Chapter 10 – Bonapartism
Even where systems of co-determination are established, such as in Germany, the owners of fictitious capital retain a majority position on the supervising boards. But, a similar situation exists as with that described by Marx in relation to Absolute Rent, and the reason the revolutionary bourgeoisie recognised the logic of land nationalisation.
So long as the owners of fictitious capital, i.e. shareholders, have a majority vote on company boards, they can determine what happens with company profits. They can determine how much is allocated to capital accumulation, to being thrown into money markets, or alternatively used to pay dividends, return capital to shareholders or buy back stock. No wonder then that, as global dividend yields fell, the proportion of profits going to dividends went from 10%, in the 1970's, to 70% today.
But, even without this control, the owners of fictitious capital, and of vast amounts of loanable money-capital, would exert considerable power. The state obtains revenue from taxes, but to finance its longer-term expenditure it uses bonds, and thereby borrows in the capital markets. In the same way that landlords can withhold land unless they are paid a rent on it, so too the owners of money-capital can withhold it unless they are paid interest on it.
In this way, the capitalist state is not even in the position of a large socialised capital, which can use its own profits for capital accumulation. Even large socialised capitals, however, will not find it efficient to store up vast amounts of money-capital in reserves, waiting to be invested. In the same way that landlords can withhold land unless a sufficient absolute rent is paid, so the owners of loanable money-capital may withhold it from buying shares or bonds, unless a sufficient level of interest is paid on them.
Marx refers, in Capital III, to the fact that the worker owned co-operatives in Lancashire had to pay higher rates of interest on their loans than privately owned enterprises. Connolly makes the same point about the agricultural co-operative at Ralahine. It was only the superior efficiency of worker-owned enterprises that enabled these co-operatives to be more profitable, despite these higher interest rates levied on them.
It can be seen then why a radical social-democratic programme would call for not only the nationalisation of land, to prevent surplus value being drained in rent, but also the nationalisation of credit, to prevent surplus value being drained in interest. There is a direct comparison here between the position of the financial oligarchy – the owners of fictitious capital – and the old landed oligarchy. Once capital becomes established in agriculture, the social function of the landlord disappeared. It was taken over by the capitalist farmer. Yet the landed aristocracy continued to hold political power in parliament, not only long after its social function had been replaced, but after industrial capitalism itself had become dominant. Even at the time of Marx's Inaugural Address to the First International, in 1865, Marx refers to this continued dominant role of that landed aristocracy in parliament.
Today, long after the social function of the private capitalist has disappeared, and has been replaced by the functioning capitalists, the old private capitalists, whose wealth now resides in fictitious capital, rather than industrial capital, continue to hold political power in parliament. But, like the political power of the landlords, in the 19th century, was constrained by the objective fact of an economy that was dominated by capitalist production, so the power of the money-lending capitalists is constrained by the fact that the economy is dominated by socialised capital.
|“The corporation renders the person of the capitalist wholly superfluous for the conduct of capitalist undertakings. The exclusion of his personality from industrial life ceases to be a question of possibility or of intention. It is purely a question of POWER.”
Kautsky – The Road To Power
The old ruling class comprises the private owners of capital, but they are not homogeneous. The dominant section of that class are the owners of vast quantities of fictitious capital, and they are now a truly international and global class, reflecting the fact that capital itself created a global economy, and that, as part of it, firms became multinational and transnational corporations. But, in terms of numbers, it is the millions of small business owners that comprise the bulk of the owners of private capital, and their capital takes the form not of fictitious capital, but of real industrial capital, of capital involved in production or as merchant capital, including money-dealing capital. These sections of the class, particularly the smallest representatives, tend to view the world from a national rather than international perspective. They are more likely to seek protective measures from the state, than an opening up to global competition.
Yet, the dominant section of capital itself is not privately owned capital, but socialised capital. It is on its fortunes that the fate of the state, of the economy, and, therefore, of all those classes and class fractions within the society depends. It is the middle-class personification of that socialised capital, whose ideas form the ruling ideas of society and the state. Those ideas are technocratic and meritocratic, seeing the state and society as a sort of machine, and their function, as in production, being to ensure that the machine runs as efficiently and harmoniously as possible.
|“The peculiar character of social-democracy is epitomized in the fact that democratic-republican institutions are demanded as a means, not of doing away with two extremes, capital and wage labour, but of weakening their antagonism and transforming it into harmony. However different the means proposed for the attainment of this end may be, however much it may be trimmed with more or less revolutionary notions, the content remains the same. This content is the transformation of society in a democratic way, but a transformation within the bounds of the petty bourgeoisie. Only one must not get the narrow-minded notion that the petty bourgeoisie, on principle, wishes to enforce an egoistic class interest. Rather, it believes that the special conditions of its emancipation are the general conditions within whose frame alone modern society can be saved and the class struggle avoided. Just as little must one imagine that the democratic representatives are indeed all shopkeepers or enthusiastic champions of shopkeepers. According to their education and their individual position they may be as far apart as heaven and earth. What makes them representatives of the petty bourgeoisie is the fact that in their minds they do not get beyond the limits which the latter do not get beyond in life, that they are consequently driven, theoretically, to the same problems and solutions to which material interest and social position drive the latter practically. This is, in general, the relationship between the political and literary representatives of a class and the class they represent.”
Marx – The Eighteenth Brumaire of Louis Bonaparte
But, as Engels recognised,
“... the middle class can never obtain full social and political power over the nation except by the help of the working class.”