Progressive v Conservative Social Democracy I
Given what I have said previously about conservative and progressive social democracy, what Paul relates here is significant.
“To contain worker militancy, governments hiked the social wage to record levels and brought workers' representatives into government. In Italy this was in the context of the 1976 'historic compromise' that ended the period of unrest, tying the Communist Party and its trade unions to a conservative-led government. The same basic process van be seen in the Spanish Moncloa Pact of 1978, the 'social contract' of the Wilson-Callaghan governments (1974-9), and numerous attempts by the American unions to secure a strategic deal with the Carter administration.” (p 206)
The real dilemma, as I see it, in the 1970's is this. The dominant role in the economy of advanced capitalism is played by large-scale, socialised industrial capital. Indeed, by the 1970's a lot of that capital is itself multinational. For, GM, Shell, Unilever, IBM, and so on are no longer large capitals tied to a particular state, but footloose global capitals free to locate production wherever it is most profitable. That means they expect protection of the nation state, wherever they locate, and because of their importance to economic activity, employment, incomes and taxes, they even expect different nation states to compete amongst themselves to attract their affections.
Two elements of these businesses have to be distinguished. Firstly, three is the objective interest of the business itself, as capital. That is the interest of the capital as capital, in the shape of socialised productive-capital or commercial capital. That interest is to be able to act as capital, to self-expand, and accumulate. Over the previous century, this capital has learned that the best way to do that is by incorporating the workforce, so as to ensure continuity of production, flexibility and rising productivity. In this context, formal relations with a trades union bureaucracy, acting in a mediating role, via collective bargaining arrangements, annual improvements in living standards are an effective means to this end. In many ways, industrial unions, or in the absence of them, combine committees comprising all the unions, simplify things for management.
The interests of this capital, as capital, concerned with maintaining this stability, is also that the economy itself operates under conditions in which the anarchy of the market is replaced by a degree of planning and regulation at the macro-economic level. These conditions apply equally in every economy where this large-scale, socialised capital dominates.
In Capital I, Marx notes that, in the period when the Factory Acts were being introduced, in Britain, individual capitalists would seek advantage by avoiding compliance. In some districts, capitalists who were magistrates would effectively ignore the laws. The capitalists themselves realised that this chaos was ultimately detrimental and could not continue. In the end, as Marx says, there recognition that what they required above all was a level playing field won out.
Capital had indeed already learned that lesson in relation to standardisation. For train systems, standardised times and time zones had to be introduced; but mass production and Taylorism could only be effective if the billions of components, involved in production, were increasingly reduced to a relatively few standards. For the US, which had fought the Civil War, in order to assert the dominance of the Federal State over the power of the individual states, this process was reasonably obvious and straightforward.
Not only was it obvious to large US companies, of the advantage of a single set of regulations and standards, applying across the whole United States, but its obvious that workers have no reason to continue residing in, say, Georgia, if conditions are better in Florida, or California, so the Federal state is led to harmonise and take primacy in determining those conditions. That is something those who want to ensure free movement of capital whilst abolishing free movement of workers, in relation to Brexit should be reminded of.
And, indeed, it was for the same reason that European countries were led to follow the path of the US, and to attempt to create the EU. Moreover, in the post-war period, these interests of multinational corporations meant that attempts to create the level playing field and relative stability, were initiated more widely via international para state bodies such as GATT/WTO, IMF, World Bank and so on.
But, as Marx describes in Capital III, the nature of those large socialised capitals – other than in the case of the worker owned cooperatives – is that control over the capital is exercised by those who lend money-capital. In the case of joint stock companies that is the shareholders; in the area of nationalised industries, the capitalist state itself. The interests of these money lenders is not at all identical to the interests of the businesses, i.e. of the socialised capital itself. State control, for example, has been used as a short-term means for governments to obtain additional revenues, or has resulted in the industry being starved of investment. It has often been used as a means of providing subsidies to large non-state companies via the pricing and purchasing policies of the nationalised industry. For example, nationalised energy companies sold to large private companies at low prices.
In the 1950's and most of the 1960's, there was no major conflict of interest between the big socialised capitals and their shareholders. Capital accumulated, profits rose, and dividends rose with them. In the post-war period, as this process of capital accumulation occurs, especially with high levels of public debt from the war, and government spending on infrastructure and the creation of welfare states, interest rates keep a lid on capitalised asset prices, including share prices. In the UK, astronomically high house prices immediately after the war, actually fell dramatically in the following years, as new house building increased supply. In the period 1950-1980, the Dow Jones rose by only 312%, whilst US GDP rose by 848%, in the same period. By comparison, between 1980 and 2000, the Dow rose by 1323%, whilst US GDP rose by only 257%. Modestly rising asset prices, with rising profits and dividends, means rising yields, so there is every reason for the rentier capitalists, the 'coupon clippers' to feel happy about the situation.
By the 1970's, however, the situation has changed. The rising living standards of the 1950's, and 60's meant that workers no longer felt the need to undertake large amounts of overtime to get the level of wages they needed. In fact, this was the era of The Good Life, where people did begin to ponder the desirability of a simpler existence. All the married women had already been drawn into the workforce. The baby-boomers had already joined the workforce, during the 1960's. Immigration had increased the workforce, in the 1950's and 60's, but had been used by reactionaries to whip up xenophobia that threatened the social stability that the large-scale socialised capital requires for the production of profits, and accumulation of capital. Similar conditions applied in the US, and across Europe. The ability to increase absolute surplus value, by increasing the size of the social working day, had, therefore, hit its limit.
What is more, the other solution for capital, higher productivity, to reduce necessary labour, and raise relative surplus value, was also increasingly unavailable. The Innovation Cycle had peaked around 1935. Some of its products had started to be utilised in production in the 1930's, during the period of intensive accumulation that accompanies, the stagnation phase of the long wave cycle. Some began to appear as new types of commodity, in the mid to late 1930's, and these formed the basis of the new consumer goods industries that flourished in the post-war boom.
I can remember when the few cars on the roads were black boxes, like the old Ford Popular. Within a few years, I remember how exciting it seemed when the headteacher of the secondary school next to our infant school, turned up in his convertible Ford Consul, complete with fins, the like of which we'd only seen before on 77 Sunset Strip, on TV. Yet, the reality is that, irrespective of the superficial changes in car design, the basics of motors cars changed little between 1950 and 1980. Nor did much change in the way they were produced, during that period. What we had was a period in which technology improved organically, and was rolled out extensively.
The consequence was that, in a whole range of industries, it was impossible to increase the mass of absolute surplus value, because there was insufficient exploitable labour-power, but nor was it possible to increase relative surplus value, because the productivity gains of the previous period had been exhausted. The productivity gains continued to reduce the value of wage goods, and so of the value of labour-power, but not at a sufficient pace to keep up with the growth in demand for labour-power, as the boom proceeded, which caused wages to rise, and profits to get squeezed. Finally, the existing commodities that comprised the consumption of the masses had themselves become stale. Workers had higher wages, but to get them to buy more of these existing commodities, increasingly required there prices to fall by larger amounts.
By, the 1970's, many people had a car, a colour TV, and so on. It was no longer a question of capital expanding the market by selling these things to workers for the first time, but of getting them to buy replacements of them more frequently, or to buy duplicates of them etc. One obvious consequence of that was that in order to sell more, the market price had to fall, and that squeezed profits even more.
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