Wednesday, 24 May 2017

Theories of Surplus Value, Part I, Chapter 4 - Part 79

In the example given, the total value of output was equal to 30 hours, and this was also equal to the value of the consumable product. All of the total product was thereby reducible to revenue. That was so even though two-thirds of the value of the consumable product comprised constant capital, and only one-third new value added by the baker. The constant capital here is the equivalent of what in the GDP figures constitutes “intermediate production”. That is it is the value of all those inputs which are used in the production of the final consumable product.

Wikipedia describes it like this.

“Conceptually, the aggregate "intermediate consumption" is equal to the amount of the difference between Gross Output (roughly, the total sales value) and Net output (gross value added or GDP)...

Thus, intermediate consumption is an accounting flow which consists of the total monetary value of goods and services consumed or used up as inputs in production by enterprises, including raw materials, services and various other operating expenses.”

But, the only reason we arrived at this conclusion that all of this value of final production was entirely resolvable into the new value added, was because we began by assuming that the only constant capital consumed was that which was created in the current year by the expenditure of labour. So, we assumed that the farmer did not use any constant capital, for example. In fact, of course, this is impossible. In order to produce grain, the farmer must himself consume constant capital. Seed is required for any grain to be produced; tools are required for planting, cultivation and harvesting; barns are required; fertiliser is required and so on.

All of this production must be reproduced out of the value of his production, and is, therefore, unavailable for consumption as revenue. Moreover, it is not just the farmer in this position. The farmer is provided with tools from the machine maker, who likewise has constant capital that must be reproduced out of their own production, and whose value is thereby not available as revenue. The machine maker is similarly provided with steel from the steel producer, wood from the timber producer and so on, all of whom have constant capital that must be reproduced out of their production.

Tuesday, 23 May 2017

Theories of Surplus Value, Part I, Chapter 4 - Part 78

The miller sells flour to the baker with a value of 20 hours, made up of 10 hours of grain (c) and 10 hours of new value added by their labour. Let us assume that instead of money payments we have an actual exchange of commodities. In that case, the baker gives bread to the miller with a value of 20 hours. But, now, the miller cannot consume all of this bread, any more than the baker could previously. The miller can consume half of the bread they have received with a value of 10 hours, but they must set aside the other half of the bread because they must exchange it with the farmer for the grain they require. In other words, the value of the flour that the miller exchanged with the baker comprised two parts, a part equal to the value of the constant capital (grain) and a part equal to the value of the labour added (revenue).

It is only this latter part that can be consumed. The miller exchanges bread with a value of 10 hours with the farmer for grain with a value of 10 hours. 

Because we have assumed the farmer uses no constant capital, the value of his product is wholly attributable to the new value created by his labour. It all constitutes revenue, and so he can consume all of the bread received. For the baker, the two-thirds of his product he exchanges constitutes his commodity-capital. In exchanging it with the miller for flour, it is for him an exchange of capital for capital. Commodity-capital is exchanged for productive-capital. The portion of his product that he exchanges, two-thirds, is equal to the value of constant capital consumed in his production.

For the farmer, and the miller, however, it is an exchange of capital with revenue. The miller provides the baker with means of production, with a value of 20 hours, but this value is comprised of 10 hours of new value created by the miller, and 10 hours of new value created by the farmer. When the miller exchanges with the baker, therefore, he exchanges both these revenues, for revenue in another form, i.e. in the form of bread. Half of the bread he consumes as revenue, the other half being exchanged with the farmer, who consumes it as revenue.

If we consider the farmer and miller as one producer of means of production one one side (B) and the baker on the other side as producer of consumption goods (A), then,

“If we look at the relation from both sides there, A exchanges his constant capital for B’s revenue, and B exchanges his revenue for A’s constant capital. B’s revenue replaces A’s constant capital, and A’s constant capital replaces B’s revenue.” (p 237) 

As Marx describes in Capital II, what is sold or exchanged is not capital but only commodities. For the farmer, his grain constitutes his commodity-capital, but he does not sell it as capital, i.e. as self expanding value. He sells it only as grain, as a commodity whose value is determined by the labour-time required for its production. The miller who buys the grain also does not buy it as capital, but only as a commodity – grain. The use value they purchase is not that of capital, as self-expanding value, but only the use value of grain, which can be turned into flour. Once purchased, it does become a part of their productive-capital, but it is neither bought nor sold as capital.

The flour represents the commodity-capital of the miller, but likewise it is not sold to the baker as capital, but only as a commodity. It is bought for its use value as flour, of being capable of being turned into bread. As Marx sets out in Capital III, in describing the development of interest-bearing capital, in all of these exchanges, it is not capital that is bought and sold, but only commodities. It is only the use value of capital as capital, as self-expanding value, that can be sold as a commodity, and whose market price is the rate of interest. But, this use value has no value, because it is not the product of labour. Its market price, the rate of interest, is determined solely on the basis of the demand and supply for money-capital.

“In the exchange itself only commodities confront each other—and a simple exchange of commodities takes place—the relation between which is merely that of commodities, the designations of revenue and capital having no significance here. Only the different use-value of these commodities shows that one lot can only serve for industrial consumption, and the other only for individual consumption, can only enter into this consumption. The various practical uses of the various use-values of various commodities, however, concern their consumption and do not affect the process of their exchange as commodities.” (p 237-8)

Monday, 22 May 2017

Strong and Stable Leadership? No, A Weak Kneed Coalition of Chaos!

So, we were expected to believe that Theresa May represented strong and stable leadership.  Please.  Anyone who has seen her pathetic performances at Prime Minister's Questions, when she engaged in bad amateur dramatics and what appeared to a gurning competition, as she tried to channel Maggie Thatcher, whilst failing to answer any questions posed to her, and being unable to respond in any way that was not already covered in the scripts that had been written for her beforehand, knew that such an epithet was never going to fly.  It was a battle plan that was going to collapse on first contact with the enemy.

This is the same Theresa May whose nickname amongst the Tories was submarine, not because she is a turd lurking just beneath the water, but because for most of her time as a Cabinet Minister, even during the EU Referendum, she was nowhere to be seen.  This strong and stable leader was not even prepared to stand up in public and engage in a TV leaders debate with Jeremy Corbyn and other party leaders, yet we are expected to believe she was going to be up to the job of negotiating with the EU 27, let alone at the encouragement of the Daily Mail and the rabid right-wing extremists that have captured the Tory Party from amongst the previous ranks of UKIP and the BNP, to go to war with Europe over Gibraltar!  Please give us a break, you must be having a larf incha?

And now, we have with the first puff of wind in the adverse public reaction to her scandalous Manifesto commitment to attack elderly people through the withdrawal of the Pension Triple Lock, the removal of the Winter Fuel Allowance and the introduction of the Dementia Tax predictable response of our supposedly strong and stable leader.  Instead of standing up straight and strong, she teeters and totters on her renowned expensive high heel shoes, and then collapses in a heap.  This time she did not even have the hand of her friend Donald Trump to hold her up.  Never mind from her bedraggled and spreadeagled, prostrate position on the ground she looks up, and now channelling The Donald tells us that her fall is all the fault of fake news!

