“Society as a whole is more and more splitting up into two great hostile camps, into two great classes directly facing each other – Bourgeoisie and Proletariat.”
(Marx and Engels – The Communist Manifesto”)
Of course, this statement, a piece of rhetorical propaganda, was not Marx nor Engels final word on the subject. Marx's historical materialist method is more practically applied in his analysis of The Civil War in France, and The Eighteenth Brumaire of Louis Bonaparte, whereby this division into two great classes facing each other, is more nuanced, so that the position of class fractions, of those two great classes, reflecting their particular interests, as well as the position of intermediate classes, of the peasantry, and petit-bourgeoisie is also analysed, so that the two great hostile camps, can, at any one time, contain a variety of coalitions of these different class fractions, and intermediate classes. In Britain, the proletariat stood with the bourgeoisie, as a whole, against the landed aristocracy; the proletariat stood with the industrial bourgeoisie against both the landed aristocracy, and against those class fractions of the bourgeoisie – the financial oligarchy – linked to the landed aristocracy, to push through the repeal of the Corn Laws, and establish the political dominance of the industrial bourgeoisie; the landed aristocracy repaid the industrial bourgeoisie, by lining up with the workers to push through factory legislation. As Lenin puts it, “the truth is always concrete.”
Engels describes the attitude of himself and Marx, in his letter to Bloch.
“... history is made in such a way that the final result always arises from conflicts between many individual wills, of which each in turn has been made what it is by a host of particular conditions of life. Thus there are innumerable intersecting forces, an infinite series of parallelograms of forces which give rise to one resultant — the historical event. This may again itself be viewed as the product of a power which works as a whole unconsciously and without volition. For what each individual wills is obstructed by everyone else, and what emerges is something that no one willed. Thus history has proceeded hitherto in the manner of a natural process and is essentially subject to the same laws of motion. But from the fact that the wills of individuals — each of whom desires what he is impelled to by his physical constitution and external, in the last resort economic, circumstances (either his own personal circumstances or those of society in general) — do not attain what they want, but are merged into an aggregate mean, a common resultant, it must not be concluded that they are equal to zero. On the contrary, each contributes to the resultant and is to this extent included in it.”
Brexit is the main political issue being fought out in Britain today. Polls indicate that more people identify themselves by the label Remainer or Leaver than do those identifying themselves as Labour or Tory. Yet, that dichotomy presents a false picture, because overwhelmingly Labour voters (more than 70%) also back Remain, whereas around the same proportion of Tory voters back Leave. Moreover, the same surveys show that these positions are hardening, with those supporting both camps, becoming ever more convinced in the correctness of their ideas. This is a class struggle, in the true sense of the word; it is society divided into two great hostile class camps in serious combat, which is why the division has become more intensified, as it has proceeded. Moreover, this battle, although it is exemplified by Brexit, can be seen in other forms across Europe, as well as in the US. In all these places, as with Marx's analysis of the events in France, or as with the class struggle over the repeal of the Corn Laws, these two great class camps do not resolve cleanly into bourgeoisie on one side, and proletariat on the other.
What is the material basis of the conflict? It is quite simple. More than a century ago, large-scale industrial capital became dominant. As this large-scale industrial capital expanded further, it burst the bounds imposed by the nation state. It became multinational capital. But, as I wrote more than thirty years ago, the growth of this multinational capital was still constrained, because of the structure of firms. What removed that constraint, was, as Michael Barratt Brown, said, the development of the multinational corporation, which operated via a headquarters, which acted centrally, like a bank, and allocated capital across numerous locations. That process has been further accentuated by the development of the Internet, which acts to, instantaneously, connect all of these separate operations to each other, and to the central headquarters. It has made possible flexible specialisation, in place of Fordist mass production, and Just In Time, production and stock control systems that sees a multitude of components moving many times across borders, particularly within the single market, prior to the completion of final products.
The nation state itself developed to meet the needs of capital, as it required minimum sized single markets, each operating with a single currency, a single set of fiscal and regulatory rules. The introduction of the Factory Acts, as Marx describes in Capital I, are a good example of that, as the industrial capitalists, themselves, began to recognise that, much as each of them had an incentive to overwork their labourers, and to reduce working conditions, so as to gain competitiveness, and boost profits, taken as a whole, such practices were detrimental to capital's long-term interests, as it threatened to wipe out the very source of its profits, by destroying the working-class. It required the capitalist state to impose rules and regulations on all of them, so as to limit that damaging competition. In the age of the multinational corporation, the individual nation state – unless it is a huge state like China, which, like the US, in reality, is a federation of a number of smaller states – is no more capable of fulfilling that function than would have been the Kingdom of Mercia, in the age of 19th century British industrial capital.
