GDP - Part 2/8

Keynes recognises the existence of saving, and introduces the concept of the marginal propensity to consume, which, he says, is always less than 1, meaning that there is always an element of saving, but he restores equilibrium, by then equating this saving with investment. In other words National Income, Y, divides into spending and saving, whilst spending itself divides into consumption, C, plus investment, I. Thereby, supply creates its own demand, income equals expenditure, Y = C + I. 

This, of course, still does not account for the value of constant capital consumed in production, which forms a revenue for no one. By an almost sleight of hand, it conflates that element with investment. That solution itself was not new, and was dealt with by Marx in Capital. 

Indeed, some “Marxist” economists, in practice, accept this dogma, because they do not understand the concepts set out by Marx, in relation to the consumption of constant capital in production. They take the element of means of production consumed in production, indicated by what is called “intermediate production” in the national accounts, as representing this element of constant capital, or “c” in the value of output. But, it isn't. Marx shows in Capital II, that this intermediate production, i.e. the value of constant capital supplied by producers of means of production to the producers of final output, consumption goods, contains not one penny of value of constant capital. It contains only the value of new labour, i.e. revenue. Indeed, its for that reason that it can legitimately be included in the GDP figures, which are only a measure of added value, by labour. 

The value of constant capital, in the value of total output, is, as Marx shows, equal to the value of constant capital consumed in the production of means of production, and this appears nowhere in the national accounts, and could not do, because it does not produce a revenue for anyone, and nor is it bought from revenue. If it appeared in the figure for the value of total output, then total output value would diverge from total revenues by this amount, undermining the basic tenet of orthodox economics that the value of output resolves entirely into revenues, and provides the basis for the concept of general equilibrium, that supply creates its own demand. 

“Adam Smith, however, has promulgated this astounding dogma, which is believed to this day, not only in the previously mentioned form, according to which the entire value of the social product resolves itself into revenue, into wages plus surplus-value, or, as he expresses it, into wages plus profit (interest) plus ground-rent, but also in the still more popular form, according to which the consumers must “ultimately” pay to the producers the entire value of the product. This is to this day one of the best-established commonplaces, or rather eternal truths, of the so-called science of political economy.” 

(Capital II, Chapter 20, p 438) 

Adam Smith argued that the value of commodities resolves entirely into revenues, but then had to recognise that the value of, say, a loaf of bread does not resolve entirely into the wages of the bakery workers, the profits of the capitalist baker, or the rent of the baker's landlord, or the interest of the money-capitalist who loaned money-capital to the baker. It also consists of the flour and other materials used by the baker, along with the value of the wear and tear of the baker's ovens and other equipment. The value of the bread is comprised of the total of all these values, both the added value by labour (v + s), and the value of the constant capital, (c), contained in the flour, materials, and machinery etc. The baker cannot dispense all of the value of the bread as revenues, because if they did, they would have nothing left over to be able to again buy flour, or to replace their machines when they wear out. 

Smith recognised this contradiction, but resolved it by saying that matters are different when the value of total output is concerned rather than of individual commodities. His argument amounts to saying that, the value of the flour bought by the baker then resolves entirely into revenues, as does the value of the machinery and so on. But, Marx points out that this is clearly not true, because the value of the flour does not just resolve into revenues either. It resolves into the value added, but also into the value of the grain processed by the miller, and the value of the machinery used by the miller to process the grain. Smith's solution, Marx says, simply sends us from pillar to post, in an unending search for some commodity that contains only labour and no constant capital. It doesn't exist. As Marx says, even Smith's example of the Scottish pebble collectors does not stand up, in that regard, because they used baskets in which to collect the pebbles. 

“"In every society the price of every commodity finally resolves itself into some one or other, or all of those three parts [viz., wages, profits, rent] ... A fourth part, it may perhaps be thought, is necessary for replacing the stock of the farmer or for compensating the wear and tear of his labouring cattle, and other instruments of husbandry. But it must be considered that the price of any instrument of husbandry, such as a labouring horse, is itself made up of the same three parts: the rent of the land upon which he is reared, the labour of tending and rearing him, and the profits of the farmer, who advances both the rent of his land and the wages of his labour. Though the price of the corn, therefore, may pay the price as well as the maintenance of the horse, the whole price still resolves itself either immediately or ultimately into the same three parts of rent, labour [meaning wages] and profit." (Adam Smith.) — We shall show later on how Adam Smith himself feels the inconsistency and insufficiency of this subterfuge, for it is nothing but a subterfuge on his part to send us from Pontius to Pilate while nowhere does he indicate the real investment of capital, in which case the price of the product resolves itself ultimately into these three parts, without any further progressus.” 

(Capital III, Chapter 49, Note 52, p 842) 

In other words, if we follow the example of the bread backwards, we reach the farmer and their production of grain. But, the value of the grain does not consist just of the value added by labour. Even if we ignore the value of fertilisers, machinery and so on, the value of the grain includes the value of the seed required for its production. The farmer provided the seed from their previous year's output of grain. The value of this seed undoubtedly then forms a part of their current year's output of grain. But, it forms no revenue/income for anyone, because, in order to continue production on the same scale, the farmer must, replace the seed consumed, and so must take this quantity of grain out of their current year's output simply for that purpose. They do not sell this quantity of grain to the miller, and so obtain no income for it, and so also cannot consume any amount equal in value to it. Nor can this be resolved by the subterfuge that the farmer sells the seed to themselves, because, were that the case, it would equally be true that they must buy it from themselves to plant it, so that again it represents no revenue. The value of the seed does not produce a revenue for anyone, and its replacement is not bought out of revenue, but is bought out of capital. 

Of course, in theory, the farmer could sell all of their grain, and obtain an income for it, and then use this income to consume, but if they do, they cease being a farmer, and certainly cease being a capitalist, because having done so, they now have no seed to plant the following year, and so cannot produce. They would have literally consumed their seed-corn. But, in terms of the economy overall, whatever any individual producer might do, it is based upon ongoing production. 

The only variant that applies, here, as Marx sets out, is where there is a change in productivity. If productivity rises, so that this year, the farmer produces far more grain, having used a given amount of seed, land, labour and capital, the value of the seed itself will have fallen. So, the farmer can replace the given quantity of seed at less cost than would formerly have been the case. If previously, they used 10k of seeds, and produced 100k of grain, the seed constituted 10% of output. If now output rises to 200k of grain, they still only need to replace 10k as seeds, which now represents only 5% of output. So, the value of their advanced capital falls, and their rate of profit rises. This is why Marx bases his calculation of the rate of profit on current reproduction cost, rather than historic prices. 

But, also, as Marx demonstrates, in Theories of Surplus Value, Chapter 22, the other effect is that capital is released equal to the fall in value of the seed – here the equivalent of 5k of seeds is released. An amount of value that the farmer would previously have had to set aside to reproduce seed, constant capital, is now released, and this creates an illusion that more profit itself has been created, whereas all that has happened is that capital is converted to revenue, the same as if the farmer had shut up shop, and was then able to sell all of their output. However, to put that latter case in perspective, if the individual farmer shuts up shop, and converts their capital to revenue, we might well expect that someone else takes over their farm, and in order to do so must convert their own revenue to capital. In other words, they must reduce their own consumption in order to convert the revenue they would have expended on it to capital, purchase of the farm.

