Reaction v Conservative Social-Democracy (3)
The current situation is one in which an undeclared civil war is taking place, with Brexit being the manifestation, in the same way that religion was the manifestation of the English Civil War in the 17th century. This civil war is between reactionary forces based upon the plethora of small private capital that seeks to bring about a political counter-revolution that overthrows the social-democratic state that has existed for just over a century, and social-democratic forces, based upon the dominant socialised capital, upon which that social-democratic state rests. The social-democratic forces are divided, because social-democracy is a transitional form between capitalism and socialism, just as socialised capital is the transitional form of property. As such a transitional stage it represents a heightened degree of contradiction. It is a similar situation that existed under Mercantilism, as a transitional form between feudalism resting upon landed property and capitalism resting upon industrial capital. Under Mercantilism, sections of the landed aristocracy aligned with the rising merchant class, based in the towns, along with the growing class of independent capitalist farmers (yeomanry) like Cromwell, against the power of the King. The clear manifestation of this alignment was their symbiotic relation in creating colonial empires across the globe based upon the extraction of rent, commercial profit and interest.
Social-democracy is itself divided between conservative social-democracy, which rests upon the owners of fictitious capital who draw their revenues from it, in the form of dividends and interest on the shares and bonds they own, which is dependent upon the profits of this socialised capital, and progressive social-democracy, which rests upon the working-class and middle class whose employment and wages depend upon the growth of this socialised capital. The middle class managers of this socialised capital are its personification, and as such, they represent its drive to maximise the profit of enterprise, both by driving up the rate of profit, and also by driving down the appropriation of profits as by payments of interest and dividends. In terms of class struggle it is the struggle between these two form of property socialised, industrial capital and fictitious capital, which characterises this stage of capitalism. It is this which demonstrates the reactionary nature of the forces behind Brexit, because they want to turn the clock back from the current stage of development of capitalism. It is why the owners of fictitious capital, and the working-and middle class are objectively aligned by their interests in opposition to the forces backing Brexit – and a similar situation exists in relation to Trump in the US, and other reactionary nationalists, like Orban in Hungary etc.
The forces of progressive social democracy are weak, and it is they which can mobile large-scale social movements, based upon the power of the organised working-class. That is why the resistance to Brexit has fallen to the forces of conservative social-democracy, which undertakes that struggle using its own methods, primarily utilising its control over the social-democratic state, and its institutions such as the civil service,.the courts etc.
To understand, this its necessary to understand the objective basis of social-democracy as resting upon socialised capital, in the form of the cooperative and joint stock company/corporation.
In the worker owned cooperative, the workers find that they are still wage labourers as before, and they are still confronted by capital as before, even though it is now socialised capital over which they exercise control. But, because it is capital, and still continues to operate as capital within the context of a capitalist system, it must continue to function as capital. The workers who now elect their own managers to take on the role of functioning capitalist, to organise production as efficiently and profitably as possible, find themselves constrained by the same objective economic laws that confront every other capitalist. They find that they cannot simply raise their wages above the market price for labour-power, because if they do so, they will reduce the profitability of the cooperative. If the profitability is reduced it will have less capital to reinvest. If it reinvests less capital, it will become less competitive as against other cooperatives and other capitals, so that eventually it will lose market share and go bust. (This should not be taken to apply mechanically, but only as a general law. Obviously, if workers in a cooperative produce more efficiently than the average firm, and Marx sets out that this is the case, and current data supports it, they can pay themselves higher wages whilst still producing the average profit. It simply means they cannot escape the general laws of capital).
As Marx puts it,
“The co-operative factories of the labourers themselves represent within the old form the first sprouts of the new, although they naturally reproduce, and must reproduce, everywhere in their actual organisation all the shortcomings of the prevailing system. But the antithesis between capital and labour is overcome within them, if at first only by way of making the associated labourers into their own capitalist, i.e., by enabling them to use the means of production for the employment of their own labour.” (Capital III, Chapter 27)
But, in the joint stock companies, the associated producers never exercise this control. The capitalists, as ruling class, ensure that, even as they withdraw from their active role in production, they use their political power to pass legislation that determines company law, to give them control, as shareholders, over capital which they do not own, just as the landed aristocracy, after it withdrew from an active role in agricultural production, to live off rent, ensured they used their political power, to ensure their continued control. As Marx puts it,
“It reproduces a new financial aristocracy, a new variety of parasites in the shape of promoters, speculators and simply nominal directors; a whole system of swindling and cheating by means of corporation promotion, stock issuance, and stock speculation. It is private production without the control of private property.” (ibid)
In other words, the ruling class uses its political power to give shareholders a right to exercise control over capital it does not own. The shareholders live off interest, in the same way that the landlords live off rent, and both live off capital gains from speculation in these assets, which results in the inflation of share, bond and property bubbles, totally independent of what is happening in the real economy, and separated from real capital accumulation, which thereby introduces a whole new sphere in which financial crises can erupt, and thereby affect what happens in the real economy.
The shareholders, having removed themselves from any active role in production, assign the management of their interests, to maximise these revenues, from interest and dividends, to “nominal directors”, the Boards of Directors of companies, and a series of executives who contribute nothing in terms of added value, whilst receiving huge remuneration, paid out of company profits. Their role is to exercise control over the actual functioning capitalists, minimising the extent to which they can maximise profit of enterprise for reinvestment, and thereby maximising the amount paid in interest and dividends, and other forms of capital transfers to shareholders. It is what has resulted over the last thirty years in dividends going from 10% of profits to 70% of profits, with huge amounts of profits also going into share buybacks to pump up share prices, to inflate capital gains, and so on.
All of this represents the main class division that exists within modern capitalism in this transitional phase of social-democracy between capitalism and socialism, in which this socialised capital is dominant. That division is between two forms of property socialised industrial capital on the one hand, that is the real capital employed in production and distribution of goods and services, and fictitious capital on the other hand, that is all of those financial assets such as shares and bonds, as well as landed property, and the various derivatives created from these assets, such as mortgages, mutual funds, pension funds, mortgage backed securities and all of the 57 variety of Special Investment Vehicles (SPIV's).
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