Last week Health Minister Jeremy Hunt assured us that the idea of a cap on care costs for the elderly was out of the question, dead and buried, not only were they declaring it so, but they were declaring it so in their Manifesto ahead of the election.  The Tory newspapers came out to hail the bravery of the decision of Theresa May's Team in scrapping any possibility of a cap on care costs.  Then at the weekend Bojo was sent out on to the Sunday morning politics show to emphasise just what a strong and stable leader May was by scrapping any possibility of their being a cap on care costs for the elderly.  He was followed by Damien Green who when asked if there was any chance that the Tories would reconsider the idea of their proposals for the dementia Tax, and for imposing any kind of cap on those costs answered abruptly, and with unusual clarity and candour "No, absolutely not."

Within 24 hours, the policy was scrapped.  Or was it?  Our strong and stable leader May, came out of hiding to try to face down the press and media with the kind of bare faced dissembling that only Tories have perfected.  Nothing has changed, our strong and stable leader insisted against all the evidence to the contrary and the obvious derision of even the overwhelmingly Tory media and press assembled!  It had always been their intention to publish a Green Paper, after the election for discussion about what the actual details of the policy on care costs would be.  That despite all of those Tory spokesmen only the day before telling everyone loud and clear that the policy was decided and set out in the Manifesto, and that there would be no cap on costs!

One can only wonder whether her father the vicar was turning in his grave at his daughter telling such obvious porkies.  Even the veteran psephologist David Butler, the cousin of Tory Chancellor R.A. Butler, came out to say that he had never seen in all of his 92 years, such a dramatic, sudden and sizeable U-Turn.  In fact, the tories have managed to conjure up the worst of all worlds.  First they come out with a policy that quite obviously had been dreamed up overnight, and emerged from Theresa May's inner circle.  The policy as everyone recognised was a direct attack on the tories core voters amongst the elderly property owners.  Yet, they did not seem to realise just how damaging it was likely to be, or more likely, they are just so arrogant, and removed from reality that they did not care.

Then having built their entire campaign on effectively no policies, and intending to run a campaign solely on the question of Brexit, and May's supposed strong and stable leadership, they have undermined that one pillar of their election campaign by folding at the first adversity, thereby showing that far from being strong and stable May is weak and unstable.  But, then they went from bad to worse, because having so obviously folded they denied having done so, in the most unbelievable and dissembling manner possible.  But, ever worse than that having folded and claimed they have not, they have still not said exactly what the cap on carre costs would be!

And again demonstrating their arrogance they refuse to say what any such cap would be, just as they have refused to say what the limit might be for their imposition of means testing of the Winter Fuel Allowance.  As things stand, elderly people could find themselves worrying about whether they or their children will be able to meet hundreds of thousands of pounds of care costs, whilst in the meantime they struggle through Britain's cold and inclement Winters afraid even to heat their homes. This is what seven years of Tory-Liberal government has brought us to as they have wrecked the economy, and destroyed public services with their insane and economically illiterate policies of austerity.

And what does may offer us?  Another decade of even more Tory austerity, and an austerity that is likely to get much worse as a result of the Hard Brexit May is planning, as they wrench Britain out of Europe in the next six months.  As the statement of David Davis made clear at the weekend the Tories have no intention of negotiating in good faith with the EU.  The Tory government is really just a coalition of chaos with the ultra right-wing nationalists of UKIP, and their outliers from the BNP, who have no concern for the British people or the British economy, and are only concerned with pushing through their own xenophobic policies aimed at immigrants.

And the reality is now becoming apparent.  The Tories have asked the question who would you prefer leading Britain in the negotiations with the EU, May or Corbyn?  Well let's think about that question.  In Theresa May we have someone who has spent most of her political life with her head firmly kept below the parapet - hence the submarine nickname.  In Jeremy Corbyn, we have someone who through thick and thin, and against all adversity of whatever the media and the right-wing of the Labour Party threw at him, stuck to his principles, and eventually won through gaining a huge majority in being elected Leader of the Labour Party.  In Theresa May, we have a posh vicar's daughter who has gone through life having things handed to her on a plate.  Unlike Jeremy Corbyn, who had to earn the massive vote of support for him as Labour Leader, May even had the Tory Leadership handed to her on a plate without even a vote!

In Theresa May we have a posh Tory who has never had to fight for anything, never had to negotiate anything.  In Jeremy Corbyn we have someone who before becoming an MP, was a trades union organiser and negotiator for the low paid public sector manual workers in NUPE.  In Theresa May we have someone who represents a Tory Party that wants to go back to its days of privilege for those who still think we are living in the days of Upstairs Downstairs or Downton Abbey.  They accuse Labour of wanting to go back to the 1970's (an era which was very good for many of us), but Theresa May's Team want to take us back to the 1870's!  They want to go back to the Victorian Days of Fox Hunting, of Tom Brown's School Days, and Grammar Schools.  They are not just conservative, they are thoroughly reactionary.  No wonder they use the language of the authoritarian strongmen, of strong and stable leadership, of blood and iron nationalism, because that is what they intend to impose on the people of Britain, to keep them subdued as the reality of Tory austerity, and Tory Hard Brexit is imposed on them.

By contrast, Jeremy Corbyn has already opened channels of dialogue with socialist parties across Europe.  Far better, if Britain is to leave Europe to do so under the guidance of someone who actually does want to negotiate that on the best terms, rather than the Tories who still think that these are the days of Empire when British gunships could impose the will of the British ruling class on Johnny foreigner.

Theories of Surplus Value, Part I, Chapter 4 - Part 77

In a money economy, the farmer simply receives money from the miller, rather than flour, and then exchanges this money with the baker rather than flour.

If we consider the position of the baker here, as the producer of consumption goods, only a third of the value of his product constitutes revenue. It is that third, equal to the new value he has created by his labour. The other two-thirds is equal to the value of constant capital used in its production, 20 hours of flour. Although this two-thirds of his product exists in the form of consumable commodities, he cannot consume them, because he must exchange this product once more, in order to obtain the flour he requires to continue production.

In a sense, the situation here is reversed from that considered previously. What he must reproduce is the flour consumed, but he does not do this by actually selling two-thirds of his production to the miller. Instead he sells one third to the farmer and one third to the miller, and thereby obtains the money required to buy the flour once more from the miller.

The same is true here if there were the producer of some other type of consumable product, such as linen. If the baker exchanges 5 hours of their product for linen, with a value of 5 hours, this is only possible, if their own consumption of bread falls by 5 hours. In other words, their total consumption is limited to 10 hours. If the baker consumed 10 hours value of their production, and then exchanged the other 20 hours of their production for linen, they would then have to exchange this linen for 20 hours of flour, because without flour they could not continue to produce bread on the same scale.

But, having consumed 10 hours value of that production, either as bread or linen, the baker must exchange 20 hours of consumable product. The only possible exchange is then to exchange this consumable product for means of production, i.e. flour.

“Its use-value excludes industrial consumption. So he can only industrially consume its value, [by selling it] to the producers of those elements of production needed for his product. He can neither consume in kind this part of his product, nor can he consume its value by selling it for other products that can be consumed individually. Just as little as this part of his product can enter into his own revenue, can it be replaced out of the revenue of producers of other individually consumable products; since this would only be possible if he exchanged his product for their product and so consumed the value of his product, which cannot happen.” (p 237)

Likewise, because his product can only be consumed, the buyer of this product can only do so in order to consume it, rather than to use it as means of production. In other words, the buyer can only buy it from their own revenue – wages, or profit.