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Keir Hardie Would Be Expelled From Today's Labour Party

Remember a while ago there was furore about Jeremy Corbyn writing a foreword to a new edition of J.A. Hobson's "imperialism"?  How could he do such a thing, the Tory media howled, when it was well known that Hobson was an anti-Semite, who influence other anti-Semites , and radical leftists such as Vladimir Lenin.  In fact, of course, the Tory media, who ae marked by their laziness, matched only by their willingness to grab an easy headline, had no idea who Hobson was.  Most of them had never heard of him.  But dropped the titbit that Lenin's Imperialism was based largely on Hobson's earlier work, that was enough for them to assume he must have been some other raving lefty, rather than what he actually was, a liberal, whose ideas presaged those of John Maynard Keynes, particularly in relation to underconsumption as the cause of unemployment.

Hobson's offending statements followed him covering the Boer War for the Guardian.  It was following his experiences there that he concluded that the British government's war had been driven by the interests of British mine owners in South Africa.  He connected the idea about underconsumption, and the problem of realising profits, causing unemployment, with his ideas on the pernicious effects of monopoly, a belief held by all liberals, with the drive of imperialism to carve up the world into colonies where monopoly power could be exercised, and the surplus product of the imperialist powers could be sold.  The idea is bunk, and goes back to the under-consumption theories of Sismondi and Malthus, and was taken up by the Narodniks in Russia.

Hobson, was one of the British bourgeois economists, in the late 19th century, who helped develop the neoclassical school of liberal economics based upon the concept of marginalism.  Extending his ideas about the causes of war, Hobson talked about, 

"Jewish financiers", whom he saw as "parasites", manipulating the British government that danced to their "diabolical tune".  

But, Corbyn is not the only prominent Labour figure to discuss the work of Hobson. R. H. Tawney wrote the following in The Acquisitive Society (1920):

"The greater part of modern property has been attenuated to a pecuniary lien or bond on the product of industry which carries with it a right to payment, but which is normally valued precisely because it relieves the owner from any obligation to perform a positive or constructive function. Such property may be called passive property, or property for acquisition, for exploitation, or for power.... It is questionable, however, whether economists shall call it "Property" at all, and not rather, as Mr. Hobson has suggested, "Improperty," since it is not identical with the rights which secure the owner the produce of his toil, but is opposite of them."

Hobson's ideas were taken up by liberals in the United States, already critical of European colonialism, and monopoly capitalism, leading them to have introduced their anti-monopoly laws, at the end of the 19th century against the big oil companies and so on.  

Hobson was a liberal, and like other radical liberals found his way towards the Fabian Society, and then to the ILP.  Moreover, unlike Corbyn who can be accused only of having an elderly person's eyesight, in not having determined the detail of a picture seen on the small screen of a smart phone, as against his detractors who have plastered the same picture of a mural onto giant TV screens,  some of Hobson's contemporaries were more explicit in sharing his ideas in relation to the role of financiers, and Jewish financiers.

Keir Hardie, repeated Hobson's statement, accusing "half a dozen financial houses, many of them Jewish" of leading the UK to war.  Corbyn has never made any such anti-Semitic statement.  There would be no place in today's Labour Party for one of its founders, after whom its present  leader is named.  If his namesake were alive today, Keir Starmer would have to expel Keir Hardie.

See: Wikipedia J.A. Hobson

The Economic Content of Narodism, Chapter 1 - Part 15

The Narodniks, with their subjectivist sociology, could not understand the role of these class interests in determining the actions of the state. For the Narodniks, it comes down to only wrong ideas in the heads of state officials and the intelligentsia that have wandered off from the natural path of development. Lenin says that, for the Narodniks, 

“If the state assists the development of capitalism it is not at all because the bourgeoisie possess material force enabling them to “send” the people “to work” and bend policy in their own will. Nothing of the sort! It is simply that the Vernadskys, the Chicherins, the Mendeleyevs and other professors hold wrong theories about a “fatal” order, and the state “takes heed” of them.” (p 354) 

Lenin quotes a passage from the Narodnik which illustrates this failure to understand the class nature of the state. The same approach is taken by modern-day statists, be they social-democrats, socialists or even those that call themselves revolutionaries. 

“... cannot, finally, the negative aspects of the advancing order be softened, somehow altered or the period of its domination shortened? Is the state really something so inert, involuntary and helpless that it cannot influence its own destiny and change it; is it really something like a spinning-top, released by providence, that moves only along a definite road, only for a certain time, and performs a certain number of revolutions, or like an organism of very limited will-power; is it really directed by something resembling a huge iron wheel which crushes every audacious person who dares to seek the nearest roads to human happiness?!” (p 354) 

But, of course, the question is never cannot the state act? It always can and always does. The question is in whose interests will it, and does it act? As a class state, it acts in the interests of the ruling class. Sometimes, it even does that by acting against the apparent, short-term interests of that class, in order to advance its long-term interests. Always, it acts in the interests of the dominant section of that class, as a whole, rather than in the interests of individual elements of that class. The actions of the state in relation to the Factory Acts were a case in point. The state acted in the interests of industrial capital as a whole, and particularly its dominant section, even as individual capitals sought to avoid or flout their responsibilities in that regard, as a consequence of competitive pressures upon them. As Engels points out, the state pursues such enforcement all the more willingly at the point that the large-scale producers dominate production, and who can easily absorb these costs. In fact, what these laws do is to favour the larger capitals, and, thereby, facilitate the process of concentration and centralisation. 

“Being hostile to capitalism, the small producers constitute a transitory class that is closely connected with the bourgeoisie and for that reason is incapable of understanding that the large-scale capitalism it dislikes is not fortuitous, but is a direct product of the entire contemporary economic (and social, and political, and juridical) system arising out of the struggle of mutually opposite social forces. Only inability to understand this can lead to such absolute stupidity as that of appealing to the “state” as though the political system is not rooted in the economic, does not express it, does not serve it.” (p 354-5) 

The small producer understands that the capitalist state is not inert but acts in the interests of big capital. Workers know that the capitalist state is not inert, but acts in the interests of capital in general, and of big capital and fictitious capital in particular. Periodically, the political regime falls into the hands of forces that attempt to modify the operation of the state. Conservative and reactionary governments, themselves representing the interests of small capitalists may, for example, introduce measures to that effect. Thatcher, for example, attempted such an agenda, in the 1980's, introducing a series of measures such as Enterprise Zones, aimed at the small business class from which she came. The growth of Euroscepticism in the Tory Party, in the late 80's, and during the 90's was part of this same trend, as is the coming to office of Boris Johnson. Similarly, progressive social-democratic governments have tried to move the lever further in the other direction. But, all of these simply represent nuance. They represent the phenomenal form of the underlying reality, by which the state acts in the interests of the dominant section of the ruling class. Its no wonder then that the state attempted to frustrate the attempts of the Tory government to implement its Brexit policy. Nor is it any surprise, at the other extreme, that the Chilean state overthrew the progressive social-democratic government of Allende.

