Chapter 5 – The Crisis of Social-Democracy
The
fundamental basis of social-democracy is the idea that social
progress depends upon the accumulation of capital, the steady
increase in social productivity, and the improvement in living
standards, which this brings about. The failure of social-democracy
to follow through on the logic of its own ideology, by confronting
conservatism, and the antediluvian forms of capital, as Marx
describes them, on which that conservatism rests, undermined its own
social base. It undermined socialised industrial capital, vis a vis
fictitious capital, and the consequences of that are now being felt,
because, as illustrated earlier, the latter ultimately is
subordinated economically to the former. It is this basic
contradiction that explains why the political centre, across all the
developed capitalist economies, has collapsed.
Social-Democracy
can only go forward by capital itself going forward. In the period
after the the end of the post-war boom, in 1974, capital responded in
the way it always does. To deal with high wages, caused by a
relative shortage of labour-power, as capital accumulation had
proceeded to a degree where it had been overproduced, capital engaged
on a programme of intensive rather than extensive accumulation. In
other words, it concentrated on introducing new labour-saving
technologies.
There
would be absolute over-production of capital as soon as additional
capital for purposes of capitalist production = 0. The purpose of
capitalist production, however, is self-expansion of capital,
i.e.,
appropriation of surplus-labour, production of surplus-value, of
profit. As soon as capital would, therefore, have grown in such a
ratio to the labouring population that neither the absolute
working-time supplied by this population, nor the relative surplus
working-time, could be expanded any further (this last would not
be feasible at any rate in the case when the demand for labour
were so strong that there were a tendency for wages to rise); at a
point, therefore, when the increased capital produced just as
much, or even less, surplus-value than it did before its increase,
there would be absolute over-production of capital; i.e.,
the increased capital C + ΔC would produce no more, or even less,
profit than capital C before its expansion by ΔC. In both cases
there would be a steep and sudden fall in the general rate of
profit, but this time due to a change in the composition of
capital not caused by the development of the productive forces,
but rather by a rise in the money-value of the variable capital
(because of increased wages) and the corresponding reduction in
the proportion of surplus-labour to necessary labour.
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This
process, by raising the rate of surplus value, by relatively
diminishing the proportion of labour employed, acts to reduce therate of profit/profit margin, because the proportion of new labour (v
+ s) contained in each unit of output declines, whilst the proportion
of dead labour (c) in the form of processed materials rises.
However, the very same process of technological development and
increase in social productivity raises the annual rate of profit, and
so the general annual rate of profit of society.
It
does this in a number of ways, as Marx describes in Capital III,
Chapters 6 and 15. Firstly, by raising productivity, it
ends the relative shortage in the supply of labour-power, which had
caused wages to rise, and profit to be squeezed. It creates a
relative surplus population, which causes wages to fall, surplus value to rise, and the rate of profit to rise.
Secondly,
the mass of new technologically more advanced equipment that is
introduced causes a large moral depreciation of the existing fixed capital stock, which brings about an immediate rise in the general
annual rate of profit. Thirdly, the rise in social productivity
reduces the labour-time required for the production of both fixed and
circulating constant capital, again bringing about a rise in the rate
of profit, as the value of constant capital falls. Fourthly, that
rise in social productivity also reduces the value of wage goods and
so of the value of labour-power, causing the rate of surplus value to
rise, and the rate of profit along with it.
Fifthly,
new technologies create more effective ways of using existing
materials, as well as introducing new, more effective materials.
Better engines burn oil more effectively, carbon fibre is more
effective, and required in smaller quantities, than steel, and so on.
Finally, the rise in social productivity increases the rate of turnover of capital, and thereby raises the general annual rate of
profit, and releases capital for other purposes.
This
huge rise in social productivity that began in the mid 1980's, and
brought about a consequent huge rise in the general annual rate of
profit, is what caused the secular decline in interest rates that
began at that time, as this mass of realised profits grew at a faster
pace than the demand for money-capital to finance additional real
capital accumulation. The secular fall in interest rates fuelled a
secular rise in the capitalised values of financial assets and
property, which underpinned the growth in the power of the owners of
fictitious capital, and the conservative ideas that are based on it.
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