Thursday, 31 August 2017

Labour's Brexit Shift Is A Step Forward

The decision of Labour's leadership to shift its position on Brexit, so as to support staying in the Single Market and Customs Union, for a provisional period, after 2019, is a step forward. The previous position was untenable. Every time a Labour spokesperson appeared before the media, it made them look either incompetent, uncertain,or dissembling, because it meant arguing two irreconcilably opposed positions, based upon the the Government's ludicrous approach of seeking to have cake and eat it. Moreover, try as Labour might to deny it, it was clear that Labour's position, in practice, was no different to that of the soft-Brexit Tories, which itself is untenable. However, all that the shift in position has done is to highlight how untenable the previous position was. It merely avoids the awkward questions that position raised in the immediate situation, only to defer them to a few years down the road.

Arguing for remaining in the Single Market and Customs Union, for now, avoids the contradictions that arise over the Irish border, citizens rights, free movement and so on, and the disastrous effects on the economy that a cliff edge split with the EU will bring with it. But, all of those questions still exist, if Labour continues to argue for withdrawal from the Single Market and Customs Union at some future point. Yes, theoretically, if Labour were to argue for becoming a member of the EEA or EFTA, some of those contradictions could be removed, but that ignores the fact that whilst such solutions might be workable for small countries like Norway or Switzerland, in practice, they are not solutions for Britain's larger economy.

Even politicians in Norway argue that its relation to the EU is not desirable. It means they are bound by EU obligations, decisions and laws, but with no input into forming those rules and obligations. But, for small countries like Norway and Switzerland, that may be a small price to pay for being able to obtain the benefits of membership of the single market or customs union. For Britain, it's clear that whilst it is a small fish compared to the whole EU, or to economies like the US, or China, it is big enough not to be prepared to play such a back seat role as a Norway or Switzerland. The current UK-EU negotiations have made that clear, as Barnier talked about Britain's stance reflecting a kind of nostalgia, of wanting to enjoy all the rights of EU membership, in framing rules and regulations, but without being a member of the club. In other words, it is an expression of the arrogant British stance of seeking to have cake and eat it. There is no way the EU will accept such a stance, and those Brexiters who continue to think otherwise are simply deluded, and are misleading the British people, as they did during the referendum campaign itself.

Labour's change of stance has already had an effect on the Tories. It is probably why May has come out to more firmly announce her intention of staying and fighting the next election, and why the hard Brexiters have rallied around her. The fact is that now, the Tory Remainers, and soft Brexiters have a flag to rally around. Its only a pity that Labour had not provided it during the parliamentary debates over Article 50. The other consequence of that, however, is that it looks like the hard right in the Tory Party are angling to create an excuse to break off talks with the EU, as UKIP had been advocating.  That will require a determined struggle in Parliament, and probably the need for another General Election.  The shift of stance is also welcome because had Labour continued to appear merely as a pale reflection of the Tories on Brexit, the chance was that many of those younger voters who flocked to Labour as the only hope of resisting hard Brexit, would begin to splinter away.

The shift in stance means that the support of those younger voters and all those that went further and joined the party, can be consolidated, and the chance of fake left parties such as the Greens, Liberals, Plaid and SNP acting as a pole of attraction is cut off. But, that only applies for so long, and the current shift in stance is only a stop-gap, in that respect. Moreover, Labour's stance is back to front. It argues that it will accept free movement, as a part of remaining in the single market, but the starting point ought to be arguing positively for free movement. It is free movement that is the basic element of promoting workers rights, whilst it is the elements of the free market ideology of the Single Market, that undermines workers rights and interests that Labour should be seeking to change along with socialists and social-democrats across the EU.

And a recent poll suggested that even amongst Leave voters, the principle of free movement has majority support, as a recent Left Foot Forward post illustrated.

Labour's stance has so far continued to be framed in those old Blair-right terms of what is good for business as being the basis of what is then good for workers. Yet, even in those terms, what the free market policies that underpinned the EU really represented was not the interests of capital per se, of large-scale socialised capital, but only the interests of the owners of fictitious capital, of share and bondholders. Its foundations framed by people like Thatcher, and other European conservatives in the 1980's, reflected the interests of that fictitious capital, in contrast to the original foundations of the Common Market, based upon extending social-democratic principles of planning and regulation, as the basis of the accumulation of real productive-capital.