No sooner did large-scale industrial capital, become dominant, in the last half of the 19th century, than the needs of this capital could only be met, by the creation of a correspondingly large, social-democratic state, which acted to protect the interests of that section of capital, and to further its interests, by the use of monetary and fiscal policy, by the introduction of various forms of long-term, macro economic planning, the creation of central banks, the creation of welfare states and so on. To go along with this went votes for the working-class, because, although this section of capital was economically dominant, and upon its fortunes rested the fate of the state, those that owned or controlled these companies, were only a tiny proportion of the population. A much larger proportion of the population, and of the bourgeoisie, were that plethora of small private capitalists, the shopkeepers, market traders, back street workshop owners and so on, which today accounts for around 5 million businesses in Britain.
As against these small private capitalists, the large capitalists represent a small minority, and so as Engels points out,
“Both these circumstances had turned the English working class, politically, into the tail of the ‘great Liberal Party’, the party led by the manufacturers. This advantage, once gained, had to be perpetuated. And the manufacturing capitalists, from the Chartist opposition, not to Free Trade, but to the transformation of Free Trade into the one vital national question, had learnt, and were learning more and more, that the middle class can never obtain full social and political power over the nation except by the help of the working class. Thus a gradual change came over the relations between both classes.”
(Preface to The Condition of the Working Class in England)
The Labour Party, as a party based upon the working-class, was simply a more rational development of this reality, that social-democracy was only possible on the basis of the support of the working-class, and that reality has imposed itself across all developed capitalist economies, whatever the particular names of the parties, in the various states, that most ideally perform that function, be it the Democrats in the US, or the SPD in Germany.
But, by the 1950's, this very process of the continued concentration and centralisation of capital, that led to the development of the multinational corporation, meant that the nation state was no longer sustainable. The US, had, in fact, gone beyond that point in the mid 19th century, as part of its process of industrialisation. California would probably have become a separate nation state, had it not been for the fact that the building of the transcontinental railway, tied the country together, in the same way that the building of railways in India achieved the same result. The US Civil War, was a war waged by industrial capital, concentrated in the Northern states, against the Confederacy, precisely in order to subordinate the power of the states to the Federal State. The repeated wars in Europe, during the 19th century, were a reflection of a similar process, at a more embryonic level, that took on a more developed form in World War I and II, which were, similarly, an attempt to create a European state, alternately under the domination of France and Germany, as a counterpoise to the then dominant British State.
In the US Civil War, to advance the cause of Northern industrial capital, and the creation of a unified US state for that purpose, Marx stood with the Northern industrialists, and with the working-class that fought alongside them, against the southern slave-owners, who represented a reactionary counter-revolutionary force. The components of the two great class camps divided in respect of Brexit are as follows: On the side of Remain: the working-class, the large-scale shareholders in the big companies (and their representatives that sit on company Boards), the professional managers in those companies, i.e. what Marx calls the functioning capitalists that comprise the aforementioned “middle class”, associated layers of this middle-class, for example, the state bureaucrats that occupy a similar role to the professional manager, the trades union bureaucrats, whose role is to negotiate and arbitrate between capital and labour, and other middle-class professionals. In addition, there are those private capitalists, whose firms are large enough to also be dependent upon trade with the EU. On the side of Leave, is that plethora of small private capitalists, whose businesses have no immediately visible connections to trade with the EU, and for whom the EU, and its minimum standards for workers rights, consumer and environmental standards, and so on only represents an impediment to their attempt to make profits, by cutting corners, and reducing rights and protections. As outlined above, these small capitalists account for around 5 million businesses in Britain, which when their families are taken into account, amounts to at least 10 million voters. In addition to them, there are their own associated layers, including some of their workers, who are usually separated from the organised working-class, atomised, backward, and often seeing organised workers as privileged, due to their ability to obtain better wages and conditions. Similarly, there are all those former workers, who aspired to the middle-class, purely on the basis of their good fortune of being part of the baby-boom generation, and who saw an illusion of the inflation of their wealth, as property prices rose in an astronomical bubble from the 1980's onwards. They too grew up in an age during which the illusions of superiority, created by the British Empire, were still powerful, and which have been played upon by the Brexiteers, in promoting the idea of the creation of a British Empire 2.0. Its one reason they hate the criticism of the vile, racist, white supremacist, and Anti-Semitic bigot, Churchill, who epitomes that concept of superiority. These are the backbone, also, of the Tory Party's core membership and voter base. And below them are those that exist even more on the periphery of society, and whose precarity and atomisation leads them into individualistic ideologies and behaviour, similar to those of the small capitalists. They comprise that lumpen element that Marx describes as the “dangerous class”.