Sunday, 21 May 2017

The Mass Rallies and Support For Corbyn and Tory media Bias

Up and down the country, tens of thousands of ordinary working people have been turning out spontaneously to hear and support Jeremy Corbyn and Labour.  Yet not one word is written in the Tory press, (even those that claim to be Labour or "liberal") not one clip is shown on the Tory media.  The bias is palpable and disturbing given the extreme right-wing authoritarian nature of Theresa may and the Tories.

We are told that ordinary working people do not support Corbyn, and so its obvious why they do not report this mass social support for Corbyn.  They are creating a narrative in which that is true, and where everyone is led to perpetuate the meme that Corbyn is unpopular, and so on.  That reality was grasped and laid out by Rag and Bone Man in the clip below.



But the extent of the rallies is truly phenomenal, and only matched by the phenomenal arrogance and bias of the mainstream media that thinks that in an age of social media it can continue to get away with deliberately failing to report it.  Below are some of the videos showing the extent of the support across the country particularly here in the North, for Corbyn, and the change he is promising for Labour and for the country.

Jeremy Corbyn on The Wirral



Corbyn turned up on spec to The Libertines Concert at Tranmere Rovers Football Ground




Jeremy Corbyn at Hebden Bridge in Yorkshire

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Corbyn in Leeds




Theresa May's Dementia Tax and House Prices

Theresa May has decided to attack older people, who she thinks will vote for her come what may. She is not only scrapping the Triple Lock on pensions, along with the Winter Fuel Allowance, and setting up further large rises in taxes to pay for the economic crisis that will follow Brexit, but she is also proposing to introduce a Death Tax on the estates of older people who have the misfortune to suffer with dementia.

This tax does not affect you if you have heart condition in old age, or suffer from cancer, when you will still be entitled to go into hospital and be treated for free, and receive the long term care for those conditions you need.  It only affects you if you become confined due to dementia or Alzheimer's, and need full-time care either in a care home, or in your own home.

For a long time it has been the policy of government and of Social services to try to get elderly people to remain in their own homes rather than go into care homes.  The reasons given for that have been framed in terms of providing dignity in old age and so on, but the real reasons were about cost of providing good quality care homes and provision for the elderly.  The experience of many elderly people with care homes itself encouraged them to want to avoid them and stay in their own home. But, there is no reason why elderly people in this country should not enjoy the same kind of retirement villages, and care facilities that many elderly people in the United States enjoy, when they retire to Florida, and other states with climates more suitable for the elderly.

However, as a result, many elderly people in Britain to stay in their own homes, and have care provided for them, usually by a mixture of care from their families, and by social services.  Up to now, the value of the family home was not included in your assets in calculating whether you should pay for the state care provided in your home.  Now it will be down to £100,000.  That means that many people whose only asset is the house they live in, will find that they have to pay for the support that previously they obtained for free.  The Tories say that no money will have to be paid until after you are dead, with the money coming out of the estate.  In other words, this dementia Tax, is also a huge Death Tax, being imposed on hundreds of thousands of elderly people, and their families who for years provide them with free care and support in their homes, and receive nothing from the state for doing so.

The Tories say that it means that at least £100,000 will be available to be passed on from the value of the home, but that does not change the fact that many people will be paying out hundreds of thousands of pounds, which currently they do not.  The Tories have tried to phrase this in terms of it being fair, because it is those who have benefitted from sharply rising house prices who will pay the most.  This again is crass, and wrong.

The average house price across the country, according to the estate agent indices is £250,000.  That means that even if those paying the dementia tax have no other assets, they would be liable to pay up to £150,000 in care costs.  In many places, house prices are more than that, so the care costs would be potentially much higher.  Its true that those most affected by that will be those whose main asset is their house, and whose house price has inflated astronomically.  But, there are two things about that, the most wealthy in society do not have the majority of their wealth in the form of their house, secondly, whilst some elderly people have benefited, on paper, from the astronomical inflation of house prices, it provides them with no actual tangible benefit, and moreover, their children have suffered as a result of that same rise in house prices.

The really rich do not have the majority of their wealth in their home, but in shares, bonds and other revenue producing assets.  But, even for those moderately rich people who do have a lot of wealth tied up in their home this is not likely to affect them too much.  In the village where I live there are several properties that have been up for sale recently for prices between £1 million and £3.5 million. Even if your care costs came to £300,000 that still leaves you with £600,000 on the £1 million home, and £3.2 million on the more expensive.  But, for the average person, a £300,000 bill would more or less wipe you out.  And, indeed, someone buying the £3.5 million house, which had an attached horse racing circuit, and stables, would be likely to have even more of their assets in shares etc.

These kinds of rich people can not only afford care costs, as only being a small proportion of their revenue from these assets, let alone as a proportion of their wealth, but their lawyers and tax accountants would have ensured that these assets were placed in trusts for the children so as to avoid any question of the estate having to pay any Inheritance taxes, or charges against the estate.  It is once again the ordinary working person, and middle class person that will suffer whilst the Tories ensure the really rich benefit.

For the majority of people say in London and its environs where house prices have risen ridiculously, the one thing that has enabled those prices to remain high, and allowed some younger people eventually to buy a house, is the fact that when their parents died, they picked up a house, or they inherited the proceeds of the sale of the house.  One good thing of the Tories Dementia Tax, would be that if the value of all London houses was swallowed up in paying for care costs, there would be nothing left in estates to be passed on for children to use as deposits etc. to buy those houses at their current inflated prices.  It would thereby fairly quickly burst the London property bubble, and with it the property bubble in the rest of the country.

However, in the meantime, it would be all of the younger people who have provided free care and support to their parents, who would immediately suffer from that, as their one hope of being able to afford a home, via the inheritance of the proceeds of their parents home disappeared into thin air.

Damien Green Does Not Understand Economics and Finance

On The Andrew Marr Show, this morning, Damien Green accused John McDonnell of not understanding the way government borrowing and capitalism works, in relation to the financing of Labour's proposals for renationalising various utilities.  In fact, it is Green who showed that he does not understand economics and finance.

John McDonnell set out the way that Labour would undertake come of these nationalisations by swapping bonds for shares in the companies.  As I've previously described, I would not even do that.  I would simply pass new company law legislation on corporate governance that made all shares non-voting shares, so that shareholders no longer have any right to determine company policies, or to appoint Boards of Directors.  I would introduce industrial democracy so that the Boards of Directors were democratically elected by the whole of a company's workforce from the senior managers down to the labourer who sweeps the floor.  In that way, shareholders would receive only what they are economically entitled to receive, and what any other lender to the company receives, which is the market rate of interest on the money they have lent to the company.

In fact, the same thing could be achieved by converting such shares into bonds, a reversal of the procedure with so called CoCo's, where bonds are issued by a company, which at a future date can be converted into shares.  McDonnell, however, was talking about issuing government bonds, and using those proceeds to buy the outstanding shares in the company's to be nationalised.  That s what opened a door for Green's comments, but Green was still wrong.

