there and elsewhere, that experienced these property bubbles have benefited compared to other parts of the country, who likewise, therefore, continued to pay too much in Business Rates. In other words, as with many more things, for example, the cost of commuter rail travel to London, the rest of the country has been subsidising already buoyant businesses in the capital.

The owners of these businesses in London, are complaining about the size of the rises they now face, of as much as 300%. But, the fact is that they know how Business Rates work, and they know that in the last seven years, at least, property values in London have been in an unsustainable bubble. They have had seven years, during which time their Business Rates were lower than they should have been, to have set aside some of their profits to cover this rise when it came, or else to have used that time to relocate their business to other parts of the country, where property values have not soared, if the question of such rates are a significant impediment to their business.

After all, that is how the capitalist market is supposed to operate. If costs rise in London to a level where firms make lower profits than in say Stoke, those businesses should relocate to Stoke, where their costs will be lower, and their profits higher. That would provide work for the people of Stoke who over the last seven years and more, have suffered from the policies of fiscal austerity that in part have been driven by the government's attempts to keep interest rates low, and to keep the property bubbles in places like London inflated. The increase in the demand for labour-power in Stoke would then increase workers wages in the area, and increase the demand for property, bringing about a rebalancing, whilst the fall in employment in London, and fall in the demand for property, would decrease London wages, burst the London property bubble, and thereby bring about an equalisation. This is the basis for the formation of a general rate of profit that drives the allocation of capital in a capitalist economy.

As this reallocation of capital, to places like Stoke, then occurs it not only raises living standards in the area, which have been decimated, as a result of the conservative policies implemented over the last thirty years, but on the back of those higher revenues for workers and businesses, it would also raise local taxes to finance the decayed infrastructure and so on that has been destroyed over that period, and which has led to the rise of reactionary forces such as UKIP and Brexit. There is then no economic rationale for the Tories collapsing, over the demands of business owners in London and other areas, where property values have soared. But, as with the situation before the 2015 election, and other issues relating to property bubbles, the reason the Tories are likely to buckle is purely political.

It isn't big businesses that are complaining about the rise in business rates. For these businesses, such taxes represent only a small part of their profits. It is the small businesses that are complaining, because the tax forms a larger part of their profits. But, that is the problem the Tories face, because they represent the interests of these small private businesses, as well as the interests of money-lending capitalists, and landlords. It is these small private capitalists that make up the core of the Tory party membership, and of its electoral base. Yet, if the Tories concede to those interests in London, it will relatively disadvantage the same social layers in the rest of the country.

Looking at the small businesses in London, either they own or rent those properties. The business owners who own the property, of course, have not complained about the huge speculative capital gains they have made in the prices of those properties over the last seven years and beyond, which have absolutely nothing to do with any effort on their part. Their is a good economic argument for encouraging such beneficiaries of these speculative capital gains to realise them by selling their properties and moving their business to some other lower cost part of the country, as described above. There is no economic argument for facilitating further such speculative gains, and allowing those business owners to benefit from them, by effectively subsidising their current Business Rate liability.

After all, the basis of the rise in those rates is not a rise in the actual tax rate itself, but is the fault of that very rise in property values. If small businesses in London want to see lower Business Rates, they should place the blame where it lies, on hugely inflated property values, and seek to burst that property bubble.

For those businesses in London that rent their premises a different set of questions arises. Firstly, high commercial property prices are a reflection of high commercial rents, because property prices are capitalised rent. But, as Ricardo and Marx described long ago, the reason there are higher differential rents in one area as opposed to another, is because the difference between commodity values and the price of production is greater in some areas than others, so that surplus profits are obtained, and landlords thereby levy a differential rent on this surplus profit. In other words, the economic conditions in London, facilitate surplus profits for businesses there, which enables landlords to levy higher differential rents, which thereby inflates property prices. There is little economic basis, let alone social justice basis, therefore, for the less well off, economically depressed parts of Britain, to subsidise London business, and London landlords, by subsidising the business rates of small businesses in the capital.

The same small businesses that are complaining about the rise in Business Rates, do not seem to have complained in the same way about the higher commercial rents they have had to pay over the last seven years, and yet one might assume that these rents are a more significant portion of their profit than is Business Rates. Higher Business rates, required to finance local services and so on, in London, would reduce the amount available to be paid out as rents to landlords, which would in turn assist in lowering London property values. There is no reason that anyone should be subsidising London landlords, who have made a killing from simply being parasites leaching off the economic activity of others.