If we look across Europe, at the support for right-wing nationalist populist parties, or across the US, in the support for Trump, we see broadly the same alignment of forces. That is because, we are at a critical conjuncture, where the interests of two types of property, and property ownership are coming into direct conflict, much as was the case with the US Civil War. It is a conflict between large-scale socialised capital, and the need to pursue its objective interests, and the interests of small private capital. The former represents the potential for advance, whilst the latter represents counter-revolution, and reaction.
In Capital III, Marx notes that there is a division of interest, not just between the private capitalists, and the large-scale socialised capitals, represented by the joint stock companies, corporations etc., (which he says, are the transitional forms of property between capitalist property and socialist property) but also between the interests of the socialised capital, and the “functioning capitalists”, who are the personification of that socialised capital, and the money-lending capitalists, i.e. the shareholders/owners of fictitious capital. The former seek to advance the accumulation of the capital, which means minimising the amount paid out as interest/dividends to money-lenders/shareholders, whereas the latter have an interest in maximising the amount they can obtain in interest/dividends. Today, we would add that they also have an interest in maximising the value of their shares etc.
“The lending capitalist as such faces the capitalist performing his actual function in the process of reproduction, not the wage-worker, who, precisely under capitalist production, is expropriated of the means of production. Interest-bearing capital is capital as property as distinct from capital as a function. But so long as capital does not perform its function, it does not exploit labourers and does not come into opposition to labour.
On the other hand, profit of enterprise is not related as an opposite to wage-labour, but only to interest.
… assuming the average profit to be given, the rate of the profit of enterprise is not determined by wages, but by the rate of interest. It is high or low in inverse proportion to it.”
(Capital III, Chapter 23)
Yet, the fact is that, in order for interest/dividends to be paid, to these shareholders/bondholders, industrial profits must be made, and the more capital can expand and accumulate, the more can those profits be increased, so that more interest/dividends can be paid out. There is a limit, as the 2008 financial crash demonstrated, to the degree that shareholders can keep increasing the proportion of profits paid to them as dividends, so that share prices, and other asset prices rise, before they end up killing the goose that lays that golden egg. The more money that goes into inflating those asset prices, rather than in investment in real capital accumulation, the less can industrial profits rise, and the less, therefore, the ability to sustain payments of interest/dividends. There is a depreciation of the value of money-capital, so that it buys fewer and fewer shares, and other financial assets. As Marx puts it,
“It would be still more absurd to presume that capital would yield interest on the basis of capitalist production without performing any productive function, i.e., without creating surplus-value, of which interest is just a part; that the capitalist mode of production would run its course without capitalist production. If an untowardly large section of capitalists were to convert their capital into money-capital, the result would be a frightful depreciation of money-capital and a frightful fall in the rate of interest; many would at once face the impossibility of living on their interest, and would hence be compelled to reconvert into industrial capitalists.”
(ibid)
So, it is not just the functioning capitalists, the professional managers employed in these large corporations that have an interest in sustaining the EU, as the best conditions for capital accumulation, and the creation of profits, but also the shareholders in those companies, and consequently also their representatives, the executive directors that sit on company boards. The working-class has an interest in promoting this development of capitalism, for many reasons. Firstly, the working-class has an immediate direct interest in the most rapid development of capitalism, because it creates an additional demand for their labour-power, which is the best conditions for them to raise their wages, and to improve their living standards. As Marx puts it, in Wage Labour and Capital,
“The more quickly the capital destined for production – the productive capital – increases, the more prosperous industry is, the more the bourgeoisie enriches itself, the better business gets, so many more workers does the capitalist need, so much the dearer does the worker sell himself. The fastest possible growth of productive capital is, therefore, the indispensable condition for a tolerable life to the labourer.”