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GDP - Part 1/8

GDP, or Gross Domestic Product, is not a Marxist term, but it is a term used by Marxists, as well as orthodox economists. However, although Marxists, superficially, define GDP in the same way as orthodox economists, as being the amount of new value created in a year (value added), they actually mean something quite different to what orthodox economists mean by this definition. Orthodox economics means by the new value created in the year, also the value of output for the year. They equate output value with consumption plus net investment, in the Keynesian formulation Y (National Income) = C + I. Marxists do not. That is because orthodox economics (both neoclassical and Keynesian) follows Adam Smith, in resolving the value of commodities, and so of total output, entirely into revenues, i.e. incomes from wages, profits, rent and interest. On this basis, total income equals total expenditure, equals total output value. GDP measured on any of these bases should always be the same – it never is, because of statistical discrepancies. This is also the basis of Say's Law, that supply creates its own demand. In other words, supply results in the sale of output; the sale of output means that those that participated in the production of that output (capitalists, workers, landlords, money-lenders) each receive an income for their contribution to production (profit, wages, rent, interest), which should equal the marginal revenue product, of each of these factors of production, in a condition of general equilibrium; the owners of these revenues then spend them, and, in so doing, create an equal amount of monetary demand for what has been produced. 

“... the fantasy of men like Say, to the effect that the entire yield, the entire gross output, resolves itself into the net income of the nation or cannot be distinguished from it, that this distinction therefore disappears from the national viewpoint, is but the inevitable and ultimate expression of the absurd dogma pervading political economy since Adam Smith, that in the final analysis the value of commodities resolves itself completely into income, into wages, profit and rent.” 

(Capital III, Chapter 49) 

In Capital II and III, Marx shows that Adam Smith's proposal that the value of commodities, and so of total output, resolves entirely into revenues was an “absurd dogma”. In Theories of Surplus Value, Chapter III, Section 10, Marx demonstrates the fallacy of Smith's proposal at even greater length. Essentially, Marx says, its clear that the value of commodities, and also, thereby, of total output cannot resolve entirely into revenues (added value), because the value of all commodities includes an element of value from raw materials, and the wear and tear of fixed capital, which were not produced in the current year. In other words the value of total output consists not just of new value added by current labour, but also of a quantity of value from dead or congealed labour contained in these commodities consumed in production. In Theories of Surplus Value, Chapter 17, Marx, not only shows that Say's Law, based on this “absurd dogma” is wrong, because, revenues cannot then possibly be equal to the value of total output, so demand cannot equal supply, on that basis, but, also, it is wrong because it does not take into account saving. 

“At a given moment, the supply of all commodities can be greater than the demand for all commodities, since the demand for the general commodity, money, exchange-value, is greater than the demand for all particular commodities, in other words the motive to turn the commodity into money, to realise its exchange-value, prevails over the motive to transform the commodity again into use-value.” 

(Theories of Surplus Value 2, p 505) 

As Marx puts it, it takes the rules that apply under systems of barter and applies them to systems of commodity production and exchange in a money economy, which itself is the foundation of a capitalist economy. 

Keynes addressed this latter deficiency of neoclassical economics, but only by making savings equal to investment spending, and, even to make this work, its necessary to include an unplanned increase in inventory levels as “investment”. So, as Hansen says, although saving and investment may then be equal, they will not necessarily be in equilibrium. But, Keynes continued to accept the “absurd dogma” of Adam Smith, as have all orthodox economists after him, that the value of output resolves entirely into revenues. 

“The classic statement of Say's Law maintained the thesis that the free price system tends to provide a place for a growing population and an increase in capital. In an expanding society, new firms and new workers wedge their way into the productive process, not by supplanting others, but by offering their own products in exchange. The market is not regarded as fixed or limited – incapable of expansion. The market is as big as the volume of products offered in exchange. Supply creates its own demand. Viewed as a broad generalisation, this statement presents in the large a picture of the exchange economy... (p 4) 

Keynes was careful to state that he was making no attack on the neoclassical theory of value and distribution. This part of classical theory had been erected, he said, ' with great care for logical consistency.' (p 19)” 

(Alvin H. Hansen “A Guide To Keynes) 

What Keynes was attacking, Hansen says, is not Say's Law itself, but the Pigovian version of it. According to Pigou, the original version of Say's Law as presented by Mill, Say and Ricardo was not relevant to a capitalist economy, because it was formulated in relation to the kind of economy based upon petty commodity production that still existed in their time, but which had disappeared. In other words, it was based upon an economy where a multitude of independent, small commodity producers, produced goods, and exchanged them for the other commodities they required for their own consumption. This was no longer the case with capitalism based upon the large-scale, employment of wage labour.

But, as Marx describes in Theories of Surplus Value, Chapter 17, as indicated in the quote provided earlier, it is not the difference between the conditions of generalised commodity production, as against capitalism, that explains the deficiency of Say's Law, it is the difference between barter and generalised commodity production, in a money economy. It is the fact that a seller, be they a capitalist or a petty commodity producer, obtains money, and has no need to then use it to buy other commodities that means that supply does not automatically generate its own demand. C-M, does not necessitate, M-C. Indeed, its this fact that the petty-commodity producer can hoard money, rather than spend it, which means that it can be converted into capital, which forms the process of the differentiation of the peasantry into a bourgeoisie and proletariat. 

The point that an expanding population, or an increase in living standards, leads to an expansion of the market is quite true, and the driver of this expansion is indeed anticipation of such increased demand. Marx was aware of that, and sets it out long before Keynes incorporated it into his General Theory. Ricardo argued that additional investment would only occur if prices rose causing profits to rise, but Marx sets out why this is wrong, for the simple reason that capital accumulation is driven by competition, and need to capture market share. But, that does not at all mean that the increased demand is equal to the increased supply, which occurs in advance of it. The market continually expands, but not smoothly, only via repeated crises of overproduction. 

“Finally, the extension of cultivation to larger areas — aside from the case just mentioned, in which recourse must be had to soil inferior than that cultivated hitherto — to the various kinds of soil from A to D, thus, for instance, the cultivation of larger tracts of B and C does not by any means presuppose a previous rise in grain prices any more than the preceding annual expansion of cotton spinning, for instance, requires a constant rise in yarn prices. Although considerable rise or fall in market-prices affects the volume of production, regardless of it there is in agriculture (just as in all other capitalistically operated lines of production) nevertheless a continuous relative over-production, in itself identical with accumulation, even at those average prices whose level has neither a retarding nor exceptionally stimulating effect on production. Under other modes of production this relative overproduction is effected directly by the population increase, and in colonies by steady immigration. The demand increases constantly, and, in anticipation of this new capital is continually invested in new land, although this varies with the circumstances for different agricultural products. It is the formation of new capitals which in itself brings this about. But so far as the individual capitalist is concerned, he measures the volume of his production by that of his available capital, to the extent that he can still control it himself. His aim is to capture as big a portion as possible of the market. Should there be any over-production, he will not take the blame upon himself, but places it upon his competitors. The individual capitalist may expand his production by appropriating a larger aliquot share of the existing market or by expanding the market itself.” 

(Capital III, Chapter 39) 

Lenin makes this same point in his polemics with the Narodniks, who used the same under-consumptionist arguments of Sismondi and Malthus, to argue that capitalism could not develop naturally in Russia, because there were limits to the expansion of the market, necessitating the existence of a foreign market. (See: On The So Called Market Question).

