The replacement of private capital by socialised capital, as a transitional form of property is a necessary stage in he transcendence from capitalism to socialism, but it is by no means sufficient. As Marx says, in Capital III, Chapter 27, the worker cooperative resolves the contradiction between capital and labour positively, because it turns the workers into their own capitalist. The joint stock company resolves it negatively, because, although the capital belongs to no one, but to the company itself, which can only logically mean the associated producers themselves, those associated producers do not exercise control. Control is exercised by shareholders, and their appointed representatives.
For so long as commodity production predominates, each capital, be it a privately owned capital, a socialised capital, in the form of a worker owned cooperative, or a state owned capital, or a corporation, is led to compete in the market. In order to compete, it must reduce the individual value of its output below the market value, and to do that it must accumulate capital. In order to accumulate capital, it must produce profit, and to increase its mass of profit, it must exploit more labour, and exploit labour more effectively.
The worker owned cooperative resolves the contradiction positively by turning the workers into their own capitalist, but, as capitalists, they must still accumulate capital, and, thereby, exploit their own labour by the most effective means of scientific management, the use of the most effective technology, etc. Their advantage is that they now do this to their own account, and under their own control.
For the workers in other forms of socialised capital, such a condition requires that the workers gain the same control. That requires that the same kind of political revolution that brought political democracy, in the 19th and early 20th century, at the level of the state, now be undertaken to bring industrial democracy at the level of the enterprise. But, the former private capitalists (and their descendants) who removed themselves from the social function in production, now have no part in this relation between capital and labour. On the contrary, as the owners of fictitious capital, as money lenders, they stand in a contradictory and antagonistic relation, not to labour but to the productive-capital itself, and, thereby, to the functioning capitalists, whether those functioning capitalists be managers appointed by workers in a cooperative, employed by the state, or by a large company.
“Interest presents capital not in opposition to labour, but, on the contrary, as having no relation to labour, and merely as a relation of one capitalist to another; consequently, as a category which is quite extrinsic to, and independent of, the relation of capital to labour. The division of the profit amongst the capitalists does not affect the worker. Thus interest, the form of profit which is the special expression of the contradictory character of capital, is an expression in which this contradiction is completely obliterated and explicitly left out of account. Apart from expressing the capacity of money, commodities, etc., to expand their own value, interest, insofar as it presents surplus-value as something deriving from money, commodities, etc., as their natural fruit, is therefore merely a manifestation of the mystification of capital in its most extreme form; insofar as it at all represents a social relation as such, it expresses merely relations between capitalists, and by no means relations between capital and labour.” (p 494)
The industrial capital is still compelled by the laws of capitalism to accumulate. Competition drives this accumulation. As the economy expands, each capital is compelled to accumulate so as to obtain its share of the increased market. Each capital is compelled to accumulate so as to reduce its costs of production, to remain competitive. Ultimately, these laws of capital dominate, but, in the short-term, the contradictory interests of fictitious capital, of interest-bearing capital can dominate. The recipients of interest/dividends are, here and now, interested not in maximising company profits, or accumulation, but of maximising the interests/dividends they obtain. The more that goes into interest/dividends the less there is for capital accumulation.
As seen in the last thirty years, this concern to promote “shareholder value” above the interests of the company, and capital accumulation can take varied forms. At one point, it assumes the form not only of a restriction of accumulation, but outright destruction of capital, in the form of asset stripping. It takes the form of pushing up dividends to compensate for falling yields, as asset prices are inflated. As Haldane has noted, dividends in the 1970's accounted for 10% of profits, and today account for around 70%. As yields fell, even as dividends were raised, because asset prices were continually inflated, so the owners of fictitious capital, which now forms the vast majority of their private wealth, became more concerned with capital gains than with yields/revenues from those assets.
The representatives of shareholders on company boards used profits not to accumulate capital, but to increase dividends and provide direct transfers of capital to shareholders; they used profits to buy back shares and to buy the shares of other companies, thereby pushing up those share prices (and, in the process, increasing the value of their own share options); they even borrowed money on bond markets, not for capital accumulation, but to buy back stock, and, thereby, inflate share prices. When the inevitable happened, and the relative diminution of the real capital base, and its ability to produce surplus value/profits came into conflict with the continued inflation of asset prices, causing a series of financial crashes – the last so far being that of 2008 – the representatives of the owners of this fictitious capital, in the state apparatus, were on hand to again bail them out.
The central banks cut their official interest rates, so that commercial banks could borrow from them at less cost, and they used various means to direct this additional borrowing and currency into the purchase of financial and property assets. Conservative governments implemented policies of austerity, so as to hold back economic growth, which would have ensured that the increased capital accumulation raised interest rates, thereby again causing asset prices to crash. But, each time they have adopted such methods, they have been less and less effective in raising asset prices, requiring even more and more money printing, and lower and lower yields, and official interest rates, even to the extent of producing negative official interest rates, and negative bond yields, now amounting to $15 trillion globally. At the same time, availability of loans for actual capital investment has dried up for small and medium sized firms, and the actual market rates of interest they face has correspondingly risen. At the same time, nominal profits have been inflated as money wages fell, by workers relying increasingly on credit, in the form of personal loans and credit and store card debt to finance their consumption. But, these forms of credit are extremely expensive, with interest rates of around 30% p.a. For some, reliant on payday lenders, the rates are as high as 4,000% p.a. Consequently, the effect has been to simply make the contradiction even more acute, and make the inevitability of even bigger financial crash that much greater.
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