Progressive v Conservative Social Democracy II
Marx, following Ricardo, had shown that rising wages do not cause rising prices or inflation. Its rising prices that raise the value of labour-power, which leads to rising wages. If wages rise, the consequence is falling profits, not higher prices. But, the reality is that central banks were created, at the start of the 20th century, to create modest annual inflation so that, as productivity rose, instead of the fall in the value of labour-power leading to a fall in nominal wages, money wages could remain constant, whilst real wages/living standards rose, but the rate of surplus value, and thereby profit rose, because more surplus labour was undertaken. It only required that real wages rose by a smaller proportion than the rise in productivity, so that a greater proportion became surplus product.
Now, when it becomes impossible to increase either absolute or relative surplus value, and the demand for labour-power continues to push up wages, money-supply has to rise accordingly to accommodate higher prices, as firms seek to raise prices, to cover costs, so as to, at least, maintain profits. And, so the stagflationary spiral of the 1970's set in. It was symbolised by the fact that it was Tory Prime Minister, Edward Heath, who introduced monthly indexation of wages to RPI, a period during which many of us obtained the biggest increases in money wages we had ever seen.
But, here also is the significance of Marx's analysis as against Ricardo. As inflation rises, money wages rise, and profits rise, but fixed incomes, such as bond interest, rents and so on do not, or not immediately. This represents a fall in revenue for these sections of society. However, it is shareholders who had the right to determine corporate policy. In conditions of repeated crises, interspersed by governmental measures to stimulate growth, any upturn is used, not as the basis for additional investment, but merely to raise prices. Shareholders look instead to utilise any increase in profits to raise their dividends; shares then attract money-capital away from bonds and property, so that overall yields rise.
The problem was that, on the basis of the existing technology, and with the existing supplies of labour, it was not possible to sufficiently increase the mass of surplus value. The answer to that is a) revolutionise technology, and b) find new supplies of labour. A progressive social-democracy could address the first of these by utilising all of the resources of the state, via its universities and research facilities; it could also, by operating on a wider basis, for example with the creation of the EU, reduce other barriers and inefficiencies that would have the effect of raising productivity; structures like the EU, by facilitating free movement of labour and capital, could make better use of existing labour supplies, enabling both to move to where they are in short supply, and a larger state can also more easily absorb external immigration, to the same effect.
But, as it actually occurred, things were different. The owners of loanable money-capital are only concerned with their own immediate interests. Investing in new labour saving technology for shareholders is not a matter of addressing an issue affecting society, but simply a means of addressing the squeeze on profits that is hitting their dividends. Where such new technologies can be created and introduced, they are brought in, though notably its often newer private capitals that first do so. For example, it was smaller private capitalists that created all of the rash of Instant Print shops, and it was Eddie Shah that utilised similar technologies to set up Today, as a competitor to the existing tabloids. Workers are laid off, and wages are cut. Where, new technologies cannot or are not introduced, either businesses close, and assets are stripped, the proceeds being used for investment elsewhere, or else the shareholders vote to move production to where larger supplies of cheaper labour are available.
A number of selected zones, in a small number of developing economies, notably in Asia, become the focus of this relocation of industrial production, which, as I noted in the early 1980's, creates the basis for a new international division of labour. So, ultimately, the solution – a revolution in technology, the creation of a larger exploitable workforce, and subsequently an expansion of the market on this basis, and of the creation of whole new industries – is implemented, but instead of that implementation arising in a planned and regulated manner, it again arises on the basis of chaos and crisis.
Social-democrats could, in theory, have avoided that. If shareholders did not have a right to vote, and did not appoint company executives then the decisions relating to the existing productive-capital of companies could be taken on the basis of industrial democracy, by the workers and managers in those companies. That doesn't remove them from the economic facts of life. If the company does not produce goods or services that can be sold at a profit, it will fold; it will find it can't borrow money etc. But, similarly, provided it could operate profitably, any decision of shareholders become irrelevant to it. If shareholders seek to sell shares they can only sell them in to the stock market to other potential share buyers. It has no effect on the actual productive-capital of the company itself.