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Northern Soul Classics - Wedding Bell Blues - The Fifth Dimension

 

Friday Night Disco - Reach Out - The Four Tops

 

The Economic Content of Narodism, Chapter 1 - Part 14

The Narodnik writes, 

“This process, which began in Europe much earlier than ours did, has come to an end in many countries; in others it is still being held up by the debris of feudalism and by the resistance of the working classes, but the wheel of history is there, too, year by year breaking up these debris to an ever greater extent and paving the way for the new order.” (p 353) 

This shows, Lenin says, just how little the Narodniks understood this process, not just in Russia, but in Western Europe too. To claim that the process of capital accumulation, of concentration and centralisation, and the differentiation of small producers into bourgeois and proletarians had come to an end was wrong. Even in Western Europe, a large number of small producers continued to be split into a small number of capitalist producers and a much larger number of proletarians. In Britain, today, there are still around 5 million businesses, and these are overwhelmingly people who are self-employed, sole traders, or small family firms. Each year, a small number of these grow into larger businesses, but many, many more go bust, their owners becoming wage workers. Similarly, each year, some workers and sections of the middle-class, establish new businesses. But, again, of these a small number grow, but the large majority go bust. 

But, in this quote, the Narodnik puts forward the typical Sismondist view, also found in the ranks of the “anti-capitalists” and “anti-imperialists” that the role of the labour movement was to “hold up” the process of capitalist development. This reactionary view is also put forward by the proponents of Lexit, as well as some of those in favour of Scottish independence, and other petty-bourgeois nationalist endeavours. 

“This is clear proof that in respect of not only Russia, but also of the West, our Narodniks are incapable of understanding how one can fight capitalism by speeding up its development, and not by “holding it up,” not by pulling it back, but by pushing it forward, not in reactionary, but in progressive fashion.” (p 353) 

The Narodnik writer also presents a petty-bourgeois scenario that has similarities to that put forward by James Burnham. The difference is that for Burnham the new petty-bourgeois ruling class is formed out of the managerial elite, whereas for the Narodnik, it is formed by elements that fall from the nobility and those that rise from the peasantry. 

“In its general features this process consists of the following: between the nobility and the people a new social stratum is being formed of elements that descend from above and of elements that rise from below, who, as it were, are of equal relative weight, if one may so express oneself; these elements are welding themselves closely together, are joining forces, undergoing a profound inner change and beginning to change both the upper and the lower strata, adapting them to their requirements. This process is extremely interesting in itself, but for us it is of particularly great significance. For us a whole series of questions arise: does the rule of the third estate constitute a fatal and inevitable stage in the civilisation of each people?...” (p 353) 

The question, in relation to Russia, was meaningless, because whatever may or may not have been inevitable, the reality was, as described by the Narodnik himself, that Russia already was passing through such a stage. It was already capitalism which dominated the economy, and, thereby, determined that bourgeois interests dominated. It was that which determined that the state would act to promote those bourgeois interests. 

“Only a romantic can think that interests are to be combated by syllogisms.” (p 354)

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GDP - Summary

 GDP

Summary:

• GDP is not a Marxist term, but Marxists understand it differently to orthodox economists

• Both understand GDP as being equal to the new value (added value) created during the year. Both understand it as, then, being equal to total incomes received during the year.

• Orthodox neoclassical economics believes that total incomes equal total expenditures, so that income equals expenditure equals total output. Keynesian economics introduced the role of savings and investment spending, but accepts the underlying tautological relation, which flows from Say's Law, that supply creates its own demand, which, in turn, flows from Adam Smith's argument that the value of commodities resolves entirely into revenues (wages, profit, interest, rent) – what Marx calls Smith's “absurd dogma”.

• Marxists reject Smith's “absurd dogma”, and Say's Law, and so understand GDP differently to either neoclassical economics or Keynesian and post-Keynesian economics. The value of commodities does not resolve entirely into revenues – the new value created – but also into the constant capital (raw materials, wear and tear of fixed capital) consumed in their production. In other words, into c + v + s, not just into v + s. So, the value of total output also must resolve into c + v + s, not just v + s, and so not solely into incomes, or new value added.

• Total output value is equal to the new value added (incomes) – which divides into consumption plus savings – plus the value of raw materials and wear and tear of fixed capital consumed in production, which forms an income for no one, and is bought not from income but from capital. GDP is equal to new value added, which is equal to incomes, which is equal only to the consumption fund plus savings/net investment.

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The Economic Content of Narodism, Chapter 1 - Part 13

Indeed, the same phenomena can be seen in many other organisations, as Trotsky pointed out to the Third Campists. Trades unions, for example, are workers' organisations, yet they are invariably dominated by a petty-bourgeois bureaucracy. Its existence is testimony to the generally weak position of workers within capitalist society. The bureaucracy exists to mediate the class antagonism between capital and labour not to overcome it. That is one reason that TU bureaucrats are often hostile to the development of workers' cooperatives, where the basis for such mediation ceases to exist. The bureaucracy uses its position to establish for itself a middle-class lifestyle, leaching from the contributions of union members. In numerous cases, the union bureaucrats hold reactionary views. Yet, Trotsky says, this does not lead us to conclude that trades unions are not workers' organisations, or to abandon them. 

And, the same applies to the bourgeoisie. As Marx says in Capital III, the various appointees to company boards obtain stipends in inverse proportion to the amount of work they undertake. The top executives of corporations, acting on behalf of shareholders, whenever they can, first act on behalf of themselves, as TYCO, Enron and others have demonstrated. And, even in the most democratic of bourgeois-democratic republics, the bureaucrats at the higher layers of the state bureaucracy feather their nests in fine style, also moving seamlessly from state bureaucracy to corporate bureaucracy, as was described in relation to the military-industrial complex. 

At least the originator of these petty-bourgeois, Third Campist, subjectivist theories – James Burnham – was consistent in their application. In his book, The Managerial Revolution, Burnham claimed that the state bureaucracy in the Stalinist states and the state and corporate bureaucracies in the advanced capitalist states showed that a convergence of these systems was occurring, and a new social formation, based upon this managerial class, was being created. The idea was taken up with relish by Liberals, like Hayek, who cites it in his book The Road To Serfdom. It was also taken up by Hayek's protege at the LSE, Ralf Dahrendorf, in developing his own thesis on post-capitalism. The concept is frequently applied by Libertarians/anarcho-capitalists, in the US, whose own opposition to big capital equates it to socialism, because of the existence of such bureaucracies the ability to shape the market via planning and regulation and so on. 

In Russia, even in 1879, the bourgeoisie were not “preparing to govern” in the sense of becoming the ruling class, but were already governing. 

“...and has been “governing” for ages; it is only the Narodniks who “are preparing” to select the best paths to be followed by Russia, and they will, presumably, spend their time getting ready until the consistent development of class contradictions sweeps aside, jettisons all those who fight shy of them.” (p 352-3) 

That was so despite the existence of the Tsarist political regime. In the USSR, the working-class was governing, despite the existence of the Stalinist political regime, but because the manifestation of it offended the moral sensibilities of the Third Camp of the petty-bourgeoisie, they refused to acknowledge it, and continued to construct their own ideal schemas of how the “natural path” for Russia should unfold.

Back To Part 12

Forward To Part 14

The Tiers Of A Clown

Bojo is replacing the existing national lockdown with a national lockdown in name only, by placing the whole of the country, once more, into a system of tiered lockdowns, which will amount to the same thing. The purpose of the change is merely to pretend that he has saved Christmas, and enabled millions of people to get together over the holiday, even if that means that some of them will put their lives at risk by doing so. Once again, the policy, and the narrative surrounding it shows the idiocy of the response to Covid19. 

The national lockdown is bad enough, in terms of the various rules surrounding it, that people have to try to decipher. The return to tiers of lockdown is even worse. Already the TV channels are spending large amounts of time trying to explain all of these byzantine rules, and the adage remains true – if you're explaining you're losing. But why is there a need for all that complexity and confusion? The facts remain as plain and simple as they have always been. 