But, the working-class has a longer-term, more strategic interest in the development of capitalism, as facilitated by the EU, and that is that the most rapid development of the productive forces, by capitalism, is the precondition for socialism. As Lenin put it,
“And from these principles it follows that the idea of seeking salvation for the working class in anything save the further development of capitalism is reactionary. In countries like Russia, the working class suffers not so much from capitalism as from the insufficient development of capitalism. The working class is therefore decidedly interested in the broadest, freest and most rapid development of capitalism. The removal of all the remnants of the old order which are hampering the broad, free and rapid development of capitalism is of decided advantage to the working class.”
In the case, of the EU, the reason is also clear, because the EU means that the competition between workers in different states, is thereby more easily reduced. It means that the similarity of condition that faces workers, as workers, whether they be in France or Romania, Italy or Britain, facilitates the development of a common class consciousness, which creates the basis for a unified class struggle across the continent. It means that workers can more easily create a single unified EU wide labour movement to confront a single unified European capital; they can demand common EU wide trades union rates of pay, workers rights', welfare rights and so on. The socialist case for Europe is not any conservative social-democratic illusion in the beneficence of EU institutions to provide any of these things, but is precisely the facilitation of the working-class organising to achieve it via its own self-activity.
For, the functioning capitalists, the interest in defending the EU, is again precisely that these middle class elements are the personification of large-scale socialised capital. They represent its innate nature as self-expanding value, and the need to accumulate on an ever expanding scale, including the need to create ever new markets, which the EU, with its huge single market, and frictionless trade facilitates. For, the other associated middle class layers, be it amongst state bureaucrats or trades union bureaucrats, the incentive is the same, as outlined above by Marx, because it is clearly easier to arbitrate and conciliate the interests of capital and labour in conditions of rising capital accumulation and social wealth than in conditions of stagnant growth and capital accumulation.
The forces backing Remain, therefore, are a coalition as seen before in history, such as described by Marx and Engels, for example, in relation to the repeal of the Corn Laws, or in relation to the US Civil War. On the one hand, there are the forces of conservative social democracy that want to defend the EU as the means of better accumulating capital, so as to increase profits, and thereby to increase interest/dividends, and consequently share and other asset prices. In that camp come the sections of the Tory Party such as Ken Clarke, and Anna Soubry, as well as the Blair-right Labour MP's. Alongside them comes the progressive social democrats. They represent the objective interests of that large-scale socialised capital. Its needs are to remove barriers to its accumulation, including the power of shareholders and other parasitic layers that leach from its profits that could otherwise be invested in productive capital. They seek an extension of the role of the state in providing additional regulation and planning so as to create the framework for their long term investments. These elements are currently weak, but in the 1960's and 70's, they were much stronger, represented by the extension of macro-economic planning bodies, such as NEDO. Those objective interests were manifest in Wilson's Commissioning of the Bullock Report on Industrial Democracy, which proposed having half of the members on company boards elected by trades unions, a situation that has existed in Germany for more than a century. It was also proposed across Europe, in the Draft 5th Company Law Directive, before being shelved, as conservative governments, like that of Thatcher, were elected across Europe, with the EU itself thereby falling under the grip of these conservative national governments.
The Leavers, overriding motivation is nationalism. The small private capitalists are driven by nationalism, in the same way those forces, in past times, formed the bulwark of Tory support for Protectionism. They seek protection by the state from all those sources of competition that threatens their existence as small private capitalists. That does not just include protection from foreign competition, it means protection from organised labour, and its ability to fight for higher wages, and from larger companies, whose greater productivity enables them to be more efficient and profitable. These small capitals can only exist on the back of such protection from the state, via anti-union laws and so on, as well as by the state subsidising their inefficiency through the payment of various in-work benefits, to enable them to continue paying wages below the value of labour-power, as well as via the payment of Housing Benefits that also go straight into the pockets of profiteering landlords. These elements make up the bulk of the Tory support, as well as the bulk of support for Leave.
And the other layers that back Leave do so for similar reasons. They are declassed elements that associate more closely with nation than class. In the case of the elderly Tories, that make up a disproportionate number of Leave voters, if they ever were connected to the organised labour movement, they have long since ceased being so. They grew up in, and still live in, an imagined community in which large parts of the globe are coloured in the pink of the British Empire, and where Britannia Rules the Waves. They want the world to remain as it is in their imagination, but a world that long since ceased to exist.