What Labour, merely as a progressive social-democratic party needs to get back to is the advocacy of those same principles of longer-term planning and regulation, as the basis for creating the stable conditions under which capital accumulation can proceed across the EU. It needs to get back to the ideas that underpinned the EU's Draft Fifth Directive on Company Law, that proposed establishing the same kind of co-determination of companies by having 50% of company boards made up of elected worker representatives, as already exists in Germany. And that requires also not a breaking up of the EU, but its further integration, and the harmonising of taxes, benefits, minimum wages and so on within its borders. It requires a more rapid development of a Federal United States of Europe, as the minimum basis upon which the struggle for a Workers' Europe can be undertaken.

And that same approach also needs to be taken inside Britain itself. Blair pushed forward the devolution agenda for typically Blair-right reasons. Blair's politics was based entirely upon electoralism, as a form of populism, and the tailing of public opinion. It saw a party's politics as being merely a commodity to be sold to voters, like washing powder, simply packaged up in a fashion that its market research told it would be most effective. Every policy, if such it could be called was merely a consequence of a process of triangulation to maximise votes from different segments of the electorate, in the same way that advertisers seek to maximise sales by stratified marketing.

The various focus groups told the Blair-rights that Scots voters wanted something different to what English voters wanted, particularly those English voters in the South-East that Blair was desperate to win away from the Tories. A single Labour message across the whole of Britain thereby threatened to retain Labour's core vote, whilst alienating some of the English “middle ground”. Devolution meant that a different Labour message could be sent out in Scotland to England, and that, it was intended, would be the way of undermining the SNP, and maximising the Scottish Labour vote. In fact, it inevitably had the opposite effect. It meant the nationalists could continue to blame Westminster for all the ills of Scotland, whilst taking credit themselves for any success. It meant that politics in Scotland was increasingly fragmented along nationalist and loyalist lines rather than class lines, not yet as clear-cut as in Northern Ireland, but moving in that same direction.

Indeed, the logical extension of that has been seen more recently, where that trend has infected the Labour Movement, and Labour Party itself with increasing calls for the Scottish Labour Party to separate itself from the Labour Party in the rest of Britain, much as the SDLP in Northern Ireland exists as an independent party, and the logical extension of that is for the Scottish TUC and Scottish trades unions to separate themselves from their English brothers and sisters, much as is the case with the Northern Irish trades unions. Wherever, these vertical cleavages in society are allowed to become more decisive, or where they are by the history and nature of the society, already more decisive (for example, in Northern Ireland, but the same kind of cleavages exist in a more exaggerated form in places like Iraq, Syria Egypt etc.) they undermine the organisation of politics on class lines. They encourage the formation of cross-class alliances that always weaken the position of workers, and subordinate their interests to those of the respective national bourgeoisie.

Indeed, the same thing could be seen over Brexit itself. Much as Corbyn and others sought to fight the referendum on the basis of the shared interests of workers across Europe, the media were only interested in framing the discussion around a binary choice of the interests of Britain v the interests of the EU. And, when it came to the Scottish referendum that same binary choice was what was on offer. Labour's disastrous Scottish referendum stance was to become good English Nationalists, arguing the case for the union, as it stood, as a capitalist union.

With Kezia Dugdale standing down as Labour Leader in Scotland, the opportunity opens up for a different approach. The approach throughout the UK should be the same as our approach to Europe. We start from the position of what is in the interests of the global working-class. That is why we support the right of free movement, irrespective of whether Britain is in or out of the EU; we start from the position that the minimum practical unit in which to pursue even progressive social-democratic policies is that of the EU. The reason to advocate staying in the EU is not because it would be good for Britain, or good for British business, but because it is the best basis upon which to forge workers unity and class solidarity across the continent, and thereby to undertake the political struggle for workers' interests.

And, the same is true in relation to Scotland, as socialists we argue against Scottish independence not because we are English nationalists, or because such union is good for British business, but because nationalism is a diversionary dead-end, and distracts from the need to build ever closer unity in action of workers throughout Britain, and beyond to ever closer unity in action with workers across Europe.