That is COVID19 is a virus that affects, almost exclusively, the elderly, those over 60, and those over 80, in particular. The average age of death of people with it, is 82, higher than the average life expectancy of people in Britain! In addition to the elderly, those with medical conditions that compromise the immune system are also at risk, but, whereas 92% of people dying are age over 60, the number under 60, but who have underlying conditions is just 7%.

Either way, we know who the people are, who are at risk from this virus, and they are easily identified, as are their households. By contrast, we have absolutely no idea who the millions of people are, who might be infected with the virus, let alone the millions more people who they will come in contact with, at any hour of the day. Yet, rather than focusing on the known people who are at risk, the whole strategy has been based on trying to identify millions of unknown carriers of the virus, and tens of millions of other unknown people they might infect, even though 90% of such people will suffer absolutely no, or only minor, consequences of having been infected. That strategy is total madness. 

A strategy of focused protection of the elderly and vulnerable is not just a strategy that begins by identifying and protecting a limited number of known individuals and their households, but it is easy to explain, and to understand. It has one simple message, and rule. If you or someone in your household is over 60, or has some condition that would compromise their immune system, you are at risk from the virus, and should isolate yourself from contact with it. That is all that needs to be said. Then all attention can be focused on ensuring that all such households are indeed able to isolate themselves from the potential of infection. Some simple measures could ensure that. 

1. The state via local authorities, NHS, etc. should ensure that such households can get necessary supplies of groceries, and so on delivered to their door. For most people, this is not a problem, because that can already be done by online shopping, so its only for those that are unable to do that where any assistance is required. 
   
   
2. Where people require health or social care workers for assistance, the state should ensure that all such workers have the required PPE, and that contact protocols are in place to prevent transmission. That should not need to be said in relation to hospitals and care homes, and yet, precisely because there has been no focused policy, and instead a scatter gun approach to try to identify tens of millions of asymptomatic people has been undertaken, it has been those institutions where the most egregious failings have taken place, and where the virus has run riot amongst the vulnerable. 
   
   
3. Any worker in the group identified, should be entitled to indefinite sick leave on full pay. A simple process of any such worker self-identifying would get around the problem of it being someone in their household, rather than them as individuals, who was at risk. Providing such financial support to those in this category would have been far cheaper than paying out billions in the furlough scheme, alongside the hundreds of billions that will be lost to the economy as a result of having locked it down. 

That is really all that was required. But, the government has failed to convey the message that for 80% of the population COVID19 poses no threat. We still have the ridiculous situation where classes and entire schools are being closed down, just because some pupil shows symptoms of having a winter cold that might be confused with COVID19, even though we know that children are at virtually no risk whatsoever from the virus. Only those children in the at risk group identified needed to be off school; only school staff in that group, needed to be off work, so that schools should have operated more or less normally throughout the whole period. 

And, because the message has instead been conveyed that everyone is at risk from the virus, we have had the idiotic lockdown, and test and trace fiasco that instead tried to identify tens of millions of unknown individuals, each of which was a moving target, rather than conveying the simple message that if you are in the actual at risk group, just isolate yourself. Its not much more difficult than telling people who have nut allergies to avoid nuts and products containing nuts! 

And, because they have failed to convey that simple message and adopt that simple strategy, and instead have put huge amounts of effort, not to mention billions of Pounds channelled, ineffectively, into the medical-industrial complex, we have continued to have people, in the at risk group, being infected, and many of them dying, as a result. The proposals for tiered lockdowns over Christmas are just as absurd. 

The main concern seems to have been to draw up complicated rules that people can use to try to essentially get around a common sense approach. They are designed to allow people, in the at risk group, to meet with other people, not in the at risk group, even though it is absurd for them to do so, because, in the process, they are risking their lives! In other words, the government began by not protecting the people in the at risk group, and basically putting out propaganda to the effect that they were at no more risk than anyone else, which necessitated that everyone have to self isolate via lockdowns, so as to reduce the number of the people actually at risk who then became infected, and died. Now, recognising that large numbers of people, over the holiday period, would ignore the lockdown rules, the government is changing the rules to enable them to do so, but, in the process, is also now actively exposing the people in the at risk group to the possibility of infection and death! 

If you are in that at risk group, it is, of course, your choice, as to what is more important to you, whether you want to create a reasonably high chance that you or someone on your household will die, as a price worth paying for spending an hour with one of your relatives over Christmas, but the government has a responsibility to tell you that is what you are doing, rather than create a series of ridiculous tiered regimes that basically say, its okay to put yourself at risk, within this set of rules. In large part, the reasons given for these rules, and the narrative around them, are designed only to defend the narrative that the government has presented all along about the threat being to everyone. Under pressure of the facts, they have had to modify it to say, to younger people, well you may not be at risk, but you could put your granny at risk. The answer to that, of course, is that it is up to granny not to put herself at risk, by encouraging you to come in contact with her, even if it is Christmas. 

Personally, I find that argument pretty weak anyway. I know that when I was 17 or 18, the last thing on my mind was visiting grandparents. In fact, the only time I was in the house with my parents, during that time, was to eat and sleep. And, the same now. My son and his partner are daily coming into contact with other people, as a result of work, meeting friends, other relations and so on. As a result, whenever they have come over in the last few months, we have met outside. Now, over the Winter, that is not really possible, so we talk by phone or Skype. The last thing I would want to do would be to stop them going about their lives as normally as possible, and if that means they don't come over for Christmas then, for me, that is fine. Its me that is at risk from COVID not them, and so me that has to take responsibility for ensuring I don't come into contact with it, not them. Similarly, my son has a nut allergy, and for that its his responsibility to avoid nuts, and no reason for me to give them up! 

What the government is doing is effectively saying to people in the at risk group, look its Christmas, and we know it would be unpopular to appear like The Grinch. Our ridiculous lockdown narrative means that we have to continue to say that everyone is at risk, even though that isn't true, or we have to say that everyone has to isolate to prevent a known minority from being infected by others, even though that isn't true either. We know that the majority of people will ignore the lockdown rules over Christmas, so we are changing the rules, and as part of that, we are basically saying that the vulnerable can take the risk of infection. 

They are essentially encouraging people who are in the at risk group, and who should, and many of whom would, isolate, instead to put themselves at risk. But, just because the government changes its rules does not change the fact that you will be at risk from the virus, if you are in that vulnerable category. People should be able to have the sense to work this out for themselves, but unfortunately, many do not, because a reliance has been created on the state to tell everyone what they can and can't do, what is and isn't safe. Many will take the government's guidelines on meetings over Christmas as some kind of guarantee that, so long as they abide by those rules, they are safe, even though that clearly will not be the case. Yet, at the same time, the lives of millions of others, who actually are not at risk, will have been curtailed as a result of the imposition of unnecessary restrictions. But, that has been the reality of the idiotic lockdown from the start.

The Medical-Industrial Complex - Part 3 of 3

Part of the problem is that the Left has turned the NHS into a fetish. 

“The basic source of left orthodoxy is not hard to trace, It lies in the widespread over-romanticised attachment to the NHS on the left, which derives from a belief that the 'principles of 1948', under which it was set up, form the basis for a socialist health care service.” 