Incidentally, if Labour were to issue bonds to raise money to buy shares, it only needs enough to be able to buy around 30% of the shares in any of the company's because its generally recognised that around that proportion of shares gives you a controlling stake, as the rest of the shareholders are divided, many do not vote etc.  Moreover, Labour could by taking over one or more of these companies, use the balance sheet of that company to be able to buy a controlling stake in other companies, without the government itself raising additional financing.  In addition, it could use the company balance sheet, rather than the government balance sheet to lever up its finances to buy shares in these other companies, as well as issuing additional shares from any of the companies it controlled to raise finance for the purchase of these other shares.   All of that could be done without increasing the size of the state balance sheet.

However, assuming that the government decided to simply issue sufficient bonds to raise the money to buy all the shares in all the companies that it intends to nationalise, Green is still wrong.  Johnathan Portes of the NIESR last week explained that issuing shares to buy shares does not constitute either revenue or capital spending for the government.  It is not revenue spending because it does not relate to current spending, but nor is it capital spending, because it is a below the line debt for equity swap, that simply results in an increase in the size of the government balance sheet.  In other words, on one side of the balance sheet arises an addition liability in the shape of the debt, but cancelling it out on the other side of the balance sheet is an asset, i.e. the company shares, of equal amount.

Green argued that if someone takes out a mortgage to buy a house, the mortgage still represents a debt, even if the house represents an asset, but that is failing to recognise the value of the asset, whilst only recognising the value of the liability!  If we take the revenue consequences then in terms of a house, one way this is often dealt with is to take an imputed rent, as the revenue obtained by the home owner.  In other words, if I was a tenant in the house, or a house of similar value, I would have to pay rent for its use.  As a home owner I do not pay rent, but I either forego interest on the money I have paid cash for the house, or else I pay interest on the mortgage I have taken out to buy the house.  Whether buying the house, by cash or by mortgage is a good deal or a bad deal - setting aside any question of capital gains or losses that might arise as a result of changes in the market price - depends upon how much I would have paid in rent, (the imputed income from the asset) as against what I am losing in interest on my money-capital, or what I am paying in mortgage interest.

In fact, in relation to the purchase of shares as actual revenue producing assets the more appropriate comparison that Green should have made is with that of a landlord who takes out a mortgage on a buy to let property.  There the landlord takes out a mortgage and buys a property, which then then let out and receive rent.  Their anticipation is that the revenue they obtain in rent will cover the interest they pay on the mortgage, and still prove them with excess revenue over and above it.

The case that Labour is making is the same.  They issue bonds, on which they currently would pay around 1-1.25% interest (fixed) dependent upon whether they issued 10 or 30 year bonds to finance the share purchase, whilst they would expect to receive currently around 5-6% in dividend yield from the shares they buy.  In other words, this would contribute around 4% on the investment to Treasury coffers, which would go towards reducing the budget deficit.

Anyone who actually understands finance would think this was quite a good deal.  Unfortunately, Green like most of the Tories actually understand neither economics nor finance.

The Bizarre Tim Farron

I have felt that some of the pronouncements of Tim Farron of late have been increasingly removed from reality.  Taken in consideration of the Liberals proposals for legalising cannabis, perhaps an explanation for their surreal nature could be gleaned.  However, watching Tiny Tim on the Sunday politics shows today led me to believe that even the influence of narcotics cannot explain the bizarre nature of the Liberals arguments.

The argument put forward is an extension of the Alice in Wonderland politics by which Farron has been saying since the election was called that the Liberals were the only real opposition to the Tories, despite the fact that the Liberals have only 9 MP's, and that this is the same Liberal Party that just two years ago was a part of the coalition of chaos with the Tories, that led the country into its current sorry state!

Farron's argument now is that Labour is likely to lose at least 90 seats in the election.  Indeed, Farron seems intent on doing everything possible to convince everyone that the Liberals former coalition partners in the Tory Party will achieve such a result.  So, what is Farron's bizarre solution to the Tories obtaining a landslide majority, as a result of taking these seats from Labour?  It is that everyone should vote Liberal, despite the fact that were they to do so, it would indeed split the anti-Tory vote, and let the Tories in, giving them the landslide victory that Farron predicts!

Even Farron admits that they only have the possibility of picking up a handful of their former seats in the South-West, so the result would be of people voting Liberal, that in most of the country where the fight is a straight one between Labour and Tories, a Liberal vote will split the anti-Tory vote letting the Tories in, whilst the only potential positive would be that the Liberals might go from their current 9 seats to say 15.  Even that seems unlikely.  The truth is that their coalition of chaos with the Tories in 2010, showed everyone the true nature of the Liberals as a second rate Tory Party.  Most of the Liberals who held the deluded view that they might be some progressive force have been relieved of that misconception, so that the only people who might vote Liberal are its own free market wing, who think that the Tories are too protectionist.  Its now probable the Liberals will end up with even fewer seats than they have now.

And good riddance too.

Theories of Surplus Value, Part I, Chapter 4 - Part 76

It may also be the case that the producer of one type of means of production exchanges none of their output with the producers of means of consumption. For example, suppose we have a producer of coal and steel who only supplies this coal and steel to the producers of means of production, which in turn are used to produce means of consumption. The producer of coal and steel exchanges none of their output with the producer of means of consumption, and yet obtains them. They do this because in reality, they exchange the coal and steel they produce with the producers of means of production, and then exchange these means of production with the producers of means of consumption.

It does not appear that way, because in a money economy the whole process is mediated by money. But, the reality is something like this. The producer of coal and steel expends 10 hours producing these commodities, and exchanges them with the producers of means of production. The producer of means of production expends 10 hours of labour themselves so that the value of their output is now 20 hours.

They now obtain 20 hours value in means of consumption in exchange. Of this 20 hours, 10 hours they retain themselves, the other 10 hours going to the producer of coal and steel, in exchange for those commodities sold to them. Although the producer of coal and steel does not exchange directly the use values they produce with the producer of consumption goods, they exchange the value of their products with them indirectly, because that value is incorporated as constant capital in the production of all the intermediate production that takes place in the process of providing the producer of consumption goods with the constant capital they require.

For example, the farmer creates 10 hours of new value via their labour, in producing grain, which becomes constant capital for the miller. The miller adds 10 hours of value via their labour, to turn the grain into flour. The flour appears as 20 hours of value of constant capital for the baker, who then expends another 10 hours of labour producing bread with a value equal to 30 hours, which is consumed by himself, the miller, and the farmer, and bought with their revenue.

“The products therefore—of which the aliquot part that represents revenue can be consumed by their own producers as value, but not as use-value (so that they must sell the part for example of their machines which represents wages and profit in order to consume it, [as they] cannot directly satisfy any individual need with it as a machine)— [these products] can just as little be consumed by the producers of other products; they cannot enter into their individual consumption, and hence cannot form part of the products on which they spend their revenue, since this would be in contradiction to the use-value of these commodities: their use-value by the nature of the case excludes individual consumption. The producers of these unconsumable products, therefore, can only consume their exchange-value; that is to say, they must first transform them into money in order to retransform this money into consumable commodities.” (p 236)

If the economy was based on barter, rather than being a money economy, the farmer would exchange grain with a value of 10 hours with the miller, obtaining flour with a value of 10 hours. The farmer would then exchange this flour with the baker, obtaining bread with a value of 10 hours in return. The miller, having obtained grain with a value of 10 hours from the farmer, and adding 10 hours of value by their labour to it, would have had a product with 20 hours of value, half of which they have exchanged with the farmer. They now exchange the other half with the baker, obtaining bread with a value of 10 hours.