Germany has had co-determination laws since the 19th century. Its current laws enable workers in companies to elect 50% of the members of supervising boards. In the 1970's, proposals for similar laws were drawn up in Britain, and in the EU. Such laws continue to give shareholders or the capitalist state a casting vote, leaving workers always in a minority, but there is no reason workers should not have the right to elect 100% of the members of those boards. It is, in fact, iniquitous that shareholders have any right to appoint Directors or vote. That right is not given to any other creditors of the company, or lender of capital to it. Them having that right also conflicts with the long-term interests of socialised capital, and its requirement to accumulate, on the basis of planning and regulation. There is every reason, logically, therefore, why progressive social democracy should remove that anachronism, and affront to even bourgeois property laws. But, it didn't, and the reason it didn't is fairly obvious. Its not accidental that company law, across the globe, gives shareholders the right to exert control over property they do not own, in blatant violation of bourgeois norms. In just the same way that Lord Palmerston was able to stand up in parliament to oppose the Irish Tenancy Rights Bill, and declare that the House of Commons was a house of landed interest, so company law was created, by the monied interest, by the representatives of those capitalists who had removed themselves from the tawdry business of actually running companies, to simply drawing dividends on their shareholdings.
In order to overcome that social democracy would have to wage the same kind of political struggle as had been waged against the landed aristocracy over the Corn Laws. It would have to actively mobilise the workers to bring about such a change, but that, in the 1970's, presented risks comparable to those previously seen in 1917, when what began as bourgeois democratic revolutions spilled over into proletarian revolutions.
In 1975, Harold Wilson, having given his Ministers free rein to line up on either side of the Common Market referendum, officially remained neutral. In reality, he lined up with the pro-EU forces, and his reasons for doing so, which he described later, are revealing. He did so, he said, because otherwise the wrong forces would have secured a victory. By “wrong forces” Wilson did not mean the reactionary nationalist elements like Enoch Powell, and the National Front. Wilson's actual concern had nothing to do with nationalism v internationalism, or the actual issues around the EEC itself. What Wilson meant by the wrong forces were the left in the party around Tony Benn, supported by the Tribunites, and externally by the Communist Party, and their fellow travellers in the trades unions. He also meant those to the left of those forces, in the International Socialists and Militant, who having initially been abstentionists, had collapsed into the same Little Englander nationalism, under pressure of this left public opinion, and fear of losing their periphery.
In 1975, only two years into Britain's membership of the EEC, the question of In or Out was not as significant to Wilson as the need to defeat the Left strategically, and to halt its forward momentum. Wilson the technocrat had no objection to many of the shibboleths of that left, he was a protege of Bevan, in the 1945 Attlee government. His 1960's vision of “The White Heat of Technology” driving forward British capitalism was quite compatible with notions of large scale state ownership, of macro-economic planning, by a corporatist state, via NEDO, along French lines, and of meritocracy and widening of opportunity for the working class, as symbolised by his championing of the Open University. And, Wilson had little time for the parasitic money-capitalists, or the Gnomes of Zurich, or the financial gambling they represented. In fact, Wilson even objected to the introduction of Premium Bonds, because he said it encouraged gambling. But, it was precisely because Wilson was such a technocrat, who saw society as a machine to be controlled and manipulated that led him to believe in the need for everything to be controlled from the top down. Hence, In Place of Strife. For Wilson, the left were “the wrong forces” because they were anathema to that perspective. The left-wing shop stewards that organised the wild cat strikes, and so on, were not part of a well oiled machine, whose levers were to be pulled, but saboteurs, throwing their shoes into the machine to cause it to break.
And, to a point, Wilson was right. As a protege of Bevan, he knew the history of the General Strike, and of that meeting between Arthur Cook, and the other union leaders, with the government. There was a large element of the Left which was simply “anti-capitalist”, but which had little positive idea about what to create as an alternative. Elements of that alternative could be identified in the Alternative Economic Strategy, and the proposals for industrial democracy, as outlined in the Bullock Report, as well as with the proposals for the National Enterprise Board, support for worker co-operatives, and so on, but they were all a bit of a mish-mash, and undermined by the overwhelmingly nationalistic framework in which they were constrained, heavily influenced by the Stalinist heritage from which they were derived.
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