(Left Orthodoxy and the Politics of Health, in Capital & Class 11, Summer 1980) 

But, of course they don't. The NHS was established to meet the needs of capital not labour. As Carpenter says, the Left seemed to have more difficulty understanding this with the NHS than it did even with other elements of the welfare state, such as education. Most of the Left could understand that education is geared to the needs of capital; it concentrates on the kind of education and training required by capital to provide the kinds of workers in demand at the particular time. In truth, large sections of the Left have lost even this understanding. The kind of statism that dogged the Left for a century, based upon the ideas of Lassalle and the Fabians, and promoted by Left social democrats and Stalinists, but which had begun to weaken in the 1960's and 70's, has grown ever stronger since the 1980's, and for much the same reason that Carpenter identifies here. The Left lost the ability to think critically. It became obsessed with fighting immediate battles over cuts, austerity, privatisation, job losses and so on, and did so simply on the basis of placing a minus sign wherever their enemies placed a plus sign. The obvious manifestation of that was to defend existing state capitalist institutions, to defend the existing capitalist state itself, including, as can be seen today, defending institutions like the BBC, which acts as the propaganda organ of the capitalist state. It completely failed to present, as an alternative, any independent working-class analysis or solution. 

“Let us take for granted that the NHS is different. Nevertheless, if we accept the 'socialist' character of the NHS at face value, it leads to the acceptance of a particular kind of socialism, obscures the way in which the NHS serves fundamentally conservative purposes. It has led socialists in this country to think of health services as the 'natural' means of tackling the ill-health effects of capitalism, and it has on the whole led them to accept the medical mandate to define health and ill-health even when criticising aspects of doctor's practice.” 

(ibid) 

As Carpenter says, any Left critique of the NHS has amounted only to a criticism of its failure to live up to the socialist principles of 1948, not to question whether those principles were themselves socialist in any case. The more the NHS came under attack from, particularly, Tory governments, though the Labour government of the 1970's inflicted cuts on the NHS too, the more the critique has become not of the NHS itself, as a state capitalist institution, but merely of the failure of Tory governments to provide adequate financing of it. 

“In capitalism... health and ill-health are both made to serve the needs of capital accumulation.” 

(ibid) 

Capitalism sought healthy workers to facilitate capital accumulation, but in so far as capital made workers ill, resulted in accidents and so on, a section of capital profited from this too via the provision of drugs, surgical treatment, the provision of devices and so on. The NHS fulfils a useful ideological role in presenting a fiction that everyone is provided with free healthcare on an equal basis, and on the basis of need. But, it never has. Its not free, but paid for out of the wages fund, as healthcare is a component of the value of labour-power. Workers buy it collectively from their wages in the form of an insurance payment, or tax.

In the process, by enabling healthcare to be undertaken on massive Fordist lines, they also reduced the cost of healthcare for the bourgeoisie too, who benefit from the production of new drugs and so on at much reduced costs, because of economies of scale. Every survey also shows that the provision of healthcare is neither provided equally across the country nor on demand. There is greater provision in more affluent areas, and many of the workers who require treatment for their particular complaints do not get it. The current decisions to deny treatment to many workers, for cancer or many other life-threatening conditions, in preference to providing treatment for COVID patients, is a case in point. But, it also assumes that every individual starts from an equal position of health, whereas it is always the case that the bourgeoisie, or even just the more affluent, tend to start with better health than do workers. 

“Of course, in reality, working class people have sickness problems which the NHS does not deal with at source, or even adequately after the event...” 

(ibid) 

As Carpenter says, illness is a “profoundly decollectivising experience”. In many ways, its a bit like the way people turn to God when they suffer bereavement, or some other tragedy, because such events always appear as individual, personal events, and lead to a desire for some form of succour, for events that are outside our own individual control. Its no wonder that, in all those decayed urban areas, a similar attachment to the capitalist state, as benefactor, provider of doles and even minimum security, and a paternalistic, more or less feudal, relation of dependency is created from it. Its no wonder that its in those areas that this semi-feudal relationship of dependency to the capitalist nation state manifests itself in the form of a nationalistic desire to keep its bounty for the preserve of the natives, and deny it to foreigners, and leads to reactionary ideas such as Brexit. 

Left orthodoxy, 

“... helps to foster 'the NHS illusion' that the problem of ill-health in our society can be largely dealt with by more and 'better' health services, the 'better' meaning to a considerable extent 'whatever doctors decide'.” 

(ibid) 

And, this feeds directly into the mechanisms of the medical-industrial complex, because individual doctors are under tremendous pressure from those medical-industrial companies to prescribe the latest drug etc.; they are under pressure to conform with the orthodoxy within the medical-industrial complex itself, which has been obvious in relation to responses to COVID, and to the demonisation of any medial scientists or practitioners, such as those that have signed the Great Barrington Declaration, who dared to point out that the Emperor had no clothes on, when it came to the claims about the existential threat posed by the virus, or the requirements for lockdowns as a means of responding to it. 

The proponents of lockdown have tried to use the old Stalinist tactic of the amalgam to defame those scientists that have signed the Great Barrington Declaration, and who argue for focused protection of the elderly and vulnerable, not by dealing with their arguments, but by talking about the libertarian ideals of some of its backers. Yet, no one points to the actual medical-industrial complex that channels millions of pounds into universities like those listed in the FT article cited above, such as Imperial, Cambridge, and UCL, in research grants that, in turn, results in the development of very expensive drugs that produce billions of pounds of revenue for those drug companies, paid for by the capitalist state, out of the NHS budget! 

As described above, the current test and trace scheme is useless. It would be useless even if the tests were reliable, and the computer systems to identify contacts, and to trace them worked perfectly. In Germany, which has as close as can be considered to such a system, it has seen the same surge recently in infections that have been seen in Britain, France, Spain and Italy.  But, the tests are not reliable. Around 30% of positive infections are missed by the tests, whilst a significant number of false positive tests have been shown up by the fact that people on holiday who had the virus weeks ago, are still showing up as positive, because the tests cannot distinguish between the DNA of dead viruses and those of live viruses.

But, it is useless anyway, because around 90% of the population who have the virus are not tested. They are asymptomatic or not ill enough to seek testing. So, the vast majority of people who are infected are walking the streets infecting others anyway. Testing and tracing would require testing everyone every day, even if the tests were reliable. It is simply a diversion and means of giving a false impression. Yet, the focus put on testing and tracing alongside the idiotic lockdowns has pumped £12 billion directly into the pockets of the tech companies, and consultants responsible for developing the app, on top of that it has pumped billions more into those drug companies that produce the test kits, and those that analyse the tests.  The only tests that make sense are those that identify existing immunity, but it is those tests that no priority is being given to. 

All of the emphasis is on expensive medical solutions, be it testing, hospital treatment, or the production of a vaccine or other drugs to deal with the symptoms of the virus. All of that channels money into the medical-industrial complex on a vast scale, pumping up the profits of the drug companies and other medical services providers, swelling the personal empires of the health bureaucracies in the department of Health and NHS. Yet, a sensible approach would instead start from the perspective of simply isolating that minority of the population actually at risk from the virus. Compared to the billions of pounds already spent, on useless testing systems, the state could have simply told those over 60, or in vulnerable categories to self isolate, and could have financed that at much less cost. But, it would have provided no revenues to the medical-industrial complex, no addition to the profits of those big companies. 