Theories of Surplus Value, Part II, Chapter 8 - Part 3

Marx repeats a point made in his discussion of rent in Capital III, which may be historically accurate, but which I'm not sure is theoretically valid. He writes,

“Quite apart from the variation in rent according to the fertility of the land, the very existence of rent—i.e., the modern form of landed property—is feasible because the average wage of the agricultural labourer is below that of the industrial worker. Since, to start with, by tradition (as the farmer turns capitalist before capitalists turn farmers) the capitalist passed on part of his gain to the landlord, he compensated himself by forcing wages down below their level. With the labourers’ desertion of the land, wages had to rise and they did rise. But hardly has this pressure become evident, when machinery etc. is introduced and the land once more boasts a (relative) surplus population. (Vide England.)” (p 17)

There is no doubt that capitalist farmers sought to compensate for the payment of rent by reducing wages below the value of labour-power, but the same can be said about the less efficient capitalist producers in general, who seek to compensate for their lower profits, arising from that inefficiency, by paying lower wages, and imposing poorer conditions.

Marx also describes the response to that in agriculture, with the movement off the land into the towns, and consequent rise in agricultural wages. Again, yes, historically, the response over time was to introduce labour-saving machines, which recreated a relative surplus population on the land, but its not clear how this is different to the position labour faces in general, when such new technology is introduced to remedy a relative shortage of labour. Marx's argument, related to this, in Capital III, was that it reflects the fact that productivity in agriculture is always lower than in industry, but it is not clear that this must always be the case or that the basis of rent would disappear if it were not the case.

The basis of Marx's argument is that the difference between agriculture and industry is that increased surplus value in industry arises from cheaper production, whereas in agriculture it arises from more expensive production. Marx sets out the situation in industry. But, his argument is rather lax.

He takes the price of production of yarn, and then examines the situation of a producer that produces with a lower individual value, due to the use of fixed capital, which allows more efficient production, on a larger scale. So, if the price of production of 1 kg. of yarn is £2, this producer may be able to produce it at £1, including the average profit. Because this lower cost is the result of producing on a larger scale, say 10,000 kg. rather than 8,000 kg., this represents increased supply of 2,000 kg., a place for which must be found on the market.

Marx makes a slight error, because he says that the lower cost is only achieved because the fixed capital cost is spread over this larger output, so that if only 8,000 kg. were sold, the price would be 20% higher. In fact, of course, the fixed capital raises productivity so that also the cost of wages in each kg. of output falls.

In order to sell this 10,000 kg., therefore, the producer reduces the selling price, so as to create additional demand. However, in reality, it depends on the relative proportion of total output which this producer accounts for. If the total production of yarn is say 1 million kg., the additional 2,000 kg., of this producer, will not be significant. They would, in reality, continue to sell their output at the existing price of production of £2 per kg., making £1 per kg. of surplus profit.

But, Marx assumes that this 10,000 kg. is sufficient to require the producer to reduce their price so as to sell it. If they reduce their price to £1.50 to do so, this will be below the previous market price and price of production, but above the individual value/price of production for this 10,000 kg. thereby still providing a surplus profit of £0.50 per kg.

Marx does not pursue the ramifications of the argument, however, For example, if this 10,000 kg. represents a significantly large proportion of total output as to require a fall in the market price of yarn, to create the demand to absorb the additional supply, it must also be large enough to also affect the market value/price of production of yarn itself. It is not just this producer alone who then must sell at £1.50 per kilo, but all other producers of yarn. But, other yarn producers may produce with a price of production equal to the previous level of £2 per kg. which means that they now make profit below the average, to the extent of £0.50 per kg. Others may produce at prices of production even above the old level who now see their profit disappear, leading them to withdraw their capital.

Turning to the situation in agriculture, Marx argues that the supplier would sell, not at £1.50 per kg., but at £2 per kg, because “... if I had sufficient fertile land, the less fertile would not be cultivated.” (p 18)

But, if we assume no change in demand, in both cases, that is what would happen. In the case of industry, some of those businesses that produced at costs of production above the new price of production, of £1.50 per kg., would cease production, reducing supply. If the supply of corn rises by 2,000 kg., because some new technique raises productivity, this additional 2,000 kg. of supply can only be absorbed by the market if demand rises, and assuming no change in the demand conditions for corn, that can only happen if the market price of corn falls accordingly.