The Tories, of course, are likely for purely political reasons to subsidise both the small businesses and landlords in London and the South-East, which again effectively means helping to keep those property bubbles inflated, and paying for it by draining surplus value from productive investment, and from the more deprived areas of the country. It is the same conservative political agenda, which over the last thirty years left large swathes of the country in a state of decay and decline, with similar conservative policies in the US and EU having the same effect that then leads to the rise of reactionary separatist and nationalist agendas and parties.

When house prices entered an unsustainable bubble, it led to the 2007-9 financial crisis. The bubble in house prices should have meant that demand for them, itself largely artificially stoked, for speculative purposes, by the Tory government in the 1980's and after, collapsed, causing a collapse in those prices. In fact, that is what happened. In parts of the US, property prices fell by around 60%, the same was true in Ireland. In Britain, house prices fell by 20% in short order – demonstrating that the high prices had nothing to do with some structural shortage of supply – and were on their way to exceeding the 40% drop they suffered in similar conditions in 1990. But, instead of allowing that collapse to proceed in order to restore some semblance of rationality to the property market, first the Labour government of Gordon Brown, slashed banks borrowing costs so that they could subsidise mortgages, and then as those money drugs wore off, after 2010, the new Tory-Liberal government, artificially boosted demand yet again with the Help To Buy scams, and so on, so as to prevent the bubble from bursting. The Tories are addicted to these property and financial bubbles, because the illusion of wealth they create is central to the fictitious wealth of those sections of the population on which they rely for their support. But, the cost of keeping those bubbles inflated is to damage actual economic growth and productive investment. Moreover, the cost of doing that has grown more and more over the years, so that it is now unsustainable.

Rents are at massively inflated levels, and yet rental yields are at record lows; dividend and bond yields are at near zero levels, and yet the amounts paid out in dividends and interest are at high levels; mortgage rates have been reduced to record low levels, and yet mortgage payments have soared, and an increasing number cannot afford to buy a house, because house prices themselves have ballooned to ridiculously high levels. In the meantime, dragged down with all of this debt, increasing numbers of people cannot get through the month without resort to high cost credit on their credit cards, or to payday lenders charging up to 4000% p.a. interest rates. This is not just unsustainable, it is way beyond unsustainable. The lesson that should have been learned over the last thirty years is that economies cannot be built upon such fictitious wealth and debt, and when this bubble inevitably bursts, the consequences will be much greater than in 2008, when that reality first broke through.

Of course, Business Rates are themselves a bad tax, just as domestic rates had been, and as Council Tax is now. They are all regressive forms of taxation, which is why, in relation to Business Rates, it is the small businesses that are complaining, not the big businesses. It would be far better to replace both Business Rates and Council Tax with a local income tax. Modern computer technology makes that quite easy to achieve.

In fact, asI wrote previously, I would also scrap Corporation Tax, and replace it with much higher taxes on dividend income, so as to encourage firms to reinvest their profits into the business rather than pay it out as dividends. I would accompany that with changes in the laws on corporate governance, so as to remove the rights of shareholders to elect company boards, and instead give that right to the workers and managers within the company. That would also deal with the question of corporate raiders simply buying up the shares of a company, and then using their control to shift production elsewhere.

And, as I also wrote some time ago, if companies are to be taxed, they should, like workers, be taxed on their sales not their profits. If workers paid income tax only on the profits they made from selling their labour-power, as companies do in paying corporation tax on their profits, then workers would pay no income tax, because they make no profit on selling their labour-power. The cost of producing their labour-power is equal to the price they obtain for it, in the form of their wages – if they are lucky!

The problem with local income taxes is that in those areas of the country where economic activity is already depressed, and where more is required to cover things such as social care, health care and so on, the tax base is also lower. That means that either the services provided in those areas are of lower quality, reducing the use value of labour in that area, and also acting as a deterrent for other inward investment, or else the rates of tax levied in such areas have to be higher, again acting as a deterrent for inward investment, and encouraging the better paid workers to also move out to lower tax areas. That was witnessed in New York, during the 1970's, for instance.

In order for such local income taxes to work properly, therefore, they have to be accompanied by forms of fiscal transfers from a central state authority, so as to create a more level playing field within the overall economy, and in order to prevent a race to the bottom in relation to taxes, and services. In fact, that is one reason that not only is Socialism In One Country a reactionary and utopian concept, but in the modern globalised world, with a world economy, and capital taking the form of huge multinational companies, even the idea of social-democracy in one country is a reactionary and utopian concept. It is why the foundation of the Eurozone was always flawed, and why the EU will have to bring about greater fiscal and monetary integration, and introduce greater fiscal transfers across the member states, so as to promote growth in economies such as Greece, Portugal, Italy and Spain.

It is also why Brexit is a thoroughly reactionary concept that will damage the interests of workers, particularly in Britain, for decades to come, if it is ever pushed through.