The policy of focused protection immediately protects the elderly and vulnerable, who are being culled in their tens of thousands by the current lockdowns, which have not even provided effective protection for the elderly and vulnerable in hospitals and care homes. And, by allowing everyone else to go about their business normally, it means that not only is the economy not destroyed, but these millions of people develop herd immunity safely at no cost. It is this herd immunity at no cost that the medical-industrial complex, of course, is most concerned about, because no cost means no profits for the big drug and medical supplies companies, no bigger empire for the health bureaucrats, and so on. Not to mention no funding for the university epidemiologists that, time and again, have told us that there was going to be some existential threat that, in fact, turns out to be nothing of the kind. 

Instead, we have huge sums being pumped into the development of vaccines, with government already ordering tens of millions of them from the drug companies, at a cost of billions of pounds, even without knowing whether they are safe, or will work. In Russia, we have seen that resulting in vaccines being rushed out without proper testing, we have seen vaccine tests stopped in the US and UK, due to the development of illness by trial participants. In order to develop vaccines quickly, genetic modifications are being used, which normally would require extensive testing before any new vaccine was released generally, but governments know they cannot keep populations locked down forever, both because there would be increasing rebellions against it, and because the existing lockdowns are destroying economies, and so they are placing all their eggs in the basket of a vaccine saving their bacon. Even, so the reality is that a vaccine is not going to be ready for at least six months, and it is no wonder that, with all the pressure for it to be rushed out, there are many who will be reluctant to take it for fear of being used as guinea pigs. 

We can bet that the first people its tested on will be the old, the vulnerable and the poor. If a successful vaccine is produced that is safe, then, of course, that will be great, but will it be worth all of the death and destruction that lockdown has caused as the necessary consequence of relying on its development, rather than the development of cost-free natural immunity in the intervening period? Once again, we see the consequences of health policy being determined by the interests of the medical-industrial complex rather than the interests of workers and their health.

Back To Part 2

The Economic Content of Narodism, Chapter 1 - Part 12

As Trotsky points out, every bureaucracy acts parasitically to drain resources to itself. The bureaucracy that the capitalists establish to run their corporations and their state acts parasitically in its own interests to feather its nest. The trades union bureaucracy feathers its nest at the expense of its members. And, in all these instances, these bureaucracies attempt to usurp power to themselves. 

“Always and in every regime, the bureaucracy devours no small portion of surplus value. It might not be uninteresting, for example, to compute what portion of the national income is devoured by the fascist locusts in Italy or Germany! But this fact, of no small importance by itself, is entirely insufficient to transform the fascist bureaucracy into an independent ruling class. It is the hireling of the bourgeoisie. True, this hireling straddles the boss’s neck, tears from his mouth at times the juiciest pieces, and spits on his bald spot besides. Say what you will, a most inconvenient hireling! But, nevertheless, only a hireling. The bourgeoisie abides him because without him, it and its regime would absolutely go to the dogs... 

Nevertheless, the privileges of the bureaucracy by themselves do not change the basis of the Soviet society, because the bureaucracy derives its privileges not from any special property relations peculiar to it as a “class,” but from those property relations that have been created by the October Revolution and that are fundamentally adequate for the dictatorship of the proletariat. 

To put it plainly, insofar as the bureaucracy robs the people (and this is done in various ways by every bureaucracy), we have to deal not with class exploitation, in the scientific sense of the word, but with social parasitism, although on a very large scale. During the Middle Ages, the clergy constituted a class or an estate, insofar as its rule depended upon a specific system of land property and forced labour. The present-day church constitutes not an exploiting class but a parasitic corporation. It would be silly to actually speak of the American clergy as a special ruling class; yet, it is indubitable that the priests of the different colours and denominations devour in the United States a big portion of the surplus value. In its traits of parasitism, the bureaucracy, as well as the clergy, is similar to the lumpenproletariat, which likewise does not represent, as is well known, an independent “class.”” 

(Trotsky – The Class Nature of the Soviet State) 

The fact that the bureaucracy wielded political power, not the workers, only tells us that the Russian working-class was weak and unable to exercise its social dictatorship directly, via its own political regime. So, why then do the Third Campists not arrive at the same conclusion in the many instances where the bourgeoisie is similarly too weak to exercise its social dictatorship via its own political regime? Tsarist Russia, as discussed, here, by Lenin is a case in point. 

When the young British bourgeoisie took on Charles I, it too found itself too weak to rule directly, via its own political regime and gave way to the Protectorate of Cromwell. By 1688, the position of the bourgeoisie as ruling class was established. Britain was a capitalist state. Yet, the bourgeoisie did not exercise political power directly via its own political regime. Parliament continued to be dominated by the landed aristocracy. The bourgeoisie, mostly, did not even have the vote. In 1819, at the time of the Peterloo Massacre when the bourgeoisie and petty bourgeoisie mobilised to demand political reform, dragging the small infant urban proletariat behind them, only 2% of the population had the vote. Even where the bourgeoisie had the vote, they were concentrated in urban areas that often had no MP, whereas the rotten boroughs and rural constituencies that had more sheep than voters, returned several MP's. Only in 1832 does the bourgeoisie get the franchise, and only in 1848 does the industrial bourgeoisie begin to exert its political supremacy. Even then, as Engels describes, it can only do so with the support of workers. 

The same is true of Napoleon, and, as Marx describes in the Eighteenth Brumaire, of the subsequent regimes of Louis Phillippe and Louis Bonaparte. In Germany, a capitalist state modernises the economy, whilst the political regime is in the hands of the Junkers. And, the same can be said of the political regime of Hitler. Dozens of examples of capitalist economies with capitalist states, but where the political regime is in the hands of a Bonapartist or military junta can be cited. And yet, no matter what extent these political regimes or state bureaucracies use their positions to appropriate disproportionate amounts of social production, no serious Marxist denies that the underlying economic base of these countries is capitalist, or that the state in these countries is itself capitalist. In most cases, not even the Third Campists deny this. Its only when it comes to the Stalinist states that they claim some different criteria applies.

Back To Part 11

Forward To Part 13

The Medical-Industrial Complex - Part 2 of 3

A medical-industrial complex operates on the same principles as the military-industrial complex. It ties together powerful vested interests within the Department of Health bureaucracy, the NHS, University medical science departments, and large-scale pharmaceutical, biotechnology and medical technology industry. Huge monopolies and bureaucracies and elites exist, in each, with overlapping interests. The Department of Health channels huge amounts of money into the drug companies and other medical equipment industries, via the the NHS purchasing budgets. Last year the DHSC spent £70 billion on procurement, up from £68.3 billion the previous year. To give an example of current spending with these private companies, £12 billion has already been spent on test and trace, equivalent to about 16% of the procurement budget. Yet, it has been completely useless, whilst no penalty clauses were even put into the contracts for its provision! Its no wonder powerful interests from within the medical-industrial complex have kept insisting that only large-scale testing and tracing can provide a solution, when clearly it has not, and cannot. 

The state also channels large amounts of funding to universities to engage in pure research, as well as targeted research in a range of areas including health sciences. But, the research work done by universities also feeds directly into the large health sciences industries, who frequently do the commercial development of the products first created in university labs. Since the 1990's, and the development of large science parks on the campuses of most universities, that has become increasingly important. Many of the new biotechnology, gene technology and other such cutting edge firms have come out of such science parks, with academics bleeding over into the creation of these new firms. Often, these firms are then bought up for billions of pounds by large pharmaceutical companies. But, in the same way that the large defence contractors funded scientific research in universities that led to the development of new weapons systems, so the huge pharmaceutical and medical equipment producers also fund university research, with the resultant products then being commercially developed by the big companies. A lot of the funding, for research in these spheres comes from the big companies.  