Wednesday, 30 August 2017

Theories of Surplus Value, Part II, Chapter 8 - Part 2

This difference in productivity, therefore, can only be compensated by absolute surplus value, i.e. by increases in the length or intensity of the working-day, within fairly narrow limits. If the labour-time required for the reproduction of labour-power is six hours, then the rate of surplus value, of 100%, with a twelve hour working day, can be increased to 200% with an eighteen hour working day, but its unlikely to be able to extend it beyond that.

If there are one million workers, so that the necessary social working day is six million hours, then, with this eighteen hour day, eighteen million hours of value is produced, giving twelve million hours of surplus value. If the number of workers doubles, the total amount of surplus value also doubles to twenty-four million hours, but the rate of surplus value is not changed. But, this is not the case with relative surplus value. If social productivity rises, then its possible that the needs of this working population of two million may still be met by the expenditure of six million hours of labour, but in an eighteen hour day, these two million workers produce thirty-six million hours of value, so that surplus value is now thirty million hours, giving a rate of surplus value of five hundred percent, with a consequent increase in the rate of profit.

Its possible that instead of a reduction in the value of labour-power arising from rising social productivity, a similar effect may be achieved by reducing wages below the value of labour-power, but, over the longer term, this will reduce the supply of labour-power, for a variety of reasons. Workers may leave the country, have smaller families, or be incapable of working for the same length and intensity. They will not develop the same level of skill, education and so on, so that even if the same quantity of concrete labour is undertaken, it will represent a smaller quantity of abstract labour.

Marx repeats the point made in Capital I, in response to Carey.

“In any case because in a given country the value of labour is falling relatively to its productivity, it must not be imagined that wages in different countries are inversely proportional to the productivity of labour. In fact exactly the opposite is the case. The more productive one country is relative to another in the world market, the higher will be its wages as compared with the other. In England, not only nominal wages but [also] real wages are higher than on the continent. The worker eats more meat; he satisfies more needs.” (p 16-17)

Yet, as was indicated earlier, these higher wages go along also with higher profits, and a higher rate of profit, because although these wages are higher than wages in other countries, they are not higher as a proportion of the total value of production.

“But in proportion to the productivity of the English workers their wages are not higher (than the wages paid in other countries].” (p 17)

Tuesday, 29 August 2017

Theories of Surplus Value, Part II, Index

Chapter numbers, or parts provide a hyper link to the relevant blog post. Chapter Titles provide a hyperlink to the Chapter, or section in Capital itself at

Theories of Surplus Value Part II

Chapter 12 - Tables of Differential Rent and Comment

[1. Changes in the Amount and Rate of Rent]

Part 1

[2. Various Combinations of Differential and Absolute Rent. Tables A, B, C, D, E]

Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8, Part 9

[3. Analysis of the Tables]

Part 10

Part 11, Part 12

Part 13, Part 14, Part 15, Part 16, Part 17, Part 18, Part 19, Part 20, Part 21

Part 22, Part 23, Part 24, Part 25, Part 26, Part 27, Part 28, Part 29, Part 30, Part 31, Part 32, Part 33, Part 34, Part 35, Part 36, Part 37

Chapter 13 - Ricardo’s Theory of Rent (Conclusion)

[1. Ricardo’s Assumption of the Non-Existence of Landed Property. Transition to New Land Is Contingent on Its Situation and Fertility]

Part 1, Part 2, Part 3, Part 4

[2. The Ricardian Assertion that Rent Cannot Possibly Influence the Price of Corn. Absolute Rent Causes the Prices of Agricultural Products to Rise]

Part 5, Part 6

[3. Smith’s and Ricardo’s Conception of the “Natural Price” of the Agricultural Product]

Part 7, Part 8

[4. Ricardo’s Views on Improvements in Agriculture. His Failure to Understand the Economic Consequences of Changes in the Organic Composition of Agricultural Capital]

Part 9, Part 10, Part 11, Part 12, Part 13, Part 14, Part 15, Part 16

[5. Ricardo’s Criticism of Adam Smith’s and Malthus’s Views on Rent]

Part 17, Part 18, Part 19, Part 20, Part 21, Part 22, Part 23, Part 24, Part 25, Part 26, Part 27

