The Creation of Wealth
Paul says,
“Credit creation works only if it makes the market sector grow – so the borrower can repay the loan with interest. If the non-market sector begins to grow faster than the market sector, the inner logic of banking would break down.” (p 282)
Firstly, commercial credit does not depend on the payment of interest. It works on the basis of mutual credit given by companies to each other. In other words, goods are typically supplied to other companies, invoiced on the basis of payment in 30 days, 60 days, 90 days etc. It's only bank credit that involves the payment of interest. However, it's not clear why Paul thinks that the difference between market and non-market activities is significant here, unless he is under a serious misapprehension about how social reproduction, including under postcapitalism operates.
Social reproduction, in every mode of production, involves surplus labour, and the production of a surplus product. Without it, the necessary labour required for society to function, but which creates no new value, could not exist, or be reproduced. A proportion of social labour, for example, must be involved in administrative tasks, which of itself, creates no new value, But, if all those workers involved in this activity, do not get wages, or some token enabling them to draw the wage goods required from social supply, they cannot survive. To do so means a surplus product must exist.
The same applies to the young, elderly, sick, etc., who must consume, but do not produce. Paul seems to be under the same misapprehension here that under postcapitalism, profit/surplus value/surplus product becomes unnecessary. It doesn't. If anything, it has to become much bigger. As Marx puts it,
“Before this is divided among the individuals, there has to be deducted again, from it: First, the general costs of administration not belonging to production. This part will, from the outset, be very considerably restricted in comparison with present-day society, and it diminishes in proportion as the new society develops. Second, that which is intended for the common satisfaction of needs, such as schools, health services, etc. From the outset, this part grows considerably in comparison with present-day society, and it grows in proportion as the new society develops. Third, funds for those unable to work, etc., in short, for what is included under so-called official poor relief today.”
(Critique of the Gotha Programme)
If Paul thinks that profit/surplus value/surplus product disappears just because a non-market sector expands or replaces the market sector that indicates a serious misunderstanding of the economic fundamentals, and basis of social reproduction. Without profit/surplus value/surplus product it becomes impossible to accumulate capital/means of production, which means that economic growth stops, and any potential for innovation and improvements of technology/productivity stops with it. It means no increase in population can be supported, provision for unproductive members of society would cease, and so on.
Interest is a deduction from surplus value, and so wherever surplus value is produced, a part of it can be paid over as interest to the money-lending capitalist. The question has nothing to do with whether the profit/surplus value/surplus product is created by/in the hands of a business operating in the market or non-market sector.
Paul sets out his argument for the introduction of a Universal Basic Income. I have written in the past about why it's a bad idea. So, I will not cover that ground again. In summary, it results in an inflation of wages, and prices. Secondly, it systematises the subsidy of all those low-paying, inefficient small capitalists who would simply be able to deduct the UBI from the wage they would otherwise have to pay. We should instead demand a minimum weekly wage – irrespective of hours worked – and scrapping of all in-work benefits; we should, therefore, also scrap Housing Benefit, Council Tax Benefit, and so on. Instead, we should introduce a single payment unemployment and sickness benefit, adequate to cover the basic needs of a worker, including for a child. We should seek to establish a cooperative labour supply agency, able to exercise a monopoly of labour supply, so as to both ensure that employers are held to the required minimum wages and conditions, and to begin to raise wages and conditions above those minimum levels.
Preferably, we would also bring social insurance back into workers ownership and control, so that the current iniquities imposed on benefit claimants by the capitalist state could be dispensed with, and the claimants needs, including for retraining, and appropriate employment, could be addressed by local workers committees, acting as administrators of the social insurance fund.
Paul describes the lifestyle of some of the 1%. In my novel 2017, I wrote, about,
“those stock market traders and other yuppies, who, at the same time of day, frequented the designer pubs and wine bars, in other parts of the capital, where they showed off their designer stubble, alongside their designer clothes, and designer watches, which, at the end of the day, they checked, before getting into their designer sports cars, to drive home to their designer apartments, where they entertained their designer girlfriends, and their designer vaginas. And, despite their multi-million pound bonuses, much of it was paid for by designer credit, which reflected the superficial and ephemeral basis upon which it all rested."
The contrast drawn there between the lives of all those workers who created real wealth, by the production of real goods and services, but who obtained such a small share of it, as opposed to those who have the lion's share of that wealth, whilst having produced nothing, is the story of the last thirty years, a story that is reaching its final paragraph.
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