In the 1970's, local, “cottage hospitals” were closed, and attention focused on the development of large hospitals that patients now had to travel to. 

“It was argued that effective treatment required a high level of skilled manpower and the best in technological hardware that was available, Only a large hospital could support the skilled workers – and by skilled workers, consultants are generally meant – by giving them enough cases to be fully occupied without having to waste their expensive time travelling from hospital to hospital. Similarly, the high technology machines – generally even less mobile than consultants – needed frequent use to justify their high cost.” 

(Health Policy and the Cuts, by Tom Manson in Capital & Class 7, Spring 1979) 

Even for things like laundry services in these large district hospitals this argument applied, providing a market for private machine producers in that area too. Manson describes the way this focus on high cost systems had resulted in other areas of medicine being denied funds, for example in geriatrics and mental health. It resulted in patients on a production line being pushed out of hospital early, placing greater stress on other elements of health and social care. But he also notes another critique. 

“This critique is based on the fact that in societal terms, all the successes in medicine have not made much difference to the health of the population. Instead of spending money on heart transplants (for instance) money should be spent on those social factors that affect the health of the whole population, such as environmental factors and indeed the distribution of wealth.” 

(ibid) 

Huge amounts of health spending goes to deal with the consequences of obesity, for example, a factor that is also involved in susceptibility to COVID19. But, instead of dealing with the causes of obesity to begin with, which requires education and intervention not even at the level of Primary Care, but in schools, and as part of a programme of health education and monitoring, the NHS seeks to cure the problems arising from the obesity after it has arisen. Drug companies make huge sums from selling people slimming aids, or medicine for high blood pressure, for Type II diabetes, and so on. The NHS spends large amounts treating the consequences of the diabetes, performing heart operations, as well as surgery to implant gastric bands and so on. 

The introduction of large socialised healthcare systems was designed to ensure that healthcare was provided efficiently, so as to reduce the costs of reproducing labour-power for capital as a whole, but the existence of the medical-industrial complex means that it does not even do that, because the monopolies and bureaucracies that it generates result in policy and expenditure being skewed into channels that benefit the individual interests of the drug companies and other medical supplies companies, and that facilitate the development of large bureaucratic empires within the NHS and Health Departments, and which, thereby, leads to unnecessarily high costs compared to health outcomes. The last Labour government trebled spending on the NHS, for example, but its own performance monitoring showed that it did not even double the health outcomes resulting from it, meaning that instead of economies of scale, it resulted in diminishing returns. 

Of course, its not just the vast bureaucracies within the Department of Health, or in the hospitals where this applies. Go to any GP's surgery and you will notice the steady flow of salespeople from the drug companies that tread their path to the doctor's office. GP's are bombarded with a barrage of advertising from drug companies, in particular, but also other medical supply companies, all out to increase their sales. With the NHS paying for all of these prescription drugs, the pressure is always on for hard pressed GP's to get patients through their waiting rooms by prescribing them the latest pill for this that or the other. Its why we have seen the growing resistance to antibiotics that have been grossly overprescribed, not to mention the level of over-prescription for anti-depressants and so on. All of this is symptomatic of a health service based not upon wellness, but on treating illness. Talking about the discussions inside the Politics of Health Group, of the Conference of Socialist Economists, Mick Carpenter wrote, 

“In particular those concerned about work hazards, and the relationship between health and anti-imperialist struggles in the Third World, looked beyond health services. The former saw the need to remove the fundamental cause of ill-health in the places where people wok, rather than to patch them up in shiny new citadels of technological medicine; the latter knew that the export of western models of medicine had proved patently inadequate to deal with the health problems caused by neocolonial economic and social relations – indeed were a significant feature of them. Finally, the group contained radical epidemiologists who were able to show that the improvements in health made in the last century had more to do with improvements in social conditions than health services.” 

(Left Orthodoxy and the Politics of Health, in Capital & Class 11, Summer 1980) 

Carpenter was writing at a time when the NHS was under right-wing attacks from Tories seeking to make public spending cuts. But, he rightly states that some of the Right's critique of the health service was justified. If we allow our politics to be defined by the Right, but simply place a minus sign where they place a plus sign, then it becomes impossible for our own analysis and politics to advance. In that case, it would mean simply defining yourself only in terms of opposition to health cuts. The modern equivalent is the idea that any kind of sustainable unity or progress can be achieved simply on the basis of opposition to “austerity”. 

“Instead we allow the right to make all the running, and at best fight a rearguard action.” 

(ibid)

Back To Part 1

Forward To Part 3

The Economic Content of Narodism, Chapter 1 - Part 11

Even if then we accept the characterisation of Russia, presented by Lenin after the revolution, as a state capitalist economy under the domination of a workers state, we are led to the conclusion that this is a transitional form of society based upon a transitional form of property – socialised capital. As Marx says in Capital III, Chapter 27, 

“The capital, which in itself rests on a social mode of production and presupposes a social concentration of means of production and labour-power, is here directly endowed with the form of social capital (capital of directly associated individuals) as distinct from private capital, and its undertakings assume the form of social undertakings as distinct from private undertakings. It is the abolition of capital as private property within the framework of capitalist production itself... 

This is the abolition of the capitalist mode of production within the capitalist mode of production itself, and hence a self-dissolving contradiction, which prima facie represents a mere phase of transition to a new form of production. It manifests itself as such a contradiction in its effects. It establishes a monopoly in certain spheres and thereby requires state interference. 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.” 

Its quite clear that such a transitional form of society, based upon this transitional form of property, will have many, widely varied paths of development, depending on the exact material conditions that each of these societies will be presented with, and that very fact will result in wide variations in the political superstructures that are developed in each of these cases. Marx, for example, argued that the period of dissolution of capital would be protracted. Just as its development had been. Engels comments that he and Marx had seen the worker cooperatives playing an extensive role in this prolonged transition period between capitalism and socialism. 

Whether the productive relations in Russia were defined as being socialised capital – state, property, joint stock companies, cooperatives etc. - or socialised means of production, the reality was that this was certainly not private capitalist property, and, consequently, there was no basis for the existence of a capitalist class. In a capitalist state, even one where there is state capitalism, the capitalist class takes the form of owners of fictitious capital, coupon clippers, as Marx sets out in Chapter 27, and he and Engels describe in Anti-Duhring. But, this didn't exist in soviet Russia. The workers' state provided the required money-capital, or resources via allocation. The dominant form of property was, at least, socialised capital, in process of dissolution into socialised means of production, and, in most cases, was already socialised means of production. 

There was no social basis for the existence of a capitalist class as either owners of real industrial capital, or as owners of fictitious capital. The ruling social class was the working-class, resting on this socialised capital/means of production, just as in a worker owned cooperative it is the workers who rest upon its socialised capital. The petty-bourgeois Third Campists ignored this underlying material reality and based themselves, like the Narodniks, on their own subjective sociological analysis of the political regime of the Stalinists. On that basis, they focused on the superficial aspects of the polity, and on the fact that the Stalinist bureaucracy wielded political power, not the workers, and that the bureaucracy appropriated to itself a disproportionate amount of social production. But, this is meaningless subjectivism and moralism.

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