Chapter 14 - Adam Smith’s Theory of Rent

[1. Contradictions in Smith’s Formulation of the Problem of Rent]

Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8, Part 9, Part 10

[2. Adam Smith’s Hypothesis Regarding the Special Character of the Demand for Agricultural Produce. Physiocratic Elements in Smith’s Theory of Rent]

Part 11, Part 12, Part 13

[3. Adam Smith’s Explanation of How the Relation Between Supply and Demand Affects the Various Types of Products from the Land. Smith’s Conclusions Regarding the Theory of Rent]

Part 14, Part 15, Part 16, Part 17, Part 18, Part 19

[4. Adam Smith’s Analysis of the Variations in the Prices of Products of the Land]

Part 20, Part 21, Part 22, Part 23

[5. Adam Smith’s Views on the Movements of Rent and His Estimation of the Interests of the Various Social Classes]

Part 24

Chapter 15 - Ricardo’s Theory of Surplus-Value

A. The Connection Between Ricardo’s Conception of Surplus-Value and His Views on Profit and Rent

1. Ricardo’s Confusion of the Laws of Surplus-Value with the Laws of Profit 

Part 1, Part 2, Part 3, Part 4, Part 5

[2. Changes in the Rate of Profit Caused by Various Factors] 

Part 6, Part 7, Part 8, Part 9

[3. The Value of Constant Capital Decreases While That of Variable Capital Increases and Vice Versa, and the Effect of These Changes on the Rate of Profit] 

Part 10, Part 11, Part 12, Part 13

[4. Confusion of Cost-Prices with Value in the Ricardian Theory of Profit] 

Part 14, Part 15, Part 16, Part 17

[5. The General Rate of Profit and the Rate of Absolute Rent in Their Relation to Each Other. The Influence on Cost-Prices of a Reduction in Wages] 

Part 18, Part 19, Part 20, Part 21, Part 22, Part 23, Part 24, Part 25, Part 26, Part 27

B. Ricardo On The Problem Of Surplus-Value

1. Quantity of Labour and Value of Labour. [As Presented by Ricardo the Problem of the Exchange of Labour for Capital Cannot Be Solved] 

Part 28, Part 29, Part 30, Part 31, Part 32, Part 33

2. Value of Labour-Power. Value of Labour. [Ricardo’s Confusion of Labour with Labour-Power. Concept of the “Natural Price of Labour”] 

Part 34, Part 35, Part 36, Part 37, Part 38

3. Surplus-Value. [An Analysis of the Source of Surplus-Value Is Lacking in Ricardo’s Work. His Concept of Working-Day as a Fixed Magnitude] 

Part 39, Part 40, Part 41, Part 42, Part 43, Part 44, Part 45, Part 46, Part 47, Part 48, Part 49, Part 50

4. Relative Surplus-Value. [The Analysis of Relative Wages Is One of Ricardo’s Scientific Achievements] 

Part 51, Part 52, Part 53, Part 54, Part 55, Part 56

Chapter 16 - Ricardo's Theory of Profit

[1. Individual Instances in Which Ricardo Distinguishes Between Surplus-Value and Profit]

Part 1, Part 2, Part 3, Part 4, Part 5

[2.] Formation of the General Rate of Profit. (Average Profit or “Usual Profit”)

Part 6, Part 7, Part 8, Part 9, Part 10

Part 11, Part 12

[3.] Law of the Diminishing Rate of Profit

Part 13, Part 14

Part 15, Part 16, Part 17, Part 18

Part 19, Part 20, Part 21, Part 22, Part 23, Part 24, Part 25, Part 26

Part 27

Part 28, Part 29, Part 30, Part 31, Part 32, Part 33, Part 34, Part 35

Chapter 17 - Ricardo’s Theory of Accumulation and a Critique of it. (The Very Nature of Capital Leads to Crises)

[1. Adam Smith’s and Ricardo’s Error in Failing to Take into Consideration Constant Capital. Reproduction of the Different Parts of Constant Capital]

Part 1, Part 2, Part 3, Part 4, Part 5

[2. Value of the Constant Capital and Value of the Product]

Part 6

[3. Necessary Conditions for the Accumulation of Capital. Amortisation of Fixed Capital and Its Role in the Process of Accumulation]