And that is true also for those deluded Lexiteers, who believe that their economic nationalism could provide the basis for them to introduce their programme of progressive social-democracy within national borders. The argument was put forward recently by Chris Williamson, on Politics Live. He argued that, even if Brexit resulted in UK growth slowing further, or even shrinking, a Corbyn government could still improve the lives of British workers by a programme of what amounts to Fabian redistributive socialism. But, that of course, is nonsense, and has been shown to be nonsense over and over again, the latest example being in Venezuela, a country whose vast oil wealth, should, if anywhere could have implemented a successful policy of redistribution, have been able to do so. The fact is, as Marx described more than a century ago, the idea that socialism can be brought about by such policies of redistribution, or even that workers living standards can be sustainably raised by such methods, is a dangerous fantasy.
“Any distribution whatever of the means of consumption is only a consequence of the distribution of the conditions of production themselves. The latter distribution, however, is a feature of the mode of production itself. The capitalist mode of production, for example, rests on the fact that the material conditions of production are in the hands of nonworkers in the form of property in capital and land, while the masses are only owners of the personal condition of production, of labor power. If the elements of production are so distributed, then the present-day distribution of the means of consumption results automatically. If the material conditions of production are the co-operative property of the workers themselves, then there likewise results a distribution of the means of consumption different from the present one. Vulgar socialism (and from it in turn a section of the democrats) has taken over from the bourgeois economists the consideration and treatment of distribution as independent of the mode of production and hence the presentation of socialism as turning principally on distribution. After the real relation has long been made clear, why retrogress again?”
(Marx – Critique of the Gotha Programme, Part I)
If, Britain leaves the EU, one of the first consequences will be that many large companies will begin to relocate their activity out of Britain and into EU countries, a process that is already taking place. So, there will be fewer jobs for workers. The demand for labour-power will fall, and so wages will fall. Unemployment will rise, so that the state will need to use taxes not to redistribute towards workers, but simply in order to prevent the unemployed workers falling into further destitution. It will do so from a shrinking tax base, as less capital employed means less surplus value produced, from which to obtain the tax revenues. As these larger companies leave, and reduce their investments, so the small inefficient private capitalists will take advantage of the increased supply of labour-power, and lower wages, so that the current conditions of precarity, of zero hours contracts, of poor working conditions will increase. These are the conditions that the Brextremists such as Rees-Mogg favour, but they are also the conditions that a Corbyn government would have to confront.
If a Corbyn government sought to increase taxes on those large companies to make up for the lower tax take, as less capital was employed, that would simply create an even greater incentive for those companies to relocate to other EU countries, or elsewhere, which is what happened when Francois Mitterand attempted to introduce such nationally based social-democratic policies. But, even if that did not happen, a larger portion of revenues taken just to pay out dole to unemployed workers, means less of those revenues available for productive investment that would have employed those workers on real wages, and contributed additional new value, and wealth. Its precisely for those reasons that even the kind of limited progressive social-democratic policies proposed by Corbyn can only realistically be implemented on an EU wide scale.
The fact is that the programme of the Lexiters is just as reactionary as that of the Rees-Mogg's, because it starts not from class but from nation. In an era when the productive forces have long since burst asunder the bounds of the nation state, trying to force them back into that straitjacket can only ever have reactionary consequences. The Lexiters, with their programme of economic nationalism, are objectively reactionary – whatever their subjective desires – because they start from what is in the interests of the nation, i.e. of Britain, and not what is in the interest of the working-class, including in this case, the interests of the development of capital, upon which the interests of workers also depends. They prefer to put their faith in being able to pursue their policy of economic nationalism, rather than to place their faith in the working-class, as an international class, and here specifically of the European working-class.
The battle over Brexit is a class struggle between two great class camps. On the one hand, there are the forces of progress and modernism, driven forward by the interests of the working-class, for the development of capital. It is mobilised to oppose Brexit, which represents the biggest threat to its advance in 75 years. On the other, stands the forces of reaction, which seek to turn back the clock to a more primitive form of capitalism, based upon the domination of small private capitals, and rampant free market competition. It is a battle that is also being played out in different forms across all developed economies. It is imperative that the forces of reaction be defeated.
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