The baker has obtained flour with a value of 10 hours from the farmer, and another 10 hours from the miller. They have added a further 10 hours of value by their own labour, giving a total value of 30 hours in the bread. Of this they have exchanged 10 hours of bread with the farmer for 10 hours value of flour, and a further 10 hours of bread with the miller, for the other 10 hours value of flour. That leaves them with bread with a value of 10 hours, available for their own consumption. Each participant, has obtained means of consumption, of equal value to their own revenue, i.e. equal to the new value they have created by their labour.

The total new value created by labour was 30 (10 farmer, 10 miller, 10 baker), and this was the value of the final product, the bread. That consumable product has then been acquired for consumption by each participant, in proportion to the new value each created, i.e. proportionate to their revenue. In the example above, it was assumed that the farmer exchanged grain with the miller, who turned it to flour, and handed half the flour back to the farmer, and so on. In reality, as Marx describes, in relation to the process of social reproduction, each of these participants already possess the commodity-capital, which they exchange.

So, for example, the farmer does not start the process at the beginning of the cycle to produce grain. If that were the case everyone would starve waiting the several months for it to be grown and harvested, and then processed. The grain that the farmer exchanges with the miller is not grain they grow in this year, but the grain they grew last year, and harvested at the end of last year, and which now comprises their commodity-capital. Likewise, the miller does not take this grain from the farmer, and make the farmer wait until they have milled it, before handing flour back to the farmer. The miller likewise, has a stock of grain from the previous year, waiting to be processed, as well as a stock of grain that has been processed, and is waiting to be exchanged/sold. The same is true for the baker.

This is also why the value of these commodities that comprise the constant and variable capital must be based upon their current reproduction cost, and not their historic cost, because it is not the labour-time that was actually required for the production of all these commodities last year that is of relevance, but the proportion of current labour-time, of current social production, required for their replacement that counts. It is that which determines how much of total social production constitutes a surplus product, and so surplus value. It is that which determines the relation of this surplus product to the total product, and so the rate of profit.

Saturday, 20 May 2017

Theories of Surplus Value, Part I, Chapter 4 - Part 75

“All products which are only means of production cannot be consumed in kind, in their immediate form, as revenue, but only their value. This however must be consumed in the branches of production which produce directly consumable articles.” (p 235)

On this basis, all of social production can be divided into the production of means of production and means of consumption, and likewise into capital and revenue. The fact that these can be broken down further does not change matters.

For example, revenue not only divides into wages and surplus value, but surplus value itself divides into profit, interest and rent.

“Rent, interest, etc., are parts of profit; the income of the State good-for-nothings is part of profit and wages; the income of other unproductive labourers is the part of profit and wages which they buy with their unproductive labours—it therefore does not increase the product existing as profit and wages, but only determines how much of it they consume, and how much is consumed by the labourers and capitalists themselves.” (p 235)

In other words, the state covers its expenditure including the payment of wages to functionaries out of the taxes it collects. But, those taxes are themselves a deduction from the revenues of others. Taxes to cover the functioning of the state itself are a deduction from the revenue of those for whom the service is provided. For example, if the state provides teachers for workers education, the education provides part of the workers' consumption, and rather than being paid for by a price it is paid for by a tax on wages.

Similarly, a prostitute obtains their revenue by selling their services to the worker, capitalist or landlord who pays for these services out of their own revenue.

Equally, although some means of production may also be used as means of consumption, this does not really change anything. If we were to include a third department, in which all commodities that could be used either as means of production or means of consumption are included, we would find that of the production of this department a proportion of its output was actually used as means of production, and so belonged to Department I, and the other portion belonged to Department II.

In addition, many products once used, can themselves be used again for some other purpose. For example, clothes when used can be turned into rags which are used in paper production.

“But no one produces linen in order that it should become, as rags, the raw material for paper. It only gets this form after the linen weaver’s product as such has entered consumption. Only as excrement of this consumption, as residuum and product of the consumption process, can it then go into a new production sphere as means of production. This case, therefore, is not relevant here.” (p 236)

It is only that part of the value of the means of production that is newly created, i.e. that constitutes revenue. In the example above, that is the entire value of the means of production, because it was assumed no constant capital was used in their own production.

Northern Soul Classics - Where There's A Will - Jimmy Thomas

Friday, 19 May 2017

Friday Night Disco - Its Alright - The Impressions

What is Mayism-Leninism?

Theresa May says there is no such thing as Mayism. Given the total vacuousness of her Tory Manifesto, and the fact that none of the vague aspirations it contains have even been costed, nor any attempt given to show how they would be paid for, I am led to agree. But, the political approach of May can be given a name. I call it Mayism-Leninism. In reality it is a pale version of National Bolshevism, which itself is derived from Strasserism.

Marxism-Leninism, in contrast to Mayism-Leninism is the combination of the Marxist method of scientific analysis of history and social phenomenon with the Leninist conception of the party, as a disciplined organisation based upon democratic centralism, as a means of applying that scientific analysis in practice. Marxism-Leninism is then distinguished from Mayism-Leninism precisely by the fact that its foundation is the scientific analysis of society, as the basis for action. Mayism, by contrast is purely a subjectivist, populist trend that makes it up as it goes along.

Marxism-Leninism disintegrated, because under Stalin, the Marxist scientific analysis was abandoned, similarly for a subjectivist approach, that simply made it up as it went along, leading to violent swings from opportunism to ultra-leftism. And in order to be able to make these wild swings without having to provide theoretical justification for them, the democratic element of the democratic-centralism was abandoned, so that it became simply bureaucratic centralism, that responded to any criticism or opposition with ruthless brutality. All opponents were labelled wreckers or saboteurs, just as the Tory gutter press today labels anyone who stands in the way of Theresa May and her hard Brexit agenda.

There is indeed no such thing as Mayism. It is characterised precisely by its emptiness. It cannot even be described as shallow, because even something shallow has substance to it. There is no substance to Theresa May's agenda. The agenda itself is continually being made up as they go along. In the budget just a couple of months ago, they came unstuck with the proposal to increase National Insurance contributions, because it conflicted with the Manifesto Commitment set by Cameron in 2015, not to increase VAT, Income Tax or National Insurance. They had to abandon the National Insurance hike. The response has been to call this election, and thereby to ditch all of those plans and commitments that the 2015 Manifesto placed upon. What are those commitments replaced with? Nothing, emptiness, that enables May to make it up as she goes along.

A strong and stable leader
In reality, such stumbling along with no road map as to where you are going is the very opposite of being a strong and stable leader. It implies the same kind of chaos that the USSR descended into under Stalin. The actual chaos, the stumbling along from one crisis to another is then made up for by the imposition of increasing levels of authoritarianism. The strong and stable leader, whether it is Stalin, Mussolini, Hitler, Duterte, Erdogan or whoever is not strong because they have their finger on the pulse, and know exactly where they are going, but because of the opposite. They are strong and stable in opposition to the rest of society, not on the back of the support of that society. They are strong and stable against the rest of society only on the basis of the kind of authoritarian regime they impose to keep themselves in place, despite the catastrophic nature of the policies they implement.

Oswald Moseley.
Another Strong and Stable Leader
It is no accident that the Mayist-Leninists of the Tory Party have been emphasising this aspect of strong and stable leadership, as well as their sharp swerve to the far-right nationalism that previously was occupied by UKIP and the BNP. It has been seen many times before. Cromwell insisted that only his strong and stable leadership under the leadership of the New Model Army could save the country. Mussolini said that Italy could only be saved and the trains made to run on time, under his strong and stable leadership and the discipline that his blackshirts were able to impose. Moseley offered a similar vision to Britain, and the Daily Mail, who today back the Mayist-Leninist agenda, were of course ardent supporters, in the 1930's of Moseley, Mussolini and Hitler, and the strong and stable leadership they offered.

The fact that Mayism-Leninism comprises elements that confuse many of the subjectivist political pundits in the media is again not surprising. It has been seen before, and it is symptomatic of the phenomena. Mayism-Leninism is, in fact, a mild form (for now) of National Bolshevism, which itself derives from Strasserism.

A Strong and stable Leader.
He promised state intervention
to make the trains run on time
In all of the recent furore over Ken Livingston and anti-Semitism, it is forgotten that the true nature of Nazism, as with the fascism of Mussolini, and of the Phalangists of Franco etc. was a right-wing regime designed to protect the existing ruling class from the possibility of its overthrow by a rising working-class, as the system went into a crisis that required serious measures to correct. The first victims of Mussolini and of Hitler were the communists, socialists and trades unionists. Utilisation of nationalist and xenophobic ideas fitted the ideology of these parties, but they were largely designed to create the kind of populist appeal that could mobilise behind them all of the plebeian layers of society, who felt left behind and abandoned, and whose atomised condition left them separated from the masses of the organised working-class.

In fact, Mussolini had a great deal of financing from Jewish bankers, who like Ettore Ovazza, were also prominent members of the party. It was only from around 1938, as Mussolini became increasingly dependent on Hitler that laws against Jews in Italy began to be introduced. Meanwhile, connections between both Italy and Germany and Zionist groups such as the Stern Gang continued. Mussolini in particular believed that by supporting Zionist organisations he could gain an advantage in the Middle East, against Britain. The Stern Gang itself adopted the ideology of National Bolshevism, which derived from Strasserism, declaring,

“that it would establish a Jewish state based upon "nationalist and totalitarian principles"”

The superficial political pundits are confused when they come to deal with such phenomenon, as a right-wing populist party like that of May, which promises to implement statist policies, because their superficial, subjectivist analysis only associates an interventionist role for the state with being a left-wing phenomenon, just as it can only associate fascism with anti-Semitism, and only associates anti-Semitism with anti-Zionism. The idea of right-wing state intervention, does not compute for them any more than fascist Zionists computes.

General Sherman.
Proponent of Total War.
A Strong and stable leader who
cleared away Native Americans
from their lands to let
the railway through.
Yet, the reality is that the capitalist state was created to defend and extend the rule of the capitalist class. And that role includes, and has always included large-scale intervention in the economy. As Marx describes in Capital I, a large part of the primary capital accumulation that occurred in Britain was down to the role of the state, and the running up of a huge National Debt. In the US, the Civil War was fought to establish a strong centralised state, which was itself used to impose a strong wall of economic protection behind which the country was able to industrialise, free from foreign competition. And one of the most important aspects of its industrialisation, the creation of the transcontinental railway, was only made possible by the intervention of the Federal Army, which cleared away hostile Native Americans, under the guidance of General Sherman.
He is the totemic strong
and stable leader!

And, the state ownership and state intervention was a central aspect of the economic policies of both Mussolini and Hitler, and pretty much every other dictator of that ilk. The difference with Strasser was only that he took the anti-capitalist rhetoric of Hitler literally. May is following in those footsteps, and for her, and for now, the anti-capitalist rhetoric takes the form of attacking the large corporations, because what she seeks to achieve is the maintenance of her support amongst all of those small capitalists that comprise the core of the membership and electoral base of the Tories.

In essence, what Mussolini and the Nazis reflected was the fact that capitalism faced a contradiction.

It is that the economy is characterised not by those small capitals, although numerically they overwhelmingly prevail (there are around 5 million small capitalist businesses in Britain even today, though they typically go bust within five years) but by large scale socialised capital. This socialised capital does require greater regulation and planning of the economy, and it really also thereby needs to operate on a larger scale than the national economy. Even the huge US economy, with its vast market, and extensive geographical spread is led to create larger economic zones, for example, via NAFTA, and China is doing the same. In the absence of a socialist or internationally based social-democracy to bring about such conditions, history moves forward by other means. The US did it via a Civil War, Europe tried during several wars in the 19th century, and two major wars in the twentieth century to bring it about, before it resolved to do it peacefully via the establishment of the EU.
In Italy in the 1920's, in Spain and Germany in the 1930's, the ruling class feared that the means by which the regulation and planning of the economy would be achieved was by the working-class, under the influence of multi-million strong Communist and Socialist Parties, going beyond the normal bounds of social-democracy. It slapped down the working-class, but the only means of achieving the kind of reorganisation of the economy required, was by handing over the political regime, and control of the state to the fascists. It did not do so lightly, and the experience is likely to make them even more reluctant to use that option in future.

Far more effective for them was the achievement of those aims by Roosevelt with the New Deal, and the implementation of these measures of international social-democracy after the war, under the guidance of the Keynesians, with the introduction of the IMF, World Bank, and so on.

The Mayist-Leninists know that exit from the EU is not at all going to be like the story they have told themselves and the public until now. Its clear that the EU are going to give May nothing, and can give May nothing. Its clear that May has positioned herself for the hardest of hard Brexits, and the negotiating stance is now designed to ensure the rapid collapse of any talks with the EU. They know that outside the EU, with no deal, the UK economy is headed sharply downhill. The start of stagflation is already more than clear, with the RPI, which is a better measure than CPI, already standing at 3.5%, and with wages once more stagnant.

An international of
strong and stable
nationalist authoritarians
The Mayist-Leninists are, therefore, preparing to batten down the hatches on their political regime for the shit storm to come, as the people realise they have been seriously conned, and they once again face the economic consequences. The Mayist-Leninists know that the path of the last thirty years, of blowing up asset price bubbles, and encouraging further private household debt is closed off to them. They know that, as with Trump in the US, the state will have to play a more active role, via its fiscal stance, to reorganise British capital, as it gets increasingly separated from European capital. That fiscal stance will cause borrowing to rise, which in turn will cause interest rates to rise, in a world where global market rates of interest are already rising. That means that the asset price bubbles, and all of the illusion of wealth that people had in the paper prices of their houses, and their ISA's etc. will burst overnight. Mayism-Leninism is about creating a centralised, disciplined authoritarian regime to beat down the hostility of civil society that will ensue.

Theories of Surplus Value, Part I, Chapter 4 - Part 74

Provided that production of all of these different consumable commodities takes place in the correct proportions, however, then a part of total production can now be said to have been dealt with. The revenue of the producers of these consumable productswages and profits – has been used to buy a proportion of the output of those consumable products, equal to the new value added in their production.

But, not all of the consumable product is accounted for solely on the basis of the new value created by labour. The value of this product as with every other is c + v + s. That is, in addition to the new value created (v + s) the value of the product also comprises the value of the constant capital used in its production, which must be reproduced.

If we consider a farmer, their corn does not arise just on the basis of their current labour. It also depends upon the performance of past labour, which at the very least produced the seed used to produce the corn, but which in reality also produced the tools used for cultivation, planting, and harvesting, produced fertiliser and so on, and whose mass and contribution to current production tends to grow over time, as a consequence of capital accumulation.

But, the labour required for the production of this constant capital did not spring from nowhere, and nor can the replacement of this constant capital be effected without a portion of current production being set aside for that purpose. The same principle as that previously outlined applies. If we consider Robinson Crusoe, he may find that having produced an enclosure for the animals he and Friday require for their consumption, an amount of their labour-time must be expended to maintain this enclosure, or else their food production would decline.

Once established, therefore, as part of their constant capital, it must be maintained, and that means that labour-time used for this purpose is not then providing goods for immediate consumption. But, again, whilst both Robinson and Friday may both engage in this activity, experience shows there is a benefit from specialisation. If Friday specialises in maintaining the enclosures, then Crusoe has time released to spend on the production of products required for immediate consumption. But, Friday will only do this if the time spent on maintenance of enclosures is compensated by the provision of their consumption needs that would have been conducted during that time.

In other words, if previously Crusoe and Friday spent 10 hours per day each catching fish and rabbits, and collecting fruit, they may have enhanced the quantity of these things produced by also producing tools, traps and other equipment. But, once introduced, they have to be maintained. Friday may then spend all of his time doing this maintenance work, but then produces no consumption goods for himself. That is only then possible if Crusoe is able to produce all of the consumption goods required by both of them. In essence, Crusoe obtains the means of production ("capital") he requires to do this by providing Friday with the consumption goods he requires.

Where previously both only produced goods for consumption, so that they exchanged revenue for revenue, now there is also an exchange of revenue for capital. Suppose we think of an economy where the only two things produced and required are food and clothing. The producer of food works 10 hours per day, and so does the producer of clothing. They only use labour. Each then gives half their production to the other, so that the needs of each are met. We have an exchange not only of revenue with revenue (new value produced with new value produced) but of consumable product with consumable product.

Now, suppose both producers require means of production. The food producer needs tools, and the clothing producer is provided with tools and materials. This producer of means of production produces nothing consumable, yet they must consume food and clothing. They obtain that consumption from the producers of food and clothing, now in exchange for providing them with the means of production they require. This is possible both because those producers are now freed from spending time on that themselves, and because these means of production increase their productivity so that more use values are produced.

If previously we had food (A) and clothing (B) production made up

A (v + s) = 10 hours = 100 units

B (v + s) = 10 hours = 100 units

We may now have:-

A c = 5 hours + (v + s) = 10 hours = 200 units

B c = 5 hours + (v + s) = 10 hours = 200 units

C (v + s) = 10 hours = 100 units.

So, now C the producer of means of production, works 10 hours, producing 10 hours of new value, represented by 100 units of means of production. They sell this 10 hours of value in means of production to A & B. Previously, A required half of their production of food for themselves = 50 units, and exchanged the other 50 units with B for clothing, and vice versa. A still requires 50 units for their own consumption, as does B, in relation to clothing. None of C's production is required by A, B or C for consumption, because it can only be used as means of production.

If we examine the value of A and B's production, it is made up in both cases of c 5 + (v +s) 10 = 15, and in both cases produces 200 units, or 0.075 per unit. The total value of production is equal to 40, but the total value of revenue, i.e. the new value added, is equal to 30 (10A + 10B + 10C). 

Putting A and B together, as producers of consumption goods, we have:-

c 10 + (v + s) 20 = 30 = 400 units.

A and B have exchanged their own products to meet their needs, but this accounts for only ⅔ of the value of their output, and correspondingly, therefore, only 266 units of their production. They sell the other 133 units to C, in exchange for the means of production they require.

The total value of production is then equal to 40 hours, whilst the total value of revenue (wages, profits, rent, interest), new value created, is equal to 30, 10 each in A, B, and C. In turn, this is equal to the value of the consumption fund, i.e. the value only of that part of production that is available for consumption rather than as means of production.

Thursday, 18 May 2017

Theories of Surplus Value, Part I, Chapter 4 - Part 73

But, Marx says, the assertion of Say and others that there can be no overproduction, but only under-consumption, or what is the same under production of other commodities, does not follow either.
“... that if A cannot sell his linen or can only sell it under its price—that is, the part of his linen which he wishes to consume himself as revenue—then this happens because B, C, etc., have produced too little wheat, meat, etc. It may be because they have not produced enough of these. But it may also be because A has produced too much linen. For assuming that B, C, etc., have enough wheat, etc., to buy all A’s linen, they nevertheless do not buy it, because only a definite quantity of linen is consumed by them.” (p 234)

In other words, this is the situation described earlier. My production of linen may increase, as may your production of fish, and they may increase in the same proportion, so that we could continue to trade. Yet, the fact that we could do so, does not mean that we will. Suppose previously that I produced 10 fish, and you produced 10 metres of line, and now we both double our production. We could continue to trade, but there is no reason why we will. Just as I only have a demand for 5 fish, and so exchange the other 5 with you for 5 metres of cloth, it may be the case that you have no demand for more than 5 fish either. So, although I may be happy to take as much linen off you as you can produce, you do not feel the same way about my fish.

The reason you do not exchange your linen for my fish has nothing to do with your underproduction of linen, you have produced enough to buy all my fish, and so is not a consequence of under-consumption of fish on your part, but is a consequence of overproduction of fish on my part. Had I spent half my time catching rabbits rather than fish, you may have been happy to exchange half of your linen for half of my fish and rabbits, leaving us both to consume the other half of our production ourselves. 

In the 19th century, when Britain increased its output of textiles and other commodities massively, this situation arose, as it continued to ship these commodities to China and other overseas markets, in ever rising quantities. But, as with the above example, these overseas markets only had a demand for a given amount of these commodities. When, therefore, these markets became glutted as a consequence of this overproduction, British economists, basing themselves on Say's Law, insisted that this could not be the result of overproduction in Britain, but was rather the consequence of under-consumption by China and other countries.

They insisted that the problem was that China and these other countries were not producing enough of the various commodities that Britain required, which could then be exchanged for the British commodities that were glutting their markets. So, Marx says, here, that such a crisis may arise because of under-consumption, but it can also be a consequence of overproduction.

“Or it may also be because A has produced more linen than the part of their revenue which can be spent on clothing materials altogether—that is, absolutely, because each person can expend as revenue only a definite quantity of his own product, and A’s production of linen presupposes a greater amount of revenue than in total there is.” (p 234)

In other words, there may be a balance between the value of consumable commodities on the market, and the amount of revenue available to buy them, but it doesn't mean that the consumable products have been produced in the proportions required to meet demand.

“It is ridiculous, however, when it is only a matter of the exchange of revenue against revenue, to suppose that what is wanted is not the use-value of the product but the quantity of this use-value, thus once again forgetting that this exchange concerns only the satisfaction of needs, not, as in exchange-value, the quantity.” (p 234)

In other words, as stated previously, just because now I exchange my 5 fish for your 5 metres of linen, it does not at all mean that even if the value of fish and linen remains constant, that I will be able to exchange 10 fish for your 10 metres of linen, because I may be happy to take whatever additional linen you can produce, whilst you will take no more fish.

Of course, everyone will prefer to have more of something than less, but the point is that beyond a certain point, every use value ceases being a use value for its owner. There is only any point in producing more of it, if additional consumers of it can be found, or if existing consumers can be persuaded to consume more.

In other words, for each commodity there is diminishing marginal utility. The more of some commodity I have, the less utility I obtain from each additional unit of it. As Marx says, if this were not the case no problem of overproduction could ever arise.

If I am a producer of fish, however much I produced, I would just consume it myself, and the same for the producer of linen.

“Why does he at all transform his revenue from the form of linen into other forms? Because he has to satisfy other needs than the need for linen. Why does he himself consume only a certain part of the linen? Because only a quantitatively determined part of the linen has use-value for him.” (p 234)

But, if the producer of linen only requires a certain quantity of linen, the producer of fish may also only require a certain quantity of linen, and the same for the producers of a range of other commodities, so that, even though the production of all these other commodities may increase, there is absolutely no reason why this will result in a proportional rise in their demand for linen. 

Indeed, it may be that if the production of wine increases, the wine producers may prefer to consume this additional wine themselves, rather than exchange it for linen. So, the inability to sell the increased linen production cannot then be placed at the door of a failure to increase wine production sufficiently, i.e. under-consumption of linen by wine producers.

Wednesday, 17 May 2017

General Election – What Labour Should Say On Workers Rights and Industrial Democracy

The Tories say that they will protect and extend workers' rights. It is, of course, nonsense. This is the same Tory Party that decimated workers' rights in the 1980's, in order to push through a massive attack on workers' living standards; it is the same Tory Party that imposed virtual martial law on mining communities during the 1984-5 Miners' Strike; it is the same Tory Party that has introduced further attacks on workers rights since 2010, and yet still seeks to impose further restrictions on workers ability to refuse to sell their labour-power at any price the employer dictates. Moreover, when the Tories talk about workers' rights, what they mean is the individual rights of workers as against the collective rights of workers.

Theresa May when she assumed the position of elected dictator, last year, stood in Downing Street, and talked about having workers' representatives on company boards. The rest of the Tory Cabinet soon forced her to drop that idea. It was, in any case, a meaningless offer. The BullockReport in 1975, proposed having 50% of company boards elected from the workforce, by the trades unions; Germany's co-determination laws, also give workers the right to elect 50% of their company board; and the EU's Draft Fifth Company Law Directive proposed similar legislation. Even having the right to elect half the board, in practice, puts workers in a subordinate position, because the management always retains the casting vote, and it always becomes possible for the management to divide the worker representatives. So, having just one workers' representative on boards is mere tokenism.

But, the fact that May opened the discussion should give Labour the opportunity to walk through the door she has opened. The fact is that all firms that are incorporated are legal entities in their own right. The shareholders in these companies are only creditors of the company, no different than a bondholder, a bank that lends money to the company, or any company that lends equipment to the company, and so on.  That was set out by John Kay and Aubrey Silbertson some time ago .

One of the first things that Labour should do in government is to pass new company law on Corporate Governance. It should reduce the rights of shareholders, in relation to corporate governance to that of any other creditor. In other words, they should have no right to have any say over company policy, no right to elect boards of directors, or to appoint company directors. As a legal entity, the company itself is socialised capital, and belongs to itself.  Decisions on how that capital should be used belongs to the company, which, therefore, means all of the workers and managers employed in the company. It should be for those workers and managers to democratically elect boards of directors, and to appoint the company executives, to determine their pay etc.

That would have several immediate effects. Firstly, it answers the objections of Tories and the Tory media about how Labour would fund nationalisation of the water companies, rail companies, energy companies, Post Office and so on. It would face no problem, because there would no need to nationalise what, in reality, is already the property of the workers and managers in those companies. It would simply be a matter of giving those workers and managers control over their collective property, which currently is being denied them.

Secondly, it would mean that questions over fat cat pay would be more adequately addressed. Once workers in these companies decided what executives they did or did not require – and experience shows that many of these executives serve no useful purpose for companies whatsoever – they would also open up these posts to a much wider circle of people, outside the tight coterie of self-selecting elites that currently dominate those positions. It would mean that workers would only pay salaries to any such executives that they found was justified.

Thirdly, it would mean that the ability to transform the economy went much wider than the current modest proposals on utilities.

Shareholders would, of course, continue to be entitled to receive dividends on their shares. In effect all shares would become non-voting shares. Competition for capital would mean that companies would continue to have to pay market rates of interest in the form of such dividends, or shareholders would sell shares sending the company's share price lower, and thereby making it more difficult to raise future capital by share issuance. But, companies would have the ability also to buy back shares as they do now. The difference would be that as the company bought back the shares that would benefit the company, and the workers and managers within it, not the shareholders and executives as happens now.

If workers and managers had such control over companies, then as I have set out previously, it would be beneficial for these companies not to face Corporation Tax, which would inhibit their ability to reinvest profits. The tax should instead fall on the recipients of dividends and interest, and other non-earned income.

If Labour introduced this simple and democratic measure it would mean that workers had the same democratic rights in their place of work as they have in society in general. It would mean that other trades union rights would not have to bear the weight of defending workers rights that they currently are ill equipped to endure. Once workers had democratic control over their place of work, they would be able to ensure that many of the inequities, injustices and inequalities they face would disappear, because they would be running those companies for their own mutual benefit.

But, there are still millions of small companies that are privately owned by small capitalists. These companies, because they usually cannot compete with the big companies, are often the worst culprits when it comes to paying low wages, giving workers poor conditions, and depriving them of rights. Its in these companies where unions are most needed, but where they are most often lacking. We need to give every worker not just the right to belong to a trades union, but the right to have a trades union negotiate on their behalf. In other words, we should scrap all ability of employers to deny union recognition. Even one worker in a firm should have the right to be represented by a trades union, and we should enable unions to negotiate for members across a number of companies in an area on a collective basis. That is in line with Labour's proposals to set up industry wide collective bargaining, which already exists in a number of European countries.

Alongside it, Labour should scrap all the anti-union laws, and introduce a general Trades Union Act, that enshrines a series of trades union rights on collective bargaining and so on. Labour should also work with the TUC and Co-operative Movement to establish a Co-operative Labour Agency that would act as a monopoly supplier of labour to companies, at guaranteed rates of pay, and minimum sets of working conditions. This would remove the Tory objections to a blanket ban on zero hours contracts and other flexible working arrangements, because it would be possible for workers themselves, through such an agency to organise the working hours etc. that best suit them, rather than being pressured by employers to accept the conditions that the employer requires.


Alongside the changes to the law on corporate governance so as to give workers and managers control over their companies' capital, Labour should also legislate to give workers the right to control their company pension funds, rather than that control resting with company executives, and more often with banks. The boards of pension funds should be elected by the workers whose money those funds administer. That would give workers a powerful source of additional money-capital, to be used to further workers' aims of developing the economy. It would also prevent the huge sums that currently are syphoned away in commissions and other payments, and which thereby never even get invested on workers behalf.