Part 7, Part 8, Part 9, Part 10, Part 11

[4. The Connection Between Different Branches of Production in the Process of Accumulation. The Direct Transformation of a Part of Surplus-Value into Constant Capital—a Characteristic Peculiar to Accumulation in Agriculture and the Machine-building Industry]

Part 12, Part 13, Part 14, Part 15, Part 16, Part 17, Part 18, Part 19, Part 20, Part 21, Part 22, Part 23

[5. The Transformation of Capitalised Surplus-Value into Constant and Variable Capital]

Part 24

[6. Crises (Introductory Remarks)]

Part 25, Part 26, Part 27, Part 28, Part 29, Part 30, Part 31, Part 32, Part 33, Part 34

[7. Absurd Denial of the Over-production of Commodities, Accompanied by a Recognition of the Over-abundance of Capital]

Part 35, Part 36, Part 37, Part 38

[8. Ricardo’s Denial of General Over-production. Possibility of a Crisis Inherent in the Inner Contradictions of Commodity and Money]

Part 39, Part 40, Part 41, Part 42, Part 43, Part 44

[9. Ricardo’s Wrong Conception of the Relation Between Production and Consumption under the Conditions of Capitalism]

Part 45

[10. Crisis, Which Was a Contingency, Becomes a Certainty. The Crisis as the Manifestation of All the Contradictions of Bourgeois Economy]

Part 46, Part 47, Part 48, Part 49, Part 50, Part 51, Part 52, Part 53, Part 54, Part 55, Part 56, Part 57

[11. On the Forms of Crisis]

Part 58, Part 59, Part 60, Part 61, Part 62, Part 63

[12. Contradictions Between Production and Consumption under Conditions of Capitalism. Over-production of the Principal Consumer Goods Becomes General Over-production]

Part 64, Part 65, Part 66, Part 67, Part 68

[13. The Expansion of the Market Does Not Keep in Step with the Expansion of Production. The Ricardian Conception That an Unlimited Expansion of Consumption and of the Internal Market Is Possible]

Part 69, Part 70

[14. The Contradiction Between the Impetuous Development of the Productive Powers and the Limitations of Consumption Leads to Over-production. The Theory of the Impossibility of General Over-production Is Essentially Apologetic in Tendency]

Part 71, Part 72, Part 73, Part 74, Part 75, Part 76, Part 77, Part 78

[15. Ricardo’s Views on the Different Types of Accumulation of Capital and on the Economic Consequences of Accumulation]

Part 79, Part 80, Part 81, Part 82, Part 83, Part 84, Part 85, Part 86, Part 87, Part 88, Part 89, Part 90, Part 91

Chapter 18 - Ricardo’s Miscellanea. John Barton

[A.] Gross and Net Income

Part 1, Part 2, Part 3, Part 4

[B.] Machinery [Ricardo and Barton on the Influence of Machines on the Conditions of the Working Class]

[a) Ricardo’s Original Surmise Regarding the Displacement of Sections of the Workers by Machines]

Part 5, Part 6

[b) Ricardo on the Influence of Improvements in Production on the Value of Commodities. False Theory of the Availability of the Wages Fund for the Workers Who Have Been Dismissed]

Part 7, Part 8, Part 9, Part 10, Part 11, Part 12

[c) Ricardo’s Scientific Honesty, Which Led Him to Revise His Views on the Question of Machinery. Certain False Assumptions Are Retained in Ricardo’s New Formulation of the Question]

Part 13, Part 14, Part 15, Part 16, Part 17, Part 18, Part 19, Part 20

[d) Ricardo’s Correct Determination of Some of the Consequences of the Introduction of Machines for the Working Class. Apologetic Notions in the Ricardian Explanation of the Problem]

Part 21, Part 22, Part 23, Part 24, Part 25, Part 26, Part 27, Part 28

[2. Barton’s Views]

[a) Barton’s Thesis that Accumulation of Capital Causes a Relative Decrease in the Demand for Labour. Barton’s and Ricardo’s Lack of Understanding of the Inner Connection Between This Phenomenon and the Domination of Capital over Labour]

Part 29, Part 30, Part 31, Part 32, Part 33

[b) Barton’s Views on the Movement of Wages and the Growth of Population]

Part 34, Part 35, Part 36, Part 37


Part I              Main Index                Part III