Thursday, 27 April 2017

Social-Democracy, Bonapartism and Permanent Revolution, Chapter 11 – Results and Prospects (2)

Chapter 11 – Results and Prospects 

Part 2

Industrial capital, via its natural process of concentration and centralisation, becomes socialised capital, which, as Marx describes, is the transitional form of property, and upon which the material basis for social-democratic ideas are developed, which bear within them the roots of socialist consciousness.

The value of these great social experiments cannot be overrated. By deed instead of by argument, they have shown that production on a large scale, and in accord with the behests of modern science, may be carried on without the existence of a class of masters employing a class of hands; that to bear fruit, the means of labour need not be monopolized as a means of dominion over, and of extortion against, the labouring man himself; and that, like slave labour, like serf labour, hired labour is but a transitory and inferior form, destined to disappear before associated labour plying its toil with a willing hand, a ready mind, and a joyous heart. In England, the seeds of the co-operative system were sown by Robert Owen; the workingmen’s experiments tried on the Continent were, in fact, the practical upshot of the theories, not invented, but loudly proclaimed, in 1848.”

Marx – Inaugural Address to the First International

In the 1970's, social-democracy pulled back from confronting and overthrowing the power of the owners of fictitious capital, because, as was the case with the liberal bourgeoisie, in 1848, they required the mass of the working-class behind them to accomplish their aims, and took fright. The consequence was a conservative reaction, most notably in the shape of Thatcher and Reagan, in the UK and US, Both rested upon that social base of millions of small business owners; both sought to undermine the social base of social-democracy within the organised working-class. Neither could escape the objective reality that modern capitalism is dominated by socialised capital, and that the interest and rents paid to rentier capitalists, and the taxes paid to the state, depend on the profits produced by that socialised capital.

Nor could they escape the fact, as Marx described in Capital III, Chapter 15, that the extraction of surplus value, is only the first part of the story in the production of profits, and that the second part depends upon the realisation of those profits, via the sale of the finished products.

But this production of surplus-value completes but the first act of the capitalist process of production — the direct production process. Capital has absorbed so and so much unpaid labour. With the development of the process, which expresses itself in a drop in the rate of profit, the mass of surplus-value thus produced swells to immense dimensions. Now comes the second act of the process. The entire mass of commodities, i.e. , the total product, including the portion which replaces the constant and variable capital, and that representing surplus-value, must be sold. If this is not done, or done only in part, or only at prices below the prices of production, the labourer has been indeed exploited, but his exploitation is not realised as such for the capitalist, and this can be bound up with a total or partial failure to realise the surplus-value pressed out of him, indeed even with the partial or total loss of the capital. The conditions of direct exploitation, and those of realising it, are not identical. They diverge not only in place and time, but also logically. The first are only limited by the productive power of society, the latter by the proportional relation of the various branches of production and the consumer power of society. But this last-named is not determined either by the absolute productive power, or by the absolute consumer power, but by the consumer power based on antagonistic conditions of distribution, which reduce the consumption of the bulk of society to a minimum varying within more or less narrow limits. It is furthermore restricted by the tendency to accumulate, the drive to expand capital and produce surplus-value on an extended scale. This is law for capitalist production, imposed by incessant revolutions in the methods of production themselves, by the depreciation of existing capital always bound up with them, by the general competitive struggle and the need to improve production and expand its scale merely as a means of self-preservation and under penalty of ruin. The market must, therefore, be continually extended, so that its interrelations and the conditions regulating them assume more and more the form of a natural law working independently of the producer, and become ever more uncontrollable. This internal contradiction seeks to resolve itself through expansion of the outlying field of production. But the more productiveness develops, the more it finds itself at variance with the narrow basis on which the conditions of consumption rest.”

Capital III, Chapter 15

A necessary contradiction arises from attempting to raise the rate of profit by depressing wages, and so raising the rate of surplus value, and the ability then to realise that produced surplus value, as profits, when the workers whose wages have been cut, comprise a large component of aggregate demand.

As I described in my book, Marx and Engels Theories of Crisis, the answer that was found to this dilemma was debt. What workers could no longer consume from their stagnant or reduced wages, they were encouraged to buy instead on credit, as credit controls and other financial regulations were abolished in the 1980's. Many thereby mortgaged their future labour-power, to finance their current consumption, turning themselves into debt slaves, as well as wage slaves. Private debt soared into the period prior to the 2008 crash, and has soared again now to similar levels.

Households covered their consumption via this debt, whilst countries covered the import of the commodities consumed by those households, by borrowing from foreigners, particularly from Asia, as the trade deficit grew ever wider. But, as described in Chapter 9, consumption that is not financed from revenue can only be financed by a consumption of, and thereby destruction of, capital. As Joan Robinson said, a long time ago, there is a big difference between borrowing to invest in productive capacity, which increases wealth, and borrowing simply to finance consumption, which destroys wealth.

In examining the situation in any society, as I wrote recently, Marxists do not simply undertake a superficial, journalistic snapshot of the constitutional arrangements, and governmental powers, but examine the social relations upon which the different parties rest. The truth is always concrete.

A fundamental understanding, in this regard, as I have set out in the past, requires a recognition of the existence of three different powers – the economic and social power, the state power, and the governmental power or political regime.

The economic and social power can be thought of as civil society, As Marx says, in The Critique of the Gotha Programme, it is upon this civil society that the state itself ultimately rests. The civil society is never static, but is constantly developing in the direction of the new economic and social relations, under the pressure of the development of the productive forces. The bourgeoisie developed capitalist property within the pores of feudal society, and they developed their own forms of self-government alongside it, as alternative forms to those of the existing ruling class. And, the working-class develops co-operatives, trades unions, and other forms of collective organisation, such as Friendly Societies, and its own political party as an alternative power to that of the bourgeoisie.

The economic and social power itself derives from the dominant social relations arising from the dominant economic relations. Moreover, this has to be analysed concretely and dynamically, not superficially and statically.

No comments: